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COVER STORY Energy Solutions for Future Earth Activities 1 Achieving a Sustainable Society through Digital Innovation in the Electric Power Industry —Establishing Digital Solutions for the North American Power Grid— The deregulation of electricity retailing, combined with greater adoption of renewable energy sources and distrib- uted generation have produced advances in digital technologies that are bringing major changes to the energy industry. This trend is occurring throughout the global market and in the electric power industry in particular. The changing nature of this industry is driving the value chain towards more sophisticated ways of operating power plants, maintaining equipment, realigning roles, and reordering the relationships between suppliers and consum- ers. The traditional model is evolving toward a system of supply and demand, away from the tightly regulated systems and practices that once governed the main grid. With this as a backdrop, electric utilities are starting to recognize that the use of digital technologies will result in superior operating decisions that are based on effective data management. For example, greater integration and compatibility between in-house systems incorporating fi eld data from the grid can use that data for improving performance measures. In North America, a market where electric utilities number more than 3,000 companies, Hitachi is engaging in collaborative creation with customers in order to incorporate digital solutions that address the challenges facing customers. These solutions will make use of Hitachi’s own comprehensive capabilities. the separation of generation and transmission assets, and Adopting Digital Technology in the establishment of a balanced energy market. Political the Electric Power Industry and regulatory pressures are shifting the priorities of the electric power market toward new metrics such as adop- Th e business environment in which the electric power tion of renewable energy resources to meet stricter envi- industry operates is undergoing change, facing among other ronmental expectations, achieving greater cost reductions, things, regulatory reforms that involve retail deregulation, and improving resiliency and security. Ken Badaracco David Brozek Norihiko Moriwaki Shinji Matsuda President and CEO, Hitachi Senior Vice President, Sales General Manager, Digital Director, New Business T&D Solutions, Inc. and Commercial Operations, Business Strategy Division, Development Department, Hitachi T&D Solutions, Inc. Energy Business Administration Hitachi T&D Solutions, Inc. Division, Hitachi, Ltd. 36. Decarbonized Society through Energy Solutions Figure 1 Progress on Digitalization by Electric Utilities in North America Estimated percentage of companies Example activities • Digital twins of equipment and grids • Extensive use of prediction to balance supply 10–15% Innovative and demand • Maintenance based on predictive diagnosis • Focus on prediction and optimization of risk 10–15% • Equipment information integrated with GIS Active • CBM • Integration and visualization of information • Only as much monitoring and control as 70–80% Conservative needed for regulatory compliance • Routine maintenance, reactive response to faults • Only monitor bare minimum of KPIs such as outage duration GIS: geographic information system CBM: condition-based maintenance KPI: key performance indicator Th e growing addition of renewable energy resources, with their fl uctuating output, is increasing the operational Action on US Electric Utility’ Management complexity of the power grid. Th ese fl uctuations aff ect sup- Challenges and Digitalization ply and demand load balancing, voltage control, power fl ow calculations, and power generation planning. In the current environment, North American transmis- Th e use of digital solutions enables faster and more effi - sion and distribution utilities are looking at investing in cient system control by using data to predict and optimize enhancements to grid operation resulting from the increas- operational decision making and risk reduction. ing use of renewable energy and improving asset manage- ment of equipment. Moreover, people are also starting to The Electric Power Industry in North think about the use of digital technologies in terms of how America is in a Period of Rapid Change they can mitigate various forms of risk while also keeping their businesses economically viable. While the European Union has taken the lead in electric Recent events are causing many utility operators to power innovations, especially decarbonization, the USA become even more risk conscious. For example, when lack is also making progress. Th e US market, with total annual of maintenance on aging transmission lines was blamed for generation of four trillion kWh, has increased renew- wildfi res in California, it led to stiff penalties and lawsuits, able energy generation by more than 280 billion kWh requiring one company to fi le for protection under Chapter from 2010 to 2017 using mainly wind and solar resources. 11 of the US Federal Bankruptcy Code (equivalent to Coal-fi red generation during this period fell by 640 billion Japan’s Civil Rehabilitation Act). Th is has had a severe kWh. Use of renewable energy in North America refl ects impact on the security of electricity supply, with outages the diff erent regional attributes, with solar providing 16% known as “public safety power shut-off s” (PSPSs) continu- of generation in California and wind providing 15% in ing to be imposed on windy days in order to prevent new Texas. One factor behind this shift to renewable energy is fi res. As a result, businesses and residents often experience the Renewable Portfolio Standard (RPS), which requires intermittent power outages with some lasting several days states to obtain a certain proportion of their electricity at a time. supply from renewable sources. Twenty-nine states, as Th is is not to say, however, that adoption of digital solu- well as Washington D.C., having signed up for this as of tions by electric utilities as a means of addressing these October 2018(1). issues is necessarily progressing. For example, Figure 1 Hitachi Review Vol. 69, No. 4 444–445 37. COVER STORY Energy Solutions for Future Earth Table 1 Value Steps at Different Levels of Figure 2 Development of Digital Solutions Customer Progress on Digitalization Based on OT × IT Level Value step Activity Grid monitoring and control 4 Cloud Business Agility Pursuit of new business value (provision of FACTS service infrastructure for renewable energy) Communications Grid protection 3 Operations Operation based on risk prediction, OTIoT IT AI Management Automation and higher operational efficiency Lumada Switchgear HVDC 2 Asset Reduced maintenance costs through more Transformers Management efficient equipment management Big data IT systems analytics 1 Data Integration Make good use of data by providing data & Connectivity management platforms OT: operational technology HVDC: high voltage direct current IoT: Internet of Things AI: artifi cial intelligence shows the various separately implemented in-house sys- Th is allows collaborative creation with customers to tems at many electric utilities that have not yet been inte- make strategic use of Hitachi’s knowledge of products and grated, leaving data widely dispersed among them. As a data management capabilities. Examples include intimate result, these companies are only now beginning to come knowledge of switchgear and transformers, expertise in the to grips with the issues, which include shortages of data provision of associated services, extensive customer net- integration infrastructure and data analytics as well as a work in North America, cloud service delivery, fl exible and need for better understanding by staff of digital technolo- highly reliable data management services, and the ability gies in general. Another problem resulting from data being to leverage the portfolio of existing solutions(2) available widely scattered is that management lacks the data it needs on Lumada for delivering immediate results. Hitachi also to make better decisions and the means to access it. To facilitate the awareness of digital solutions that address the challenges facing customers, Hitachi has Figure 3 Overview of Hitachi Data defi ned “value steps” that represent a path for guiding elec- Management Service tric utilities along their digitalization journey (see Table 1). Hitachi Vantara Business insights By doing so, the aim is to deliver value in a form appro- applications Operation insights priate to the level and challenges of each customer and to (safety, quality, etc.) enable planning for moving up these steps. Utility Asset insights Mining (preventive maintenance, etc.) Oil and gas Context/semantic and Development Strategy for Digital Solutions knowledge layer (railways) Transportation Analysis + Data lake integration To create comprehensive digital solutions, Hitachi com- bines deep IT expertise with extensive operational technol- Data sources ogy (OT) experience. Th e union of Hitachi Transmission (examples) Switchgear LIDAR PLC and Distribution Solutions (HTDS) and Hitachi Vantara integrates the OT abilities of HTDS through detailed Transmission Business Grid monitoring knowledge of transmission and distribution (T&D) sys- equipment information measurements (maintenance inspection measurements tems and Hitachi Vantara’s renowned IT capabilities in results, etc.) the fi eld of data management and Internet of Th ings (IoT) LIDAR: light detection