Bob Gilligan
General Manager, GE Energy

Bob Gilligan is a 17-year veteran of one of the largest and most successful industrial enterprises in the world. Bob runs GE Energy’s T&D business – a significant component of the $19 billion GE Energy business that is by itself, several times the size of all but a few of its industry counterparts. Moreover, GE brings to bear a depth and breadth of products and services that encompass virtually every aspect of the utility automation/IT business. However, despite the size and diversity of GE’s portfolio, like any other company, there are things that they do better than others and things that are best done by others. In preparing for this interview, I thought it might be interesting to further examine that dichotomy with Bob to see how and where he feels GE best fits into the market – and where they don’t – both now and in the future. – Ed.]
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EET&D: For nearly a century, GE has been primarily a product-centric supplier of transformers, capacitors, protective relays, UHF/VHF radios and meters. Over the past decade, however, the company has transitioned into a mainstream force in the systems portion of practically every major automation/IT solution set, much of which has been the result of strategic acquisitions. What major objectives have you set for GE-Energy over the next few years, and how do you intend to get there?

Gilligan: Our overall strategy has been to bring best-of-breed building blocks together to form comprehensive automation/IT solutions for our customers that embrace both established and evolving standards, new technologies and support intelligent grid initiatives.

Our view is that it will take a more integrated open systems approach to address the difficult challenges facing utilities today. Development and conformance to industry standards, a holistic systems approach, and the wherewithal to implement and maintain solutions over an extended time frame will be key to success. We think that GE is uniquely positioned to meet this need.

With this vision and strategy in mind, GE embarked on a series of acquisitions to develop its portfolio of solutions. One of our earliest acquisitions – the former Harris Controls in Melbourne, Florida – was at the beginning of our strategic automation/IT solutions initiative, which put us squarely into the SCADA/EMS business. That was followed by the acquisition of Smallworld Systems in 2001, and Syprotech and Ascada in 2002. The Smallworld acquisition put us literally “on the map” in the GIS field.

GE has invested heavily in the integration and expansion of these businesses as a parallel to the integration that has been steadily evolving within those markets. Today, we have blended a tightly coupled business model with open systems architecture, creating strong business and technical support across our platforms for our customers.

Our overarching goal is to directly provide the essential automation/IT building blocks at both the platform and device levels. We augment that foundation with specific domain expertise complemented by a network of strategic suppliers and partners that allow GE to provide a holistic approach to the challenges utilities are facing – and will face in the coming years.

EET&D: There is little doubt that the electric utility industry is entering a new era creating quite a lot of discussion regarding the use and application of technology to help address the multitude of challenges and problems associated with power delivery. Clearly, GE has vast technological research and development capabilities at its disposal. How do you see the role of technology as it relates to solving T&D problems while also advancing your objectives in electric utility automation/IT markets?

Gilligan: Unlike common practice in the 1970s, 1980s and most of the 1990s, utility needs today are far less likely to be dictated by technology trends than by business processes, KPIs (key performance indicators) and financial drivers. This is about solution driven technology. What this means is that we have to get our engineers out of the laboratory and into the field with our customers. This “outside-in” orientation is helping us to ensure that the products, systems and services we develop are justifiable from the customer’s economic and practical standpoint. The result is an increase in our R&D spending due to greater certainty in an economic return.

EET&D: Although very large companies like GE are often said to be less nimble as their smaller counterparts, some aspects of the business require resources that would be virtually impossible for less robust companies to muster. Do you agree with that notion?

Gilligan: A key strength of GE is our ability to scale up and sustain investment over a long period. We do this through internal resource commitments and the development of partnerships and strategic relationships with third parties that have complementary skill sets and offerings that GE does not provide directly.

It’s clear that there will be great challenges involved in transitioning the current grid to a more modern design with the ability to operate in ways not originally intended or accommodated by the present design. Many different types of solutions and technologies will be required, some of which GE already has, some of which we will develop and some of which will be provided by a network of partners and strategic suppliers.

Our network of partners and strategic suppliers is a key asset for GE, both in terms of the breadth of our solution portfolio as well as the size of our geographic footprint. GE is a global company with a pervasive presence, but we obviously can’t be everywhere. Our partner network helps us to extend our local presence and project ourselves forward into new geographies faster than we could on our own.

EET&D: Quite a lot has been written and said about the two big issues that seem to be foremost in everybody’s mind right now – Aging Workforce and Declining Infrastructure – so I don’t want to belabor them, but I think our readers would like to hear your thoughts on how the industry can address these looming and most formidable problems.

