Some of them may be wondering if making the climb was such a good idea.
Never before has the utility industry been inundated with so many problems all at the same time. And, many of the other executives sitting in those boardrooms are increasingly looking to IT for solutions that they needed “last week.” Information technology didn’t create most of the problems, but technology certainly is expected to come up with answers, and quickly. Now CIOs are part of the “we” that has to face a myriad of problems being served up by politics, economics, demographics, regulation, terrorism, war, etc.
“We in the United States built the best electrical system ever devised; it was out on the edge,” said Austin Energy CIO Andres Carvallo at a Transmission and Distribution Conference in San Antonio. However, when that system was built the “edge” in electricity consumption was a home that had a few light bulbs and maybe a radio, he pointed out. Today’s “edge” is energy-gulping homes and businesses with computers, televisions, and a host of kilowatt-hungry appliances and devices. And there are many more of those homes. The U.S. faces major a massive supply/demand disconnect with a system that is old and largely based on 50-year-old technology.
The U.S. Energy Information Agency estimates demand for electricity in the U.S. will increase 41 percent from 3,660 billion kilowatt-hours in 2005 to 5,168 billion kilowatt-hours in 2030. Other estimates put future demand much higher. Estimates of the number of conventional power plants that would be necessary to meet that demand range from 1,500 to more than 3,000. Building that many power plants in the United States is something that just isn’t going to happen. Besides the sheer astronomical cost of that many plants, the U.S. political, regulatory and social climate just won’t allow them to be built unless the NIMBY (not-in-my-back-yard) group changes its song or environmental regulation is relaxed. Neither is likely to happen in the 22 years between now and 2030.
Demand explosion (especially for electricity) is the major problem facing the U.S. utility industry today and its CIOs and other executives in the boardroom. But it is only one of a host of problems. Others include the aging infrastructure, the aging workforce, the Global Warming political storm, transmission congestion/instability and the political difficulty of building more, fuel prices, market instability, terrorism and related security regulation, etc., etc.
So why are Information Technology and CIOs so much in the cross-hairs in the boardroom? For the simple reason that they have been so successful in the past and technology is seen as holding the magic wand for all the problems of today and in the future. IT was able to extend the life of aged systems by providing better command and control of the distribution and transmission networks. IT was able to multiply the productivity and efficiency of linemen and other field workers by pushing maps, work orders and the right parts into the field through mobile systems. Technology was able to vastly reduce the number of workers needed for such things as getting out bills and collecting remittances. Technology was able to automate call centers and get people to talk to machines rather than “live workers.”
The problem for CIOs now is that all those “miracles” have been used up and there still is demand for more -- more cost-cutting, more efficiency, more productivity. And, there still is some room for improvement. According to CIOs surveyed by Energy Central’s Sierra Energy Group, there still is a lot of integration of systems yet to be done, as shown in this chart of CIO’s major issues:
Integration of existing systems is critical before CIOs can move on to the next steps to help their utilities solve their problems. This includes the deployment of automated, self-healing, self-operating "Smart Grids" and coupling them with "Intelligent Enterprises" that provide rapid, comprehensive analytical and decision-support mechanisms to the boardroom. This is the only way utilities can hope to meet the demands likely to be placed on them over the next 20 years.
While CIOs are likely to be in the forefront of deploying new “smart” systems, they also still have to fight “rear-guard” action against the traditional “silos” of technology that developed over the last 30 years. At the same conference where Carvallo spoke about progress his utility has made toward the Intelligent Enterprise, a senior operations engineer at a major utility made the observation, “IT doesn’t understand SCADA and DA.” SCADA (supervisory control and data acquisition) and DA (distribution automation) are the primary information systems traditionally involved in operating the grid.
While most CIOs would disagree with the operations engineer’s observation -- SCADA and DA are not rocket science -- whether they understand the arcane intricacies of these systems is irrelevant to the overall operation of the utility and meeting the demands of the future. The Intelligent Enterprise must receive “data” from SCADA and DA -- hopefully next-generation, self-healing, self-reporting SCADA/DA systems -- and convert that data into “information” necessary to run the utility. CIOs will be at the top of that information chain helping make critical decisions on investment and response to the host of issues utilities face. But they must have the critical information about the day-to-day operation of the grid -- something that has been held in the “operations silos” for too many years. Attitudes such as that espoused by the operations engineer die hard, however, and are just another one of the tangled web of issues CIOs face. As most of them will attest the “cultural” and “change management” aspects of their jobs usually are far more challenging than understanding the technology. Many utilities still haven’t dealt with the “silo mentality.”
Time is running out, however, and unless utility leadership gets a good grasp on a complete picture of what they have, how it operates, its limitations and strengths, and its needs, they will be totally unable to meet the increasing demands. Demand Response -- programs to cut demand through advanced metering, in-home networks, etc -- will help some, but can substitute for only a fraction of the need for the future. “Green Energy” systems will help, but that will be slow -- only about 3% of U.S. energy currently is supplied by such systems. Increased generation, possibly even new nuclear plants, will help, but they can’t be built fast enough or in enough places to meet that demand bubble.
With the current political/regulatory/legislative environment in the U.S., it is extremely unlikely that enough generation or transmission will be built to meet that EIA-anticipated increase in demand by 2030.
The only place left to look is toward more efficiency and more productivity out of what utilities already have. That means more, faster, better-integrated technology.
When other top executives reach that conclusion, where do they turn -- the CIO. Welcome to the boardroom…and the “hot” seat!