You Need To Move As Fast As Your Data. Here’s How We’re Doing It At AES.

I work at a global energy company, in an industry that is well over a century old. As the world is ever-changing with evolving demands for power and growing concerns about sustainability, the energy industry is also going through a major transformation. The more than 100-year-old linear model of electricity is being challenged and reimagined as the rules and demands of electrification are shifting. Digital is reinventing the generation and delivery of energy. If the cloud-based digital revolution is transforming our sector—and it is, fast—it’s coming to yours. 

That’s because whatever industry you’re in, the increase in digital technologies means that there is now more data coming from more sources with every passing moment. When analyzed well, this data will enable faster and better decision-making as well as new opportunities for innovation you may not have considered. For example, at AES, data opened our eyes to new ways of lowering the costs of power creation and differentiated customer outcomes, while also improving our impact on the planet.

Here is how digital is changing our business, from the power we provide, to the way we generate revenue, to how to our customers are using energy:

• Data drives productivity improvements across the business. The energy transition to renewables is in full force. Today, advancements in technology have made renewables price competitive with traditional carbon-based fuels. Given that renewables are data rich with the advent of AI, we can unlock new levels of efficiency, productivity, and ultimately sustainability. For example, we made our windmills more productive by using laser-based sensors to discern the strength of oncoming wind. We then use those data and AI insights to change the yaw and pitch of the windmill blades, thus generating more power which ultimately helps us support our sustainability efforts. We are also driving predictive maintenance for all critical components of our generation assets, including AI-enabled commercial bidding. Other advances involve crunching more data in the cloud in new ways to spot new efficiencies, predict price, and optimize our energy generation. Bottom line, data allows us to unlock new and more accurate choices in planning, pricing, and distributing energy.
• Data improves processes by helping us better understand needs and resources. We generate and distribute energy, which in a sense isn’t that different from manufacturing and distributing food, toys, or any number of products—we need to produce our product at scale and then sell it in amounts our customers need. In the past, we counted on big power plants and a rigid power grid for distribution. Today, the business of distributed generation is rapidly growing, and we can create “virtual producers” by finding and aggregating distributed energy resources like utility-scale wind or solar or rooftop solar panels. We can distribute energy more dynamically and with competence akin to online retail logistics or a ride-hailing service. We are also exploring digitally enabled business models to drive tailored customer outcomes.
• Data enables better decision-making for the business, customers, and the environment. In the past, consumers used energy as they needed it and didn’t pay attention to environmental factors that were putting pressure on the grid. Today, thanks to digital monitors, controls, and overall awareness of energy’s impact on our environment, consumers are making smart decisions about their energy consumption in ways they have never done before, using technology like Google Nest thermostats and Uplight’s customer engagement software. 

Transforming into a “digital utility”

Each of these shifts were made possible because cloud-based digital systems collect, analyze, and respond to data more frequently and faster than ever before, transforming us into a “digital utility” in an industry where everything used to be fixed. System maintenance—which was on a set schedule (even when it might not be needed) or reactive after a breakdown—is now more condition- or predictive-based, depending on real-time data streams of connected assets. For example, using Google Cloud and AI models, we can decide whether to bid on our generated energy supply in real time or a day ahead based on price trends, to maximize our profitability. We want to give our customers usage recommendations that are right for them and on demand. This also allows us to explore new business models, new products, and new services offerings.

We have achieved substantial benefits by transforming ourselves into a digital, data-driven company that uses AI technology. We now use data to conduct predictive system maintenance across our assets, significantly lowering the related costs. For example, we’ve been able to cut the usual $500,000 cost of replacing a failed gearbox by 30% and can now adjust windmill blades for dynamic wind conditions, an outcome that can result in revenue increases of 2-3%. And the use of data has informed our bidding strategies, contributing to an incredible increase in variable margin by up to 10%. 

Getting the most out of our technology and data

Cultural transformation is a key element in successfully employing technology and data. We started this process by building a mindset of digital first and a willingness to engage in experimentation. We now train our teams on putting that data mindset to work and on using relevant data to make better and more informed decisions. We are building multi-disciplinary teams to execute our AI roadmaps and consistently deliver greater business value. 

On top of all this, we constantly think about other ways a digitally-driven energy company can draw on data, including the use of videos from drones to inspect transmission lines and wind turbine blades, or using street imagery to plan grid optimization. This is a large part of why we chose Google Cloud—in addition to the strength of their analytics capabilities. Many parts of Alphabet, Google’s parent company, use visual data and other cues—like the household consumption patterns discerned by Nest thermostats—to find new efficiencies and businesses. By partnering with Google Cloud, we gained access to the Google technology ecosystem and the various Google analytics technologies. These factors are important and of considerable benefit to our renewable energy infrastructures. 

If our 100-year-old industry is being transformed to this degree by data, think about what this could mean for yours. Look at your fundamentals and think about what might happen if there were new ways to break down some of the oldest and most cumbersome aspects of your business, from creation and sales to the delivery of products and services. How might you work more efficiently with partners and serve your customers better and at lowered costs with higher revenues? How might you improve your processes and achieve your company’s sustainability goals? Are there pain points your customers are experiencing that analytics technology could resolve? How might you explore new digitally-enabled business models or data monetization opportunities? Get a big whiteboard, gather your digital team—including your cloud and data engineers, and a couple of domain experts—and have some fun. At the end of that process are significant rewards for your company.

Keep learning: Cultural transformation is a key element in successfully employing technology and data. Get Google’s guide on how to build a data-driven culture.

About the author

Sanjeev Addala, SVP, Chief Information & Digital Officer, AES

Sanjeev joined AES as the Chief Information Digital Officer in 2018 to accelerate its leading position in new technologies, including solar, energy storage, drones and digitalization. Sanjeev works closely with the global team to achieve the next level in AES’ transformation to drive steady corporate growth, innovation and productivity through digital vision and strategic roadmap implementations. He designed a digital vision and strategy that influences every aspect of AES’ business, from global operations to customer experience innovation to new business models to commercialization to digital energy ecosystem and digital platforms business. As part of his commitment to digitalization across the company, he currently serves on the boards of Indianapolis Power & Light and Uplight and is a member of AES’ Innovation and Technology committees. During his time as Chief Digital Officer at Caterpillar and GE, he successfully accelerated digitalization and business growth and innovation efforts and established himself as a thought leader in the digital space. Sanjeev’s digital influence is bolstered by master’s degrees in mechanical engineering and business administration from the Kellogg School of Management at Northwestern University and an executive leadership program at Duke University. Sanjeev resides in Illinois with his wife, Lakshmi and son. He enjoys golfing, reading, and spending time with his family.