www.pwc.

ru/en/IoT

Adoption
of IoT technology
in electric power
industry
The IoT will fundamentally
transform industry and
everyday life for business and
consumers alike.

Paper #2
 Adoption
of IoT
technology
in various
fields The Internet of Things will IoT solutions in logistics will cut
fundamentally transform industry costs, increase transparency in
and everyday life for business and supply chains and reduce the need
consumers alike. In a number for human work. Smart city
of areas, human input and error will technology will create a more
be minimised completely. attractive urban environment that
features efficient transport systems
In the electric power industry,
and utility services, convenient
for example, IoT technology will
infrastructure and improved safety.
ensure cost savings and create new
The most popular smart home
products. In agriculture, IoT will
technologies among consumers
enable precision farming and
include smart appliances and
substantially improve the operation
thermostats as well as devices that
of agricultural machinery.
enhance security and control water
and energy consumption.

2 Adoption of IoT technology in various fields

4
Content

Adoption of IoT in the

electric power industry:
grid integration 5

Impact of IoT adoption in

the electricity sector 6

The role of IoT in creating

new power markets
10

Prospects and drivers of

IoT adoption in the power
sector 11

Barriers to IoT adoption in

the power sector 12

PwC’s IoT Centre

of Excellence in Russia 14

3
 Adoption
of IoT
technology
in various
fields
The Internet of Things will
fundamentally transform industry
and everyday life for business and
consumers alike. In a number
of areas, human input and error will
be minimised completely.
In the power utilities industry,
for example, IoT technology will
ensure cost savings and create new
products. In agriculture, IoT will
enable precision farming and
substantially improve the operation
of agricultural machinery.
4 Adoption of IoT technology in various fields
4
IoT solutions in logistics will cut
costs, increase transparency in
supply chains and reduce the need
for human work. Smart city
technology will create a more
attractive urban environment that
features efficient transport systems
and utility services, convenient
infrastructure and improved safety.
The most popular smart home
technologies among consumers
include smart appliances and
thermostats as well as devices that
enhance security and control water
and energy consumption.
1. Adoption of IoT in
the power utilities
real-time communication. All parts
of the system will be able to “see” Power
the other parts, understand
industry:
interconnection of
their capabilities and needs, and
perform their roles efficiently. This
sector
shift will help to reach a
elements fundamentally new level of
reliability and efficiency in the
operation of power systems.
In preparing this study, PwC
experts interviewed more than
The digitalisation of power grids,
ten managers at energy
power generation and the
companies. The majority agreed
consumer sector should be parallel
that all three components of the
processes, as smart grids cannot
power industry—generators, grids
function without smart consumers.
and consumers—should go smart
The Internet of Things will have the
in future. Deep IoT-driven
greatest impact on the following
integration among market players
key areas in the electricity sector:
will help to redefine the sector.
• Technology (which, among
The hierarchal model of other things, will become more
generation–transmission–sale reliable);
(where processes are strictly
governed by regulations, • Savings, including reduced
consistency is achieved through losses;
government control, and the
news is the main source of • Creation of new markets,
information) will be replaced attributes and businesses.
by a flexible system of productive,
Figure. 1. IoT applications in electric power

