ENERGY

09 May 2016

Critical investments continue in Asset Management, Energy Trade/Risk Management, and Network Management Systems

Framingham, Mass., May 9, 2016 – The power sector is currently undergoing a digital transformation (DX) that will continue to play out for several years. This transformation is enhancing the way energy is produced, delivered, and consumed. A new report from IDC Energy Insights, Business Strategy: The State of Digital Transformation in 2016 North America Power (Doc #US41213616), provides an overview of how digital transformation within investor-owned utilities (IOUs), independent power producers (IPPs), and public power entities, such as municipal utilities and electric co-operatives, are creating advancements and alterations in the way these entities do business.

Digital transformation in the power space can be characterized as the continuous process by which enterprises adapt to —or drive — disruptive changes among their customers and within their markets. This can be successfully accomplished by leveraging digital competencies to innovate new business models, products, and services. Ideally, such models, products, and services, seamlessly blend both the digital and physical experiences related to the business and customers, while improving operational efficiencies and organizational performance. In the new report, IDC Energy Insights outlines the core focus and digital transformation opportunities that organizations within the power space need to leverage in order to remain competitive and on the leading edge. Specifically, IDC Energy Insights recommends:

Investor Owned Utilities (IOU) - Core Focus and Opportunity : Transmission and Distribution System - Insights into equipment performance and power delivery.

This will include but not be limited to:

• Line Monitoring, Power Quality and Transformer Load Management
• Security
• Asset Management
• Net Metering Capabilities
• DER Integration and Forecasting

Independent Power Producers (IPP) - Core Focus and Opportunity : Generation Asset Management - Insights into Optimizing Power Plant or Fleet Operations.

This will include but not be limited to:

• Predictive or Strategic Asset Maintenance
• Balancing Fuel and Power Plant Technology Mix
• Energy Trading and Risk Management
• Emissions Compliance
• New Build and Decommissioning Decisions
• Ancillary Services Improvements and Requirements

Public Power - Core Focus and Opportunity : Customer Engagement and Personalization - Insights into Customer Usage Patterns and Customized Energy Products.

This will include but not be limited to:

• Energy Efficiency and Demand Side Management
• Advanced Battery Storage
• Social Media and Customized Mobile Applications
• Time of Use Rates
• Smart Thermostats
• Smart Appliances

According to IDC's 2015 Vertical IT and Communications Survey: 3rd Platform Adoption by Industry (Doc #258079), there is a shift in investment focus for technology in all power utility organizations. Some of the most critical invest areas will continue to be asset management, ETRM, and NMS:

• Asset Management – This encompasses not only the maintenance of assets, but also the management of the field resources needed to perform the work on the assets. It is an area that for both regulatory and performance reasons has seen increased focus from companies.
• Network Management Systems (NMS) – Combining Outage Management (OMS), Distributed Energy Management Systems (DERMS), communications management, etc. into one unified system has benefits in system maintenance, training, information access, and asset performance. From 2014 to 2015, the number of companies investing in NMS has gone from just over a quarter of the respondents to almost half.
• Energy Trading and Risk Management (ETRM) – ETRM has generated a lot of buzz as new capacity and wholesale markets develop. While ETRM has generated significant interest amongst large IOUs, it is now starting to become the key digital transformation core for IPPs as they adjust to new market models like PJM's new capacity market.

Lead analyst, John Villali, notes that other areas like cybersecurity and Meter Data Management (MDM) are also important because they are still being acquired and rolled out. But ETRM, NMS, and asset management are areas that IOUs, IPP, and other utility companies see as forming the core of digital transformation and support the goals of DX - economic efficiency, reliability, and customer service.

"When taking on digital transformation, IDC Energy Insights recommends power organizations focus on pain points of the business and customers, and areas that can mitigate risk in the long run, as well as areas that have a clear and attainable ROI. Once initial steps have been taken into the world of DX, more complex and concurrent projects can be taken into consideration," said Villali.