Digital Transformation Seminar

Lawrence Jones, Vice President, International
Programs, Edison Electric Institute
Gulf Cooperation Council Interconnection Authority
November 13, 2019
Dubai, United Arab Emirates
Digital Transformation
Seminar

Agenda
 Building a Digital Organization
 Digitalization Trends & Opportunities
 The Digital Electric Company of the Future
|2

Questions
• What kinds of cities do we want to live in tomorrow?
• What if assumptions behind the projections about
urbanization are wrong, and the current trend of
urbanization is reversed by 2030 or 2050?
• What if the global south achieved the same level of
prosperity, wealth, and standard of living as the global
north?
|3

Incumbents’ False Sense of Security
- Why Innovate When the Current Operations Are
Doing so Well
- Henry Ford’s Horseless Carriag
- Walmart vs. Main Street
- Apple’s iphone – dismissed by Nokia and RIM
- Amazon vs. Walmart
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But First, Some Definitions
 “Digitization was using digital tools to automate and
improve the existing way of working without really
altering it fundamentally or playing the new rules of the
game” – Dion Hinchcliffe
 “Digital transformation is more caterpillar-to-butterfly
process, moving gracefully from one way to working to
an entirely new one, replacing corporate body parts
and ways of functioning completely in some cases to
capture far more value than was possible using low-
scale, low-leverage legacy business” – Dion Hinchcliffe
|5

But First, Some Definitions
 Digitization is the process of changing from analog
to digital form.
 Digitalization is the process of moving to a digital
business, that leverages digital technologies to
change a business model and provide new revenue
and value-producing opportunities.
 Digital Transformation is the process of using
digital technologies to create new — or modify
existing — business processes, culture, and
customer experiences.
|6

Business Risk or Opportunity?
 Business leaders identified digital transformation as
their top concern in 2019.
 Of USD 1.7 trillion invested in digital transformation
this year, an estimated USD 900 million will go to
waste.
Why do some digital transformation
initiatives succeed and others fail?
|7

Business Risk or Opportunity
 Either businesses see the opportunity to transform
as a proactive “a ha” moment that leads to “what
if” and “what’s next” or as a reactive situation
where “uh oh” prompts a response of “why didn’t
we” or “we could have done something had we
known.” The latter is a new sort of “Kodak
moment.”
|8

10
Is digital transformation a top
strategic priority at your
organization?

11
Building a Digital Organization

What words come to mind when you think
of digitalization?
|12
Connected, real-time, monitoring, design, mobile, marketing, social media,
new skills, evolving, future, adapt, vision, culture, coordination, cross-silo,
innovation, sensors, smart, optimized, automated
Digitalization is the use of technology to radically
improve performance or reach of enterprises

|13
Source: Adapted from George Westerman - Leading Digital: Turning Technology into Business Transformation
Fashionistas
•Advanced digital features
•No digital vision
•Underdeveloped coordination
•Siloed digital culture
Digital Masters
•Overarching digital vision
•Many digital initiatives with measurable
value
•Cross-silo with strong digital
governance with integrated digital
culture
Beginners
•Management skeptical of advanced
technology
•Immature digital culture
•Few digital pilots
Conservatives
•Underdeveloped digital vision
•Several traditional digital capabilities
but few advanced
•Strong governance across silos
•Actively creating digital culture
DigitalCapabilities
Leadership Capabilities

|14Source: Adapted from George Westerman - Leading Digital: Turning Technology into Business Transformation
Customer Experience
Customer Understanding
 Analytics-based
segmentation
 Socially-informed knowledge
Top Line Growth
 Digitally-enhanced selling
 Predictive Marketing
 Streamlined customer
processes
Customer Touch Points
 Customer service
 Cross-channel coherence
 Self service
Operational Process
Process Digitalization
 Performance improvement
 New features
Worker Enablement
 Working anywhere
 Broader and faster
communication
 Community knowledge sharing
Performance Management
 Operational transparency
 Data-driven decision-making
Business Model
Digitally-modified
business
 Product/service
augmentation
 Transition physical to digital
New Digital Business
 Digital products
 Reshape organizational
boundaries
Digital Globalization
 Enterprise integration
 Redistribute decision authority
 Share digital services

