Accenture’s annual Digitally Enabled Grid research provides important insights regarding our increasingly digital grid. Findings highlighted the urgent need for utilities and their regulators to address significant risks associated with evolving customer demands and business strategies, and the challenges and opportunities we face.
Utility executives identified the integration of distributed generation (DG) as the business challenge that has grown the most over the last two years. In response to the disruptive network impact of DG, a majority of utilities anticipates deploying a broad set of new capabilities over the next 10 years in network capacity planning, storage support and distributed generation operations. But there is still a long way to go.
The research quantified significant benefits associated with utilities embracing key strategies for a digitally-enabled grid:
- Substantial reductions in capital spending for utilities deploying customer-facing smart grid solutions (e.g. for small-scale DGs on utility networks)
- Smarter DG integration’s potential to be a foundational component of the smart grid for many distribution utilities, providing cost-effective solutions to urgent challenges.
“The rapid evolution of the technology, better economics and the growing accessibility and environmental appeal of residential solar photovoltaics – or PVs – have pushed distributed generation from the fringe to a mainstream factor on the grid,” said Stephanie Jamison, managing director, Accenture Transmission and Distribution. “Combining solar PV with more economical options for battery storage, demand response, and energy efficiency will give consumers more power and require distribution utilities to provide more flexibility and different types of services. Despite the challenges the integration of these new technologies at scale bring, it is essential to meet the growing expectations of consumers in order to position utilities to provide services-based business models that could drive much-needed new revenue.”
Accenture’s survey revealed that 58 percent of distribution utility executives believe DG will cause revenue reduction by 2030. The concern is higher in North America and Asia Pacific than in Europe, due to the prevalence in these regions of vertically integrated utilities, which face the double impact of declining energy sales revenue and increased network costs to support reliable energy delivery.
Nearly six out of 10 executives (59 percent) expect grid faults to increase by 2020, due to more volatile uses of their networks triggered by the deployment of distributed renewable generation.
The need for our industry to address DG hosting capability was highlighted: 59 percent of participants in the survey believe they will exhaust their DG hosting capacity within 10 years, if they haven’t already. After that, accommodating new DG on the distribution network will require increasingly high capital reinforcement costs.
In the face of such disruption, only 14 percent of distribution utilities have a very clear forecast of their potential distributed generation network hosting capacity.
Executives said the biggest DG-related stress on utilities’ network hosting capacity will come from energy prosumers who are driving small-scale DG (cited by 59 percent), followed by medium or high-voltage connected DG such as a large-scale solar plant (28 percent).
Smarter Distributed Generation Integration Can Meet the Challenges
“A balanced, network-wide approach is required to successfully integrate DG and enable utilities to benefit from its proliferation,” said Jamison. “The key will be to strike the right balance between prudent capital investments, optimizing operations and maintenance spending, while managing regulatory constraints on deployment and investing in smart solutions. This investment offers the opportunity to reduce the anticipated capital spending on network reinforcement and operating costs, while maintaining the quality and reliability of the power supply.”
The reductions in cost would be enabled by technologies that optimize networks for greater efficiencies across a more dynamic operating range. For example, locational incentives could steer investment to parts of the network with higher reinforcement costs; curtailment of DG output could be made at critical times, and storage and demand response services could be deployed.
More information on this Accenture research is available at this link: Digitally Enabled Grid research.