Intelligent Energy

Making Energy Smarter and Greener

This white paper was written almost 10 years ago for a global energy conference while still at IBM, but shows the strategic environmental direction I developed back then has still not been adopted by many companies today.

Introduction

Is energy the single most urgent — and daunting — issue our planet is facing today? As we have seen in oscar winning movies or star studded Hollywood fundraisers our lust for more and more energy is having an almost irreversible impact. Many believe so, but lately, as evidence shows in almost everything around us today from dishwashing detergent to hybrid cars, change is possible and the success of these “greener” more energy efficient products also support the argument that the energy issue offers tremendous upside potential. A strong case can be made that, rendering our energy systems “smart” holds the key not just to fueling our economy, but also to preserving our environment and even resolving some of our toughest geopolitical conflicts.

We at IBM have witnessed the impact of energy, climate and the environment on both business and society first hand — from our own experience as a company, to our energy and utility clients’ struggles to be more efficient and profitable across their entire supply chain, to the front pages of our newspapers. IBM, the world’s leading innovation company, is stepping up to the challenge. Taking a holistic approach to the issue, we’ve embarked on a journey to help clients play their part in solving the issue at hand across many areas in their business environments.

It’s not surprising therefore, that “A Healthy Planet” was one of the main topics of IBM’s internal Innovation Jam last July[2], nor that two of the jam’s top 10 ideas announced on late last year in Beijing by Sam Palmisano, IBM’s current CEO, dealt with energy. The tangible outcome of these have been a number of evolving initiatives including the Intelligent Utility Network which addresses how IT can improve the electric utility supply chain. Another example is Big Green Innovations, a new business unit focusing on renewable and sustainable energy sources such as solar and hydro power. Lastly, one of our most value creating initiatives is the on-going evolution of our quarter century and more involvement in optimizing the product development processes; our Product Lifecycle Management Solutions as applied to the Energy and Utility companies such as Canada’s Hydro-Quebec. These ideas are just the tip of a large iceberg of IBM’s growing — and increasingly focused and coherent — bid to become the world’s leading provider of energy and climate solutions.

1. An intelligent energy strategy

Persistent power grid failures, the instability of oil prices, and the severity of changes in weather conditions have significantly raised the urgency of the issues of energy and climate change — for governments, corporations and the public overall. IBM having a longstanding commitment to environmental leadership across its global business operations, with its first corporate environmental policy having been issued by its CEO 36 years ago in 1971, it is no coincidence it would be one of the early promoters of adoptable energy strategy. A decade ago, IBM became the first company in the world to earn a single global registration to the ISO 14001 Environmental Management System standard. Every year since 1990, IBM has publicly disclosed its environmental performance via voluntary corporate environmental reports. And IBM’s performance has led the industry with a favorable record of recognized results across the broad areas of pollution prevention, waste management, environmentally conscious product design, energy conservation and climate protection.

Regarding energy & climate change, IBM’s record is characterized by early action, leadership results, collaboration and transparency.

• Between 1990 and 2005, IBM’s energy conservation actions saved 4.3 billion kWHrs of electricity and $273M USD, at the same time reducing CO2 emissions by an amount equal to 40% of its 1990 emissions.
• IBM has been the semiconductor industry leader in reducing per-fluorocompound emissions, achieving a 58% reduction between 2000 and 2005.
• IBM’s Product Stewardship program, established in 1991, formalized the company’s focus and objectives regarding product energy efficiency and other environmental attributes of IBM products, and brought about industry-leading practices in this area.
• IBM actively supports the use of renewable energy and is the world’s premier company in support of employee mobility and corresponding CO2 emissions avoidance.
• IBM has collaborated for numerous years with organizations such as the U.S. EPA (ENERGY STAR, Climate Leaders, SmartWay Transport Partnership), The World Wildlife Fund (Climate Savers), The World Resources Institute (Green Power Market Development Group), The Pew Center on Global Climate Change, and the Chicago Climate Exchange.

