Partnerships for the next generation of renewables
How can collaborative partnerships help sustain the rapid acceleration of the renewable energy industry?
Scott Harden, Chief Technology Officer at Microsoft – Energy, describes the energy transition as one of the greatest endeavours since we put people on the moon and talks about the importance of global collaboration in helping to achieve this. Scott outlines some of the innovative ways that Microsoft are seeking to reduce their own energy consumption to work towards their goal of becoming carbon negative, and some of the exciting partnerships they have formed with other businesses committed to playing their part in the renewable energy transition.
Finally, he touches on the importance of developing a culture for change in businesses that starts at the top – but doesn’t end there. He believes courage will be required by all businesses to help meet our collective goals.
MATHIAS STECK Hello and welcome to the 10th series of the DNV Talks Energy Podcast. I’m your host, Mathias Steck. In this series we take a fresh look at the role businesses play in lowering the world’s carbon emissions and how they can work with governments, policymakers and other key decision makers to transition faster to a clean energy future.
In this episode, we look at the role of partnerships in accelerating the energy transition. I speak to Scott Harden, Chief Technology Officer at Microsoft Energy. He describes the energy transition as one of the greatest endeavours since we put people on the moon, and talks about the importance of global collaboration in helping to achieve this. Scott also outlines some of the innovative ways that Microsoft are seeking to reduce their own energy consumption, and the courage required by all businesses to help meet our collective goals. We hope you enjoy the episode.
Scott, you recently joined Microsoft Energy as CTO, so congratulations for that. Can you tell us a bit about your career up to this point, and especially what you are doing in Microsoft now?
SCOTT HARDEN Yes. Thank you very much for that, Mathias. And I’m really excited to be at Microsoft, and really excited to be part of this conversation today. I spent the last 20 years of my career really in consulting and focused on system integration in the energy sector. And what has been really interesting about that is just watching this industry evolve to the point where we are today regarding energy transition. And so, when this opportunity came up at Microsoft, I was thrilled to join this team. And it’s really more about not just this role as far as how this role applies to Microsoft, but what our team represents to Microsoft, which is really a commitment to the energy industry and a lot of investment that comes behind that. Our team is really responsible for evangelizing what we do and, at the same time, we also represent the voice of the customer back into our partner ecosystem and our engineering teams. And so, it’s really a two-way street to address both stakeholder groups, but it’s a very important one because as this industry is progressing through energy transition, we want to make sure that we deliver the most appropriate products and services that’ll enable our customers and our partners to address this industry.
SCOTT HARDEN In our viewpoint, energy transition is real and it’s well underway. There’s some really significant examples in industry that highlight this. And these examples have only been accelerated by COVID-19 and the global pandemic. And so, we see energy transition as well underway and the industry is certainly not turning back.
A couple of examples. Just last month, China pledged to be carbon neutral by 2060, a shift that would set into motion more than a 65% drop in its oil consumption and a 75% cut in gas. The EU is aiming to reach neutrality across all greenhouse gases by 2050, which is going to be partially funded by the green deal that invests in electrification of transportation, as well as the promotion of clean hydrogen. And then back here stateside, California announced a new plan to end the sale of gasoline-powered cars by 2035. And this is from a state that alone accounts for 1% of global oil demand. What we see is that energy transition from our perspective is likely to be one of the greatest endeavours since we put people on the moon. Similar to NASA and the Apollo programme, Microsoft has invested a decade of work and resources into creating a capability with unprecedented scale and performance, the public cloud. Our belief is that Azure will be utilized by our partners and our customers to develop the global solutions that are required to support the energy transition. However, a lot has been learned about space exploration since the days of Apollo. When you look at the accomplishments of SpaceX and Blue Origin, you can see the power of partnerships, private industry and NASA working together to accomplish remarkable things in a much shorter amount of time. We recognize that we can’t take on energy transition alone at Microsoft. Although we can provide an unprecedented platform, we need to follow the example from the space exploration and work with industry partners and lighthouse customers as key collaborators to bring the domain relevance and sources of innovation to the systems that are going to be required to support the energy transition.
