The Future of Smart Grid

Powering the Future of Smart Grid

November 20, 2024

Christina Cardoza

Solar panels and wind turbines in a sunny field with a cityscape in the distant background.

Until a major weather event or a bout of extreme temperatures threatens it, most people aren’t terribly aware of their local energy grid. But, of course, it underpins a modern society’s functioning. And discussions about renewable energy sources and increasing demands for electricity (think of the push toward electric cars) bring the grid out of the shadows and into the future, as these changes and others power the transition from grid to smart grid.

A panel of experts gathered to discuss the smart grid of the future, its challenges and opportunities, as highlighted in the recent report by research firm CCS Insight “The Grid of the Future”: Valerie Layan, Head of Power and Grid Segment in Europe at Schneider Electric, global specialist in energy management and automation; Ian Fogg, Research Director of Network Innovation at CCS Insight; Philippe Vié, Global Group Lead for Energy, Utilities, and Chemicals at Capgemini, a global leader in technology services; Marc Delandre, Director for Advanced Network Technologies at French DSO Enedis; and Paul O’Shaughnessy, Sector Head for Energy and Utilities at hardware manufacturer Advantech.

They discussed the grid of today and its transformation journey to the smart grid of tomorrow; what can be learned from other industries and their tech transitions; and the importance of partnership, collaboration, and standardization in moving everyone along a path toward resilience, efficiency, security, and sustainability (Video 1).

Video 1. Industry experts discuss the importance of partnerships and technologies on the path toward grid modernization.

What is the current state of the grid and the factors driving toward a smart grid?

Valerie Layan: I would say that the grid is not smart enough today and requires much more digitization to make it more efficient but also flexible and decarbonized. Why does the grid need to be smarter or more digital? It’s really pressure from the EU around renewables; we have to grow from 23% of renewables in the mix in 2022 to 45% by 2030.

But when we invest $1 or €1 on renewable, we should invest the same on grid. This change has put a lot of pressure onto the grid, and we cannot anymore invest in a lot of hardware and CapEx to absorb that capacity. Also, CapEx is usually taking five years a project.

So we need to make the grid more digitized and make it more efficient by putting in extra software to make it smarter. For example, if we implement the Advanced Distribution Management System (ADMS) software solution, we know we can reduce at bare minimum the technical losses by one point. This digitization is key, and we are really pushing all the ecosystem to make sure that we also invest in the software.

Ian Fogg: On the electricity-generation side, there has already been a massive shift to renewables. And the growth there has come from solar and wind, which have very different patterns of generation. Obviously, solar is seasonal in terms of time of year and depending on how far you are from the equator. Wind obviously varies based on the weather.

The other piece that’s interesting is that as the wider economy decarbonizes, that shifts a greater proportion of the overall energy needs of each country to electricity as well. I think this leads to what Valerie is saying about the need to also invest in the grid alongside the renewables.

You’ve also got the generation happening with solar panels that can potentially be a two-way dynamic. That is quite different to what that distribution grid used to do, so how do you balance the consumption with the generation? Storing energy is very difficult, but if you can alter consumption patterns to better respond and reflect the more variable generation patterns that you get with solar or wind, you don’t need to have as much generation capacity. And the substation piece is so important, because if you put intelligence there, you can help match things up.

But you need very good, very speedy data communication between the different parts of the grid to help balance that need. And you need to increase the flexibility of the system so it can respond to these different consumption and generation patterns. We must also maintain the reliability of the grid at the same time. And that requires new investment in technology, in substations, in billing systems—in all kinds of parts of the grid.

Philippe Vié: I will build on Valerie’s and Ian’s points. There is a lot of pressure on the electric system for this production-equals-consumption balance. Overcapacity during some periods of the day will make for negative price episodes, which endanger the energy transition because it’s endangering the profitability among the renewable players.

Second, in the past the energy sources and the electricity were flowing through transmission and distribution grids from centralized generation assets. Today the renewables are distributed in the grid. So there is a paradigm shift.

Then we have massive electrification. We are today at 23% of electrification compared to the energy needs, and the Net Zero Scenario from the International Energy Agency will probably move us to about 50% or 60%, depending on the region.

The other drivers are about the digital technology. Automation can be leveraged to avoid physical investments in networks. As Valerie stated, anytime you put $1 on renewables, you need to put $1 on grids. It’s a huge increase in the investment, and it will increase the price of the electricity, of course.

What are some grid pressures from the standpoint of a DSO?

Marc Delandre: There is a big issue with electricity: It’s very difficult to store. The main issue with electric cars is the sizing of the batteries. So we have to balance in real time energy consumption and generation. And it has to be done at the level of the primary and secondary substations and by any customer connected to the grid.

The main issue is that an electric grid may be covering a big country, as here in France. We have many, many units in the field. Also, when we invest, it has to be affordable for the customer; at the end, the customer will pay all the investment in their bill.

