building the 21st century digital grid - td world · 2020-01-17 · automated innovation utilities...

BUILDING THE 21ST CENTURY DIGITAL GRID

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After a decade of investing in grid modernization, utilities are more efficient, innovative, sustainable, and customer focused than at any time in their history. Modernization through the deployment of sensors and smart grid technology has laid the foundation for a digital transformation of the power industry. This digital conversion is creating a new business model for utilities, allowing them to become flexible service operators capable of managing an increasingly complex grid. However, to secure long-term financial success, additional investment in communication networks, grid automation, IoT devices, distributed energy integration, and artificial intelligence (AI) is needed to fully optimize the increasingly “intelligent” grid.

A digital utility will be transformed from a 20th century analog business to an enterprise that can communicate, monitor, compute, and control grid and customer operations with real-time intelligence and situational awareness. This computer-based modernization will allow for automation to enhance grid control and stability that improves decision-making, safety, security, sustainability,

and reliability. A digital utility will be customer-centric, resilient, automated, and hyperconnected with collaboration between AI and human processes. Digital utilities will tackle the business challenges of aging infrastructure, a regulatory system in flux, distributed energy resources, and the convergence of information technology and operations technology (IT/OT).

How should the industry track the progress utilities have made toward digital transformation? What are the steps utilities should take to modernize? In this report we present a Digital Maturity Curve and evaluate how prepared the industry is to move up this curve.

“A digital utility will be

transformed from a 20th century

analog business to an enterprise

that can communicate, monitor,

compute, and control grid and

customer operations with real-

time intelligence and situational

awareness.”

Zpryme surveyed 150 utility industry professionals to understand their perspectives on digitization, digitalization, and enterprise integration. This report explores the stages involved in becoming a digital utility and the progress the industry is making toward building the digital grid.

Demographics

• Utility type: IOU (38%), municipal (30%), cooperative (21%), and district/federal (10%)• Services provided: electric (95%), gas (33%), water (25%), wastewater (15%), and other (8%)• Organization headquarters: Midwest (24%), Southwest (17%), Southeast (14%), international (14%), Northwest (13%), Northeast (10%), and Mountain (9%)• Organization annual revenue: >US $1B (37%), US$100M to US $500M (24%), <US $100M (22%), and US $500M to US $1B (17%)• Primary role within organization: engineering(37%), operations (18%), IT (16%), executive(15%), customer service (10%), and inance (4%)• Level of responsibility: professional staff (40%), manager (31%), executive (14%), director (11%), administrative (2%), and other (1%)

Key Findings

• 91% of respondents report that embracing digital technology is crucial to the future success of their utilities.• Only 23% of utilities have reached a level of digital maturity where they are making capital expenditure decisions based on predictive analytics.• In the next 3 years, 76% of utilities expect to be able to align digital strategy with regulatory policy and ill key digital roles in their enterprise.


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THE DIGITAL MATURITY CURVE

The digital maturity curve is a vision and framework for how utilities can effectively modernize to meet regulatory and business challenges. There are three major stages on the path to becoming a digital utility: digitization, digitalization,

and enterprise integration. Each of these stages has three steps that help utilities define and understand the technology, systems, people, and processes that can be deployed to effectively modernize.

Throughout this paper and our corresponding interactive infographic on the maturity curve, we will delineate the criteria found at each step and the stage as a whole. Furthermore, through survey data we will show the progress the industry is currently making toward modernization. The Digital Maturity

Curve will help power industry professionals create a common vision for progress on the journey. An individual utility can use the curve to self-assess what priorities it wants to focus on to achieve the right level of maturity to meet business objectives, regulatory requirements, and customer expectations.

Digitization Digitalization Enterprise Integration

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https://etsinsights.com/media/infographics/the-digital-maturity-curve/

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DEFINE THE STAGES AND STEPS OF THE DIGITAL MATURITY CURVE

For utilities to measure the progress they are making from step to step as they move through the three stages, we have established four core business areas that enterprises should focus on. At each step there will be certain defined

characteristics, technologies, processes, and capabilities that would indicate a utility has reached this step. Utilities can measure their progress in each of these four core business areas to track their progress up the digital maturity curve.

