McKinsey: Analytics is key to success for grid operators
Advance analytics could be the key to a bright future for grid operators rising to the global challenge of distributing electric power during COVID-19 and changing regulatory trends.
According to a report by consultants McKinsey & Company top performers are now using analytics to optimise costs, improve operations and advance their evolution as they navigate a rapidly changing landscape.
McKinsey & Company’s Transmission and Distribution (T&D) Benchmark report provides an insight for operators looking to improve their service of electricity transmission and distribution. During the past 10 years more than 110 companies have applied the benchmark to help identify areas of opportunity in a bid to stay competitive at this imperative time.
Current pressures on operators include:
- COVID-19 could spark economic challenges as regulators reduce the cost of electricity in some countries
- burden of an aging asset base
- grids need adapting to new power flows
- low interest rates and political pressure push to keep public services affordable
According to McKinsey & Company the convergence of these factors is prompting the sector to renew its focus on performance. The report identifies three ways grid operators can use analytics to unlock their potential along with three insights for targeted action.
Unlock potential using analytics
1. Install investment planning
One European operator developed a model looking at more than 10,000 variables from grid assets to import and export capacities. It can simulate the impact of external events, such as the risks of grid failures. McKinsey & Company state using the model to inform investment decisions enabled the operator to reduce its capex (capital expenditure) by between 10 and 30 per cent.
2. Draw on available data
By drawing on data already available, operators can build algorithms that help them rethink asset strategies, reduce opex (operating expenditure) and capex. These algorithms can predict failure points in the grid to help operators’ direct maintenance spending to the areas that need it most.
3. Equip employees with digital tools
In field operations, using technology to optimise high-value activities such as smart scheduling, live dispatching and remote support can deliver considerable improvements. One European operator, which adopted remote-support devices and required contractors to use a mobile app, managed to improve its success rate for critical interventions by up to 30 per cent.
1. Balance quality with spend
The McKinsey & Company report challenges the constant call from operators “we need to spend to maintain quality”. Research has shown that top performers focus on two key operational drivers, totex (total expenditure: operational plus capital) and SAIDI (System Average Interruption Duration Index: a measure of supply quality).
By doing this they can optimise their totex while keeping their SAIDI score below that of others with higher spending. Achieving this balance is vital as it can have a fundamental effect on an operator’s cash flow and credit rating.
2. Is prevention better than cure?
Analysis shows that achieving cost efficiency involves striking the right balance between corrective and preventive maintenance. However, the report reveals stark differences in approach from one region to another.
The emphasis on prevention among the East Asian operators leads to a world-class supply quality, but at a higher cost while Latin American operators’ reliance on corrective maintenance harms their quality of supply.
3. Outsource to cut costs
The new data reveals some of the most successful grid operators outsource up to 70 per cent of functions from Human Resources (HR) to finance. To be effective, outsourcing must be implemented with governance in place as operators should not become dependent on powerful suppliers for critical capabilities.
Itronics successfully tests manganese recovery process
Itronics - a Nevada-based emerging cleantech materials growth company that manufacturers fertilisers and produces silver - has successfully tested two proprietary processes that recover manganese, with one process recovering manganese, potassium and zinc from paste produced by processing non-rechargeable alkaline batteries. The second recovers manganese via the company’s Rock Kleen Technology.
Manganese, one of the four most important industrial metals and widely used by the steel industry, has been designated by the US Federal Government as a "critical mineral." It is a major component of non-rechargeable alkaline batteries, one of the largest battery categories sold globally.
The use of manganese in EV batteries is increasing as EV battery technology is shifting to use of more nickel and manganese in battery formulations. But according to the US Department of Interior, there is no mine production of manganese in the United States. As such, Itronics is using its Rock Kleen Technology to test metal recoverability from mine tailings obtained from a former silver mine in western Nevada that has a high manganese content.
In a statement, Itronics says that its Rock Kleen process recovers silver, manganese, zinc, copper, lead and nickel. The company says that it has calculated – based on laboratory test results – that if a Rock Kleen tailings process is put into commercial production, the former mine site would become the only primary manganese producer in the United States.
Itronics adds that it has also tested non-rechargeable alkaline battery paste recovered by a large domestic battery recycling company to determine if it could use one of its hydrometallurgical processes to solubilize the manganese, potassium, and zinc contained in the paste. This testing was successful, and Itronics was able to produce material useable in two of its fertilisers, it says.
"We believe that the chemistry of the two recovery processes would lend itself to electrochemical recovery of the manganese, zinc, and other metals. At this time electrochemical recovery has been tested for zinc and copper,” says Dr John Whitney, Itronics president.
“Itronics has been reviewing procedures for electrochemical recovery of manganese and plans to move this technology forward when it is appropriate to do so and has acquired electro-winning equipment needed to do that.
"Because of the two described proprietary technologies, Itronics is positioned to become a domestic manganese producer on a large scale to satisfy domestic demand. The actual manganese products have not yet been defined, except for use in the Company's GOLD'n GRO Multi-Nutrient Fertilisers. However, the Company believes that it will be able to produce chemical manganese products as well as electrochemical products," he adds.
Itronics’ research and development plant is located in Reno, about 40 miles west of the Tesla giga-factory. Its planned cleantech materials campus, which will be located approximately 40 miles south of the Tesla factory, would be the location where the manganese products would be produced.
Panasonic is operating one of the world's largest EV battery factories at the Tesla location. However, Tesla and other companies have announced that EV battery technology is shifting to use of nickel-manganese batteries. Itronics is positioned and located to become a Nevada-0based supplier of manganese products for battery manufacturing as its manganese recovery technologies are advanced, the company states.
A long-term objective for Itronics is to become a leading producer of high purity metals, including the U.S. critical metals manganese and tin, using the Company's breakthrough hydrometallurgy, pyrometallurgy, and electrochemical technologies. ‘Additionally, Itronics is strategically positioned with its portfolio of "Zero Waste Energy Saving Technologies" to help solve the recently declared emergency need for domestic production of Critical Minerals from materials located at mine sites,’ the statement continues.
The Company's growth forecast centers upon its 10-year business plan designed to integrate its Zero Waste Energy Saving Technologies and to grow annual sales from $2 million in 2019, to $113 million in 2025.