We also have to deal with renewable, because tomorrow every customer will become a prosumer—a consumer and a producer. That means there will be renewable energy coming from each single dwelling house, on the top of any building—everywhere. Again, the key role of the network will be to balance energy generation and consumption. It will be our core activity tomorrow, and it needs a strong, strong investment.

What are some of the other challenges involved in the transition to smart grid?

Paul O’Shaughnessy: As a hardware manufacturer, one of the major challenges for us as well is the scale of the challenge. Also, even though we’re a hardware manufacturer, we have to consider the need to support various software. We have to be able to support all the new protocols—virtualization, security—and legacy protocols.

Another aspect is the variability of those assets that are deployed, and that variability requires multiple solutions. Storage technology, IO, cooling—all of these are key things that are driven by the variability of the assets. But working with strategic technology partners—like Intel, a significant partner for us—on defining the processor roadmaps does help to ensure that we’re bringing the right products to market.

Another big thing is compliance to protocols like 61850-3 and IEEE-1613. We have to comply with those to be a player in this space, and that is not inexpensive.

Philippe Vié: And the investment approval should be made by stakeholders and shareholders, but also by governments and regulators—to probably doubling in 2030 the investments that were made in 2020.

Another challenge is the skill scarcity. In the next 20 years, smart grid will create probably 5 million jobs with digital technology at the core. And there is also the Baby Boomer retirement wave and many people to replace. There is also a lack of roadmaps. You need to have a consistent roadmap and to revise it every two or three years, because things are moving very fast.

Finally, there is the lack of standards. The purpose of the alliances E4S (Extreme-Scale Scientific Software Stack) and vPAC (Virtual Protection Automation and Control) is to agree—all of us technology providers and grid operators—on common standards to develop interoperable modules on smart data.

Each limitation goes with many solutions that can vary from one country to another, from one electric grid state to another.

Ian Fogg: Another thing that comes up is around smart metering and the cellular capability. There are two problems. One is that cellular data is often not that up to date: It’s 15 to 60 minutes. And often the data is spread out, which—if you’ve got short-spot pricing and you’re trying to do very smart tariffs—isn’t always quick enough.

But the other piece is that it’s a hardware solution rather than a virtualized, software-defined solution, which means that there are challenges now with older smart meters that have older cellular radios for network generations that the mobile operators want to switch off. And that speaks to the different pace, the different life cycle of that part of the economy with the smart grid.

And, of course, having those smart meters is foundational for many of the usage scenarios of shifting consumption patterns. If we’re having to upgrade and replace those early smart meters, that’s a whole pain point that we shouldn’t really be doing. If those radios were software defined, perhaps we could update the software in the radio to respond to newer technology generations, without having to do a truck roll or a hardware-replacement cycle.

Let’s talk about technology advancements that are helping the transition.

Valerie Layan: Some of it may be not new, but new for grid. Other segments—telco, health, transportation—have been using some of this technology, and this is good because we will be leveraging technology that is mature. So I think we have a mix of mature technology coming from the other end markets, plus our own, like the ADMS technology that I mentioned before.

First of all there is an evolution of the ADMS solution to make a grid that is more efficient and more resilient—capacity management, outage management, load and generation control, asset management, power. The second technology is digital twinning, which can be used for training, for simulation, for remote software updates.

And the third point is virtualization. And with all this data at the edge putting pressure on the substation, virtualization is key. In E4S we believe that virtualization will absorb this level of data and this pressure that is coming at the edge on the secondary substation. And we really want to collaborate there to define open-standard reference architecture and common design toward this virtualization.

Prosumer is also very interesting, because commercial buildings, even potentially individual consumers, can have their own generation. Solar rooftop is a typical example. But in a bigger consumer-industrial area—a port, for example—they could actually have wind as a generation source. And then they could potentially reinject and resell that capacity to the grid. So we have now a solution to integrate this flexibility at the edge, to make the grid more efficient, and to monetize that ecosystem.

“The grid is not smart enough today and requires much more #digitization to make it more efficient but also flexible and decarbonized.” Valerie Layan, @SchneiderElec via @insight.tech

What else can be learned from those parallel industry transformations?

Ian Fogg: I also think virtualization is one of the key ones, shifting more functions from hardware into software, using standardized hardware solutions that give you scalability to upgrade the platform to support higher performance workloads.

The other piece we’ve seen in other sectors is this combination of OT and IT. There are some examples in the CCS Insight report around what that interaction is and what the different cultures around that are.

Philippe Vié: I will take the angle of automation. For example, we are dreaming of a control room without people, fully automated. We are dreaming of AI enabling self-healing when there is an outage to reconnect 99% of the consumers in one or two minutes. In fact, we are dreaming of all the AI capabilities that could be really beneficial for grid performance and for avoiding investment.

What is the role of AI and edge AI going to be in the energy and the utility space?

Paul O’Shaughnessy: This is the fastest-growing part of the business, bar none. It is absolutely exploding. Up until now edge AI has been heavily dominated by vision-based applications, but the number of use cases and applications is growing day by day.