Digitization

The gathering and transferring of information and data from analog to a shareable format that can be processed by a computer.

AnalogThere is limited or no central data management system across discreet business units. A utility has legacy systems, processes, and data storage.

Awareness and Analysis

Utility leaders begin to identify key business units and technologies to measure while simultaneously creating modernization roadmap.

Business Intelligence

The utility is able to understand the what, when, and where of technology and business data. This allows for digital data capture across business units.

Digitalization

The transformation of business processes by end-to-end sharing of information across the entire enterprise improving operations and effectiveness of customer delivery.

Network Communication

The utility deploys advanced communications networks that can intuitively share data across business units and use that data to deliver better services to customers.

System IntegrationThe utility can intuitively share data across business units and use the data to deliver better communication and services to customers.

Grid edgeData is captured and communicated autonomously throughout a distributed network, improving the speed at which individual departments and the utility can operate.

Enterprise Integration

The optimization of strategic, data-driven decision-making and digital processes to solve business challenges.

Unified process management

Distinct business applications are working cohesively to achieve organizational targets and objectives for all stakeholders. Distributed energy resources will be fully in balance with traditional GT&D.

Optimized business development

Integrated analytics optimized process and systems across the enterprise. Furthermore, the utility has a 360-degree view of the customer that improves delivery, digital communication, and customer experience.

Automated Innovation

Utilities can continuously and seamlessly innovate as operational, customer, regulatory, and business opportunities present themselves.


Business Strategy and Management

GridOperations

IT and Communications

TechnologyCustomer Delivery

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DIGITIZATION

Digitization is the gathering and transferring of information from analog to a shareable digital form. Capturing asset, meter, and customer data digitally is the foundational building block for the modern utility. Most utilities in North America entered the digitization phase in the late 2000s or early 2010s

with the deployment of Advanced Metering Infrastructure (AMI). Supported by the Smart Grid Investment Grants, part of the 2009 ARRA stimulus funding, AMI meter installations hit their peak in 2010 and 2011. However, it took until 2018 to reach more than 50% smart meter penetration.

Figure 1: Importance of applications for grid modernization efforts today *Note: % of respondents who selected “4” or “5” on a scale of 1 to 5 (1 = not important at all, 5 = extremely important).

Advanced metering infrastructure (AMI)

Geographic Information System (GIS)

Supervisory Control and Data Acquisition

Outage management system (OMS)

Meter data management (MDM)

Customer Information Systems

Mobile workforce management

Advanced distribution management system

Enterprise Asset Management/Asset Performance

Demand response management system (DRMS)

Distributed Energy Resource Management

Other

84%

82%

82%

78%

74%

73%

67%

60%

55%

49%

44%

24%

Outage management system (OMS)

Advanced metering infrastructure (AMI)

Geographic Information System (GIS)

Meter data management (MDM)

Supervisory Control and Data Acquisition

Customer Information Systems


Enterprise Asset Management/Asset Performance

Advanced distribution management system

Demand response management system (DRMS)

Distributed Energy Resource Management System

Other

81%

79%

78%

78%

78%

76%

68%

66%

65%

59%

53%

27%

Figure 2: Importance of applications for grid modernization efforts in next three to five years*Note: % of respondents who selected “4” or “5” on a scale of 1 to 5 (1 = not important at all, 5 = extremely important).


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DIGITIZATION

While AMI has been at the forefront of digitization and grid modernization investment, many utilities still have a long way to go to reach 100% smart meter penetration (Figure 1). One of the main reasons it has taken such a long time for the industry as a whole to progress through the digitization stage is the enormous regional variation in smart-meter deployment. The biggest predictor of where a utility is in this crucial component of digitization is not the type (IOU, municipal, co-op) or size of the utility but the regulatory incentives at the state level (Figure 3). States like California, Michigan, Georgia, and a half-dozen others see penetration

rates close to 80%. Conversely, states like New York have seen their utilities deploy only a handful of smart meters. While smart meters alone do not signify the completion of the digitization stage, they are a foundational component for moving up the maturity curve. Other digital systems become more effective once AMI has been deployed. Two perfect examples of this are outage management systems (OMS) and geographic information systems (GIS), which receive huge boosts in their effectiveness because each meter is effectively a sensor that automatically lets the utility know where power is out.

