ADOPTION OF IOT TECHNOLOGY IN ELECTRIC POWER INDUSTRY - PWC
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www.pwc.ru/en/IoT
Adoption
of IoT technology
in electric power
industry
The IoT will fundamentally
transform industry and
everyday life for business and
consumers alike.
Paper #2
Adoption
of IoT
technology
in various
fields The Internet of Things will IoT solutions in logistics will cut
fundamentally transform industry costs, increase transparency in
and everyday life for business and supply chains and reduce the need
consumers alike. In a number for human work. Smart city
of areas, human input and error will technology will create a more
be minimised completely. attractive urban environment that
features efficient transport systems
In the electric power industry,
and utility services, convenient
for example, IoT technology will
infrastructure and improved safety.
ensure cost savings and create new
The most popular smart home
products. In agriculture, IoT will
technologies among consumers
enable precision farming and
include smart appliances and
substantially improve the operation
thermostats as well as devices that
of agricultural machinery.
enhance security and control water
and energy consumption.
2 Adoption of IoT technology in various fields
4
Content
Adoption of IoT in the
electric power industry:
grid integration 5
Impact of IoT adoption in
the electricity sector 6
The role of IoT in creating
new power markets
10
Prospects and drivers of
IoT adoption in the power
sector 11
Barriers to IoT adoption in
the power sector 12
PwC’s IoT Centre
of Excellence in Russia 14
3
Adoption
of IoT
technology
in various
fields
The Internet of Things will IoT solutions in logistics will cut
fundamentally transform industry costs, increase transparency in
and everyday life for business and supply chains and reduce the need
consumers alike. In a number for human work. Smart city
of areas, human input and error will technology will create a more
be minimised completely. attractive urban environment that
features efficient transport systems
In the power utilities industry, and utility services, convenient
for example, IoT technology will infrastructure and improved safety.
ensure cost savings and create new The most popular smart home
products. In agriculture, IoT will technologies among consumers
enable precision farming and include smart appliances and
substantially improve the operation thermostats as well as devices that
of agricultural machinery. enhance security and control water
and energy consumption.
4 Adoption of IoT technology in various fields
41. Adoption of IoT in
the power utilities
real-time communication. All parts
of the system will be able to “see” Power
the other parts, understand
industry:
interconnection of
their capabilities and needs, and
perform their roles efficiently. This
sector
shift will help to reach a
elements fundamentally new level of
reliability and efficiency in the
operation of power systems.
In preparing this study, PwC
experts interviewed more than
The digitalisation of power grids,
ten managers at energy
power generation and the
companies. The majority agreed
consumer sector should be parallel
that all three components of the
processes, as smart grids cannot
power industry—generators, grids
function without smart consumers.
and consumers—should go smart
The Internet of Things will have the
in future. Deep IoT-driven
greatest impact on the following
integration among market players
key areas in the electricity sector:
will help to redefine the sector.
• Technology (which, among
The hierarchal model of other things, will become more
generation–transmission–sale reliable);
(where processes are strictly
governed by regulations, • Savings, including reduced
consistency is achieved through losses;
government control, and the
news is the main source of • Creation of new markets,
information) will be replaced attributes and businesses.
by a flexible system of productive,
Figure. 1. IoT applications in electric power
Generation capacity Consumption
monitoring monitoring
Power grid
monitoring
Distributed Consumption profile
generation management
Adoption of IoT technology in various fields 5Figure. 2. Figure. 3. IoT applications in electric power
Key benefits of IoT
technology for the electric
532
power sector 180
169
Consumers
• Demand management 52
• Procumers 91
• Virtual power plants 41
Total Energy Construction Supporting Fuel Fuel
losses of new capacity investments (optimised (balancing load)
production)
Generators
• Increased productivity
• Growth of distributed
generation and green energy In terms of power generation, IoT
2. Impact of IoT
adoption will entail equipping
Grids adoption in the critical units at power plants with
• Improved communication power sector diagnostic systems. It is worth
among market participants mentioning that most power plants
• Opportunity for consumers We estimate that the economic have already been outfitted with
to choose among power impact of IoT adoption on the embedded telemetry and, of course,
suppliers power utilities sector will be RUB automation technology. APCSs4 also
532 billion by 2025. form an integral part of critical
Technology systems at generating facilities.
