Grid modernization: A net-zero future

Partner, Grid Modernization and Energy Transition, PwC Canada

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Grid modernization is critical to achieving Canada’s net-zero goal by 2050 and will help reduce capital investments needed by allowing further integration of renewables.

According to the Canada Energy Regulator, there are significant and diverse clean generation investments required (five to seven times current renewable capacity) to achieve Canada’s long-term climate goal of reaching net-zero greenhouse gas emissions by 2050.¹ The challenge of meeting increasing demand for electricity won’t be resolved solely by increasing generation capacity.

Power utilities must focus on fundamental grid modernization efforts to increase reliability, resilience and efficiency to successfully integrate renewable sources of electrical energy while continuing to meet future demand.

There are fundamental grid modernization investment areas that are critical to power utilities’ future success. Basic energy management remains as important as ever, and utilities will need to continue upgrading legacy infrastructure. This will require significant investment in digital assets, emerging technologies, modern customer platforms, asset management and operational systems, while upskilling the workforce.

For any industry, transformation and making impactful change is challenging, and power utilities is no exception. Transmission and Distribution (T&D) utilities must transform their business model and operations while maintaining a stable, resilient and reliable network. They must provide a consistent power supply to meet ever-increasing and unpredictable demand, while using intermittent distributed energy resources (DERs) in an evolving regulatory environment.

Power utilities must focus their capital investments and grid modernization efforts in three main areas to support energy transition:

1. Digitize physical assets and upskill the workforce: Create a stable and resilient foundation to manage digital assets and enable the workforce of the future.

2. Enable interactions through unified digital platforms: Take a capability-led approach to implementing digital tools and automation to allow employee, customer and stakeholder interactions as energy markets transform.

3. Accelerate prosumer adoption and integration of DERs: Deploy advanced digital technologies while maintaining a secure core infrastructure to help accelerate prosumer behaviour and integration of distributed resources.

1 Digitize physical assets and upskill the workforce

Power utilities, especially the distribution entities, operate many physical asset domains that often spread across operations technology (OT) and information technology (IT) applications. These physical assets and operational systems are often managed in silos and span multiple enterprise and operational boundaries.

As utilities deploy digital and sensory assets that can transmit and analyze data for more accurate insights on the grid, integration and workflow orchestration across IT and OT applications becomes essential.

Power utilities need to continue building and upgrading physical infrastructure with an increased focus on efficiency, resilience and reliability, while optimizing the grid using automation and artificial intelligence (AI). The application of advanced technology and workflows across the IT and OT domains will help prolong asset life and mitigate failures through predictive maintenance and quality programs. Internet of Things (IoT) devices, digital instrumentation and connected digital equipment on the grid will provide real-time performance monitoring capabilities, optimized maintenance of assets and more efficient scheduling of crews and critical resources.

The convergence of IT and OT environments will require a new degree of cyber resilience to better protect the electricity ecosystem from cyberattacks on critical infrastructure. To avoid the devastating social and economic consequences of a cyberattack, power utilities must integrate cybersecurity risk along with business risk and manage at an ecosystem level with cross-functional security teams. Organizations must take an active approach and implement digital and physical protection measures to address security concerns and help prevent unauthorized access.

The growth of DERs across the T&D network means interoperability and data exchange across various IT and OT applications will be critical. These applications include energy management systems, supervisory control and data acquisition systems, geographic information systems, and work and asset management systems. They also include other grid monitoring, control and balancing systems, such as advanced metering infrastructure, advanced distribution management systems and DER management systems.

Utilities need to invest in more advanced analytics capabilities with AI, machine learning and intelligent automation to help enable integrated workflows across these systems. The use of advanced simulation capabilities such as digital twins, which are precise data replicas of these IT/OT systems and grid assets, will provide an advanced asset management platform that combines large amounts of disparate data to build comprehensive views of the electric network.

This digital utility reinvention is only possible with a comprehensive approach to talent transformation, tailored to the magnitude of change and focused on upskilling existing employees on emerging technologies and advanced capabilities that these digital platforms enable. Tomorrow’s grid management will require myriad new and evolving roles, and it will be imperative to retain and upskill your existing workforce to maintain internal delivery capabilities.