SCOTT HARDEN The best way to really illustrate that is to just give you a few key examples. One of the recent announcements from Microsoft and from our consortium is around an initiative called Northern Lights. All participants recognize climate change requires urgent action, as you said in your question. Countries and industries are coming together to create economic models that aim to address today’s challenges while providing more sustainable opportunities for growth. So, for years, in this example, Norway’s government has been especially involved in analysing and investing in forward-thinking technologies and initiatives, not just to address climate problems but to actually envision new industries for the future. So, Northern Lights is a joined effort between the Norwegian government and the energy firms, Equinor, Shell and Total, all of which have deep roots working with Microsoft. The partnership is seeking to standardize and scale the carbon capture and storage, or CCS, across Europe. CCS, or otherwise referred to as CCUS, has great potential to reduce carbon output, particularly in industries where cutting emissions is more difficult to achieve. And recently, the Norwegian government announced an investment in this proposal, in Northern Lights. So, together, this group is going to explore how to integrate our digital expertise and work to find ways to invest in the effective development of this project. Microsoft is going to look into the use of Northern Lights’ CO2 transport and storage facilities as part of our own portfolio of carbon capture, transportation and storage.
Another example, it’s a small one but I think it’s an impactful one that I’d like to highlight, is a partnership in Ireland with Scottish and Southern Energy Airtricity. So, we partnered with SSE, Ireland’s largest provider of essentially solar energy, to install and manage the internet connected solar equipment which they’re going to be connecting with or they are connecting with Azure IoT and Azure, our cloud. This new model is in lieu of the standard power purchase agreements that we would enter into with other generation companies. So, the software tools we provide aggregate and analyse real-time data on energy generated by the solar panels, demonstrating a mechanism for Microsoft and other corporations to achieve sustainability goals and reduce the carbon footprint of the power grid. For the distributed power purchase agreement in this scenario, SSE Airtricity uses Azure IoT to aggregate the generation of all the solar panels installed across 27 schools across the provinces of Leinster, Munster and Connaught, and they run it through a machine learning model to determine the carbon emissions that the solar panels actually offset by way of standard generation. So, the schools use the electricity generated by the panels, and it reduces their utility bills. Microsoft receives the renewable energy credits for the generated electricity, which we apply to our carbon neutrality commitments. The panels, just to put this into context as far as the scope just in this small example, the panels are expected to produce enough energy annually to power the equivalent of what would be around 70 homes in Ireland and abate more than 2.1 million kilograms of carbon, which is equivalent to 4.6 million pounds of carbon dioxide emissions over the 15 years of the agreement. And lastly, I’ll just say Microsoft is also participating in a number of other consortiums to address emission reduction, including the Open Footprint initiative and Project Astra.
SCOTT HARDEN Yes, that’s a great question. And that is really what the purpose is for our industry team. So, we’re an HQ-based team and we have a worldwide footprint. And our role is really to bring domain relevance into what we provide from a product perspective to our customers and, as I said, at the same time, we engage with our customers to bring back that knowledge into Microsoft so that we can bring a lot more clarity into what we need to provide as a solution provider to industry. And so, myself coming from an energy background, over 20 years. And the colleagues that I have on my team, we actually have… I have colleagues that are actually focused on the subsectors of energy. And I should say, our team is really focused on energy, all up, deliberately. We cover oil and gas, power and utilities and mining. And all of that is deliberate because we see energy transition converging these industries. And so, my colleagues that are focused on strategies associated with each come from industry and they don’t come from a technology background. I play the role as a bridge between the both, and so I’m covering the technology trends and aligning that with the strategies that we’re focused on for industry.
SCOTT HARDEN Yes, and this is a great question because it addresses the growing need for bidirectional controls in the power systems, and we believe that data and AI are going to be at the heart of the solution. I’ll give you an example of working with another customer. And I think these real-world examples really try to help… They help set the context. This one is another story from the Nordics actually. A Norwegian DSO, Agder Energi, they had a substation that was running over its capacity just by a couple of megawatts for a few days or a few weeks during the winter months. So, by design or by typical asset cycle, they would have to actually replace that, but the cost was going to be $5 million to replace the substation.
