Grid modernization requires skill and flexibility
It’s often said that the electrification of American society was the greatest engineering feat of the 20th century. But there’s little if any time to rest on our laurels. Building the power grid of the future, and developing the operational skillsets, business processes and regulatory policies to support its success, will be one of the most critical infrastructure challenges of the 21st century.
The requirements of the modernized transmission and distribution (T&D) system extend well beyond generating and delivering electricity down the line from point A to point B. Tomorrow’s grid must be much more resilient to withstand extreme weather events, physical and cybersecurity attacks, as well more volatile energy demand and changing load shapes.
The modern grid must also be more flexible to accommodate two-way power flows and the continual expansion of distributed energy resources. It must enable more choice, empowerment and convenience for customers, many of whom will become “prosumers,” generating their own power to use or to sell in a transactive marketplace.
That’s no small order. As I try to put this transformation into useful context, I think of The Jetsons cartoon and the space cars zipping around in all different directions. In some respects, the transition to more distributed energy resources, prosumers and transactive energy, is akin to moving from commercial airlines as the primary means of air travel to individually-owned flying cars. How would our centralized air traffic control system, currently managing about 5,000 aircraft in 21 zones on pre-determined routes on any given day, adapt to mass market consumers flying in their own vehicles? ATC would have to operate on much smaller scales with tremendous increases in volume and efficiency.
Utilities face a similar challenge with the with the bi-directional, or even omnidirectional flow of electricity. How do you manage the traffic signals, intersections, on-and-off ramps, and the “rules of the road” for a highly distributed energy marketplace? With so many moving parts, some will have to be seen and managed at a macro level but many components will have to be automated with distributed computing and artificial intelligence – think microgrids, smart meters, DERs, EVs and storage.
Utilities must learn from other industries
On a less whimsical note, I think of the telecom industry, where languishing revenues over the past few years are fueling a digital business transformation and serious reassessment of capital spending levels. While computing power and capabilities of smartphones may have increased a thousand-fold over the last 15 years, telecom providers have found themselves saddled with outdated technology in the back office. They’re now focused on taking advantage of new technology to trim costs, streamline business processes, drive innovation and address new customer needs.
The challenges faced by utilities with their future T&D strategies and plans look similar. Investor-owned utilities in the U.S. are spending more than $100 billion a year on the grid and supporting functions, according to the Edison Electric Institute. And while there have been significant technology updates and improvements made to the grid infrastructure, we’re still a long way from realizing the full consumer, economic and environmental benefits of a digitized grid.
Technology drives transformation
From a technology perspective, greater emphasis and investment in several areas will be required to achieve these benefits:
· Seeing the bigger picture: Instead of solving discreet problems, technology solutions must increasingly take a holistic view of grid as a system rather than solving specific problems at their location or based on utility organizational structure. The broader impacts of increased distributed generation, changing load shapes, demand spikes and cyber threats must be understood in the context of their impact on the grid as a whole.
· Monitoring, awareness and control: From phasor measurement units at the transmission level to Advanced Distribution Management Systems (ADMS) on the lower-voltage network, the digital grid requires significant investment in advanced sensors and software to manage the operational challenges posed by the intermittency of increased distributed generation such as voltage fluctuations, equipment overloads etc.
· Putting intelligence where it’s needed: We’ve heard a lot about the advantages of cloud computing and now we’re hearing more about the need for edge computing, distributed intelligence and machine learning. All will be critical for operating the digital grid and successfully integrating operational technologies with information technology. Cloud computing will play a key role in optimizing IT costs and applying system-wide analytics while edge computing will be essential for managing rapidly changing grid conditions and transactive energy markets at a localized level.
Regulators must keep pace with the changes in the utilities market
The key question for so many utilities is the regulatory environment. Regulatory uncertainty makes investment decisions perilous. But we’re starting to see some clear patterns in terms of regulatory initiatives across multiple states as commissioners recognize the significance of this transformation and the importance of regulatory clarity.
From coal plant retirements to more diverse integrated resource planning to increasing access to renewable energy, regulators in states both blue and red are going greener. They’re also encouraging adoption of electric vehicles and storage technology, time-variant pricing programs, blockchain-enabled transactive energy pilots; and boosting energy efficiency goals.
Perhaps most importantly, regulators are starting to take meaningful steps in reforming the utility business model from the traditional rate-based, cost-of-service model to new approaches to drive innovation and adapt to changing realities. These steps include Performance-Based Ratemaking (PBR) in which utility shareholders are compensated, in part, on their ability to improve reliability, efficiency and customer service.
Several states are also changing the treatment of capital investments versus operational expenditures, enabling utilities to recover costs when they invest in cloud-based software and service offerings to improve customer service and enable new offerings. And after years of generous net metering tariffs propelling the residential solar market, regulators are directing utilities to base distribution system planning on the true value of solar assets based on their location and impact to the grid.
The future looks bright indeed
These are just some of the technology and regulatory requirements to move us toward a digital grid and a more distributed energy marketplace. Many of these themes are captured in New York’s Reforming the Energy Vision (REV) proceeding, which is considered by many to represent the leading edge of regulatory reform. Many are watching New York closely to determine if they’ve found the right formula.
Billed as a comprehensive energy strategy for the state of New York, REV promises a host of policy outcomes that include customer choice and empowerment; more clean energy and resulting CO2 emissions; a more flexible and resilient power grid; driving innovation — see the evolution of Distributed Energy Resource Management Systems (DERMS); and testing new business models and market designs.
All of these dynamics represent a remarkable confluence of need and opportunity, where new technologies to address key challenges are available and cost-effective. The outcome will be more clean energy, a more resilient and flexible power grid, and empowered consumers making choices based on their needs. Building this digital energy infrastructure may not be quite as exotic as the notion of flying cars, but it still may be the most important engineering feat of the 21st century.
Mazi Fayazfar is the Chief Technology Officer for the Telecom, Media & Utilities group at Atos in North America. He can be reached at firstname.lastname@example.org. For more information, visit: https://pages.atos.net/digital-utility/