• Interview
  • IHS CERAWeek

Transcript:
Speaker 1:
This is the Energy Makers Show, brought to you by Comcast Business. Built for business. Here's your host, Russ Capper.

Russ Capper:
Welcome back to the Energy Makers Show, brought to you by Comcast Business. Built for business. Coming to you today from IHS Energy CeraWeek. My guest now is Tom Siebel, founder and CEO of C3 Energy. Tom, welcome to the Energy Makers Show.

Tom Siebel:
Thank you Russ, great to be here.

Russ Capper:
You bet. Tell us about C3 Energy.

Tom Siebel:
C3 Energy is an information technology company in Silicon Valley. We've been involved in a project for the last seven years, to basically bring value to the value chains of energy production, distribution, and use. We're applying the sciences of big data, cloud-scale computing, analytics, machine learning, and social human-computer interaction to increase the safety, reliability, lower the cost, and reduce the environmental impact of power, exploration, generation, processing, and delivery.

Russ Capper:
Wow. That's a pretty big basket full of important applications. I guess it's a pretty exciting space right now.

Tom Siebel:
It's very exciting. This falls into the general category of what is known as "the internet of things", or cyber-physical applications, where we have very, very large sensor networks, giga-scale sensor networks, exa-scale datasets, hundreds to thousands of different data sources, and then complex algorithms, and machine learning, and big data, to optimize these value chains in ways that were never before possible.

Russ Capper:
Okay. Normally we don't do this, but that is so complex, I'd like you to share with our audience your background. You've been in this kind of space forever.

Tom Siebel:

Yeah. This is my fourth decade in the information technology business. I was involved at the very early days in starting Oracle Corporation with Larry Ellison and Bob Miner, in building the relational database business.

My second company was a company that I founded in 1993, called Siebel Systems. Siebel was about the application of information technology and communication technology to the value chains associated with sales, marketing, and customer service. We largely invented the market that is known today as "CRM" or "customer engagement".

That company merged with Oracle in 2006, and in a very good outcome for Oracle, and for the company. Since 2006, we've been focused on making a contribution to the energy dialogue.

Russ Capper:
Okay. It sounds like you were just preparing always for C3 Energy.

Tom Siebel:
Well, in a funny way, I think, the first three decades of work enabled us to be ready to address this opportunity.

Russ Capper:
Okay. A lot of the application of what you do today, perhaps the leading one, is in the area of what a lot of people would call "smart grid". Would that be accurate?

Tom Siebel:
Yes. Let's talk about the grid. The electric grid has been identified by the Association of Engineers as the most significant scientific achievement of the 20th century. This value chain consists of power generation, transmission, distribution, metering, and delivery. It delivers about 22 billion gigawatts of energy around the world with pretty high reliability.

Russ Capper:
Okay.

Tom Siebel:

This infrastructure is undergoing an upgrade this decade, so that all of the devices in the infrastructure are being sensored in a manner that they're becoming remotely machine addressable. These include, one of the most common examples, which most people are familiar, is the smart meter. It also includes the thermostat, the variable speed fan in Walmart, the smart meter, the transformers, the substations, the vibration sensors on nuclear reactors. They're all being sensored to provide signals in real time.

Worldwide, the investment in this technology upgrade of this decade is two trillion dollars. This will be the largest, and most complex machine ever built. What we have done, is we've effectively been building the operating system for the smart grid.

Russ Capper:
Which also means major, big data application and analysis.

Tom Siebel:

Yeah. The datasets are staggering. If we give an example of Enel, which is our utility based in Rome, Enel operates 67 million meters in 40 countries. It's a utility roughly the size of the U.S. market. There, we're working on applications associated with revenue protection, which is identifying revenue theft, predictive maintenance, which is identifying devices that are going to fail before they fail. The economic and social benefits of that are obvious.

This application involves, for Italy alone, where they have 32 million smart meters, this involves the aggregation of seven trillion rows of data into a 700 terabyte cloud image, that grows at the rate of 300 gigabytes a day, and we're processing transactions currently at the rate of 1.5 million transactions per second, which is, by any standards, a record. We do this in large cloud-based, elastic cloud infrastructures.

