A Hunger for Energy and Brakes on Costs

July 12, 2006 by SAP News

The question of how to deal with the worldwide hunger for energy is approached differently in different parts of the world. For example, the United States tends toward tax reductions for energy suppliers and for greater energy efficiency. The European Union (EU), however, looks more toward greater energy savings and support for renewable energy. But a consensus exists around the world in terms of the electric bill: costs are rising. Turning a light switch on, using the oven, or starting up the washing machine is becoming more and more expensive. The price for a barrel of oil has increased from $US55 in mid-June 2005 to approximately $US70 today. According to the U.S. Department of Energy, the price of electricity in the United States has increased by about 12% in the past year. Verivox, an industry information service, reports an average increase of 7% in Germany over the same period. The increased prices are coupled with increasing demand in countries like China, Brazil, and India. You certainly don’t need to be a prophet to predict that energy prices will not tumble back to more moderate prices.
The changing market means that utilities must operate in an environment of increased competition and perform a balancing act. They must reduce costs and simultaneously invest in their power grids to guarantee the availability of energy. As a result, they must thin out their processes and look for opportunities to optimize them. That doesn’t always happen without some pressure from above. For example, the German government wants to reduce the percentage of transmission costs. The responsible government agency wants to force the country’s 900 electricity and 500 gas utilities into ongoing cost reductions starting in 2008 and to pass on the energy savings to consumers as lower prices.
These forces primarily challenge utilities in Germany to work with comprehensive workflows that can avoid redundant information, duplicate entries, and opaque documentation. “A focus here is on the integration of the grid-conducting technology in the logical landscape of the company’s IT,” says Jürgen Lucht, director of the PRINS consulting unit of Business Technology Consulting (BTC) AG in Oldenburg, Germany. The grid-conducting technology has the highest requirements for security and high availability. That’s why it’s an area of high security for utilities, an area that companies used to run in house. Increasing competition, increased prices, and increased pressure on prices makes the exchange of data between the technical world and the office more and more important.
“We need solutions with several interfaces between technology and management to bring IT systems into compliance with EU regulations for free competition,” according to a report from the marketing research company, Pierre Audoin Consultants (PAC). The company analyzed IT trends in the utilities industry in the past year. But interfaces require a great deal of effort to program and are not very flexible. “Linking different systems without a great deal of effort requires an integration platform like BTC PRINS Talk,” says BTC expert Lucht. EWE AG in Oldenburg, Germany, for example, has linked geographic information systems (GIS) and energy data management systems (EDM) with the SAP for Utilities solution portfolio and customer-specific applications. Data is exchanged and business processes modeled on the basis of modern technology with Microsoft Windows Server and a service-oriented architecture.

Reducing Maintenance Effort, Reducing Costs

Mobile devices can be linked to that kind of integration environment without a great deal of effort. The devices can also contribute to process optimization. The grid operator swb Netze of the swb utility headquartered in Bremen has used the status management system (SMS) of BTC AG for about a year. The solution enables the utility’s technicians to capture data from technical assets using mobile devices. The browser-based application operates on the SAP NetWeaver Application Server (SAP NetWeaver AS) 6.40 component. SAP Mobile Infrastructure 2.5 (now called SAP NetWeaver Mobile) provides technicians with a checklist for each individual resource from SAP plant maintenance software. The checklist tells technicians which measurements to take at specific assets. The electricity, pressure, or corrosion data that technicians enter into their personal digital assistants (PDAs) travel over the Internet with the SAP xApp Mobile Asset Management (SAP xApp MAM) composite application into SAP plant maintenance software. This approach avoids duplicate entries and input errors.
Grid operators can find a great deal of potential savings in the interplay between reliable data and the necessary maintenance activities. swb Netze currently performs maintenance at predefined, fixed intervals. Over their life cycle, specific assets require 25 inspections and 6 maintenance activities. “We can now significantly reduce these numbers with a strategy oriented toward the actual status of the assets. Of course, the costs go down accordingly,” says Lars-Holger Sobek, project manager at swb Netze, about the illuminating context. Simulations for a period of 20 years have shown a savings potential of 20% to 25%, according to Holger Ostendorf, project manager at BTC.
Up to now, grid managers had to rely on their experience to evaluate the status of an asset. Now SMS uses an algorithm to evaluate all the relevant measurements from the technicians’ checklists and weighs the data. With this approach, users can determine the assets at which age plays a particularly important role. The analysis results in a status value between 0 for very good and 100 for very bad. The grid manager can use these values to determine the optimal maintenance interval for an object type. The numerous and expensive circuit breakers are a good example. They are an essential part of high-tension grids and ensure that the supply of electricity does not fail because of short circuits.

More Efficiency with Transparency

In the European Union, lawmakers are also setting new standards for reporting. According to EU electricity guidelines, utilities must separate their business areas – grid and energy generation, for example – and found legally independent units. “This unbundling does not affect only the organization and accounting. It also demands action from IT as informational unbundling,” says Karsten Leclerque, a consultant at PAC. Individual units require separate systems for handling information.
That why Reutlingen Stadtwerke enlisted BTC to implement profit center accounting with SAP software. The company now has separate profitability accounting for each organizational unit (such as grid management, planning, transportation, distribution, technical services, and sales). Activities like generation, grid, and sales were also distinguished within the branches for electricity, natural gas, and water. “Now we know who is contributing to what profit,” summarizes Michael Stäbler, company officer and director of finance at the municipal utility in Reutlingen. “That was the goal – not concrete cost savings,” he adds. Based on new information, the Reutlingen utility reduced the number of disbursements that were distributed by apportionment. Instead of prices for services settled between the areas, the company now works with a fixed price for communications technology, processing insurance claims, or ordering easements. Stäbler now expects additional improvements for benchmarking. Based on the greater transparency of its numbers, the Reutlingen municipal utility can now participate in new benchmarking projects in the industry with less effort and can better compare its individual services areas with those of other utilities.

Franziska Jandl

Franziska Jandl

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