APO in Utilties

[Former Member]

Hi Experts,

This is a very broad question. But still I would like to have all valuable insights.

1) Is APO ever used in Utilities Industry i.e. Gas/Water/Electricity Domain

2) If yes, then which functionality of APO is suitable?

3) Are there any practical examples of use of APO in Utilities; - to be precise in Transmission & Distribution arena?

Regards,

Rohit

[somnath_manna · Accepted solution]

After going through Pankaj and Ken's replies I did a bit of Google search on Utilities industry business requirements. The search results plus based on my earlier brief industry experience in Captive Cogeneration Power Plant engineering here are few points I could come up with.

For this discussion I am just considering conventional (coal or gas-based) Power Plants. These plants being capital intensive ideally need to run at their peak capacity (Plant Load Factor). So most power plants do not look at the demand but keep on generating at max PLF. In case there are multiple units (turbines ) at a power generation plant then depending on the load (customer demand) the decision would be to shut down one unit (turbine). However depending on the type of fuel that can be an inefficient operation. For example for a coal-based plant the shut-down and subsequent start-up time is farily high (measured in 8 hour shifts). On the other hand for liquid or gas fuel based plants (like oil, natural gas, naptha) the shut-down to start-up operation is quite fast (measured in half hours).

Whatever is the case demand management is important for utilities industry but not in terms of day-to-day planning for generation. It's either long-term planning (decision to shut down a unit for preventive maintenance etc.) or very short-term planning (sudden peaking of load due to another power plant trip in the grid etc.)

So really Production Planning or Demand Planning module is not a good fit.

On the other hand - apart from generation, transmission and distribution is other area. Here again as far as my knowledge goes, in developed countries there are huge inter-connected grids with control centers which act as brokers between generation (suppliers) and distribution (consumers) companies. These centres are quite specialised with power trading (matching of demand and supply) carried out in at least 15 minute intervals (if not less). Such a granular supply demand matching process depends on specialised automated optimization solutions.

While there are APO functionalities (potentially CTM) which can carry out such Demand Supply Matching, I do not think they are good anough to plan in quch a quick-changing scenario. For example if the CTM run has to be done in every 15 minutes with a different CTM profile (since master data like plants, capacities) then the results and interpretation of it will not leave much time.

But there is one area - Service Parts Planning where there can be a potential use of APO. There are a number of parts requiring servicing at specified intervals (preventive maintenance) or just inventory in case of failure both in generation (like boiler pump bearing, gaskets, piping etc.) and transmission & distribution (transformers?, wires, towers, switch gears). In these cases the business requirement would be to forecast the service parts requirement, decide on the optimal service parts inventory and its location. Service Parts Planning module of APO can definitely help in that.

Well that's my 2 cents on this issue. No doubt its an interesting and stimulating discussion and any feedback will be much appreciated.

Thanks,

Somnath

[Former Member · Accepted solution]

Hi Somnath, Ken, Pankaj!

Appreciate your valuable inputs. They are indeed in-line with my research as well.

In my organization; my project manager has seen use of APO in a T&D industry at Toronto. And will share his thoughts over this topic soon when he is back in Mumbai.

Regards,

Rohit

[praveen_suryadevara]

Agreed with analysis done, I guess Service part planning, SNC might be a good fit. Please share if any one did similar scopiing.

[Former Member]

Hi Rohit,

APO can be used in any industry scenario provded you have a prodcution set up where in you have demand followed by fulfilling the demand through Production or purchasing.

In case of Power/ Gas/ Electricity generation, I assume there has to be some demand which can be a forecasted or the Customer based demand, so in this case DP can be of much use where in you can use the various available foecasting profiles to arrive to the forecasted demand.

Then you can always use this demand for working out the resources & the material input for doing the optimised rosource allocation.

In a nut shell, I do not think APO is industry specific you can always deploy this functionality where in you have the Supply chain manufacturing.

Hope this shall answer your query.

RGds,

Pankaj

[kenneth_snyder]

Good question...

I implemented APO (SNP and DP) at FPL (Florida Power & Light) but it was for their service parts and construction materials (poles, wire, transformers, etc...).

Nice project.

I also have always wondered why no utility company has used optimizer to determine energy production and distribution (which plant should produce each megawatt and how should it be distributed)...

Ken Snyder

[somnath_manna]

I do not have answers to your questions but a quick search on www.sap.com >> Solutions >> SCM shows the following

No Customer Successes in Utilities Industry.

Brochures & White Papers under Utilities there are only two; one of which Optimal Service Parts Management can be of interest. It talks about SPP (Service Parts Planning) module under APO.

Traditional APO modules (DP, SNP, PPDS, GATP, TPVS) will not be much suitable to the business needs of Utilities industry.

For T&D however Spare Parts Planning module can be of importance especially in terms of inventory holding and requirement planning for items undergoing preventive maintenance (such as after x hours of operation you change the part).

Thanks,

Somnath