Digital and analytics in

power generation
companies
Board training document
September 28th, 2021

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of McKinsey & Company is
strictly prohibited
Introducing
the experts
people “in the
room” today

Jochen Latz
Partner Matias Melero Christian Staudt
Associate Partner Associate Partner
Europe
Cologne office US US/Europe Washington
Digital Power Plant Stamford office DC office Renewables
Thermal Power

McKinsey & Company 2

Context and objectives

Context Objectives for today

Digital and analytics (DnA) levers will drive Provide a perspective of what is digital in power
significant value creation in almost every industry, generation and what are leading integrated and
and power generation is not an exception. IPP players doing worldwide in terms of DnA.
Many of the world’s leading power generation Understand core value drivers in specific
companies are investing in digital, but with technologies (Thermal, Hydro, Renewables) and
different levels of conviction and success. cross-technology workflows.
However, it is not uncommon for energy companies to Reflect on what lessons we have learned to
struggle scaling DnA levers and drive successfully deploy a Digital transformation in
significant value creation. power generation.

McKinsey & Company 3

 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Lessons learned implementing DnA in power generation

McKinsey & Company 4

Business leaders across energy sector are setting bold aspirations to
capture value from AI / digital

“We own know-how and the technologies, IT and

AI, to enhance the transition of the energy system.
“Digitalization offers us a hedge against Nevertheless, we need decision makers, political
“Every economy is built with 3 purposes:
sudden crises like coronavirus for business bodies…to understand how essential it is to reach
communication, energy & mobility. There is
continuity" the requested high level
a layer entering those purposes which I call
“Data Layer”. This is where artificial of quality investments.”
– Christian
intelligence kicks in. It is fundamental ” Director for Territories,
Buchel,
–Karsten – Francesco Starace, Customers and
Wildberger, CEO 2020 Europe, 2021
COO & Board Member, E.On,
2021

“By turning analyzed smart meter data into In 2018, we built an innovation hub to scale
proactive, convenient care for our customers, practices across the entire company, not just IT. That
“We developed a line of business and IT
Vistra is adding to an already strong record of framework allowed the IT department to partner
partnership to tackle data and analytics as a
innovation in the world of retail electricity" with our business, to drive innovation and to ensure
part of PG&E’s Digital Catalyst group. transformation is ingrained in our core”
The Digital Catalyst approach combines – Bonnie Titone,
design thinking, agile development and co- – Scott
location of business and IT resources.
CIO, 2020
Hudson president of Vistra
– Jen Owens Retail, 2021
Member of PG&E’s Digital Catalyst
group, 2018

"We have been developing a lot of offerings that

"We are essentially leading the digital SOURCE: Annual reports, press search enable remote operations. The pandemic has
transformation in energy management and accelerated digital transformation world over."
automation. We see ourselves as a
technology provider at the convergence of
energy automation and software."
– HERVÉ – Akshay Bellare, President
COUREIL, Global CIO, Schneider Honeywell India, 2020
Electric, 2019
“Digitalization, automation and sustainability are growth engines for our
business. The company is now a “focused technology company that is
addressing industry, infrastructure,
transportation, and healthcare” that sees “the digital transformation
as a key challenge.”

–Roland Busch,
CEO, 2021
McKinsey & Company
McKinsey & Company 5
Major players have taken actions according to their digital vision
and strategy
NON-EXHAUSTIVE

Digital vision “Foundations have “Our digital strategy “We realized we “Digitization is As part of its 2030 “Our "EDP Group’s "Innovation is an
and strategy been laid using the focuses on needed to focus on going to play a strategy, EDF is commitment to digitization important driver
cloud, platforms keeping us at the both the customer fundamental role focusing its continuous process is taking of the new Axpo
and cyber security forefront of our and employee in the energy transformation improvement in over the strategy. Digital
as enabling industry with a key experience. That transformation programme on everything we do company's entire transformation was
factors. The focus in offshore goal would drive through the “accountability, drives us to landscape, the basis for
strategy for the wind power our overall digital electrification of the simplification and develop changing […] the corporate change
coming years operations, transformation economy” innovation/digital innovative, way we interact even before
targets large- customer solutions, strategy. ” technology” industry- with our Corona. Axpo
scale digitization market trading, leading employees, intends to use the
to maximize value.” combined heat and solutions to customers and the opportunities
power plant complex communities we offered by this
operations and challenges” serve." process.."
shared services.”

