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2019 Strategic Directions:Smart Utilities Report

Grid Edge Becomes the Center of Next-Generation Utilities

Digital technology and networks are breathing life into utilities’ aging distribution systems just as distributed energy resources (DER) and renewable energy are challenging traditional business models and centralized generation.

With the decentralization of generation, the edge is coming into focus. Economical advances in energy production, storage and control are giving rise to the prosumer, driving consumer choice and ultimately producing a new energy marketplace at the local distribution level. However, utilities now are left to wonder how they’re going to manage two-way power flow and variable DER while maintaining the reliability, efficiency and security of their operations. Distribution modernization is inevitable, and making the grid edge autonomous and interactive is paramount for satisfying tomorrow’s energy demands.

Black & Veatch’s latest snapshot of the industry, the 2019 Strategic Directions: Smart Utilities Report, crystallizes what’s top of mind among overseers of electric networks. According to the report’s survey of industry insiders, respondents overwhelmingly declared that increased monitoring, control and automation capabilities — along with improving grid reliability — are the top drivers of modernizing their electric distribution systems.

And they say they’re ready to spend a considerable amount to make it happen.

Roughly one of every five respondents say their utility plans to pour more than $200 million into modernization over the next three years. An additional 26 percent report they’ll devote $100 million to $200 million to that cause.

As the edges of utilities’ grids are adapting to the deployment of disruptive technologies such as DER — things such as microgrids, rooftop solar and fuel cells — Black & Veatch’s report explores the industry’s weightiest issues.

  • Distribution Modernization/Automation: The key drivers of the investments that utilities are making in distribution system modernization stem, perhaps ironically, from assets that utilities often don’t own, namely DER such as rooftop solar arrays, electric vehicles and battery energy storage systems.
  • Field Area Networks: The electric grid is undergoing its most transformational shift in history with digital technologies and devices being pushed to the edge to support dynamic two-way power requirements in real-time while ensuring reliability, efficiency and security. As these digital devices are pushed to the edge and densified across the grid by more than 1,500 percent, utilities need an advanced wireless network that goes beyond supporting Advanced Metering Infrastructure (AMI) and supervisory control and data acquisition (SCADA) devices that traditional field area networks (FANs) support today. A majority of the respondents to this report’s survey say the existing field area networks they’re using for AMI and SCADA will need significant enhancements to support the digital utility of tomorrow. Now the question is, what’s the right technology solution?
  • Low-Impact Assessments and Security: Utilities recognize the critical role that cybersecurity plays in ensuring the health, reliability and resilience of the electric grid, and for years, the focus was on protecting the high- and medium-impact assets that make up the bulk electric system. But a NERC CIP standard issued in early 2018 is changing the game by mandating that utilities extend proper cyber protections to all low-impact assets on the grid by 2020. The distributed nature of these projects — from the multiple site types to the sheer volume of devices — makes implementing this standard a daunting task. Where does the industry stand in bringing themselves into compliance?
  • Network Management Services: Advocates of the Internet of Things (IoT) and other integrated technologies have done an admirable job of selling utilities on the value of smart devices: With applications before and behind the meter, network intelligence strategies involving AMI and other technologies carry the promise of unprecedented volumes of data about customer habits, asset health, system outages and other anomalies.
  • Whole Systems Asset Management: Driven by a desire for increased monitoring and improved reliability, plus the need to integrate DER, utilities are working to bring a massive new array of assets online in the distribution space. The speed, scale and complexity at which these advanced systems deploy will require visualization and immersive interaction wholly unachievable with today’s methodologies, paving the way for a revolution in asset management. As a result, conventional “replace and repair” asset management approaches will have no place in this future world and are being quickly eclipsed by a more holistic, whole-systems perspective.
  • DER Market Enablement: Utilities are beginning to embrace the ever-increasing presence of DERs in their regions. But to animate the DER market and allow investors to sell their energy into the system, a new organizational body must be formed that can manage this new source of power flow onto the grid.

Without question, the way utilities and customers engage is shifting. Consumers are empowered and becoming more technologically savvy and digitized by the day, thanks to the rise of smart metering and other intriguing gadgetry like smartphone apps that give them more control and functionality over their energy. They also can readily switch between suppliers and pressure utilities to prize customer service to stifle customer attrition or the potential fallout of bad publicity on influential, broad social media.

Enter the pressing import of grid modernization — now.


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