For utilities to move up through the digitization phase over the next three to five years, investments in OMS will be combined with AMI and GIS to give the enterprise better information and decision-making capabilities in at least one business process area (Figure 5). The more digitally mature utilities feed OMS

data into their customer information systems (CIS) to communicate with customers proactively across social and digital channels during outages. The benefits of digitization lead to increased visibility and control, which can translate to a reduction in restoration time and better customer engagement.

Figure 3: Map of smart meter penetration by stateSource: U.S. Energy Information Administration, Annual Electric Power Industry Report

81%-100% 61%-80% 41%-60% 21%-40% 1%-20% Less than 1%


“While smart meters alone do not signify the completion of the digitization stage, they are a foundational component for moving up the maturity curve.”

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DIGITIZATION

distributed energy resources (DERs) customers desire from a business model perspective. The reduction in greenhouse gas emissions resulting from this integration is purely an ancillary benefit.

Figure 4: Top benefits from digitization *Note: % of respondents who selected an option in their “top 3”

When further examining the benefits of digitization, the disparity between the expected ability to increase the integration of distributed generation and renewables and the resulting environmental impact is stark but not that surprising. Digitization is a pathway to balancing the

Analytics-based decision-making

Better customer choice and engagement

Increased visibility and control

Increased security

Increased integration of distributed generation

Increased asset life

Energy efficiency

Reduction in restoration time

Ensuring future energy demand is met

Reduction in forced outages and blackouts

Improved power quality

Environmental/GHG reductions

Other

42%

37%

34%

29%

24%

24%

23%

21%

20%

16%

14%

3%

1%


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CybersecurityMetering and meter data management

Customer engagementEnergy efficiency

Outage managementDeployment of Communications Network

Distribution/network automationMobile workforce management

Fraud detectionWork and asset management

Demand responseIdentify key management roles

Create a strategic digital roadmapSmall-scale renewables

Creating an organizational structurethat emphasized cross functional planning

Electric vehiclesSupply chain management

Deployment of sensors on key assetsDistributed energy resources

Energy storage

85% 11% 2% 1%

1%

1%

3%

3%

3%

1%

2%

3%

4%

5%

3%

2%

12%

6%

11%

4%

7%

9%

16%

7%

9%

12%

9%

11%

14%

11%

14%

7%

14%

19%

17%

16%

27%

20%

17%

21%

19%

24%

18%

21%

17%

21%

25%

25%

32%

30%

43%

37%

35%

41%

30%

29%

28%

43%

41%

38%

30%

74%

69%

68%

67%

61%

59%

53%

49%

45%

43%

41%

39%

39%

38%

36%

32%

31%

31%

26%

THE STATUS OF DIGITIZATION AT UTILITIES

attention caused by a data breach ensures that utilities are doubly incentivized to focus on cybersecurity.

DERs have been a major focus in the industry over the past couple of years, so the lack of progress in digital integration is surprising; however, the regional variance in rooftop solar goes a long way in explaining why the majority of utilities are planning to tackle this challenge over the next decade (Figure 6). To become more responsive to customer demands for more control over their energy choice, utilities will need to focus on the deployment of software to better manage demand response (DR), electric vehicles (EVs), and DERs.

Figure 5: Status of digitization within areas of the organization

The majority of utilities will be in the digitization stage for at least the next three to five years; however, the industry has made significant progress in the past decade (Figure 4). As a result of the 2004 implementation of the North American Electric Reliability Corporation Critical Infrastructure Protection (NERC-CIP) standard, cybersecurity has been a primary focus for utilities in their modernization efforts. It is not surprising that utilities have focused so heavily on modernizing their cybersecurity as they have digitized. No enterprise wants to be responsible for an operational systems breach that could create outages, damage equipment, or cause a national security crisis. The potential for negative national media


“To become more responsive to customer demands for more control over their energy choice, utilities will need to focus on the deployment of software to better manage demand response (DR), electric vehicles (EVs), and DERs.”

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software, utilities need to identify key management roles and digitize workforce management. Putting the right digital team in place can ensure that a roadmap is properly developed to solve business challenges and help spark a culture of innovation.

