Digital Grid Voyage

China Energy Storage Network News: The innovation dilemma of "doing nothing wrong but being defeated by the times" has been repeated over the decades of the technological explosion. The lesson left for the "leaders" is that the only certainty is uncertainty.

The utility nature of power grid giants once gave the outside world a conservative and stereotyped impression. In fact, changes have already taken place. Power grid companies are integrating digital technologies in all aspects, reshaping their business models, and opening up cooperation to embrace the era of great change.

eo reporter Zhou Huizhi Feng Jie

1. Why is it a good time for the power grid to revolutionize itself?

In midsummer, seven mainstream domestic information and communication (ICT) companies were invited to the headquarters of the State Grid Corporation of China in Guangzhou Science City to hold a technical seminar with the power grid covering multiple fields including energy, industrial manufacturing, communications, the Internet of Things, cloud computing, big data services, and artificial intelligence.

The four giants that are conquering the To B/G end - Baidu, Alibaba, Tencent, and Huawei (BATH) - all attended the event. ZTE, Aerospace Cloud Network, and DreamWorks Digital represented the new forces in communication networks, industrial Internet, and data services, respectively. Together with the Digital Grid Research Institute (formerly Dingxin Technology), the R&D platform of the Southern Power Grid, the eight teams spent two days focusing on how to achieve the digital transformation of the Southern Power Grid in terms of technology.

Of course, all participants were clear that technology is only the beginning of the transformation of the power grid. The vision of the digital transformation of the Southern Power Grid lies in organically combining digital technology with the elements, businesses, and processes of the power grid, reshaping the operation, management, and business models of the power grid, and empowering upstream and downstream of the industrial chain, digital government, the national industrial Internet platform, and stakeholders in the Guangdong-Hong Kong-Macao Greater Bay Area.

On January 22, at the 2019 Work Conference of the State Grid Corporation of China, Meng Zhenping, Chairman and Secretary of the Party Committee, upgraded digital transformation to the company's strategic level for the first time, and clearly proposed to use digitalization as one of the strategic paths to support the transformation of the State Grid into "three businesses" - smart grid operators, energy value chain integrators, and energy ecosystem service providers.

Subsequently, the "Company Digital Transformation and Digital Southern Power Grid Construction Action Plan (2019 Edition)" (hereinafter referred to as the "Action Plan"), which took four months to draft and dozens of revisions, was officially released. The "Action Plan" plans to basically realize the construction of the digital Southern Power Grid by 2025. Along with it, there is also an investment budget of 8.5 billion in the first phase (2019-2020), and a huge imagination space left for the outside world.

In China today, consumer demand is upgrading, traditional industries are seeking transformation under the competition of stock, and the growth of the real economy is entering a new track of old momentum. At the same time, in the past three decades, CPU computing, memory capacity, and communication speed have increased by a million times. The computing power, algorithms, storage, and transmission infrastructure that undertake data have become as important as the power grid as never before.

Digital technologies represented by AI are transforming from the former "black technology" to the ubiquitous new "productivity", bringing higher efficiency, lower costs, faster response, less manpower and stronger coordination to traditional industries. Following the steam age, the electrical age and the information age, digital technology, as a continuous and renewable "new fuel", is setting off a wave of the fourth industrial revolution around the world.

According to statistics from the China Academy of Information and Communications Technology, the scale of the digital economy accounted for one-third of China's GDP in 2018. The construction of "Digital China" has also risen to a national strategy, and the digital economy has become a new engine for China's economic growth.

Standing in front of the digital torrent, plunging into it is an inevitable choice for power grid companies. As a basic sector of the national economy, the power industry, after undergoing digitalization, will not only reconstruct the ecology of the energy industry chain, but will also affect and benefit the entire real economy. The digitalization of power grids will eventually drive the digitalization of the industry.

