The challenges of grid modernization for electric utilities.

Hello everyone. Welcome to this edition of Network IQ. I'm Steve Tongish, the Chief Marketing Officer at IQGeo. And today I'm really pleased to have two guests with me from the Boreas Group. And that's Robert Sarpy, who's a management partner, and Bill Boswell, who's the Chief Technology Officer. Welcome, gentlemen. Good morning, Steve. Thank you ever so much for having us today. We're definitely excited about having this discussion. Hey, good morning. Well, as everyone can see, we're actually recording this session remotely, but only a couple days. Bill and Robert and I were all together at the Distributec Trade Show in San Diego. And I think I'm right in saying that's probably the largest electric utility trade show in North America, certainly, and perhaps the world. There were over 600 exhibitors, including IQGeo. And there were hundreds of different topics discussed during the sessions that they gave in the different presentations. But there was one topic that seemed to be universal. And that topic was about grid modernization. And so today I thought we would take time to explore that a bit further with Robert and Bill. And I want to pose the first question, which I think is probably the most difficult question. And that's about the whole grid modernization challenge. And what do you think is the biggest challenge that electrical utility operators face in trying to modernize their grids? You know, Steve, Distributec was definitely exciting. And there were all sorts of, I'll say, new technologies, a lot of DERMs to, quite frankly, robotic dogs. And I think what I heard from a lot of my clients is when they walk the floor, there's just so much stuff, so much new stuff, they get overwhelmed. And, you know, this really highlights the challenge that in the past, utilities have actually driven change on the grid. But today, the customers are driving change on the grid. And quite frankly, utilities used to have a planning cycle of around 30 years. Today, change is happening way faster than that, and they don't control it. So the number one challenge for utilities is timing. How do I meet the needs of the changing grid fast enough? You know, utilities respond well to regulatory drivers. Unfortunately, there isn't really the kind of clear direction with respect to how utilities need to behave. So we all know that we have to be able to accommodate DERs or renewables on the grid. But all of the back office systems associated with that aren't really considered in those regulatory frameworks. So, yes, accommodate more PV. But nobody's saying you need to go out and buy DERMs. And then we also have to face the reality. So things are changing really quickly. But the reality is most utilities aren't prepared. They don't even know how to necessarily be prepared. From a labor perspective, they're probably right-sized. But the talent isn't necessarily in the most appropriate area of the business. So you have this perfect storm coming together of fast change and the need to change quickly. Preparedness to accommodate this new model where the utility isn't driving change. And the need for some base systems in place, which quite frankly aren't necessarily in place. The one thing that people forget, and it's a common theme that we see, is that data isn't necessarily where it should be. What was good yesterday isn't good enough today. Everybody wants the new toys. But quite frankly, investing in data and data correction hasn't been on their radar in the past. Today, that's changing. Bill is the fellow that's often tasked with figuring out how to realize these lofty grid strategies. So I'll turn to Bill and ask Bill, what's your experience with data and specifically data preventing utilities from achieving their goals? Generally, the utilities always think their data is probably better than it is. And it's a surprise to them sometimes when they figure out just how far it's got to go. And some utilities even traditionally have not tracked phasing properly, thinking that it was never going to be required. But it turns out that was really a wrong decision on their part. We see some other utilities that have gone through cleansing activities to clean their data up. But they haven't really addressed the root cause of why it was bad in the first place. And that data just deteriorates again over time, causing problems with these new advanced applications that they want to use. Wow. That doesn't sound like a very good situation, Bill. Well, I think, yeah, it is a serious situation. And given the experience that the Boreas Group has with utility operators around the world, and you've worked with many of them, what is the best strategic approach to this challenge? Where do you take that first step? You know, Steve, sometimes simple is beautiful. And I think that that mantra applies to this situation. You know, we do a lot of work in, obviously, North America, but as well as sub-Saharan Africa and Asia-Pacific region. And I give the same advice to everybody, regardless of which geography you're in and what particular nuance you have with respect to your particular