SAP.info: Right now,the energy industry has its hands full adjusting to legal regulations and the changing market. What do you see as the most important challenges?
Dr. Ritter: It is indeed a massive transition. On the one hand, people are becoming more and more aware of the fact that fossil fuels are on the decline and that high greenhouse gas emissions are contributing to radical climate change. Meanwhile, policy makers are pushing through measures to liberalize the energy market. By separating energy production, logistics, and sales, they want to increase competition among energy providers to the benefit of the consumer.
SAP.info: So what does this mean for energy providers?
Dr. Ritter: The complexity of their business processes is increasing significantly, and with it the importance of information technology. To reduce greenhouse gas emissions, energy providers have to use IT to coordinate energy production, logistics, and use in a more intelligent way. Meanwhile, the cap on grid usage fees is forcing grid operators to optimize and automate their processes, and sales companies are having to introduce retention programs and other measures to combat higher customer fluctuation.
SAP.info: You’ve touched on the separation of energy production, logistics, and sales – areas of value creation that energy providers used to combine under one roof, but that now have to be divided among those in the market. Is it even possible to establish efficient, end-to-end processes under these circumstances?
Dr. Ritter: From an organizational point of view, these objectives do seem contradictory: While Germany’s Energy Industry Act (Energiewirtschaftsgesetz) is intended to break up systems of integrated energy provision, close links between the various levels of value creation are precisely what’s needed to reduce greenhouse gases. Implementing IT integration from production to consumption is the only way to save energy – which is still currently based on fossil fuels – by using it more efficiently. Decentralizing the operation of cogeneration plants and focusing more energy use on volatile renewable sources are two examples of ways to make this happen.
SAP.info: That seems reminiscent of the requirements placed on supply chain management in the automotive industry…
Dr. Ritter: Right; both situations are about dovetailing levels of value creation as closely as possible. As I said, we’re talking about energy process management (EPM) that extends all the way from energy production to consumption. Along with the energy provider EWE and other partners, BTC is currently developing corresponding integration scenarios in Cuxhaven, Germany, as part of the eTelligence project – a joint undertaking that the German Federal Ministry of Economics and Technology is supporting. We’re compiling the results of this effort in our EPM model, which matches integrated BTC solutions for the different levels of value creation to the corresponding business processes.
SAP.info: What part is the installation of consumer smart meters playing in this context?
Dr. Ritter: The law distinguishes between the market roles of grid operator, meter operation service company, supplier, and consumer. The actual goal of smart metering is to achieve transparency in the consumer’s energy use and CO2 emissions, as well as close coordination of production and consumption to promote energy efficiency. How much electricity or gas is currently being used? What greenhouse gas emissions does the energy mix of the chosen energy retailer produce? Customers should also be able to tell, based on real-time analysis, which of their appliances make the biggest differences in their consumption. The actual usage statistics need to be available to the various participants in the market; for smart-grid operators, for example, this data can help optimize load distribution and maintain a high level of energy service.
SAP.info: That entails coupling the provider’s supply with consumer demand in real time. How can this be achieved?
Dr. Ritter: The first step requires suppliers to offer at least one variable rate by the end of 2010. This can make it cheaper to start your washing machine, for example, in the evening rather than during the day. However, time-variable rates can only coordinate supply and demand in a very basic way. To promote energy efficiency and the use of renewable sources, it makes much more sense to closely integrate suppliers’ load-variable rates and automated demand-side management by the consumer.
SAP.info: Sounds like something that would probably involve processing and analyzing huge amounts of data. Are today’s IT systems up to the task?
Dr. Ritter: The masses of data are definitely a problem; IT systems have to be designed to deal with them. SAP’s strategy is clear: It wants to focus primarily on data relevant to business. Traditionally, energy consumption has been measured once per year, but many energy providers are now looking to do so every 15 minutes. This means 96 data records per day and around 35,000 more per customer every year. All of it requires preprocessing, which can further multiply the data volume. In defining its Meter Data Unification and Synchronization (MDUS) specification, SAP has come up with a standard interface that producers of meter data management (MDM) systems can use to connect their infrastructures to SAP’s solutions for the utilities industry (SAP IS-U, SAP CRM for Utilities, and so on).
