We live in a digital age, and our production processes need to evolve to reflect that fact. Converting traditional production environments into highly automated “smart” plants will entail fundamental changes in the way metals manufacturers interact with their suppliers and customers. When technology works in perfect harmony with the different aspects of metals production, the effect can be compared to that of a skilled orchestra’s performance……………
Kenji Ando is Senior Executive Vice President of Mitsubishi Heavy Industries (MHI), President and CEO of MHI Power Systems and President and CEO of Mitsubishi-Hitachi Power Systems (MHPS). MHPS is an energy joint-venture established in 2014 by MHI and Hitachi. Ando is a 40-year veteran of MHI. Turbomachinery International recently visited him in Japan and enjoyed a tour of several MHI facilities. He discussed the state of the gas turbine market, the extent of the current downturn, new technology and alternative technologies………
Turns out, a better refrigerator and autonomous driving technology have something in common. They are both features that could help increase the number of semi truck drivers on the roads in the U.S. Because people like Malcolm Bryant don’t come around that often. I recently visited the Volvo Trucks Customer Service Center in Dublin, Virginia the day that Bryant (not pictured above) was honored by Volvo Trucks and Southeastern Freight Lines for a career that has lasted more than 50 years – and his spotless safety record with zero accidents during that time………….
In the past seven days, the valuation of the crypto market dropped from $184 billion to $138 billion, by more than $46 billion.
The cryptocurrency market experienced one of the worst weekly sell-offs in all of 2018, and the prices of major digital assets like Bitcoin have dropped by around 75 percent to 85 percent from their all-time highs.
Despite the steep decline in the valuation of the crypto market, renowned cryptocurrency investor and CoinShares executive Meltem Demirors stated that the cryptocurrency ecosystem, market, and industry are still improving at a rapid rate.
ICOs in Trouble But Industry is Vibrant
Over the past several months, initial coin offering (ICO) projects have lost billions in market cap, after raising more than $30 billion in the past two years. Many projects that have had less than $10 million in daily volume had valuations of hundreds of millions of dollars to billions of dollars, in most cases without any working product to show.
ICOs have started to struggle in remaining relevant and driving new capital into the cryptocurrency market. As Binance CFO Wei Zhou pointed out, it is of significant importance for the long-term trend of the market for the space to see the emergence of high-quality projects and founders to attract smart capital.
“On the issuer side, many crypto projects that raised money through an ICO face massive challenges to stay relevant and create real purpose. This is what happens when you lack a true finance function, and unfortunately, ‘crypto finance’ is still nebulous and undefined on the whole. Just look at this balance sheet below, which characterizes many crypto firms that raised cash through token offerings,” Demirors said.
But, as seen in the success of infrastructure-building businesses like Coinbase and Binance that have achieved a market cap of over $8 billion, the cryptocurrency exchange market and industry have started to see exponential growth in terms of infrastructure, user base, and revenues.
Binance, for instance, achieved 10 million users across 180 countries and in an interview, Binance CFO Wei Zhou emphasized that the company is aiming to secure one billion users in the long run.
As such, while the value of major cryptocurrencies has declined substantially over the past eleven months, Demirors stated that the cryptocurrency ecosystem had grown noticeably in virtually every major area.
“So while value may be moving out of the assets themselves as the market digests new information and re-formulates its thesis on crypto assets, value is continuing to grow across the cohort of companies serving the crypto ecosystem. Just look at the people in this industry — thousands who continue to spend their time, energy, and capital on helping the crypto ecosystem grow. By writing, researching, advocating, building, developing, or simply holding.”
Even Traditional Finance is Struggling
Blackrock, the world’s largest asset manager, recorded its first quarter of net outflows as clients withdrew more than $3.1 billion and analysts are predicting the US stock market to continue sinking after deleting all of 2018 gains.
Bespoke Investment Group co-founder Paul Hickey stated that most investors in the US market are “rushing for the exits,” given current market conditions and intensity of the recent sell-off.
The decline in the momentum of the US stock market, which will directly affect major economies in Asia in the likes of South Korea and Japan, is having a negative impact on the cryptocurrency sector as investors shift away from high-risk, high-return trades.
However, Demirors noted that funds and asset managers in the crypto sector have historically survived several market cycles and major corrections in the past, and 2018 will be no different.
“Lastly, the funds and asset managers in the space, while under pressure, have historically done well given their longer time horizon and their ability to survive and weather market cycles. We expect this trend to continue, especially for some of the larger, better capitalized managers with deep experience who are able to manage finances and allocation strategies to capitalize on short-term price movements while keeping a long-term investment outlook.”
