Executive Insight, Metering, Transmission

The Digital Transformation of Distribution Utilities

Powerful, global market drivers are causing changes within the utility industry on a large scale.

Traditional system architecture did not account for distributed, customer-controlled energy assets including distributed generation, micro grids, flexible demand-side resources, distributed storage and electric vehicles. The growth of these distributed energy resources (DERs), and the growth of digital technologies generally has impacted distribution utilities more than most in the energy sector. Power generation has become increasingly decentralised and distribution utilities must evolve to ensure they are equipped to deal with this new power generation landscape.

One of the key factors to success for distribution utilities is digital transformation-the reinvention of an organisation and all its processes through the use of digital technology to improve performance. Within distribution utilities this addresses two main objectives. Firstly, to integrate distributed energy resources, both behind and above metered energy assets such as rooftop solar, behind-the-meter batteries, flexible demand-side resources, etc. Secondly, to address evolving energy demand, reducing losses, ensuring security and reliability, and changing business models.

So how can distribution technologies make the most of digital transformation to be driving force in today’s evolving energy world?

IT/OT convergence

Operational technology (OT) is a category of hardware and software that monitors and controls how physical devices perform. In the past, OT was used in industrial control systems for manufacturing, transportation and utilities. Today, as physical devices are becoming ‘smart’, there is an increasing trend towards IT/OT convergence.

Utilities have experienced an increase in both the quantity and quality of both IT systems and OT systems. The decentralised model of power generation and IT/OT convergence demands that distribution utilities face certain challenges around their ability to handle multiple data sets in parallel and with efficiency and flexibility.

For digital transformation to be successful it must take place in an environment with strong existing IT architecture and process. This gives stability and support to the large transactional systems that enable the day-to-day operations of the distribution utility’s business.Taking control and leveraging distributed energy resources is only possible via a deep digital transformation.

Internet of Things

The Internet of Things (IoT) is underpinning the growth of connected devices. Distribution utilities are finding an increasing number of vendor offerings that include new, connected technologies. The challenges of IoT overlap in some ways with IT/OT convergence.

As IT/OT systems converge, and adopt IoT technologies increases, distribution utilities that have undergone digital transformation will be in the best position to make the most out of the greater efficiency, reliability and performance these tools can provide. This offers distribution utilities greater insight into their systems, but does come with a lot more data to contend with.

Data is the future of distribution utility business, it’s the core component of digitalised mechanisms for asset management and grid operations, as well as future grid orchestration.

Data analytics

Distribution utilities are now realising that it is one thing to collect data and quite another to manage and analyse it to make it useful. Utilities must invest in and develop their abilities to make this data work for them. By expanding capabilities in scheduling, planning, simulating, managing assets and managing operations, advance analytics can deliver greater insights and better decision making.

This data must interact between systems that have not been linked previously. Stronger, more efficient, and better automated distribution grids will rely on international standards in terms of data models, data integration, and open data and communication for smart grids and associated technology. This is a major challenge happening at the edge of the grid, but conquering it will allow distribution utilities to boost efficiency by operating open-vendor systems.

It will also support the increasing need for data exchange with other actors involved in the power ecosystem, including TSOs, distributed generation operators, aggregators and prosumers. For this reason, standardised data models and interfaces are at the core of a utility business.

Cyber security

While interoperability standards have continued to develop to bring about data that is accurate and analytically useful, cyber security continues to be a significant concern. When considered through the lens of risk mitigation, cyber security lets utilities devise a targeted approach that considers their network in the most practical way, as well as its people, processes and organisation.

Companies should look to build security into the design of their IT and OT systems via retrofit, upgrades or bolt-on approaches. Integrated cyber security strategies should also define the organisation’s policies regarding concepts such as patch management, data ownership, data privacy and identity management compliance. As more and more data is created within the utilities sector, end-to-end security from the sensor to application level, is more critical than ever.

The changes brought about by the growth of distributed energy resources and connected digital technology affect distribution utilities across their operations. To make the most of the opportunities that these technologies offer, distribution utilities must have a digital transformation plan in place to ensure that they remain competitive in an increasingly complex energy world.

About the author: Jean-Yves Bodin is marketing director of Energy Digital Solutions, Energy Business at Schneider Electric.