Drew Puffer | MEL Clean Energy Candidate | December 2020
APPP 506 – Master of Engineering Leadership Capstone Project, University of British Columbia
Acknowledgment: The Category Management Group at BC Hydro. In Particular Kelley Hishon for her ongoing support and guidance and Tania Dashko. I also would like to thank Vladan Prodanovic and Donabel Santos for all of their help in bringing this project together.
Abstract
Abstract
The production, distribution, and consumption of energy is a focus for the future prosperity of Canada and British Columbia. As the demand for energy grows and the need to generate sustainable clean energy becomes more important it is vital that the energy supply chain be as efficient as possible. The optimization of the energy supply chain will lead to improvements in energy efficiency, resource use, cost-effectiveness, and ultimately the price consumers pay for power. Understanding and optimizing the complex system of hydroelectric energy production in BC will provide British Columbians with lower utility rates and will decrease the carbon intensity of the energy supply. The average electricity demand for BC is satiated by the large hydroelectricity operations within the province but during peak consumption times surplus electricity must be imported from Alberta (albeit a small percentage)1. The electricity produced in Alberta is derived from high carbon intensity sources, predominately coal-fired power plants2. Thus, better utilization of the funds for the advancement of hydroelectricity generated within the province will ultimately lead to less reliance on carbon-intensive energy sources of Alberta.
Historically the various supply chain procurement projects concerned with producing and distributing power in BC were tracked, manipulated and visualized in an Excel format. Using Tableau software, it may be possible to improve the way this information is stored and shared, ultimately leading to greater efficiencies, lower costs and higher quality service.
This capstone project will aim to create a framework in which the acquisition of resources related to producing and distributing energy can be organized and tracked in real-time to improve the efficiency of the entire supply chain.
Introduction
Over four million British Columbians rely on the power produced by BC Hydro, this represents roughly 95% of the population as of 20194. The figure below shows the areas where BC Hydro operates within the province of British Columbia.
With the average household consuming approximately 10,000 kWh of electricity per year there is a substantial amount of power that must be produced to meet the needs of BC residents5. BC Hydro operates 30 hydroelectric generation facilities across the province4. The combined capacity of these plants is approximately 11,921 MW4. Thermal plants and diesel generation make up the remainder of the electricity produced in BC but represent only a fraction of the total energy production. BC is endowed with substantial hydroelectric capabilities with two rivers (the Columbia and Peace River) accounting for the majority of the energy production4. This makes the energy produced by BC Hydro much less carbon-intensive than most other conventional energy production methods. Indeed, roughly 98% of the energy produced is classified as “clean energy”4. All of this power needs to be distributed to customers across the province through a maze of transmission lines. These lines span approximately 18,000 Km and are energized to 69 kV and above6.
Below is a map depicting the high voltage transmission lines in BC:
BC Hydro is constantly looking for ways to save energy and costs for its customers in order to provide the highest quality service at the lowest price. Concentrating on these underlying values the demand side management portfolio was able to achieve 868 GWh of electricity savings in 20198. These energy savings are equivalent to the annual average energy use of almost 78000 Canadian households5.
The logistics associated with supplying energy to the province are complex. Improving processes for the procurement of essential resources is crucial for maintaining low-cost clean power in British Columbia.
Background
The proper acquisition of resources is a core value at BC Hydro with the goal of having “the most economic and environmentally friendly resource acquisition program in North America in the next five years”11. In conjunction with their other values, it is imperative that the crown corporation continuously work to improve their supply chain process management operations. A strategic process has replaced the historically more transactional focused supply chain model at BC Hydro. Supporting the overall mission of the organization with an emphasis on the best business practices throughout the supply chain demands strategic thinking. Sourcing the materials and services in only the beginning of the challenges as the suppliers need to be managed throughout the lifecycle of a project. Using sequential gates, milestones and touchpoints helps the category management team ensure the approach to optimizing the supply chain processes is disciplined and organized.