Figure 6: Map of installed MW solar PV by stateSource: NREL Open PV project.

We expect that demand response management systems (DRM) and distributed energy management systems (DERMs) will be major areas of concentration for utilities as they look to modernize to meet customer demand for sustainable energy. In addition to investments in asset modernization and


10,000+ 3,000 to 9,999 1,000 to 2,999 500 to 999 100 to 499 1 to 99

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DIGITIZATION STATUS

KEY INDICATORS IN CORE BUSINESS AREAS AT EACH STEP OF DIGITIZATION

Analog Awareness and Analysis

Business Intelligence


There are no digital data professionals in the utility.

The utility creates a business unit that has data management as one of its key roles. This business unit and senior leadership create a digital or grid modernization roadmap.

Key roles for data management are filled at the utility. The digital roadmap is shared widely throughout all business units to create a vision for the organization that is focused on creating a new business model.

Grid Operations

Traditional grid and workforce management that takes place without advanced software systems to capture, manage, and store communication operational data. Legacy data gathering across discrete utility business units.

Creating proof of concepts and component testing for new sensors, switches, communication devices linked to outage management, smart meters, and distribution management.

Sensors or intelligent systems are deployed:•Smart metering•Outage management systems

(OMS)•Geographic information

systems•Supervisory control and data

acquisition (SCADA)

IT and

Communications Technology

Limited or no central data management system across discreet business units.

Identify software and solution providers to partner with to manage digital data.

Real-time information gathering can take place, and there are software systems to manage the data.

Customer Delivery

Traditional customer service takes place without advanced software systems that capture, manage, store, and communicate operational data.

The utility creates a website and a digital communication presence to communicate with customers.

Deployment of either a customer information system or customer relationship management system.Furthermore, the website is mobile ready and a mobile app is created.


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DIGITALIZATION

Digitalization is the transformation of business processes by end-to-end sharing of information across the entire enterprise improving operations and effectiveness of customer delivery. This is the stage where innovative utilities will move beyond “smart” and where a true ROI begins to crystalize around the collection and use of data. Enterprise-wide sharing of data and information will improve operations and customer delivery.

Using the data collected during digitization and developing more effective systems for communicating across the utility allows the grid to operate more efficiently and flexibly.

Integrating distribution automation, demand response, and distributed resources to strategically manage system conditions in a more responsive way comes from the ability to control every point along the grid holistically. Digitalization is exemplified by IIoT and the connectivity of devices, people, and software systems and cloud-to-cloud information sharing across the utility enterprise. An example can be seen in the integration of workforce and asset management systems with customer devices to improve grid planning and customer choice options.

Utilities expect cloud-to-cloud sharing of information to have a strong impact on analytics-based decision-making (Figure 7). This is important for utilities as they look to expand customer choice and build brand engagement. Using data gathered from meters and IIoT devices, utilities can create customized solutions that offer customers more control over their energy consumption. This data will also give utilities insight into how to create a more streamlined customer experience by informing utility marketers which customers prefer receiving emails vs. information from social channels. Another important benefit utilities expect to see as they start to move

into the digitalization phase of the maturity curve is increased asset life. Digitalization presents a significant opportunity for utilities to understand and use data from previously unconnected systems, creating a more holistic view of their assets. Utilities can create a digital twin of a transmission substation, or any asset, and use data to run thousands of simulations, providing a significantly more informed understanding of true asset life cycles. Analytics-based decision- making enables engineers to optimize maintenance and executives to make the critical investments in the grid.

Figure 7: Top benefits from digitalization *Note: % of respondents who selected an option in their “top 3”


Analytics-based decision making

Increased security




Energy efficiency

Increased asset lifeIncreased integration of distributed

generation and storageEnsuring future energy demand is met



Other

40%

40%

26%

26%

26%

25%

25%

23%

21%

16%

15%

2%

1%


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DIGITALIZATION

A digital twin is a complete and operational virtual representation of an asset, subsystem, or system, combining digital aspects of how the equipment is built (PLM data, design models, manufacturing data) with real-time aspects of how it is operated and maintained. The capability to refer to data stored in different places from one common digital twin directory enables simulation, diagnostics, prediction, and other advanced use cases. Source “Digital Twin Applications: https://new.abb.com/control-systems/features/digital-twin-applications

