Why GE is now a software company (and why utilities need to make the same change)
By: SGN Staff
By Jesse Berst
Noted venture capitalist Marc Andreesen wrote recently in the Wall Street Journal that "software is eating the world." Value is migrating rapidly from hardware toward software. And it is doing so in industries that were previously impervious. Thanks to a new generation of low-cost sensors, software can now get data from infrastructure such as roadways, grids and water networks. And once it has the data, it can perform analytics to amazing effect.
The Industrial Internet has hit the tipping point
General Electric has seen the change that is coming and is pivoting its entire business to respond. I got an inside look when I flew to San Francisco to moderate a panel at a glitzy event GE put on to announce its new corporate theme: the Industrial Internet.
How utilities can benefit
If a giant like General Electric is reinventing itself, you can bet that this trend will impact everyone, including electric power utilities. Companies that understand and apply the new technologies will wring out great efficiencies and gain competitive advantage. Those that don't will erode. This applies as much to utilities as it does to industrials.
As the world realizes that the Industrial Internet has finally hit the tipping point, it will circle back to you. Bosses, regulators and big customers will be hearing about this change, will be reading about amazing efficiencies, and will expect the same kinds of improvements from you.
Utilities owe it to themselves to begin making this transition. For the customer's sake, but for their own sake as well. If a rival or neighboring utility can wring 1% out of its fuel budget and reap enormous savings, you are going to be in a world of hurt if you fail to make improvements of your own.
Where to look for opportunities? GE says there are four main area:
Â· Network optimization (the power network, to be sure, but the device and communication networks as well)
Â· Facilities optimization (especially power plants)
Â· Asset optimization
Â· Fleet optimization
GE's latest offering, which debuted at the event, is called Grid IQ â€œSolutions as a Serviceâ€ (SaaS). The system links power plants and transformers to smart meters and crunches their data in cloud-based computers. GE claims that it "turns the power grid into the Industrial Internet of Electricity. The system allows appliances, smart meters and utilities to talk to each other and manage the supply of power. It can also re-route electricity during an outage and make the grid 'self-healing.'â€ (Pictured here, GE's new cloud-based Grid IQ "turns the power grid into the industrial Internet of Electricity.")
What to do next? I'd start looking to staff up with analysts and "data scientists" â€“ a designation that cropped up recently to denote people skilled at mining massive data sets. I'd be taking a hard look at next generation, low-cost sensors for field assets such as transformers. And I'd be talking to vendors and partners about the cloud. You'll never have enough people and enough servers to fully exploit the Industrial Internet except by "renting" resources from the cloud.
What do you think the Industrial Internet will mean to utilities? The Talk Back form awaits your comments.
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Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.