With an increase in the access to variable renewable energy sources, the shutdown of fossil fuel-based power plants and changing load patterns due to the increase in the number of electric vehicles, the days of stable power flows are now a thing of the past. Grid operators are finding it harder to deduce the extent and positioning of grid transformation. They are also finding it harder to put in place, the operational changes that are essential to delivering upon evolving customer expectations like high-quality, reliable power. Utilities have been through a roller-coaster ride over the past decade, trying to adapt to evolving generation and consumption patterns. They can expect more of this over the decade to come, as the grid evolves even further.
Keeping these changes in mind, the appetite for investments on the grid seems infinite. Utilities have spent millions of dollars on grid upgrades in the past couple of years. But, in spite of sharp growth in global electricity demand, many utilities have declared returns that are below-average. This could only mean that there have been inefficiencies in investments in recent years. To cite an example, many power utilities have aggressively invested in digital transformation, but most have yielded unsatisfactory results. Although the transformation of the grid is essential to meet future demands, it is critical to ensure that investments address the grids pain points and meet customer expectations.
Use advanced analytics to make a significant impact
Before making any investment decisions, operators have to find the appropriate pathway that prevents unnecessary or insufficient investments. But, the issue lies in the fact that grid requirements vary significantly across regions and are very local. Grid operators have found it challenging to identify and narrow down critical grid assets that might cause problems in the future until customers and power producers in these regions are repeatedly affected. Thus, the lack of predictive capabilities is severely hampering grid improvement decisions.
Employing advanced analytical approaches can evaluate the effects that the energy transition will have on the grid under various potential market scenarios in the near future. In Europe, advanced analytics was used by a transmission grid operator to evaluate a medium-to high-voltage grid. The model simulated the impact of external events down to the level of individual assets and analysed the risks of possible future grid failures, the related values that were at stake and the potential solutions to avoid such scenarios. In a rapidly evolving energy world, advanced analytics have the potential to provide a critical service for grid operators and enable them to make effective strategic decisions in a dynamic sector.
Customer experience needs increased emphasis
The performance of a grid is ultimately measured in terms of customer satisfaction. It is gauged on whether it is able to provide the quality of service its customers expect. Traditional measures of reliability are based on the average duration and frequency of outages across a system and there are various indices that measure the same. However, the customer of the future will come to expect much more than the baseline. With a greater number of independent power producers entering the space and the addition of a substantial amount of renewable energy into the overall energy mix, customers will expect grid operators to provide them with greater flexibility in choosing who they buy their power from. Consumer consumption patterns and data on the amount of “clean energy” used will need greater transparency.
Utilities in Europe allow customers to choose from a choice of power generators. The customers are given details on the energy mix of the power that they consume. A utility in the USA offers its customers direct access to the wholesale power market. The direct access allows them to consume more during periods of low power prices. It minimises consumption during periods of peak demand. This takes out the middlemen and saves money for the customers. It also flattens demand patterns for utilities, resulting in better demand management.
Every single capital investment needs a convincing case
In most cases, grid operators will have to prove, to often-sceptical regulators, that decisions on significant capital investments are useful. A successful investment pitch should include clear performance-related outcomes and parameters of judicious investment. There have been a lot of cases where regulators have rebuffed large investments because grid operators failed to convince them of the value-added from those particular investments, and the corresponding effect on customer satisfaction. So, a prioritised investment and deployment plan, which includes established internal mechanisms to execute the plan, needs to be developed These mechanisms include Operations and Maintenance (O&M) costs, governance, metrics and organisational structure.
Modernisation pathways should evolve with grid evolution
As the global focus changes from power generation to grid modernisation, utilities will have to be careful with where and how they invest their money. Analysis of a list of probable future problem-scenarios should employ modern data analytics methods. Deduction of a list of possible solutions will help narrow down potential avenues for improvement.
Utilities also need to increase their focus on customer satisfaction. They need to analyse whether the investments they are making will go towards meeting evolving consumer expectations. Investments in the sector need to be uncompromisingly prioritised to funnel investments into areas that will have the highest amount of impact on transforming the grid today, to meet the needs of tomorrow.