Table 1. IBM Proof points

Regardless of our track record and many initiatives, in our view, the work extends beyond any single company, industry or even country. It will require collaboration on many fronts. The goal: sustainable energy use that can build economies while protecting the planet. The challenge: rethink and redesign the systems that bring power to the people. Addressing one issue in power generation unearths environmental and economic issues elsewhere. Challenges are many — but innovation is underway to help address many aspects of the system comprising energy and climate. The challenges we have been wrestling with include:

• Increased pressure from a range of sources — including increased energy demands, overtaxed assets, price volatility, energy legislation and deregulation, and an aging workforce — will require energy and oil companies to innovate to ensure growth and maintain a reliable and cost-effective infrastructure.
• Currently, the electric grid in the United States — and in many other countries — is predominantly analog, a remnant of the Machine Age. In essence, that means we’re running today’s digital society through yesterday’s grid. It’s like running the Internet through an old telephone switchboard.
• On the transportation fuels side of the equation, easy-to-find and recover oil sources are dwindling, and the costs to find and recover oil in remote areas are climbing, making it more difficult to increase production to meet rising demand. Alternatives — like ethanol or bio-fuels — are confronted with a complex supply chain.
• A growing consensus of scientists has concluded that observed secular climate change is caused, in part, by carbon dioxide emissions from the combustion of fossil fuels. Policy makers in many parts of the world are — or soon will be — taking action to constrain carbon emissions through a range of regulatory actions.
• Excessive heat, insufficient power and poor space utilization, layout and design are just some of the problems rearing their heads in data centers worldwide. The physical limits of many data centers has been — or is about to be— reached.

The Gartner Group has said that through 2009, 70 percent of data center facilities will fail to meet operational and capacity requirements without some level of renovation, expansion or relocation.

Pursuant to the recommendation of the company’s Energy & Climate Executive team, the Strategy organization began further exploring IBM’s overall business opportunity related to Energy & Climate Change. Specifically, they are undertaking a disciplined, strategic review of the emerging marketplace for products, services and solutions related to the global generation, distribution and consumption of energy across industry sectors and the changes that may be necessary in a carbon-constrained world.

A strong case can be made regarding transforming our energy systems into “intelligent” systems in order to fuel our economies and preserve our environment. In the energy industry, data is the key to making energy systems “smart.” The world of business is filled with data. We as a culture utilize and analyze data on a minute-by-minute basis to grow our businesses and operate in the global economy. The Internet revolution of the last fifteen years has shown us how data and its use has become the backbone of some of the largest companies in the world — Wal-Mart and Google, to name a few.

The pressing issue is how to use the data intelligently while focusing on key business drivers. For most energy companies, this entails using data technology to increase reliability and productivity, create efficiency and provide secure information delivery.

1.1 Intelligent Utility Network

One example is the Intelligent Utility Network (IUN), where sensors and other technologies sense and respond in real-time to changes and everyday problems. An Intelligent Utility Network:

• Connects all parts of the utility — equipment, control systems, applications, and employees — providing real-time access to operations and business data.

• Brings together a combination of ‘smart’ technologies and analytics which provide on-demand data and information that can enhance service to customers and improve electric power line grid planning, operations and maintenance.

• Enables the capability to sense and detect an outage, and to restore service faster.

• Enhances the efficiency and reliability of utility operations, and significantly increases the ability of utility companies and consumers to manage and use energy in a more cost-effective, energy-efficient way.

Utilities gain greater flexibility and resiliency with this newly accessible information. The key is a better understanding of customer needs and how these impact the infrastructure. The workforce will have the ability to predict and proactively maintain assets. Regulators will gain greater operational visibility instead of facing an after-the-fact audit perspective.

Similarly, the Intelligent Oilfield is helping upstream petroleum production companies become more efficient and profitable across their entire supply chain by giving them the ability to manage reserves, facilities, plants and equipment remotely — with nearly real-time information. Innovation in technologies and services can reduce project cycle times and reduce inefficiencies in the value chain.

Fig. 1. Chemical and Petroleum example of Intelligent utility networks.

Incorporating “smart surveillance” into Intelligent Oilfield operations through event early detection will enable a new efficiency never before seen in the industry. Typically, most real-time data from equipment or oil wells is fed into a SCADA system. The SCADA systems have alarms that are user-defined based on undesirable conditions that indicate or precede adverse well events, such as sand mixing in with the petroleum as it is being extracted from deep water.