 Customer experience
 Gain an in-depth understanding of specific geographies
and market segments
 Use analytics to better understand customers, what
leads to customer dissatisfaction, and to drive customer
behavior
 Leverage digital media to promote company brand
 Simplify customer processes
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 Operational Process
 Automation – allows more time to focus on innovation
and creativity while collecting data
 Virtualize individual work by having tools and for remote
work and processes for collaboration
 Data for decision-making and no longer using
assumptions for internal and customer-facing processes
 Providing collaboration tools across companies to
improve operational transparency
|16

 Business Models
 Augment physical with digital offerings and share
content across organizational silos
 Reshape company boundaries
 Integrated information and digital technology to
promote global flexibility
|17

|18
Unified Data & Processes Analytics Capability Business & IT Integration Solution Delivery
Customer Experience
Customer Understanding
 Analytics-based
segmentation
 Socially-informed knowledge
Top Line Growth
 Digitally-enhanced selling
 Predictive Marketing
 Streamlined customer
processes
Customer Touch Points
 Customer service
 Cross-channel coherence
 Self service
Operational Process
Process Digitalization
 Performance improvement
 New features
Worker Enablement
 Working anywhere
 Broader and faster
communication
 Community knowledge sharing
Performance Management
 Operational transparency
 Data-driven decision-making
Business Model
Digitally-modified
business
 Product/service
augmentation
 Transition physical to digital
New Digital Business
 Digital products
 Reshape organizational
boundaries
Digital Globalization
 Enterprise integration
 Redistribute decision authority
 Share digital services
Source: Adapted from George Westerman - Leading Digital: Turning Technology into Business Transformation
Building a Digital Organization - Enabling Digital
Capabilities

The Key - It’s Not Just About Technology
 Leadership Capabilities
 Top-down Approach
 Vision + Governance
 Chief Digital Officer (i.e. Starbucks)
|19

 Figure out your business strategy before you invest in anything
 There is no single technology that will deliver “speed” or “innovation” as such.
The best combination of tools for a given organization will vary from one vision
to another.
 Leverage insiders
 Your staff have intimate knowledge about what works and what doesn’t in
existing operations.
 Design stakeholder experience from the outside in.
 If the goal is improving stakeholder satisfaction and intimacy, you need in depth
input from stakeholders.
 Recognize employees’ fear of being replaced.
 Emphasize how digital transformation is an opportunity for employees to
upgrade expertise
 Bring Silicon Valley start-up culture inside.
 Uncertainty requires agile decision making, rapid prototyping, flat structures
|20

 Organizations with sophisticated digital cultures
typically do 5 things:
 promote an external, rather than an internal,
orientation.
 prize delegation over control
 encourage boldness over caution
 emphasize more action and less planning
 values collaboration more than individual effort
|21

 Are employees encouraged and empowered to
create change?
 Do teams operate with sufficient autonomy for
judgement to be exercised?
 Are incentives aligned with transformation goals?
 Is questioning of the status quo encouraged?
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23
Digitalization Trends & Opportunities

 What is digitalization?
 Digitization of electricity, gas and water networks using
advanced technology. It allows two-way communication
between the utility and the network, including its
customers, and enables insight, automation and control
across the utilities’ operations, empowering utilities to
improve reliability, availability and efficiency of the grid
|24
EY – Digital grid: Powering the future of utilities. 2016. Summary. Full Report.

 Four Technological Forces Driving Disruption
 Cloud Computing
 Big Data
 Artificial Intelligence
 Internet of Things
|25

|26
Digital Transformation, Tom Siebel

 Growth of Data and Connectedness
|27
Source: IEA, Digitalization and Energy, 2017
 Internet traffic has
tripled in past five years
 90 percent of world’s
data created in past two
years
 54 percent of
households have
internet access at home
 Global mobile
broadband subscriptions
surpassed 4 billion in
2017
There are more mobile phone subscriptions than people in the world

 Internet of Things (IoT) Devices
 Digital technologies are connecting to
communications networks to provide range of
services and applications
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Number of connected IoT devices is forecast to grow to
over 20 billion by 2020

Impacts across all energy sectors
 Transport
 Sensors, automation, and satellite communications improve
efficiency and reduce maintenance costs
 Big data analytics optimize route planning and reduce fuel use
 Future of automated driving technologies could improve safety
 Buildings
 Smart thermostats and lighting
 Sensors and predictive user behavior for heating/cooling
 Industry
 Long-history of improving safety and production
 Advanced process controls coupling sensors and data analytics
 Industrial robots and 3D printing
|29

|30
EY predicts investment in digital will reach 2 trillion by 2022
 2016 Investments
 13B smart meters
 11B smart grid
infrastructure
 11B building energy
controls
 6B EV chargers
 4B industrial energy
management software
 2B electricity systems
software

