The energy industry is currently moving from a traditional, highly regulated production model dominated by electricity utilities to a decentralized, deregulated model featuring a higher proportion of renewable energy sources such as wind and solar power. With subsidies in decline, renewables are reaching grid parity—with costs equal to or less than traditional sources. Not surprisingly, two-thirds of industry investment is being directed into renewables. A trend that is expected to continue over the coming years.
As more industry players move into renewable energy, they need to do so profitably. To do this, they must minimize generation, transmission, and consumption costs, while maximizing power stability, reliability, and sustainability. Additionally, given the complexity of supply and demand within the evolving ecosystem, they need the capability to make informed, accurate operating decisions. And, because project capital costs have already reached their lowest level, they need to focus on reducing operating costs.
To help these companies meet their business and profitability objectives, Honeywell has created a Remote Operation Center (ROC) capability, which provides expertise, skills, and technology capabilities that customers may not have internally.
In this article, I will examine the industry requirements for the ROC, explain how the model works, and describe how it can help customers achieve desired outcomes.
Three Imperatives for Competitive Success
Many energy companies are currently channeling investment into three areas that they believe will drive their long-term strategic and competitive success. The areas of focus are:
- Digital Transformation. Today, just 10% of the energy industry is automated, but by 2022, this figure is estimated to be closer to 80%. Industry players increasingly see automation as a way to connect technology with people in order to meet strategic goals, but they are not sure how to achieve this on their own.
- Getting Smarter with Data. Energy companies are currently only using a small amount of collected data for decision-making, missing out on opportunities to drive savings and efficiencies. However, they know that a robust data analytics capability can help them boost profitability by up to 30%, while delivering strategic and competitive benefits. The question is: How can they begin to exploit data analytics within their operations? And where can they get the expertise to interpret the data?
- Overcoming the Skills Gap. Some 72% of energy companies say that access to talent is one of their foremost challenges. They see information technology (IT) as a solution to addressing the skills gap and increasing the efficiency of workers, but they’re unsure how to apply IT to get the outcome they want.
Helping Companies Across the Energy Ecosystem Realize Their Ambitions
Honeywell’s ROC offering is designed to meet the transformational, data-driven and skills-related desires of multiple stakeholders within the energy value chain, including:
- Commercial and industrial end-user owners primarily concerned with economic performance.
- Utility owners prioritizing both economic and environmental performance.
- Independent system operators and regional transmission owners—served through the developer or community that owns the microgrid—concerned with grid reliability.
- Operations and maintenance (O&M) companies providing services to the wider energy community.
- Microgrid operators for whom virtual power plant performance, and environmental and economic impact are vital.
- Developer owners and independent power producers running energy-as-a-service and virtual power plants offerings, behind the meter and front of the meter, respectively; as well as behind-the-meter and front-of-the-meter power purchase agreements.
Delivering Contractually Agreed Upon, Outcome-Based Services
Honeywell offers its ROC capability as an outcome-based lifecycle management service in which it monitors and operates a customer’s remote distributed assets, while guaranteeing specific outcomes.
Every program is tailored to the specific customer needs. Front-of-the-meter services might include virtual power plant and distributed energy resource management capabilities, frequency support, voltage support, and spinning or non-spinning reserve. Behind-the-meter services might include peak shaving, demand management, energy arbitrage, and time of use.
Honeywell also provides customers with a wide range of training courses to meet their competency goals. For example, Honeywell’s UniSim Competency Suite can be used to improve console and field operator aptitude and speed preparation through realistic training experiences. Using the latest simulation software and intelligent virtual reality (VR) headsets, attendees get an immersive, interactive learning experience and accrue the skills they need to succeed in hours, versus months if traditional classroom techniques were used. Critically, the course helps industrial facilities address the industry shortage of trained operators.
What sets Honeywell’s offering apart from other outcome-based services is the contractual guarantee of key performance indicators (KPIs). Generally, a customer’s KPIs will mirror its business goals—outcomes that Honeywell can help control with its technology. Sample KPIs include CO2 metric ton reduction, guaranteed long-term financial performance of a project, warranty tracking and management, competency of staff, knowledge retention, training to a specified standard, or metrics such as guaranteed mean time to identify (MTTI) or mean time to contain (MTTC).
A Closer Look at the Honeywell ROC Model
There are three scenarios through which Honeywell provides ROC services to its customers. They are:
- Honeywell uses its own ROC to monitor and operate assets on behalf of a customer. In such cases, Honeywell assigns a program director and outcome performance manager, who are responsible for the customer’s project’s success, plus an operational team—the size of which is dictated by the customer’s footprint and number of assets.
- Honeywell supports a customer-owned ROC with technology that enables it to monitor multiple distributed assets. In this scenario, Honeywell provides outcome-based competency management and performance management to ensure the attainment of KPIs.
- Honeywell provides technology capabilities to an O&M service provider that manages the assets of multiple owners.
Key to the success of each of these scenarios is seamless competency management and collaboration between people and technology, regardless of whether Honeywell owns the ROC or supports a customer-owned ROC.
Looking Toward the Future
Honeywell sees significant promise for outcome-based services in the energy sector. Although the industry is playing catch up with digital transformation, it’s doing so faster than many traditional industries—and it’s adopting new technology at a similarly rapid rate.
Additionally, as renewable energy generation reaches grid parity, government subsidies will begin to decline globally. Given that capital expenditures (CAPEX) for greenfield projects are already low, energy companies will need expert skills and resources to help them reduce operational expenditures (OPEX) over the 25- to 30-year life of their plants.
Given the industry’s growth potential, it’s not surprising to see a wide variety of companies emerging with creative ideas on how to serve it. For its part, Honeywell will continue to invest significantly in in-house solutions and collaborate or partner to deliver innovative yet bankable solutions that will allow energy customers to achieve the business outcomes they want.
—Vineet Shah is Director Global Strategy and Partnerships, Renewable Energy for Honeywell.