Shaping a New Era in Energy - An Australian Approach to Energy Innovation and Collaboration

www.UtilitiesProject.com

Neil Cherry is a partner in IBM Global Business Services Australia who works with clients in energy utilities

and telecommunications, including Country Energy.

Ben Hamilton is Country Energy’s general manager for corporate and business strategy, responsible for

corporate planning and reporting, commercial development, sustainability and IT strategy.

An Australian Approach to Energy Innovation and Collaboration

Just as global demand for energy is

steadily increasing, so too, are the

recognized costs of power genera-

tion. A recent report about the possibility

of creating a low-emissions future by Aus-

tralia’s Treasury noted that electricity pro-

duction currently accounts for 34 percent

of the nation’s net greenhouse gas emis-

sions, and that it was the fastest-growing

contributor to greenhouse gas emissions

over the period from 1990 to 2006 [1].

This growing realization of the true

cost of energy production will be brought

into stark relief, with the likely implemen-

tation of a national emissions trading

scheme in 2010.

Australia’s energy producers are enter-

ing an era of great change, with increasing

pressure to drive efficiencies in both the

supply and demand sides of their busi-

nesses. These pressures manifest them-

selves in the operation of energy and utili-

ties organizations in three basic needs:

• Totightenthefocusondeliveringvalue,

within the paradigm of achieving more

with less, and while concentrating on

their core business;

• Toexploittheopportunitiesofanindus-

try in transformation, and to build new

capabilities; and

• Toactwithspeedintermsofdriving

leadership, setting the agenda, manag-

ingchangeandleveragingexperience

– 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 respon-

sibly and efficiently. The most obvious

evidence of this reaction is the develop-

ment of advanced metering infrastructure

(AMI) and intelligent network (IN) programs

across Australia. Yet a more fundamen-

tal 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 oppor-

tunity to think and act in dynamic new ways

as they re-engineer their operations to:

• Transformthegridfromarigid,analog

system to a responsive and automated

energy delivery system by driving oper-

ationalexcellence;

• Empowerconsumersandimprovetheir

satisfaction by providing them with near

real-time, detailed information about

their energy usage; and

• Reducegreenhousegasemissionsto

meetorexceedenvironmentalregula-

tory requirements while maintaining a

sufficient, cost-effective power supply.

a Global IssueIn Australia, Country Energy, a leading

essential services corporation owned by

the New South Wales Government, is lead-

ing 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 him-

self.

a Powerful allIanceFormed by IBM, the Global Intelligent

Utilities Network (IUN) Coalition repre-

sents a focused and collaborative effort

to address the many economic, social and

environmental pressures facing these

organizations as they shape, acceler-

ate and share in the development of the

smart grid. Counting just one representa-

tive organization from each major urban

electricity market, the coalition will col-

laborate to enable the rapid development

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CASE STUDY: COUNTRY ENERGYCHAPTER 1 ENHANCEDSTRATEGIES

WRITTEN BYneil cherry — IbM, ben Hamilton — country energy

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.

Shaping a New Era in Energy

CASE STUDY: COUNTRY ENERGYCHAPTER 1 ENHANCEDSTRATEGIES

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 informa-

tion 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 coali-

tion, 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 utili-

ties 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 gener-

ation and storage, as well as enabling con-

sumer interaction through the provision of

real-time information on energy consump-

tion, cost and greenhouse footprint.

coMMunIty collaboratIonKeen 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 imple-

mented 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, Coun-

try Energy has developed Australia’s first

comprehensiveINResearchandDemon-

stration Centre near Canberra.

This interactive centre shows what

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regional development centre, located in

the city of Bathurst.

Thecentreisdesignedtohelpmaximize

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 innova-

tions delivered to its business via skills

transfer. The outcome also allows Country

Energy to meet its commitment to support

regional areas and offers a viable alterna-

tive to global delivery models.

lookInG to tHe futureIn many ways, the energy and utilities

industry has come to symbolize the cross-

roads that many of the planet’s systems

find themselves at this moment in time:

weblInk

>>>>>>More information and additional

material can be found online at:

www.utilitiesproject.com

the power network of the not-too-dis-

tant future will look like and how it will

change the way power is delivered, man-

aged and used.

The centre includes a residential set-

ting to demonstrate the “smart home of

the future,” while giving visitors a preview

of an energy network that automati-

cally 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 MoDelIn addition to the coalition, IBM and

Country Energy developed and imple-

mented 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

legacy systems are operating in an eco-

nomic 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 sys-

temswiththeinstrumentationtoextract

real-time data from every point in the

value chain, interconnecting these points

to allow the constant, back-and-forward

flow of information, and finally, employing

the power of analytics to give these sys-

tems the gift of intelligence.

In real terms, IBM and Country Energy

are harnessing the depth of knowledge

andexpertiseoftheGlobalIUNCoalition,

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 pro-

viding them with near real-time, detailed

information about their energy usage.

And for the planet that these consum-

ers — and billions of others — rely upon,

Country Energy’s efforts will help reduce

greenhouse gas emissions while main-

taining that most basic building block of

human development: safe, dependable,

available and cost-effective power. n

reference1 Commonwealth of Australia. Common-

wealth Treasury. Australia’s Low Pollu-

tion 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.