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2 April 2018 year Mikhail Lifshitz: “Digitalization brings transparency to the industry”
Interview for Energy and Industry of Russia magazine

Digital technology quickly went from being a passing fashion to an effective and necessary tool used in a number of industries. The energy sector is no exception.

According to Mikhail Lifshitz, Chairman of the Board of Directors of ROTEC JSC, one of the main bonuses of the digital transformation is the ability to coordinate the development of energy with the needs of industry. In the near future, energy companies will be able to plan their activities for the long term. “Today, when many strategies are written on the basis of subjective opinions about how the industry will develop, we sometimes find ourselves in an ambiguous situation; we build the alleged necessary capacities first, and then we learn that they are idle. The use of digital technologies will make it possible to avoid such precedents and establish strategic planning for 5-10 years,” emphasized the speaker in an interview with EIR while discussing current trends and the energy of the future.

A window of opportunity on the horizon

Mikhail, the digital transformation of the energy sector has been actively discussed recently. The question is, is the industry ready for this?

Digitalization is already here, and it is a tool that we must use wisely. It provides a unique transparency; it disciplines staff and breaks down the outdated and sometimes strange mechanisms for procuring components and services for equipment maintenance and repair. As a result, it saves significant financial resources and minimizes risks.

Will digitization take place in several stages?

Of course. At the first stage of implementing digital technologies, we start by using certain computational methods to help the system manager increase its reliability and improve performance. At the second stage, we replace the person with computer technologies for certain aspects, and at the third stage, digital technologies begin to change the look of the system which they were designed to control. Probably, the third stage can be called the real transformation.

Is this stage still far off?

Not really. With all the conservatism of the energy sector, most energy facilities are already past the first stage; digital technologies are being implemented in dispatching, and almost all UES power plants in Russia are equipped with automated process control systems. At present, we are in the second stage. It is just a matter of time before we move into the third stage; a lot depends on the owners of generating and network companies, which should stimulate this process.

Industry "veterans" will be very highly valued.

According to experts, the active development of digitalization technologies will affect the labor market, as many people will have to improve their skills or even change their specialization. Do you think power engineers will be at risk?

Well, the energy industry as a whole will change, and so there will also be some changes in the profession. However, we should not be afraid of this - a similar process has already affected other industries. According to statistics, the number of translators and interpreters has significantly reduced over the last ten years. This is due to the fact that people began to learn foreign languages more, and it is not usual for English to be a mandatory requirement when applying for a job. At the same time, the job requirements in this sphere have changed - translators of the highest category are in demand, including linguistics specialists and simultaneous interpreters.

The same thing will happen with the energy industry; the requirements for specialists will be higher, the specializations will be slightly different, but their number will not decrease - it may even increase. This is determined by a trend towards decentralization; where previously countries sought to centralize generating capacity - one such example is Denmark - today, we are witnessing the reverse process. At the same time, the total number of people needed to service small power facilities is hardly likely to decrease. Perhaps they will have to change their specialization and adapt to new requirements, but they will not be left without a job.

Nevertheless, modern forecasting systems are already able to replace people...

Yes, they are capable of doing so, but the final decision is always left to the personnel. Figuratively speaking, forecasting systems in the energy sector turn blue-collar workers into white-collar ones, helping to optimize work processes, improve their quality, and replace physical examination with model analysis. It is clear that we must prepare for the coming changes, but believe me: energy "veterans", who know the hardware and know how to work with forecasting and diagnostic systems, will be very much valued. This should be taken into account in educational programs, and there should be an increased focus on mathematical and IT components.

Digitalization – the key to efficiency

What opportunities will the digital transformation of the industry offer power engineers?