 Smart meters
 Sensors
 Drones
 Building energy controls
 EV chargers
 Predictive analytics
 Artificial intelligence &
machine learning
 Internet of Things (IoT)
 Cloud computing
 Blockchain
 Distributed energy resource
management solution
 Mobile-enabled workforce
 Cybersecurity solutions
 Visualization technologies
 Robotics
 Augmented/virtual reality
 Digital twins
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Examples of digital technologies:

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Opportunities of Digitalization
 Reduce power system costs and boost profitability
– Reduce operations and maintenance costs
– Improve power plant and network efficiency
– Reduce unplanned outages and downtime
– Extend operational lifetime assets
 A 5 percent reduction in O&M costs achieved through
digitalization could save utilities nearly 20 billion USD
annually (IEA)
 Performance gains of 20 to 40 percent in safety,
reliability, customer satisfaction, and regulatory
compliance (McKinsey)
|33

Additional opportunities include:
 Improve power production and delivery reliability
 Grow existing business with new revenue streams
 Expand into new areas of business opportunities
 Retain operations talent
 Greater efficiencies in workforce automation
 Improve business position against competitors
 Better manage grid operations to greater profitability
|34

Most of this potential
can be achieved
through:
 Smart meters and
smart grid
 Digital productivity
tools for employees
 Automation of back-
office processes
|35

36
The Digital Electric Company of the Future

37
Source: Deloitte. Digital
Innovation. https://www2.deloi
tte.com/us/en/insights/industr
y/power-and-utilities/digital-
transformation-utility-of-the-
future.html

Where is the Industry Now?
 Electric company efforts include:
 Plant optimization
 Transmission & distribution asset management
 Employee experience
 Customer journey
|38

Power Plant Optimization
 Increasing power plant efficiency, capacity, and
flexibility with improvements in operations
performance
 Reducing operations and management costs
through better demand and technician planning
 Improving machine and equipment health and
reliability through performance management
|39

Enel Green Power: Digitalization of
Hydropower Plants
 Predictive maintenance and
advanced solutions for 33 of Enel
Green Power’s hydroelectric plants
 Hours-based maintenance to
predictive and conditions based
maintenance
 Provide analysis of over 190,000
signals and deployment of 800
digital asset models
 Improve plant performance, reduce
unplanned failures, and enable
more efficient planned maintenance
|40
Predictive analytics will improve the plant
performance of Enel Green Power’s
hydropower plant fleet

EDF Group: Digitalization of Nuclear
Plants
 Outage Management
 Use of virtual reality for outage preparation
 3D visualization for Plant Maintenance and Upgrade
 IT Interfaces for collaboration in outage between Outage Control
Center, work sites, mobile workers
 Human Performance in Operations
 Plant field workers mobile technologies
 Computer based procedures, Electronic Work Packages, App store
 Computerized operator support systems
 Augmented reality to improve situation awareness
 Cybersecurity control
 Advanced Training (video, knowledge capture)
 Advanced Controls, Automation, Digital Architecture
 Rapid Prototyping for I&C Modification & Qualification
 Advanced Video Processing for Fuel Reloading Surveillance
 Online Equipment & Process Monitoring
 Wireless Sensors
 Fleet Monitoring & Early Failure Detection
 Remote Field Access to Process Data
 Digital Twins for O&M
|41
Digital models or “twins” help
plant personnel make critical
operational, business, and
maintenance decisions.

Transmission & Distribution Asset
Management
 Real-time situational awareness of generation, transmission,
distribution assets
 Operational staff manage data, as much as assets
 Network of sensors, drones, cameras, and other services provide
continuous steam of data on status and performance of power
plants, lines, towers, substations, transformers, poles, etc.
 Dynamic visualizations display statistics from load to moisture,
voltage, current, fuel and water input, etc.
 Analytics with AI and machine learning cut costs of asset
inspections
 Digital twins of asset base apply real-time data to help predict
and identify failures
 Build 3-D models and data from aerial surveys to understand
health and status of vegetation around power grid
|42

Endeavour Energy: 3D Model for
Vegetation Management
 Built a three-dimensional model
of its entire power grid and the
physical items surrounding it,
including trees and other objects
that may cause obstructions
 Combine model with input data
from aerial surveys to
understand current landscape of
vegetation management around
the power grid
 Enables better identification of
risks and pre-emptive vegetation
management
|43