So, as an alternative, they partnered with Microsoft to connect demand side flexibility to dispatch load or increase supply when forecasting an overload situation. We provided the capabilities to forecast the substation load based on historical data, smart metre information and weather data, as you asked. Our capabilities in Azure, our machine learning capabilities, were used to deliver this forecast in advance. And then we built an optimization service in Azure to select and dispatch the most beneficial load or distributed resource based on the asset profile, current or future state. And we leveraged price signals from the market and other properties. The end customer that Agder Energi is serving was given a price to make those assets available, and a higher price if their flexibility was actually leveraged. The reporting back to Agder Energi was provided by way of Power BI reports, and that would show assets, load, customer and price and dispatch situations. The retailers, they had the end customer relationship, a contract. And so, the DSO made a bid to the retailer in overload situations. And the DSO has the visibility into what demand-side flexibility the retailer has within its portfolio. The next phase of the project is to create what we see as a decentralized energy flexibility marketplace where DSOs can bid for demand-side flexibility and the retailer and the energy service company and aggregators can offer demand to this market.
A great partner to engage in this was the existing market operator for 15 of the European countries, called Nord Pool. And so, Agder Energi and Nord Pool created an organization called NODES, a joint venture. And this marketplace is actually in place today, and it’s running on Azure, and it’s matching bids and offers. And we’re running pilots in ten countries in Europe, across 15 different project areas. In these projects, the DSOs, TSOs and aggregators are all collaborating. And the market design for Europe is also integrated with these wholesale markets, capacity markets, and day-ahead and intraday markets. And we see this as a model because in the United States, there was a recent FERC Order, FERC Order 2222, that essentially will allow aggregated resources to be bid into the wholesale energy markets in the United States. And there is the potential, and FERC’s guidance on this projects that this could have an impact of up to 360 gigawatts of power that is generated at the edge of the grid by 2025. And that’s astounding. And so, this marketplace model we see as a model that will be emerging here in North America as well as in many other regions around the globe. And we really see the need for software to play a central role for that, to provide the capabilities to aggregate those resources and bid them back into the market.
SCOTT HARDEN When it comes to looking at data across industry, and I think what you’re referring to here is looking at not only new data that’s additive, coming from IoT devices, but legacy data that’s coming out of SCADA systems, because the real value is to establish relationships in this data. And so, we see a need, and again, this goes back to my conversation around public cloud and the platform that Microsoft is providing by way of Azure, we see a need that the scale and the performance that’s going to be required to bring that data together and make it actionable is really only going to be possible by way of leveraging public cloud. Because I don’t think that there’s a data centre on the planet that a utility owns that’s going to be able to actually bring information together to make it useful in that context. Now, data quality is a whole other area that we’re focusing on as well. And just a few examples there. One of the things that is a known issue with any utility is the data quality problems that they have within their GIS. But yet, if you’re actually going to apply technology across a grid in the context of bidirectional energy management, you have to have a very accurate digital representation of that grid. And so, we’re looking at how we can apply techniques to actually improve the quality of the representation within GIS by analytics that take into consideration data from other sources, such as AMI, outage management systems, SCADA, etc.
SCOTT HARDEN Yes. And thanks for asking that question actually, because sustainability has really become part of our DNA at Microsoft. In July, we released a progress report on the goals that you just listed, and just I’ll provide a few highlights associated with that. Number one, we continue to reduce our own carbon emissions, and focusing on reduction of Scope one and Scope two emissions to near zero. To do that, we really need to continue to change how we operate. And we feel like we’re on track, and maybe even ahead of track, to obtaining renewable energy power purchase agreements for 100% of the day-to-day power for our data centres by the middle of this decade. Second, we’re continuing to focus on how we’re going to remove our own carbon emissions. And our climate commitments require us to reduce our carbon emissions by more than half by 2030, and then we need to remove the rest while also removing all of our historical emissions since we were founded in 1975. And that goal is really by 2050. But we’re not waiting until 2030 to get started. This year, Microsoft has actually taken concrete steps to remove a million metric tons of carbon from the environment. We’re sourcing carbon removal from a range of technology-based solutions that are net negative and verified to a higher degree of scientific integrity. I mentioned the Norwegian Lights partnership. That’s a great example of that carbon removal type of technology.