SAP.info: What does this new interface offer?
Dr. Ritter: BTC, for example, uses MDUS to integrate a wide variety of products with energy management solutions from providers like Landis+Gyr, as well as our own provider-neutral MDM system. With its MDUS interface, SAP has compartmentalized the world of metering such that only the data relevant for billing purposes, for instance, needs to be imported into the SAP IS-U solution. Rate information necessary for data compression is passed on to upstream systems through MDUS. The invoice-relevant data then flows back into the SAP system in compressed form.
SAP.info: How is IT contributing to the use of renewable energies and increases in energy efficiency? What do business software systems like SAP’s have to be prepared for?
Dr. Ritter: The eTelligence project I mentioned is demonstrating how to set up a regional energy marketplace that intelligently coordinates “virtual” power plants, different energy producers, and manageable consumers. The fishing industry plays a big role in Cuxhaven, for example, which is why the city has a significant number of refrigerated warehouses. During periods of energy surplus, the marketplace keeps these warehouses a few degrees colder so they don’t need more energy when supplies are low – such as when a drop in wind energy production is expected.
SAP.info: Beyond smart metering, what do users expect from their ERP systems?
Dr. Ritter: People use SAP in every phase of the EPM model. Meanwhile, energy suppliers’ rates and products are becoming more complex: Just like in the telecommunications industry, there are always going to be new products and services. Business software systems like SAP’s have to support the resulting variety and offer highly integrated service life-cycle management to reduce time-to-market. In the future, more products will go beyond the actual provision of energy. Contracts with today’s mobile service providers often include new cell phones; utility companies might soon throw in an energy-efficient refrigerator or modern heating system when customers sign up. The corresponding business processes have to be automated as much as possible and capable of mass implementation.
SAP.info: BTC has contributed to alpha ventus, a wind farm project that began recently on the North Sea, by developing an entire IT infrastructure with new administration and maintenance concepts. What strategy does the company follow as an IT specialist and SAP partner in approaching such endeavors?
Dr. Ritter: BARD Offshore 1 is another wind farm project we’re involved in about 55 miles north-northwest of Borkum, Germany. Further progress is being made in establishing a new value chain for intelligent, highly efficient energy provision. BTC’s everyday business involves integrating control technology, asset management, and SAP systems for energy providers. We offer our customers sustainable IT solutions that provide a solid foundation for adjusting to changing market conditions.
SAP.info: In some instances, BTC gets right down into the core of electrical technology – with its wind farm regulator, for example, which ensures that transmission system operators accept wind energy…
Dr. Ritter: The law requires wind-energy installations with a rating of more than 100 kilowatts to support remote control by the respective grid operators. When the stability of the electrical grid is at risk, the operators have to shut down or reduce the output of these installations. Those who don’t comply will lose their guaranteed feed-in tariff, and with it the business foundation of their wind farm. BTC developed its wind farm regulator – patent pending – to help meet the technical requirements of feeding electricity into the grid. From a technical perspective, it demonstrates just how innovative the role of IT can be in direct connection with electrical technology. Conventional regulators, which use proprietary, physical means to balance out the flow of electricity, really can’t compare.
SAP.info: That said, this use of IT does come with its own significant energy requirements. What part are energy-saving concepts playing in this regard?
Dr. Ritter: Although it’s clear that renewable, efficient energy isn’t possible without IT, you do have to remember that the world’s information and communication technology is already producing as much CO2 as its air traffic. BTC has just reduced its own carbon footprint by implementing a number of green IT measures: For example, our data centers recently began using green electricity, and all of our customers can obtain the same certified energy from Naturwatt GmbH at no extra cost.