Digital for Conventional Power Generators

Conventional power producers have experienced intense competitive pressure over the past decade—and there’s no sign that those pressures will be easing anytime soon. BCG’s Center for Digital in Power & Utilities helps implement digital changes that touch virtually all work processes, fundamentally changing them and placing companies in a vastly different competitive position.

In the US, the shale revolution has upended traditional thinking about electric generation just as asset owners are turning away from coal-fired generation. In Europe, asset owners are closing coal and nuclear stations and building gas-fired generation.

Since 2008, the combination of declining coal prices and increasing availability of photovoltaic (PV) and wind generation capacity (promoted by feed-in tariffs for renewables) has caused a sharp decrease in load hours and wholesale prices for European owners of conventional generation.

For the ten largest conventional-generation producers in Europe, annual revenue potential per gigawatt of installed conventional capacity has declined over 40% in real terms since 2005.

The Digital Path to Productivity

In response to today’s challenges, power producers have aggressively cut costs to obtain some short-term relief. But companies cannot cost-cut their way to success over the long term. Eventually new value-creation strategies are needed.

Digital transformation affects virtually all work processes:

Safety. Proximity alarms, atmospheric sensors, geo-location tracking, and emergency alert systems have created healthier, safer power and utilities workplaces characterized by fewer worker injuries, lower insurance premiums, decreased legal costs, and reduced reportable injuries. All that rolls up to lowered costs and larger margins.
Capital Efficiency in Construction. Asset owners and developers are building power and utilities facilities faster and at reduced capital cost after implementing recommendations from BCG, including digital-project management, cloud-based building-information modeling (BIM), project timeline forecasting and analysis, improved supplier coordination, and digital documentation management and transfer.
Workforce Effectiveness. A digitized workplace can mean a more effective workplace. Potential improvements include handheld digital-sensor devices, vehicle-based digital systems for fieldwork, dynamic scheduling optimization, personal communication devices, real-time access to manuals, and decision support applications with access to global experts.
Operations & Maintenance (O&M). Unplanned outages sap revenue and deprive operators of profit opportunities. Asset owners can improve O&M performance with outage planning, predictive maintenance, digital-parts tracking, drone inspections, and real-time updating of maintenance logs.
Asset Optimization. Too many asset owners still lack real-time insight into their assets and operational costs, making earnings misses more likely. Power and utilities companies that have digitized their assets and processes have recorded improvements in emissions tuning, startup-time optimization, synchronizing plant systems, and adjusting operation for maximum output or lifespan.

The Impact of BCG’s Center for Digital in Power & Utilities

A leading utility turned to BCG to develop the roadmap for the establishment of a combined-cycle gas turbine (CCGT) control center as part of the company’s ongoing expansion. We identified options for the most efficient and cost-effective approaches to the project, and in the end successfully executed the plan and roadmap.

The results were clear. With the integrated control center, the utility gained significant value and brought the plant to the next level. It secured maximized plant reliability, availability, performance, and cost efficiency.