Enhanced reliability
• Asset management
on a real-time basis Russia’s leading power generating
• Tremendous boost
Power systems were traditionally companies are currently busy
in reliability built around the principle upgrading their generating facilities
of reliability: consumers should and harmonising new and old data
always have access to electricity. within a single SCADA5 system,
Cost savings Because of the key role that
• Reduced fuel costs, payroll
including Inter RAO Electric Power
energy plays in the economy and Plants, Unipro, Fortum,
and losses in meeting people’s daily needs, Rosenergoatom, and
power grids and generating Gazpromenergoholding (GEH).
New products facilities were designed with The latter has acquired a share
• Big data in electric power built-in redundancies to provide in a company that is developing
• Internet of Energy consumers with significant IoT systems for power generation
• Personalised electric power operating reserves of power. equipment6.
IoT elements like smart grid
technology can significantly At power plants, IoT systems also
improve the reliability of power enable users to receive data
systems. on equipment operation in real time
Figure. 4. and take informed decisions on
Reserves in the power system Essential KPIs1 in the grid maintenance and repairs, as well
complex include CAIDI2 and as optimise the timing of equipment
SAIFI3, which indicate the shutdowns and minimise the risk
208 capacity available to consumers. of incidents. For the foreseeable
GW Process
-28% IoT technology can help reduce future, equipment will continue
power system
failures in power grids by quickly to be repaired according to existing
delivering information regulatory frameworks. However,
on equipment problems and IoT technology will help to ensure
150 scheduled repairs. For example,
GW that equipment is operating
by monitoring oil levels according to factory specifications
in transformers remotely, power after scheduled maintenance.
companies can quickly identify If used efficiently, IoT technology
leaks and prevent overheating could help operating teams
and possible transformer failures concentrate their efforts on key
or substation fires. functions rather than on routine
1 KPI: key performance indicator
2 Customer Average Interruption Duration Index
3 System Average Interruption Frequency Index
4 Automated Process Control System
5 Supervisory Control And Data Acquisition (SCADA) is a software package intended for development or
Available Projected
UES capacity peak load real-time operation of systems to collect, process, display and archive information.
6 Here, we mean Tecon.
6 Adoption of IoT technology in various fieldsactivities, as well as help Economic impact and cost
to optimise staffing numbers. savings from IoT adoption in the
Considering that the electric electric power sector
power sector currently employs
over 700,000 people with a Business factors are just
payroll budget of RUB 50 billion, as important as improving
IoT technology could help reliability. In certain cases,
to achieve considerable consumers are ready to reduce
improvements in productivity. their consumption to save costs
The point is that IoT is not just when the price it too high. Rosenergoatom (REA)
about things, it is also about
people. Teams armed with In the grid complex, the Over the past two years, Units 1
knowledge can do their jobs widespread adoption of IoT and 2 at the Smolensk Nuclear
better. technology could have a major Power Plant have been retrofitted
impact. For business in general with IoT technology. The plant has
In power generation, IoT and power grid companies also implemented ABB’s eSOMS
adoption entails the introduction in particular, reducing costs system. Without the need to install
of relatively simple systems like is an important objective. numerous sensors, this system
personal tablets for employees On the one hand, the grid provides employees with displays
on power plant floors. These component accounts for 67% that show the best routes to take
devices can: of the price of electricity for on equipment walk arounds. Line
households and about 40% for workers can send information
• Reduce the burden industry.7 On the other hand, on their observations
of paperwork for personnel; regulatory authorities have begun to a centralised information
to insist that grid companies system in real time.
