Data Empowered Utilities

Data Empowered Utilities Data analytics: Empowering utilities to solve today s problems while building tomorrow s business Author: Thomas Zimmermann, CEO Smart Grid Services, Smart Grid Division, Siemens Infrastructure & Cities Sector Executive Summary... 2 Motives: What s Driving Utilities Toward Data Analytics... 2 Empowering the Utility Workforce to Solve Business Problems... 2 Advantages of Cloud... 4 Starting Strategically with Analytics... 4 Conclusion... 5 www.siemens.com/emeter 1

Executive Summary Utility professionals such as CIOs, enterprise architects, data analysts, customer operations staff, and marketing managers are under immense pressure to manage the flood of data from smart meter deployments. The challenge is to create clear, useful insights that serve needs of a variety of internal and external stakeholders. This motivates utility professionals to either build an in-house enterprise-wide analytics solution or look for custom, off-the-shelf products to solve problems quickly. Utility decision makers want to know: Is there a scalable and measurable analytics solution that empowers their professionals to create actionable intelligence today and for the future? The answer lies in adopting a phased approach. Start small, use analytics first to focus on specific use cases, and expand as needed by showing success metrics. This will help utility professionals to address growing analytical needs as well as solve business problems. Motives: What s Driving Utilities Toward Data Analytics Revenue Protection Our sophisticated application uses advanced data mining techniques to automatically detect loss or theft. Load AMI DATA Automated Investigation Ticket Created Advanced Data Mining to Identify Candidates Data Analysis Analysis Review Field Investigation Result Fed Back to System Siemens Revenue Protection Analytics application can help utilities address revenue leakage problems. Non-Technical Loss Verified Figure A There isn t a one-size-fits-all application that solves all analytical challenges. In fact, utility professionals see a myriad of data types being tested to solve business problems. How can utility professionals respond to the growing needs from business owners using the right data-set for the right outcome? Current market research, as well as numerous conversations that Siemens have had with utility with utility decision-makers in various business groups, indicate four key needs that are increasingly driving the utility industry toward analytics solutions: 2. Improving reliability. Around the world, the increase in extreme and unpredictable weather patterns has created a trend of declining reliability metrics for many utilities. In North America alone, utilities are spending billions of dollars to improve infrastructure to prevent or minimize outages.² Also, regulators pay close attention to reliability and customer satisfaction. 3. Building a utility brand. Utilities need to build a strong, consumer-facing brand to support their future business. But most customers aren t aware of this relationship until something goes wrong such as a power outage, or an unexpectedly high bill. According to J.D. Power and Associates, in 2013 overall customer satisfaction declined among North American utilities.³ In deregulated markets, retail providers constantly compete to create brand awareness. Creating a customer-driven brand is a long-term but vital strategy. 4. Finding new revenue streams. Utility revenues are declining even while the cost of electricity is increasing globally.⁴ All parts of a utility organization billing, operations, field service, marketing, planning, and more need innovative tools to detect non-technical losses due to fraud and theft. This will also help utilities remain competitive in the face of growing revenue challenges, such as distributed generation. Empowering the Utility Workforce to Solve Business Problems Recently, the energy industry news and analysis firm UtilityDive surveyed⁵ over 527 professionals, from across many U.S. utility organizations, about the most pressing challenges their industry faces. Aging infrastructure was by far the most pressing challenge reported (by 48% of responding utility professionals). Furthermore, 31% of respondents cited the aging utility workforce as a top industry challenge. These are only two of many major industry concerns. 1. Recouping investment. Worldwide, utilities have been investing billions of dollars into smart metering and smart grid deployments.¹ From a business perspective and to satisfy regulators and stakeholders, utilities need to start using the data produced by these technologies to solve business problems right away. This means business stakeholders are looking to muster specific insights from smart meter and grid data as quickly as possible. Survey Source: The State of the Electric Utility 2014 by Utility Dive Figure B 2

