What are the key market drivers and dynamics affecting the change in the power generation industry today? Does it differ from a regional perspective?
Electricity is unique – you can’t put it on a tanker and move it from continent to continent, like gas, coal, or oil. It’s up to each region to develop its own infrastructure for power generation and transmission and distribution (T&D). It’s an important variable in each region – much more so than in other industries, such as steel, or automotive or such, because regions must be self-sufficient, to a large degree.
The situation in power generation markets in recent years has been specific to each region, and the two major observations are:
Developing Asia has undergone rapid and sustained growth for a very long time. China has had 7-10 percent year-on-year growth in power consumption for many years. This has been unprecedented development, and now China has become a major segment of the worldwide power market. China’s economy is slowing down now, but it’s still growing at 4-5 percent, and will continue to drive investment in new generating capacity of all types for the next five years at least.
In developed economies, specifically Europe and North America, there’s an entirely different dynamic going on, made up of flat electric demand since the financial crisis, as well as the adoption of energy efficient technologies and renewable generation. These are greatly reducing the need for new thermal generating capacity, and the trend is that the new capacity that is being added is in the form of renewables.
Based on these trends, what do you expect will be the key challenges facing power generation plant managers?
The convergence of regional and global power generation trends, and the changing dynamics of power generation itself from central block to geographically distributed systems, is creating major new challenges for power sector managers. This is particularly visible in European markets, which have gone the furthest in terms of substituting intermittent renewables for baseload capacity.
The challenge for the existing installed base of generation is it has to be able to interact with this new renewable generation in order to manage the overall grid. Dispatchable generating capacity, which consists of coal and natural gas thermal plants, has to be able to respond to the intermittency of the renewable generation, as well as the behavior of the load itself – which means they have to become more flexible and more responsive. Much more of existing plant will have to cycle at least daily, so they have to respond faster. Larger portions of what are now base load plants will not be base loaded in the future.
Automation needs to support changing markets: How can automation best support the revolution that is ongoing in the global power business, in the context of today’s fast, challenging and competitive market environment?
The challenge of automation is to address these major changes in our power generation markets: moving from base loaded to cycling operation based on renewable power availability. A new plant is probably designed to deal with that kind of operation, but a 15, 20, or 30-year old coal plant was not designed with that mode of operation in mind.
Distributed generation makes managing grid operations much more complex, because there are many more participants, although many of them are small. It’s the difference between a few dozen large power generating units within a control area, and a few dozen large units plus hundreds or thousands of very small units, such as the wind or solar sites that are now also participating. Grid management becomes greater than just matching generation to consumption. It’s further complicated by the implications to T&D infrastructure.
For example, most solar generation is attached to the distribution system directly, sometimes at the extreme ends of the grid. Distribution system power flows can be impacted severely by changes in solar generating capacity. The other kinds of challenges that I hear utilities talking about are the common industry challenges like a greying work force, but in utilities it’s a bit more distinct in that they had a very solid skills development model for their plant personnel, a well-defined career path that enabled personnel to develop great expertise at a particular site. This doesn’t happen as much anymore, particularly in the fossil-fuel world. Today, career paths are much more open and undefined.
In terms of automation, the trend is towards doing more with less, and reducing Capex in favor of Opex. End users want to add more capability to their systems, but to do it incrementally. It is difficult for them, especially in an older facility, to justify a major upgrade investment or tolerate the risk of a major rip-and-replace upgrade to a plant or an automation system when they don’t know what the expected life of the asset is going to be.
In North America, given the kind of incremental improvements end users are looking for, the move from Symphony to Symphony Plus, for example, is much less disruptive than some of the other options available, and this is welcomed by the installed base of Symphony, Harmony and Melody systems.
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