2 Enable interactions through unified digital platforms

Energy transition will entail new digitized interaction patterns for current and new energy market stakeholders. Beyond the foundational grid modernization investments, utilities must direct capital resources to enable these new forms of interaction through connected and unified digital platforms. Internally, these efforts need to focus on improving workforce safety, efficiency and compliance. Externally, utilities must digitize customer, prosumer and market participant interactions through automated and AI-enabled workflows using data-driven insights.

In addition to benefits attributed to modern work and asset management capabilities, utilities could couple advanced analytics and AI to automate field maintenance and support processes and help improve workforce safety and productivity. The deployment and dispatch of appropriate resources, including service fleet and asset inventory, during emergency response combined with real-time weather, traffic patterns and grid conditions can dramatically improve restoration times. There are also various facility management and workforce IoT monitoring applications that promote the health and safety of field employees, contractors and others in operational proximity to the network.

Customer and stakeholder engagement and digitized interactions will become a critical, complementary component to grid modernization as utilities evolve from managing physical to digital infrastructure.

While utilities remain grid-focused first, their goal will become more directed towards intelligent integration and management of renewable energy resources and demand response programs. This evolution will require them to offer more value-based services to consumers and prosumers, while enabling flexibility through advanced tariffs, feedback mechanisms, data exchange capabilities and smart-home applications.

The emerging data-driven digital technologies will also help utilities realize immense value using operational and customer data for intelligent workflow automation. These applications will push the technical limits of legacy grid operations to support DERs and enhance operational efficiencies in facilities and business functions. Commercial and industrial customers can enhance their workforce safety and productivity, and customer experiences will be enhanced by additional flexibility, customization and control.

3 Accelerate prosumer adoption and integration of DERs

Power utilities are often confronted with challenges managing a reliable transmission and distribution network—and integrating DERs will only compound this challenge.

One of the main objectives of grid modernization is to intelligently integrate, organize and manage sources of renewable energy generation with integrated, automated and autonomous processes. This ability depends on real-time visibility and control capabilities to monitor grid conditions and predict improvement measures. As such, power utilities need to modernize and secure the grid to allow DER integration to support energy transition.

Electric network reliability is the most important factor in supporting increased demand, while easing congestion and securely integrating new generation sources of electricity. Grid modernization investment initiatives supporting improvements in monitoring, visualization and control capabilities will yield the most impact in terms of network reliability. Automation of power systems through digital technologies also introduces cybersecurity risks and vulnerabilities that need to be considered.

Over the next decade, capital investments associated with grid modernization initiatives will significantly increase to support integration of decentralized generation and renewable sources. Canadian T&D system operators anticipate major growth of electric vehicle charging equipment that increases flexibility in electricity demand through vehicle-to-grid technologies. Demand-side management and demand response programs are shaping up to help with further flexibility and control of electric consumption and generation patterns. The small modular technology of DERs places flexible energy storage capacity closer to the loads on the grid, and many who were once only consumers of electricity are becoming prosumers contributing to our electrical grid.

To date, many power utilities have prioritized upgrading the existing infrastructure and intelligently monitoring existing assets on the network, but as renewable distributed sources quickly integrate into the electrical grid, utilities will need to gain more intelligent control of the mid- to low-voltage circuits and deploy individual feeder automation capabilities on the network.

Tomorrow’s power utilities need to be more digital, integrated and agile to accelerate integration of these renewable sources while managing ever-increasing demand for electricity.

Power utilities are faced with significant challenges in meeting future demand while maintaining a stable, resilient and reliable network. To reduce some of the capital investments needed for energy transition, utilities must promote and accelerate integration of DERs through a capability-led and technology-enabled approach. This includes strategically planned capital investments to seamlessly orchestrate convergence of IT/OT applications, while using digital platforms and emerging AI, analytics and workflow automation capabilities to support future market interactions.

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^{1. A Hurry-up Offense for Energy Transition and Clean Growth Projects: Energy Future Forum Policy Memo, Arash Golshan, Public Policy Forum, March 27, 2024, https://ppforum.ca/publications/energy-transition-clean-energy-growth/}

Grid modernization: Paving the way to a net-zero future