Generation capacity Consumption

monitoring monitoring

Power grid
monitoring
Distributed Consumption profile
generation management

Adoption of IoT technology in various fields 5

 Figure. 2. Figure. 3. IoT applications in electric power
Key benefits of IoT
technology for the electric
532
power sector 180
Consumers
• Demand management
• Procumers
• Virtual power plants
Total Energy
losses
Generators
• Increased productivity
• Growth of distributed
generation and green energy
2. Impact of IoT
Grids adoption in the
• Improved communication power sector
among market participants
• Opportunity for consumers We estimate that the economic
to choose among power impact of IoT adoption on the
suppliers power utilities sector will be RUB
532 billion by 2025.
Technology
Enhanced reliability
• Asset management
on a real-time basis
• Tremendous boost
Power systems were traditionally
in reliability built around the principle
of reliability: consumers should
always have access to electricity.
Cost savings Because of the key role that
• Reduced fuel costs, payroll
energy plays in the economy and
and losses in meeting people’s daily needs,
power grids and generating
New products facilities were designed with
• Big data in electric power built-in redundancies to provide
• Internet of Energy consumers with significant
• Personalised electric power operating reserves of power.
IoT elements like smart grid
technology can significantly
improve the reliability of power
systems.
Figure. 4.
Reserves in the power system Essential KPIs1 in the grid
complex include CAIDI2 and
SAIFI3, which indicate the
208 capacity available to consumers.
GW Process
-28% IoT technology can help reduce
power system
failures in power grids by quickly
delivering information
on equipment problems and
150 scheduled repairs. For example,
GW
by monitoring oil levels
in transformers remotely, power
companies can quickly identify
leaks and prevent overheating
and possible transformer failures
or substation fires.
1 KPI: key performance indicator
2 Customer Average Interruption Duration Index
3 System Average Interruption Frequency Index
4 Automated Process Control System
5 Supervisory Control And Data Acquisition (SCADA) is a software package intended for development or
Available Projected
UES capacity peak load real-time operation of systems to collect, process, display and archive information.
6 Here, we mean Tecon.
6 Adoption of IoT technology in various fields
169
52
91
41
Construction Supporting Fuel Fuel
of new capacity investments (optimised (balancing load)
production)
In terms of power generation, IoT
adoption will entail equipping
critical units at power plants with
diagnostic systems. It is worth
mentioning that most power plants
have already been outfitted with
embedded telemetry and, of course,
automation technology. APCSs4 also
form an integral part of critical
systems at generating facilities.
Russia’s leading power generating
companies are currently busy
upgrading their generating facilities
and harmonising new and old data
within a single SCADA5 system,
including Inter RAO Electric Power
Plants, Unipro, Fortum,
Rosenergoatom, and
Gazpromenergoholding (GEH).
The latter has acquired a share
in a company that is developing
IoT systems for power generation
equipment6.
At power plants, IoT systems also
enable users to receive data
on equipment operation in real time
and take informed decisions on
maintenance and repairs, as well
as optimise the timing of equipment
shutdowns and minimise the risk
of incidents. For the foreseeable
future, equipment will continue
to be repaired according to existing
regulatory frameworks. However,
IoT technology will help to ensure
that equipment is operating
according to factory specifications
after scheduled maintenance.
If used efficiently, IoT technology
could help operating teams
concentrate their efforts on key
functions rather than on routine
activities, as well as help
to optimise staffing numbers.
Considering that the electric
power sector currently employs
over 700,000 people with a
payroll budget of RUB 50 billion,
IoT technology could help
to achieve considerable