However, the opportunities of the times are also accompanied by huge challenges. For the power grid, this transformation is particularly difficult because it needs to find a balance between several contradictions:

In a cultural environment centered on safety, standardization, and execution, we must incubate innovative and flexible response mechanisms; while investing in stable businesses, we must seize opportunities to develop new business models; and under the limitation that the main business is regulated, we must cut the umbilical cord between competitive emerging businesses and regulated businesses.

Is this an unsolvable problem? Almost all the people from the Southern Power Grid interviewed by the reporter said: No, this is a must-answer question that must be actively solved. The evolution of the system and mechanism of enterprise digital transformation is the process of exploring solutions.

The era of digital navigation has arrived, and the State Grid Corporation of China is heading towards a digital transformation journey that combines the co-growth of "enterprise-level changes" and "society-level concepts."

Times have changed, demands have changed, and the power grid needs to change

In Guangzhou's catalog electricity price list, the power grid's customers are divided into four categories: large industry, general industry and commerce, paddy field irrigation and threshing, and agricultural production. With the user type, the customer's electricity purchase price will be different according to different voltage levels and the city's peak and valley hours. This is a simple label that the regulatory authorities have laid down to facilitate the unified regulation of utility prices.

But do grid operators really understand their customers?

Yi Yongqiang, director of the General Office of the Digital Department of the State Grid Corporation of China, who has visited Alibaba's headquarters several times, has a direct understanding of this: "In 2012, Alibaba attached about a few thousand labels to its 300 million user portraits. By 2015, the number of labels for its 600 million user portraits soared to tens of thousands." The rich data has given rise to precise search and personalized business recommendations. For example, 90% of the transaction volume on "Double 11" in 2018 came from labeling and recommendation technology.

User portraits are popular in the e-commerce field. As a precision marketing tool based on big data, they have been used as references by many traditional industries such as finance and telecommunications. Behind this is an era of comprehensive upgrading of Chinese consumption. The 2018 government work report mentioned, "Promote consumption upgrading and develop new consumption formats and models."

Consumers are no longer simply chasing low prices, but will pay more attention to quality, experience and sustainability. Whoever can provide more personalized and customized services, in other words, whoever understands customers better, will be more likely to capture their attention. This rule also applies to the energy industry.

Electricity reform calls for electricity to return to commodity attributes, renewable energy grid parity is accelerating, interactive energy technologies such as energy storage and electric vehicles are maturing, and multiple changes in energy supply modes such as distributed and multi-energy complementarity are quietly shaping a new coordinate axis. The demand quadrant presented to the power grid has changed.

The judgment of the Southern Power Grid on user consumption behavior is that "the Internet has brought about a transformation in user needs. In the future, users will present more diversified Internet characteristics, such as individuality, efficiency, convenience, and intelligence. Taking the user's demand for energy as an example, it presents five characteristics: digitalization, cleanliness, personalization, convenience, and openness."

The changes in the times and customer needs have challenged the traditional business model of power grid companies in terms of transmission, distribution and sales. If the interaction between the power grid and customers is limited to registration, payment, maintenance or meter replacement, it is very likely to face customer loss. The power grid is fully aware of this change. Other traditional utility companies such as gas and heat supply and power generation companies have also felt the crisis, and the new direction they have chosen is integrated energy services. Integrated energy services are a shift from a product-centric to a customer-centric energy supply mode, and they value providing customized energy supply services to consumers.

According to the summary of Zhou Xiaoxin, an academician of the Chinese Academy of Sciences, since the 1950s, China's model of large units and large power grids, which are mainly based on fossil energy, hydropower and nuclear power, is moving towards a model dominated by renewable energy generation, combining backbone power sources with distributed power sources, and combining backbone power grids with local distribution networks and microgrids. At the same time, the one-way power flow of the distribution network is transforming into smart distribution networks, microgrids, and two-way energy and power flows with widespread access to distributed energy. Single power services are developing into diversified services that integrate comprehensive energy, power and information services.