Actions taken In 2017 Enel launched Running 800 FTE IT In In 2016, Engie Since 2008, digitizationAcquired Oreka Acquired Windlogics, Established EDP Launched a pilot project at
Enel X, global e- department and adding created Engie Digital, a of centralized asset Solutions, a solution an advanced analytics Digital Global Unit as the Sarganserland power
solutions business line Architecture and Centre of Excellence management provider of 3D wind forecast company in separate department to plant to make it the first
including 4 core areas: e- Design departments dedicated to support the simulations for 2006 integrate digital digital power plant in
home, e-industry, e- city digital transfor-mation of IT department works in decommissioning initiatives in core Switzerland
and e-mobility Established 6 Agile the Group’s 25 BUs. an agile manner that is nuclear plants Established Digital functions
Release Trains (ART) driving many of the Transformation Office Tests using drones to
Fully migrated to cloud running across the Invested in Tiko, a initiatives Teep Trak, a start-up under CIO EDP digital factory inspect power plant
in 2019 (100% organization, with pioneer in the specializing in indus- developed >300 digital water catchments that
applications in Cloud Offshore operations as development of intel- trial performance MVP initiatives are difficult to access
most advanced ligent energy manage- monitoring solutions,
ment systems in 2019 raised EUR 3 million
through EDF incubator

Selected Using drones to reduce Installation of smart Implemented Robotic Installed asset life cycle Developed Use of advanced Built Digital AI forecast model
the operation, wind sensors led to Process Automation in management and VVProPrepa, a video analytics and Monitoring Center to increase
implemented
maintenance and virtual uplift in production of their back offices, with a predictive analysis with game styled training for predictive mainte- avoids efficiency accuracy of wind
use case reality to train 2% increase in efficiency maintenance teams to to losses, increases forecasts success-
0.2-0.3% for SGRE2 single license having the nance allows NextEra
and impact specialized fleet equal to DKK ~21 processing capability of 6 and 35% reduction in explore reactor buildings to operate at $3 to $4 availability, and fully implemented
technicians mn in EBITDA p.a. human workers turndown down to the smallest [per MWh] better than reduces maintenance Spain and gradually
detail competition costs rolled out in Europe

Source: Press Search, Investor Reports, Annual filings 6

McKinsey & Company
Technological megatrends driving the “Digital Age” are directly
applicable in power generation

“Connectivity” digitization “Intelligence” advanced Flexible automation

analytics
Touch/voice interfaces and Predictive analytics (e.g., HR Plant/Factory Automation (e.g.,
next-level GUIs (e.g., monitoring with machine drones in confined space, smart
WO,SOPs) learning algorithms) valves)

Digitization and automation of Sensors and actuators/ Internet Autonomous vehicles

knowledge work of things (e.g., RFID tags, (e.g., coal yard)
(e.g., planning process, LSW) digitized boiler)

Virtual and Augmented Reality Big data/open data Cloud Additive manufacturing (e.g.,
(e.g., heat rate training, PM technology 3D Printing in maint.)
execution, remote operation)

McKinsey & Company 7

What do we mean by Digital power plant?
Digital power plant of the future – Coal example

McKinsey & Company 8

DnA has multiple
applications
along the power
generation Generation Workflow
Thermal/
Fossil Renewables Hydro
workflows and
1 Capital planning and optimization
technologies
Technology specific Non-technology specific
Direct DnA impact

2 Unit efficiency and yield optimization

Unit availability - unplanned and

3 planned events

4 Unit flexibility and dispatch

5 Consumables optimization

Maintenance execution and value based

6 maintenance

7 Digital workforce enhancement

McKinsey & Company 9

 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Fossil
Renewables
Hydro
Cross-cutting workflows

Lessons learned implementing DnA in power generation

McKinsey & Company 10

DnA has multiple
applications
along the power
generation Thermal/
workflows and Generation Workflow Fossil Renewables Hydro
technologies 1 Capital planning and optimization
Technology specific
Non-technology specific
2 Unit efficiency and yield optimization
Direct DnA impact