Gilligan: The common denominator between the aging workforce and declining infrastructure is the need for knowledge capture and the ability to act on it. This should be the output from the automation/IT infrastructure we put in place. The aging resource challenge is to capture the knowledge of the utilities’ retiring human assets and convert it to defined processes, tasks and decision tools. This must get memorialized in the automation/IT systems, enabling the utility to share that knowledge more quickly than can be done manually today, thus, improving efficiency.

Similarly, with aging infrastructure there is an increasing need to monitor the health of that equipment on a more real-time basis. Again, more information capture and associated decision tools are required to allow utilities to act quickly to protect those assets. Moreover, the aging workforce and declining infrastructure are driving investments in grid intelligence. The brute force method of throwing people and assets at the problem of reliable grid operation is too expensive. Automation/IT infrastructure investment represents an opportunity for greatly improved operations productivity and asset life extension, helping to address these critical challenges.

EET&D: Let’s switch over to the regulatory side of the equation. The Energy Policy Act of 2005 has been lauded by some as providing definitive direction for a variety of much needed initiatives including infrastructure improvement, energy conservation and reliability enhancements, just to name a few of the many areas it touches upon. However, it has also been roundly criticized as containing little more than vague suggestions, hyperbole and innuendo. What’s your take on this broad and encompassing piece of legislation; is it actually having – or will it ever have – any tangible impact on any of those vitally important areas?

Gilligan: EPACT is a typical legislative measure. It’s not the panacea that some had envisioned, but it does significantly raise the level of awareness and comprehension of the present and future landscape of our energy needs and challenges. That broad-based awareness is a vital first step toward making tangible progress.

Overall, we see an overwhelmingly positive effect from the heightened awareness brought about by EPACT that we must now turn into definitive solutions, much of which will necessarily require automation/IT components.

EET&D: Dealing with energy issues is by no means unique to the United States or North America. As a global company whose involvement in these issues transcends both geographic and political boundaries, what can we learn from other countries or regions that may be applicable to the domestic automation/IT marketplace?

Gilligan: A good example is the UK where there has been a greater emphasis on putting the technology to work to solve business needs. According to a 2003 study by Cambridge Energy Research Associates (CERA), operators in the UK have much higher capital employment efficiency than in the US, which results in measurable operational and performance improvements. Notably, a great deal of the reason for that improvement is the extensive use of fully integrated automation/IT throughout their major utility enterprises. I think the UK’s experience is a very important case because it establishes precedence and a set of proven metrics for justifying the use of automation.

EET&D: I’ve always felt that in many, if not most cases, the utility automation/IT business has been driven more by suppliers than by the utilities themselves. But today, we’ve arguably reached a crossroads where utilities need to take the lead on some of the sweeping changes that are needed before any real progress can be made toward what are arguably the most aggressive goals this industry has seen in a long time, perhaps ever. How would you characterize the roles and responsibilities of suppliers and utilities in today’s market?

Gilligan: The key component in this equation is risk and the sharing of that risk, and as we all know, utilities are inherently risk averse, especially where the adoption of new technology is involved. The traditional practice of piloting new technology and concepts is no longer working because what needs to be piloted now is not just a particular product or technology, but rather an entire business model.

Clearly, creating a new business model requires a much bigger investment that is not adequately addressed and that cannot be properly resolved in a timely or economic fashion using the typical RFP process. It needs to be addressed on a partnership basis with both the risks and rewards being shared at every stage of the project between the owner and supplier(s).

With the myriad of new technologies that will be deployed in connection with smart metering, demand response and intelligent grid initiatives, utilities will likely be creating new forms of revenue production that have not been there in the past. The specifics will increasingly depend on new and/or enhanced levels of service that go well beyond the present operating norms, which must be married with new reward mechanisms that are developed in concert with the local and national regulatory bodies.

EET&D: Speaking of economics, very few projects of any substance get approved without an economic justification. Yet not very much has been said about the economics of Intelligent Grid initiatives; so far, it’s been mostly about reliability. How do you put dollars and cents on such a bold set of expectations?

Gilligan: The intelligent grid is not just about reliability; it’s also about energy efficiency (resource utilization), operational efficiency (revolving around optimal use of non-electrical assets; i.e., people) and environmental impact (reducing the amount of greenhouse emissions, etc. and minimizing the impact of the energy generation, transmission and distribution have on the environment). These are the four main pillars upon which grid infrastructure improvements will be based in order to achieve better overall grid management, reliability and efficiency.