Ensuring the continued generation of clean energy across the province through the procurement of materials and resources is the main focus of the category management group. Approximately $2 billion/year is spent on these indispensable resources. Beyond the management of financial assets, the category management group needs to ensure safety while maintaining and building strong relationships with suppliers and enhancing responsiveness. Furthermore, they aim to optimize organization, productivity, and efficiency in combination with decreasing the lifecycle costs and increasing value, all within the regulatory framework.
Currently, the category management team is using excel to keep track of all of their projects spanning the energy supply chain in BC. Although this is a common method for tracking projects there are inherent limitations with the software. Basically, Excel is a spreadsheet tool that can classify information in a database and keep track of different aspects of a project. The tabular format of excel lends itself to the creation of static graphs, charts, and other visualization tools that are not easily manipulated. Furthermore, Excel makes it more difficult to solve data-driven problems on a granular level. Due to the structure of the program, it is often difficult to drill down and look at data from different levels of organization. The final limitation when using excel in tracking live projects has to do with the automation functionality. It can be tedious to embed macros that make it possible for Excel to update automatically. This can lead to inefficient use of resources for tracking and manipulating live project data.
Case Study
Discussing every aspect of the power production and distribution system would be exhaustive and is beyond the scope of this project. The procurement of transformers will serve as a case study for the strategies used to optimize category management at BC Hydro. Power transformers are specialized equipment used to convert high voltage electricity from transmission lines to a lower voltage that can be used for everyday appliances, lighting and heating. These types of transformers are ubiquitous in the urban landscape and are often pad mounted green or yellow rectangular box about half a meter in height7. Conversely, transformers can also be used to “step up” electricity effectively boosting the voltages for transmission across long distances8. The transformers used by BC Hydro are custom built and extremely expensive. A single unit can take up to 14 months to manufacture and deliver and can cost anywhere from $500,000 to $3.5 million8.
Below are photos of a standard step-down transformers:
As mentioned previously, the supply chain focus has switched to a more strategic process for acquiring high quality materials at the cheapest price. This is exemplified by the switch in transformer purchases since 2013. Prior to 2013 BC Hydro bought the majority of its power transformers from low-cost facilities overseas8. These units were often purchased in silos where one transformer would be used for a specific project. Since 2013 the category management group has resolved many of the issues with consistency, quality, reliability and delivery with a systemic approach to optimization. Although the initial upfront cost of the transformers was significantly less than the ones used today there were a multitude of extraneous costs that would ultimately increase the price of a single transformer by more than 46%8. As Peter Kobzar (Category Portfolio Manager for Major Equipment) points out “it wasn’t just about the purchase price for the transformer alone—we needed to take a step back and rethink our approach from start to finish.” 8. Optimizing the supply of power transformers was multidisciplinary effort. Teams from finance, quality management, infrastructure procurement, capital infrastructure project delivery as well as generation and transmission engineering needed to work together to solve the supply chain problem. A diverse working group created plethora of changes in the functioning of the supply chain of power transformers. New models were created for pricing and contracting as well as revamping end-to-end process. One unintended consequence of sourcing better power transformers was the collaboration between different groups within the origination. As Bob Stewart, (Principal Engineer in Integrated Planning) remarked “This project represented the first time Generation & Transmission engineering worked together to develop joint specifications” and “these groups now collaborate regularly as part of their work.” 8.
The collaboration between departments creates challenges for tracking projects across teams and the historical Excel spreadsheets were in danger of becoming overly complicated. To streamline the input, manipulation, visualization and overall understanding of projects a solution was devised using Tableau. By creating a unified platform where interdisciplinary teams would have access to project information, in real-time, could improve project performance. As this platform was just released to the category management department it is not possible to quantify the resource savings from integrating project information into this type of system. However, the feedback from the category management division was compelling. As BC Hydro continues to refine the supply chain process this type of platform will become more valuable in tracking operations while providing a means for cross-team collaboration.