• Control line worker reduce their fees and fee-related
operations; costs. The system then summarises,
analyses and transfers all the data
• Minimise the impact Grid companies can optimise to plant operators, together with
of human error, thanks their costs by ensuring better recommendations on further
to a standardised form monitoring of the power grid. actions in case of any issues.
completion process; Knowing the condition of The system has allowed line
substations, power transmission workers to perform walk arounds
• Provide personnel with lines, isolators and other grid almost 20 times faster, reduced
instant updates about the components makes it easier to cut paperwork dramatically and
condition of equipment the following elements from the enhanced the quality of monitoring
using historical data, as well cost structure: and decision-making. The
as with operational forecasts; economic impact from efficiency
• Repairs: Currently, grid gains has amounted to RUB 45
• Transmit information from companies conduct repairs million per year, and the return
shift supervisors to the according to industry on investment was achieved within
central control room standards (power lines, for two and half years. According
on a real-time basis. example, should to plant management, however,
be overhauled every 12 years the most significant outcome
In fact, Rosenergoatom and on average). The transition of adopting IoT technology has
Unipro have already such from standardised to been the operational
systems, and other generating predictive maintainance will improvements that have reduced
companies are planning achieve savings of over RUB 8 repair costs, increased the plant’s
to do so as well (see the insert billion by 2025 (see the insert capacity and, above all, provided
on Rosenergoatom). on Rosseti) by prioritising an entirely new level of reliability
repairs and ensuring longer and safety.
equipment life cycles.
Figure. 5. The eSOMS solution is currently
Cumulative growth rate of the purchase price for electricity, being installed at the Voronezh
% of the previous year Nuclear Power Plant. According
to other market players, the
impact of REA’s new management
144 153 161 168 174 system is visible from the outside
136
84
100 111 122
simply from changes in their
72
34 45 58 63 repair schedule. Today, the
25
10 company is applying the lessons
of its successful IoT adoption
2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
experience to business processes
Source: Rosstat, ACRA forecast
for managing repair works.
7 Analytical Credit Rating Agency (ACRA), report from 24 April 2017.
Adoption of IoT technology in various fields 7• Operations: Taking basic
readings from grid facilities
requires employees to conduct
walk arounds and equipment
checks. For example,
companies need access
to an HV laboratory to inspect
transformers every six months
(oil used to cool transformers
must be sent to the lab).
Inspections of lines and
substations are carried out
personally by specialists.
In addition, identifying
defects during power line
failures must often be carried
out manually. Use of IoT
technology to collect accurate
Rosseti data remotely and
instantaneously could
One of Rosseti’s main priorities In 2015, Rosseti spent RUB 35.8 significantly reduce the time
is introducing smart grid billion on repairs. This figure could needed to review and fix
technology. Currently, the have been smaller if IoT systems problems and, consequently,
company is running more than ten had been in place. A realistic help to cut costs.
pilot projects aimed at building investment in IoT technology that
and developing smart metering could be repaid within five years • Losses: On average, grids
systems that enable real-time would be 3-5% of the cost of basic have relatively high technical
diagnostics and more efficient equipment. and commercial losses
operation of the energy system. of 9.22% (or RUB 60 billion)
Rosseti management is also per year. Bringing loss levels
One of the most promising focusing on another possible down to international
initiatives is the Digital Power outcome from improved benchmarks of 3-4% via
Distribution Zone project that the monitoring systems, namely, improved grid control could
company has launched in the reduced energy losses. In 2015, save about RUB 40 billion
Kaliningrad Region in cooperation improved meters saved the a year. Moreover, reducing
with the National Technology company 225.3 million kWh, loss levels could help
Initiative and EnergyNet. The i.e. nearly RUB 500 million. companies address their
project includes three stages: commercial losses. Starting
automating substations and grids, The shift to broader use of IoT- from mid-2018, territorial
deploying a comprehensive energy based grid monitoring systems grid companies in Russia will
monitoring system and is integrated into the company’s be prohibited from
implementing a support system. Framework for Developing modernising old metering
Accomplishing this project will Technical Diagnostic Systems. devices in order to promote
propel management of the system The document calls for the massive the adoption of smart meters.
