Energy Infrastructure and Industrial Data: Between Global Data Policies and an Evolving iIoT Environment

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SEI-GT_Data-Policies_4_20.pdf (2.03 MB)
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Farhat, Karim
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http://hdl.handle.net/1853/64939
 https://doi.org/10.35090/gatech/64939
Abstract
This paper identifies the factors shaping Industrial Data (ID) use and sharing among Southeastern energy firms. The research questions underlying this study are: 1. What factors affect an energy firm’s decision to use and share ID 2. To what extent does ID use entail strategic or collaborative sharing arrangements with other firms 3. What are the procedures by which these arrangements take shape? Contrary to other research findings, agglomeration economies and locational advantages based on Information Technology (IT) infrastructure were not drivers of ID development in the Southeast. Data localization and data protection laws were also not found to influence how Original Equipment Manufacturers (OEM) handle transnational data flows. The decision-making procedures by which ID arrangements take shape instead depend on strategic choices around data management and the evolution of the cloud services market. Business model adaptation among OEMs has significant impacts on data management practices. While diversified energy service offerings remain sparse among Investor-Owned Utilities (IOUs), OEMs are experiencing an increased complementarity of demand between goods and services as they start to divest from central power generation. For example, demand for gas turbines or transformers coupled with demand for analytics services to minimize failure and downtimes was indicative of a shift from isolated products to services built around products. In the ongoing convergence environment between IT and legacy Operational Technology (OT), access to data is more relevant than ownership. The ownership of intellectual property in software and algorithms that enable the continued use and reuse of data for various business ends drives firms’ competitive advantages. However, despite the flexibility afforded by the latest opensource developments in data management, such as container platforms, we found no evidence of energy firms sufficiently leveraging these tools. Our analysis of the role of standards in the ID ecosystem’s evolution shows no risk of serious harm due to vendor lock-in, particularly in the smart grid. The path-dependent inertia of IEEE 1815/DNP3, lack of awareness and perceived benefit of IEC 61850, and strategic OEM preferences for DNP3 involve the kinds of switching costs that are to be expected in a competitive market environment. These costs are dependent on the economic and organizational barriers defining the position of the utility in question along its technological migration path (legacy infrastructure, hybrid systems, or fully digital substations). Costs for deployment may progressively shrink as legacy infrastructure continues to be replaced. We recommend that Investor-Owned Utilities better leverage the capabilities that data science has to offer and foster ongoing relationships with large OEMs or third-party energy service providers with proven track-records of providing added business value. As a matter of regional economic policy, methods to facilitate market entry for third-party energy service providers should be explored.
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Georgia Tech Strategic Energy Institute Seed Grant
Date
2021
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