The economic benefit of that, we're talking about increasing the safety, increasing the reliability, lowering the environmental impact of the processes in Italy and Spain, where the economic benefit, in Italy alone, is on the order of 350 million euros a year.

Russ Capper:
Enel is an existing customer that's been with you how long?

Tom Siebel:
Enel has been a customer for about a year. We have 20 utility customers around the world. Enel has been a customer for about a year. They're just going live, actually we began work with them on this application in November of 2014, and we will go live next month in Italy.

Russ Capper:
Well, Tom, forgive me for this, but I'm a sales guy. I can't imagine that's a very easy sale, even if you have great products and demonstration to persuade a major utility to integrate your system.

Tom Siebel:
If you look at the applications, the value that we're able to realize for utility, when you get into things like balancing voltage, and reactive voltage, if you can do that properly, there's eight percent production in the amount of power that you would need to generate to fuel the grid. Eight percent, that's a lot of coal.

Russ Capper:
Right.

Tom Siebel:

Predictive maintenance, revenue protection, the economic benefit of what we do is on the order of 300 dollars, per meter, per year to the utility operator. If you have 60 or 70 million meters, this is significantly non-zero. The economic benefit of what we afford Enel, is on the order of six billion euros a year in recurring economic benefit. That's not a very hard sell. The economic benefit that we afford Exelon is on the order of 2.7 billion dollars a year in recurring economic benefit.

I've been in the information technology business for almost as long as the information technology business has been around. I have never been involved with an application in information technology where the economic benefits, the social benefits, and the environmental benefits were so obvious.

Russ Capper:
Shifting gears on you completely, I also understand that you've got significant development of applications in exploration and production in the oil business.

Tom Siebel:

Yeah. We have an analogous value chain in, and not a dissimilar value chain, in oil and gas. The difference is, that value chain is already almost fully sensored. They're much further advanced in the sensoring of the wells, the pumps, the lifting systems, the towed arrays, all of it. The data that are available are staggering, and the rates of data acquisition are breathtaking.

These data tend to be stored in discrete, siloed information systems for geophysical systems, or well production, or temperature, or rotational velocity, or whatever the physics are that are measured. We're able to, again, aggregate all of these data into a unified, federated image, and then analyze these data at machine speed to be able to ... let's take an example of predictive maintenance, at any point in time, eight percent of production facilities in the world are down, because of a device failure.

If we can tell an operator what devices are most likely to fail next, and why they're going to fail, they can either fix them, or replace them before they fail. The economic benefit of what we afford Royal Dutch Shell is on the order of five billion dollars a year recurring economic benefit.

Russ Capper:
I guess it's fair to say, in the EMP business, they've been real progressive and ahead of the trends in the sensing devices, but maybe not in the software that takes all the data and formulates it into actionable items.

Tom Siebel:

When we get into oil and gas, we're dealing with very smart, very sophisticated people who are dealing with leading edge technology. These sensor networks are in place, and these information systems that they have are very, very rich. That's an enormous opportunity.

What we do is aggregate the data from these discrete systems, and be able to handle the influx of all these sensors to make sense out of it. The utility industry is not known to be leading in the information technology industry. The oil and gas industry is. They are absolutely ready for this and can perhaps realize the economic benefit.

Russ Capper:
You're relatively new in that space, right?

Tom Siebel:
Yes. We've been active in the oil and gas space for the last six months, and we've been in active discussion with Saudi Aramco, Chevron, Royal Dutch Shell, Occidental Petroleum, we do a lot of work with Boston Consulting Group, and with McKinsey and Company. We're right now kicking off a project with Occidental Petroleum associated with predictive maintenance for rotational devices.

Russ Capper:
Okay. Tom, I really appreciate you sharing your story with us today.

Tom Siebel:
Thank you so much. I appreciate the opportunity.

Russ Capper:
You bet. That wraps up my discussion with Tom Siebel, founder and CEO of C3 Energy. This is the Energy Makers Show, brought to you by Comcast Business. Built for Business.