Florida Power and Light: Smarter Energy
Infrastructure
 Florida Power and Light has installed more than 5 million smart
meters and more than 90,000 intelligent devices including automated
feeder switches, automated lateral switches, and fault current
indicators among others
 Automated switches kept more than 30,000 customers from losing
power during Hurricane Hermine in 2016
 Drones assessed damage of infrastructure to assist restoration
 Restoration completed in less than 24 hours
|44

Toronto Hydro: Network System
Monitoring & Control
 Network System Monitoring and Control Program
 Equip existing assets with sensors and install vault
monitoring hardware
 Install fiber optic communication infrastructure to
allow for communication between distribution assets
 Will allow for remote monitoring and control of
secondary network equipment assets in real time:
 Distribution Grid Operations will be able to live monitor
assets and receive instant alarms if issue arises at the
network vaults.
 Asset Management group will be able to trend asset
conditions over the life of the asset (e.g. load, oil
temperature and level) to anticipate any issues that
would not otherwise be apparent.
 Program is in implementation and testing phase,
with plans to finish the commissioning of all core
network vaults by 2025.
|45

Alectra Utilities: Automatic Isolation
and Restoration Tool
 Alectra Utilities installed a new triage
tool on a major part of its distribution
system to help with power restoration
 The “automatic isolation and
restoration tool” is designed to
pinpoint the source of the outage
automatically
 The tool:
 Isolates the section of the grid that is affected
 Sends a signal to nearby power lines to
reroute power
 Begins work to fix the failure
 Benefits:
 Reduces the search time and cost to
determine location of equipment failures
 Reduces overall outage time and
inconvenience to customers
|46
Alectra’s tool reroutes power around component
failures to reduce customer inconvenience during
restoration.

UK Power Networks: LoadShare Trial
 Smart Wires technology intelligently and
instantly routes power through the cables
which have available capacity, maximizing
the use of the existing network
 Freed up 95 MW of network capacity
 Year-long trial has already saved
customers £8 million and enabled
renewable power to safely connect to a
previously constrained point in the local
electricity network
 UK Power Networks plans to deploy the
technology in other areas to
accommodate even more renewable
energy generation at a reduced cost to
consumers.
|47

EDP Brasil: Transmission Project
Management
 EDP Energias do Brasil digitized the
management of its power transmission
projects using a cloud collaboration
software
 The platform, Colaborativo, integrates all
stakeholders (e.g. suppliers, customer,
technical auditor and government
agencies) involved in the transmission
projects in a single interface.
 Gives EDP visibility, control and agility to
approve and oversee processes.
|48

Employee Experience
 Employees work enabled by digital experiences
 Performance and learning and development
measured in real-time
 Most processes are automated, freeing employees
from routine, and sometimes dangerous, tasks
|49

Manitoba Hydro: VisualSpection
 Manitoba Hydro’s augmented reality platform,
VisualSpection, is used during asset inspections and
maintenance, leading to:
 Increased efficiency and safety for workers
 Reduced costs and enhanced reliability for customers
 Information can be collected and projected into
user’s line of sight with a heads-up display, allowing
user to see things otherwise invisible to the naked
eye (e.g. property lines, new transmission line
designs, culturally sensitive areas).
 Hands-free technology allows the user to easily
perform inspections, trainings, repairs, installs,
maintenance, and troubleshooting.
 VisualSpection can help complete inspections in a
third of the time versus conventional tablet-based
planning.
|50

Pacific Gas & Electric: Mobile Asset
Inspection Application
 PG&E set up a digital center of
excellence and implemented design
thinking for solutions
 Sent digital specialists to shadow
electricity and gas field workers
 Uncovered ways to aid their work
 Led to a mobile application to help
field crews complete asset
inspections more efficiently and
safely with real-time information
 Provides a digital map with
customer data and location of
assets in need of repairs
|51
Mobile Asset Inspection Application allows PG&E field
crews to easily locate and inspect infrastructure
throughout California

Ontario Power Generation: AI for
Nuclear Plant Outage Scheduling
 Annual planned maintenance outages for
OPG’s nuclear facilities require scheduling
20,000-25,000 individual tasks – requires
significant manual time
 OPG’s Outage AI solution focuses on
predicting logic ties for tasks, creating the
initial version of the schedule with all the
tasks pre-populated
 Outage AI is a custom-built cloud-hosted
application that integrates into OPG’s
existing IT infrastructure and leverages
elements of AI, machine learning, natural
language processing (NLP), and intelligent
automation
 Currently uses eight years’ worth of past
outage data to create schedule predictions,
and will continue learning from upcoming
nuclear unit outage schedules.
|52
The Outage AI solution creates new dummy tasks
for a current schedule (left) based on work-orders
from historical schedules, with task-matching
based on natural language processing (right).