to a new level, significantly cut adoption of IoT technology to help According to plans, 80 million
operational and repair costs, the company’s Production Asset smart meters are expected
reduce losses, ensure more efficient Management System (PAMS) to be installed in the grid
utilisation of equipment and move to a new level. Earlier, complex.
increase reliability. Completing the monitoring systems could
first stage of the project has be installed only on equipment IoT adoption will also help
allowed the company to increase of more than 110 kW, but this increase the service life and
the average response time restriction was removed in 2017, capacity (utilised capacity)
to consumer emergencies by four and now monitoring systems can of existing assets. In the current
times. be used for economic reasons environment, grid development
on grids of any voltage class. is limited not only by capital
Economic benefits will be achieved In addition, Rosseti’s asset intensity but also by physical
possibly mainly via IoT solutions. management principles now capacity, especially in densely
Real-time equipment monitoring include evaluating the social and populated regions and cities,
makes it possible to ensure the economic consequences of power which have no space for
safety and reliability of the system failures. constructing new grids.
without the need for strict According to regulations, line
operational standards, which are loads and substations must
often calculated based on high be maintained at specific levels.
margins. In summer, capacity is lower due
to greater wire sag.
8 Adoption of IoT technology in various fieldsHowever, knowing the actual (via Even a small percentage
the IoT) values rather than just improvement in this area by
the standards could minimise Russian generating companies
bottlenecks in the system. This could save the sector and the
could have a multiplying effect for economy billions of roubles every
the entire sector by optimising year (see the insert on Inter RAO
repair schedules and loads in Electric Power Plants).
other grid sections during the
summer repair campaign. At the same time, strong
Currently, Russia is using only connections between producers
two-thirds of its grid capacity. and consumers will help maintain
loads at efficient levels. According
In generation, analysis of optimal to electricity sector Inter RAO Electric Power
operation modes using IoT representatives, trade on the Plants
technology could reduce the wholesale market is conducted
volume of excessively burned fuel, anonymously. In some regions, Inter RAO Electric Power Plants is
which in some cases amounts to the most efficient plants are rolling out a system to collect,
over half of all operating operating at half of their capacity, transmit and calculate technical
expenses. The Russian electric while far less efficient facilities in information (SSPRTI) at the
power sector annually consumes neighbouring regions are fully company’s power plants.
about 115-120 million tonnes of loaded.
coal and about 200 billion cubic The project is aimed at designing
metres of gas, which in monetary and installing devices and sensors
terms exceeds RUB 1 trillion. of various types, as well as
building an IT system to monitor
the data.
The SSPRTI project has two goals:
• To increase equipment
reliability within five years by
improving observability,
automating manual inputs,
introducing a new production
culture, and gathering
information on changes in
equipment performance after
replacements or repairs.
• To reduce expenses through
better management of the
thermal effectiveness of
equipment (reduce overheating
incidents). Equipment
operators at plants should
receive tools to take
economically efficient decisions
and master the equipment.
Taking into account fuel economy
(annual expenses in the group
amount to about RUB 130 billion)
and repairs savings, implementing
the system is expected to repay the
investment within five to seven
years. Devices and sensors account
for the greatest part (about 80%)
of the cost of adopting the new
system. The parallel process of
categorising equipment and
reference data indexing is also
under way. SSPRTI data will soon
be used by the Enterprise Resource
Management (ERP) IT system as
well as by the maintenance and
repair (M&R) system.
Adoption of IoT technology in various fields 93. The role of IoT in creating
new power markets
For grids, IoT technology (smart
grids) offers powerful levers
Fortum to handle challenges that the
energy system has not faced
In 2012, Fortum launched a project to manage the value that the before, for example, integrating
on IoT adoption called CIMS equipment generates rather different sources of power and
(Company Information and than the equipment itself fluctuations in production. With
Measuring Systems). (because the operators the growing number
understand the economic of distributed sources now
The project was guided by a simple consequences of their actions). integrated into power grids, the
logic: you cannot manage what adoption of IoT technology
you cannot measure, and without In addition, the project made is becoming inevitable.
