If you want to find the global heavyweight in electricity, look no further thanGeneral Electric (NYSE: GE). Nearly 1/3 of all the electricity generated in the world is generated using GE technology.But the company isn't content to stop there. GE has a plan to use its emerging digital industrial technology to increase its market share and build new revenue streams.
Continue Reading Below
These plans were on display at its recent Minds + Machines event, as GE highlighted its partnerships with another industry heavyweight, Fortune 100 utilityExelon(NYSE: EXC). The two companies shared concrete examples of how they are using GE's digital capabilities to revolutionize the electricity industry, and saving lots of money in the process.
GE believes that digital and data are the solution to solving the world's power needs. Image source: Getty Images.
The power of data
GE's flagship digital software is its Predix platform. Predix is a cloud-based industrial operating system that can run apps for the operation, maintenance, and analysis of GE industrial machinery. GE is now manufacturing "Predix-enabled" machines, which are able to automatically collect and send data securely to the cloud for analysis.
The amount of data on industrial equipment that can be generated is staggering. According to Steve Bolze, the President and CEO of GE Power, a single GE plant generates 2 terabytes of data per day.Only about 2% of that data is currently used, but it's being used to good effect. GE electricity customers who have signed up for Predix in the past year are seeing 3% higher efficiency and 5% higher reliability from their operations.More impressively, they are seeing a 25% reduction in operations and maintenance costs, as Predix identifies potential problems before they occur.
Continue Reading Below
Those kinds of numbers are sure to be attractive to potential customers, particularly heavily regulated utilities that may not have the flexibility to raise prices to offset operational inefficiencies that develop.
Big client, bigger plans
One of those customers is Exelon -- the single largest utility in the U.S., with more than 10 million customers.Exelon recently deployed the largest-ever single use of Predix. It's currently installed across all of the company's electrical generation platforms, which produce 32,000 megawatts of power. Exelon's President and CEO Chris Crane announced that as part of the deployment, GE was building a Predix-enabled gas plant in Wolf Hollow, Texas, which will be the most efficient in the world when it comes online.
Obviously, this is good for GE, which now has a long-term partnership with a major client that extends beyond the sale and servicing of specific pieces of equipment. By signing Exelon up for Predix, the relationship extends to the operation and management of the client's entire network. Moreover, by demonstrating that it can successfully work with such a large client, GE is implicitly showing that it has the capacity to meet the needs of clients large and small.
But GE and Exelon didn't just outline the big-picture benefits of their partnership at Minds + Machines. They also gave a very specific example of how Predix has been able to directly affect Exelon's bottom line.
When the wind blows
Exelon has 1,700 wind turbines across the country that produce 1,800 megawatts of power. One major problem with wind power, though, is that it's unreliable: if the wind isn't blowing, naturally the wind turbines aren't going to produce any power.And because energy can't yet be stored in mass quantities, if a wind turbine is producing more energy than expected, it's going to simply be lost. If it's under-producing, electricity needs to be diverted from other sources to make up the difference.
GE's Predix can't make the wind blow when it wants to, but it is enabling Exelon to become more efficient by successfully predicting when and where the wind will blow. Using weather maps and a Predix application the companies co-developed, Exelon can now predict an hour in advance how much energy its wind farms will be able to produce. The Predix app sends that information to the energy markets in real time. The markets can then send a dispatch directly to the wind farm telling it exactly how much energy to produce, so that only usable capacity is generated. This saves Exelon money by reducing unnecessary energy loss and helping to ensure unexpected capacity is used, as well as making the entire energy system more efficient.
GE's management projects that 50% more electricity will be needed worldwide over the next 20 years as consumption increases and areas of the globe that currently have no electricity come online. Despite this, GE management predicts, this increase in generation will need to be coupled with a 50% reduction in carbon emissions. The only way to make that happen will be innovation and increased efficiency. And GE Power's Bolze thinks that utilizing digital data is one solution that will have a significant impact.
Exelon has jumped in with both feet, and is embracing these new digital capabilities to good effect.By using Predix, the company is seeing increased efficiency and decreased maintenance costs, of which its wind prediction power is just one example. Embarking on this strategic partnership now should pay dividends for both companies over the long term.
10 stocks we like better than General Electric
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and General Electric wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of Nov. 7, 2016
John Bromels has no position in any stocks mentioned. The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.