improvements in productivity.
The point is that IoT is not just
about things, it is also about
people. Teams armed with
knowledge can do their jobs
better.
In power generation, IoT
adoption entails the introduction
of relatively simple systems like
personal tablets for employees
on power plant floors. These
devices can:
• Reduce the burden
of paperwork for personnel;
• Control line worker
operations;
• Minimise the impact
of human error, thanks
to a standardised form
completion process;
• Provide personnel with
instant updates about the
condition of equipment
using historical data, as well
as with operational forecasts;
• Transmit information from
shift supervisors to the
central control room
on a real-time basis.
In fact, Rosenergoatom and
Unipro have already such
systems, and other generating
companies are planning
to do so as well (see the insert
on Rosenergoatom).
Figure. 5.
Cumulative growth rate of the purchase price for electricity,
% of the previous year
34 45 58
25
10
2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Rosstat, ACRA forecast
7 Analytical Credit Rating Agency (ACRA), report from 24 April 2017.
Economic impact and cost
savings from IoT adoption in the
electric power sector
Business factors are just
as important as improving
reliability. In certain cases,
consumers are ready to reduce
their consumption to save costs
when the price it too high.
In the grid complex, the
widespread adoption of IoT
technology could have a major
impact. For business in general
and power grid companies
in particular, reducing costs
is an important objective.
On the one hand, the grid
component accounts for 67%
of the price of electricity for
households and about 40% for
industry.7 On the other hand,
regulatory authorities have begun
to insist that grid companies
reduce their fees and fee-related
costs.
Grid companies can optimise
their costs by ensuring better
monitoring of the power grid.
Knowing the condition of
substations, power transmission
lines, isolators and other grid
components makes it easier to cut
the following elements from the
cost structure:
• Repairs: Currently, grid
companies conduct repairs
according to industry
standards (power lines, for
example, should
be overhauled every 12 years
on average). The transition
from standardised to
predictive maintainance will
achieve savings of over RUB 8
billion by 2025 (see the insert
on Rosseti) by prioritising
repairs and ensuring longer
equipment life cycles.
144 153 161 168
136
84
100 111 122
72
63
Rosenergoatom (REA)
Over the past two years, Units 1
and 2 at the Smolensk Nuclear
Power Plant have been retrofitted
with IoT technology. The plant has
also implemented ABB’s eSOMS
system. Without the need to install
numerous sensors, this system
provides employees with displays
that show the best routes to take
on equipment walk arounds. Line
workers can send information
on their observations
to a centralised information
system in real time.
The system then summarises,
analyses and transfers all the data
to plant operators, together with
recommendations on further
actions in case of any issues.
The system has allowed line
workers to perform walk arounds
almost 20 times faster, reduced
paperwork dramatically and
enhanced the quality of monitoring
and decision-making. The
economic impact from efficiency
gains has amounted to RUB 45
million per year, and the return
on investment was achieved within
two and half years. According
to plant management, however,
the most significant outcome
of adopting IoT technology has
been the operational
improvements that have reduced
repair costs, increased the plant’s
capacity and, above all, provided
an entirely new level of reliability
and safety.
The eSOMS solution is currently
being installed at the Voronezh
Nuclear Power Plant. According
to other market players, the
impact of REA’s new management
174 system is visible from the outside
simply from changes in their
repair schedule. Today, the
company is applying the lessons
of its successful IoT adoption
experience to business processes
for managing repair works.
Adoption of IoT technology in various fields 7