Effectively gathering, analyzing, and quickly reacting to data-based stimuli is rapidly becoming a competency that not only can mitigate potential and severe oil production problems, but can be the key distinguishing attribute for real competitive advantage. Acting quickly, and sometimes preemptively, to prevent problems requires problem detection in real time — and even in advance — through sophisticated pattern recognition tools. This type of “smart surveillance” is the critical technology for enabling accurate early warning problem detection. Increasingly, for both utility and oil companies, turning vast amounts of data into ‘intelligence’ is more than just an IT process — it’s a key facet of how to run the business. Embracing and implementing an “Intelligent Energy” strategy involves many steps. Here are a few:

• Assess your needs for today and tomorrow based on market dynamics.

Data digitization can enable developing countries to leapfrog older-style networks. Through component-based modeling, an energy company can tie its strategic plans, business process and information technology requirements into a common framework to support transformation initiatives. This common framework will be supported by comprehensive hardware and systems-management tools made up of “smart” computing environments. Additionally, these “smart’ environments that run the framework also can optimize power consumption and cool the infrastructure that serves the framework.

• Establish the architecture to drive end-to-end integration.

Currently, many energy companies operate islands of automation within the same company, subsidiary or partner. For example, the majority of corporate energy investments in the Liquefied Natural Gas (LNG) arena are through joint asset ventures in liquefaction, shipping and re-gas terminals. Owners and operators must integrate information management, extend business analytics, and leverage intelligence to better manage their business at a global level. These actions will drive operational excellence and reliability at the local LNG terminal asset level.

• Identify ways to integrate people, process and technology.

Many “Intelligent Energy” strategies utilize frequently-captured data, which are delivered and acted upon in realtime. To maximize this data, companies need to find ways to fully integrate all three components of the business — people, process and technology. Technology improvements alone, without the complementary changes in work process and human factors, have a long history of failure — in both oil and utility companies. The most differentiating aspect of any “Intelligent Energy” implementation is often the degree to which the users (or, “the People”) acclimate and leverage the latest tools and technologies (or, “the Process”).

• Build a roadmap for implementation.

Companies must proactively step into energy management/load management. From this perspective, emerging economies are better positioned to implement Intelligent Utility Networks. Since many joint ventures have limited experience in plant operations or in implementing information technology applications, they often settle for buying stand-alone, “best in class” applications that later pose issues of integration and interoperability with their core corporate business processes. A more robust alternative can be information technology outsourcing, as it ensures world class information technology design and operations with minimal staff and infrastructure investment.

• Evaluate current data center energy management practices

Assess and study opportunities for consolidation and virtualization, efficiency of systems design, and systems management practices, to optimize energy usage.

The ultimate goal of implementing an “Intelligent Energy” strategy is to provide energy companies with the platform necessary to make better decisions with existing data. Informed decision making will come with the culmination of technology infrastructure that enables real-time optimization of business decisions and transforms data into differentiating intelligence.

1.2 Big Green Innovations

Formed as a result of IBM’s Innovation Jam, Big Green Innovations resides within the Global Engineering Solutions unit of IBM STG. Its mission is to anticipate critical environmental problems confronting the world, develop breakthrough technologies and services, and deliver relevant solutions through collaborative innovation with clients and key business partners. The initial four focus areas for Big Green Innovations that will leverage, then extend, existing IBM strengths to help its clients with solutions to their environmental challenges, consist of:

• Advanced Water Management, including technologies for safe drinking water and management of water resources

• Green Operations & Supply Chain, including the development of green best practices and environmental conscious supply chain integration and collaboration

Table 2. Traditional design parameters and examples of their greener counterparts[3].

• Computational Modeling, including models for better management of natural resources
• Alternative Energies, including technologies in support of renewable energy and business processes for management of an organization’s impact on climate change.[5]

1.3 Product Lifecycle Management

1.3.1 PLM — A Definition for the Hydro Industry

For 25 years IBM has invested in a highly complex and special information technology discipline, dedicated to design and manufacturing innovation: PLM (Product Lifecycle Management) is a set of capabilities that enables an enterprise to effectively and efficiently innovate and manage its products/plant/industrial assets and related services throughout the entire business lifecycle, from conception through recycling or disposal. As discussed by my colleague, Philippe Audrain in great length in last years Hydro conference[2], PLM appeared initially in the late 70’s/early 80’s when computing technology allowed calculation of two dimensional diagrams to represent reality. As computer technology started catching up with user requirements, the 3rd dimension then appeared, making what was rendered on the screen much closer to the real world. However this discipline is less a graphical tool than a virtual world modeller, allowing to design, test, simulate process scenarios prior to let them be alive when everything seems to react and work accordingly. The idea is to promote ideation and iterations on the users intentions in this “greener” virtual world and optimize those designs early in the design stage (in the first 10- 20% of the design or the early conceptual stage of the overall project timeline) where 90% of the life-cycle design costs (manufacturing, energy resources, maintenance and disposal are determined.