THE STATUS OF DIGITALIZATION AT UTILITIES

Figure 8: Status of digitalizing applications within organizations

Cybersecurity Metering and meter data management

Outage management Energy efficiency

Customer engagement Distribution/network automation

Integrated Communications NetworkWork and asset management

Mobile workforce management Fraud detection

Demand response Electric vehicles

Small-scale renewables Align digital strategy with regulatory

Filling key roles throughout the organizationSupply chain management

Distributed energy resources Creating a center for innovation

Energy storage Sensors fully deployed throughout the grid

80% 11% 7% 1%

3%

1%

3%

3%

2%

3%

2%

3%

4%

7%

13%

9%

4%

3%

5%

11%

9%

14%

13%

6%

6%

12%

9%

12%

9%

14%

11%

12%

16%

16%

21%

20%

19%

19%

21%

23%

25%

26%

11%

24%

18%

23%

24%

30%

34%

33%

34%

33%

28%

30%

42%

43%

39%

34%

28%

31%

32%

80%

70%

66%

65%

62%

58%

51%

51%

47%

41%

38%

35%

34%

33%

32%

32%

28%

26%

16%

There are some utilities that have certain departments of their business and programs that are in the digitalization stage, but only a few can claim to have their entire enterprise at this level of maturity. Most utilities are still in the process of understanding the business implications of integrating meter, asset, and customer data. Interoperability of disparate software systems will be key to seamlessly sharing that data. Just like in the digitization stage, cybersecurity is a major focal point for utilities. Investing in software that uses advanced threat detection and AI that can trigger automated responses to hacking attempts would be a sign of a digitally mature utility (Figure 8). The deployment of advanced communication

networks and edge computing is another key component. There is not a one-size-fits-all approach, but broadband field area networks can provide remote device control and drive real-time monitoring of distributed assets. Combining real-time data and grid edge communications will allow for a more seamless integration of distributed automation and integration of DERs. Deployment of these system-to-system communication networks will be essential for a utility to move up the digital maturity curve. Demand response, electric vehicles, microgrids, and renewables will only reach their full potential when the ability to analyze data is matched by the ability to use it across the utility enterprise.


13

DIGITALIZATION

As utilities build their digital roadmaps, a key area that they should account for in the digitalization stage is a center for innovation. One often discussed innovation area is electric vehicles. The lack of advancement on EVs in both the digitization (Figure 4) and digitalization (Figure 8) stages is somewhat surprising because of the load-growth potential that transportation electrification has for utilities. While

EV sales grew in 2017, customer concerns over the range, charging infrastructure, and a lack of EV models is slowing this potential revenue generator for utilities. Forecasts over the next five years indicate that automakers will be investing heavily in these types of vehicles, and utilities should work with regulators and other partners to build the necessary infrastructure to capture this market.

KEY INDICATORS IN CORE BUSINESS AREAS AT EACH STEP OF DIGITALIZATION

Network Communications

System Integration Grid Edge


The utility identifies and creates key digital roles throughout the organization that promote cross-functional planning and operations.

Business units throughout the utility are easily able to share data, which improves decision- making.

All key digital roles are filled. The digital strategic road map aligns with regulatory policy.

Grid Operation

Deployment of digital communication channels: •Field Area Networks•LPWA•Cellular communications

Advanced grid management systems are deployed to optimize voltage control and improve fault detection:•Distribution management

systems•Advanced distributed

automationMobile workforce• Management tools are

deployed to integrate andstreamline grid operationsand the workforce.

DERs are integrated into resource planning.

Digital twins of key assets and the grid are created.

IT and Communications

Technology

Discrete IT systems can share information. Utilities begin implementing analytics systems to maximize the value of the data they are gathering.

Software is fully deployed for field device control and real-time monitoring.

Moving key IT functions to the cloud to increase the speed at which backend infrastructure operates.

Customer Delivery

Coordination between marketing and customer experience develops by using data to improve customer communications.

Customer programs around demand response, energy efficiency, and DERs are integrated with data to begin the process of automation.

