Bob Karschnia is CEO and president of Sentient Energy.
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The relationship between consumers and utilities is changing in new and exciting ways. What used to be a one-way, seller-to-consumer relationship is now becoming a bi-directional partnership of net-generators and net-consumers. Consumers and businesses alike are investing in renewable energy such as solar and wind to actively participate in improving the environment and to take advantage of lower-cost energy sources. And the trend is accelerating globally.
According to the IEA, renewable electricity generation in 2021 is set to expand by more than 8%, the fastest year-on-year growth since the 1970s. China alone is predicted to account for almost half of the global increase in renewable electricity in 2021, followed by the United States, the European Union and India. Much of this power generation is happening at the very edge of the grid, on the rooftops of homes, businesses, campuses and solar farms.
As the energy industry continues to evolve, and the disintermediation of the power economy matures, the distribution grid itself will play a different yet critical role. The grid and its ability to effectively facilitate bi-directional power flow will become a product and revenue stream for the utility industry. No matter how power is generated, or how it is purchased, it will still need to travel over the infrastructure that is managed and maintained by power companies. And these companies will be responsible, just as they are today, for its safety, reliability and quality.
Soon, utilities will be able to monetize access to their grid infrastructure in new ways. The quality of delivery and reliability will factor into pricing as much as the amount of power distributed. Data and analytics will play an even greater role in power distribution in this era. Progressive utilities are already preparing their distribution grid for this high-demand future now.
There are four key areas of focus to begin the process:
1. Gain insight into the distribution line. According to a Scientific American article, "The U.S. electrical grid is the largest interconnected machine on Earth: 200,000 miles of high-voltage transmission lines and 5.5 million miles of local distribution lines, linking thousands of generating plants to factories, homes and businesses." Intelligent sensors are particularly critical to the operation of thousands of distribution lines. Sensors capture critical information about distribution grid performance and help utilities pinpoint problem areas, monitor load, disturbances, faults and the efficacy of two-way power flows in this vast network. Real-time data, and the analytics associated with it, are the key to pre-empting problems and proactively improving grid operations as distribution infrastructure is taxed with increased demand and complexity.
2. Aggregate and analyze grid performance data. Tracking grid performance at every level gives visibility into overall grid operations. Grid data and analytics reveal current problems, but more importantly, they provide insights and reveal trends that help utilities identify, anticipate and mitigate potential problems in the future. Utilities can model future demand and usage trends to identify and prioritize modernization efforts. Data about real-time and historical disturbances, load levels and usage trends, and current and predictive equipment health data provide a road map to modernization. Each component of the grid that is modernized strengthens its foundation and ability to meet future demand.
3. Develop a progressive grid optimization and utilization strategy based on lots of data. Over time, as more utilities add intelligence to their distribution grid, a wealth of data will exist about how energy travels and is exchanged, used and interrupted. As utilities share data and incorporate data from external sources such as weather forecasting and tracking organizations, cities and municipalities, and businesses, they will be able to create more accurate models about current and future power demand and distribution. Data and analytics, from both internal and external sources, are critical assets for utilities as they stretch to meet the evolving needs of consumers.
4. Become a learning organization. To achieve the greatest result, utilities will need to strengthen and empower their organizations with data scientists and analysts who are capable of using new data and tools effectively. Utilities will need to help their employees gain critical new skills associated with interpreting data and modeling future grid operations. Many utilities have prioritized formal “upskilling” programs for existing team members and are requiring a baseline of data and analytical capabilities for new hires. Building a technical team that is capable of using information to guide modernization efforts is essential for both utilities and their customers alike.
Disruption is taking place in the energy economy — regardless of if you're ready or not. Soon, the relationship with consumers won’t solely be about power generation, distribution wires and meters; rather, it will be about the exchange of power and the use of grid infrastructure to do so.
Ultimately, those utilities that embrace new energy distribution business models, data and analytics, and skills requirements will be the ones that are able to build stronger relationships with consumers. These companies are the ones most likely to profit from evolving customer relationships while giving customers the flexibility they demand. They’re also the most likely to take leadership positions in the energy economy of tomorrow.
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