But, here in Australia, and even in the huge US energy sector, only a small number of companies are utilising the technology to that extent and realising the benefits from investing in the analytics technology.
There’s been wide ranging deployment in Australia, the US and many other countries of smart technology, like smart meters, that give utilities a huge amount of data on the operation of their businesses, including electricity consumption data, or even information of consumer behaviour.
Analysing that data, however, is the issue and its the use of advanced analytics to make sense of the data, and potentially get the costs savings and benefits, that is at the forefront of the work of experts like Dr Tao Hong, the founding chair of the IEEE (Institute of Electrical and Electronics Engineers) Working Group on Energy Forecasting.
Dr Hong, who is also the Director of BigDEAL (Big Data Energy Analytics Laboratory), Graduate Program Director and EPIC Assistant Professor of Systems Engineering and Engineering Management at the University of North Carolina, has advised companies in the energy sector in many countries.
According to the professor, load forecasting, price forecasting and renewable forecasting are the most important areas where advanced analytics can be deployed by companies in the energy sector.
But, from what Dr Hong says, while a lot of utilities in the US are doing a lot with smart meters – as is increasingly the case in Australia – there are still only a minimal number of companies using advanced analytics to fully analyse the data collected to facilitate the potential, significant cost savings and benefits he says are possible.
Dr Hong confirms that in the US, and no doubt here in Australia, utilities and those organisations in the energy sector are still primarily using analytics for reporting and descriptive analytics purposes.
The more advanced analysis of the data – or what is commonly now referred to as Big Data – for forecasting purposes in the energy sector is still the exception, rather than the norm.
Dr Hong acknowledges that organisations not using advanced analytics to analyse Big Data for forecasting purposes to the extent they should, to gain competitive benefits and improve their business, is a common problem around the world.
As SAS Australia and New Zealand Head of Energy and Utilities, Matt Mason, observes in his introduction to this week’s roundtable discussion with a number of key industry players and experts, including Dr Hong, “responding correctly and rapidly to changing inputs in the gas and electricity marketplaces has never been more challenging.”
“The wealth of data is only rarely matched with a wealth of insight and even more rarely with a successful implementation of strategy.
“How utilities react in the next few years could have a significant impact on profitability, market share and service delivery.”
Dr Hong says that while not all utilities are using the advanced analytics and technology available now with providers like SAS, there are some embracing the technology to the extent he says is needed to potentially get the big cost savings and other benefits.
And, he says if the energy sector does not embrace all the new methodologies being proposed, and being tested, “you will always complain about the (market) volatility, and just lose in the end.”
“If you do some cost benefit studies the benefits (of using analytics for forecasting) are often way higher than people can imagine,” says Dr Hong.
”Yes you can save $800,000 in a nine hour period, that’s about $100,000 per hour.”