Electric utilities are currently facing an increasing number of uncertainties. Continuing supply chain problems, clean energy mandates, demand shifts, weather events, cybersecurity attacks, technology transformation and a host of other unknowns make production, transmission and distribution difficult, at best, to deliver consistently.
At the same time, the grid is aging. The lack of upgrades on infrastructure, combined with increased demand due to a push for electrification, puts many utilities in risky territory. Where, when and how to invest in infrastructure expansion and improvement becomes paramount.
The long list of network and business challenges means the risk of dangerous outages is growing. Electric utilities can be dangerously exposed to unpredictable events. Given how essential electricity is to perform daily tasks, the impact of disruptions can be huge. Only advanced technology can help address today’s challenges.
There are three questions in this environment: How much risk is the utility exposed to? How to gauge the potential impact of a risk on the network? And how to adequately prepare?
Risk exposure can be difficult to measure. Some shifts, like the growth in demand due to the rise in EVs, are relatively easy to quantify through empirical research. Others, like the work-from-home transition, the increasing digitalization of society, and the threats presented by physical or cyber attacks, are variable and more difficult to predict the impact. Such challenges are met only through diligence, awareness of change, proactiveness, and a willingness to embrace unfamiliarity.
The second question, gauging the impact of trends and events, can be answered using advanced predictive analytics. Utilities already collect a massive amount of data, historic as well as real-time; demand can be correlated against temperature swings, for example, with great accuracy. Predictive forecasting allows electric utilities to perform “what-if” scenarios that can identify areas of weakness in systems and equipment.
These forecasts allow decision-makers to think about how they want to prioritize assets and how they can prepare today for the long-term. For example, analytics can tell managers what happens if the majority of EVs are charging overnight versus morning or daytime hours. Planners can ask, “What if high temperatures in August in our region were to go beyond two weeks? How badly would that stress the network?” “How can we plan to minimize the risk of blackouts over the next few years as the number of severe weather events increases?” Risk analysis can also model the likelihood of failure under various frequencies of extreme or unusual events and reveal where the highest rates of infrastructure risk will be found.
Analytics are Key
The third question, how to prepare, is a central concern of utility C-suites everywhere. Here again, technology can help.
Asset Investment Planning (AIP) software is designed for risk and constraint analysis as well as long-term capital planning. It helps utilities make better decisions with limited resources; what’s more, it accommodates priorities that are unique from one utility to the next. Using data-driven simulations, analytics allows companies to better allocate their investments to reach their organizational objectives.
AIP platforms enable decisions to be made about asset investments over five, 10, or even 25-plus years. The advanced capabilities of such systems allow forecasters to simulate alternative plans for asset evolution, helping leaders not only select the best strategies for possible outcomes, but also iterate quickly as needs, priorities and events change.
When measured against failure rates of grid components using MTBF (mean time between failure) analysis, planners can determine which assets should be prioritized for repair, upgrades or replacement. AIP goes beyond stress mitigation to encompass cost-benefit analysis and can reveal the ROI of short-term increases in investment.
Asset investment analysis can be of particular use as utilities transition to clean energy sources. According to the International Energy Agency (IEA), renewables are expected to be able to meet only around half of the projected growth in global energy demands this year, despite a renewables growth rate of 8% in 2021 and another anticipated 6% by the end of 2022.
While hydroelectric has been a part of power generation since the earliest days of electric utilities, investments in wind and solar are much newer and will take years to mature. ESG initiatives are also forcing a wide range of decisions about long-term asset transition. Analytics help establish schedules for these expensive investments as well as identify potential repairs and updates needed to maintain the infrastructure. The advanced technology provides what-if scenarios to help utilities plan for the unexpected like natural disasters, shifts in priorities or changing regulations.
The Certainty of the Unexpected
Uncertain and low-probability events can lull organizations into complacency. But the sum of many unlikely occurrences is the strong possibility that one will happen, and in the near future.
A report from S&P Global states that utilities face the highest combined physical risk from the effects of climate change of any industry. Natural and man-made threats are a fact of life — and it’s paramount for electric utilities to be prepared. Fortunately, advanced technologies are here to assess the unexpected — and to better prepare for the unknown.
Didem Cataloglu is chief executive officer of DIREXYON Technologies.