The business environment around us is changing very fast, at a pace which until a few years ago was impossible to imagine.
The digital ‘tsunami’, if I may use this word, has a potential to dismantle years of established business models, which, to some extent, is already happening. I love to ask my senior executive peers from the power industry (ones with the domain expertise) how they cope with the new digital world in their respective businesses. Frankly, most of them do not feel too comfortable discussing how, for example, distributed cloud computing could change the world around us all, their immediate concern being the increasing competitive pressures and, of course, ever-increasing demand for renewables – a trend that has surprised even the most ardent critics of the technology.
And what about the demand-supply imbalance in the power equipment business! Did we see it coming? Perhaps we did, but many industry strategists seem to have turned a blind eye to the bigger picture, investing in markets where demand was slowing down while building (over)capacities in the domestic markets around the time when general economic slowdown was taking place everywhere.
The digital ‘tsunami’ which we can see around us is changing the business environment at a very fast pace
Conventional power industry has been left with an overhang that calls for a reset of sorts. PowerTender, led by power industry professionals with many years of experience, thus found the timing right to launch the next digital revolution in the global power equipment trade and associated services.
In the last few years, a lot of advancements have been made on the digital front. Infrastructure build-up around large scale data centers, software systems, internet reach, speed of communication and data analytics have shown remarkable potential. The cost of using these services has also come down, making it possible to use such technologies across the energy sector as a whole. Information and Communication Technology (ICT), as it has come to be known, is going to be the backbone of many innovations going forward.
Changed business model
The power industry has traditionally been very conservative, driven primarily by the reliability of providing uninterrupted power to its customers. Adoption of new technology has generally been cautious and equipment sourcing follows a set practice. Yet, power sector is credited with early adoption of digital technologies, especially around operational aspects of the interconnected systems; e.g. advanced energ y management and SCADA systems.
At about the same time when advancements were made in newer ICT technologies, power sector saw a paradigm shift in the business model. Supported by government incentives, and concerns about global warming, renewable energy has made a remarkable impact on the utility business. Many utilities in Europe have been able to supply a large part of their electrical load (sometimes upwards of
80 % for certain short durations) through renewable sources. Plant load factor of conventional power plants is steadily going down, impacting profitability of the sector. Utilities are under severe pressure to reduce costs and improve productivity. This situation isn’t going to ease out, since cost of solar and wind power has now reached levels where it can compete with conventional form of power generation.
As per the latest World Energy Outlook 2017 report, the trend of higher growth in renewables segment is going to continue. On top of that, with a significant shift towards electric vehicles (EV) in years to come, requiring EV charging stations, electrical industry will continue to grow, albeit with a difference.
Certain regions with lower growth will need to keep their aging infrastructure up and running (North America and Europe), together with continued support for renewables and their integration into the grid; while other regions will require investments to build their distribution and transmission systems equally, like for example Africa, South East Asia, India, Middle East, etc.
Companies are under severe pressure to reduce costs and improve productivity, and ICT helps to improve the overall ecosystem around buying and selling of power equipment in a global environment
The power of connections
A lot is written about the benefits ICT technology will bring about in the power systems, e.g. lowering of O&M costs, enhanced efficiencies through better power demand/supply fulfilment, higher system uptime and increased life of assets, etc. But there is yet another aspect of ICT that’s worth discussing. And this is to do with improving the overall ecosystem around buying and selling of power equipment in a global environment. I am sure many of us will recall past attempts at facilitating on-line efficiencies around trade in power equipment. Technology wasn’t available to properly connect all stakeholders (remote location), not to mention challenges with architecture to support large file transfers to exchange pictures and large data as just one example.
So, there are two important factors that make it possible to improve productivity and price structure in the power equipment trade.
One factor is that conventional power equipment manufacturing is now mostly a matured business with many low-cost, so called developing, countries having both the capacity and technical know-how to produce world-class products. Most such traditional equipment manufacturing while catering to in-country needs has the potential to supply and fulfil the demand anywhere around the globe at a marginal cost of manufacturing. And the second enabler is of course the latest ICT technology, which, while helping to connect the demand and supply centers of power equipment, also enables features to be built that can support the traditional sourcing model of the buyer (e.g. EPC players) and the end user with high degree of security features.
PowerTender helps establish this connection between buyers and sellers in a global environment, which otherwise is not easy and is both expensive and time-consuming. And as mentioned before, with pressure on costs all around, buyers are willing to procure from new suppliers outside of their traditional supplier base and in doing so, expect manufacturers to optimize their supply chain, go-to-market spends and productivity gains and pass on the benefits for a win-win for everyone.
Another important aspect of a successful global transaction involves proper communication. It starts with easily identifying the suppliers of interest and then floating either a limited enquiry or a global request for quote (RFQ) in a few easy steps. The four illustrations, Step 1 to Step 4, demonstrate the simplicity of this process.
Posting an enquiry makes it possible for participants to communicate within the group so that sellers fully understand the techno-commercial requirements of buyers and are able to supply compliant offers. PowerTender helps facilitate all this directly on-line, besides providing regional support close to our global customers to further aid communication. Knowledge of power industry, the equipment involved and its application, familiarity with regional customers and their sourcing preferences, and hands-on experience of global trade give PowerTender a unique insight into what customers want, which is very much reflected in the way PowerTender has set up the on-line tool.
PowerTender helps establish the connection between buyers and sellers, which otherwise is not easy and is both expensive and timeconsuming
Creating a fresh request for quotations is a simple four-step process
New video for buyers explaining easy steps to create a fresh RFQ
A new video is available explaining how a buyer can easily create request for quotations (RFQ).
This video is also good for sellers to get a good understanding of how buyers get to receive and assess the proposals and steps in the whole process.
Knowledge of power industry, its global users, equipment familiarity and its application become important, which is the unique capability of PowerTender
Neer aj Kaul is a power sector professional with 34 years of experience in the power industry; both utility and manufacturing. For 11 years he worked for India’s largest power utilities of NTPC and PowerGrid engaged in building advanced power transmission systems. The next 22 years he was with GE Energy in various leadership roles covering Africa, Middle East, India and South East Asia regions. He was active in GE’s renewables, gas, steam and digital energy businesses for many years and in his last role he was the General Manager of Marketing for all products under GE-Energy for India region. Neeraj is now associated with PowerTender as its partner and is located in India.