I repeat, the main advantage of digitalization is the transparency of the industry. Technological risks will be reduced (by this I mean protection against accidents and fines); operational efficiency will increase due to reducing inventory stocks and preventing inefficient repairs and unjustified downtime. In addition, it will be possible to plan costs and organize a high level of control with regard to operating personnel, contractors and component suppliers. On top of that, automated diagnostic and forecasting systems are an objective arbiter when conflicts arise with insurance companies and equipment manufacturers. For distributed generation, it will be possible to automatically control the technical condition of a large spread out park of generating equipment. In general, I believe that digitalization is the key to improving the controllability of large technological complexes, and moreover, the costs spent on servicing and managing them will decrease.

New effective methods of remote control and monitoring can increase the attractiveness of small generation facilities for energy companies. Is it possible in this context to talk about the impact of digitalization on the structure of the energy sector? When should we expect the first changes and how can we prepare for them?

The digitalization of networks and the creation of industrial energy storage systems will increase the flexibility of the power system, which will bring us closer to automatic distributed dispatching. This will reduce the input threshold for power output for small generators (less than 25 MW), increase the utilization rate of installed power, which means that the payback of own generation will also lead to the appearance of virtual local power grids, and reduce the volume of power flows. If we look at the analytics of the Energy Center of the Skolkovo Business School, which is based on data from Rosstat, SO CDD and McKinsey & Company, regarding the dynamics of own generation capacity for 2025-2035, in the most conservative outcome, Russia will have 12 GW of small and medium-scale distributed generation by 2035. If the most optimistic scenario is achieved, then up to 32 GW of small, medium and large-scale distributed generation will emerge in our country.

Can digitalization change the way energy companies manage the generating assets?

Digitalization will change not the approach used by energy companies, but the energy companies themselves. I will give an example from another area: once upon a time, all factories where machines were made were huge, with tens of thousands of people working under one roof. However, over time, these giants broke up into a number of smaller facilities: some are involved in casting, others in mechanical processing, and others produce electronic components. The same thing is likely to happen in the energy industry.

I once met with the Minister of Energy of an African country, and he said during our conversation that they were not planning serious development of the networks. On noticing my surprise, he asked me, “Have you seen the birds here in Africa? Why do you think they fly like that - from branch to branch, from branch to branch?” I wagered a guess: “Maybe they like it this way?” But he told me that they cannot physically fly more than five meters. “Therefore, when you cut down a 200-meter wide glade, you cut through an ecosystem, causing irreparable harm to it,” my foreign colleague explained, looking at me reproachfully. Indeed, in the pursuit of building huge facilities, we do not think about how this infrastructure leaves a terrible imprint on the environment.

Does this mean that the future belongs to distributed energy?

This is the trend of our time - the emergence of small power systems, which, among other things, become more efficient than traditional generation. The advantage of a large system over a small one in terms of lower cost per kilowatt is gradually being erased. This fact is well illustrated by the dynamics of the cost of solar modules and batteries. In addition, the investment period for a small system is hundreds of times shorter than that of traditional generation; if the payback period of a large power plant is measured in dozens of years, then a small power plant can be paid off in a few years. At the same time, digitalization allows small-scale generation to come together in a large integrated system, which in the long term can pose a threat to the existence of the energy sector as we know it.

It is also important to note that small power systems are highly flexible in terms of adaptability for different types of fuel: solar, wind, diesel, gas, and geothermal sources can be used here. Thus, the real transformation of the energy sector will begin when small systems learn to quickly unite into large ones.

Interestingly, “big” generators do not perceive distributed generation as a powerful force, though its volume in the industrial segment today is comparable to the volume of inputs under the PDС program. The placement of small generating facilities is dictated by demand and market conditions, so these energy sources are unlikely to stand idle. Obviously, these distributed sources not only need to be interconnected, but also integrated into a single network. Therefore, anyone who works in a large energy or power engineering industry should closely monitor this process.

Win-win for consumers

Speaking at the Russian Energy Week forum, you noted that digitalization processes should be approached with caution, since there are some risks involved. What are the main risks to take note of and what should be done to eliminate them?