this, no automation is possible. it possible to deal with other
It was a strategic decision to start issues, including Distributed power includes, first
the long-term project. There were and foremost, renewable sources
no detailed calculations, but it was • Attracting young specialists like solar, wind and water (small
clear that it was impossible to run to work in plant operations hydropower plants). Although
a comprehensive process without with cutting-edge technology; Russia plans to put more than
accurate information. 5 GW of renewable capacities into
• Providing confidence operation by 2025 (i.e. about 2%
The project went through several to personnel by investing in the of the installed capacity of the
versions and caused heated plant’s long-term future of the country’s energy system), this
discussion. However, once the plant. volume could increase thanks
agreement and approval saga was to microgeneration by
over, and the company adopted the A parallel project in heat networks households. The government
philosophy, the project became was also launched in order intends to allow sales of surplus
an integral component in to address major issues in the heat power generated by
managing the company. network business, including microgeneration facilities with
improving accounting operations, capacities of up to 15 kW.8
The main goal of the project was reducing losses and optimising In addition, industrial distributed
to create a single channel called costs. For example, the company’s power generation should also
the Process Information technical policy states that be included. According to experts,
Collection Centre (PICC), overhaul and reconstruction it already accounts for 5-6% of the
where information would efforts must use only pre-insulated, capacity of the country’s entire
be collected from metering devices high-capacity pipelines energy system, or about 13 GW.
in a single database and format in combination with a remote Integrating new power sources
without human input. moisture and insulation control requires redefining the entire
The Centre has helped to: system (a system of conductors operation of an energy system
integrated in the pipe insulation). that has evolved in response
• Create a single database Signals from these pipelines to the to specific needs over decades.
available to all participants network make it possible This is not a simple task. The
in the process, from the shift to identify defects with an power grid was initially designed
supervisor and engineers accuracy of one to three metres. as a one-way street from
to accountants and officers These types of pipelines require generators to consumers. Trying
involved in debt recovery. no maintenance and help to reduce to make it work both ways is like
costs and losses. Using the latest learning to drive a car using only
• Monitor all technical processes valves and fittings and enhanced the reverse gear.
in real-time on all equipment coverage with meters (for remotely
at the plant, whether on collecting readings and operating As distributed generation
turbines, boilers, generators, equipment) has become expands, IoT technology will
switchyard stations or cooling an alternative to keeping a large support the growth of virtual
towers, as well as remotely team of line workers. power plants. Power generators
manage their operation (including households) will
(telemetry + telecontrol). The data from these meters be able to dispose of a certain
is automatically sent to the Process capacity at a given moment (e.g.
• Automate reporting for internal Information Collection Centre. of dozens of MW) with a 100%
and external use. All automation was performed probability thanks to IoT
by Russian companies, while he technology and thus operate
• The project’s most important data is processed using the 1C as independent players on the
outcome was providing the platform and then integrated with wholesale market.
plant’s personnel with the tools SAP.
10 Adoption of IoT technology in various fieldsA new business ecosystem options above are not feasible. Russian power meter
is already emerging around the manufacturers alone produced
third component in the power Considering that there are about 9 million units already
sector chain, the consumer. reportedly over 7 million private in 2014.12
homes and over 30,000 petrol
According to experts interviewed 4. Prospects and drivers of
stations, as well as over 2.5
by PwC, it is households and the IoT adoption in the power
million small and medium
small and medium-size business sector
businesses, consumers equipped
sector that will soon become the with smart meters will likely
main drivers of the IoT The outlook for IoT technology
determine the development of
revolution. The situation is the in the power sector is quite
Russia’s smart energy system.
same in other sectors. We focused promising. According to most
a separate section of our research experts interviewed by PwC, the
An additional outcome from IoT
on smart meters and smart sector will pass the point
adoption could be achieved with
homes. If smart meters grow of no return within the next five
the help of big data analytics. The
exponentially, as expected, their years. Technology, sensors, data
power sector cannot move
owners will begin to demand that processing tools, microprocessors
forward without data analytics
grid and retail power companies and software are developing
and machine learning. For
take into account their at a rapid pace. Data transmission
example, a 500 kW substation
consumption data. channels are no longer
transmits up to 100,000 signals
an obstacle, because all power
per second on the state of its
plants and substations with
equipment, while the System
The scheduled launch capacities of more than 110 kW
Operator of Unified Energy
of a competitive retail power are already connected to optical
System receives millions of
market in Russia will also help lines.
