The need to adopt new technologies for power utilities cannot be stressed enough, especially at present, when the world is grappling with a pandemic. With the Covid-19 crisis pushing millions of people to work from home, cloud computing solutions have become essential for business continuity. Early adopters of the cloud are already reaping its benefits in these turbulent times, while utilities that have so far been reluctant in its adoption are making plans to deploy cloud solutions. The ability to allow businesses/utilities to work remotely without compromising efficiency is just one of the many benefits of cloud computing, which essentially entails the delivery of scalable computing resources from applications to data centres as a service over the internet or intranet on a flexible pay-as-you-use model. This means utilities can get infinite resources that are accessible from anywhere. In the near term, utilities are expected to fully commit to cloud solutions led by a range of drivers and potential benefits in terms of cost savings and efficiency improvement.
Key drivers
As power utilities are moving towards smart grid technologies, there is a need for an integrated approach for managing the generation, transmission and distribution segments. Utilities are in a transformative phase owing to factors such as the growing share of renewables, stringent environmental regulations, move towards e-mobility and energy storage, and changing consumer preferences. For a smooth transition to a new-age energy sector, utilities need to invest in the latest technologies as well as optimise their existing ones. Cloud solutions have shown promising results in aiding utilities in this transformation by managing costs, improving collaboration, providing better customer experience, increasing IT and asset efficiency, and maintaining a reliable grid.
Further, emerging technologies such as blockchain, internet of things and growing digitalisation are also driving energy utilities towards cloud solutions. Industry estimates suggest that the global smart grid-as-a-service market, focusing on data services, cloud-based software and fully managed services, is expected to more than quadruple from $1.3 billion in 2016 to $6 billion in 2025. In addition, the need to maintain and upgrade the ageing power infrastructure is another driver for the adoption of cloud solutions as utilities require advanced asset analytics for delivering reliable performance. Also, there is a significant increase in both structured and unstructured big data, owing to the use of analytics, supervisory control and data acquisition and advanced metering infrastructure. Cloud solutions can help in big data management, storage and security, besides functioning as a platform to integrate all the existing and upcoming IT applications of a utility.
Benefits
The benefits of cloud solutions for energy utilities are aplenty. Energy utilities, especially in the distribution segment, are often under pressure to reduce costs, while investing and modernising their power supply infrastructure. Cloud computing has the potential to help utilities increase their operational efficiency and simplify processes, while achieving higher revenue growth and reducing operational costs.
As the power sector adopts new digital models, the need for IT infrastructure is increasing day by day. Power utilities need to make considerable investments for upgrading the legacy IT infrastructure to accommodate new digital competencies. A shift to cloud services can help them cut down hardware and software procurement costs as the technology provides an automated, dynamic and cost-effective alternative for the acquisition and delivery of IT services. Cloud can help utilities reduce their investment in on-premises IT infrastructure by providing all the tools and systems virtually in a flexible and scalable way. As per global research and advisory firm Gartner, energy providers invest up to 56 per cent of their total IT budget in infrastructure and hosting, and shifting to the cloud can help reduce these costs significantly. Also, cloud computing comes with the advantages of scalability and collaboration, so that it can be used to deploy new services with greater speed and without additional capex. Utilities across the world are realising the benefits of cloud solutions such as significantly shorter application development cycles and faster IT services and infrastructure modernisation.
Cloud solutions provide for pay-as-you-use pricing and as-per-need hardware or software so that utilities can access technology when they need it and only pay for what they use. These solutions can be customised as per utilities’ requirements so that they can add on to their capabilities and scale up any time.
Energy utilities can also deploy cloud solutions to standardise and optimise their day-to-day operations, store data securely and be a part of a secure super computing environment for advanced analytics. The process of analytics through legacy systems is quite time intensive as against the use of cloud-based platforms, where the time lag is less and large chunks of data can be processed quickly. Faster data processing can enable utilities to take informed decisions swiftly in order to increase operational efficiencies at power plants and improve distribution networks.
Cloud computing comes handy in field services too. By using cloud solutions, field staff can detect and fix issues in real time in case of breakdown or outage. These solutions help field service providers handle emergency situations better by improving the reaction time and offering quick resolution.
India’s policy and regulatory framework
In India, the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) are in the process of framing the policy on cloud computing. TRAI issued a consultation paper on cloud computing in June 2016 and later issued its recommendations on cloud services in August 2017. TRAI’s recommendations cover the legal and regulatory framework for cloud services, overarching and comprehensive legal framework for data protection, interoperability and portability, legal framework for cloud service providers (CSPs) operating in multiple jurisdictions, cost-benefit analysis, incentives for conceptualisation, and implementation of cloud-based services in India, especially in government networks. Under the legal and regulatory framework for cloud services, TRAI has recommended to adopt a “light touch regulatory approach to regulate CSPs through their industry bodies”. Accordingly, TRAI recommended that DoT may prescribe a framework for the registration of CSPs’ industry bodies, which are not for profit. In October 2019, TRAI sought comments on a consultation paper that aims to provide a framework for the registration of an industry body by CSPs. The paper covers issues such as eligibility criteria for registration, obligations, membership policy and other issues related to the governance structure of a CSP’s industry body.
Challenges
The biggest barriers to the adoption of cloud technology are concerns about security and privacy. The issues relating to storing and securing data and monitoring the use of the cloud by service providers is an area of concern for most utilities. However, these challenges can be overcome by means of storing the information internally by the utility but allowing it to be used on the cloud. The security mechanisms between the utility and the cloud need to be robust and a hybrid cloud can support such a deployment.
Lack of standards is another issue. Clouds have documented interfaces; however, no standards are associated with cloud solutions and, therefore, it is unlikely that most clouds will be interoperable. The interfaces and application programming interfaces (APIs) of cloud services are not standardised and different providers use different APIs for what are otherwise comparable to cloud services.
Last but not the least, user requirements are continuously evolving such as the need for interfaces, networking and storage. This means that a cloud, especially a public one, does not remain static and is also continuously evolving.
Technology providers, governments and regulators are cognisant of these issues and steps are being taken to address utility concerns. Going forward, more utilities are expected to utilise cloud-based solutions for their day-to-day operations.