I would highlight threats such as third-party interference with the operation of monitoring and forecasting systems, communication lines and databases, substitution of transmitted data, and failure to issue warnings in the event of a threatening situation. With widespread digitalization, distributed cyber attacks on the power grid are not excluded. They can provoke a simultaneous mass shutdown of medium-sized generating equipment, which in turn will lead to a rolling blackout for loads and consumers. To protect against these risks, a number of measures can and should be taken, such as organizing unidirectional communication channels. On the other hand, the paradox is that in the infrastructure of industrial internet networks, an open code that is accessible for public audit must be used.

Who will benefit from the fact that energy is becoming "smarter"? Will consumers notice this transformation?

Of course, because they will pay less for the energy they consume. With the disappearance of giant energy infrastructure, the consumer will no longer pay for the transmission and distribution of energy, as well as for the losses associated with these processes. Even now, many cottagers already use a gas boiler for heating, independently setting a comfortable temperature. If we put a generator on the fuel cells instead of a boiler, we can generate electricity and heat right in the house. And at the next stage, thanks to digitalization, the consumer will be able to sell the surplus electricity back to the grid and earn money from it. This kind of system is already in place in Europe.

One of your major projects is the equipment condition forecasting system known as PRANA. What are the specific features of this system and which companies use it?

The PRANA solution was based on seven years of ROTEC's experience working in the sphere of servicing power equipment. So far, agreements on connecting 14 units to the system have been concluded. The total capacity exceeds 3.2 GW (2% of the total thermal generation capacity in Russia). The figures speak for themselves; over 2500 signals from each unit are analyzed each second, the depth of the forecast is three months, and the forecast accuracy is close to 100%.

The possibilities of PRANA are extensive: it allows us to monitor the technical condition, calculate the residual life, and plan repairs in the optimum time. It also reduces equipment repair costs by optimizing logistics and ordering spare parts in a timely manner. The system also makes it possible to assess the quality of service and work level of operational personnel, and analysis of archived data helps to identify the causes of the incident during the investigation, analyze the correctness of personnel actions and equipment behavior.

The key feature of the system is that we did not conceive it as an IT project. When starting the business of servicing large energy gas turbines, we were faced with the need to choose a remote monitoring system and realized that all the solutions available on the market at the time were outdated. Our specialists took the initiative to create something new, our own solution.

The team working on the creation of the PRANA system was joined be experts in the field of energy and mathematics. Their challenge was to propose a new system that would take into account current trends and requirements for complex technology to the maximum possible extent. Considering that ROTEC was a major independent player in the gas turbine service market, emphasis was placed on the companý's wealth of experience in this area. We created and operated the system in tandem, constantly interacting with the customer, so our PRANA solution turned out to be more mature.

Is there any interest among generating companies in applying the PRANA forecasting system at their facilities?

At our order, a comprehensive analysis of the market for remote monitoring and diagnostics of industrial equipment was carried out. The results of the study show that 40% of respondents in energy companies are interested in implementing forecasting systems, because they understand that these systems have a future.

What future do you imagine when planning the strategic development of ROTEC?

We pay great attention to innovations in both traditional and alternative energy. One of the new products is a flexible heterostructural solar module. It has an efficiency of more than 22% and is able to capture reflected sunlight. It can therefore be installed on almost any surface, such as an aircraft for example, where it will work effectively. We use this technology in our project to achieve non-stop flight around the earth running on solar energy. In addition, we are working on new solutions in the field of energy generation and systems for storing it. For example, in our production facility in Khimki, near Moscow, we produce supercapacitors - the most powerful energy storage devices. Despite the fact that their capacity is lower than that of batteries, they are able to instantly deliver a high-power current, operate at temperatures as low as –65°C without loss of capacity, and they have a huge operating life - more than 1 million charge-discharge cycles. As part of various solutions, our storage devices are already being used on railways, in robotics, and in urban and commercial transport.

Source: Energy and Industry of Russia
Interviewed by Elena Voskanyan
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