Cutting energy waste could be big for utilities

The numbers speak for themselves

Utilities and their customers around the world lose an estimated $96 billion annually to electricity theft and other types of non-technical losses (NTL) such as billing errors and unmetered consumption, according to a recent study from the Northeast Group, a Washington, D.C.-based market research firm specializing in energy and infrastructure.

In the U.S., the industry consensus puts NTL for electricity somewhere between 0.5 and 2 percent of revenues, costing utilities and their customers somewhere between $2 and $8 billion annually based on annual retail electricity sales of $390 billion, according to the U.S. Energy Information Administration. This problem not only costs consumers money but also creates serious safety issues in the field and distribution system.

According to statistics from the American Water Works Association, we lose 7 billion gallons of treated water a day to everything from leaky pipes to creaky infrastructure to running toilets. That constitutes somewhere between 14 and 18 percent of the water put into the system. When you consider the amount of energy required to treat and pump clean water, these losses compound themselves in many ways.

We’re also starting to get a better handle on how much natural gas we lose to NTL. With lower-cost and cleaner natural gas replacing coal as our preferred fuel for electricity generation, leakage in our natural gas infrastructure is becoming a bigger problem. While the Environmental Protection Agency estimates losses from the nation’s natural gas infrastructure at 1.4 percent, recent studies by other independent groups estimate it’s at least twice that high.

The other problem is that methane, which is what leaks from natural gas wells, storage and pipelines, is a very potent greenhouse gas, with more than 80 times the atmospheric warming capacity of carbon dioxide in the first 20 years after release. In other words, methane leaks from gas infrastructure are undermining the carbon emission reductions we’re achieving by moving to natural gas.

It’s challenging to put these huge numbers into context. In developing countries – where energy poverty and water scarcity can be a life or death matter — NTL numbers can dwarf those in developed countries, with water and electricity losses exceeding 30 or even 40 percent. Furthermore, regulators don’t typically provide a compelling incentive for utilities to reduce NTL, choosing instead to spread the cost of NTL across ratepayers or provide large subsidies for state-owned utilities to absorb these losses.

Technology can help control NTL

However, there’s no refuting that these losses represent a huge opportunity to save money, conserve resources and protect our environment. And while it may have been practical in the past to dismiss this theft and waste as simply a cost of doing business, technology is now available that can put a huge dent in these losses.

A new generation of smart meters capable of analyzing high-resolution data at the edge of the network is enabling electric utilities to detect energy theft in real time based on the flow of current rather than relying physical tamper alerts. This greatly reduces false positives, enabling the utility to direct field investigation resources with much greater precision and efficiency.

Water utilities are able to use the interval data from their smart meters to detect leaks behind the meter at the customer premise, conserving water and helping customers avoid a huge bill. They’re also deploying acoustical sensors on their mains — using the same network —  below the streets that listen for the sound of leaks and monitor pressure locally, enabling them to quickly find the location of the leaks under the streets.

In addition to measuring gas consumption, smart meters and the communication networks that connect them now provide an extended platform for gas utilities to add other smart devices such as methane-sensing leak detectors, pressure and temperature monitors, cathodic protection and remotely controlled valves. All of these devices enable much better leak detection to not only reduce waste but improve safety. And these capabilities can be extended well beyond the distribution system to pipelines and other gas infrastructure at the storage and wholesale levels.

IT and OT integration is critical

But none of these whiz-bang IoT technologies at the edge will deliver their intended value without the system integration and business processes necessary to capitalize on the value of the data and drive outcomes. That’s the bigger lift for organizations from both an operational and cultural standpoint.

How do you quickly correlate a suspected case of electricity diversion with the customer’s billing and consumption history in the CIS or billing system? How do you quickly check with the workforce management system to determine whether there is a field crew doing work at the premise before dispatching an investigation crew to the site? How can leak sensors on the water mains be combined with augmented reality tools in the field to help construction crews know precisely where to dig to fix the leak? How can gas utilities utilize these sensors and control devices to identify and fix a leak before it becomes a safety issue and potential liability?

Connecting these dots is the essence of digital business transformation. Utilities are ideally positioned to leverage advancements in IoT; artificial intelligence; machine learning; cloud, fog and edge computing; and analytics to tackle previously intractable problems such as non-technical losses. Reducing wasted energy and water is good for the bottom line, good for customers and good for our environment.

Mazi Fayazfar is the Chief Technology Officer for the Telecom, Media & Utilities group at Atos in North America. He can be reached at Learn more about Atos solutions for utilities:


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