Marketing and Customer Experience have developed an omni-channel communication approach with the customer to ensure that the same message is delivered across channels at the same time.


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ENTERPRISE INTEGRATION

After utilities have deployed sensors, software, and integrated communications networks throughout the grid, they will begin to experience the true benefits of digital maturity. Enterprise Integration is centered around optimizing digital processes and strategies to solve business challenges (Figure 9). An enterprise-wide digital strategy has been implemented, and the management at a utility has been flattened and empowered to make data-driven decisions. A culture of innovation and collaboration is pervasive. AI and analytics are used

to optimize the use of assets between and across supply chain participants. This leads to self-healing at the grid level. Predictive and prescriptive analytics are used in CAPEX and OPEX decision-making for just-in-time asset management. Automated AI and machine learning connect all IT systems to operational and customer-facing systems, creating a 360-degree view of the customer that optimizes delivery,digital communication, and customer experience.

Figure 9: Top benefits of digital enterprise integration*Note: % of respondents who selected an option in their “top 3”

Analytics-based decision-making



Increased security

Increased integration of distributed generation

Increased asset life

Energy efficiency


Ensuring future energy demand is met




Other

42%

37%

34%

29%

24%

24%

23%

21%

20%

16%

14%

3%

1%


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No utilities have reached the final stage of digital maturity, and even the most ambitious recognize that they are three to five years away from reaching this level of sophistication (Figure 10). However, some utilities are trying to lay the foundation for the transition through people and processes while investments in technologies play catch up. Organizational silos have been a hallmark of utilities for the past 70 years,

but as utilities are increasingly focused on long-term financial stability, environmental stewardship, and positive societal impacts (“triple bottom line”), the need to break down silos is more imperative. From a technology perspective, this means using data, software, and AI to prescriptively solve business challenges.

Figure 10: Status of digital enterprise integration for areas within organizations

Breaking down silos through optimizedinformation sharing

Fully integrated distribution/network automation

Prescriptive outage management

Optimized workforce management

Asset management that moves from preventativemaintenance to prescriptive self healing

Creating a digital utility whose ethos allowsfor triple bottom line success

Predictive Fraud detection

Machine learning connecting meters andgrid operations

Predictive customer engagement

Machine learning cybersecurity

AI supported Energy efficiency

AI powered communications networkconnected to IoT devices

AI supported electric vehicles integration

Enterprise-wide integration of all asset sensors

AI supported small-scale renewables integration

AI supported energy storage integration

AI supported demand response

AI supported distributed energyresources integration

31% 39% 21% 7%

21% 32% 32% 14%

19% 45% 24% 8%

18% 41% 27% 12%

17% 48% 24% 10%

14% 39% 27% 12%

14% 35% 32% 16%

12% 42% 28% 14%

11% 42% 32% 14%

10% 35% 27% 20%

8% 29% 34% 25%

7% 32% 31% 23%

6% 17% 34% 32%

6% 32% 33% 26%

6% 20% 34% 30%

6% 18% 36% 30%

5% 31% 33% 25%

3% 25% 33% 31%


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KEY INDICATORS IN CORE BUSINESS AREAS AT EACH STEP OF ENTERPRISE INTEGRATION

Unified Process Management

Optimized Business Delivery

Automated Innovation


Analytics-driven innovation is achieved by a collaborative, top-down and bottom-up approach. The digital strategic road map has broken down silos to improve communications and decision-making between teams.

All facets of the triple bottom line (financial, environmental, and societal) are realized.

The enterprise has been flattened and empowered to make data-driven decisions. A culture of innovation and collaboration is pervasive.

Grid Operation

Advanced grid management systems are deployed:•Distributed Energy

Resource Management System

•Automated Demand Response Management System

Dynamic grid management that is based on real data is available through end-to-end observability.

All systems are connected and communicating to integrate EVs, battery storage, and renewable generation.

Enterprise view of assets is connected with workforce management software to optimize the proximity, status, safety, and interrelationships of work on the grid.

AI and analytics are used to optimize the use of assets between and across supply chain participants. This leads to self-healing at the grid-level.

Predictive and prescriptive analytics are used in CAPEX and OPEX decision-making for just-in-time asset management.