Analytics can help utilities optimize resources while also building new capabilities and solving critical problems. Here are four specific examples: 1. Proactive management of distribution grid assets Most utilities don t have a complete and current picture of what s happening on their transformers and other key distribution assets. Analytics can help utilities accurately calculate transformer loads in real time. This is crucial to understanding the stress on utility assets, which in turn determines the useful life of specific equipment as well as overall network reliability. Utilities that understand the status and condition of their equipment can save vast amounts of money by scheduling maintenance and replacement more appropriately. For instance, Siemens offers an Equipment Load Management (ELM) application that helps utility professionals analyze loads on transformers and other grid assets using meter-level data. In this example, see Figure C below, grid planners can look at the transformer capacity using ELM, grid planners by each smart meter. This analytics approach provides an efficient process to start solving distribution grid issues that were unnoticed until now. In the long term, grid asset analytics also supports more accurate planning of grid expansions and updates. This helps utilities justify major capital expenditures and realize maximum benefits from these investments. 2. Detecting and preventing electricity outages Smart meter and smart grid analytics can help utilities identify outages quickly, even before customers call to report them. Using analytics, utilities can quickly identify outages which require the attention of field crews and dispatch the nearest crew to restore power efficiently. Smart meters provide a wealth of information about outages through last gasp messages. Utilities can correlate these messages with their distribution network database, yielding timely and accurate information about an outage event. For instance, several U.S. utilities have leveraged capabilities included in emeter s EnergyIP⁷ Meter Data Management platform for better resource planning and reducing service interruption. They are integrating outage events,, meter data and insights from analytics with their Outage Management Systems.⁸ These utilities report that this integration ultimately helps improve customer satisfaction which in turn helps satisfy regulators, who tend to pay close attention to reliability metrics such as the Customer Average Interruption Duration Index (CAIDI). 3. Reducing utility revenue losses In North America every year, up to 3% of electricity produced is stolen⁹ and in some other parts of the world, that figure is much higher. What s the percentage of time that our transformers are overloaded? How does a given transformer s lifespan affect its actual load? Which transformers should be investigated and prioritized for replacement? Figure C Siemens ELM application helps utilities analyze power loads on transformer, meter-by-meter, allowing grid planners to balance transformer capacity. Electricity theft means more than lost utility revenue; it also poses safety and reliability risks. For instance, a large marijuana grow operation might overload distribution assets and cause outages. Similarly, bypassed meters and unauthorized wiring can increase risks of fire or shock. Since electricity thieves are getting sophisticated and harder to detect, analytics is extremely useful in revealing theft-related patterns, especially as those patterns shift. For instance, Siemens Revenue Protection Analytics application can help utilities preserve and grow revenue by applying advanced data science techniques to interpret and reveal patterns from smart meter data. These can indicate either possible incidents of theft or hardware problems that may be resulting in unbilled 3

revenue for utilities. The application allows a utility revenue protection analyst to quickly isolate service points where non-technical loss may be occurring, track all site investigations and record evidence for future use. collaboration, which tends to yield new opportunities and support long-term business evolution. Over time, a phased, use-case-driven approach can build strong support throughout an organization for comprehensive analytics. 4. Addressing retail competitiveness and new business opportunities Deregulated and unbundled energy markets in various parts of the world have unique challenges specific to demand and supply. Customer retention and ability to provide a cost-effective service to the consumers are top most priorities in these market. Whether, the retail market is competitive or not in your region yet, analytics can help utility professionals improve customer operations and engagement by selecting specific use-cases.¹⁰ Analytics also can help utility executives, managers and staff. Gaining a deeper understanding of customer segments and characteristics, as well as broader market trends, can help future-proof a utility. Meanwhile, on a day-to-day basis, data analytics can help utilities devise proactive, cost-effective solutions for managing demand, increasing revenues, and also optimizing existing programs. For instance, when designing and targeting demand response programs or innovative tariffs, analytics can help identify customers who might benefit most (and also yield the greatest benefit to utilities). Advantages of Cloud IT systems in many utility companies still lack the ability to process large volumes of smart meter and grid data. Nor can these systems easily support in-depth, real-time analysis of existing network data. Advanced analytics requires robust computing power. Siemens provides analytics applications, including Equipment Load Management and Revenue Protection allowing utilities to bypass limitations of legacy computing hardware while avoiding significant up-front investments for IT upgrades. Utility professionals can engage Siemens analytics platform and applications as a subscription-based service. This model encourages starting small and experimenting, which can be easier to sell to internal stakeholders in a utility, and fosters cross-department Siemens expects a shortage of skills in the analytics discipline among utilities across the globe. Current market research and utility decision-makers echo these worries as well. Fortunately, Siemens employs many highly skilled data professionals, who can solve specific analytical and business problems for utilities. This not only provides business and operational benefits to utilities, but also maximizes the efficiency of a utility s investment. Siemens Analytics offering includes applications with dashboards that have been developed based on a Siemens deep industry expertise. These applications and reports provide actionable insights that support quick and clear decision making and they also enhance crossdepartmental collaboration and communication. Starting Strategically with Analytics Siemens has decades of experience helping utilities solve business problems. Here are three takeways for utility CIOs, marketing managers, operations staff, and other key utility players who are either beginning or fine-tuning an analytics strategy: 1. Start small and focused. Many utilities benefit from starting with small pilot projects that focus on a particular section of the grid, or on a specific challenge or opportunity, rather than immediately deploying analytics across the entire enterprise and network. 2. Innovate constantly. Don t be stalled by constrained resources and skills. Cloud and managed services support innovation by augmenting in-house capacities, thus, crucial to creating an agile organization. 3. Bridge IT and OT silios. Use analytic apps to bridge info silos (IT/OT¹¹, business development, customer service, and more) and encourage cross-departmental collaboration. This not only spurs creativity; it also can increase support and resources for using analytics to solve problems, support decisions and address opportunities. 4