Fig. 2. Showing how close virtual can come to the real world.

The tremendous added-value provided by this technology has been identified for many years by manufacturing type of industries such as automotive and aerospace, where early engineering phases are so vital for those enterprises’ end-product. Cost reduction, reduced cycle-time, quality enhancement have been achieved with great percentage figures. Hydropower industry and any other heavy industrial facility based industry can now take similar advantage of this approach with lower percentage figures, but with significant benefits due to the amount of investment and at the same time leverage these innovative technologies to lessen the impact on the environment. This is where the benefit can be 2-fold both since a “greener” upfront strategy has a net positive effect on the bottom line where most decisions end up being decided on.[3]

So while trying not to repeat what was presented in last years paper, [2] I will attempt to illustrate how PLM applied to hydropower industry brings new ways to handle dam projects with external partners (being engineering enterprises, procurement and construction enterprises, joint-venture partners, etc…) in ways to affect the bottom line but also the environmental line we should all be following. First of all, an intelligent utility network strategy can also start to be applied to the Hydro supply chain as exemplified by the following figure of one of our clients, a large Canadian hydroelectric Owner and Operator.

Fig. 3. A Hydroelectric Owner and Operator supply chain and its enabled collaboration with its main partners.

The related technology allows not only to design new facilities but also to apply physical rules to the produced three dimension models. This way one can begin to build design rules, intellectual property and design intent into the virtual models thus capturing complex relationships that can be re-used in subsequent projects without starting from scratch saving lots of time and energy.

1.3.2 PLM disciplines and technologies applied across the Hydro industry to impart efficient energy and resource conservation

If we were to start at the beginning of a Hydro project at a non-descript client in Anytown, United States of Anywhere, we might have to persuade the local government to allow us to select a site. With environmental impact assessments, many parameters come into play when deciding on a particular optimized location. One can take into account the topography around the dam to optimize the final location of the asset by minimizing required concrete volume and/or excavation needs and hence lowering the impact on the surrounding natural environment.

Project managers can also learn from costly mistakes in previous projects and can thus avoid more waste of natural resources.

As the initial design of the hydro project progresses different disciplines need to interact together in unison in a complex very carefully choreographed plan where one setback can have tremendous daily losses in the millions of dollars. By being able to perform digital mock-up inspection of the project as the each crucial milestone is prepared accidents can be avoided.

In addition, one can then simulate behaviour of the facility in several contexts, with proper operational conditions set up to predict fatigue analysis due to weather conditions such as wind and snow. More complex end of life predictions allowing proper environmental impact studies of the surrounding environment could also be conducted. Also, we are able to simulate construction sequences and check maintainability of the assets.

Besides the environmental impact, simulations can be tailored to educate the users of the constructed assets and train future operators.

One can use laser scanning techniques to take a three dimensional snapshot of existing old dams and use it as a basis to build virtual revamping of these assets. This can help optimise the use of existing assets which may have been developed with older less efficient technology and in place where today no new construction could ever be approved. A virtual site revamp together with actual net energy output gains with no actual environmental impact could help win support of such a project.

One can use the “virtual reality” tools to produce marketing and communication materials and films. These have been already successfully implemented by our to gain the approval of the government. These step by step detailed project illustrations highlighted the major milestones digitally in order to present the project prior to its start-up and

let the several stakeholders, as well as population, approve it and adopt it.

As a more recent example the virtual representations can be overlaid onto Google earth maps to create an even more realistic image of the impact of a project on the surrounding flora and fauna.

2. Inherently Global

The energy and environmental challenges facing people, communities, governments and businesses are inherently global, complex, societal and political. Consider that:

• The International Energy Agency predicts a 53 percent increase by 2030 in global energy demand, mostly for fossil fuels. China and India will account for 70 percent of that growth.