Among other things, this will allow the optimization of the current infrastructure to deliver more real power and to become a more effective highway for managing loads across the grid. In the end, it’s really all about resource utilization and resource efficiency, so the thrust of the intelligent grid initiatives must be focused on those real-world objectives where the economic benefits are fairly easy to see and justify rather than on the economics of any given individual project of the traditional definition.

In other words, simply justifying an AMR, GIS or SCADA project isn’t going to get us where we need to be. The process has to be taken to a much higher level across the entire utility enterprise that is fundamentally supported by – rather than justified by – the individual automation/IT initiatives.

EET&D: So much of the Intelligent Grid discussion revolves around things like AMR/AMI/MDM and related Smart Metering initiatives. With so much interoperability among automation/IT platforms already in place, how does the Intelligent Grid fit into the broader scheme of things?

Gilligan: Exchanging data across disparate platforms is a huge and very expensive challenge. This is where the use of open standards is very important. GE has made a corporate commitment and substantial investments in nurturing and supporting standardization initiatives. As such, we make an effort to embrace and implement these standards across our products and services whenever and wherever possible.

Much of what needs to be accomplished from an automation/IT perspective within a utility enterprise involves data validation, whether it’s ensuring accurate data for a complex transaction, analyzing a security issue or providing operational data for regulatory compliance.

In all of these cases, as well as many others, open standards are needed to help accelerate and improve that validation process. Bringing the right data – say from a bank of smart devices – onto an enterprise bus that provides access to the data in an appropriate format and subset required for compliance and/or decision-making is absolutely crucial to supporting specific business processes. And, as we evolve toward a more robust and flexible grid, those processes are likely to become even more diverse, more demanding and more complex.

EET&D: We’ve already talked about the head-end and “middleware” of the automation/IT business. There is a body of research that suggests a surge in the transition from traditional instrumentation to IEDs (Intelligent Electronic Devices) is building. What do you see happening at the sensor level and how does that fit (or not) with Intelligent Grid initiatives?

Gilligan: Of course the trend toward increased usage of IEDs will continue as will the standards that allow this vital field data to be accessed. However, despite the considerable intelligence implicit in these devices, we feel that utilities will probably lean toward inexpensive sensors that deliver critical data and transmit that data easily and efficiently.

There are already huge amounts of what many refer to as “non-operational data” in the field that the utilities cannot afford to access for reasons ranging from insufficient communications bandwidth to a lack of the necessary analytical tools and staff to make proper use of it. Thus, in many cases, a large cache of data – valuable though it may be – is often not as valuable as a few pieces of critical data that can be easily accessed.

EET&D: Utilities are just now rebounding from what amounts to a 20-year moratorium on T&D investments. Now, we’re talking about undertaking sweeping changes to the grid that while certainly long overdue, will require billions in investment before any tangible results can be realized across a long list of glowing expectations. Is it realistic to think that utilities will move forward fast enough to see measurable progress toward those lofty goals within a reasonable period of time?

Gilligan: As we’ve discussed, many forces have aligned to drive the change: stronger energy policy; aging workforce; stressed equipment infrastructure. T&D has been under-invested for 20 years in comparison to new generation capacity… so the time has come for change. There will be leaders and followers in this change process. I think it’s very realistic to expect near–term, large-scale demonstration projects of broad investments in utility automation and IT infrastructure to demonstrate and quantify real operational benefits. In addition, economics will force utilities to demand more targeted technology solutions for asset life extension and workforce productivity with a view to how these application specific solutions will fit into their longer-term vision for the more holistic systems architecture.

EET&D: I’d like to wrap up by getting your general views about the future of electric power delivery in North America. While I think everyone would agree that our dependency on electricity is going to keep on growing, huge challenges loom. As such, there are divergent theories about how we can actually meet that growth outlook while preserving reliability, security and the environment. What insights can you share with us about the kinds of changes we might expect over the next three to five years, particularly from an automation/IT perspective?

Gilligan: Well, Mike, that’s an interesting question… I think the scope of the challenge will certainly require that utilities, suppliers, and regulators all think and act differently. New business models will emerge with more equitable risk sharing among the key stakeholders. As utilities move into the information era, the pace of change for technology will continue to accelerate. This will require adoption of more standard - as opposed to custom engineered - solutions, that can be more effectively and efficiently maintained and migrated by the suppliers than by the utilities themselves. Domain knowledge will become critical to understanding and effectively impacting the critical issues facing the utilities. Long-term supplier relationships will grow in importance to reduce the risk of “stranded” applications. GE is well positioned for the long term to lead and succeed in this environment.