signals at its control centre. The
to drive IoT development. This
latest IT systems are already
will enable consumers to choose New 35 kW capacity substations
capable of handling such large
among power suppliers.9 First, are also equipped with
volumes of data.10 IoT in the
switching between suppliers will connectivity. In addition, power
power sector will be supported by
require rapid financial line communication technology
related technology such as
calculations. Second, competitors (PLC) also can be utilised.
blockchain.11
will make suppliers offer
consumers flexible fees on power Many companies in the Russian However, without major
and later on other resources. power sector are establishing government support, IoT
Third, consumers (petrol stations, analytical centres designed to adoption in the power sector will
neighbourhoods, housing analyse data on equipment, be slower, and the process will
communities, etc.) will be able including RusHydro, Inter RAO driven more by consumers than
consolidate and enter the retail Electric Power Plants, REA and by the corporate sector.
power market as independent other utilities.
players. One of the reasons is that most
At the same time, the number of of the economic dividends from
Unless consumers have smart smart meters continues to grow IoT adoption have no single
meters, however, the three and is expected to triple to 7 beneficiary. Rather, they are
million between 2015 and 2020. distributed among consumers,
generators, grids, etc. In the
absence of a single stakeholder,
Figure. 6. the government could assume
Mapping the benefits of IoT adoption in the power sector this role, as it is well positioned
to see the total economic impact
Reduce cost
Improved
collection
Telemetry of adopting IoT (see the insert
on the System Operator of the
High
Performance
analytics
Improved deviation
management
Telecontrol Unified Power System).
Mode
analytics
Pro-active
repairs
Data
validation It is a positive sign that
IoT potentian
government policy in the power
Moderate
Strategic Tactic sector has embraced
Demand Customer Income
technological innovation.
response segmentation protection In particular, the most prominent
Revenue simulation Stronger customer loyalty More accurate Better data
state initiatives have included the
By tariffs via online self-services collected data availability possible decision to remove
High
regulations on grid repairs and
Revenue growth roll out smart meters and RES-
8
based distributed generation.
Wind generators or PV panels installed on roofs and in gardens of private houses.
9 Consumers now have to buy power from monopoly last resort suppliers (LRS) operating in their region.. These ideas are reflected
10 http://www.pwc.ru/ru/publications/assets/big-data-presentation.pdf
11 More information on applying blockchain technology in the power sector is available in
in several documents discussed
Blockchain: an opportunity for energy producers and consumers? in brief below.
http://www.pwc.ru/ru/publications/blockchain.html
12 According to J’son & Partners Consulting.
Adoption of IoT technology in various fields 11• The Energy Strategy
of Russia for the Period
up to 2030 outlines the
creation of a new generation
of highly integrated smart
backbone and distributed
electric grids (smart grids)
within the Unified Power
System Operator of Unified Energy System (SO UES) System of Russia.13
SO UES is the primary control could not have been broadly • The draft Energy Strategy
centre in the national power implemented without IoT, will of Russia for the Period
system and, among other things, save millions of roubles every up to 2035 also contains
manages process regimes, day. a section on efficient energy
monitors compliance with systems of the future,
reliability parameters and The PJM power system, the including smart homes,
frequencies in power supply, North American equivalent a comprehensive upgrade
approves repairs and power of SO UES (peak consumption of the Unified Energy System
development programmes, etc. load is 156 MW, while UES and the development of smart
All UES entities are required of Russia is 159 MW), operates grids.
