Earlier this month (November 2023), Ignite held its first gathering of peers in the utilities space to discuss data’s role in the energy transition. Our inaugural speaker was Hilary Newstead, General Manager, Strategic Energy Management with SIMEC Energy, Australia (SEA).
Hilary and SIMEC were the right choice for our first breakfast. SIMEC’s role is interesting in that they are not a traditional electricity retailer within the National Electricity Market (NEM). SEA sits within the GFG Alliance group of companies, managing the energy portfolio of all of GFG Alliance’s operating businesses, participating in the wholesale market for electricity and gas. As a vertically integrated steel maker, GFG Alliance comprises iron ore mining, coking coal operations, steel manufacturing and downstream steel processing.
The discussion explored SEA’s data journey so far and its focus for the next phase of the transition. This inspired some robust discussion of what different attendees are focused on right now.
Data Driven - Engaging the whole organisation
Data drives everything that SEA does. SEA is responsible for ensuring the GFG Alliance’s steel products are delivered at an optimal price through strategically managing the energy used in producing it.
The SEA team’s portfolio of 2.5 TW/h of electricity and close to 10 PJ of gas is equivalent to the size of a tier 3 retailer. SEA manages this with a lean team of just five people, supplemented with outsourced expertise from Ignite Data Solutions.
Since starting with Ignite on their data journey in 2020, SIMEC has continued improving and unlocking reporting and data capabilities for their operations teams. Having real data points and the ability to see how operational changes are impacting manufacturing costs, for a product sold in a fixed spot market, is powerful in helping to improve margins.
The success of SIMEC becoming data-centric is demonstrated by the manufacturing sites interacting and engaging with reports from SEA to make real time production decisions, improving margins and business strength.
SEA has focused on building a solid, two-way relationship between the energy users and their team. The big win is that now their operations managers are interacting with energy reports and making good production decisions, before the SEA team calls them.
What did SIMEC do right?
The data team became actively involved and familiar with the requirements of sites from an energy and operations perspective. This included understanding the legacy thinking that they needed to counter and provide alternatives to.
Hilary and her team held weekly meetings, regular onsite visits, keeping all stakeholders informed and enabling them to share what was happening onsite, rather than only pointing to what the data was saying. Combining this key qualitative insight with quantitative data analysis enables the SEA team to tap into the intelligence that exists across the business and ensure that operations are optimised.
During the initial trust building process, data was used to give evidence to a point, and a real effort was made to make this data accessible at the time of discussion. SEA’s use of Microsoft-based applications allowed them to enable easy access through single sign-on services, and access to PowerBI reports through mobile phones is an important aspect for site managers who spend far less time at their desk than energy trading teams.
Identifying the individuals who play key roles within the process can help to build that trust fast;
- The Evangelist – who engages board and operations with critical information and insights and provides the’ why’ to engineers and operations teams.
- The Translator – who translates operational and strategic decisions into tools.
- The Data team – who ensures decisioning tools are robust and economical
Hilary’s advice?
- Start now and start small.
- Understand what you don’t know first.
- Maintain regular engagements with key stakeholders.
- Engagement must be more than just email communication.
Data's role at SIMEC as it accelerates its energy transition
SEA is working to decarbonise GFG’s steel making processes. Its current operations are very carbon intensive, using natural gas and coking coal to process iron and turn that into steel.
The Whyalla Steelworks is the only site in Australia manufacturing railroad tracks, which requires a lot of heat during the process.
The first step is to shut down onsite coking ovens, importing for the short term. Following that, blast furnaces will be decommissioned and replaced with electric arc furnaces.
Onsite emissions will halve when coal is removed entirely from steel manufacturing process in the future. As GFG sites are relying on more external energy, SEA’s short-term exposure to the market has amplified. The use of electric arc furnaces at some sites will triple renewable electricity demand.
The SEA team is working with site managers to develop operating rhythms to help reduce pricing sensitivity and load demand, especially important for sites on the fringes of the West of South Australia. Access to the right data and the ongoing communications engagement is key to their success with this goal.
The next evolution is for the plants to use hydrogen to create green iron and green steel products already required by C&I customers to develop 6-star green buildings.
SEA is currently performing data analysis to understand how to best use energy to make hydrogen at a cost-efficient price, assessing production profiles and use to optimise hourly, daily, weekly, and monthly pricing fluctuations in the electricity market.
SEA is also using their data to help operations teams determine the best size in new equipment investments and operating schedules.
More data, more granularity, more insight
Further discussion with breakfast participants
Hilary’s journey prompted discussion around the table with attendees noting that, from a data perspective, the energy transition is becoming a bit of a distraction. Attendees highlighted that they were facing complex questioning within their businesses as more leaders and customers look to understand their energy transition progress.
For SEA, the focus for the transition is on measures to improve cost of energy and emissions per production unit. Energy cost per production unit will enable GFG to fully understand the levers that they have to improve profitability.
Other attendees noted that their customers are also increasingly asking about the carbon intensity of products being made, emissions per production unit and more data granularity and insight. This requires more data feeds and more data capabilities to provide such interrogation.
At the executive level, leaders highlighted the impact the increased transparency of operations has had on reporting demands from boards. More questions are being asked and more feeds are being brought online (for distributed assets in particular).
The Ignite team discussed the feasibility of standing up a system like SEA’s in 6 to 8 weeks for smaller retailers or NEM participants, as the data product is available, it just requires streamlining. Key to any data acceleration is the ability for the data team to provide bite sized chunks that executives and boards can digest and understand easily, rather than tabling another 50-page management report. This reflects Hilary’s advice on starting small.
This increased ask on data teams is being driven by:
- Increasingly complex questions of data from Executives and Boards, despite data remaining relatively the same.
- Executives concern about their looming reporting requirements as part of the transition, while the 3-year buffer is resulting in slowed progression to compliance.
- New policies and regulations assuming that Executives and Directors have access to crystal clear data.
- Overengineered policy design and multilayered regulation
The general consensus around the table was that Consumer Data Right (CDR) has been a grudge purchase for those retailers impacted. The benefit can’t be determined, and CDR was rolled out too fast with a lack of standards – which is having a significant consequence for further regulatory measures.
For distributed assets, there are also no standards. There are no security standards, nor data ownership standards, impacting Joint Ventures and partnerships with site operators owning both data and assets, and gaining visibility becomes a difficult task.
We look forward to continuing these conversations at our next Ignite Industry Breakfast in the new year (2024) in Sydney. Watch this space!
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