Unit availability - unplanned and

3 planned events

4 Unit flexibility and dispatch

5 Consumables optimization

Maintenance execution and value based

6 maintenance

7 Digital workforce enhancement

McKinsey & Company 11

Major thermal players are leading the power generation digital
practices
What are other companies doing - Selected fossil fuel examples

DnA AI and Machine Learning applications to Using PRiSM software (by Schneider), develops Connected to over 30,0000 locations and can
Capabilities forecast energy demand, enabling: data models to pick up patters in sensor remotely manage and control “hundreds
and energy plant data for maintenance and and thousands” of energy assets.
 Efficient dispatch of generation fleet
performance.
 Early warning of anomalies Deploys Predictive Maintenance for Networks
Assets:
Virtual Reality technology to
enable real-time collaboration between  Machine learning to predict if an asset on the
remote sites and Vistra subject matter electrical network is likely to fail
experts.

Digital Have implemented 300+ real time “Duke Energy Smart Gen Program” Building an Energy Economic Integrated
execution Machine Learning models across the fossil developed monitoring, predictive analytics, data platform to power different forecasting
highlights fleet to drive operational improvement and and diagnostics infrastructure: modules and enable prompt market insights.
plant efficiencies.  Has 4 monitoring stations for reviewing Uses Tableau to monitor the status of
 As of 2020, produced 1-2% efficiency the health of its power generation fleet1 hundreds of sensors on each Combined
gains across fleet Heat and Power (CHP) system:
Over 30,000 sensors implemented across
50 selected power plants for asset health  Visualizes and analyses using deep
monitoring and alert notification. learning algorithms that determine their
600 TBs volume database growth from
health and state
2014-2018 of new operating data. Leverages SparkCognition AI algorithms to
safeguard turbines by predicting potential
disasters and shut down.
1. As of 2016
Sources: Company websites, Annual reports, Press search
McKinsey & Company 12
Proven Fossil Analytics Impact Cases
Not exhaustive

Use-case Description
Unit 1 Heat rate setpoint Real time optimizer providing frequent setpoint recommendations to operator to optimize overall system
Efficiency optimization efficiency – boiler efficiency, turbine, augmentation mode usage – leveraging historic unit specific
operating data and real time input conditions (e.g., coal quality, water temperature, ambient conditions)

Real time recommendation of desired operating mode to optimize between fuel and maintenance costs
2 Optimized dispatch (e.g., LTSA)
strategy
Aggregate risk signal by trip archetype that synthesizes multiple sensor data to identify anomalous
Unit 3 Advanced trip behavior taking into consideration actual run profile, performs initial root cause analysis and provides
Availability prediction prescriptive actions to operations perform

Real time planner to optimize timing of main maintenance activities such as boiler cleaning, filter changeouts,
4 Maintenance compressor washes, taking into consideration actual and expected performance and degradation and associated
optimization O&M costs

Performance management dashboards leveraging real time data to set targets to operators while improving site-
Unit 5 Start-up and ramp commercial / HQ coordination
Flexibility sequence

6 Day ahead capacity Dynamic max generation estimations based on input quality

McKinsey & Company 13

1: Advanced Analytics can bring huge value to fossil fleets by
optimizing complex non-linear relationships

Net heat rate1 in function of net output

Ambient temperature °F

~0.5-2%
Improvement in heat
rate in CCGT

1-3%
Improvement in heat
rate in coal plants

Heat rate variation

Thermal efficiency fluctuates 1-5% across
output levels, even when holding ambient
0.5-1%
conditions constant Improvement max
generation
1. Heat Rate is a measure of efficiency used at thermal (coal, natural gas) power plants to evaluate the amount of thermal energy (BTU) required to
generate a unit (KWhr) of electrical energy

Source: Energy Velocity; McKinsey R&I McKinsey & Company 14

3: Advanced analytics move trip detection from single variable
alarm to prescriptive insights
Back-up

From single variable alarms… …to multivariate predictions… …to prescriptive insights
Monitor behavior of individual Defining trip archetypes (e.g., temp spread Prescribes action based upon
variables (i.e., bearing tirp, temp trip, valve failure, vibration, pump aggregate failure risk and associated
temperature) to gauge failure risk health) and dynamically aggregate insights system behavior to deliver dynamic,
and equipment health across all key variables to gauge failure asset actionable insights
risk profile
Predict and notify control room
of increased failure risk

