Digital Transformation Process of a Utility

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Meredith Haynes
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Max-Stromeyer-Str. 21-29 78467 Konstanz Tel.

1 Roland Stader Head of Energy Automation, Telecommunications & IT Digital Transformation Process of a Utility Stadtwerke Konstanz GmbH Max-Stromeyer-Str Konstanz Tel.: +49 (0) Fax +49 (0) r.stader@stadtwerke-konstanz..de

2 Agenda Stadtwerke Konstanz Utilities in Germany Digital Transformation Process Regulatory constraints and law situation Challenges and Chances for Energy suppliers and utilities Practical Approach in Konstanz Communications and IT as a core process Grid Automation Strategies

Stadtwerke Konstanz - Introduction - 3 - Constance Birthplace of count Zeppelin Located in southern Germany / Swiss Border Lake of Constance Central Europe s third biggest lake Stadtwerke

3 Stadtwerke Konstanz - Introduction Constance Birthplace of count Zeppelin Located in southern Germany / Swiss Border Lake of Constance Central Europe s third biggest lake Stadtwerke Konstanz - Municipal utility Constance: - Roman origin - Population Two universities - Tourist area - Historical city centre - Natural reserve - EU-external frontier - No major industries 3

Stadtwerke Konstanz A typical German Multi Utility?

Thermal Spa, Ferry Boats, cruise vessels Distribution Grid (110/20kV/0,4kV)

000 Power Meters Central SCADA System (NCC) >10MW Photovoltaic Power (No

4 Stadtwerke Konstanz A typical German Multi Utility? Power, Gas and Water Supplier Energy Service, City bus traffic Thermal Spa, Ferry Boats, cruise vessels Distribution Grid (110/20kV/0,4kV) Redundant Suppliers (Germany / Switzerland) 350 Substations / Power Meters Central SCADA System (NCC) >10MW Photovoltaic Power (No Wind power) Telecommunications Carrier (FTTC/B/H) Distributed Datacenter Operator (Tier3+) Submarine fibre optic cables

5 Utilities in Germany ~ 800 utilities in Germany today Historically community based (mostly) Individual and different business orientation 98% of German distribution Grids owned by utilities Forecast: Earnings will decline (also due to regulation) Future prospects uncertain Unequal challenge with big four (e.on, RWE, Vattenfall, EnBW) Massive impact and effects expected from Digital Transformation

6 The Digital Transformation Wikipedia: Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society. digital transformation may refer to the concept of "going paperless All what can be automated, will be automated! Data is the new oil in our society! All moves towards Internet Protocol (IP)!

7 Digital Transformation Process Expected Effects for Utilities (Energy) Impact of all levels (market, technology, socio-economic, etc.) Crash of conventional business models, attacked by digital competitors Energy market is rapidly changing Massive changes, caused from the Energiewende New Technologies necessary by decentralised Energy production Regulatory and law constraints from the government Convergence of IT/OT Highly uncertain, complex environment! Some Fear of Future developments... Pressure to act!

8 Digital Transformation Process Effects for Utilities (Energy) There are a lot of chances and threats within the Digital Transformation Central Challenge is to be successful and start digital Transformation processes Digital Transformation has to take place also in the heads of the employees Professional Change Management is critical factor / grown structures dangerous Digital Transformation is a task of the Management board Is highly correlated with huge costs IT becomes a core process!

9 Regulatory constraints and law situation Regulatory constraints German Smart Metering regulations Rollout Scenarios Smart Meter Gateway Administrator BSI Protection Profiles Decentralised Generation Smart Grid approach SMGWA difficult for utilities! Extreme high focus on IT Security

10 Regulatory constraints and law situation German law situation IT-Sicherheitsgesetz (ITSiG) IT Security law ratified in July 2015, together with EnWG Security catalog Focus lies on protection of critical Infrastructures against cyber attacks Energy, Water, Telecommunications, etc. Set of Minimum protection Standards until 01/2018 required (ISO 27001) IT security manager necessary Certification and periodical audits (every two years) necessary

11 Challenges strategic process Overall Automation and Efficiency Increase All Systems become virtual and IP-capable big data, vulnerability, etc. Lots of Operational Technologies (SCADA, DMS, EMS, GIS, etc.), communicating Digitalisation of Business Processes New understanding and perception of the customer (prosumer) New way of thinking of employees arise / break up old structures Cooperations necessary New business areas can arise by Identification of USPs Overall system becomes complex. Try to lower uncertainty as well as complexity and concentrate on reliable parameters

12 Utilities to small to compete? Utilities in Germany view of the customers History teaches: not the size is critical Customers do trust utilities, Utilities are serious Utilities can combine local products Utilities are local or regional they do have a face Utilities are usually not stock market driven Utilities have long investment periods Utilities do have a lot of competitive advantages!

