The Energy Utilities Series- Challenges and Opportunities of Decarbonization (Post 2 of 6)
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In my first post in the Energy Utilities Series, I covered the industry’s major challenges, and in this post, I’ll focus on the first challenge, decarbonization, while also exploring a few significant opportunities.

Decarbonization is the process of transitioning from carbon-based fuels, such as coal, oil, and natural gas, to renewable energy sources, which include wind, solar, and hydroelectric power. Energy utilities are under increasing pressure — political, regulatory, and social — to decarbonize their operations and reduce their carbon footprints. The transition to renewable energy sources typically involves moving from a limited number of coal- or gas-fired power stations, each with a large generating capacity, usually in the gigawatt range, to many, much smaller generating plants, each with significantly less capacity.

To illustrate this with a personal example, my father used to work as a maintenance fitter at the now-closed Ferrybridge C coal-fired power station in the UK. The power station had four turbines, each with a 500-MW generating capacity for a total output of 2 GW. A modern wind turbine can typically generate 8 MW of electricity, so you would need a large number of wind turbines to replace a power station such as the one at Ferrybridge.

Energy utilities are already heavily investing in renewable energy sources, and we are starting to see the benefits. During the first three months of 2023, almost one third (32.4%) of the UK’s generating output came from wind power alone. This made wind power the largest contributor to electricity generation during the period – generating almost as much as gas and coal combined. During the same 3-month period, the UK’s renewable energy generation output exceeded the total demand across the country for 50 days.

The Challenges of Decarbonization

However, although these advances are encouraging, it doesn’t mean that decarbonization is easy. The transition, not only of the generating sources but also the business model, is fraught with challenges. As I mentioned, renewable energy generating plants are mostly more numerous, with smaller output. In addition, the output is often variable; think of solar or wind power generation on cloudy or windless days. The traditional carbon-based generation capacity was, and still is, available on-demand and of known output. This transition to renewables requires best demand forecasting and then matching the forecasts with generation capacity.

This variable supply can be flattened with large Li-ion batteries and pumped hydroelectric storage systems. However, battery storage technology is just reaching the cost to enable industrial-scale battery farms and the supply of lithium is a concern. Pumped hydroelectric storage is based on pumping water to a storage lake during low demand periods, when there is excess capacity in the system, and then releasing the water to drive hydroelectric turbines at peak demand. This is a well understood and efficient way to ‘store’ excess power and then release it on-demand. However, pumped hydroelectric requires the right geography and getting the necessary planning permissions, which can be a long, arduous task. New storage technologies are starting to emerge, but many are years away from being ready, on an industrial scale, to solve the current challenges. Until then, utilities will need more accurate demand and generation forecasting, and for this reason many countries are keeping carbon-based generating capacity, running part-loaded in reserve, so they can instantly meet unmet demand.

Most renewable energy generating plants are geographically dispersed and often in remote locations; think about offshore wind farms. In response we are seeing a new form of NIMBYism as residents oppose the building of new plants near their homes, and this is making it more difficult for energy utilities to build generating plants in more accessible locations, which makes it significantly harder to perform routine maintenance on these plants. The large power stations had teams of maintenance workers based in the station itself. Nowadays, maintenance teams need to be mobile, and the utilities need to run preventative maintenance programs to optimize operational readiness.

Another piece of the decarbonization puzzle is the customer, the consumer of the electricity. Educating the customer about their consumption patterns and rewarding them for leveraging off-peak energy is going to be a critical part of the transition. Smart meters enable consumers to understand their energy consumption patterns and manage the change to off-peak consumption. Some energy utilities, such as Octopus Energy in the UK, are paying customers to use off-peak energy. Data from the Octopus customer’s smart meter is made available via a smart phone app so customers can see the lowest-cost usage period and plan their consumption accordingly. For example, they might set their washing machines to run at 3:00 in the morning.

The Power of Data: Unlocking Opportunities

A critical weapon that will enable energy utilities to successfully transition to renewable energy sources is data and analytics. Utilities collect a wide variety of data, such as smart meter data from customers, sensor data from generating plants, weather data from external agencies, market data for energy traders, location data, and so on. Utilities use all of this data to forecast energy demand, predict generating output, run predictive analytics for preventative maintenance, optimize maintenance team operations, deliver insights to customers to modify their consumption patterns, etc. The challenge for utilities is that this valuable data is stored in different repositories — in data lakes, applications, Internet of Things (IoT) clouds, time-series databases, and so on. Utilities need to leverage a modern data architecture, such as a data fabric, to make this data readily available and accessible to those teams within the organization that need it.

This is exactly what energy utilities such as TransAlta is doing. TransAlta is using the Denodo Platform to access and use sensor data from wind turbines and weather data from external agencies to predict icing events on the wind turbine blades. Blade icing can affect turbine efficiency and can also cause an imbalance that can lead to greater wear-and-tear and maintenance costs. TransAlta operations controllers can use this icing information to decide whether to shut down a wind turbine or keep it running at a lower capacity.

Also, a large utility in Texas collects over 800M smart meter readings every day and uses the Denodo Platform to integrate this data with asset geolocation data to determine the cause, location, and extent of power outages. This enables the utility to proactively contact customers to inform them of known outages, preventing a flood of calls to its contact centers. The Denodo Platform also integrates the utility’s workforce GPS data and status to accelerate its response to outages.

In my next post in the Energy Utilities Series, I’ll cover the challenges and opportunities of electrification.

Paul Moxon