AWS for Industries
Four trends driving global utility digitization
The Power & Utilities industry has reached an inflection point in digitization as early adopters give way to early majority growth. Our utility customers have shared four trends that have accelerated their digitization plans enabled by cloud technology and services.
Sustainability is imperative
Utility stakeholders including regulators, customers, and investors are pressuring utilities to declare sustainability commitments. The World Resources Institute reports that 15 states (and Washington, D.C. and Puerto Rico) now have official targets to obtain at least 50 percent of their electricity from clean sources. These states represent 28 percent of all US electric power demand, up from just 17 percent of US demand in 2018. US utilities are now working to expand environmental, social, and governance (ESG) reports with clear emissions reduction goals. A recent Utility Dive survey found that that 46 percent of utility CEOs have declared sustainability as their number one business concern. Data centers present utilities with an immediate opportunity. An Uptime Institute study found that an average enterprise data center has a Power Usage Effectiveness (PUE) of 1.7 compared to cloud providers like AWS rated at 1.07–1.15, which is more than 71 percent better. Utilities such as ENGIE who have moved to the cloud have reduced their data center carbon impact.
Distributed energy and utility computational needs
In a 2017 IEEE paper published by US Department of Energy titled “Security and Cloud Outsourcing Framework for Economic Dispatch,” authors assessed the impact of cloud and its role in utility economic dispatch with increasing use of variable, distributed energy resources (e.g., rooftop solar). The study authors found that “the computational complexity and problem sizes of power grid applications have increased significantly with the advent of renewable resources and smart grid technologies. The current paradigm of solving these issues consists of in-house high performance computing infrastructures, which have drawbacks of high capital expenditures, maintenance, and limited scalability. Cloud computing is an ideal alternative due to its powerful computational capacity, rapid scalability, and high cost-effectiveness.”
The study acknowledges the security challenges associated with the use of cloud. The abstract continues, “In this work, a security and cloud outsourcing framework is developed for the Economic Dispatch (ED) linear programming application. The security framework transforms the ED linear program into a confidentiality-preserving linear program that masks both the data and problem structure, thus enabling secure outsourcing to the cloud. Results show that for large grid test cases the performance gain and costs outperforms the in-house infrastructure.”
Distributed Energy Resource Management System (DERMS) software vendors have taken full advantage of these capabilities in delivering cloud-based SaaS solutions to utilities and advanced distribution management system vendors (ADMS) are now following suit. AWS DERMS partners include AutoGrid, Enbala Power Networks, mPrest, Opus One Solutions, and many more.
Democratization of data in silos
A University of Massachusetts study on the impact of EVs on distribution transformers in the US found that even 10 percent penetration of EVs has the potential to increase distribution transformer failure rates by 2,000 percent. Sacramento Municipality Utility District identified 17 percent of their transformers in need of replacement as a result of EV-related overloads, at an average estimated cost of $7,400 per transformer. According to a 2015 US Department of Energy report, 70 percent of power transformers in the US are over 25 years old. Today few utilities are even exploring how to forecast the failure rate of their own transformers on a monthly basis. Utility data silos present barriers to completing the needed analysis. Transformer loading data can be calculated from the smart metering data that is locked in metering systems geared mainly to support utility billing. Some AWS utility customers are now extracting the meter data into a cloud data lake where superimposed Geographic Information System (GIS) data can help utilities create models of transformer loading and accurately forecast which transformers are likely to fail next. This approach provides savings and improves long-term System Average Interruption Duration Index (SAIDI) and customer satisfaction scores, which create a virtuous cycle for profits and future regulatory rate cases. Democratization of utility data into a data lake can unlock innovation and deliver measurable, bottom-line benefits.
Digitization fuels utility innovation
Electric utilities in the US spent close to $100 billion on Operations and Maintenance (O&M) expenses in 2018. A Deloitte survey in 2017 of CIOs across all industries suggested that energy and utility companies are spending substantially less than other verticals on technology innovation – often spending less than 15 percent of their technology budgets toward innovation. In comparison, other highly regulated industries like financial services and healthcare spend five times more and the results are evident. If utilities earmarked just two percent of O&M budgets to innovation, the global average across industries, it would have a transformative impact on their businesses. This Deloitte graphic depicts potential changes to utility assets in the future:
AWS Power & Utility customer reference testimonials share ways that cloud-driven innovation has unleashed significant cost savings around the world. Utility CEOs and CIOs who drive cloud initiatives from the top will find the potential to create a “flywheel effect” where a virtuous cycle of O&M savings drives a cycle of continuous process innovation. The resulting utility cost, reliability, and service improvements accrue to end utility customers and society at large.