How Digital Transformation Reduces Unplanned Downtime in the Energy Sector
Power outages cost the U.S. economy roughly $150 billion annually, according to the Department of Energy. Depending on the severity of an outage, these events can be difficult for power companies to recover from. Thankfully, through digital transformation strategies, utilities can reduce their unplanned downtime, and improve performance, reliability, and profitability.
In this blog, we will explore how much unplanned downtime costs the energy industry, and the root causes of downtime. Then, we'll examine how digital transformation strategies can reduce downtime and your costs, and why digitization strategies are among the top priorities for organizations.
1 hour of downtime costs electric utilities $300,000.
For U.S. electricity customers, the average power outage lasts 5.8 hours. One hour alone costs electric utilities over $300,000, while 5.8 hours amounts to $1.7 million in downtime costs.
However, the consequences of downtime extend beyond monetary costs. Additional impacts of unplanned outages include not being able to deliver services to customers, lost production time on critical assets, and an inability to service and support equipment.
The causes of unplanned downtime.
But what is causing such widespread unplanned downtime—and how can digital transformation make a difference? Most commonly, hardware (45%) and software (39%) failures/malfunctions are the causes of downtime. As a result, the key to solving the majority of downtime lies in enabling technologies that prevent malfunctions, and facilitate reacting to malfunctions faster.
How digital transformation reduces downtime and your costs.
The fastest way to react when a malfunction occurs is through industrial remote access. Traveling on-site takes time—and during unplanned downtime, every minute counts. The more quickly you can reliably deliver power to customers, the happier they will be, and the less downtime you will experience.
Digital transformation strategies like ICS remote access help with more than reaction times—they also reduce your costs. Digitization can reduce operating expenses by up to 25%, leading to higher profits, and performance gains of 20-40% in safety, reliability, customer satisfaction, and regulatory compliance. For utilities that have already digitized, these changes led to reduced maintenance costs by $50 million within 18 months.*
*McKinsey & Company
Let's look at how digital transformation can reduce your operating expenses. Most utilities spend a large portion of their operating revenue on operations and maintenance (O&M) costs—specifically, employee labor costs. Labor costs can run high due to the need for 24/7 monitoring on-site. To reduce the number of on-site operators, while allowing them to address on-site issues quickly, you can enable ICS remote access. Remote employees consolidate your workforce, leading to a reduced spend on employee labor costs, and lower O&M expenses. If your organization requires a handful of operators to remain on-site at all times, remote access can help a group of 2-3 people more effectively tackle the work of 7-10 people.
Representative Example: Industrial remote access reduced needed full-time employee burn by 33% and allowed 50% of operating workforce to alternate shifts on-site and work from home.
Why digital transformation strategies are being prioritized.
We've established that digital transformation strategies are key to eliminating the downtime problem, but why else are they a main priority for companies? Organizations are spending millions to "go digital," to transform how they operate their businesses and deliver services to customers. In the United States, the utility industry will spend US$14 billion a year throughout 2023 to modernize and build a smarter infrastructure.
Keep in mind that the primary driver for power companies to undergo digital transformation—improving power production and delivery reliability—is directly tied to downtime. Approximately 44% of power companies aim to improve power production and delivery reliability through digital transformation, 42% aim to grow their existing business with new revenue streams, and 38% want to expand into new business opportunities as a result.
Unplanned downtime is costly for the energy industry. The good news is that digital transformation tools can help organizations prevent downtime, and reduce their costs. If you're looking to combat your downtime problem, make sure you have a way to react quickly when downtime and malfunctions occur. Depending on your facility's needs, you might find that the most cost-effective solution to reducing your organization's unplanned downtime is industrial remote access.
At the end of the day, it's essential that the digital transformation initiative you implement enhances the performance, reliability, and profitability of your organization, and works to eliminate downtime. If you are looking for a tool to reduce downtime and its associated costs, consider visiting dispel.io/efficiency for more information on ICS remote access.
Dispel provides secure remote access designed for OT networks. Built on Moving Target Defense architecture, Dispel helps organizations enable OT remote access while staying aligned to regulatory frameworks and compliance standards. If you are looking to securely bring an OT network online, or harden existing Internet-accessible OT assets, schedule a demo at dispel.io/efficiency.
- https://www.reliableplant.com/Read/25998/Power-outages-petrochemical-plants#:~:text=Unplanned downtime at petrochemical plants,failures and hardware problems combined
- https://www.mckinsey.com/~/media/McKinsey/Industries/Electric Power and Natural Gas/Our Insights/The Digital Utility/The Digital Utility.ashx
- https://lp.servicemax.com/rs/020-PCR-876/images/After The Fall whitepaper - updated global numbers FINAL refresh.pdf