As Binance CEO Changpeng Zhao and Coinbase CTO Balaji Srinivasan said, it is of utmost importance for both businesses and individuals in the space to continue building throughout a mid-term bearish trend.
More and more of us are living in smart, connected homes. We use devices like Amazon’s Alexa to control our lights, Google’s Nest to learn and anticipate our heating preferences, and smart meters to give us real-time data about our energy usage.
But these Internet of Things technologies have an impact far beyond our homes, especially when it comes to energy.
Smart meters, for example, give a clearer picture of energy usage not only to consumers, but to grid operators too, taking the guesswork out of balancing supply and demand.
And this is just the tip of the iceberg when it comes to the digital infrastructure now helping the energy sector to be more efficient than ever before.
Smarter supply with AI
If you visit a modern power plant, you will find digital sensors attached to every piece of equipment.
These sensors generate vast amounts of data, which Artificial Intelligence is able to analyze and make sense of to increase efficiency – helping to generate more electricity from less fuel.
Not only this, but combining data and AI can create a power plant capable of operating itself.
And this is not just a futuristic vision. In Takasago, Japan, Mitsubishi Heavy Industries Group is in the process of building a ground-breaking new natural gas power plant capable of running autonomously.
The plant uses a digital platform developed by Mitsubishi Hitachi Power Systems, MHPS-Tomoni. This has the capability to mine data generated by sensors around the plant, and uses AI to take on tasks such as diagnosing failures before they happen, reducing supply when needed, or increasing power generation if demand spikes.
While the plant can be fully independent, the concept of Tomoni – which translates as ‘together with’ – emphasises the importance of AI and experienced engineers working together to make power plants operate as efficiently as possible.
Though the new Takasago facility is still under construction, operational plants are already using the system to improve their performance. One gas-fired power plant in Oklahoma, USA, using MHPS’s digital platform has set a global 60 hertz combined-cycle efficiency record of 62%.
In addition, ongoing surveillance of sensor data and AI-driven analytics can help plant operators detect potential problems early and take action. This surveillance can take place anywhere, via the cloud. MHPS has calculated that they can typically reduce downtime by three days per incident as a result.
Data driving down demand
While it is a significant step forwards, using AI to run power plants more efficiently only solves the supply side of the wider energy efficiency equation.
Reducing energy demand is also critical, and huge leaps forwards have been made over the past decade.
According the International Energy Agency, global energy intensity – measured as the amount of primary energy demand needed to produce one unit of GDP – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant improvement from the average rate of 1.3% between 1970 and 2010.ore than half of these gains have come through the improved HVAC systems and energy efficiency of buildings. This is thanks to everything from advanced building insulation, energy efficient lightbulbs through to devices like smart thermostats.
But industrial energy – the biggest and most intensive area of energy consumption – has so far only accounted for around a sixth of the total global investment in energy efficiency.
Despite these relatively low levels of spending compared to buildings and transport, the IEA says energy use per unit of economic output in the industrial sector fell by nearly 20% between 2000 and 2016.
The IEA says this trend is likely to continue thanks to the growing use of energy management systems, which provide a structure to monitor and control energy consumption and identify opportunities to improve efficiency.
These industrial-scale systems connect with IoT sensors and use AI to analyse the data that they generate and provide actionable insights.
Through data visualisations, factory owners can get a clear understanding of their energy use, and even identify which pieces of equipment are running inefficiently. Poor calibration or potential faults are among the triggers that signal a piece of equipment may need to be repaired.
Factory owners can also see the patterns in their energy usage that may help them identify the best times to operate certain functions, cutting costs and increasing efficiency.
In some countries, such as the US and UK, for example, major energy users can even use this knowledge to participate in so-called ‘demand side response programs’ in the local electricity markets. In these markets energy consumption can be traded as virtual generating capacity.
This effectively means they are paid not to operate during times of peak electricity demand. It also helps grid operators make sure there is always enough electricity to keep the lights on.
A leading industrial firm, Mitsubishi Heavy Industries Group (40 billion USD annual revenue) is finding new, simpler and sustainable ways to power cities, improve infrastructure, innovate manufacturing and connect people and ideas around the globe with ever-increasing speed and efficiency. For over 130 years, the company has channeled big thinking into innovative and integrated solutions that move the world forward. MHI owns a unique business portfolio covering land, sea, sky and even space across industries from commercial aviation and transportation to power plants and gas turbines, and from machinery and infrastructure to integrated defense and space systems. Visit MHI Global or MHI Spectra.
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