regulatory or business context. The first is do an honest self-assessment. Where am I right now? Where am I truly right now? And what do I have to fix? So you aren't going to be able to implement a modern DERMS unless your data is in really good shape. Unless you have accurate three-phase connected data. Most people, quite frankly, they'll say they have good three-phase connected data. It leaves a bit to be desired. So honest self-assessment. Make a simple plan with lots of milestones and checkpoints that are business-driven. Make sure you can measure the outcome. So at each milestone, quantitatively look at the performance. And if you don't meet the exit criteria for that milestone, quite frankly, don't move to the next one. You know, we see some clients that have these GIS projects where it's a migration, yet it takes 18 months to see a simple prototype. Unacceptable. 18 months into the project, you should know exactly where you're going. Not groping for gravitas in terms of what you're trying to deliver to the customers. And so you really need to focus on a solid foundation. You know, everybody wants the eye candy downstream. But part of being honest is actually delivering that base foundation that actually works. You know, Bill and I got into the industry in the mid-90s, delivering outage management systems with one of the large vendors. Quite frankly, today, I see more customers having to resort to paper outage processes than Bill and I saw in the 90s. And it all comes down to people not being honest with themselves about where they are, what they can do, how many users they have, what kind of performance they need. So, honest self-assessment, simple plan with lots of milestones, and basically validate numerically that you're actually meeting your objectives. Bill, from a hands-on perspective, what words of wisdom do you have for us all? I think when you put those points out there for any of the utilities and their PMs, they would absolutely agree with everything you've said. But, you know, it turns out when we get called in to try to help recover a project, they really haven't been doing those simple things. And if they had, they wouldn't be in the trouble that they're in. So, if you've got especially some quantitative measurement of your baseline as well as ability to measure improvement, you'll be able to track to your project and actually track, you know, what advantage you're receiving from the work you're doing, which is more of a key today than it ever was before. Yeah, I think that's fascinating. And it also chimes with some of our own experiences at IQgeo, that sometimes customers are a bit more ambitious than they should be on those first projects. Kind of rein it in, focus in on what it is you want to achieve. And to Bill's point, what are the outcomes of that? Make sure those are clear. So, okay, you've done that assessment. You understand where you are. But every organization has limits. We have limits in manpower, in time, in technology, in finances. And if you need to place your bets on that first starting point, where do you begin? Which problem do you attack first? You know, Steve, that's a really – it's very personal to each utility. But when I look at the success of technology in a utility, and it's very rare that a regulatory requirement says, you need to go out and buy lots of technology to solve this problem. But realistically, in order to meet the velocity of change, you do have to implement lots of technology to meet the business or regulatory needs. Every plan needs to include people, process, technology, culture, and governance. Quite frankly, what we see is a lot of utilities with an engineering-centric culture. And, you know, this is my – you know, my engineering license lets me say that I'm an engineer. So I don't need to read the manual. I don't need to pay attention to people. I'll watch a little YouTube video, and I'm ready for surgery tomorrow. Right, Bill? And engineers ignore people, process, culture, and governance. They think people can figure it out for themselves. Well, it doesn't work. So any project, no matter how small, you really need to consider the people, the people aspect to it. And quite frankly, pump the people up with some success. Not drag them out for a year and a half on a pilot and only to figure out, oh, my God, this doesn't actually meet our expectations. And so what I would say is – and it's so easy to cut the softer stuff. Training. I don't have time. I don't have budget. They don't need that much training. They're smart people. They can figure it out. Wrong answer. So you need to focus more on the people aspect. Problem throughout the world in every utility I've run into, quite frankly. Hey, Bill, what do you think? I mean, so simple, Bill, yet what do you see in this area? I mean, I'm a really big fan of using smaller projects to prove concepts and to get some immediate feedback. I mean, everyone is impatient and really appreciates the instant gratification of seeing that, hey, we did this and it works. And here's some result that actually means something. I'm really hesitant to, say, jump into any large projects that