An Australian Approach to Energy Innovation and Collaboration by Chris Trayhorn, Publisher of mThink Blue Book, January 1, 2009 Just as global demand for energy is steadily increasing, so too, are the recognized costs of power generation. A recent report about the possibility of creating a low-emissions future by Australia’s Treasury noted that electricity production currently accounts for 34 percent of the nation’s net greenhouse gas emissions, and that it was the fastest-growing contributor to greenhouse gas emissions over the period from 1990 to 2006 . This growing realization of the true cost of energy production will be brought into stark relief, with the likely implementation of a national emissions trading scheme in 2010. Australia’s energy producers are entering an era of great change, with increasing pressure to drive efficiencies in both the supply and demand sides of their businesses. These pressures manifest themselves in the operation of energy and utilities organizations in three basic needs: To tighten the focus on delivering value, within the paradigm of achieving more with less, and while concentrating on their core business; To exploit the opportunities of an industry in transformation, and to build new capabilities; and To act with speed in terms of driving leadership, setting the agenda, managing change and leveraging experience – all while managing risk. The net effect of the various government initiatives and mandates around energy production is to drive energy and utility companies to deliver power more responsibly and efficiently. The most obvious evidence of this reaction is the development of advanced metering infrastructure (AMI) and intelligent network (IN) programs across Australia. Yet a more fundamental change is also starting to emerge – a change that is leading companies to work more openly and collaboratively toward a smarter energy value chain. This renewed sense of purpose gives energy and utilities organizations an opportunity to think and act in dynamic new ways as they re-engineer their operations to: Transform the grid from a rigid, analog system to a responsive and automated energy delivery system by driving operational excellence; Empower consumers and improve their satisfaction by providing them with near real-time, detailed information about their energy usage; and Reduce greenhouse gas emissions to meet or exceed environmental regulatory requirements while maintaining a sufficient, cost-effective power supply. A Global Issue In Australia, Country Energy, a leading essential services corporation owned by the New South Wales Government, is leading the move to change not just its own organization, but the entire electricity supply industry. With the strength of around 4,000 employees, and Australia’s largest power supply network covering 95 percent of New South Wales’ landmass, Country Energy recognized the scale and scope of this industry challenge meant no single player could find all the answers by himself. A Powerful Alliance Formed by IBM, the Global Intelligent Utilities Network (IUN) Coalition represents a focused and collaborative effort to address the many economic, social and environmental pressures facing these organizations as they shape, accelerate and share in the development of the smart grid. Counting just one representative organization from each major urban electricity market, the coalition will collaborate to enable the rapid development of solutions, adoption of open industry-based standards, and creation of informed policy and regulation. Not only does the coalition believe these three streams of collaboration will help drive the adoption of the IUN, or smart grid, in markets across the planet, but the sharing of best practice information and creation of a unified direction for the industry will help reduce regulatory, financial, market and implementation risks. And, like all productive collaborative relationships, the rewards for individual members are likely to become amplified as the group grows, learns and shares. Global Coalition, Local Results As Australia’s only member of the coalition, Country Energy has been quick to capitalize on – and contribute to – the benefits of the global knowledge base, adapting the learnings from overseas operators in both developed and emerging markets, and applying them to the unique challenges of a huge landmass with a decentralized population. From its base in a nation rich in natural resources, the Australian energy and utilities industry is quickly moving to adapt to the emergence of a carbon economy. One of Country Energy’s key projects in this realm is the development of its own Intelligent Network (IN), providing the platform for developing its future network strategy, incorporating distributed generation and storage, as well as enabling consumer interaction through the provision of real-time information on energy consumption, cost and greenhouse footprint. Community Collaboration Keen to understand how the IN will work for customers and its own employees, Country Energy is moving the smart grid off the page and into real life. Designed to demonstrate, measure and evaluate the technical and commercial viability of IN initiatives, two communities have been identified by Country Energy, with the primary goal of learning from both the suitability of the solutions implemented and the operational partnership models by which they will be delivered. These two IN communities are intended to provide a live research environment to evaluate current understandings and technologies, and will include functionality across nine areas, including smart meters, electrical network monitoring and control, and consumer interaction and response. Demonstrating the Future In preparing to put the digital age to work, and to practically demonstrate to stakeholders what an IN will deliver, Country Energy has developed Australia’s first comprehensive IN Research and Demonstration Centre near Canberra. This interactive centre shows what the power network of the not-too-distant future will look like and how it will change the way power is delivered, managed and used. The centre includes a residential setting to demonstrate the “smart home of the future,” while giving visitors a preview of an energy network that automatically detects where a power interruption occurs, providing up-to-date information to network operators and field crews. An initiative as far-reaching as the IN will rely on human understanding as much as it does on technology and infrastructure. Regional Delivery Model In addition to the coalition, IBM and Country Energy developed and implemented an innovative new business model to transform Country Energy’s application development and support capability. In 2008, Country Energy signed a four-year agreement with IBM to establish a regional development centre, located in the city of Bathurst. The centre is designed to help maximize cost efficiencies, accelerate the pace of skills transfer through close links with the local higher-education facility, Charles Sturt University, and support Country Energy’s application needs as it moves forward on its IN journey. The centre is also providing services to other IBM clients. Through the centre, Country Energy aims to improve service levels and innovations delivered to its business via skills transfer to Country Energy. The outcome also allows Country Energy to meet its commitment to support regional areas and offers a viable alternative to global delivery models. Looking to the Future In many ways, the energy and utilities industry has come to symbolize the crossroads that many of the planet’s systems find themselves at this moment in time: legacy systems are operating in an economic and environmental ecosystem that is simply unable to sustain current levels – let alone, the projected demands of global growth. Yet help is at hand, infusing these systems with the instrumentation to extract real-time data from every point in the value chain, interconnecting these points to allow the constant, back-and-forward fl ow of information, and finally, employing the power of analytics to give these systems the gift of intelligence. In real terms, IBM and Country Energy are harnessing the depth of knowledge and expertise of the Global IUN Coalition, collaborating to help change the way the industry operates at a fundamental level in order to create an IN. This new smart grid will operate as an automated energy delivery system, empowering consumers and improving their satisfaction by providing them with near real-time, detailed information about their energy usage. And for the planet that these consumers – and billions of others – rely upon, Country Energy’s efforts will help reduce greenhouse gas emissions while maintaining that most basic building block of human development: safe, dependable, available and cost-effective power. Reference 1 Commonwealth of Australia. Commonwealth Treasury. Australia’s Low Pollution Future: The Economics of Climate Change Mitigation. 30 October 2008. Author’s Note: This customer story is based on information provided by Country Energy and illustrates how one organization uses IBM products. Many factors have contributed to the results and benefits described. IBM does not guarantee comparable results elsewhere. Filed under: White Papers Tagged under: AMI/AMR, Ben Hamilton, Cap and Trade, Case Studies, Climate Change, Customer Empowerment, Generation, Neil Cherry, Smart Grid, Utilities About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.