Harnessing ICT for Sustainable Tomorrow

Being a country vast in size, India faces a lot of challenges. And the foremost challenge is to ensure that the country’s economy continues to grow. However, the economic growth largely depends on energy supply. And when the country faces energy deficit, it affects its GDP. In this context, ICT is truly an enabler for the energy sector, including power and utilities and oil and gas in India. If appropriate and pragmatic ICT investments are made, most of the problems in this sector can be contained. In this regard, Dataquest takes a note into the current condition of both power and utilities and oil and gas and how ICT can solve most of the problems.

Power and Utilities

Power and utilities companies globally face the triple challenge of improving environmental performance, keeping consumers’ costs down, and maintaining system reliability. These challenges more or less exist in the similar form in India. ICT in the power distribution sector is perceived as an enabler in delivering electricity from suppliers to end-consumers and enables energy saving, cost-reduction, and increased reliability and transparency. ICT can help these companies to judiciously utilize their resources and improve productivity. However, it requires them to invest in solutions that can really work for them. At the same time, the sector offers business opportunity to the IT players which have solutions designed mainly for the power and energy sector.

There are several challenges in the existing power distribution system, but there are many IT-enabled solutions which can tackle these problems. These solutions enable these companies to monitor and control every kWh of power flowing through the system. Such a distribution system seamlessly interfaces with consumer equipment to signal pricing and grid stability conditions.

Challenges are Opportunities

According to a study, over 400 mn people in India lack basic access to electricity, requiring additional power generating infrastructure. Peak demand shortage and average energy shortage runs in double digit. Total aggregate technical and commercial (AT&C) loss stands up to 27.15%. Depleting energy resources, enhancing access to energy, and ensuring energy-security are the major challenges facing the Indian power sector. Imagine, if this loss is prevented, it can light millions of homes in India. The ICT solution providers for the energy sector have a great chance to solve these problems and make money. ICT can lead to improvements of the efficiency, reliability, and flexibility of all the sub-sectors viz. generation, transmission, distribution, including the activities of power exchanges.

The generation and transmission sub-sectors have seen significant penetration of ICT and it is progressing further depending on the need. However, in distribution sub-sector, which is presently the weakest link in the power supply chain, ICT interventions are taking place at a very slow pace. At the same time cost-effective ICT interventions in distribution sub-sector can go a long way in improving the operational and financial performance of the entire power sector.

Smart Grid: A Nasscom-Teri study suggests that one possible solution to the existing challenges in the power sector is to move from a static grid network to a flexible smart power grid which requires bi-directional information flow which can be realized by implementing ICT. The ICT solutions enable one to monitor and control every kWh of power flowing through the system. Such a distribution system seamlessly interfaces with consumer equipment to signal pricing and grid stability conditions.

Smart Metering: Opportunities for ICT interventions in power distribution sub-sector lies in advanced metering infrastructure. It is believed that smart metering can save a lot of money and wastage of power. Smart metering enables power distribution companies to collect real-time status of power consumed by households and businesses. It prevents people from tampering with their meters for stealing power. This is a huge opportunity for the ICT players. However, the government needs to take effective regulatory steps to make smart metering real in the country. North Delhi Power (NDPL) recently renamed as Tata Power Delhi Distribution and BSES have initiated deployment of smart meters which substantially reduced revenue loss incurred through huge AT&C losses. An integrated deployment of ICT interventions like advanced metering infrastructure, distribution automation, distributed energy resources, yield benefits more than when deploying them in piece meal.

Government’s Role: Policy makers and regulators need to provide fiscal incentives in the form of tax and duty breaks to the industry for mass scale deployment of ICT solutions to bring efficiency in the power sector. Plus, they need to mandate studies and preparation of feasibility reports by utilities along with ICT companies on need based ICT applications in different parts of the network bringing out the likely benefits and costs. In addition, it is important to expedite the establishment of Regulatory Information Management System at central and state levels.

At the same time, the ICT industry needs to develop cost-effective ICT systems suited to the divergent needs of different utilities. ICT players also have to spread awareness among the end-users about the benefits of ICT interventions and energy conservation.

The Oil and Gas Industry

ICT is crucial to the ongoing transformation of the oil and gas industry. Technological development has delivered countless opportunities, offering up innovative ways to modernize processes and improve operations. The oil and gas companies from the government and private sector are facing challenges to reduce cost and improve supplies. They need instant updates about their pipelines, supplies, trends, and demands to ensure business continuity and customer satisfaction.

This sector plays a huge role in India’s economy since it provides fuel to most of the industries especially manufacturing and agriculture. Because of the vastness of the country, supply is the challenge for most of the oil and gas companies. In order to address all kinds of challenges at their end, they have to deploy the state-of-the-art solutions. Thus, the sector is emerging as one of the biggest consumers of IT services and IT solutions in India.

The sector has been a growth area for IT product companies such as IBM, HP, SAP, and Oracle, etc. At the same time, it offers great opportunities to IT services companies such as TCS, Wipro, Infosys, Mindtree, and others. It is believed to be one of the top buyers of IT solution after the BFSI and government sector. The ecosystem is vast and has multiple players which need solutions to address sector-specific problems.

The sector is also in line with global IT trends such as big data, cloud, virtualization, SDN, SDX, and IoT. If Ovum is to be believed, big data is being embraced as one such technology, allowing organizations to gain insights from the vast pools of information collected, while predictive analytics uses data to pre-empt problems before they even occur. It further underlines in its report that significant strides have also been made in communications technology. And the increased capability of mobile devices, tailored applications, and cloud computing has facilitated remote access to systems and operational control of distant oil fields.

However, all the above mentioned trends indicate how the companies mainly in oil exploration, refining, and distribution space face immense stress to streamline their supplies. They have to put extra effort on supply chain management. Besides the best-of-breed solutions from SAP, Oracle or Microsoft, they have to manage data sets generating due to massive scale and analyze them.

Meanwhile, the oil and gas companies continue to make investments in optimizing their existing resources. This is another area of growth for the ICT companies in this sector. They can help these companies to optimize their solutions in some areas, especially when it comes to optimizing their hardware resources. In most of the organizations, hardware is underutilized.

Contained IT Spending

A recent survey of CIOs of 20 non-OPEC oil and gas companies found that these companies had cut IT spending by less than 10%, a lower than expected rate, and that cut will be more selective rather than across the board.

It was a global survey but is believed to be effective for Indian oil and sector as well. The survey further outlines that 85% of the respondents will either maintain, or slightly increase or reduce by less than 5% of their spending on IT. While 60% of the respondents anticipate that their 2015 IT budgets will decline, but three-quarters of those will cut budgets by spending less than 5%. 15% of respondents expect to reduce their IT budgets between 5-10%; none of the CIOs surveyed said they expected to cut spending by more than 10%.

IT internal staff focused on exploration and drilling workers are likely to be the most affected by IT spending cuts. Workers who support production, including IT staff, are likely better positioned, but the decline in oil prices has raised concerns for everyone.

IT spending will actually increase in 2015 at production and mid-stream operations, the survey found. Despite the slowdown in drilling, some companies will continue to drill to take advantage of lower drilling costs, and to meet lease agreement requirements.

The Road Ahead

Since most of the companies in this space are facing transformational challenges, there is a need to modernize the processes and invest in solutions which are scalable and reduce opex. Also, oil and gas producers have more data than ever about exploration, development, production, and market conditions, and more choice than ever about which vendors can best help them put all that data to use.

Even though the IT spending is expected to be a little less for oil and gas sector this year, it is a significant part of the domestic IT spend. Though at the global front, the tech trends are driving adoption and upgradation in this sector