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UPDATE 1-FOCUS-Coronavirus accelerates European utilities' digital drive

Mon, 10th Aug 2020 16:19

* COVID-19 forces utilities to steer plants, grids remotely

* Enel, E.ON, Iberdrola have accelerated tech adoption

* Relying more on software will help cut costs
(Adds detail on Enel's investment plans in paragraph 21)

By Stephen Jewkes and Christoph Steitz

MILAN/FRANKFURT, Aug 10 (Reuters) - When COVID-19 plunged
Italy into lockdown, it was decision time at the Verampio power
station. The control room, which runs a fleet of hydroelectric
plants across the Piedmont region, hard hit by the pandemic, had
to be secured to keep the lights on.

Operator Enel, Europe's largest utility, moved
quickly to create a parallel backup control room at a smaller
site 30 kms (18.6 miles) away while also plugging some workers
into the plant's data base so they could work from home.

"We'd never done this sort of thing over a long period of
time but it worked instantly," said Giuseppe Serrecchia, Enel's
head of Global Power Generation Digital Hub.

"To properly respond to the challenges of COVID, we've
boosted our overall digitalization drive."

Like companies in other sectors, European utilities are
having to speed up the adoption of new technologies as the
coronavirus crisis forces them to use software, not people, to
steer critical infrastructure including plants and grids.

Consultants say the move was overdue.

Spain's Iberdrola, the world's second-largest
renewables group by capacity, has set up similar processes to
Enel.

The pandemic has created advantages for businesses immune to
shutdowns and restrictions, allowing staff to work remotely and
providing technology to keep service flowing.

"Utilities that started digital programs before the crisis
have been more resilient. In the post-COVID 19 world, many will
need to reconsider their technology priorities," consultancy
McKinsey said.

"Using remote supervision could help grid operators minimize
the risk for their workforces while simplifying operations," it
said in a report.

RESILIENCE

At Germany's E.ON, Europe's largest operator of
energy networks with 1.56 million kms of power and gas grids,
that message has also sunk in.

It has freed up a further 500 million euros ($591 million),
on top of a total 13 billion euros it plans to invest over the
next three years, mostly in upgrading its energy infrastructure.

The company has increased the use of drones by 50% and
relies more on automated image recognition software for the
inspection of high-voltage power lines as a direct consequence
of the pandemic, officials told Reuters.

E.ON, which recently completed the takeover of Innogy's
networks and retail activities, is also banking on virtual
reality. At subsidiary Bayernwerk, which operates distribution
grids in the German state of Bavaria, E.ON has virtually
recreated substations to train staff remotely and provide remote
access to partner firms.

"During the corona crisis, our employees and customers have
learned to re-appreciate the advantages of digitalisation," E.ON
CEO Johannes Teyssen said, adding the group would accelerate
digitising its processes.

E.ON is also in the final stages of developing an app
similar to Apple's video conferencing service FaceTime
that lets technicians help customers fix their smart meters at
home, unless the problem is too complex to handle from afar.

The creation and use of new technologies is a step change in
running infrastructure and retail businesses more efficiently
and could boost valuations, analysts and consultants say.

"It builds more resilience in your business when you can
operate from multiple locations," said Steve Jennings, head of
Energy & Utilities at PwC. "The crisis will accelerate the
digital revolution for utilities."

DIGITAL BILLIONS

Companies are investing billions to get big data
infrastructure in place that will allow them not only to manage
plants and grids efficiently and fast, but also roll out new
services and create new revenue streams.

They could find some help from plans the European Union has
put in place to combat the COVID-19 fallout as its 7-year
1-trillion-euro budget proposal and 750 billion euro recovery
plan are geared towards green and digital transitions.

Enel has already spent 4.5 billion euros on digitalization
in the last three years, and plans to invest a further 2.5
billion euros in 2020-2022 on "platformisation" of its business.
"Platformisation" is the setting up of systems or platforms
where service providers and customers can meet to do business.

But such drives don't come without risks as the increased
need to work remotely also raises the chance of cyberattacks,
Leo Simonovich, global head, industrial cyber and digital
security at Germany's Siemens, said.

"Less-reliable internet connections, social engineering
attacks against employees and their families, and honest
mistakes made in unfamiliar workflows are all new potential
risks."

Utilities have little choice but to plough on, concerned
that they could be challenged by tech giants such as Alphabet's
Google or oil majors including BP, which last
week unveiled plans to enter renewables.

"If they don't do it then big data giants like Apple and
Google will come in with their apps and redefine the client
relationship," said Ingmar Wilhelm, chairman of energy big-data
startup Energisme.

"And COVID is hammering the message home."

($1 = 0.8450 euros)
(Additional reporting by Isla Binnie in Madrid; editing by
Emelia Sithole-Matarise)

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