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Reinventing electricity grid series

Protecting the world from the worst environmental outcomes and eliminating greenhouse gas emissions up and down the global energy supply chains will not only require a transition to more renewable energy sources but also for power grids to become more innovative and ready to deal with the challenges of sustainable electricity generation and demand.

Intelligent solutions already exist to facilitate this transition, but their global adoption – and the conversation around how to enable this change fast enough – must become the top of the agenda. Plenty of energy and resources have gone into developing and improving the efficiency of renewable energy sources such as solar, wind, and energy storage. To date, however, less thought has gone into the role of our electricity distribution networks, which provide access to renewable energy to consumers.

Electricity grids in use today have not changed much since they were first designed and built over a century ago. On the other hand, electricity generation and energy demand have changed significantly and need to continue over the next decades to reach global decarbonization goals. To this day, electricity distributors typically forecast consumption using traditional models, which often include adding safety margins up to 100 percent of peak consumption to prevent overloads leading to outages. Low voltage networks are designed based on these models with minimal visibility of the current load.

This has not been an issue in the past due to the stable and predictable nature of low-voltage power flows. Consequently, investments in real-time monitoring of low-voltage grids have been deemed unnecessary. However, in the current situation, network operators are being flooded with requests to connect new generations and load to their networks. These connections often occur on the lower voltage levels, resulting in the distribution networks turning into bottlenecks of the energy transition

Energy consumption peaks typically only occur during a fraction of the 8,760 hours per year. Consumption data from European distribution grid operators shows that only 7 percent of the available network capacity is used on average. All the extra capacity is deployed to prevent outages during these few peak hours. So, while there is plenty of power in the network most of the time to host all new connections, it is not utilized correctly. In the end, it would seem we are still trying to power the most connected, productive and industrial economy the world has ever seen with a technology that is over a 100 years old. Edison, can you hear me?

The root cause of this inefficient management is how the network monopolies are usually regulated, which has been reasonable until now. To incentivize the proper maintenance and expansion of network capacity, the most common regulatory model is to give the network operator a return on investment proportional to the network assets’ value. Building more networks provides a higher profit. The good news is that solutions exist to drastically increase the efficiency of existing grids, allowing them to better handle the load and voltage fluctuations associated with renewable generation and consumption patterns and significantly increase their level of utilization. Now, a regulation change must also be followed to incentivize network operators to benefit from this new technology to solve the most pressing challenges.

Rooftop solar generation is a cost-efficient solution to transition homes from dependency on fossil fuels. Unfortunately, the generation fluctuates wildly depending on the weather and season, causing network overloads during sunny days. At the same time, electric energy consumption trends have evolved, with consumers demanding more energy while actively looking to decarbonize their lives by, for example, replacing fossil fuel cars with electric vehicles.

For example, about 80 percent of all new vehicles sold in Norway are electric. In the U.S., California has mandated that all new vehicles sold after 2035 be electric, up from 18 percent in 2022. In China, a quarter of all new cars sold in October 2022 were electric. The change on the consumer side is rapid and requires fast adoption in power grid capacity to ensure all these vehicles are efficiently supplied with the power they need. And it is not just electric vehicles. Transforming from gas boilers to electric heating of homes will add another significant load to the networks. While the need to supply electric vehicles represents one slice of the market, it is a telling one.

The future energy system will require electricity networks to be flexible enough and intelligent enough to adapt to changes in inputs and outputs on the fly.

Ignoring management

But, while the benefits of intelligent solutions to transform legacy grids are multiple, only some stakeholders are paying enough attention to the potential and the magnitude of the socioeconomic impact such a change could bring.

The world is betting on clean electricity to decarbonize our entire economy, but these bets must be accompanied by profound changes in how low-voltage electric grids are managed. The first steps are tapping into real-time data providing complete visibility into demand, and deploying analytics of grid capacity in real-time. These two factors would allow distributors to run the network closer to its limits, enabling more power, speeding up the connection of renewables, and ensuring grid stability while minimizing waste.

The cost savings in actively managing distribution networks amount to hundreds of billions of dollars and benefit the distribution operators and the electricity consumers. For society, it is a non-regret move.

Better and more sustainable planning

Electricity distributors can play a crucial role in driving the energy transition and enabling affordable and sustainable electricity for everyone. However, within the current regulatory environment, the network operators experience a lack of incentives to change and difficulties in getting access to detailed and real-time data from customers and devices connected to the network. Therefore, they are forced to plan and operate based on assumptions and legacy methods that no longer fit for purpose.

Using existing models, energy distributors end up over-dimensioning network assets, increasing network costs for consumers. The required network reinforcements are often lengthy and complex projects requiring digging up the streets in urban areas. They are causing long lead times for new connections of sustainable generation and loads and consume more natural resources than necessary. Addressing this waste and inefficiency will be vital to managing the energy transition needed for the future. Many distributors are already taking steps towards adopting intelligent solutions and, in so doing, contributing to greater global sustainability. But the conversation around how we can speed up the transformation of distribution networks must be stepped up across society, including network operators, regulators, policymakers, and industrial and residential customers. All stakeholders throughout the energy supply chain must participate with their piece of the solution as the energy transition unfolds as a desperate global necessity.

The electricity grid system as we know it has indeed served us well but remained unchanged for more than 100 years. Even with today’s level of technology, grid operators have limited visibility into what is happening in the grid below 20,000 volts.

It is time for that to change.

/Alberto Mendéz

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