CERAWeek 2022: With digitalization, power grid operators can improve flexibility, utilization

As renewables move towards being a major part of and, eventually, the dominant resource on power grids, panelists at CERAWeek 2022 by S&P Global said digitalization of grid management will allow better use of transmission lines in real time and support more efficient and reliable operations

The current US grid was designed decades ago for delivering power generated by large coal- and oil-fired generation units along high-voltage transmission lines. As nuclear and gas power joined the energy mix, they were assimilated into the same model of generating controllable amounts of power from a relatively few sources, and sending it in one direction, from a generator to a user. A grid operator's job (in simplified terms) was to anticipate power needs a day ahead and schedule enough power to meet that need irrespective of the source.

Renewables present grid operators with a different situation, said David Carroll, chief renewables officer for ENGIE, a Europe-based utility with operations around the world. The output of each unit is smaller, there are more of them, and their performance is less predictable and controllable.

These factors complicate the calculation of how much power will be available at a given time, and it means that grid operators need much more data from each power unit—and they need it more quickly. Digitalization is the answer, and as operators get more adept at using information in real time, they will be able to finetune operations and continue to provide the reliability that customers expect. The "shared nature" of information flowing back and forth from generator to grid operator, to use Carroll's term, can be turned to an advantage.

Nick Akins, CEO of American Electric Power, compared the old and new to the difference between a simple mathematical equation and "handling multivariate calculations."

"Data analytics will allow operators to have a much better understanding of the system," Akins said.

Today, a grid operator might receive performance data coming every 15 minutes from the inverters on a wind power unit, said Laura Anderson, senior vice president, service controls and digitalization for Siemens. "You have a 'live' understanding of what's going on for the grid," she said, which enables real-time adjustments to keep the grid in balance.

Avoiding unnecessary buildouts

Digital technology could enable greater utilization of existing transmission line capacity in lieu of adding new power lines, said speakers. With reliability always a core mandate for any grid operator, it's not uncommon for twin lines to be installed on key energy corridors to ensure service. A great deal of the US transmission network is "100% redundant, literally parallel lines," said Chris Shelton, chief product officer, AES Next, the technology development arm of power distribution company and utility AES.

Many parts of the transmission network never operate more than one of those two lines, i.e., 50% of capacity. Shelton said that situation can be changed. "Thanks to digitalization, we can optimize grid operations, expand our utilization rates, and use less capital," he said.

New technology allows for shifts of power from one line to another in fractions of a second. "'Smart wires' can route power around constraints [on the system]," he said.

This is in addition to a buildout of the transmission network itself to serve new renewables installations, said Shelton and other utility executives.

Operators will be able to incorporate artificial intelligence (AI) as well, said Anderson. This is beneficial for power providers, whether they use fossil fuels, renewables, or both, she said. "Our customers need to think about how to pull their entire fleet together … how to release which power to the grid. What is the best value [at each point in time]?"

AI will grow in usefulness as battery storage becomes common on networks, several panelists said. They described batteries as "virtual capacity," that is, generation for peak periods on an as-needed basis to avoid the need for new fossil fuel or renewable power installations.

Rapid response to actual conditions also will enable system operators to avoid load shedding, a scaling back of power to avoid an overload of the grid. "In aggregate, peak-shedding is very costly and [increases] pollution," said Yair Amir, professor of computer science at Johns Hopkins University who also heads the Distributed Systems and Networks Lab. "We're not here yet with AI," Amir said, but he said he believes it will reach a point when energy production "can be optimized end-to-end."

Looking further down the line, as rooftop solar becomes more common, digitalization will enable communication from home or office rooftop units back to the grid operators, said Aamir Paul, country president, United States, for Schneider Electric, a French firm that provides energy and automation digital solutions for efficiency and sustainability.

"Software allows the different sources [of power] to coexist," he said, blending the traditional, centralized power with distributed generation. Schneider Electric estimates that up to 40% of US energy production eventually come from a distributed source.

But for distributed generation to work, "information flow must be bidirectional," Paul said. "If we just [install] distributed energy and have traditional generation [not communicating with it] … then we are not optimizing."

Regulatory impediments

Unfortunately, the way that US utilities are paid for system upgrades does not incentivize digital upgrades, said Jason Stanek, a member of the state utility regulatory body Maryland Public Service Commission (PSC) who also the chairs the Joint Federal-State Task Force on Electric Transmission. Because utilities go to their state regulators for approval to recover the cost of new infrastructure—plus a profit margin—from ratepayers, Shelton said they have an interest in larger, costlier projects, especially when they are based on technology familiar to regulators such as new transmission lines.

"If we have a $20-million digital solution that will have the same impact as a $400-million transmission project, sometimes the utility sees the more costly solution as providing a better return," Stanek said. "As regulators, we need to encourage outside-the-box thinking instead."

Yet regulators seem reluctant to approve an unfamiliar technology, even if it saves money for consumers in the long term, said Philip Moeller, executive vice president of the Edison Electric Institute. "Regulators need to understand how these new technologies allow more [power to] flow through," he said.

As the US electrifies sectors of the economy such as home heating and transportation, power demand could double in some regions of the country in the next 20 years, said Caleb Stephenson, executive vice president for commercial operations at Calpine Corp., the largest US generator of electric power from natural gas and geothermal resources. At the same time, utilities, states, and the federal government are eager to reduce carbon from power generation by adding renewables. "We have to move quickly," he said. "The pace of innovation has to increase."

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.