take a lot of time to even get some diverse feedback. I mean, we've seen customers that start a pilot and the pilot is a year and a half long. And that's a really long time to wait on a potentially bad result. Yeah, and certainly the evolution of the technology to reply to what was common in the beginning, that's moving so quickly that if your project takes a year and a half for you to look results, the whole goalposts have moved, haven't they? Everything's changed by then. So you find yourself just continually behind the curve. So it's an interesting problem. And it's fascinating that as engineers, you're talking about people. But I think that that's so important as well. And we've seen that in the projects we run. Okay, so that's the theory. One last question. You have so much experience with operators. In fact, right before this recording, you were talking about a customer that you were working with and you were just on a call with them. So can you give me one or two examples where you've got customers who are doing this right? And give me some examples of how they've achieved some significant change, maybe incrementally, but significant change. You know, my favorite answer to this question, and this question gets asked quite often because everybody's curious, is we've had two mid-tier U.S. utilities. And it really doesn't make a difference of their geography or their size, but they were both lacking behind industry expectations. And not just, you know, their own perspective, but various industry benchmarks. They were definitely, they were embarrassingly laggards. So CEO called us in to take a look at how they can improve their rankings in the benchmarking studies because it was really, it was impacting public perception. One of them, I remember sitting down with the CEO and he said, but I like have to do all of these technologies. And I said, you don't, you don't, unfortunately, you don't have the foundation. It's, we're talking 20 years of neglect. You aren't going to implement the latest applications. And even if you could, your people, they don't have the skills to actually use them where they are right now. And he, he quite frankly decided to focus on technology. Very, very aggressive program implementing what I'll call flavor of the day and not focusing on the fundamentals. Quite frankly, I can go back five years later and I would say the situation has further deteriorated in that they ripped out some legacy systems that kind of sorted their jobs, put in new technology that they simply don't use. They don't know how to use, they don't know how to maintain it. Just a horrible situation. Got another client, very, very similar situation. And the CEO was, he was, I'll say more of a patient, a patient chap. And his, he listened and he realized, he said, you know, I can't do the fancy stuff unless I have the foundation in. And even if I, even if I could do the fancy stuff, my people just don't have the wherewithal to do this. I'm, you know, they're going from tricycles to a bicycle and I'm expecting them to roll down the road doing wheelies like, like Bill Boswell can do. And it's just not, it's just not happening overnight, you know, let alone a wheelie on a tricycle. He put in a slow plan that accelerated over time, building on incremental successes, focusing a lot on people and training and process. Three years later, when you went back and he was ready for a new plan, you, it was completely different. Even the mood going into the break room, you know, people were proud of what they accomplished. They were feeling good about themselves. Whereas you contrast it to one, they didn't like each other in the end. And this one that was more constrained, more practical, people were happy and happy people make for happy customers. Bill, what, what do you think about that? I definitely agree. In particular, like if you take data as sort of a measure or a goal for improving it, you know, put it in place, a continuous improvement process where things get better over time. It's often impossible to do it in one fell swoop. But that attitude and a holistic look about how it's going to affect the utility as a whole, to me, is the way to go. And that continuous improvement process also applied to not just data, but everything is a way of gaining everyone's acceptance and getting everyone pulling in the same direction. I mean, having people in silos just doesn't work anymore within the utility. I mean, it was probably good enough for yesterday, 10, 15 years ago, but it's not good enough today. But that's a great way, I think, to finish things off. The approach of incremental, pragmatic change to attack these really big issues, I think, is a great template. And your experience is evidence that that works. So I really want to thank you, Bill and Robert, for taking the time to speak with us today. And if anyone's interested in this topic, I invite you to take a look at the blog we recently published about our top three takeaways from Distributec 2023. You can take a look at that. And I hope you're able to join us again for another edition of Network IQ. Thank you for joining us. Bye-bye. Thank you, Steve.