IT and

Communications Technology

Full integration and control of data from generation to customer.Predictive modeling and near real-time simulation that leads to optimization.

Enterprise-wide security implemented using AI and ML to lead advance threat detection and mitigation.

Automated AI and machine learning connect all IT systems to operational and customer-facing systems.

Customer Delivery

Customer usage analysis is combined with real-time pricing signals at the device and outage management at the residence.

The customer’s end-to-end energy usage and supply is integrated and automated.

A 360-degree view of the customer that optimizes delivery, digital communication, and customer experience.


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Becoming a digital utility will not be cheap (Figure 11), and after spending billions of dollars in the past decade on grid modernization, it is reasonable to question whether utilities have the capacity to modernize as quickly as they would like.

But as more utilities deploy pilots of intelligent systems, AI, and communication networks, the ROI should become more apparent.

Utilities must work with policymakers and regulators to ensure that they can earn a rate of return on future digital technology investments. Developing this new business model will require a culture of innovation. Utilities must simultaneously hire digitally minded professionals and retain experienced talent that knows how to operate an increasingly complex grid. As utilities look to the digital future, there is a growing recognition that they must go beyond just managing the flow of electrons and focus on

engaging with increasingly savvy and demanding customers. Capturing data from a variety of sources and analyzing it will allow utilities to create a 360-degree view of each customer. Such focus on the customer will permeate the culture of the future digital utility. Analytics-driven outcomes at the grid edge will focus on how to both integrate DERs and maintain the reliable power that customers demand (Figure 12).

MOVING INTO A DIGITAL FUTURE

Figure 11: Top challenges to digital modernization initiatives within organizations *Note: % of respondents who selected an option in their “top 3”

Budget limitations

Business benefits/ROI

Security

Executive buy-in/goal setting

Technology vendor availability and/or capabilities

Organizational structure

Employee buy-in/support

Regulatory requirements

62%

46%

33%

31%

29%

26%

23%

22%

Figure 12: Primary ways utilities are planning to use digital technology *Note: % of respondents who selected an option in their “top 3”

Customer engagement

Grid operations

Asset management

Improved reliability

SCADA

Network communications

Analytics-based decision making


DER integration


Energy efficiency


Microgrids

Distributed energy storage

Smart cities

Environmental/CHG reductions

40%

35%

32%

31%

25%

23%

19%

18%

14%

13%

9%

7%

4%

4%

4%

1%


18


A customer-centric utility with a digital infrastructure will be more reliable, even as the grid becomes more complex. Being operationally nimble in a time that requires a diversification

beyond commodity power delivery toward a value-added services business model will serve utilities well as they look to ensure long-term financial success (Figure 13).

At the operational level, field crews are seamlessly connected to the assets, ensuring efficient and safe workers. From a financial perspective, a utility will be able to accurately measure asset health and optimize CAPEX decisions instead of replacing a transmission substation once every 30 years. At the customer level, usage data can be combined with an

interest in renewable energy to create customized electricity plans designed to delight and engage the user. Beyond all the individual examples, at its core, a digital utility is an organization that is better able to make intelligent decisions to drive improved outcomes across the enterprise.

Figure 13: Link between digital modernization strategy initiatives

Long-term financial success and viability of your utility

Future energy industry success, viability and growth

Utility corporate strategy

Customer engagement and brand management

Enterprise-level operational efficiency

Department-level operational efficiency

Short-term financial success and viability of your utility

Regulatory and public relations

Corporate and social responsibility

Environmental objectives

67%

62%

54%

52%

51%

50%

38%

31%

28%

20%

1. Hire digitally minded people and create a digital team that can help train existing staff and build a culture ofinnovation.

2. Develop a coordinated strategic road map that is centered on how moving up the digital maturity curve will lead toimproved decision-making processes.

3. Use digitization and digitalization to take a portfolio-based approach to solving business challenges. This will allow autility to invest in one or more use cases with the potential for strong ROI over a shorter period of time, and one or twouse cases that are more strategic and require a longer time frame to see a return.

4. Address the data requirements up front internally and with key strategic partners.

5. Develop a communication plan that emphasizes the importance of digital transformation to employees, customers,policymakers, vendor partners, and regulators.

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