Pressure Temp IR
sensors sensors sensors
Bearing
temp

Quality Level
sensors sensors
Prescribe actionable interventions

Vibration Touch Proximity

sensors sensors sensors
McKinsey & Company 15
These organizations are changing their sites into the “Power Plant
of the Future”
Unit operating recommendations
Real-time monitoring of heat rate setpoint optimization, optimum
Environmental
load levels (HSL), and anomaly behavior for valve and leak Consumables spend
system control
detection optimization
optimization
Real-time chemical usage and
Improved injection recommendations to
Heat predictability of
rate MW reduce emissions most cost
operating impact on
output effectively
environmental
systems, leading to
optimized operating
control

Live performance management & target definition

Early event detection at Value-based
Real-time visibility of startup performance to drive to quicker and
plant maintenance
more efficient startups MW
Real-time monitoring of Live recommendations
equipment health indicators for optimal timing and
to detect and address root prioritization of Heat rate
cause of equipment failures maintenance activities
before based on equipment
they occur; utilizing health & performance
relationships between Current time elapsed Previous best
data
“00:12:35” “00:19:21”
multiple sensors and limiting alarms to Projected finish
ID fan “00:18:59”
the most actionable

Remote Monitoring Center Operating control room Maintenance & scheduling

McKinsey
McKinsey & Company 16
&
Company
 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Fossil

Renewables
Hydro

Cross-cutting workflows

Lessons learned implementing DnA in power generation

McKinsey & Company 17

DnA has multiple
applications
along the power
generation Thermal/
workflows and Generation Workflow Fossil Renewables Hydro
technologies 1 Capital planning and optimization
Technology specific Non-technology specific
Direct DnA impact

2 Unit efficiency and yield optimization

Unit availability - unplanned and

3 planned events

4 Unit flexibility and dispatch

5 Consumables optimization

Maintenance execution and value based

6 maintenance

7 Digital workforce enhancement

McKinsey & Company 18

Major Renewables players are becoming increasingly sophisticated
in employing AA and digital solutions
What are other companies doing - Selected renewables examples
DnA
capabilities

Realtime data sensor uplink: ML based performance optimization and In house forecasting tool provides customized
 Transmits performance and weather data predictive maintenance scheduling. meteorological and power predictions for
each plant.
Integrated price forecast module. Integrated Developed proprietary AA tool for renewables
site design that considers: Uses big data for predictive maintenance of
weather forecast module. offshore turbines and developed AI models to
 Weather, resource data, land constraints, and
Performance data visibility across predict faults in onshore turbines components.
equipment characteristics for ideal build sites
operations, maintenance, and 3rd parties. Remotely monitors and operates ~7 GW of RE
 Uses historic and forecast data to extract
Digital maximum power output from resources across 55 sites (14 solar) from NCC1 in Portland,
execution OR.
highlights 1 Billion data points collected every day to
Majority of Engie’s renewable fleet is optimize project development, maximize Digitally manages its electricity generation
connected to its digital analytics platform. revenues and reduce operational costs assets.
Dedicated team of developers working with Forecasting a 30% reduction in their Solar Launched an international competition to
different external partners to develop O&M costs per MWh by 2022 resulting from identify solutions for renewables. 70+ teams
software/systems: their digital work plans. from 24 countries participated.
 Developed Darwin, which collects real time Purchased WindLogic Inc. (resource analysis Piloting waterless PV cleaning solution and
data for renewable energy assets and forecasting solution) in 2006 to leverage data soiling data measurement system.
Conducts drone assisted inspections insights and analytics prowess. Along with Shell, funded a $6M Series A round
identifying: for Innowatts (a Texas based energy AI
1. National Control Center
 Hotspots, disconnected strings, micro- platform) that predicts power demand using ML
cracks, internal corrosion, and and big data.
delamination
McKinsey & Company 19
While there is a multitude of digital levers and use cases, the full
value is captured by integrating them into a new operating model
Detailed next

Renewables
value chain Develop Own & Build Operate & market

Main Achieve lowest cost of capital

ambition High success rate in Reduce opex, increase availability and longevity
development projects Reduce capex and design for efficiency and Market electricity at highest possible value
longevity

