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The electricity industry as we have known it for the past one hundred years is being transformed.
Renewables. Electric vehicles. Consumers becoming generators. Micro grids. Intelligent thermostats. Smart meters. Big Data. COP21. These technologies, trends and global commitments are disrupting our industry so dramatically that it will soon be unrecognizable as the one shaped by Thomas Edison.
Edison’s one-directional electricity value chain, wherein electrons flow from generation through transmission and distribution to consumers, has served our industry well for a century. But the design of the electricity industry is sure to look very different in the next century, and likely will do so within the next five years.
Consider how significantly the current model is being tested today.
Organizations and customers who previously only consumed electricity are rapidly becoming generators. Today, distributed energy resources account for a generating capability of 136 gigawatts. Within 10 years, that will grow four-fold to 531 gigawatts.
The examples are everywhere. British bank HSBC now draws 40 percent of its UK electricity needs from two wind farms that it owns in the East of England. Computing services provider Amazon Web Services claims it will generate 40 percent of its own electricity needs by the end of 2016 from renewable investments.
And renewables themselves are testing the model.
To the average citizen it may seem improbable that we’re struggling to incorporate renewables into our fuel mix, but curtailment – the inability of grids to take on more supply from clean power sources– is a growing problem. Germany alone curtailed about 1,581 gigawatt-hours of green energy in 2014, a threefold increase from curtailments in 2013.
Then look at the impact of “demand response” – customer-driven moderation of electricity consumption.
When the city of New York embarked upon the 60-block Hudson Yards Redevelopment Project, it was assumed the development would require a new 200-megawatt power source. Instead, new smart building systems coupled with analytics, a micro-grid and precise energy management eliminated the need for a new power source entirely.
Electrons are flowing in directions they didn’t previously. Consumers are impacting business models more than ever. Utilities, generators and grids are struggling to keep pace with the changing fuel mix driven by both technology and policy. And we’re still only at the beginning of what feels like an electricity revolution.
Against this backdrop, it’s obvious that the model of electricity generation, delivery and consumption needs to change. The flow of data and electrons needs to become more dynamic and multi-directional and the response to the insights gained from that data, for more autonomous.
I think of it as the electricity value chain morphing into an Electricity Value Network.
In an Electricity Value Network, any node can be a generator or a consumer, and the more intelligence shared about each node (and the more collaboration and coordination between their owners) the more efficient the whole network becomes.
At GE, we’ve spent the past year imagining and designing this new Electricity Value Network together with our customers.
We started by applying the principles of the Internet of Things and software to wind power. With the GE Digital Wind Farm, we applied analytics to sensor data from connected turbines with the goal of monitoring, predicting and ultimately optimizing their productivity. The results were staggering – up to 20 percent improvements in output from the same turbines.
Then we applied these principles and similar technologies to gas turbines, and again we saw astonishing outcomes: $50 million in productivity improvements for existing plants and more than $200 million for new plants.
Today, at GE’s Minds and Machines event in Paris, we’re announcing new Digital Power Plant software that further expands the network of digitally connected generating types to the coal-powered steam plant.
GE’s new Digital Power Plant for Steam software will monitor and analyze data from the more than 10,000 data inputs in a modern coal plant. It will predict performance and recommend actions (that can be executed through a closed-loop advanced control system) to improve efficiency and output, reduce emissions, reduce downtime and ultimately make coal-powered steam plants much more flexible and responsive to the demands of today’s power market.
Once again, we believe the outcomes will be impressive. For a 1,000-megawatt plant, we’ll reduce by 67,000 tons the amount of coal consumed per year, while maintaining the same megawatt output.
We’ll do that by delivering 1.5 percentage points of efficiency through software, and that in turn will drive up to three points of CO2 emission reduction and 10 to 15 percent of NOX and SOX emissions cuts. Applied to the global coal fleet, that would be the equivalent of removing up to 120 million petrol-based cars from the road or sequestering as much CO2 as a new forest the size of western Europe could in a year. For each individual plant, we believe the value created will be $50 million.
So we’re tackling a really big problem with the Digital Power Plant for Steam, but more importantly we’re advancing our vision of an Electricity Value Network.
In time, we’ll introduce similar solutions for hydroelectric power, nuclear power, solar and more. And ultimately we’ll create complete, intelligent connected systems that help our customers move towards a truly connected Electricity Value Chain.
It’s a vision – and for GE a mission – that inspires me every day. We’re truly powering the world and simultaneously protecting our planet for future generations to enjoy.
(Top image: Courtesy of Thinkstock.)
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Ganesh Bell is Chief Digital Officer & Head of GE Power’s Digital Solutions business.
All views expressed are those of the author.