Black & Veatch’s recent 2020 Strategic Directions: Smart Utilities Report explores the challenges and opportunities ahead for a grid tested simultaneously by climate shocks, aging equipment, and the influx of intermittent and often volatile distributed energy resources (DERs). Advances in technology are pushing critical human infrastructure in exciting new directions, creating both risk and reward for utilities eager to become more sustainable, efficient, reliable, and resilient.
More than 625 industry respondents indicated that data and analytics are increasingly critical to delivering the long-promised grid of the future. These technologies offer new levels of communications and information technology (IT)/operational technology (OT) convergence with hardware and software innovations, which provides utilities with deeper levels of insight while preparing them to meet the challenges of distributed generation head on — delivering smarter, faster, and more resilient distribution networks.
Built on the expansive responses collected in this year’s annual survey of electric, natural gas, and water utility leaders in North America, Black & Veatch explores the advent of the digital grid, the impact of renewable energy, the complexities of network management, and the persistent threat of cyberattacks. These challenges will increasingly require integrated technology solutions that enable networks to talk with each other, share data, and give utility leaders actionable information about the health and resilience of their systems.
The report finds utilities striving to move forward in a rapidly modernizing world even as they remain challenged by outdated regulatory and business models. Two-thirds of respondents see improved reliability as the largest driver of distribution modernization efforts, followed by improved operational efficiency (43%), concerns about aging infrastructure (43%), and the promise of increased monitoring, control, and automation capabilities (39%).
Aging infrastructure and the increasing penetration of DERs continue to test grid resilience, even as climate change drives major fluctuations in weather and raises the pressure on aging systems. To boost resilience, the survey finds, utilities are actively embracing data and using it to root out the biggest vulnerabilities while simultaneously strengthening their assets to make them more cost-efficient and sustainable.
Although progress is being made, barriers remain. More than half of survey respondents (54%) cited budget constraints as a critical inhibitor of modernization, followed by managing competing priorities (38%), regulatory hurdles (37%), and a lack of resources and expertise (35%). Paying for these upgrades will be the biggest future challenge — not only do utilities have to find the funding, but they also must accurately understand and capture the total capital infrastructure investment.
"Fully integrated communications infrastructure will be critical to support utilities’ smart grid initiatives," wrote John Janchar, president of Black & Veatch’s telecommunications business, in the report’s opening piece. "This means not only upgrading the operational assets — the poles, wires, and distribution switches — but also upgrading the communications networks that connect and enable these systems to work together."
"Truly delivering the grid of the future will require more than simply bolting on new features and technologies," said John Chevrette, president of Black & Veatch, management consulting. "It will require a sweeping shift toward digitalization, with utilities embracing and investing in holistic and integrated communications networks that will bring it all together."
Other key findings include:
- One-third of survey respondents plan to spend more than US$200 million to modernize their distribution infrastructure over the next three years.
- Utilities are actively beefing up cybersecurity, with a combined 84% implementing active cybersecurity monitoring and 13% planning to do so.
- Integrated systems planning will continue to gain importance, with 80% of respondents viewing the integration of its planning functions as "very or extremely important."
- Approximately one in five respondents currently monitor and control — but do not own — third-party owned DERs. 39% only monitor while 24% are in the planning stages.
- Encouraged by promises of upgraded infrastructure, nearly half of the respondents see 5G attachment as an opportunity; but 25% see it as a challenge and 27% view it simply as a requirement.
- Respondents ranked OT, IT/communications and security departments as the top three teams to lead distribution automation efforts.
- When it comes to non-wire alternatives, one in four respondents consider them as part of their standard operating procedures.
A free copy of the report is available for download here.