Traditional  Leverage forward-  Standard Engineering modules Yield and availability optimization, e.g.,
levers looking cost curves  Design-to-Cost analysis (incl. suppliers)  Cleaning cycle optimization
project scope
 Tech. specification structure review  Optimized vegetation management
 Targeted securing land
 Collaborative contracting approach  Remote external monitoring
rights
 Change orders management  Remote resets

Select digital  Automatic site  Geospatial performance monitoring  Automated shadow detection and correction
use cases selection based on  Digitally-enabled sourcing tool, e.g., leveraging  Tracker efficiency improvement
forecasted demand, commodity price forecasting  Unnatural module degradation identification
interconnection
 Capex Digitalization (5 BIM, digital twin, virtual  Real time loss measurement and
information, and site
testing) improvement Static Yaw Alignment
condition
 Wake optimization
 Predictive maintenance
 Sensor-based, integrated online condition
monitoring
 Automated and dynamic planning,
scheduling, dispatching and routing
McKinsey & Company 20
By leveraging geospatial data, solar developers been able to assess
solar project trajectory, efficiency and execution practices
Roadrunner – a 497MWdc solar project completed in Q3 2020 in West Texas

Holiday break

2019 2020

Progress rates Overall workforce Workforce clustering Execution practices

By comparing satellite images Anonymized cellular data allows Cellular heatmapping provides a Detailed imagery provides insight
over time the developer is able to to assess total workforce & how it view into where labor is spending into execution practices such as
assess rates of progress as well as has evolved over time. the most time. material management, equipment
overall site layout and work By combining with installation Combining with imagery usage, work sequencing, and
sequencing. rates, the site productivity is provides insight into the installation methods.
extracted. execution approach.

© AIRBUS DS (2019-2020) © CNES (2019-2020) – All data is anonymized and aggregated without personal identifying information, complying with privacy laws McKinsey & Company 21
Wake Optimization – Opportunity to optimize individual turbine
level and park level harvesting of wind energy content

Use case description & Illustration(s) Impact

approach
Dynamically optimizing all turbines 1-2%
jointly (wake optimization) production increase
 Dynamically optimize to find global Wind
production optimum, e.g., by turning
upstream turbines slightly out of the
wind

Dynamically optimizing yield of

individual turbine (yaw misalignment)
 Compare individual turbine production to
identify potential laggers
 Use Lidar on specific turbine to align it
with “real” wind direction:
— Ensure turbine is always directed
ideally towards wind (yaw Wind
misalignments)
— Ensure blades are turned optimally Wind
(pitch misalignments)
1. Highly dependent on park layout, and its specific technical challenges
McKinsey & Company 22
Digital and Analytics transformation across
wind and solar assets drove 1-2% yield
enhancement

Context
Approach Impact

ReNew is a large Setup agile analytics lab with tangible Wind turbine yield
renewables player business value.
with over 5GW +2-2.5% post
installed capacity in Data management to streamline access correction on
Wind and Solar. across multiple sources. underperforming
Organization-wide workshops for use- turbines.
Strategic priority to
leverage digital and case pipeline generation and prioritization.
analytics to increase Use-case delivery in waves - model Solar plants generation
generation and extract building and implementation prioritized by enhancement by
more value from value at stake. 0.5-1%
existing solar and Engagement of site teams and business
wind assets. partners (e.g. OEMs) Agile Lab in place with
inhouse data scientists
and engineers
McKinsey & Company23
 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Fossil
Renewables

Hydro
Cross-cutting workflows

Lessons learned implementing DnA in power generation

McKinsey & Company 24

DnA has multiple
applications
along the power
generation Thermal/
workflows and Generation Workflow Fossil Renewables Hydro
technologies 1 Capital planning and optimization
Technology specific Non-technology specific
Direct DnA impact

2 Unit efficiency and yield optimization

Unit availability - unplanned and

3 planned events

4 Unit flexibility and dispatch

5 Consumables optimization

Maintenance execution and value based

6 maintenance

7 Digital workforce enhancement

McKinsey & Company 25

Digital in Hydro presents several use cases to increase efficiency
and decrease costs

