Electric utilities are undergoing a unique transformation—asset performance management can guide them through it successfully
Increasing electrification. New smart grid technology. Digital, service-based enterprises for 21st century power demands. As we wrote in West Monroe’s 2023 Energy & Utilities Outlook, the world of utilities is evolving—fast.
To adapt, these organizations have been increasingly investing in grid modernization technologies—from advanced metering infrastructure to distribution automation. We expect that will continue: The International Energy Agency estimates that global investments in smart grids will need to average roughly $600 billion annually through 2030 to achieve renewable energy demands.
While beneficial in the long run, these assets require better management to ensure efficient, reliable, and safe operations of the grid. This means traditional approaches to asset management may no longer cut it.
To stay ahead of the curve, utilities should develop robust, data-driven asset performance management (APM) strategies that can optimize their grid utilization and deliver reliable, cost-effective service to customers. Here’s why.
Utilities are facing unprecedented challenges—both big and small
Electric utilities are facing complex challenges on multiple fronts during this transitional moment. Electricity demand in the U.S. continues to grow—rising 2.6% year-over-year in 2022—amid the exploding popularity of electric vehicles. Extreme weather events also continue to place greater demands on the grid.
Perhaps lesser known yet still challenging, utilities are grappling with:
Navigating these challenges requires a considered strategy. That’s where APM comes in.
When implemented correctly, APM is a critical component of modern utility operations. In its most basic form, it uses data and analytics to monitor the health and performance of critical assets such as transformers, breakers, and other grid equipment to improve their reliability, availability, and utilization.
These data-driven insights allow utilities to optimize their maintenance activities by identifying the most critical assets and shaping strategies for preventative, condition-based, and predictive maintenance. This, in turn, reduces downtime and extends the life of assets by turning emergency repairs into less costly, regularly scheduled maintenance.
As part of this monitoring, APM can also help enhance safety by providing data on potential concerns and enabling utilities to proactively address them through routine maintenance before they become a hazard.
Investments in APM are especially critical as utilities continue to make significant investments in smart grid technologies—these generate vast amounts of data on the health and performance of the grid; without an effective APM strategy in place, however, many utilities struggle to make sense of this data and use it to optimize the performance of their assets. As the technologies evolve, they’re only going to get more complex—an effective APM strategy now can save time and effort in the future.
Effective APM does more than keep the lights on (literally). It also helps the bottom line. While the potential savings and revenues vary depending on several factors—such as the size and complexity of the operation and the quality and extent of APM implementation—it can often achieve significant cost savings by reducing maintenance costs and increasing asset reliability, utilization, and availability.
At the same time, it also enables better outcomes with key external stakeholders, from customers to regulators, and can help utilities achieve necessary climate goals.
For customers, the benefits of APM are clear: By reducing the frequency and duration of outages, APM can help to improve the reliability of the electric grid and ensure that customers have access to affordable power. Fewer instances of food in fridges spoiling, Wi-Fi going out during work calls, and TVs shutting off during the big game—without straining budgets—build customer satisfaction and loyalty.
After a string of attacks on electrical substations in North Carolina collided with hundreds of thousands losing power for days after ice storms in Texas earlier this year, regulators are increasingly seeking assurances that electric utilities are properly managing their assets and taking steps to ensure system reliability for this critical infrastructure. APM can provide the data and analytics needed to meet these requirements and help utilities comply with evolving regulations.
APM can also help utilities achieve their broader sustainability goals by optimizing their asset utilization and reducing waste and emissions, which is particularly critical as utilities face greater pressure from customers, investors, and regulators to decarbonize and improve their environmental performance.
For instance, policies like the Security and Exchange Commission’s (SEC) proposed climate disclosure rules for carbon emissions and state-based incentives favoring electric vehicles will require utilities to devise and implement effective sustainability strategies for greater power generation amid increasing electrification.
As electric utilities continue to invest in smart grid technologies, the need for robust APM strategies has never been more critical. APM can help utilities to meet the evolving demands of the grid, achieve their broader goals of decarbonization and sustainability, and deliver reliable, cost-effective service to customers.
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