Rosseti
One of Rosseti’s main priorities
is introducing smart grid
technology. Currently, the
company is running more than ten
pilot projects aimed at building
and developing smart metering
systems that enable real-time
diagnostics and more efficient
operation of the energy system.
One of the most promising
initiatives is the Digital Power
Distribution Zone project that the
company has launched in the
Kaliningrad Region in cooperation
with the National Technology
Initiative and EnergyNet. The
project includes three stages:
automating substations and grids,
deploying a comprehensive energy
monitoring system and
implementing a support system.
Accomplishing this project will
propel management of the system
to a new level, significantly cut
operational and repair costs,
reduce losses, ensure more efficient
utilisation of equipment and
increase reliability. Completing the
first stage of the project has
allowed the company to increase
the average response time
to consumer emergencies by four
times.
Economic benefits will be achieved
possibly mainly via IoT solutions.
Real-time equipment monitoring
makes it possible to ensure the
safety and reliability of the system
without the need for strict
operational standards, which are
often calculated based on high
margins.
8 Adoption of IoT technology in various fields
In 2015, Rosseti spent RUB 35.8
billion on repairs. This figure could
have been smaller if IoT systems
had been in place. A realistic
investment in IoT technology that
could be repaid within five years
would be 3-5% of the cost of basic
equipment.
Rosseti management is also
focusing on another possible
outcome from improved
monitoring systems, namely,
reduced energy losses. In 2015,
improved meters saved the
company 225.3 million kWh,
i.e. nearly RUB 500 million.
The shift to broader use of IoT-
based grid monitoring systems
is integrated into the company’s
Framework for Developing
Technical Diagnostic Systems.
The document calls for the massive
adoption of IoT technology to help
the company’s Production Asset
Management System (PAMS)
move to a new level. Earlier,
monitoring systems could
be installed only on equipment
of more than 110 kW, but this
restriction was removed in 2017,
and now monitoring systems can
be used for economic reasons
on grids of any voltage class.
In addition, Rosseti’s asset
management principles now
include evaluating the social and
economic consequences of power
failures.
• Operations: Taking basic
readings from grid facilities
requires employees to conduct
walk arounds and equipment
checks. For example,
companies need access
to an HV laboratory to inspect
transformers every six months
(oil used to cool transformers
must be sent to the lab).
Inspections of lines and
substations are carried out
personally by specialists.
In addition, identifying
defects during power line
failures must often be carried
out manually. Use of IoT
technology to collect accurate
data remotely and
instantaneously could
significantly reduce the time
needed to review and fix
problems and, consequently,
help to cut costs.
• Losses: On average, grids
have relatively high technical
and commercial losses
of 9.22% (or RUB 60 billion)
per year. Bringing loss levels
down to international
benchmarks of 3-4% via
improved grid control could
save about RUB 40 billion
a year. Moreover, reducing
loss levels could help
companies address their
commercial losses. Starting
from mid-2018, territorial
grid companies in Russia will
be prohibited from
modernising old metering
devices in order to promote
the adoption of smart meters.
According to plans, 80 million
smart meters are expected
to be installed in the grid
complex.
IoT adoption will also help
increase the service life and
capacity (utilised capacity)
of existing assets. In the current
environment, grid development
is limited not only by capital
intensity but also by physical
capacity, especially in densely
populated regions and cities,
which have no space for
constructing new grids.
According to regulations, line
loads and substations must
be maintained at specific levels.
In summer, capacity is lower due
to greater wire sag.
However, knowing the actual (via
the IoT) values rather than just
the standards could minimise
bottlenecks in the system. This
could have a multiplying effect for
the entire sector by optimising
repair schedules and loads in
other grid sections during the
summer repair campaign.
Currently, Russia is using only
two-thirds of its grid capacity.
In generation, analysis of optimal
operation modes using IoT
technology could reduce the
volume of excessively burned fuel,
which in some cases amounts to
over half of all operating
expenses. The Russian electric
power sector annually consumes
about 115-120 million tonnes of
coal and about 200 billion cubic
metres of gas, which in monetary
terms exceeds RUB 1 trillion.
Even a small percentage
improvement in this area by
Russian generating companies
could save the sector and the
economy billions of roubles every
year (see the insert on Inter RAO
Electric Power Plants).
At the same time, strong
connections between producers
and consumers will help maintain
loads at efficient levels. According
to electricity sector
representatives, trade on the
wholesale market is conducted
anonymously. In some regions,
the most efficient plants are
operating at half of their capacity,
while far less efficient facilities in
neighbouring regions are fully
loaded.
Adoption of IoT technology in various fields
Inter RAO Electric Power
Plants
Inter RAO Electric Power Plants is
rolling out a system to collect,
transmit and calculate technical
information (SSPRTI) at the
company’s power plants.
The project is aimed at designing
and installing devices and sensors
of various types, as well as
building an IT system to monitor
the data.
The SSPRTI project has two goals:
• To increase equipment
reliability within five years by
improving observability,
automating manual inputs,
introducing a new production
culture, and gathering
information on changes in
equipment performance after
replacements or repairs.
• To reduce expenses through
better management of the
thermal effectiveness of
equipment (reduce overheating
incidents). Equipment
operators at plants should
receive tools to take
economically efficient decisions
and master the equipment.
Taking into account fuel economy
(annual expenses in the group
amount to about RUB 130 billion)
and repairs savings, implementing
the system is expected to repay the
investment within five to seven
years. Devices and sensors account
for the greatest part (about 80%)
of the cost of adopting the new
system. The parallel process of
categorising equipment and
reference data indexing is also
under way. SSPRTI data will soon
be used by the Enterprise Resource
Management (ERP) IT system as
well as by the maintenance and
repair (M&R) system.
9

