(Published in Manila Standard Today under the Greenlight column, April 12, 2010)
Hours of brownout plagued Mindanao at the start of the year, crippling business output by fifty percent. The Mindanao Grid continued to experience generation deficiency because of the limited available capacity of the state-run National Power Corp.’s hydropower plants, most of whose water reservoirs are drying up because of El Niño.
In the Visayas, the Cebu Energy Development Corp.’s coal unit had to undergo an emergency shutdown in March, significantly cutting down the Visayas Grid’s available capacity.
In the meantime, the second unit of the Palinpinon geothermal facility in Negros Oriental, went on an emergency shutdown, causing the Visayas Grid to lose some badly needed capacity.
Bad luck or just plain and simple lack of foresight?
Whatever it is, the whole value chain of power supply – from generation, to transmission, to distribution - needs to undergo transformation to make the power grids more intelligent, digitized, and efficient, ushering the age of the “smart grid”.
While at its core the message is accurate, the smart grid is much more far-reaching than its frequent portrayal as simply the appearance of sophisticated new energy management tools in the home. It encompasses other things desired by customers such as easier access to renewable generation, faster restoration of outages, and richer products and services. Within utility organizations, it will require fundamental shifts in business strategy and industry business models, unprecedented collaboration with stakeholders, redesign of business processes and applications, and renewed focus on the roles, competencies, compensation, performance, and structure of the workforce.
Companies and governments across the globe are rising to the challenge by focusing efforts to effectively manage anticipated changes in demand, accommodate growth in distributed (especially renewable) generation resources, expand access to power, empower citizens, and encourage a stronger focus on conservation.
On the Mediterranean island of Malta, for example, power, water, and the economy are intricately linked. The country depends on electrically powered desalination plants for over half of its water supply. About 75% of the cost of water from these plants on Malta is directly related to energy production. Meanwhile, rising sea levels threaten Malta’s underground freshwater source. Additionally, the government of Malta has set an objective of transforming the island into a competitive knowledge economy to encourage investment by foreign companies. Meeting all of these goals in a short period of time presents a complex series of challenges that require immediate attention to ensure that the country has a sustainable and prosperous future.
In light of this need, the Maltese National Utilities for Electricity and Water are completely transforming their distribution networks. All 250,000 electricity meters will be replaced with smart devices. These and the existing water meters will be connected to advanced applications to enable remote reading, management and monitoring throughout the entire distribution network.
Companies on similar journeys will need to manage four separate project streams: the smart grid technology implementation itself, domain-focused projects (e.g., grid operations, work and asset management, customer experience and management), value chain integration, and management of the transformation across strategy, finance, organizational structure, and stakeholders. These companies will benefit from evaluating where they are best positioned to begin their efforts, and where they may need to develop new capabilities before initiating work.
IBM, in collaboration with the Global Intelligent Utility Network Coalition and the American Productivity and Quality Center, developed a Smart Grid Maturity Model (SGMM) that can help utilities assess where they stand in this regard. This maturity model’s structure emphasizes the likelihood that most companies will implement specific solutions gradually over time, re-evaluating results along the way and using the outcome to make decisions on the best steps for continuing development.
In order to promote the model’s widespread adoption and use, IBM handed over the Smart Grid Maturity Model to Carnegie Mellon University’s Software Engineering Institute (SEI) earlier this year. SEI will assume primary responsibility for the ongoing governance, growth and evolution of the model. In addition, the World Energy Council will be a channel for global dissemination, participation and adoption of the model using its worldwide network of member committees.
Utilities are increasingly being viewed as a critical link in solving the challenges we all face related to effectively managing our energy resources and environment. The industry is now clearly in a transition toward becoming a vibrant, competitive, innovative influence on the global economy. The decisions made today about the world’s electricity networks will impact our lives for decades to come.
-------------------------------
Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of the De La Salle University Ramon V. del Rosario Sr. Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
Hours of brownout plagued Mindanao at the start of the year, crippling business output by fifty percent. The Mindanao Grid continued to experience generation deficiency because of the limited available capacity of the state-run National Power Corp.’s hydropower plants, most of whose water reservoirs are drying up because of El Niño.
In the Visayas, the Cebu Energy Development Corp.’s coal unit had to undergo an emergency shutdown in March, significantly cutting down the Visayas Grid’s available capacity.
In the meantime, the second unit of the Palinpinon geothermal facility in Negros Oriental, went on an emergency shutdown, causing the Visayas Grid to lose some badly needed capacity.
Bad luck or just plain and simple lack of foresight?
Whatever it is, the whole value chain of power supply – from generation, to transmission, to distribution - needs to undergo transformation to make the power grids more intelligent, digitized, and efficient, ushering the age of the “smart grid”.
While at its core the message is accurate, the smart grid is much more far-reaching than its frequent portrayal as simply the appearance of sophisticated new energy management tools in the home. It encompasses other things desired by customers such as easier access to renewable generation, faster restoration of outages, and richer products and services. Within utility organizations, it will require fundamental shifts in business strategy and industry business models, unprecedented collaboration with stakeholders, redesign of business processes and applications, and renewed focus on the roles, competencies, compensation, performance, and structure of the workforce.
Companies and governments across the globe are rising to the challenge by focusing efforts to effectively manage anticipated changes in demand, accommodate growth in distributed (especially renewable) generation resources, expand access to power, empower citizens, and encourage a stronger focus on conservation.
On the Mediterranean island of Malta, for example, power, water, and the economy are intricately linked. The country depends on electrically powered desalination plants for over half of its water supply. About 75% of the cost of water from these plants on Malta is directly related to energy production. Meanwhile, rising sea levels threaten Malta’s underground freshwater source. Additionally, the government of Malta has set an objective of transforming the island into a competitive knowledge economy to encourage investment by foreign companies. Meeting all of these goals in a short period of time presents a complex series of challenges that require immediate attention to ensure that the country has a sustainable and prosperous future.
In light of this need, the Maltese National Utilities for Electricity and Water are completely transforming their distribution networks. All 250,000 electricity meters will be replaced with smart devices. These and the existing water meters will be connected to advanced applications to enable remote reading, management and monitoring throughout the entire distribution network.
Companies on similar journeys will need to manage four separate project streams: the smart grid technology implementation itself, domain-focused projects (e.g., grid operations, work and asset management, customer experience and management), value chain integration, and management of the transformation across strategy, finance, organizational structure, and stakeholders. These companies will benefit from evaluating where they are best positioned to begin their efforts, and where they may need to develop new capabilities before initiating work.
IBM, in collaboration with the Global Intelligent Utility Network Coalition and the American Productivity and Quality Center, developed a Smart Grid Maturity Model (SGMM) that can help utilities assess where they stand in this regard. This maturity model’s structure emphasizes the likelihood that most companies will implement specific solutions gradually over time, re-evaluating results along the way and using the outcome to make decisions on the best steps for continuing development.
In order to promote the model’s widespread adoption and use, IBM handed over the Smart Grid Maturity Model to Carnegie Mellon University’s Software Engineering Institute (SEI) earlier this year. SEI will assume primary responsibility for the ongoing governance, growth and evolution of the model. In addition, the World Energy Council will be a channel for global dissemination, participation and adoption of the model using its worldwide network of member committees.
Utilities are increasingly being viewed as a critical link in solving the challenges we all face related to effectively managing our energy resources and environment. The industry is now clearly in a transition toward becoming a vibrant, competitive, innovative influence on the global economy. The decisions made today about the world’s electricity networks will impact our lives for decades to come.
-------------------------------
Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of the De La Salle University Ramon V. del Rosario Sr. Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
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