Technology

Digital Twins: digitalising the management of physical assets

Peter Durante, Head of Technology & Innovation, Macquarie Infrastructure and Real Assets

4 March 2021

As the world becomes increasingly data-centric, owners and operators of infrastructure assets are embracing data to help drive decisions that will improve performance, value and the services they provide to the community. Of all the megatrends in technology that are changing the world – from renewable energy and storage, to electric and autonomous vehicles, to drones, 5G and many others – data and digitalisation is a common thread that touches all infrastructure assets.

One rapidly growing area is the use of advanced technological capabilities to manage and optimise the productivity, performance and profitability of an organisation’s operations and outputs – a new form of ‘digital asset management’. In the infrastructure sector, one way this is being done is through the use of digital twins, which can help organisations to understand, predict and optimise the performance of their assets.

What are digital twins?

Though increasingly seen as a central component of the fourth industrial revolution – that in which technology is converging the physical and digital world and driving automation – digital twins are not a new concept. The way they are used today has, however, advanced into new realms of capability.

When Apollo 13 was launched in 1970, no one foresaw that one of the oxygen tanks would explode two days into the mission. However, a key to the rescue operation was that NASA kept a mirrored system of Apollo 13 on earth – a physical model of the spacecraft and its components. This allowed engineers on the ground to test possible solutions, simulating the conditions on board Apollo 13. While this was a physical twin rather than a digital one, the concept is the same.

Digital twins are a realistic digital representation of an infrastructure asset. A digital twin consists of a digital model of the physical structure and its behaviour, combined with data from sensors attached to the real-world asset. This model can start with an abstract linkage of systems, or progress to a realistic, visual, three-dimensional model of an entire asset/company that gives the operators a real-time, virtual copy. The ‘fourth dimension’ of time can be added, which allows the capture and use of historical data, or even projections for the future.

Why use them?

Having a virtual copy of a physical asset allows for testing improved maintenance practices, carrying out scenario modelling, providing training to employees and reviewing security measures. It also allows for predictive analytics and maintenance.

Though they emerged from aerospace, oil and gas and motorsports, where their capabilities in the design, development and ongoing maintenance of assets led to improved performance, safety, and efficiency, their use now spans industries.

High costs once meant using a digital twin only made sense on very high-value, discrete assets, but, as with many technology examples, the capability of hardware and software has been steadily increasing while costs have been coming down. That means we see cost-effective applications today that would not have made sense five years ago, and we expect this trend to continue as the deployment of cloud and edge computing, Internet of Things (IoT) and machine learning accelerates.

Digital twins are increasingly being used in airports, data centres, railways, electricity grids, wind farms and ports. And their use has grown to include the simulation of complex operating scenarios, creation of new data-driven business models, advanced virtual sales tours for customers, and modelling of alternative designs for future infrastructure developments.

 

How are digital twins being applied?

Almost any industrial or physical infrastructure has the capability to be digitalised in one form or another, from the automation of discrete processes, all the way through a 4D digital twin. Governments in Europe, Asia and Australia are investing in digital twins for urban planning and real-time integrated monitoring of infrastructure. The UK has an ambitious initiative to create a national digital twin that will simulate the interaction of national infrastructure and has recruited over 700 organisations to be part of its ecosystem of connected digital twins that securely share information.1

The Port of Rotterdam, Europe’s largest and busiest, is developing a digital twin that to use real-time information on ship movements, infrastructure, water and weather conditions to optimise the use of its facility.2 Construction of the Genoa-Saint George bridge in northern Italy – which replaced the partially collapsed Morandi bridge – used a digital twin of the viaduct it crosses to streamline construction, improve collaboration between multidisciplinary teams and enable a fast-tracked build schedule. Using digital twin blueprints, General Electric monitors over 7,000 assets around the world, using 250,000 real-time data points to remotely manage and diagnose issues and plan predictive maintenance that has saved customers $US1.6 billion in replacement and rectification costs. 3

Endeavour Energy, which a MIRA fund has invested in as part of a consortium under a 99-year lease, has built a three-dimensional model of its entire power grid and its surrounding habitat, including trees and other objects that may cause obstructions. Combined with input data from aerial surveys, it provides an understanding of the health and status of the vegetation around the power grid. And by better identifying, for example, areas of potential bushfire risk it allows Endeavour to carry out pre-emptive vegetation management such as trimming back trees.