Fortum
In 2012, Fortum launched a project
on IoT adoption called CIMS
(Company Information and
Measuring Systems).
The project was guided by a simple
logic: you cannot manage what
you cannot measure, and without
this, no automation is possible.
It was a strategic decision to start
the long-term project. There were
no detailed calculations, but it was
clear that it was impossible to run
a comprehensive process without
accurate information.
The project went through several
versions and caused heated
discussion. However, once the
agreement and approval saga was
over, and the company adopted the
philosophy, the project became
an integral component in
managing the company.
The main goal of the project was
to create a single channel called
the Process Information
Collection Centre (PICC),
where information would
be collected from metering devices
in a single database and format
without human input.
The Centre has helped to:
• Create a single database
available to all participants
in the process, from the shift
supervisor and engineers
to accountants and officers
involved in debt recovery.
• Monitor all technical processes
in real-time on all equipment
at the plant, whether on
turbines, boilers, generators,
switchyard stations or cooling
towers, as well as remotely
manage their operation
(telemetry + telecontrol).
• Automate reporting for internal
and external use.
• The project’s most important
outcome was providing the
plant’s personnel with the tools
10 Adoption of IoT technology in various fields
to manage the value that the
equipment generates rather
than the equipment itself
(because the operators
understand the economic
consequences of their actions).
In addition, the project made
it possible to deal with other
issues, including
• Attracting young specialists
to work in plant operations
with cutting-edge technology;
• Providing confidence
to personnel by investing in the
plant’s long-term future of the
plant.
A parallel project in heat networks
was also launched in order
to address major issues in the heat
network business, including
improving accounting operations,
reducing losses and optimising
costs. For example, the company’s
technical policy states that
overhaul and reconstruction
efforts must use only pre-insulated,
high-capacity pipelines
in combination with a remote
moisture and insulation control
system (a system of conductors
integrated in the pipe insulation).
Signals from these pipelines to the
network make it possible
to identify defects with an
accuracy of one to three metres.
These types of pipelines require
no maintenance and help to reduce
costs and losses. Using the latest
valves and fittings and enhanced
coverage with meters (for remotely
collecting readings and operating
equipment) has become
an alternative to keeping a large
team of line workers.
The data from these meters
is automatically sent to the Process
Information Collection Centre.
All automation was performed
by Russian companies, while he
data is processed using the 1C
platform and then integrated with
SAP.
3. The role of IoT in creating
new power markets
For grids, IoT technology (smart
grids) offers powerful levers
to handle challenges that the
energy system has not faced
before, for example, integrating
different sources of power and
fluctuations in production. With
the growing number
of distributed sources now
integrated into power grids, the
adoption of IoT technology
is becoming inevitable.
Distributed power includes, first
and foremost, renewable sources
like solar, wind and water (small
hydropower plants). Although
Russia plans to put more than
5 GW of renewable capacities into
operation by 2025 (i.e. about 2%
of the installed capacity of the
country’s energy system), this
volume could increase thanks
to microgeneration by
households. The government
intends to allow sales of surplus
power generated by
microgeneration facilities with
capacities of up to 15 kW.8
In addition, industrial distributed
power generation should also
be included. According to experts,
it already accounts for 5-6% of the
capacity of the country’s entire
energy system, or about 13 GW.
Integrating new power sources
requires redefining the entire
operation of an energy system
that has evolved in response
to specific needs over decades.
This is not a simple task. The
power grid was initially designed
as a one-way street from
generators to consumers. Trying
to make it work both ways is like
learning to drive a car using only
the reverse gear.
As distributed generation
expands, IoT technology will
support the growth of virtual
power plants. Power generators
(including households) will
be able to dispose of a certain
capacity at a given moment (e.g.
of dozens of MW) with a 100%
probability thanks to IoT
technology and thus operate
as independent players on the
wholesale market.
A new business ecosystem options above are not feasible. Russian power meter
is already emerging around the manufacturers alone produced
third component in the power Considering that there are about 9 million units already
sector chain, the consumer. reportedly over 7 million private in 2014.12
homes and over 30,000 petrol
According to experts interviewed 4. Prospects and drivers of
stations, as well as over 2.5
by PwC, it is households and the IoT adoption in the power
million small and medium
small and medium-size business sector
businesses, consumers equipped
sector that will soon become the with smart meters will likely
main drivers of the IoT The outlook for IoT technology
determine the development of
revolution. The situation is the in the power sector is quite
Russia’s smart energy system.
same in other sectors. We focused promising. According to most
a separate section of our research experts interviewed by PwC, the
An additional outcome from IoT
on smart meters and smart sector will pass the point
adoption could be achieved with
homes. If smart meters grow of no return within the next five
the help of big data analytics. The
exponentially, as expected, their years. Technology, sensors, data
power sector cannot move
owners will begin to demand that processing tools, microprocessors
forward without data analytics
grid and retail power companies and software are developing
and machine learning. For
take into account their at a rapid pace. Data transmission
example, a 500 kW substation
consumption data. channels are no longer
transmits up to 100,000 signals
an obstacle, because all power
per second on the state of its
plants and substations with
equipment, while the System
The scheduled launch capacities of more than 110 kW
Operator of Unified Energy
of a competitive retail power are already connected to optical
System receives millions of
market in Russia will also help lines.
signals at its control centre. The
to drive IoT development. This
latest IT systems are already
will enable consumers to choose New 35 kW capacity substations
capable of handling such large
among power suppliers.9 First, are also equipped with
volumes of data.10 IoT in the
switching between suppliers will connectivity. In addition, power
power sector will be supported by
require rapid financial line communication technology
related technology such as
calculations. Second, competitors (PLC) also can be utilised.
blockchain.11
will make suppliers offer
consumers flexible fees on power Many companies in the Russian However, without major
and later on other resources. power sector are establishing government support, IoT
Third, consumers (petrol stations, analytical centres designed to adoption in the power sector will
neighbourhoods, housing analyse data on equipment, be slower, and the process will
communities, etc.) will be able including RusHydro, Inter RAO driven more by consumers than
consolidate and enter the retail Electric Power Plants, REA and by the corporate sector.
power market as independent other utilities.
players. One of the reasons is that most
At the same time, the number of of the economic dividends from
Unless consumers have smart smart meters continues to grow IoT adoption have no single
meters, however, the three and is expected to triple to 7 beneficiary. Rather, they are
million between 2015 and 2020. distributed among consumers,
generators, grids, etc. In the
absence of a single stakeholder,
Figure. 6. the government could assume
Mapping the benefits of IoT adoption in the power sector this role, as it is well positioned
to see the total economic impact
Reduce cost
Improved
collection
Telemetry of adopting IoT (see the insert
on the System Operator of the
High

