The future of clean electricity is dependent on modernizing America’s electric grid. At the heart of the U.S. grid are 75,000 substations that have not been updated to meet the standards of a truly smart grid. Electric utilities are grappling to control and monitor bilateral energy flows with their current substations. This is a result due to the influx of EV charging, intermittent and distributed renewables, and energy storage.
Companies across the utilities and energy sectors have a role to play in digitalizing substations, but transmission and distribution utilities (TDUs) are uniquely positioned to lead the market in the smart substation revolution.
Impediments to Implementation
Utilities and energy leaders are aware that smart substations are the foundation of the smart grid—and therefore pivotal for their long-term success. They also know that reaching this level of maturity and upgrading both hardware and software at the substation level will take time and capital.
COMMENTARY
As the enterprises responsible for the final stretch of delivering electricity to millions of American households and companies, TDUs interact directly with both end-users as well as a broader ecosystem of energy and utilities partners. Their substations are pivotal to enable bilateral energy flows as their consumers have increasingly become prosumers.
TDUs have also successfully managed the first digitalization wave–smart meters. Now they must modernize their substation software and hardware to accommodate the unprecedented flow of distributed energy, and disparate data, from across the grid ecosystem.
Many TDUs have not updated their substations due to enterprise-wide challenges. TDUs are responsible for several hundred–if not thousands–of geographically dispersed substations. TDUs are also faced with decades-long data management setbacks. There must be data integration at the substation level to gather, analyze, and share information across all systems. In essence, there is a gap between their IT (information technology) and OT (operational technology) domains.
On the IT side, teams have a deep understanding of how technology communicates across the enterprise, but with the advent of smart substations–and other intelligent solutions–the OT teams will need to acquire the skills and processes to ensure their tools are sharing data and operating in sync with the broader ecosystem.
Historically, operations have not been concerned with two-way flow. Their teams are typically focused on their own utilization of the data and not on necessarily getting the data to the rest of the organization. Therefore, leaders can provide real-time vision into the loads so the control center can react quickly. With the integration of the data back into other parts of the organization, predictive and preventive scenarios can be formulated.
Beyond the widely recognized challenges delaying substation modernization, it’s also important for leaders to recognize some recent barriers that may further impede their smart substation journeys. The surge in AI adoption presents potential disruptions, for example. TDUs and IT teams will need to simultaneously invest in AI as they also look to upgrade their substations, which could divide their attention and funds to the detriment of both initiatives.
Talent will also be another emerging challenge. The broader energy and utilities sectors are increasingly hiring younger staff to fill the ranks as a significant portion of the workforce is expected to retire in the next few years. In fact, 56% of American utilities workers will retire in the next 10 years. While this may require additional time to train new staff, there is a silver lining to this challenge. Younger staff are expected to be better versed in AI and other key tech capabilities.
To help address the challenges mentioned above, below are several strategies for TDU leaders to help mitigate operation risks in substation modernization. Those include:
• Develop a strategic and phased implementation plan
• Allocate sufficient budget for modernization efforts
• Conduct proactive maintenance and upgrades
• Enhance cybersecurity measures
• Provide training and development programs for staff
• Ensure all modernization efforts comply with relevant regulatory standards and guidelines
Scaling Substation Modernization
The market is quickly approaching the stage where delayed substation modernization will likely have long-term ripple effects that could shake a business for years to come if they do not act now. According to the U.S. Energy Information Administration, in 2019, renewables were 9% of total production. In 2023 they were 24% and by 2025, they’ll surpass natural gas as the dominant source. Without a digitalized substation the energy company won’t be able to manage, balance, predict, or utilize efficiently and effectively the loads and the generated power.
In the past few years, digital transformation partners, and vendors have developed the technology needed to manage data flows–enabling real-time measurement, predictive analysis, and enterprise-wide integration. Automating substation capabilities is now possible.
As TDU and IT leaders look to manage and modernize their substations, they should consider the below tactics:
• Update their data management strategy across IT and OT
• Create software capabilities specifically for smart substations
• Allow integration for real-time management
• Establish data governance for analytics, both predictive and preventive
The drivers, challenges, and benefits of modernizing substations are clear. After years of delays and debates across the energy and utilities sectors, now the solutions to scaling smart substations are clear as well. There are technologies in the market and implementation tactics that can be applied to modernization strategies right now. The only question for TDUs is–how long will you wait?
—Elfije Lemaitre is EVP, Resources and Energy Transition, for Capgemini America.
