How distribution businesses should embrace the transition

HOW DISTRIBUTION BUSINESSES SHOULD EMBRACE THE ENERGY TRANSITION

by Charlie Richardson, Growth Markets Utilities Lead at Accenture and Soon-Wai Lim, Technology Senior Manager, Accenture ANZ

The energy transition is an unstoppable force of disruption. It creates tremendous opportunities for distribution businesses in the utilities industry, but to the poorly prepared, it presents significant existential threats. In this article we look at some of the key areas distribution businesses should be focusing on to stay ahead of the energy transition.

Charlie Richardson. Soon-Wai Lim.

The risks of doing nothing in the face of the energy transition are significant, endangering a distribution business’ operations, reputation and ability to comply with regulations. The critical issue distribution businesses are facing right now, is that they are ill-equipped to cope.

Our 2021 Digitally Enabled Grid research, which surveyed 250 distribution utility executives worldwide, has identified the distinct focus areas underpinning distribution’s vital need for digital transformation.

Disruption at the door

We are only in the early stages of the energy transition. Most of the executives who expect a tipping point to occur believe it will be triggered within the next ten years (86 per cent). Most utility executives (84 per cent) believe uncertainty will grow over the next five years, which is almost the blink of an eye in terms of deploying new grid assets.

Globally, most respondents believe this tipping point will be caused by the growth in total supply provided by grid-connected distributed generation. The percentage of households with distributed generation is the second-most important tipping point trigger. Regulatory changes, generous subsidies, further PV cost reductions or the development of new retail products could all accelerate deployment, and rapidly bring distribution utilities to a dangerous watershed that puts system reliability at risk without sufficient preparation.

At the same time, the advancement and significant clustering of low-carbon technologies – particularly prosumer PV and Electric Vehicles (EVs) – is inevitable, driven by a societal call for greater sustainability.

Although customer demand and regulatory changes are the most pressing issues of the energy transition, fewer than half of the executives surveyed said they have better than “moderate confidence” in their ability to predict and respond to them, despite awareness of distributed generation and electric vehicle deployment.

A data-driven, intelligent energy system

In tackling this crisis of confidence, we see four distinct areas in which distribution businesses should prioritise their transformation agendas.

Firstly, businesses need to establish a data architecture foundation that supports evolving business capabilities through the energy transition. The architecture needs to be underpinned by a data model – such as the International Electrotechnical Commission (IEC) CIM – to enable effective data integration. Distribution utilities already have significant volumes of data, but this is often held across many systems and will not effectively support a more active grid.

The second area of focus extends core operational visibility and control, particularly targeting grid-connected distributed generation and the solutions required to effectively integrate it.

The third greatly expands the scope of data through the deployment of IoT devices. The fourth focus area improves distributed intelligence and control, enabled by cloud, edge computing, artificial intelligence, 5G and digital twins.

These areas are neither exclusive nor linear, but depend on many factors including location, regulatory model and industry structure. Different utilities will begin at different stages within these areas and use different elements of each as they evolve. Some will choose to advance more rapidly in select areas, such as through partnerships with technology solution providers, to address specific challenges.

Regardless of the path taken, with the advancement in technology and greater connectivity, utilities must not lose focus on cybersecurity. Attacks on critical generation, transmission, and distribution occur on a near daily basis from both domestic and foreign sources. With all members of the energy ecosystem now ‘orchestrating’ generation, storage, and transportation assets in homes and businesses, the attacks will become much more personal and threatening. Both trust and opportunity will be lost if cyber security across both the owned and managed asset pools isn’t a top priority.

The distribution system of the future

In the highly dynamic grid of the future, a distributed intelligence approach to data flow and control – driven by edge-computing solutions to manage data flow and local coordination of IoT – is needed to ensure delivery of secure, scalable, economic and self-healing grids. Effective IoT management is intrinsically linked to cloud computing. Cloud will therefore become a core component of most intelligent grids, reflected by the fact that 73 per cent of respondents have already deployed some amount of cloud and IoT.

The low latency and high bandwidth of 5G communications extends the potential of mobile broadband and brings a range of capabilities that support IoT and edge computing solutions. Network slicing is a key feature of 5G, where the functionality of specific service requirements is packaged into customised slices. For example, an ultra-reliable low-latency comms slice can be used for mobile-based drone and work safety use cases.

To help utilities optimise operations, digital twins and mirrored environments can be used to detect and predict anomalies, prevent unplanned downtime, enable greater autonomy, and dynamically adjust designs and strategies with every new piece of data collected or new test run. This can help network operators and planners to make value-driven decisions across a range of operations, all the way from the boardroom to system operations.

Change starts now

We’ve seen that the energy transition creates as many opportunities as it does threats. This presents unprecedented potential for distribution businesses to generate significant new value, although the opportunities will differ depending on region and regulatory model.

They can expand their regulated asset base, in some cases create new products and services – including driving efficiency from the purchase of newly defined flexibility services – and collaborate more closely with other parts of the value chain. They can redefine the nature of network management by using data to drive operations, and create new, innovative roles for employees.

But most of all, they will be called on to continue their remit of delivering safe, affordable and reliable power to customers as the energy transition unfolds. What’s clear is that for this to be successful, immediate action is imperative.