Potential value
Levers extraction Example initiatives
Optimize yield Increase asset • Turbine/pump optimization based on
1 availability and yield real time water conditions (turbidity,
through technical, currents, temp, etc)
digital, and analytics
tools • Solid waste and preventive cleaning
systems
• Data acquisition, collection and
management

2 Optimize Strategically identify • Robotic pipes inspections

maintenance the "when", "where"
• Early failure avoidance
and "what" for field
maintenance • Predictive and component based
maintenance strategy

3 Enable Ops- Dynamically • Water resource management

Supply optimization of inventory and optimal usage based on
Chain management based on prices projection and
alignment AA predictive models availability

McKinsey & Company 26

Currently, major Hydro players have set in place digital solutions in
a holistic manner
Selected hydro examples

Main Introduced innovative technologies to Create a revamped digital strategy for Become world’s first fully digital utility
objectives improve the safety and technical- better management of its 43 assets by integrating its whole value chain &
economic performance of the hydro (hydropower, coal & natural gas) in the ensuring lowest possible carbon footprint.
fleet. Iberian Peninsula.

DnA Developed a digital platform for Created a revamped digital strategy to Set up a 25,000 square foot digital
initiatives predictive maintenance (PresAGHO) enhance management practices in all “mission control” center in New York &
for its 44 hydro plant feet (+50MW) in assets. within it an Integrated Smart Operations
Latin America. Entered 5 year partnership contract with a Center (iSOC) to review insights supplied
Used drones & robots to facilitate vendor to use AI algorithms to facilitate by data analytics.
plant inspection in confined places. real time evaluation of energy
Launched unmanned aerial vehicle production variables.
(UAV) in Beyond Visual Line of Sight This enabled EDP to create actionable
(BVLOS) mode to monitor the health of insight to balance reliability,
certain channels in Italy. availability, performance & cost
Data integration across conventional against risk to maximize asset value.
generation, renewables, trading,
distribution and retail using Enel Unified
Virtual Data Lake (developed as part of 5
year partnership with C3).
Sources: Company websites, Annual reports, Press search
McKinsey & Company 27
European player aiming to optimize dispatching of hydro assets

Objective Methodology used by generator

Optimize dispatching strategy for hydro assets by predicting the A. Diagnostic and aspiration target identification
performance of different short term markets (e.g., day ahead, intraday, etc) based on historical data
over a time horizon (e.g., a week, a month) and optimizing resources and
generation across
B1. Advanced Analytics modeling for each hydro
With this solution, the company was aiming to answer such questions as asset and each market)
 Which markets should our hydro assets participate in to maximize value
potential? B2. Optimization model to allocate energy over
selected period of time taking into consideration
 How much energy should we bid into the day ahead and intra day markets to asset/ restrictions
maximize our margin, considering the expected volumes and prices in each market
and the opportunity cost (storing the water)?

C. Trading recommendation based on

the percentile of the current price

Expected impact
~1.8 USD/MWh or ~3%
of additional revenues D. Post implementation /
KPI monitoring

McKinsey & Company 28

 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Fossil
Renewables
Hydro

Cross-cutting workflows

Lessons learned implementing DnA in power generation

 McKinsey & Company 29

DnA has multiple

applications
along the power
generation Thermal/
workflows and Generation Workflow Fossil Renewables Hydro
technologies 1 Capital planning and optimization

2 Unit efficiency and yield optimization

Technology specific Non-technology specific
Unit availability - unplanned and
Direct DnA impact
3 planned events

4 Unit flexibility and dispatch

5 Consumables optimization

Maintenance execution and value

6 based maintenance

7 Digital workforce enhancement

McKinsey & Company 30
O&M across technologies can be digitally enhanced through
visibility, analysis and predictions across the whole process

Process
Identify bad Analyze root Implement Continuously
actors Assess gap cause & derive actions & track improve
actions

How
technology
can Real time Relevant data pre- System-supported Learning
support visualization and filled System supported tracking and algorithms for
notifications based root case monitoring pattern recognition
analysis &
recommendations

Source: McKinsey
McKinsey & Company 31
Maintenance execution: Digital Maintenance App helps for digitized
maintenance process
End-to-end process

