Optimizing asset life cycles: from generation to distribution

Our analysis suggests asset performance management is the single most valuable initiative for the electricity industry over the next 10 years, at an estimated value of $387 billion

In this article, we look at a number of initiatives related to asset life cycle management that have the potential to extend the life cycle or improve the operating efficiency of assets. Some utilities have projects underway and are deploying technologies such as smart sensors on generation and distribution assets. However, many assets still lack the capacity to collect and transmit data and are not connected to a central platform.¹ A marginal improvement in operating efficiency of generation, transformers or power lines will have an exponential effect once scaled across the industry.

The incentive is clear: the US Department of Energy found that 75% of breakdowns are eliminated by energy companies that have implemented predictive maintenance.²

Operational recommendations can be generated in real time by using data captured from connected devices, plant equipment and sensors, and applying algorithms to this data. Plant managers can immediately identify actions that decrease production costs, and can predict and prevent unplanned downtime. Engineers can be more productive by making better-informed decisions; this can eventually lead to a smaller, more skilled workforce. As an example, real-time analytics help a business better understand the trade-off between asset life and revenue generation, as there may be times when it makes sense to work a machine harder if a generator can take advantage of scarcity pricing.

Asset life cycle management is one of four themes that we believe will be central to the digitization of the electricity industry over the next decade. The other themes we examine are grid optimization and aggregation, integrated customer services and beyond the electron.

We focus on three asset life-cycle management related initiatives below: asset performance management, digital field worker and smart asset planning.

Asset performance management

This digital initiative includes condition monitoring, predictive forecasting and reliability-centered maintenance, all enabled by analytics and robotics. Asset performance management has the greatest value potential among all the digital initiatives, to the tune of $390 billion over the next ten years (see Figure 1). Utility firms across the value chain are likely to enjoy margin expansion from lower repair and maintenance costs, lower downtime of assets and fewer critical breakdowns.

Digital field worker

The focus of this digital initiative is to use digital technology to improve field workers’ performance and productivity by empowering them with data and tools to drive operational efficiencies. Electronic work packages can transform the end-to-end work cycle, from the planners and schedulers to those responsible for data entry and reporting. Up to $60 billion of value could be realized, with software and hardware service providers for this infrastructure potentially profiting most significantly. This initiative will improve productivity for field workers and associated staff; we estimate technology could result in savings of five to eight hours of work per week across the value chain.

Smart asset planning

Smart asset planning covers the use of predictive analytics, machine learning and robotics to improve capital project execution, including site and asset selection, installation and decommissioning. Smart asset planning offers the potential to better commission assets, optimizing capital expenditures. Estimated at $30 billion, societal benefits here are greater than those of all other electricity industry digital initiatives. Carbon emissions can be reduced by almost 6.3 billion metric tonnes, driven by improved planning.