Performance
analytics
Improved deviation
management
Telecontrol Unified Power System).
Mode
analytics
Pro-active
repairs
Data
validation It is a positive sign that
IoT potentian

government policy in the power

Moderate

Strategic Tactic sector has embraced

Demand Customer Income
technological innovation.
response segmentation protection In particular, the most prominent
Revenue simulation Stronger customer loyalty More accurate Better data
state initiatives have included the
By tariffs via online self-services collected data availability possible decision to remove
High

regulations on grid repairs and

Revenue growth roll out smart meters and RES-
8
based distributed generation.
Wind generators or PV panels installed on roofs and in gardens of private houses.
9 Consumers now have to buy power from monopoly last resort suppliers (LRS) operating in their region.. These ideas are reflected
10 http://www.pwc.ru/ru/publications/assets/big-data-presentation.pdf
11 More information on applying blockchain technology in the power sector is available in
in several documents discussed
Blockchain: an opportunity for energy producers and consumers? in brief below.
http://www.pwc.ru/ru/publications/blockchain.html
12 According to J’son & Partners Consulting.

Adoption of IoT technology in various fields 11

 • The Energy Strategy
of Russia for the Period
up to 2030 outlines the
creation of a new generation
of highly integrated smart
backbone and distributed
electric grids (smart grids)
within the Unified Power
System Operator of Unified Energy System (SO UES) System of Russia.13

