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"To help efficiently manage
stimulus plans and optimize their outcomes, public sector agencies are turning to
the SAP BusinessObjects portfolio of solutions. Join this Webcast to hear how SAP BusinessObjects solutions can help
your organization manage the reporting requirements of
economic stimulus programs, such as ARRA, to ensure audit transparency and accountable reporting."
Source : SAP
Energizing Utilities for the Economic Stimulus Plan: Strategies for Greater Efficiency and Sustainability
Energizing Utilities and Sustainability is also known as :
Utility,
Utilities Programs,
Energy Utilities,
Utilities Software,
Power Utilities,
Utilities Cost,
Utilities Business,
Energizing Utilities Conservation,
Energizing Utilities Strategies,
Utilities Strategies,
Utility Products,
Utilities White Papers,
Electric Utility,
Energizing Utility,
Energizing Utilities Economic,
Energizing Utilities Plan,
Utilities Stimulus Plan,
Utility Resources,
Utility Taxes,
Utility Sustainable Management,
Utility Sustainability,
Utility Property,
Sustainable Development,
Sustainable Measures,
Leaders Sustainability,
Environmental Sustainability,
Sustainability Corporate.
For years utilities have seen a growing need to enable a
smarter electric grid, promote cleaner power sources, and
replace aging infrastructures. On February 17, 2009, these
issues came into even sharper focus when U.S. President
Obama signed into law the $787 billion American Recovery
and Reinvestment Act (ARRA).
This far-reaching legislation provides extensive funding for
many energy initiatives – including programs that support
transmission and smart grids, renewable energies, and
clean-coal technologies. However, utility executives face
strict compliance guidelines associated with the stimulus
plan and ongoing environmental policies.
This SAP Executive Insight examines specific concerns that
confront utility executives in today’s economy. Further, it
describes how gaining greater business visibility and
transparency can enable organizations to execute decisively
and effectively in this challenging climate. Such clarity can
help executives answer the following key questions:
- How can we optimize energy efficiencies internally and
with our customers?
- How can we best meet the mounting challenges of
sustainability and increasingly complex government
regulations?
- How can we maximize today’s assets and build adaptable
infrastructures for the future?
EXECUTIVE AGENDA
AT A GLANCE
Goals of the American Recovery
and Reinvestment Act
Passage of the American Recovery and
Reinvestment Act (ARRA) was a dramatic
action designed to quickly stimulate
an economic recovery in the United
States. Over the next few years, billions
of dollars will be spent on programs in
areas such as education, infrastructure,
technology, and healthcare. This historic
stimulus plan also includes focus areas
that directly affect the nation’s energy
utilities:
- Energy efficiency and renewableenergy
research.
Grants will help
state and local governments implement
strategies to reduce fuel emissions
through energy efficiency,
renewable-energy research, new technologies,
and rebate programs.
- Green technologies.
The plan encourages
development in flood protection,
navigation, hydropower, wind and
solar power, water resource infrastructure,
and technologies that
reduce emissions.
- Energy assistance for communities.
The goal of the Smart Grid Investment
Program is to develop a modern
electric grid. It includes funding for
worker training and an Energy and
Transmission Loan Guarantee Program
to provide money for advancing
proven renewable energy and transmission
technologies.
- Energy-efficient automobiles.
The
plan encourages alternative fuels for
cars, emerging vehicle technologies,
and programs for cleaner energy
sources.
- Investor-owned utility and public utility
incentives.
Grants and tax credits
are available to organizations that
focus on energy conservation,
renewable technology, and energy
efficiency.
Key Challenges for the
Utilities Industry
While utility executives sort out the
implications associated with ARRA
funding, they continue to confront challenges
specific to the industry. Key
areas of concern include:
- Energy inefficiencies and costs.
By
some industry estimates, up to half of
the energy-generating components in
the United States are mostly idle during
off-peak hours. This “deadweight”
loss is funded by consumers and
increases our dependence on imported
oil. Utilities must leverage an evergrowing
amount of data to support
strategic business decisions that optimize
energy efficiencies and costs.
- Complex regulatory requirements.
The government has established guidance
and deadlines for regulations
such as those dictating reduced carbon
emissions. To avoid high fines,
utilities must address these regulations
while balancing the high cost of
retooling the infrastructure and fulfilling
the mandate for guaranteed power
availability.
- Aging infrastructure.
The country’s
utilities manage trillions of dollars in
assets – from the transmission infrastructure
to individual home meters.
Some of these components are over
50 years old. Replacing such assets
can be a long, complex, and costly
effort that, if done inefficiently, could
disrupt existing usage.