to follow SO commands. over 11 GW in demand-
response mode. Totally, about • A number of initiatives have
• New IoT technology has 30 GW is used in demand been outlined in a roadmap
enabled greater transparency response in the US, including for developing a smart energy
and manageability of the 7 GW generated by the system by the Energy.net
power system, as well population. Full-scale association, which strives
as economic efficiency. implementation of this to form a professional
In recent years, SO UES has programme in Russia could community capable
been able to drastically bring savings of billions of developing and promoting
(by factor of 24) reduce the of roubles. the global market
time needed for issuing task of competitive technologies,
plans to power plants on the SO UES introduced the demand- products and services in the
balancing market, from once response component in order field of smart energy systems.
per day to once per hour. to add flexibility to the system
Power plants can now adjust by using commercially feasible Development of IoT technology
their load schedules every hour, methods. Just as traffic jams in the power sector would be
while previously they had cannot be addressed only through further encouraged if the
to wait an entire day, no matter more road construction, government were able
what opportunities were bottlenecks in the power system to coordinate efforts by the
available. also require new methods corporate sector and private
of routing and flow management. initiatives, as well as manage the
• In addition, new technology has With more opportunities in place application of international best
enabled SO UES to launch to control the power system, grid practices in regulation.
a demand-response infrastructure and power plants
programme that provides can be utilised more efficiently. 5. Barriers to IoT adoption
consumers with financial in the power sector
incentives to reduce The economic benefits from price
consumption during peak load dependant reductions in power In our interviews, respondents
hours voluntarily. Currently, consumption will be enjoyed not mentioned five barriers that are
only 69 MW of connected by SO UES and RUSAL, but by hindering the adoption of IoT
capacity at RUSAL’s aluminium consumers in general. In the technology in the power sector.
plants are included in the absence of obvious sponsors and
demand response programme beneficiaries, the system will not The first is the topology of the
in the second price zone grow without the government power sector itself. The power
(Siberia). RUSAL’s plants as an active contributor. The system was designed according
participate in the programme demand-response launch itself was to the principles of hierarchical
when their load reduction leads made possible only following control and command, which was
to at least a 1% savings on the Russian Government Resolution in line with the technology of the
market for the next day. On the No. 699, “On Introducing day. IoT creates significant
other hand, demand response Amendments to the Wholesale changes in interrelationships
is activated at consumption Electricity and Capacity Market in the power sector, and this,
peaks when the price per kWh Rules in Summer 2016.” of course, generates new
is at its highest. This economic and technological
innovation, which obstacles. According to PwC
research,14 the power sector is
13 Section 7. Innovative and scientific and technical policy in the power sector. http://minenergo.gov.ru/node/1026 generally slow to introduce new
technology.
12 Adoption of IoT technology in various fieldsIf we look at technology of equipment takes place, new
implementation in the sector assets should be equipped with
historically, we find that power sensors as well as capacity for self-
companies have spent an average diagnosis and information
of 15-20 years on large-scale transmission. It is important
technology implementation, to realise that there is no point
whether it was R&D on APCSs in modernising substations that
in the 1960s or innovative gas were built in the 1920s.
turbines in the 1980s. RPA In addition, some equipment and
microprocessor devices were infrastructure (for example,
developed as early as in the reactors) are difficult to diagnose.
1980s, but 15-20 years passed
before they were broadly adopted As more information about the
in the operation of power systems. operation of power facilities
is generated, power systems
In addition, new technology become more vulnerable to
requires new investments. cyberattacks. Today, 80% of grid
Although capital expenditures equipment is analogue, and hackers
on technology implementation are powerless to do much harm. Of
are trending downwards, the course, this challenge needs to be
required investments are still addressed as IoT technology is
significant. Moreover, as with any adopted in the power sector.
commercial enterprise, existing The absence of time-proved
companies need to earn a return economic ROI calculations has also
on their investments in fixed slowed down IoT adoption. For
assets. most early adopters (Inter RAO
Electric Power Plants, Fortum,
This is why many of the energy Rosseti, REA and GEH), the
experts we interviewed decision to launch IoT was rather a
emphasised that the adoption leap of faith based
of IoT solutions should be guided on assumptions of expected
by the expediency principle. economic impact (see the insert on
Market players were unanimous Fortum). IoT pioneers in the power
in the opinion that IoT adoption sector will be able
is not a complete replacement. to leverage the advantages of early
As the natural upgrade and adoption and become leaders in the
retrofitting new power sector.