The Historical Program Management Database
The database organization system concerning project information was cumbersome for most users and created inefficiencies in managing projects concerned with service and material acquisition. The spreadsheet organized projects by portfolio, category, subcategory, project name/identification, and type, among others. For each project there were often associated suppliers, responsible people, job #s, and crucial dates. In cell format, this information was not intuitive and could quickly become convoluted. Additionally, there were key milestones and touchpoints associated with every project. It is vital that these milestones be met in order to ensure the delivery of crucial products and services. As such monitoring project progress was difficult and sometimes led to wasted resources for the responsible teams. This led to inefficiencies in project development which could eventually result in delays, added cost, and lower value to British Columbians.
An example of the historical spreadsheet used in projects tracking is presented below:
Optimized Program Management Database
The dashboards below represent the solution to the inefficiencies brought on by the Excel database format. This dashboard incorporates all of the important information concerning each project in an intuitive, user-friendly, and aesthetically appealing view. Different shapes and colors distinguish project status and specific milestones and are situated on a timeline to provide a reference for the timing of each important task. Different filters can be applied to focus on specific portfolios, categories, timeframes, and project statuses. This makes it easier to keep projects on track and provide assistance where it is needed most.
There is an opportunity to integrate other aspects of the supply chain into this dashboard. Linking financial information, geographical data, supplier and distributor contracts as well as material and service specifics would make this a more powerful tool in improving efficiency. As with most efficiency gains, the process of optimizing program management in a supply chain is built upon incremental improvements that eventually lead to better performance. Enhancing data visualization is a means of achieving greater performance in complex systems.
Contact
Please feel free to contact me if you have any questions or would like more information on this project!
Email – drew@puffer.biz
Linkedin – https://www.linkedin.com/in/drew-puffer/
References
1BC Hydro – Power Smart. (2019). Importing and exporting power. Retrieved December 2, 2020, from https://www.bchydro.com/energy-in-bc/operations/power-trading-and-its-benefits-to-b-c–.html#:~:text=One%20of%20B.C.’s%20electricity,reduce%20greenhouse%20gas%20emissions%20there.
2Canada Energy Regulator – Government of Canada. (2020, September 29). Energy Production – Alberta. Retrieved December 16, 2020, from https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-alberta.html
3Canada Energy Regulator – Government of Canada. (2020, September 29). Canada Energy Regulator / Régie de l’énergie du Canada. Retrieved December 2, 2020, from https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-british-columbia.html
4BC Hydro – Power Smart. (2019). BC Hydro quick facts. Retrieved December 5, 2020, from https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/accountability-reports/financial-reports/annual-reports/BCHydro-Quick-Facts-20190331.pdf
5EnergyRates.ca. (2020, September 01). Residential Electricity and Natural Gas Plans & Options. Retrieved December 10, 2020, from https://energyrates.ca/residential-electricity-natural-gas/
6Reimer, A. (May 7, 2010). BC Hydro – Electric Distribution System Cost of Service Study. Reimer Consulting Group Inc. https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/regulatory-planning-documents/regulatory-matters/cos-workshop-electric-distribution-system-study.pdf
7BC Hydro. (n.d.). Landscaping and padmounted transformers – A Guide for Planting Shrubs Around Transformers. Retrieved December 10, 2020, from https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/safety/landscaping-and-planting-around-transformer.pdf
8Zacharias, B. (2019, January 24). So you’d like to buy a power transformer, eh? Retrieved December 09, 2020, from http://hw/news/keeping_current/Pages/power_transformer.aspx
9Mazenko, E. (2020, October 22). Tableau vs Excel: Comparing Core Features and Functions. Retrieved December 09, 2020, from https://www.betterbuys.com/bi/tableau-vs-excel/
10Yerema, R., & Leung, K. (2020, April 27). RECOGNIZED AS ONE OF BC’S TOP EMPLOYERS (2020). Retrieved December 2, 2020, from https://reviews.canadastop100.com/top-employer-bc-hydro11BC Hydro – Power Smart. (2020). Climate leadership. Retrieved December 16, 2020, from https://www.bchydro.com/toolbar/about/sustainability.html