Inspect equipment and report the failure

Schedule the repair job Execute the repair

The mechanic1 enters approx. length of repairs

and work requirements (e.g. required grade and
specialty of the contractor)

The contractor receives a task and checks in

on location with an RFID tag. The app displays
guidelines for the job. Completion time is
logged with an RFID tag

Field operator The app displays Failure description

And track KPIs on desktop
checks in at the complete history of with photos is sent to
The planner can view the scheduled tasks of all
equipment location maintenance jobs. the planner and the
the contractors and designate a new one.
using an mechanic1 for
Inspector can file a
RFID tag diagnostics The contractor receives a digital work permit
report right away

1. Shadow role, performed automatically by the

script Source: McKinsey

McKinsey & Company 32

Video: Digitization of maintenance execution

McKinsey & Company 33

 Introduction: Digital and Analytics (DnA) in Power Generation

How can DnA take generation to the next level

Content Lessons learned implementing DnA in power generation

McKinsey & Company 34

To succeed in a digital
transformation is key not to … but to view it as a holistic
focus only on technology… transformation

2
Use cases development and

Technology transformation
1 implementation
Digitized business processes
All cases tied to value

2
2-speed IT and data architecture
Backbone systems for rapid
Digital transformation deployment

1 3
Business transformation Organization transformation New governance, roles, and skills

3
required
New ways of working
Establish transition plan in line with
business roadmap

McKinsey
McKinsey &
& Company
Company 35
35
We have learned that there are six key success factors to ensure
sustainable value capture and business DnA transformation
A Digital
transformation
must… Focus on impact Build conviction Start with MVPs
Be value-back not technology- Engage the organization to build Start quickly and then improve:
forward: DnA must drive business conviction: through alignment with have an small but highly skilled DnA
value through a well coordinated strategy, interactions with previously teams initially for anchor roles and
implementation instead of success cases and early development of don’t wait for perfect data to get
independent use cases proof-of-concept in critical areas started – almost all companies have
“good enough” data

Ensure sustainability Drive independence Follow a proven recipe

Be technology agnostic: be Belong to the operation: ensure Work the first time (no second
selective what technology to build in- independence, with a complete transfer chances): follow what is a proven
house vs. partnering with others of capabilities and new ways of concept from industry leaders
Develop the organization Digital working
muscles: embed DnA into the Test and iterate solutions in an
company through capability building agile manner: through a ‘2-speed’
and change in business processes technology organization

Source: Team analysis McKinsey & Company 36

Jochen Latz
Partner - DnA in Power Expert
Recent engagements
 Helping an Asian Utility in defining their digital  Supporting a >4 GW coal-fired power plant new
vision and roadmap for a >50GW power build project with lean construction and project
generation portfolio management
 Supporting a European generation company in  Helping German utilities in setting up the project
setting-up the digital transformation program organization, project planning, cost
to scale-up the impact from AA and digitization optimization and stakeholder management for
 Supporting a Southern European utility in scaling decommissioning of their fleets of nuclear power
up their digital transformation program in plants (volume of >EUR 12 bn cashout)
generation  Optimizing a fleet of fossil-fired power plants
 Supporting a major operations transformation towards end of lifetime, incl. maintenance strategy
at a German utility, improving energy and execution, operations, and decommissioning
Jochen Latz is a Partner in our Cologne Office in efficiency, operations and maintenance for a  Developing an energy efficiency program
Germany. He is a core member of our Global Energy large fleet of coal and gas fired, hydro power including a pilot project at a more than 3 GW
& Materials and Operations Practices and is leading stations as well as nuclear plants station, a quick-win roll-out across 10 power
McKinsey’s Power Generation Operations  Conducting power plant diagnostics in more stations and supporting the rollout of the full
Service Line in EMEA than 100 power plants in e.g., UAE, Germany, program
Over the past years, Jochen has mainly served Sweden, UK, Spain, Belgium, Japan, Malaysia,
clients in the energy sector in Europe, Middle Thailand, Africa, Poland, Russia and Australia
East, Russia, and Asia, focusing mainly on
operations and capital productivity topics Prior background
Jochen is leading out initiative on the “Digital  Jochen studied Mechanical Engineering (RWTH Aachen) and holds a “Dr.-Ing.” in process engineering
Power Plant of the Future” (Jülich Research Center/ RWTH Aachen). Prior joining McKinsey Jochen worked as engineer at Jülich
Research Center where he was leading a research group developing a new energy conversion process
resulting in 2 international patents