13 Practical approach in Konstanz Holistic view of several parameters Concentration on reliable environment parameters Integration of Telecommunications, Energy Automation and IT Use Agile methods, shorter Time to Markt (also research projects) New generation of employees necessary Acting from a position of strength continuous strategic evaluation process Usage of Real Options to be capable of acting in the future Cooperation is necessary and crucial

14 Reliable Parameters / lowering complexity IT is core process Automation / Virtualisation / new employees IP is the main Network Protocol Automation based on IP Networks (top down) Big Data will be inevitable Datacenter / Data Mining Fiber optic networks are future-proof Roll out fiber optic networks IT Security is crucial certification ISO New Business models are necessary Focus on USPs, combine strengths Digital transformation is irreversible Cooperations with partners

New Business Area Telecommunications Fibre optic backbones since 1996 Originally used for substation automation - 15 - FTTB/H rollout for whole city area as well as for county Combination of USPs:

15 New Business Area Telecommunications Fibre optic backbones since 1996 Originally used for substation automation FTTB/H rollout for whole city area as well as for county Combination of USPs: Carrier for Internet, Telephone, TV, IPTV, Datacenter and Cloud Services WLAN Operator / Idea of Smart Cities, Smart Homes and Internet of Things (IoT) Cooperation of 5 utilities in southern Germany to generate products and services Modern distributed Datacenter, virtualisation environment ISO27001 certification in 2017 Combination with public transport, Thermal spa and energy products Key success factor for Internet of the Energy : 2 Fibers/building reserved for Smart X (Metering, Home, IoT, etc.)

16 IT and Communications as the Glue for Smart X top legislation, regulations, etc. Grid View Market View Grid - HV Grid - MV Grid - LV Smart Meters & Gateways GLUE Communications, IT, Security, etc. Energy Automation SCADA Systems, etc. Applications MDM etc. Datacenter costs vs. financing down market, roles, users, etc.

Top Down / Fibre to the Substation - 17 - High Reliability Future Proof Fibre Optic

17 Top Down / Fibre to the Substation High Reliability Future Proof Fibre Optic Infrastructure Secure Networks Scalable Technology Broadband Telecomm. Micro Grid Smart Meters FttH

18 Strategy Intensivy Top-Down Strategy Combine of Substation Automation with Fibre Rollout Combine Smart Meter Rollout with Fibre Rollout Adjust and evolve Business Processes Indentification of added value services and product based on USPs Combine Energy automation, Telecomm. & IT as a business unit Try to get Experince and Know How Rise degree of Automation and build platforms Rely on sustainable parameters like Fibre Optic Networks

19 Summary Smart Metering/Smart Grids are strongly related to automation aspects (digital transformation) Complete digital transformation and automation cannot be done within a few years Certainty and reduce complexity is essential necessary to sustain Identify individual strategies, which can be easily adjusted during time Fibre optical networks are necessary to provide reliable, fast and secure communication FTTH-Projects can generate huge synergy Potentials in order to realize various efforts Think in mega-/gigabits! Control power with kilobits! Sell the rest! (wikipedia.org)

Smart Grid Network. A core component for FttH-Infrastructure in Constance. Roland Stader. Area Manager AAT & Telecommunications

Smart Grid Network. A core component for FttH-Infrastructure in Constance. Roland Stader. Area Manager AAT & Telecommunications Roland Stader Area Manager AAT & Telecommunications Smart Grid Network Stadtwerke Konstanz GmbH Max-Stromeyer-Str. 21-29 78467 Konstanz Tel.: +49 (0) 7531 803 343 Fax +49 (0) 7531 803 77 343 r.stader@stadtwerke.konstanz..de