Resilience and Renewables: Drivers of Change for U.S. Utilities

Blog posts, Events, Horizon 2020

Insights from DISTRIBUTECH 2020

“May you live in interesting times” goes the age-old curse. These are certainly interesting times for the utilities sector across the globe. Turbulent might be a better description. The utilities sector is under pressure from a variety of forces, often summed up in the four ‘Ds’; decentralization, deregulation, digitalization and decarbonization. Regions across the globe are affected by various combinations of these forces. Added to which, consumers are increasingly concerned about wildfires, power outages and getting more involved in producing their own power.

Travelling from Europe to San Antonio for DTECH2020 and talking to the delegates at the conference, it struck us that all these forces seemed to have converged at once on the U.S. energy sector. Added to these issues are concerns over the cybersecurity of the U.S. power grid and a series of extreme weather events that have caused power outages and forest fires.

Change may be uncomfortable, but it is also exciting. As DTECH keynote speaker, Paula Gold-Williams, President and CEO of CPS Energy said, ‘We are living the evolution of the industry’.

Coming from Europe, it’s fascinating for us to see the differences and similarities between the two utility sectors and certain trends in the U.S. market jumped out at us. However, one factor is key on both sides of the Atlantic; the importance of data for utilities is only going to increase. Utilities understand the potential of this resource. The key is putting it to work to create value, paving the way to the thriving utility of the future.

The Resilient Grid: A Driver for Change

Creating a resilient grid was a big concern for many of the delegates we spoke to. A series of events has brought this to the forefront of discussions in the U.S. energy sector.

Electricity is often an early victim of extreme weather and the U.S. has suffered from more than its fair share of weather-related power outages in recent years. It was Hurricane Sandy that first highlighted the issue of grid resiliency, but more recent power outages during the 2019 California wildfires once again brought grid resilience into sharp focus.

A limited, but successful cyber attack on utilities in the western U.S. in early 2019 came after many months of ‘probing’ by hackers. Utility Dive’s annual survey of utility executives found grid security was their top concern.

A resilient grid is not only able to maintain power during weather events and cyber attacks, it must also provide a flexible, agile, customer-focused energy service.

At DTECH2020, we noticed four areas being discussed to help build a more resilient grid.

1. A Smarter Grid is a more Resilient Grid

    While the foundation of a Smart Grid includes Smart Meters, its lifeblood is data.

    The U.S. is at the forefront of smart metering and already has a 60% penetration rate. Many utilities are now preparing for the second generation of Smart Meters, expected to hit 81% penetration in 2024. Today, this rich resource is often not fully utilized, with some municipalities simply using the data for billing. Imagine what could be done with the added help of technologies such as Data Analytics and Artificial Intelligence. To gather insights and value from this information, data flows must be integrated so that emerging technologies can be applied.

    Good quality Smart Meter data gives utilities a window into how consumers are using energy. These insights can be put to work to develop innovative services for customers and improve grid operations.

    A Smart Grid helps to make the grid more resilient as utilities can detect and isolate outages, improving the quality of power supply to their consumers. It also enables utilities to seize opportunities from Distributed Energy Resources (DERs). A Smart Grid enables renewable energy to be integrated and delivered evenly during peak times and anticipates patterns of Electric Vehicle (EV) charging.

    2. Utilities are Seeing the Benefits of a Cloud-Based Future

    For decades, utilities have made significant investments in their systems of record and on-premise software, hiring consultants and staff to integrate, manage and operate their systems. In contrast, cloud-based software offered by specialized platform providers can be accessed without the utilities having to own the equipment or purchase, maintain and update the software.

    Cloud platform ecosystems allow for end-to-end management of customer ops with the commercial benefits that the cloud provides. It helps facilitate and accelerate innovation by providing a platform for third-party vendors, startups and other stakeholders to share resources and data. It allows utilities to benefit from emerging technologies such as Artificial Intelligence and Machine Learning. Cloud platforms allow utilities to adopt an Agile Mindset that stimulates shorter application development cycles and enables utilities to bring innovative new services to market faster.

    3. Can Microgrids Offer a Solution?

    The push towards Microgrids to help build resilience and improve reliability is a particularly strong trend in some U.S. states and we see certain organizations such as universities building microgrids to give themselves more control over their own energy supply or to protect themselves from power outages.

    Microgrids are increasingly seen as a solution to making the grid more reliable and flexible. The ability to isolate microgrids when faults are detected or due to cybersecurity concerns, offers the promise of a more consistent power supply and a more secure grid.

    Once again, we are seeing the importance of data. For microgrids to work optimally, effective data integration is essential, both with the main power grid and among microgrids. This enables them to share resources and optimize resilience in the event of power outages. It also allows for the integration of additional sources of renewable energy for the microgrid if needed.

    This is an opportunity for utilities to be at the center of a microgrid network, acting as the hub through which information flows.

    4. More DERs in the Mix

    Microgrids are just one part of the burgeoning distributed energy resources (DERs) sector and this was another hot topic of discussion at DTECH 2020. DERs present challenges for utilities, but also offer opportunities to create a new and valuable role.

    New investments in renewables rose by 28% in the U.S. in 2019 and the Energy Information Administration is now predicting that renewables will be the fastest-growing source of energy, overtaking natural gas and providing 38% of electricity by 2050.

    However, DERs such as renewables and Electric Vehicles (EVs) give utilities the headache of unpredictability, balancing the grid and providing enough energy at peak periods. It is not hard to imagine the difficulties presented by large numbers of EVs all being charged around peak commuting times.

    A Data Deluge from the Grid Edge

    As DERs become an increasingly important part of the energy landscape, utilities must ensure they have an active role in shaping the future of this area. One of the ways they can achieve this is by making use of the vast quantities of data that will be generated as more DERs are employed.

    Emerging technologies rely on good quality data. ‘Garbage in, garbage out’ as the saying goes. Utilities are already generating plenty of data. The challenge now is to ensure that this data is integrated, ‘clean’ and used to produce value for utilities.

    By integrating data from renewables and Smart Meters, utilities can apply data analytics and Artificial Intelligence (AI), giving them a better picture of energy production and consumption. The insights derived from this data can be used to improve services by for example, creating more tailored energy packages for consumers.

    A New Utility Model for a New Era

    What is the role of the utility in this new energy landscape? How can utilities thrive in this era of distributed energy resources; community microgrids, independent renewable power producers and new companies springing up to provide EV charging infrastructure?

    The future for utilities must be more than simply building and maintaining the transmission and distribution of energy. We see the future utility as having a central role in an energy ecosystem. A future where utilities act as the hub through which information flows; information from Smart Grids, Smart Meters, Microgrids and DERS. The utility at the center of this hub can use data both to provide a more resilient and reliable grid and innovative, consumer-focused services.

    It is not a giant leap to see how this utility, an expert in local infrastructure and in patterns of energy consumption and EV charging, can be at the heart of tomorrow’s Smart City.

    The Ultimate Goal: Getting Closer to Customers

    As Paula Gold-Williams commented in her keynote, ‘Customers have to be our beacon.’ Utilities are not going to get closer to their customers by being ‘wires-only’ organizations.

    Data from Smart Meters, from behind the meter energy technologies and from EV charging has the potential to bring utilities closer to their customers. By becoming the central hub of an energy network, utilities can use data to understand what their customers need and want and to become consumer-focused utilities fit for the future.

    * With thanks to Kevin O’Donovan for his observations at DTECH2020