May 17, 2020

Citigroup Back in The Energy Business

citigroup
Energy
trading
trader
Admin
3 min
Citigroup is getting back into commodities trading of energy after years of absence following a post-economic crash government bailout
In 2008, Citigroup was one of the banks that required a massive government bailout to stay afloat. Part of the bailout saw a downsizing of the banks c...

 

In 2008, Citigroup was one of the banks that required a massive government bailout to stay afloat.  Part of the bailout saw a downsizing of the bank’s commodities activities.  However, three years later, the Citigroup is ready to jump back in to the energy trading game as it predicts a commodities boom just around the corner. 

Citigroup has added roughly 50 new bankers to its energy business, and has increased capital allocations to its commodities sector, including trading activities. "We're growing all aspects of our energy business, on the banking side, on the commodity side, on the research side, and across all geographical regions," says Citigroup spokesman Stephen Trauber. "We're trying to take advantage of the activity levels that we're seeing in the global economy and in the global energy market."

Trauber assures that Citigroup has a strong capital position to take advantage of the commodities market.  The company is reportedly boosting its power, metals, natural gas, oil and refined products teams.

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In regard to the price volatility of oil, Trauber believes $102 a barrel is about the average we will see trading to taker place at these days, with demand destruction culminating only if that average creeps up above the $110 a barrel mark.  He remarks, "Put me in a better economy where more people are employed and the global economy is stronger, that level may move up but, given the fragility of the global economy and U.S. economy, that number feels like it's the right number."

Trauber notes risks in the commodities to currently include economic slowdown in China, a European Union member state default, and continued unrest in the Middle East. "As those regimes change -- Egypt, Libya, Yemen, Syria -- we don't know the motives, objectives of new regimes. We don't know how they play against each other. That to me leaves a lot of political uncertainty around the Middle East for years if not decades to come," he said.

Trauber also comments on the high merger and acquisition activities taking place in the energy sector as a positive sign for reentrance into commodities, saying it’s the best merger and initial share offering activity he’s seen in the energy sector in his 25-year career as an energy banker.  More interesting, he doesn’t see high oil prices as a significant factor. "More companies are getting comfortable with higher oil prices in their modeling, but more important than that is the need to replace their own declining reserve base,” he says.  “If you have the strategic need and the lowest cost of capital you are going to be competitive in every opportunity you want to seek. That is causing majors to look elsewhere because they didn't used to have to compete with the Chinese... China was not a competitor that Exxon ever had to worry about. Today they do."

At any rate, it seems Trauber and his cohort of commodities savvy coworkers are eager to get back into the energy trading game.  Hopefully, Citigroup can manage itself a little more wisely this time around without needing another $300 billion bailout!

 

 

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Jun 12, 2021

Why Transmission & Distribution Utilities Need Digital Twins

digitaltwins
Technology
Utilities
Management
Petri Rauhakallio
6 min
Petri Rauhakallio at Sharper Shape outlines the Digital Twins benefits for energy transmission and distribution utilities

As with any new technology, Digital twins can create as many questions as answers. There can be a natural resistance, especially among senior utility executives who are used to the old ways and need a compelling case to invest in new ones. 

So is digital twin just a fancy name for modelling? And why do many senior leaders and engineers at power transmission & distribution (T&D) companies have a gnawing feeling they should have one? Ultimately it comes down to one key question: is this a trend worth our time and money?

The short answer is yes, if approached intelligently and accounting for utilities’ specific needs. This is no case of runaway hype or an overwrought name for an underwhelming development – digital twin technology can be genuinely transformational if done right. So here are six reasons why in five years no T&D utility will want to be without a digital twin. 

1. Smarter Asset Planning

A digital twin is a real-time digital counterpart of a utility’s real-world grid. A proper digital twin – and not just a static 3D model of some adjacent assets – represents the grid in as much detail as possible, is updated in real-time and can be used to model ‘what if’ scenarios to gauge the effects in real life. It is the repository in which to collect and index all network data, from images, to 3D pointclouds, to past reports and analyses.

With that in mind, an obvious use-case for a digital twin is planning upgrades and expansions. For example, if a developer wants to connect a major solar generation asset, what effect might that have on the grid assets, and will they need upgrading or reinforcement? A seasoned engineer can offer an educated prediction if they are familiar with the local assets, their age and their condition – but with a digital twin they can simply model the scenario on the digital twin and find out.