• Increasing IT power requirements present significant energy and expense challenges for data centers. Gartner reports that 50 percent of current data centers will have insufficient power and cooling to meet the demands of high-density equipment by 2008. According to IDC, costs to power and cool data centers will increase four times more rapidly than new server spending over the next five years.

• A new Rand Corp. study showing the falling costs of ethanol, wind power and other forms of renewable energy predicts such sources could furnish as much as 25 percent of the U.S.’s conventional energy by 2025 at little or no additional expense.

• The threat of global warming is influencing policies and laws to require optimized energy usage as well as measured and reduced greenhouse gases emissions. Such planetary-scale challenges demand innovative solutions, and as you have seen IBM has several ways in which we can help contribute to the solution of the global energy crisis we are in. Just like we claim to be the innovator’s innovator, and we prove it time and time again by helping our clients develop more innovative products for the ever faster evolving world we live in, adopting even one of the aforementioned intelligent energy strategies can supercharge your hydro-energy projects.

3. Thinking Global — Acting local

The change that needs to occur is not revolutionary as many think. We cannot wait for radical changes to occur or for someone else to step up. A small evolutionary incremental step made by everyone will be enough to turn the tide. Today’s apathetic trends in society suggest indifference and futility. People not having taken responsibility for their action collectively, has resulted in the situation we are currently facing. This has been the story all along, but the same can work in reverse. If one institution and one company educate their people in such a way as to find the right compromise between the intelligent energy practices and the best possible bottom line, others will inherently do the same and a change will slowly but surely be noted.

Imagine a world where financial models exist where even the average home owner can afford to lease a small hydro project to cover their personal energy needs with out going bankrupt. Imagine a local government empowering local business and real estate owners to become energy independent and in-fact small and medium sized energy providers themselves. Imagine them, having solar arrays on their rooftops and wind turbines in their premises. Imagine them…plugging and selling their excess power back into the grid based on predetermined energy optimised demand cycle models to support the local utility during peak hours. One of the true properties of an Intelligent Energy Network is that the energy can flow both ways.

In IBM, Innovation that matters is not only about innovating in products and services but innovating in business models and re-inventing the industry that we apply it to. If we as a people with in each of our communities push to create new on demand business models for countries dependant on fossil fuels for their energy requirements, utilities will be forced to work on a solution with local financial institutions, and reasonably priced energy production at the microscopic level will be possible. Place the power back into the hands of the consumer and empower them to make a difference.

References

1. Vinet, Philippe, “Hydro-Quebec — PLM Project Overview”, Waterpower XV, Chattanooga, Tennessee, USA, 2007.

2. Audrain, Philippe, “Maximizing efficiency through the use of innovative technology”, Hydro2006, Porto Carras, Greece, 2006.

3. Clambaneva, S J, “”Engineering Environmental Design” Awareness to Implementation”, International Conference on Engineering Design — ICED”, Munich, Germany, 1999.

4. Clambaneva, S J and Goodhead, T C, “Educating Engineers On Environmental Issues”, Final Year Project, University Of Warwick, U.K., 1996.

5. IBM WIKI and its authors, “Energy and Utilities and Big Green Innovations Wiki”, IBM, 2007

The Author

Stephan Clambaneva joined IBM in 2001 through the Foundation Experienced Master’s program as a business process design consultant for the Global Business Services PLM team. He is currently part of the Product Lifecycle Management Team. He works within all sectors bringing thought leadership and industry specific solutions forward to assist clients with innovation, speed to market and efficiency drivers of their major PLM projects. He headed the Industrial Products, Consumer Products and Chemicals and Petroleum Global PLM Industry Team and has supported the development of the AEC Industry, Energy and Utilities Industry as well as the Consumer Packaged Goods Industry for PLM. His experience spans the entire product lifecycle from conceptualization and ideation through execution to operations and maintenance. He has published and presented numerous papers on the subject of Green design, Product and Asset Lifecycle Management. He received his Bachelors in Mechanical Engineering from the University of Warwick in the United Kingdom and his Masters in Manufacturing Management from Pennsylvania State University. He is fluent in English, French and Greek. Mr. Clambaneva has significant international experience working in USA, France, England and Greece. He lives and works in New York.