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Cost optimization as a growth driver

Keeping costs under control is a decisive competitive advantage, especially during turbulent times. Which investments create the greatest value? How can efficiencies be best realized? And which operating and financing model is the best fit? The answers to these questions can give companies much-needed strategic room to maneuver. 

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Creating options for actions by optimizing costs

The future path towards cost-effective grid operations lies in intelligent investments in the right systems, technologies and business models, along with innovative financing models.

Energy providers are subject to rising cost and earnings pressures. Budgets are being strained by the need to modernize aging structures and the increased effort involved in managing grids. Revenue streams are being increasingly threatened by inefficient power generating units and a slowdown in demand. The situation is further compounded by increased competition from new providers, and regulators placing greater focus on the efficiency of new projects. Proactively embracing innovative technologies can help to systematically streamline grid management effort and minimize expenditure on new systems, thus freeing up funds to invest in the development of alternative business models. 

Smart investment decisions

That’s how distributed generation works – economically and safe

Power grids have to be readied for the challenges that lie ahead. Digital analysis and control technologies can help companies optimally utilize existing assets and adapt them to modified load profiles. To identify critical areas where investments in the grid would bring the greatest value, companies have to gain an in-depth understanding of the current grid status. In Wachtendonk, Germany, for example, the municipal utility company SWK Stadtwerke Krefeld and Siemens used the Power Snapshot Analysis of smart meters to assess key grid parameters. 

 

Companies can even develop completely new grid topologies with long-term grid planning and intelligent resource networking – linking everything from primary technology right up to the control level, for example using Spectrum Power Active Network Management. As part of the research project IREN2 in Wildpoldsried, Germany, Siemens utilized the in-depth grid planning expertise of Power Technology International (PTI) together with innovative tools such as the Power System Simulator (PSS) to determine the optimum grid structure at the lowest cost. Tests revealed that expansion costs could be cut by up to 40 percent. This paved the way for a topological power plant that incorporates renewable energies, offers a high degree of stability and resilience to outages, and operates extremely cost effectively.

 

Reducing costs is also a top priority in energy-intensive industries. Siemens helped its customer Buenavista del Cobre, for instance, to reduce its energy costs by 50 percent while at the same time cutting downtime by 60 percent. The company was able to establish a modern, transparent and easily manageable grid by setting up a distributed control center (DCC).

I’m very excited to be part of a forward-looking project that can answer important questions of energy security. The results of the grid testing help to reduce the costs for network expansion by 40 percent. On a nationwide scale in a country the size of Germany, this sums up to several billion Euros.

Arno Zengerle, Mayor of the energy village Wildpoldsried

Ongoing cost optimization – key to success

Smart meter management at Eletrobras, Brazil

Gaining and sustaining a competitive advantage over time depends above all on a company’s ability to continually fine-tune efficiency across all areas of operations. That is where the future lies. However, it is not just a question of isolated action plans. It calls for a concerted effort, where various resources are aligned and deployed along the entire value chain to continually leverage efficiency potential. Digital software and hardware solutions supporting specific demand response programs can prevent expensive peak loads and streamline entire grid operations through automation. Managing data efficiently is the crucial factor here. The EnergyIP NTL solution from Siemens collects, aggregates and analyzes data to minimize non-technical losses. Brazil’s largest energy provider Eletrobras used this platform in conjunction with modern Advanced Metering Infrastructure (AMI) hardware. It enabled the company to use its existing resources more efficiently, increase productivity and reduce losses by around 2.6 TWH per year. 

 

In industry, too, many companies are challenged to increase energy efficiency. Using a cloud-based platform, Siemens helped multinational automotive component manufacturer Gestamp reduce this key cost factor by 15 percent. Energy consumption in all 14 connected plants is continually monitored at the Siemens Smart Grid Control Center in Seville, Spain, enabling the company to accurately analyze consumption drivers in real time. The reduction in energy consumption together with insights into production optimization potential and predictive maintenance capabilities means that Gestamp can look forward to amortization in just three years.   



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Capitalizing on new financing and operating models

Discover fault localization in the cloud

Restructuring our energy system is a huge task that can only be achieved if all available resources are used as efficiently as possible. Grid operators bear the lion’s share of the financial and organizational burden here. If we add increasingly discerning investors and changing incentive regulations to the mix, then operators will almost inevitably have to look at new financing and operating models. If capital expenditure can be wisely shifted to the lower OPEX side, this would free up resources that could then be used to develop new business models or to further optimize existing operations. Siemens provides customers with a host of innovative solutions based on “as a service” concepts, offering applications such as microgrid management, error localization and SCADA as managed services. Customers can also rely on the company’s Digital Center solutions to monitor the performance of assets, diagnose problems, and effectively plan and manage capacity utilization. 

SIESTORAGE EDP – A new technological challenge

In addition, Siemens offers innovative financing concepts such as leasing or “pay as you save” models as part of its Financial Services portfolio. The installation of one of Germany’s largest battery storage solutions is a prime example of this. Local grid operator SWW Wunsiedel GmbH needed a 6 MW storage solution to keep their grid stable. The company chose the Siemens Siestorage battery storage system, which pays for itself in the long run. Leasing payments under the 10-year contract are covered by the additional revenue streams generated through active participation in the reserve power market, and SWW Wunsiedel has the added reassurance of ensuring long-term security of supply in the regions it serves. 



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References

Costs and benefits in balance

Optimizing the cost situation opens up new opportunities to shape the future. Some reference projects are listed below.

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Portfolio

Highlights from the Siemens product portfolio

Soft- and hardware solutions from Siemens support our customers on their way to higher security of grid operations. The common goal: future-proof systems enable short reaction times, smooth operation, and reliability.

The Power Engineering Guide is the comprehensive manual for transmission and distribution of electrical energy.
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Other topics on agility in energy

Achieving the necessary agility in the energy sector requires many components to work perfectly together. Siemens offers the right products, solutions and services in a total of four different fields. Use the following links to explore the three others.