Technology Leads the Way
for Utilities
Technology is seen as a critical enabler
for implementing the stimulus plan. In
total, ARRA includes approximately
$100 billion in funding specifically for
technology to be spent incrementally
between 2009 and 2014. Technology
can help utilities see, think, and act
more clearly as they develop and execute
the strategies necessary to:
- Optimize energy efficiencies.
New
energy-grid technologies can help utilities
balance supply and demand while
improving the efficiency of energy
delivery and consumer usage. These
metering and data-exchange systems,
however, require real-time communications
and greater system
interoperability.
- Respond to sustainability concerns.
Increasingly, the adoption of sustainable
energy practices is becoming a
business imperative. Today’s utilities
are challenged to take a holistic
approach to sustainability that simultaneously
addresses compliance, globalization,
environmental impact, and
energy politics. Visibility into all
aspects of a utility’s operations and
end-to-end process control are keys
to success.
- Develop higher-performing assets.
Managing today’s aging infrastructure
for peak efficiency while making the
energy investments that will deliver
maximum value tomorrow are basic
tenets of the stimulus program. Utilities
must be able to maintain existing
equipment, model current and future
assets, and analyze complex energy
scenarios.
OPTIMIZING ENERGY EFFICIENCIES
FOR UTILITIES AND CONSUMERS
TECHNOLOGY AND DEMAND MANAGEMENT
An Energy Agenda
On March 19, 2009, U.S. Vice President
Biden and Energy Secretary Chu
announced plans as part of ARRA to
invest $3.2 billion in energy efficiency
and conservation projects across the
country’s cities, counties, states, territories,
and Native American tribes. This
Energy Efficiency and Conservation
Block Grant program provides formula
grants for projects that improve energy
efficiency, reduce total energy use, and
decrease fossil fuel emissions. Delivering
smart energy through cutting-edge
technology is at the core of many such
projects.
The Promise of Advanced Metering Infrastructure
Advanced metering infrastructure (AMI)
technologies, for example, can help
consumers and utilities better understand
and manage energy use. With
AMI, energy consumption is recorded at
regular time intervals – for example
every 15 minutes – and then billed at
different rates based on peak and offpeak
hours. As a result, consumers and
suppliers can collectively lower overall
energy requirements and reduce carbon
emissions.
Energy consumers.
Customers can
manage their energy consumption with
greater understanding of appliance
energy use and price variations. Home
automation network (HAN) technologies
can help consumers adjust their behaviors
to maximize energy and cost efficiencies
efficiencies;
for example, deferring the use
of high-consumption appliances until
off-peak price periods and powering off
devices completely when not in use.
Having a clear profile of personal consumption
educates customers on their
individual carbon emission patterns and
assists them with making better energy–
efficiency decisions.
Energy suppliers.
With AMI technologies,
energy providers can improve the
balance between energy demand and
supply. The data collected through AMI
technologies enables utilities to better
profile energy requirements during both
peak and off-peak hours and to predict
energy usage spikes due to environmental
changes. AMI also supports
smart-grid technologies that improve
the delivery of energy by providing
greater control over load shedding,
energy leakage, and outage
management.
AMI technology can help utilities stay
competitive in ways that older metering
and data-exchange technologies simply
cannot. But without a proper IT infrastructure
that enables companies to
implement and work with AMI in a costeffective
manner, utilities will find it difficult
to deliver the flexible pricing options
that the market demands. AMI requirements
for data management and realtime
information exchange call for
improved communication and collaboration
between customer and utility. It also
requires far greater interoperability of
systems within the utility’s IT landscape
and across enterprise boundaries.
Further Changes
Energy markets throughout North America,
Europe, Australia, and elsewhere
are changing in response to legislative
mandates and market pressures to conserve
resources, protect customers,
and increase competition by offering
customers more service choices. Traditional
utilities that once enjoyed the protection
of highly regulated markets need
to improve the customer experience
while controlling costs. Upgrading
metering and data-exchange infrastructures
can increase the quality of a company’s
sales and customer service
processes. In addition, automated
business-control processes can help
utilities manage the variations between
peak and off-peak production – reducing
the overall cost to serve while lowering
the cost per kilowatt hour.
“Today, our average residential
customer uses eight percent
more electricity than a decade
ago. This [SAP AMI Integration
for Utilities] software will allow
us to provide more information
to our customers so they can
better manage their energy
consumption.”