Digital twins are also being put to use in tackling climate change by helping organisations assess the environmental impact of ‘aged infrastructure’ (e.g. older buildings) as part of their drive to manage and reduce emissions. Using IoT and detailed analytics, companies can better target advanced energy efficiency measures. When combining those with onsite renewables, storage and fleet electrification, they can help guide investment and deliver on net zero commitments.

 

What’s next?

Data and digitalisation are already proving their ability to drive value in infrastructure assets and improve the services they can provide to the communities using them. Many open up new revenue streams and investment opportunities; some, like digital twins, can transform the way existing assets are managed and used.

As enterprise-grade computing power becomes more accessible and more affordable, it will enable greater use of digital twins by more organisations, across more sectors and in a more advanced way. Faster processing times, the ability to include higher numbers of data points and the growing scale of machine learning will, allow digital twins to continuously self-learn and evolve.

Perhaps it’s no wonder then that research suggests the digital twins market is set to grow by 58 per cent a year and will be valued at $US48.2 billion by 2026.4

This market commentary has been prepared for general informational purposes by Peter Durante, Head of Technology and Innovation, who is part of Macquarie Infrastructure and Real Assets (MIRA), a business division of Macquarie Group (Macquarie), and is not a product of the Macquarie Research Department. This market commentary reflects the views of Peter Durante and statements in it may differ from the views of others in MIRA or of other Macquarie divisions or groups, including Macquarie Research. This market commentary has not been prepared to comply with requirements designed to promote the independence of investment research and is accordingly not subject to any prohibition on dealing ahead of the dissemination of investment research. Nothing in this market commentary shall be construed as a solicitation to buy or sell any security or other product, or to engage in or refrain from engaging in any transaction. Macquarie conducts a global full-service, integrated investment banking, asset management, and brokerage business. Macquarie may do, and seek to do, business with any of the companies covered in this market commentary.  Macquarie has investment banking and other business relationships with a significant number of companies, which may include companies that are discussed in this commentary, and may have positions in financial instruments or other financial interests in the subject matter of this market commentary. As a result, investors should be aware that Macquarie may have a conflict of interest that could affect the objectivity of this market commentary. In preparing this market commentary, we did not take into account the investment objectives, financial situation or needs of any particular client. You should not make an investment decision on the basis of this market commentary. Before making an investment decision you need to consider, with or without the assistance of an adviser, whether the investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Macquarie salespeople, traders and other professionals may provide oral or written market commentary, analysis, trading strategies or research products to Macquarie’s clients that reflect opinions which are different from or contrary to the opinions expressed in this market commentary. Macquarie’s asset management business (including MIRA), principal trading desks and investing businesses may make investment decisions that are inconsistent with the views expressed in this commentary. There are risks involved in investing. The price of securities and other financial products can and does fluctuate, and an individual security or financial product may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international or local financial, market, economic, tax or regulatory conditions, which may adversely affect the value of the investment. This market commentary is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in this market commentary. Opinions, information, and data in this market commentary are as of the date indicated on the cover and subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this market commentary and/or further communication in relation to this market commentary. Some of the data in this market commentary may be sourced from information and materials published by government or industry bodies or agencies, however this market commentary is neither endorsed or certified by any such bodies or agencies. This market commentary does not constitute legal, tax accounting or investment advice. Recipients should independently evaluate any specific investment in consultation with their legal, tax, accounting, and investment advisors. Past performance is not indicative of future results.

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  1. https://www.pbctoday.co.uk/news/bim-news/digital-twin-hub/85883/
  2. https://www.ibm.com/blogs/internet-of-things/iot-digital-twin-rotterdam/
  3. https://www.ge.com/digital/industrial-managed-services-remote-monitoring-for-iiot/
  4. https://www.marketsandmarkets.com/Market-Reports/digital-twin-market-225269522.html