From technical debt to digital power: 4 steps to a modern digital platform

The power industry is the backbone of the green shift, but technical debt is holding back innovation and the development of sustainable solutions. At the same time, the pressure to improve data exchange and adopt new, digital solutions is increasing, according to a Cegal survey of the industry.

In just a few years, major changes have taken place in the Norwegian power industry. The common denominator is new technology and key words are: Transition to 15-minute reading, fluctuating electricity prices, power tariffs, more power generation from uncontrollable renewable sources, more sensors connected to the internet(IoT).

The title "More of everything - faster" of the Energy Commission's report from 2023 summarizes what the power industry is facing. At the same time, many power companies lack the technological foundation to effectively embark on the green shift, become more sustainable and deliver services that both consumers and authorities expect the power industry to deliver. Technical debt prevents "More of everything - faster".

Read our blog post: Four major trends creating the perfect storm in the power industry >

Cegal has asked several power producers and grid companies about the technological challenges they face. "Technical debt," several companies replied, highlighting challenges related to older IT systems, outdated IT solutions, cumbersome user interfaces, manual processes, demanding updates and the fact that individual systems are difficult to integrate with other IT systems.

The energy companies identify two main challenges: the need for modernization of professional applications and improved collaboration between IT systems.

Technical debt prevents full effect of AMS rollout

The report "Elhub's value for society" states that "the establishment of Elhub, together with the rollout of smart electricity meters (AMS), is one of the largest digitization projects in the power sector in Norway over the past decade." "Elhub, together with the roll-out of AMS, has made it possible to provide consumers with prices that reflect the situation in the power system [which] enables resource scarcity and grid constraints to be solved at the lowest possible cost to society."

With the modernization of Elhub, a technological platform has been established that can serve as a solid foundation for the green transition and a more sustainable development of the power market and energy consumption. However, for this to happen, stakeholders must have systems and applications capable of exchanging data with the Elhub platform.

Read more about how Elhub's cloud migration has resulted in increased flexibility, faster development and lower IT costs >

At the same time, the report points to challenges related to technical debt: "The power system is now facing major challenges. There are many plans for new consumption, partly as a result of an ambitious climate policy. There will also be a lot of new power generation, but this is largely weather-dependent and varies greatly. In many places, there are challenges with the capacity of the electricity grid."

The Elhub report also points out the biggest challenges with technical debt:

• It is challenging to make changes, correct errors and develop new functions
• The APIs are old-fashioned and that this becomes a threshold for exploiting the opportunities in the platform
• The systems become unnecessarily complicated
• Operations, management and further development become less efficient

"The technical debt accrues interest so that it becomes more and more demanding to improve or pay down the technical debt if no measures are taken (compound interest)," the Elhub report summarizes.

Fragmented systems slow down innovation

Many of today's specialist applications were developed for a time when systems worked in isolation and when the power market was more locally oriented and much less digitized.

In the Cegal survey, stakeholders describe several challenges related to old specialist systems and a lack of interaction between the systems:

• Many, old systems - Several power companies say that they use several legacy applications on a daily basis that have a lot of technical debt.
• Few suppliers - The systems are developed by a small number of suppliers, some with limited resources. This leads to little progress and innovation.
• High user threshold - Several applications have cumbersome user interfaces.
• Poor data flow - It is difficult to retrieve data from multiple systems, and it can be difficult to export data.
• Poor data access -  Difficult to get an overview of and compile data in the various specialist applications.
• Person dependency and manual work -  Compiling data requires a lot of manual work and requires access to specific people who know the systems.
• Costly maintenance and upgrades - Legacy systems require regular maintenance windows. This leads to downtime and prevents efficiency gains.

An example from the Cegal survey shows how technical debt hinders the development of new services: "One company states that it took two years to implement a change."

4 steps to modernize your IT platform

Marianne Blikø, Director of Power and Renewables Products at Cegal, suggests that power companies follow these four steps when starting to modernize their IT portfolio:

1. Map the current IT portfolio and identify which systems should be upgraded, phased out or replaced.
2. Develop customized, cloud-based solutions that deliver more predictable costs and better performance
3. Automate data management to reduce manual input and improve the quality of decision-making
4. Ensure seamless integration between old and new systems through API-based solutions.

Modernizing the power companies' IT platforms offers several advantages. The most important is that the entire power industry is better equipped to meet the demands of 15-minute metering, fluctuating electricity prices, power tariffs, more power generation from uncontrollable renewable sources, as well as requirements from both authorities and end customers.

In addition, IT modernization brings tangible benefits directly to the individual company:

• Better control and predictability - Reduce dependence on individual suppliers. Get a standardized and modern IT architecture and platform that is future-proof.
• Increased operational efficiency - Automate time-consuming tasks and get systems that interact seamlessly. Avoid key people becoming a bottleneck.
  
• Better decision-making - Better data flow and higher data quality provide a better basis for decision-making. Real-time insight enables smarter and faster decisions.
• Controlled and gradual transition to cloud service - Modernize systems with a clear cost/benefit analysis and risk mitigation.