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Matias Melero
Associate Partner / Stamford
Recent relevant work experience / Select studies
 Generation – Coal unit efficiency optimization: Led deployment of advanced analytics to optimize plant’s set point
parameters across boiler and steam cycle leading to a ~2% heat rate improvement in 6 plants / 11 units
 Generation – CCGT Digital Power Plant: Led deployment of solution ecosystem across 15+ plants fleet including heat rate
optimization, advanced trip detection, predictive maintenance optimization and start-up optimization
 Generation – Digital Roadmap: Led and facilitated creation of multi-year digital roadmap for power generation player
 Mineral processing plant – Process optimization: Led tech enabled operation transformation at copper producer using
advanced analytics to optimize setpoint recommendation to increase throughput by 7%+
 Petrochemicals – Digital Roadmap: Identified and designed analytics solutions to launch across manufacturing sites to improve
conversion and throughput
 Energy Producer – O&M Transformation: Led cost diagnostic for major North America electric producer. Effort focused on
maintenance and support functions improvements and cost savings
 Generation – Fleetwide transformation: Led central team in multiple asset transformation. Effort focused on commercial dispatch
optimization, procedure standardization between assets, and progress synthesis for Board communication
 Generation – Support functions: Led support functions organization redesign during post-merger efforts
Matias is an Associate Partner in McKinsey &  Generation – Coal Power Plant Full Implementation: Led team of 20 change agents throughout operation transformation in a Coal
Company’s Stamford office, specializing in Electric Power Plant, including three coal mines and railroad organization, identifying $50M+ of savings
Power Plants and Transmission and Distribution  Coal Mine-Mouth – Diagnostic and Full Implementation: Led end-to-end rapid diagnostic and implementation phase at two coal
mines in the US identifying $45M+ of savings focusing on operation and maintenance levers
companies. He has worked extensively in US in
operation topics, from diagnostic and implementation Education and prior work experience
to sustainability efforts. Most of his work has been in  Matias holds a Masters in Business Administration (MBA) from The Wharton School at the University of Pennsylvania, US and
manufacturing and lean operations, as well as a Bachelor and Masters in Economics from Torcuato Di Tella University, Argentina
procurement topics. He leads our efforts in Generation  Prior to McKinsey, Matias was a corporate finance analyst at Crowe Horwath Argentina
and Digital Power Plants in Americas

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Christian Staudt
Associate Partner / Washington DC
Recent relevant work experience / Select studies
 Developed the US entry strategy for a global financial investor into the US renewables market
 Led due diligences on leading US solar EPC companies, solar & storage project developer, as well as infrastructure companies
 Defined the marketing & sales strategy for leading US renewables developer to build C&I market offering, incl. customer
segmentation, value proposition creation, and sales excellence
 Improved the returns of solar PV projects for a leading North American renewable project developers
 Led the customer experience transformation and redesign of critical user journeys and web presence for US Mid-Atlantic utility
 Developed the go-to-market strategy for a US utility for a new solar construction product, incl. channel assessment and
partnership options
 Drove the capital transformation at one of the largest North American electric and gas utilities, focusing on capital
efficiency opportunities as well as field force transformation
 Identified the next frontier of operations & maintenance for a leading North American renewable power developer and owner
 Leading the rapprochement of two major European electric transmission clients, identifying value generation
opportunities across all departments of both businesses
 Kickstarting the development of a greenfield energy system for a Middle Eastern client, incorporating a solar PV
Christian Staudt is an Associate Partner from megaproject, as well as distributed solar PV and battery storage technologies
McKinsey‘s Washington DC Office after working  Setting up the Digital Strategy at an European utility with focus on renewable generation and storage
McKinsey's Frankfurt office. Christian is the co-
leader of the North American renewables service line Education and prior work experience
and has been working with major electric power  Christian holds a PhD in theoretical physics from the Technical University of Munich
clients on strategic and operational challenges,  He holds a master‘s degree in mathematical physics from Cambridge University and also studied at the University College
especially focusing on renewable energy and project London and Heidelberg University
return optimization

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