Co-Author: Sitaram (Situ) Ramaswamy
Distributech (DTECH) 2020 offered a different lens into the energy and utilities industry this year. The event presented a great opportunity for the whole industry to come together to deepen our understanding of the current and future of the industry. We witnessed the biggest industry influencers delivering keynote addresses and conducting workshops to inform us of their plans to leverage new methods to utilize data for the benefit of our customers and for the society’s greater good. These included everything from microgrids and clean energy to cybersecurity and vegetation management, all in the space of just four days.
With a shift to customer-centric business models and an added emphasis on environment-friendly modes in the processes of energy production, the energy and utilities industry has embraced the idea of decarbonizing and rapid digitization.
Over the last few years, electric grids have been decentralizing, resulting in wider use of distributed resources with energy flow happening bi-directionally as well as laterally. Utility companies are increasingly implementing solutions, such as Advanced Distribution Management Systems (ADMS), Distributed Energy Resources Management Systems (DERMS), virtual power plants, and the Internet of Things (IoT). Additionally, innovations in the field of Artificial Intelligence (AI) and Machine Language (ML), as well as smart sensors becoming cheaper with time, are enabling new operational capabilities and business models.
However, there are other factors beyond technology that play a critical role in decarbonizing the electrical grid. Government policies play a crucial role in the business strategies of energy and utilities (E&U) companies. Similarly, Energy & Utility (E&U) companies also need to factor evolving customer expectations and preferences while planning their offerings. Moreover, the emergence of renewable and alternative energy sources, and the economics around them, has given E&U companies plenty to think about. In short, E&U providers are faced with the need to revisit their business models and redefine their offerings in order to stay relevant in the changed paradigm, but also to champion the environmental cause.
Identifying the Need for Change
Decarbonizing the grids by democratizing them is the end goal. To reach that desired point, it is important to start by understanding the need for change and put forth the right execution plan. In that quest, we need to first distinguish between grid reliability and grid resiliency. As we know, a grid’s reliability is determined by its ability to deliver uninterrupted power supply in the expected quantity while also ensuring that the quality is not compromised. However, a grid’s resilience is defined by its readiness for damages and disasters, and its ability to swiftly recovering from them. The damages can be caused by natural calamities, such as storms, fires, floods, etc., as well as man-made disruptions, such as negligence along with cyber and physical attacks. It is important to realize that a grid’s resiliency is directly responsible for its reliability.
Grid reliability has improved over time, but the resilience of infrastructure remains a pain point. Lack of government steadfastness in making definitive policies and mandates has acted as a hindrance for utility organizations to make sizeable investments in robust infrastructure development to replace aging assets. To put in perspective the enormity of the task, as the American power grid infrastructure alone is currently worth over $1 trillion. Technology change and uncertainties in terms of emerging business models are additional factors that inhibit investment by utilities.
Technology is a key enabler of electrical grid optimization. Grid-scale energy storage systems are paramount for companies to optimize the integration of renewable energy sources. Similarly, robots are assuming greater roles in ensuring safety and managing maintenance and repair work. Unmanned aerial energy storage systems are being pressed into action for better and faster visual inspections, improve restoration after natural disasters and maintenance work, especially on high-voltage lines.
Automation is further helping organizations gain added efficiency and agility by automating substation controls. By automating these tasks, companies are not only able to get work done faster but are also managing these substations and devices such as circuit breakers, sensors, and relays remotely. In due course, with greater automation, E&U organizations will be able to utilize distributed energy resources (DERs), such as solar and wind generation as well as battery storage. Furthermore, with quantum leaps in both internet connectivity as well as data analytics, real-time monitoring of on-ground conditions and machine lifecycles has become easier. In time, with the help of emerging technologies, organizations will have to develop the ability to measure, monitor, and manage prosumers and various devices behind the meter.
Transactive Energy Models are the Way Forward
The future of the E&U industry depends on transactive energy (TE) models. These models rely on the economics of incentives. Resources are optimally allocated to smart devices across the power grid– be it consumer devices or distribution systems or transmission system components– and demands are met meaningfully. The TE model has been working wonders for the Monash University Net Zero project. This smart energy project in Australia focuses on making the university campus carbon emission-free by 2030. If the project succeeds in achieving desired results, it is likely that power distribution companies in the region and beyond will follow suit.
Blockchain will play a pivotal role in shaping the future of payments in the energy and utilities sector. It is especially true for TE models. It will not only make payments for services simpler but also safer. Artificial intelligence and machine learning will also play vital roles in creating innovative capabilities in the E&U industry. As electrical grid structures become more decentralized, utilities will reach remotest of locations and enhance human lives. The emphasis will also shift from the producer to the consumer, and in time, to the prosumer.
At HCL, we believe that our services add value to businesses and the world at large. Our E&U offerings are aimed at promoting a greener energy sector that relies on sustainable resources and business models. After all, smart businesses and green energy make a better world.