Utility experts in a recent study believe that once 10% of a grid includes prosumers, a tipping point will occur. Here are four tips to get ahead of it.
By Dondi Schneider, Accenture
The energy transition is driving the industry toward a crucial “tipping point,” according to 78% of utilities executives surveyed in our most recent Digitally Enabled Grid research, beyond which the traditional utility operating model will become untenable. But when and how this will happen will vary significantly by region.
While the connection of an increasing amount of distributed energy resources (DERs) to the grid obviously presents business opportunities for utilities, if they don’t pursue major changes and invest heavily now, they’ll struggle to remain competitive. In fact, almost nine in 10 (86%) utility executives globally believe a tipping point will come in the next 10 years. In terms of utility planning, where decisions are often made based on integrated resource strategies spanning 20-year horizons, this is no time at all.
Globally, most respondents believe this tipping point will be caused by the growth in total supply provided by grid-connected distributed generation (DG), but with regional differences when it comes to the threshold in Europe and the U.S. For example, the majority believe it will be triggered when 30% to 40% of total supply comes from DG sources. This figure is higher in Asia Pacific (40-50%) and Latin America (50-60%).
A major trigger for utilities to monitor is the percentage of households with prosumer DG, where home and business owners can sell photovoltaic (PV) solar power and feed it into the grid. Our respondents believe that much lower proportions of localized grid supply from prosumer DG will tip the scales to a point where significant changes are required. In fact, almost half of global respondents (48%) believe 10% or less of prosumer DG deployed in a particular area would be a tipping point. Given growth in renewable energy deployment at the residential and commercial level, this may come quickly, potentially putting system reliability at risk. As we’ve seen in countries with high prosumer PV solar penetration, localized deployment of 10% can easily be achieved within a year.
To mitigate these risks and get ahead of these tipping points, it’s important that utilities act now and invest in a new digital infrastructure that supports truly active grid management and can more effectively handle the influx of sustainable generation sources and services. This means fundamentally increasing visibility and control of the electricity network, connected DERs and consumer participation.
We see four distinct areas underpinning distribution utilities’ digital transformation that will allow them to tip the scales in their favor:
- The first makes the best use of existing data and creating a data architecture that supports the evolving needs of the energy transition. Legacy grids weren’t designed to cope with the exponential growth of data sources and new operational requirements and services. Designing a better system that places data as the foundation, and delivers enhanced data exchange across the industry ecosystem, is crucial to achieving active grid management and preparing a utility for its new role providing cleaner power.
- The second extends core operational visibility and control systems to improve grid optimization and enables advanced flexibility services and contracts. Extending core advanced distribution management systems (ADMS) toward utilities’ low-voltage networks will be necessary to actively manage the growth of grid-connected DG. And as we have seen, advanced flexibility services require real-time visibility and a robust distributed energy resource management system (DERMS), which must integrate with existing network management solutions. The goal of this area is to extend data exchange across the business and to third parties such as transmission service operators (TSOs), electric vehicle (EV) charging companies, aggregators and generators.
- The third greatly expands the scope of data through the deployment of advanced communications technology and Internet of Things (IoT) devices. Enabled by IoT technologies and gateways linked directly to the cloud, utilities can collect primary asset operating data, monitor asset condition and performance, and environmental and site data – all of which are key for effective forecasting of renewable generation output.
- The fourth advances the fully intelligent grid. By implementing and deploying edge computing, new 5G communications technology and “digital twin” platforms, utilities can achieve near-real-time optimization of local assets, orchestration of grid automation, DG and demand response on the load side. In particular, we see integrating digital twins – or mirrored environments that enable interaction with a virtual grid and assets – as a vital tool. When built on comprehensive, compatible and trusted data, digital twins can help utilities optimize operations, detect and predict anomalies, prevent unplanned downtime, enable greater autonomy, and dynamically adjust their designs and strategies with every new piece of data they collect or new test they run.
These four areas are neither exclusive nor linear, but depend on many factors including location, regulatory model and industry structure. Nonetheless, utilities must take stock of where they’re at on this journey as action is imperative and preparation for the imminent arrival of these tipping points is critical.
Looking ahead, we expect to see very different approaches taken by utilities around the world, as they change from their traditional role of supplying power to connecting clean energy sources and EV charging stations while creating new supply and demand services. However, there are two principles universal to ensuring success: digital transformation and collaboration.
Creating and supporting a grid that is more stable, safe and efficient will require a convergence of communications, information and operating technology in conjunction with working with regulators and forging partnerships and collaboration across industries. Although it is an uncomfortable and unfamiliar position, utilities that embrace the change, reinvent themselves and infuse collaboration and data into the foundation of their business will be best positioned to meet the challenges and seize the opportunities of the energy transition.
About the Author
Dondi Schneider is a managing director and North America lead for utilities at Accenture. With more than 21 years of experience in the utilities industry, Dondi is an expert in cost optimization and customer experience and has worked with a plethora of industry clients to help them achieve operations and maintenance reduction goals, improve products and services revenue, and boost their customer service. She is also a regular speaker at industry events, including SAP4Utilities and CS Week, and an active board member for an Accenture joint venture, Reactive Technologies, where she’s involved in helping the industry solve for power quality and system strength.