SO UES is the primary control could not have been broadly • The draft Energy Strategy
centre in the national power implemented without IoT, will of Russia for the Period
system and, among other things, save millions of roubles every up to 2035 also contains
manages process regimes, day. a section on efficient energy
monitors compliance with systems of the future,
reliability parameters and The PJM power system, the including smart homes,
frequencies in power supply, North American equivalent a comprehensive upgrade
approves repairs and power of SO UES (peak consumption of the Unified Energy System
development programmes, etc. load is 156 MW, while UES and the development of smart
All UES entities are required of Russia is 159 MW), operates grids.
to follow SO commands. over 11 GW in demand-
response mode. Totally, about • A number of initiatives have
• New IoT technology has 30 GW is used in demand been outlined in a roadmap
enabled greater transparency response in the US, including for developing a smart energy
and manageability of the 7 GW generated by the system by the Energy.net
power system, as well population. Full-scale association, which strives
as economic efficiency. implementation of this to form a professional
In recent years, SO UES has programme in Russia could community capable
been able to drastically bring savings of billions of developing and promoting
(by factor of 24) reduce the of roubles. the global market
time needed for issuing task of competitive technologies,
plans to power plants on the SO UES introduced the demand- products and services in the
balancing market, from once response component in order field of smart energy systems.
per day to once per hour. to add flexibility to the system
Power plants can now adjust by using commercially feasible Development of IoT technology
their load schedules every hour, methods. Just as traffic jams in the power sector would be
while previously they had cannot be addressed only through further encouraged if the
to wait an entire day, no matter more road construction, government were able
what opportunities were bottlenecks in the power system to coordinate efforts by the
available. also require new methods corporate sector and private
of routing and flow management. initiatives, as well as manage the
• In addition, new technology has With more opportunities in place application of international best
enabled SO UES to launch to control the power system, grid practices in regulation.
a demand-response infrastructure and power plants
programme that provides can be utilised more efficiently. 5. Barriers to IoT adoption
consumers with financial in the power sector
incentives to reduce The economic benefits from price
consumption during peak load dependant reductions in power In our interviews, respondents
hours voluntarily. Currently, consumption will be enjoyed not mentioned five barriers that are
only 69 MW of connected by SO UES and RUSAL, but by hindering the adoption of IoT
capacity at RUSAL’s aluminium consumers in general. In the technology in the power sector.
plants are included in the absence of obvious sponsors and
demand response programme beneficiaries, the system will not The first is the topology of the
in the second price zone grow without the government power sector itself. The power
(Siberia). RUSAL’s plants as an active contributor. The system was designed according
participate in the programme demand-response launch itself was to the principles of hierarchical
when their load reduction leads made possible only following control and command, which was
to at least a 1% savings on the Russian Government Resolution in line with the technology of the
market for the next day. On the No. 699, “On Introducing day. IoT creates significant
other hand, demand response Amendments to the Wholesale changes in interrelationships
is activated at consumption Electricity and Capacity Market in the power sector, and this,
peaks when the price per kWh Rules in Summer 2016.” of course, generates new
is at its highest. This economic and technological
innovation, which obstacles. According to PwC
research,14 the power sector is
13 Section 7. Innovative and scientific and technical policy in the power sector. http://minenergo.gov.ru/node/1026 generally slow to introduce new
technology.
12 Adoption of IoT technology in various fields
 If we look at technology of equipment takes place, new
implementation in the sector assets should be equipped with
historically, we find that power sensors as well as capacity for self-
companies have spent an average diagnosis and information
of 15-20 years on large-scale transmission. It is important
technology implementation, to realise that there is no point
whether it was R&D on APCSs in modernising substations that
in the 1960s or innovative gas were built in the 1920s.
turbines in the 1980s. RPA In addition, some equipment and
microprocessor devices were infrastructure (for example,
developed as early as in the reactors) are difficult to diagnose.
1980s, but 15-20 years passed
before they were broadly adopted As more information about the
in the operation of power systems. operation of power facilities
is generated, power systems
In addition, new technology become more vulnerable to
requires new investments. cyberattacks. Today, 80% of grid
Although capital expenditures equipment is analogue, and hackers
on technology implementation are powerless to do much harm. Of
are trending downwards, the course, this challenge needs to be
required investments are still addressed as IoT technology is
significant. Moreover, as with any adopted in the power sector.
commercial enterprise, existing The absence of time-proved
companies need to earn a return economic ROI calculations has also
on their investments in fixed slowed down IoT adoption. For
assets. most early adopters (Inter RAO
Electric Power Plants, Fortum,
This is why many of the energy Rosseti, REA and GEH), the
experts we interviewed decision to launch IoT was rather a
emphasised that the adoption leap of faith based
of IoT solutions should be guided on assumptions of expected
by the expediency principle. economic impact (see the insert on
Market players were unanimous Fortum). IoT pioneers in the power
in the opinion that IoT adoption sector will be able
is not a complete replacement. to leverage the advantages of early
As the natural upgrade and adoption and become leaders in the
retrofitting new power sector.