The decision is more likely to be the right one, the utility is less likely to be blindsided by unforeseen complications, and less time and money need be spent visiting the site and validating information.

As the energy transition accelerates, both transmission and distribution (T&D) utilities will receive more connection requests for anything from solar parks to electric vehicle charging infrastructure, to heat pumps and batteries – and all this on top of normal grid upgrade programs. A well-constructed digital twin may come to be an essential tool to keep up with the pace of change.

2. Improved Inspection and Maintenance

Utilities spend enormous amounts of time and money on asset inspection and maintenance – they have to in order to meet their operational and safety responsibilities. In order to make the task more manageable, most utilities try to prioritise the most critical or fragile parts of the network for inspection, based on past inspection data and engineers’ experience. Many are investigating how to better collect, store and analyze data in order to hone this process, with the ultimate goal of predicting where inspections and maintenance are going to be needed before problems arise.  

The digital twin is the platform that contextualises this information. Data is tagged to assets in the model, analytics and AI algorithms are applied and suggested interventions are automatically flagged to the human user, who can understand what and where the problem is thanks to the twin. As new data is collected over time, the process only becomes more effective.

3. More Efficient Vegetation Management

Utilities – especially transmission utilities in areas of high wildfire-risk – are in a constant struggle with nature to keep vegetation in-check that surrounds power lines and other assets. Failure risks outages, damage to assets and even a fire threat. A comprehensive digital twin won’t just incorporate the grid assets – a network of powerlines and pylons isolated on an otherwise blank screen – but the immediate surroundings too. This means local houses, roads, waterways and trees. 

If the twin is enriched with vegetation data on factors such as the species, growth rate and health of a tree, then the utility can use it to assess the risk from any given twig or branch neighbouring one of its assets, and prioritise and dispatch vegetation management crews accordingly. 

And with expansion planning, inspection and maintenance, the value here is less labor-intensive and more cost-effective decision making and planning – essential in an industry of tight margins and constrained resources. What’s more, the value only rises over time as feedback allows the utility to finesse the program.

4. Automated powerline inspection

Remember though, that to be maximally useful, a digital twin must be kept up to date. A larger utility might blanche at the resources required to not just to map and inspect the network once in order to build the twin, but update that twin at regular intervals.

However, digital twins are also an enabling technology for another technological step-change – automated powerline inspection.

Imagine a fleet of sensor-equipped drones empowered to fly the lines almost constantly, returning (automatically) only to recharge their batteries. Not only would such a set-up be far cheaper to operate than a comparable fleet of human inspectors, it could provide far more detail at far more regular intervals, facilitating all the above benefits of better planning, inspection, maintenance and vegetation management. Human inspectors could be reserved for non-routine interventions that really require their hard-earned expertise.

In this scenario, the digital twin provides he ‘map’ by which the drone can plan a route and navigate itself, in conjunction with its sensors. 

5. Improved Emergency Modelling and Faster Response

If the worst happens and emergency strikes, such as a wildfire or natural disaster, digital twins can again prove invaluable. The intricate, detailed understanding of the grid, assets and its surroundings that a digital twin gives is an element of order in a chaotic situation, and can guide the utility and emergency services alike in mounting an informed response.

And once again, the digital twin’s facility for ‘what-if’ scenario testing is especially useful for emergency preparedness. If a hurricane strikes at point X, what will be the effect on assets at point Y? If a downed pylon sparks a fire at point A, what residences are nearby and what does an evacuation plan look like?

6. Easier accommodation of external stakeholders

Finally, a digital twin can make lighter work of engaging with external stakeholders. The world doesn’t stand still, and a once blissfully-isolated powerline may suddenly find itself adjacent to a building site for a new building or road. 

As well as planning for connection (see point 1), a digital twin takes the pain out of those processes that require interfacing with external stakeholders, such as maintenance contractors, arborists, trimming crews or local government agencies – the digital twin breaks down the silos between these groups and allows them to work from a single version of the truth – in future it could even be used as part of the bid process for contractors.

These six reasons for why digital twins will be indispensable to power T&D utilities are only the tip of the iceberg; the possibilities are endless given the constant advancement of data collection an analysis technology. No doubt these will invite even more questions – and we relish the challenge of answering them. 

 

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