Sue Swan, Vice President of Business
Technology Solutions, Consumers Energy
GENERATING STRATEGIES FOR SUSTAINABILITY
THE PATH TO A CLEANER ENERGY FUTURE
The New World of Business
Over the last few years, the global
business climate has fundamentally
changed. Protecting the environment is
no longer simply a philanthropic or moral
issue; it is becoming a highly relevant
element of the core business. The primary
factors driving businesses to
adopt sustainability are:
- Compliance.
Government regulations
– such as the U.S. Clean Air
Act and the European Union Emission
Trading Scheme – now enforce
certain behaviors by law.
- Cost and profit.
Many companies are
reducing costs through more efficient
use of resources. Others are also
seeking greater profitability in new
revenue opportunities presented by
the move to sustainability.
- Reputation.
Companies are redefining
their brand image to demonstrate
their social or environmental responsibility.
In doing so, these organizations
are also appealing to an
increasingly concerned consumer
base.
From Governments to Consumers
The push for sustainability is being
seen across all levels of government
and in every economic sector. For
example, many U.S. Environmental
Protection Agency initiatives are now
underway to promote more efficient
energy use and to improve environmental
quality without disrupting energy
supplies. These efforts include programs
to explore renewable energy
sources and advance the sustainable
production of biofuels.
Federal agencies are also helping
states and local communities foster
urban sustainability by supporting
initiatives such as:
- Smart-growth projects that include
sustainability metrics for urban
development
- Green building and infrastructure
design
- Energy efficiency in homes and commercial
buildings. Household carbonemission
calculators, for example,
enable consumers to estimate their
carbon emissions. In addition, these
devices can provide recommendations
on how to reduce emission
totals.
Businesses can take a proactive
approach as well. Many companies now
actively participate in international committees
working on global standards for
calculating environmental impact. The
Greenhouse Gas Protocol Initiative
(GHG Protocol Initiative, Scope 3), for
example, is drawing up a set of standardized
guidelines for measuring carbon
dioxide emissions for individual
products and services. This initiative is
supported by World Resource Institute
and World Business Council for Sustainable
Development.
The Impact on Utilities
The thirst for energy continues to
increase across the globe – even as
traditional sources of energy generation,
such as fossil fuels, are dissipating.
And this consumption contributes
significantly to climate change and other
environmental concerns. A chief obstacle
utilities confront today is how to
migrate to cleaner technologies in a
cost-effective and time-efficient manner.
Adopting renewable generation technology,
such as nuclear, wind, and solar
power, is costly. Such a transition
includes acquiring land, creating new
generation plants, and extending delivery
grids. In addition, providing new
forms of power to the grid involves the
implementation and tracking of new processes.
For example, when energy is
produced through consumer-owned
generation, utilities must consider purchasing
back and reloading power. With
wider acceptance of electrical cars,
chargebacks during nonusage periods
will be another consideration. Even
those utilities that continue with current
fossil-burning facilities need to implement
new technologies to support
emerging requirements for emissions
tracking and reporting as well as
carbon-credit trading.
DEVELOPING HIGHER-PERFORMING ASSETS
THE TRANSFORMATION OF ENERGY TRANSMISSION
The Infrastructure Challenge:
Maintain and Retool
Utilities face a true challenge today.
Current assets are aging, and a more
adaptable infrastructure is needed moving
forward. For the near term, utilities
must optimize current asset efficiency
and availability. Downtimes must be limited
to planned shutdowns and necessary
overhauls only. Stringent maintenance
processes can help ensure high
levels of equipment reliability. Moreover,
proactive planning can establish a stable
environment where resources such as
personnel, contractors, parts, and tools
can be optimized.
Future increases in bulk transmission
capacity, however, require significant
improvements in transmission grid management.
A smart grid, for example, can
upgrade the use of capital assets while
minimizing operations and maintenance
costs. Smart grids precisely limit electrical
power down to the residential level.
Optimized power flows reduce waste
and maximize use of the lowest-cost
generation resources.
Assets for the Energy Future
Harmonizing local distribution with interregional
energy flows and transmission
traffic can further reduce grid congestion
and bottlenecks – ultimately resulting
in consumer savings. Such improvements
can help create an open marketplace
where alternative energy sources
from many distant locations are sold
easily to consumers wherever they are
located. Intelligence in distribution grids
can enable small producers to generate
and sell electricity at the local level
using alternative sources such as rooftop
photovoltaic panels, small wind turbines,
and microhydro generators.
However, intermittent power sources
require sensors and software designed
to react instantaneously to imbalances
in order to ensure system quality with
such distributed generation strategies.
In addition, operators and managers
must have the right tools to effectively
and efficiently operate a grid with an
increasing number of variables. Technologies
include visualization techniques
that reduce large quantities of data into
easily understood visual formats, software
that provides multiple options
when operator actions are required, and
simulators for operational training and
“what-if” analysis.