Conclusion Siemens analytics solution, that includes platform and applications, enables utility professionals deliver timely insights and results to a variety of stakeholders. These results improve companies conformance with regulatory and other external mandates. This type of end-to-end solution will distinguish yourself from the competitors as well as increase customer satisfaction and revenue assurance. Learn more about how data analytics might benefit your utility by empowering you to solve problems, identify and explore opportunities, and prepare for the future. About Siemens Grid Application Platform Siemens grid application platform helps leading electric, gas, and water utilities worldwide modernize the speed of processing sensor data. We transform business operations with a software application approach that delivers accurate billing, proactive outage management, revenue protection, customer engagement and more. Deployed at over 50 utilities worldwide, our solutions empower utilities to rapidly deploy software and communications systems to effectively scale and maximize operational efficiency. Visit us at www.siemens.com/emeter to learn more. 1 Smart Grid IT Systems Forecast, Published 4Q 2013 by NavigantResearch. Also see Global Smart Grid Technologies and Growth Markets, 2013 2020, Published July 2013 by GTM Research 2 For instance, New York State will be spending billions of dollars in the next 10 years to upgrade physical infrastructure as well as improve distribution grid with new technologies - http://www.intelligentutility.com/article/14/03/pulling-insights-lessons-storm. In addition, China shows an acceleration in smart meter deployments- http://www.nanowerk.com/news2/green/newsid=34434.php 3 J.D. Power and Associates Reports for more detail - http://www.jdpower.com/content/press-release/dtft2fn/2013-electric-utility-business-customersatisfaction-study.htm 4 Utilities revenues are declining in North America as well as in Europe. Demand cycles are reducing and utilities face competition from other sources such as renewable generations : http://www.forbes.com/sites/edfenergyexchange/2014/03/07/changing-times-for-electric-utilities/, http://www. investingdaily.com/19316/lessons-from-european-utilities-wires-have-what-it-takes/ 5 State of the Electric Utility Industry 2014. Report by UtilityDive, February 2014: http://www.utilitydive.com/library/2014-state-of-the-electric-utility/ 6 emeter Equipment Load Management data sheet: http://w3.siemens.com/smartgrid/global/sitecollectiondocuments/products_systems_solutions/ Smart%20Metering/emeter/EM_074_ELM_DataSheet_vertical_F2.pdf 7 EnergyIP Meter Data Management platform by emeter, a Siemens Business: http://w3.siemens.com/smartgrid/global/en/products-systems-solutions/ software-solutions/emeter/pages/energyip.aspx 8 Outage Management: How three utilities are enhancing their ability to detect and respond to outages using EnergyIP. Case study, March 2014: http:// solutions.emeter.com/fy14q2_case_study_outagemgmt_lp.html 9 Electricity theft, a bigger issue than you think. Peter Kelly-Detwiler, Forbes, April 23, 2013: http://www.forbes.com/sites/peterdetwiler/2013/04/23/ electricity-theft-a-bigger-issue-than-you-think/ 10 Customers as grid participants: key shift in the utility industry paradigm. Chris King, Chief Regulatory Officer, emeter. Siemens Smart Grid Watch blog, Aug. 8, 2013: https://blogs.siemens.com/smartgridwatch/stories/1246/ 11 Embattled Utilities Face Talent Storm, Jeff McMahon: http://www.forbes.com/sites/jeffmcmahon/2014/03/31/embattled-utilities-face-talent-cliff/ 12 How utilities can blend the IT/OT silos, Chris King, emeter. Siemens Smart Grid Watch blog, May 31, 2013: https://blogs.siemens.com/smartgridwatch/ stories/1025-how-utilities-can-blend-the-it-ot-silos7 8 stories/1025-how-utilities-can-blend-the-it-ot-silos7 5

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