Energy industry ripe for data science revolution

Source: EnergyNews -- Felicity Wolfe - Fri, 20 Apr 2018

New Zealand's energy sector can afford to be braver in their use of machine learning and other data tools to improve their businesses, Intela AI chief executive Asa Cox says.

The volume of data the energy sector generates makes it a prime beneficiary of the data science revolution underway, he says. New Zealand firms should “start down the path” towards using artificial intelligence and machine learning to develop future industry models and business optimisation. That is happening elsewhere in the world and can be done here.

“It doesn’t need to be a transformation of your business. It is just that first step toward a smarter operating business,” he told a BusinessNZ Energy Council symposium on digital innovation.

Cox says there are “huge applications” of the technology in the energy sector. That could include anomaly detection to identify when something is happening which “isn’t business as usual” or something isn’t operating as it should.

“Whether that’s hardware, a software system - whatever it is, we are trying to find diagnostics around that.”

Cox says those types of systems are already in place around the world. Duke Energy is looking to AI to reduce maintenance costs across its 58 GW portfolio of generation across the US and Canada.

It has applied machine learning to a hydro plant asset management programme, which includes scheduling the maintenance crews. That system uses detailed forecasting from a range of sources, including  weather and traffic, to optimise getting people to the site.

Cox says predictive tools, pattern recognition, learning applications and insights are available now, and there is growing confidence in “next-best-action” capability which suggests a course of action for a particular asset or network.

Behavioural learning

Digitalisation and the smart use of data to optimise business models are increasingly being adopted by firms wanting to lower costs and improve service to customers. While there is already a lot of change underway in the energy sector, he says more can be achieved.

Cox told Energy News that his Wellington-based data science services firm is collaborating with peer-to-peer retailer emhTrade on algorithms which look at price signals in conjunction with smart meter data and consumer behaviour. The goal is to provide a demand-response capability for end-consumers, which also benefits distributors.

The aim is to build a machine learning platform “for the optimisation of their transactive grid technology”. He says emhTrade’s behavioural science work is already leading to reductions in electricity and customer acquisition costs of about 10 per cent.

Intela AI is also in talks with a “major” lines company around using drones to gain “machine vision” for asset maintenance.

Cox says data science is especially helpful when companies are facing a “big challenge or big value proposition”.

“Then you look inside the business and say, what data do we have and can those two things be used together?”

“That flows into some of the other optimisations around when to maintain something, when to invest ,” he says.

“Once you begin to collect a bit of data, that flows through into a large number of other applications.”

Digital uncertainty

BEC energy policy advisor Tina Schirr says blockchain, artificial intelligence and moving services to the cloud are among issues keeping energy executives, here and around the world, awake at night.

Schirr gave an update on the latest energy issues map the BEC collates as part of the global model put together by the World Energy Council.

New Zealand’s 2018 issues map reflects the “rise of the machine” as leaders start to grapple with blockchain, data, AI, internet of things and innovative transport. Cyber risks rose on participants' agenda as did energy efficiency, renewable energy and economic growth.

Schirr says local executives seem more worried about blockchain, AI and other digitalisation trends than their counterparts anywhere in the world. She is unsure why that is.

“Is it that they don’t know how to use the technology in their sector, or is it about the policy around it or the regulation framework?”

“Or is it, for example, that Japan and South Korea are a bit more certain about it because they are technology providers in the energy sector while we are a technology taker?”

Schirr says the local map shows the 3Ds – digitalisation, decentralisation and decarbonisation – are also rising in importance.

Efficiency and renewable energy – previously rated as highly uncertain - “seem to be issues where energy leaders are getting more confident” as work on them progresses.

Other issues - such as energy storage, innovative market designs and decentralisation - are gaining traction in this country. The map suggests work is beginning on decarbonisation, and may reflect the country's 2050 net-zero carbon target.

She says the move to more “decentralised, customer-centric solutions” will require technology to provide greater “coordination, communication and, of course, consistency and security of power supply”.

“Digitalisation is here to help, but we are uncertain how it can help.”

Investment lagging

Callaghan Innovation business innovation advisor James Muir said the energy industry needs to spend more on research and development. Industries which don’t will be more “vulnerable to disruption” than those which do.

Callaghan has found a “strong correlation” between a sector’s exposure to international competition and its innovation and new product development. Those in export markets – such as the machinery and equipment sector – are active in R&D, while those with little or no exposure – such as utilities – aren’t.

“Look at construction where almost all revenue is based in this country and there’s almost no investment in R&D.”

In order to support more investment Callaghan is looking at “the rationale for doing so”. The aim is to take potential technological disruptions and “convert them into business opportunities” for sectors.

For the energy market that is the “critical uncertainties” highlighted in the BEC energy issues map – such as the additional loads which could be created by electric vehicles. Digital technologies can also be “very consumptive” of energy - in particular blockchain “which apparently now is consuming more electricity than certain countries”.

Opportunity areas

Muir says the industry can also look at the demand in New Zealand and globally for the “next generation of emission-reduction technologies”.

“That research is on-going around the world. It’s pretty fervent and pretty busy and there is some good data out there about the multiplier effects of the investment in this particular area.”

There is also a need for greater levels of collaboration across and beyond the industry in order to find the best and smartest solutions for the sector.

There could be more international partnerships with firms beyond the sector, he suggests. One such partnership is in the marine turbine sector working with composite materials industries.

“Those are two sectors in which New Zealand has got some track-record.”

Callaghan, Muir noted, can provide support through grants and access to university interns to help with research projects. But they’re not for “imitation, or me-too or innovation with a small ‘i’”.

“When we talk about innovation we are talking about innovation that breaks new ground.”

Contact: Felicity Wolfe -- EnergyNews