Energy and utilities face key challenges in the coming years. Gartner predicts that changes in the current asset management approaches are required to deal with the challenges ahead. What role does design authority play? And how are digital twins being used?
The energy and utility sector faces defining challenges in the years ahead. As we’ve witnessed in the last year, no industry escaped the ravages of the pandemic. As organizations—both private and public—focus on combating Covid-19, an equally imminent issue is climate change and its continual impact now and in the years to come. As we witnessed, climate change is causing more severe weather, increasing the strain on utility and energy companies’ networks and operations.
A recent Accenture study revealed that 92% of utility executives surveyed feel that ‘extreme weather will increase the financial risk level of network businesses.’ This year extreme weather conditions in Texas (U.S.) demonstrated the growing impact climate change has on grid resilience.
For energy and utility entities, the capacity to respond to the sector’s mounting challenges highlights the need to find new ways of managing their assets.
In a new Gartner report(1), the research firm predicts that the current asset management approaches used by utilities are insufficient to deal with aging infrastructures, tightening environmental and regulatory policies, capital budget constraints, digital transformation, and evolving prosumer demands.
These key challenges—among others—necessitate creating a design authority that is mandated to oversee the asset management system. By doing so, leadership can manage the key challenges ahead and deliver the required short-term results while building for the future. This will mean establishing a design authority that supports data-driven asset decisions, active risk management, and adherence to asset standards.
According to Gartner, to leverage an asset’s full economic value, it is imperative for the asset management plan to integrate software design tools to ensure policy adherence. Because the lifespan of utility assets spans decades, the design authority must take into account compliance with regulations while at the same time the shorter time span of the various organizational business objectives.
Implementing design tools that provide a cross-functional (non-silo) analysis of how different asset management scenarios could play out in the short to long term ensures alignment of decision boundaries as stipulated in the design authority. This assures that even day-to-day decisions align with the long-term asset value and risk.
Equally important is the ability to oversee the asset management strategy and align stakeholder decisions. To do so necessitates a technology that supports the constraints, processes, and human resources of the infrastructure while providing visibility of how decisions impact the asset management plan in the short to long term.
When Europe’s largest electricity transmission system operator (TSO) approached Cosmo Tech, they needed a way to maintain operational efficiency in the short term to continue day-to-day operations within the existing budgetary, regulatory, and environmental constraints. The TSO required a software platform that helped them in their short-term asset management requirements while also providing the necessary long-term insights to meet the market shift to renewable energy. Using Cosmo Tech Asset, the TSO simulated physical assets, human resources, and business constraints to build an optimal strategic business plan that ensured short-term and long-term robustness.
Based on simulation technology, the Asset solution provides a 360° view of the asset management system to connect strategic and operational strategies better to meet short-term results and future needs.
The significant changes happening in the utility and energy sector mean new ways of managing assets are required. As legacy assets are retired and replaced by those needed to move to renewable energy, business, and technology leaders will need to find a scalable approach to manage the asset base over the long-term. This will mean taking a risk-aware approach to the total life cycle costs and tradeoffs across diverse units and their respective short-term objectives.
To do so will mean balancing the investment in maintaining the existing network against the costs of replacing assets in the network as part of an asset investment plan. All while optimizing maintenance policies to reduce OPEX expenditure, extend the life of assets, and make the best use of resources. This will mean aligning the organizational objectives with asset management strategies, plans, and activities across the full life cycle of assets defined by the ISO 55000 standard.
By creating better oversight and management of assets through a well-defined design authority, leaders can drive cross-function versus silo-based decisions, achieve an optimum risk versus cost versus reliability balance, and solidify investment cases for new technologies. Simulation Digital Twins provide the utility and energy sector with a robust way to determine the optimal asset life cycle management scheme following the design authority. Cosmo Tech’s technologies offer the solutions required today to help the energy and utility sector migrate to decarbonization and increased safety requirements.