And the third example I’ll provide is we’re really leveraging, as a large company, our balance sheet. And we announced our first investments from the $1 billion Climate Innovation Fund, which is an investment of USD 50 million into Energy Impact Partners. They’re a global platform for innovation for new technologies to transform the world’s energy and transportation systems, really which are the two sectors that account for the majority of greenhouse gas emissions. EIP is a leading venture capital firm, focused on decarbonized, decentralized energy industry transition that really shares learnings among their partners and facilitates collaboration.
SCOTT HARDEN A few examples come to mind. And one that I’m going to start with really focuses on Microsoft. We have almost 150,000 employees around the world. And with that employee base comes a real significant real estate footprint. So, our goal in this example was to apply our technology and best practices and sustainability to improve the efficiency of our operations. So, we looked across all areas of carbon emission within Microsoft, in energy consumption, to identify a strategic plan that includes using cutting edge technology to help meet our goals.
One area that we considered was the energy spend on heating and cooling of our buildings. Our belief was that we could use AI capabilities to improve the efficiencies of our systems and reduce energy usage. So, to teach the system the AI capability, the team that went to work first had to give it an objective, which was to reduce energy consumption while maintaining a desired temperature. From there, the system had to understand some of the variables, and the controller options that it could change to achieve this goal. The AI developed was in conjunction with a project within Microsoft called Project Bonsai, to help achieve its carbon negative goal. They returned some really interesting recommendations, counterintuitive to what people might assume. The AI itself, the system, recommended increasing the set points of the cooling towers and chillers while increasing the speed of the pump delivering water in order to achieve the objective of energy reduction while maintaining temperature, as I said. So, by leveraging the AI, we uncovered some recommended optimizations that we would’ve never come to on our own, which really the outcome was a new plan for optimization that it only took two weeks to discover, but the reduction was around 15% of energy consumption across all of our facilities. It’s pretty remarkable efficiency gains for such a short investment of time and resources.
Another example I’ll refer to is with a big customer of ours, Shell. And in the energy industry, Shell manages everything from wells to retail gas stations, 44,000 of them. And the company works hard to ensure the safety of employees and customers at its retail sites. Shell is currently piloting a new cloud-based deep learning solution based on Microsoft Azure. The solution uses closed-circuit camera footage and IoT technology to identify safety hazards and alert employees so that they can respond and eliminate potential problems. It can see and predict the future in ways that human eyes can’t. We call it machine vision, that uses imaging technology combined with image processing and analysis to guide machine action and human decisions in a commercial or industrial setting. Shell is now piloting a new machine vision system at several of the retail locations. And by applying the advanced AI capabilities, the system can automatically predict and detect unsafe actions in a shop or a forecourt and alert staff so that they can intervene. And that really is something that applies towards what is an ambition within Shell that they call Goal Zero, which is really to achieve a scenario where there is no harm and no leaks from across this entire operation. One last example. We’re doing some really interesting work associated with analysing satellite data. And we’re involved in a couple of different projects that are using AI capabilities to leverage sensor data that is coming from greenhouse gas-specific satellites, and so analysing imaging that comes back to find, to detect and actually trace methane emissions that are coming from remote operations in the Permian Basin. And it’s pretty remarkable technology because the imaging traditionally would be analysed by a user, but we’re leveraging AI capabilities and actually letting the system analyse the image. And the precision in which it identifies a leak and can help remediate those issues is quite remarkable.
SCOTT HARDEN Oh, thanks so much, Mathias. And I really appreciate the opportunity to come and have this conversation. It’s something that we feel very passionately about, and I really enjoyed the opportunity here to have this conversation. So, thank you.
MATHIAS STECK Thanks for joining us for this week’s episode. It was a fascinating conversation about the importance of partnerships and collaboration in accelerating the energy transition. In next week’s episode of DNV Talks Energy, we speak with Harald Överholm, CEO and Co-Founder of Alight, the leading company in the Nordic region in solar-as-a-service. He’ll discuss the role of utilities companies in the transition to greener energy, with a particular focus on solar power.
To hear more podcasts in the series, please visit dnvgl.com/talksenergy.