The Right Investments
Before a utility installs any type of smart
system or advanced metering system, it
must make a business case for the
investment. For example, some components,
such as power system stabilizers
installed on generators, are very expensive,
require complex integration in the
grid’s control system, and are only
effective if other suppliers on the network
have them as well. Without a real
incentive to install them, power suppliers
typically do not.
In another example, most utilities find it
difficult to justify installing a communications
infrastructure for a single application,
such as meter reading. A utility
must identify several applications that
will use the same communications infrastructure
to perform tasks such as reading
a meter, monitoring power quality,
controlling remote connection and disconnection
of customers, or enabling
demand response. Ideally, the communications
infrastructure can support not
only near-term applications but also
unanticipated applications that will inevitably
arise in the future.
Other factors also influence utilities as
they decide which pieces of the smartgrid
puzzle to implement. Each utility
has a unique set of business, regulatory,
and legislative drivers that guide its
investments. As a result, each utility will
have a different adoption rate and take
a different path to creating its smart
grid.
“And while as many as 94%
of utilities agree that asset
management is core to utility
performance and 60% agree that
addressing the aging utility
infrastructure is a very high
priority, a predominance of
utilities report being ‘reactive’
to asset investment and
maintenance.”
Source: Aging Workforce and Aging Assets
Trends 2007–2012, UtiliPoint International Inc.,
April 2007
ACHIEVING VALUE THROUGH A CLEAR ENTERPRISE
THE ROAD TO BECOMING A BEST-RUN UTILITY
Today the industry is at an inflection
point. Utilities across the United States
are confronted by:
- Today the industry is at an inflection
point. Utilities across the United States
are confronted by:
- Increased accountability from stakeholders
who demand sustainable
business practices
To survive in this environment, utilities
must see clearly, think clearly, and act
clearly. Only those organizations that
can execute decisively and effectively
can endure the current conditions and
emerge in a stronger competitive position.
To gain this clarity, utilities need:
- Visibility to refocus business strategies
and streamline operational
execution
- Transparency to demonstrate compliant
and sustainable business
practices
Clear enterprises understand what is
going on in every aspect of their business
and business networks. They
operate with increased speed, relevance,
and accuracy. They are prepared
for risk and uncertainty and can
adjust operations as market conditions
change. In short, such enterprises are:
- Transparent and accountable
- Lean and agile
- Customer-centric and collaborative
Becoming a clear organization
improves every aspect of managing an
enterprise. It can help utilities survive
and thrive in the near term and be sustainable
over the long term. For example,
sustainability presents both
significant risks and new opportunities
to improve profitability. But being sustainable
requires more than knowing
your carbon footprint. It requires realtime
knowledge of your business and
business network – and the confidence
to share this information with customers,
stockholders, and other
stakeholders.
Best-run utilities can use the SAP for
Utilities solution portfolio to overcome
functional silos and optimize their
performance. The portfolio includes
industry-specific solutions that help
utilities close the gap between strategy
and execution by delivering:
- Insight for improved performance
- Efficiency for optimized operations
- Flexibility to adapt quickly to changing
market and regulatory conditions
Specifically, these solutions include:
- Proven AMI integration with advanced
customer systems
- Enterprise asset management for
smart-grid development, renewable
generation, and infrastructure projects
- Real-time analytics for multilevel decision
making about energy efficiency
A clear enterprise – with broader
insight, improved efficiency, and more
flexibility – enables utilities to act with
greater efficiency and sustainability in
this challenging environment.
About the Authors
James McClelland is senior global
director of the SAP Utilities & Energy
Industry Solution Marketing group.
He has worked in the utilities
industry for over 25 years managing
industry solutions and creating
business strategy for utilities
deregulation.
Aditi Chhaya is a principal in the SAP
Value Engineering team, focusing on
strategic industries. She concentrates
on helping customers develop
value-based business strategies,
enabled by technology, that align to
corporate priorities.
Further Reading
To learn more about the topics in this paper,
please visit www.sap.com/usa/industries/utilities
and
www.sap.com/usa/industries/utilities/economic_recovery.
You can also contact your SAP
representative about the following
documents:
- The Business of Sustainability:
Information Technology as a
Catalyst for Short- and Long-Term
Profitability – SAP thought
leadership paper
- The Future Is Here . . . Advanced
Meter Infrastructure (AMI):
Composite Technologies to Meet
New Demands in Sales and
Customer Service – SAP white
paper
- Enterprise Asset Management:
Maximize Return on Assets with
an End-to-End Solution – SAP
solution brief