Figure. 7.
Barriers to IoT adoption in the power sector

Low emphasis on technological

innovation
The power sector implements innovations
with a 10-20 year backlog

Capital intensity
Topology of the
The Internet of Things
power sector
means new investment
Hierarchical and
while the power sector
centralised
has to repay its old
architecture
expenses

Cyber security Economy

Digitalisation in the power There are almost no calculated
sector leads to greater results of IoT implementation
vulnerability in the Russian power sector

14 Research by Strategy& (PwC). How to benefit from the transformation of traditional value-adding
chains. Technology and innovations in the era of power sector transformation.
http://www.pwc.ru/ru/publications/road-to-energy-transformation.html
It seems to me that this is the name of the English version of this document and the link to the English
version of the document: https://www.pwc.com/ee/et/publications/pub/a-distinctive-road-to-energy-
transformation.pdf
Adoption of IoT technology in various fields 13
 PwC’s
IoT Centre
of Excellence
in Russia
We believe that the Internet
of Things is not just another
technology, but a foundation
for a new production system
and philosophy that will guide
companies from across various
industries. As any other production
system, the Internet of Things
requires a massive overhaul
of methodologies, internal business
processes, and operational
and managerial cultures. For this
reason, from our perspective,
the key objective of IoT adoption
is to alter business models rather
than simply to use new
technologies and IT solutions.
According to our 2017 Digital IQ
survey, many respondents say that
the Internet of Things is the
number one technology in terms
of its potential to transform
business models of companies
and whole sectors. It goes without
saying that such large-scale
changes demand the involvement
of senior management, including
CEOs, COOs, and CTOs.
It is our commitment to support
companies as they plan, implement
and use the Internet of Things.
To achieve this, we have built
a cross-functional team in Moscow
to provide IoT services
to companies in various sectors.
Our competencies delivering
completing strategic and
operational projects, such as:
Strategic planning for IoT,
including: seminars for senior
managers and shareholders;
design of strategies on initial
34 Adoption of IoT technology in various fields
Market entry for IoT solutions
and service providers; design
of business and technical
strategies; development
of general roadmaps
of resources and competencies;
development of use cases,
operational models
and business cases;
IoT implementation,
inducing setting up a project
management office, ensuring
the transformation
of processes and methodologies,
introducing a new corporate
culture, conducting analyses
of production data, testing
and certifying IoT solutions,
and providing training on new
technologies and work
practices;
Operation of IoT solutions,
including equipment
monitoring, data analysis and
business analytics, preparing
(and providing support)
for operational processes
and auditing financial impact.
In the past two years, we have
completed a series of projects
for mobile operators and power
companies both in Russia and
abroad. We would be happy
to provide additional information
about our services and
competencies, or to arrange
a personal meeting where we could
have a detailed discussion on the
challenges that your company
intends to tackle in the area of IoT
and digitalisation.
 Contacts

Yury Pukha
Partner, IoT
Technology Sector
Leader

Т: +7 (495) 223 5177

E: yury.pukha@pwc.com

Grigory Sidorov
Director, IoT consulting,
Strategy & operational
effectiveness

Т: +7 (495) 223 5085

E: grigory.sidorov@pwc.com

Dmitry Stapran
Director, IoT consulting,
Strategy & operational
effectiveness,
Energy Sector
Т: +7 (495) 223 5044
E: dmitry.stapran@pwc.com

Adoption of IoT technology in various fields 35

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