Electric Company Enhanced Operational Excellence and Safety Through AI

Summary:

By utilizing AI technology, the company accelerated decision-making processes for the plants, automated workflows, implemented digital tools at various endpoints, and collected relevant information.

Client: 

Xcel Energy Inc. is a regulated utility company in the United States, specializing in electricity and natural gas services. Headquartered in Minneapolis, Minnesota, the company serves 3.7 million electricity customers and 2.1 million natural gas customers, offering a wide range of energy-related products and services.

Problem Statement: 

With a strong commitment to providing reliable energy, the company recognized the need to modernize its operations and become more efficient in the face of evolving customer expectations and increasing pressure to adopt sustainable practices. To drive this transformation, Xcel Energy partnered with McKinsey & Company to integrate AI into its business operations.

Results:

• Enhanced capacity for making well-informed safety decisions.
• 70,000 hours of manual labor redirected in the first year.
• Streamlined operations through process automation.
• 45% improvement in usability scores for users.
• Over $200 million anticipated impact on customer affordability over the next 10 years.

AI Solution Overview:

McKinsey provided technical expertise and extensive experience to support the company’s transformation, focusing on three primary goals: achieving cost savings through AI and automation, enhancing operational excellence and safety, and improving regulatory compliance through transparency.

McKinsey assisted in establishing a secure cloud platform on AWS GovCloud with the help of Cloud by McKinsey engineers and architects. This platform not only connected seamlessly with existing systems but also included a data lake, serving as a foundation for future digital tools and AI-driven processes. To foster a user-focused business approach, McKinsey guided Xcel Energy in creating a Digital Operations Factory, designed to quickly deliver user-centric tools and analytics, leverage cross-functional expertise, and apply agile methodologies to address key challenges. 

Key achievements included the development of workflow automation, custom mobile apps, and advanced analytics solutions, all aimed at simplifying complex processes. These advancements enabled Xcel Energy to make significant progress towards an advanced grid for clean energy and support informed decisions around renewable energy use.

To maintain consistent standards and a results-driven approach, Xcel Energy implemented a chapter-based model, bringing together communities of practice focused on product management, experience design, software development, and data science.

Additionally, the team developed a streamlined, user-friendly platform that can be easily scaled across different parts of the organization.

References: 

1. Xcel Energy: Driving towards net zero with the power of digital. https://www.mckinsey.com/capabilities/mckinsey-digital/how-we-help-clients/rewired-in-action/xcel-energy-driving-towards-net-zero-with-the-power-of-digital
2. AI in Project Management: Real-World Case Studies. https://www.linkedin.com/pulse/ai-project-management-real-world-case-studies-daun-hall-pmp-dasm-z6xtc/

Industry: Energy and Utilities

Vendor: McKinsey

Client: Xcel Energy Inc.

Publication Date: 2024