Figure. 7.
Barriers to IoT adoption in the power sector
Low emphasis on technological
innovation
The power sector implements innovations
with a 10-20 year backlog
Capital intensity
Topology of the
The Internet of Things
power sector
means new investment
Hierarchical and
while the power sector
centralised
has to repay its old
architecture
expenses
Cyber security Economy
Digitalisation in the power There are almost no calculated
sector leads to greater results of IoT implementation
vulnerability in the Russian power sector
14 Research by Strategy& (PwC). How to benefit from the transformation of traditional value-adding
chains. Technology and innovations in the era of power sector transformation.
http://www.pwc.ru/ru/publications/road-to-energy-transformation.html
It seems to me that this is the name of the English version of this document and the link to the English
version of the document: https://www.pwc.com/ee/et/publications/pub/a-distinctive-road-to-energy-
transformation.pdf
Adoption of IoT technology in various fields 13PwC’s
IoT Centre
of Excellence
in Russia
We believe that the Internet Market entry for IoT solutions
of Things is not just another and service providers; design
technology, but a foundation of business and technical
for a new production system strategies; development
and philosophy that will guide of general roadmaps
companies from across various of resources and competencies;
industries. As any other production development of use cases,
system, the Internet of Things operational models
requires a massive overhaul and business cases;
of methodologies, internal business IoT implementation,
processes, and operational inducing setting up a project
and managerial cultures. For this management office, ensuring
reason, from our perspective, the transformation
the key objective of IoT adoption of processes and methodologies,
is to alter business models rather introducing a new corporate
than simply to use new culture, conducting analyses
technologies and IT solutions. of production data, testing
According to our 2017 Digital IQ and certifying IoT solutions,
survey, many respondents say that and providing training on new
the Internet of Things is the technologies and work
number one technology in terms practices;
of its potential to transform Operation of IoT solutions,
business models of companies including equipment
and whole sectors. It goes without monitoring, data analysis and
saying that such large-scale business analytics, preparing
changes demand the involvement (and providing support)
of senior management, including for operational processes
CEOs, COOs, and CTOs. and auditing financial impact.
It is our commitment to support In the past two years, we have
companies as they plan, implement completed a series of projects
and use the Internet of Things. for mobile operators and power
To achieve this, we have built companies both in Russia and
a cross-functional team in Moscow abroad. We would be happy
to provide IoT services to provide additional information
to companies in various sectors. about our services and
Our competencies delivering competencies, or to arrange
completing strategic and a personal meeting where we could
operational projects, such as: have a detailed discussion on the
Strategic planning for IoT, challenges that your company
including: seminars for senior intends to tackle in the area of IoT
managers and shareholders; and digitalisation.
design of strategies on initial
34 Adoption of IoT technology in various fieldsContacts
Yury Pukha
Partner, IoT
Technology Sector
Leader
Т: +7 (495) 223 5177
E: yury.pukha@pwc.com
Grigory Sidorov
Director, IoT consulting,
Strategy & operational
effectiveness
Т: +7 (495) 223 5085
E: grigory.sidorov@pwc.com
Dmitry Stapran
Director, IoT consulting,
Strategy & operational
effectiveness,
Energy Sector
Т: +7 (495) 223 5044
E: dmitry.stapran@pwc.com
Adoption of IoT technology in various fields 35PwC Russia (www.pwc.ru) provides industry-focused assurance, tax, legal and business consulting services. Over 2,500 professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg, Kazan, Novosibirsk, Rostov-on-Don, Krasnodar, Voronezh, Vladikavkaz and Ufa share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. The global network of PwC firms brings together more than 223,000 people in 157 countries. * PwC refers to OOO PricewaterhouseCoopers Advisory, or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate legal entity. © 2017 OOO PricewaterhouseCoopers Advisory. All rights reserved.
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