New Strategic Directions Report explores smart grid strategies as distributed energy tests utility business models
Faced with the rapid evolution of generation, transmission and distribution technology, utilities are poised to undergo their most visible transformation in more than a century. By actively pursuing grid modernization efforts now — deploying smart devices, predictive analytics and active network management strategies — they can overcome the pitfalls of aging infrastructure assets and meet rising customer demand for clean energy, reliability and a lowered carbon footprint.
Black & Veatch's 2019 Strategic Directions: Smart Utilities Report, released today, found after surveying hundreds of utility operators that utility business models are changing to accommodate the growing volume of renewable energy coming onto the grid. Smart grid devices are gathering staggering amounts of data about consumption habits and system health, driving the adoption of powerful new software that not only collects this information but makes it actionable, giving utility managers an unprecedented tool to plan for tomorrow's energy needs.
The report explores how transformative initiatives — from the greater integration of renewable energy and distributed energy resources (DER) to the proliferation of electric vehicles (EVs) — are reshaping the market, fueling the push for grid modernization. Satisfying future distribution and energy storage demands will require a highly connected, actively managed electrical grid armed with digital technologies and devices that can support two-way, real-time power requirements. These increasingly complex systems will demand holistic network management strategies that often fall outside a utility's skill sets, opening the door for new workforce resources.
The report explores how common DER applications such as rooftop solar, on-site batteries and smart thermostats are rapidly gaining adoption and driving utilities and consumers to capitalize on ways to generate, store and monitor power. The report, in a section exploring the challenges associated with accommodating DERs, draws a comparison of grid technologies to the streaming outlets revolutionizing the music industry: "Similar to the way that music services like Spotify and YouTube give artists a platform to share and monetize their product without the oversight of a record company, a DER marketplace can have the same impact on our electric grid."
"Energy, just like music, can now be generated from (nearly) anywhere and by (nearly) anyone," that section's authors submit. "The question is, do utilities have the mechanisms in place to ensure the DER revolution will play them a favorable melody?"
"Sharp planning and management will be essential as grid modernization spreads and technologies such as smart meters, automation technology and energy storage get added to the power grid," said John Janchar, President of Black & Veatch's Telecommunications business. "This is the new normal, with DER and the march of technology changing the game of electricity delivery. Utilities can't afford to stay on the sidelines."
The report found that roughly one in five survey respondents say their utility plans to allocate more than $200 million into modernization investments over the next three years, while an additional 26 percent report they'll devote $100 million to $200 million.
"That heavy lifting takes more than just innovation and a forward-thinking mindset," said John Chevrette, President of Black & Veatch's Management Consulting business. "Utilities also must pick experienced partners in network management to give them peace of mind that this energy transition will be seamless, safe and worth the investment."
Other key findings:
Nearly four of every five respondents say they expect their telecommunications programs to grow over the next five to 10 years and are actively planning for that shift, while another 16 percent anticipate change but haven't begun planning.
Budget constraints and competing priorities tied as top barriers to modernization, followed by regulatory hurdles.
Thirty percent of utilities now provide at least five DER customer programs (demand response and/or distributed generation). Fewer than 16 percent provide only just one.
Underscoring that distributed energy is by far the top application that utilities plan to support in the immediate future, nearly three-quarters of survey respondents cited DER in general as shaping their distribution infrastructure in coming years, while 56 percent named EV charging.
The report finds that smarter grids, which rely on interconnectedness, will require active network management, holding the promise of better monitoring, control and automation capabilities.
Nearly 77 percent of utilities plan to adopt a managed charging approach to balance increased load on the grid related to EV charging.
Utilities continue to recognize the critical role that cybersecurity plays in ensuring the future health, reliability and resilience of the electric grid.
Black & Veatch's report is based on a survey of more than 200 participants across utilities that provide electric, natural gas or water services.
The report includes insights from our software subsidiary, Atonix Digital.
A free copy of the report is available to download at www.bv.com/reports.
About Black & Veatch
Black & Veatch is an employee-owned, global leader in building critical human infrastructure in Energy, Water, Telecommunications and Government Services. Since 1915, we have helped our clients improve the lives of people in over 100 countries through consulting, engineering, construction, operations and program management. Our revenues in 2017 were US$3.4 billion. Follow us on www.bv.com and in social media.
About the Strategic Directions Reports
Black & Veatch's high-impact Strategic Directions Report series provides industry insights and analysis based on market-leading research. Encompassing several annual reports, including Smart Utilities, Water, Electric and Natural Gas, the series serves to inform and educate industry players on key issues, challenges and opportunities. Visit http://bv.com/reports to learn more.