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Digitalization Enables New Business Strategies to Lower the Cost of Energy by 13%

The world has witnessed the evolution of business.

Uber, Airbnb, Amazon are proven examples of how digitalization as a business model lowers costs through increased demand. These companies digitalize their assets to create a market place of consumers and producers. When the number of producers available to consumers increase, demand increases, significantly reducing the price of the service.

The wind industry has named digitalization as a key initiative to lower costs of wind production, so that renewable energy can compete against other lower cost-basis energy sources. However, is it just another technical approach or are there some other fundamental business tactics that will impact the energy industry?

At many of the conferences we've attended, digitalization is synonymous with buying more turbines. However, we would argue that this is not the right use of digitalization. In the board rooms, the conversation goes beyond using digitalization as a way to expand the number of turbines in production. At the C-Level discussion, digitalization is about cost reduction in the face of diminishing government support. It’s about creating new channels of revenue to compete.

At Sentient Science, we are totally aligned with our customers. We know that digitalization is a business strategy and the technical approach follows the initiative, not vice versa.

So, what are the business initiatives that drive digitalization?

We know of six:

  1. Extending the life of wind assets to lower the variable O&M costs, which prevents operators from reaching their pro forma goals
  2. Improved asset management so that operators have better financial control, preventing individual sites and the fleet from exceeding budgetary levels
  3. Supply chain efficiencies to reduce the inventory required and inventory carrying costs
  4. Risk reduction to lower the cost of insurance and extended warranties
  5. New business development to compete in new business with a lower cost basis
  6. Improved governance and use of data to manage the business with better insight competitively, between sites and site management

These are the initiatives that cause wind operators and suppliers to integrate digitalization into their business strategies.

So how does Sentient’s technical approach help the industry achieve their business initiatives?

Sentient Science developed a digitalization software that combines materials science with data science to build life models that provide answers about the long-term predictive health of each individual wind turbine in a fleet. Through load-related testing, tribology and understanding material stress, Sentient’s DigitalClone technology predicts component life and failure earlier than any other method.

When an operator knows what's inside their machines, they regain ownership of their turbine. We enable the operator to control what is being installed in their wind turbines through key partnerships with their suppliers. Our materials science-based software then identifies when and where failures will occur in their fleet for supply chain optimization, inventory reduction and lower insurance premiums.

The operator uses the data we provide to make choices about O&M, asset management, supply chain, risk, new business development and governance to reduce costs across operations. The overall reduction in the cost of energy can equate up to 13% on the cost of energy production by using the outcomes to optimize business decisions.

Further that, the operator has an opportunity to build their digitalization strategies around our life models and require their suppliers to prove out the true life impact their product offerings will have on their turbines. The more supplier offerings and services integrated into the software, the more choices the operator has to optimize performance and reduce costs. The suppliers have direct access to the operator network and vice versa, creating an economies of scale environment.

Our team will be at the Wind Europe Conference & Exhibition in Amsterdam on November 27th - 30th. Schedule a meeting with our team here at Booth #1D76!