Will consolidation speed up digitisation?

Will a wave of consolidation in the wind sector speed up the adoption of digital asset management strategies at large wind operators?

That is one question that A Word About Wind and a panel of experts, including from our headline sponsor Sereema, will discuss in our ‘Asset Management Summit’ later this year.

This online event gives us a chance to discuss the big asset management issues facing utilities and independent power producers. These firms are looking to manage their wind farms more profitably while also growing their portfolios.

Much of this is being done via project and corporate acquisitions.

For example, in our European Power List report this month, we highlighted how our top-ranked person – Iberdrola chairman and CEO Ignacio Galan – has driven growth at the Spanish utility in 2020 with just such a series of deals. But Iberdrola is just one example. Engie, Ørsted and others have been similarly acquisitive in recent years.

These growth strategies can raise practical challenges, though. How best can operators put in place systems that will help them to grow their portfolios without adding large numbers of staff? Can using digital systems for asset management help?

Digital strategies

Mus Rezzoug, managing director at Sereema, says they can. He argues that owners with fast-growing portfolios should move away from their established approaches to managing wind farms and embrace digitalisation. He says this helps in two ways.

“There are two challenges, especially when your portfolio is growing fast. The first is you need more data [about your wind assets] coming from different sources, and the second is the info that you can extract from it,” he says.

Rezzoug argues the best way to improve profitability and cope with a larger portfolio is to introduce a system that pulls in asset performance data from a wide range of data sources, and suggests improvements. This can serve up insights in a clear way.

Using digital systems like this can also help firms cope with looming skills shortages.

Last year, the International Renewable Energy Agency warned that the wind industry is not bringing in enough people to develop and manage wind farms. This will lead to shortages of skilled wind technicians who can interpret data from digital platforms.

We are also seeing broader warnings about digital skills shortages. For example, a UK think tank warned this week of a looming “disaster” because of a 40% drop in the number of young people taking IT subjects at GCSE level. This is just one study, and not specific to wind, but it highlights that the widespread use of digital technology will not necessarily lead to young people learning the digital skills that companies need.

Therefore, there is a benefit for firms that use systems to serve up the data simply.

But there can be reticence. For example, larger utilities often try to develop digital systems themselves to manage their assets, with the result that they aren’t as able to respond quickly to the latest innovations in data and project performance analysis. This is often driven by a desire to retain control of their systems and use the IT professionals that they already employ.

“The dilemma for these players is what can they develop internally and when should they rely on third-party systems?” he explains, if only to keep up with the innovations that keep popping up on the market.

There are established industry models though. Utilities and operators would tend to bring in specialist advisors for other parts of the wind farm development process, and digital asset management specialists could end up being another advisor.

Engaging with entrepreneurs

This is where consolidation in the market may spark change.

Independent power producers (IPPs) usually have far fewer staff than utilities, and without established digital teams. It doesn’t make sense for them to build platforms themselves, and so they work with external data specialists such as Sereema.

This reliance on third parties enables IPPs to grow their portfolios but without having to grow their asset management teams – and wage bills – at the same speed. When these IPPs are bought then it could help introduce utilities and other large owners of wind projects to ways of working they may not have considered before, including the use of third-party digital asset management systems.

Therefore, consolidation could help to speed up digitalisation by introducing utilities and other large operators to ways of working that are being used by agile and fast-growing IPPs. This could help wind companies to fully embrace the digital age.

Do you agree? What do you see as the biggest issues in the asset management of wind farms? Get in touch now, and register your interest for our ‘Asset Management Summit’ later this year. Click here to register for more details.