Earlier this year the potential for widescale disruption of the electric grid was highlighted, following a nationwide powercut. This vulnerability was caused by the combined complexity of integrating more renewable energy and distributed energy resources (DERs).
We need to treat this as a serious wake-up call. The electricity grid, as we know it today, is built for efficiency – capable of connecting bulk generation with distributed consumers, balancing supply with demand and executing it like clockwork every single day. However, as more and more DERs and renewable energy (utility scale or otherwise) gets integrated to the grid, grid operations and maintaining uninterrupted supply become significantly more complex thanks to the variable nature of renewable energy.
The accelerated integration of DERs and renewables into the grid is also a challenge to many of the utilities’ core processes and functions, such as network planning, demand forecasting and scheduling, and customer service.
This all begs the question: how can utilities manage these complexities and make the most of the opportunities that they present?
Transformation via digital technologies
The traditional grid, with its tools and approaches geared towards centralisation and one-way energy flow, is ill-equipped to manage two-way power and the complexities of the new energy network. It needs what we call ‘the programmable grid’ – a software-controlled electricity network that ensures optimum operating state and autonomously manages itself using distributed AI and advanced control mechanisms. And it does so with the help of real-time data from thousands of smart sensors on the grid in a continuous feedback loop.
The programmable grid will thus take in data faster than humans can process it, allowing utilities firms to manage the grid in real-time, and to deliver the most efficient services at the highest achievable levels of reliability. It is also an enabler for digital technologies such as machine learning (ML), big data, augmented reality (AR) and analytics, which can, collectively, support the complexity increasingly required to handle the grid.
The development and use of these technologies are not hypothetical; they are being deployed today. Big data analytics, combined with AI and ML, for example, are already supporting Virtual Power Plants – cloud-based distributed power plants that aggregate the capacities of heterogeneous DERs to enhance power generation, as well as trade or sell power on the open market. They can also be found within Local Energy Marketplace Systems – another mechanism that enables wholesale market integration of DERs. Similarly, grid connected vehicles, smart street lighting and tailored service plans for customers based on their usage patterns are all happening now.
Readiness to evolve
The broader adoption of software-driven solutions is on the horizon, but how digitally ready are incumbent utilities to embrace this model? To explore this, Cognizant and Ovum conducted a survey of 100 utilities in the USA, Europe, Australia and the Middle East to understand the drivers, threats, opportunities and readiness for this type of transformation.
The overriding result was that the majority of respondents (almost 84 per cent of the utilities) are at initial levels of preparedness and maturity – focused on evaluating products and solutions, conducting feasibility studies, blueprinting and developing their strategies.
However, an ambition to progress beyond the concept stage is already evident. Eighty-three per cent of the utilities believe that, by 2020-30, DERs will have a transformational impact on their current business models. Almost half (46 per cent) would like to improve key areas like grid automation to better handle renewables. On the other hand, 38 per cent of vertically integrated utilities aspire to increase their digital maturity. This means having systems to monitor and control dynamic networks in real time or even become fully capable of handling DERS and microgrids with the use of cutting edge technologies such as ML and AR.
With the need to embark on this digital transformation journey acknowledged by utility companies, now is the time for them to build on ambitions to deliver end-to-end automation and programmable grid strategies to ensure they remain competitive as the industry continues to evolve. Those that do not run the risk of losing out to new, nimble incumbents who will challenge perceived value and offer significant competition for existing and prospective businesses.