Customer Journey
 Digitalization enables customers to have a personal
relationship with their utility
 Utility provides a “smart home platform” accessible
through phone, laptop, tablet, smart speaker
 Platform delivers a personalized, data-driven
customer experience in real-time
 Services including home energy management
enabled by AI, new transactions, and beyond
electricity services
|53

Hydro Ottawa – Smart Speaker Skill
 Provides personalized information
to customers through smart
speakers (Amazon Echo or Google
Home)
 Customers can receive information
on:
 Current electricity rate or time-
of-use period
 How to reduce electricity usage
and lower bill
 Find out about current power
outages
 Ask questions about the
electricity bill
|54
Hydro Ottawa smart speaker skill provides
customers personalized, timely, and easily-
accessible information regarding their electricity
usage

KEPCO – Virtual Power Plants
 Korea Electric Power Company (KEPCO)
announced a partnership with Power
Ledger to trial peer-to-peer renewable
energy trading in Japan
 Intent is to use platform to support
development of virtual power plants
where consumer-owned generating
and storage capacity can be used to
support local energy demand
 KEPCO will share meter data from
participating homes and leverage the
Power Ledger trading platform to
facilitate and monitor energy trading
between participants
 Goal is to increase incentive for
development of DERs and demonstrate
benefit of peer-to-peer trading
|55

Tokyo Electric Power Company – Elderly
Care Plan
 Developed a program leveraging
energy disaggregation technology
 A new service provided by retail
sales subsidiary, TEPCO Energy
Partner
 Differentiates load signals from a
single utility meter out into
appliance-specific data using
sensors and algorithms
 Appliance-specific data sent to
customers through a mobile
application to assess any behavioral
anomalies by usage patters and to
monitor changes in usage over time
|56
The Elderly Care Plan leverages energy
disaggregation technology, real-time
data, and mobile applications to create a
new service for customers

EDP- EV.X Mobile Application
 Created a mobile application to
education customers on the
benefits and opportunities of
electric vehicles
 EV.X application uses behavioral
analysis and real-time data to
provide users with targeted and
data-driven information on benefits
of EV adoption
 Supplies users with financial savings
and carbon reductions that they
could capture if they were to drive
an EV
 Provides information on location of
charging stations along routes
|57
The EV.X application provides EDP customers with
real-time data-driven information on the benefits
of switching to an electric vehicle.

Barriers to Digitalization
Comprehensive transformation? Not yet
 In the United States – moderate level of digitization
 Significant potential to deepen digital engagement
1. Working methods of typical utility company built
around safe-guarding large, long-lived assets and
minimizing operational risks
2. Perception of utilities as “analog-era” companies
makes it hard to attract right digital workforce
3. Utilities have complex legacy operations (and legacy
mindsets) that inhibit innovation
|58
Source: McKinsey. The digital utility: New challenges, capabilities, and opportunities.
https://www.mckinsey.com/~/media/McKinsey/Industries/Electric%20Power%20and%20Natural%20Gas/Our%20Insights/The%20Digital%20Utility/The%20Di
gital%20Utility.ashx

Accelerating Digital Transformation
1. Adopt digital ways of working
 Gain support of senior leaders
 Build a digital factory to produce new applications and
insights
2. Attracting and retaining digital talent
 Highlight the intellectual challenge and social value of the
utilities work
 Tap into broad pool of digital specialists who value balance
and stability utility offers
3. Modernize the IT architecture and environment
 Simplify the utility’s products portfolio and business
processes
 Shift to modular IT architectures
|59
Source: McKinsey. Accelerating Digital Transformations: A playbook for Utilities
https://www.mckinsey.com/~/media/McKinsey/Industries/Electric%20Power%20and%20Natural%20Gas/Our%20Insights/The%20Digital%20Utility/The%20Di
gital%20Utility.ashx

Key Leadership Questions
 How can we be different in a digital world?
 What are our competitors doing?
 What are companies/organizations doing outside of
our industry that we should think about?
|60

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