Philippe mentioned real-time monitoring and control; that is something where edge AI has a real opportunity to have massive impact on the grid in terms of decision-making at the node, at the substation, allowing for immediate responses to change grid conditions, improve stability, and reduce downtime.

Another one is predictive maintenance. We see this already heavily deployed in manufacturing environments, and it has a huge impact in terms of the utilization of edge AI in optimizing the efficiency of those environments. I see no reason why the same thing can’t apply in the grid.

But the one that is probably the most talked-about topic within the IoT sector in general is security. Edge AI has a real opportunity in terms of enhancing the security already in place, both from a cybersecurity perspective but also from a physical-security and health-and-safety perspective. Vision applications for edge AI are protecting workers in dangerous environments and ensuring that the people who are getting access to certain environments are the people qualified to access them. And I think that is something that has an absolute play for the grid.

Is the substation the best place to make all these changes?

Ian Fogg: The substation does keep coming up as a critical point, and that’s because it’s the focal point for local distribution, for data gathering, for local control, and for protection. So how do we build them? How do we upgrade them to give us longevity?

Valerie Layan: There is a future for the secondary substation, really due to the pressure that will happen at the edge, both in terms of connection and data. But it has to adapt to the new challenge, and virtualization is a part of the answer.

Ian Fogg: Virtualization gives us capabilities. What we’ve seen in other industries is that as functions are put into software, it makes the innovation cycle easier. And that, I think, is really important for longevity and for that ability to respond to changing consumption and demand patterns.

Marc Delandre: I would add that we need also an evolving solution based on open standards. A big DSO such as Enedis cannot rely on any proprietary solution, even if it is a very good one. This means certification; it means interoperability. And this has to be defined within the E4S organization.

How can companies future-proof their efforts toward the grid of the future?

Paul O’Shaughnessy: Being a member of the E4S, of vPAC, or of the 450 MHz Alliance, the one thing that’s really clear is that the only way we can achieve what we need to as an ecosystem is through modular and scalable architecture—designing systems with modular components that can be easily swapped out for others and replaced. This allows for the incremental change that you need to keep systems up to speed. Standardization and interoperability, allowing the open standards and protocols that are required to be supported, and then compatibility between different devices and systems—this is all going to be key to future-proofing. I also mentioned cybersecurity earlier.

Strategic partners, like Intel, that actively promote their roadmaps with us and make sure that we are aware of the latest technologies that are form-fit and capable of being deployed in this type of environment—that is also really critical and something that I think is often overlooked.

How do partnerships and collaborations ensure smart grid success?

Paul O’Shaughnessy: Of course, as hardware manufacturers, there’s nothing better than being locked in as a vendor. But the reality is that the scale of this challenge and the scale of this opportunity requires so many vendors and so many moving parts that it has got to be an open architecture. And we totally get that.

Everybody in this discussion is working with a couple of major alliances that have been mentioned. And the collaboration that goes on within the various working groups—whether that’s hardware, software, go-to-market, cybersecurity, whatever it is—is really important for all of us. It’s an opportunity to learn from each other and to understand what the real requirements are.

Valerie Layan: What I could add on top is that, traditionally, in energy management, in energy infrastructure, and in grid operation, it’s an OT world. But when we speak to the new technology that we need to deploy, that comes from IT.

So it’s very important to build these alliances with players like Intel, like Capgemini, that have a lot of IT knowledge to leverage the best of IT into our OT, transforming what used to be a very hardware player—the secondary substation—into something that is going to be virtualized and that will leverage the benefit of the two worlds.

What are some examples of how you’re helping to reshape the grid?

Valerie Layan: I cannot name the customers, but, generically, our EcoStruxure IoT architecture is the way Schneider Electric envisions the network of the future, with a three-layered connection of product, edge control, and apps analytics software services. We have been deploying this solution in some grid operations, and we know that with an integrated solution—an enterprise-level solution to manage the configuration of the network—we can reduce the delivery time by more than 50%.

Having an intelligent network that leverages predictive maintenance, asset-performance management, et cetera, is also helping in the operation and maintenance part of the life cycle, with TotEx reduction by at least 15%.

We are also working on a new approach that we call LV grid management, an end-to-end approach from the low-level sensor of the feeder, the protection and the control at the substation up to the ADMS. Low voltage is becoming more and more of an issue for the DSOs, because of all these consumers who want to connect their energy production back to the network.

Philippe Vié: Capgemini is working for many leading transmission and distribution grid operators on their smart grid journeys, starting with the roadmap. And then, of course, it is consulting with technology skills, IT, and OT. The larger players are all launching smart grid programs that will last 10 to 20 years.

But it’s not one program; it’s a collection of large projects: to replace a control room, to automate something, to make a substation smart and virtualized. It’s instrumenting the network, real-time health-asset management, digital twinning, digital engineering, life-cycle planning, performance management—so many dimensions and definitely a different roadmap for each of them.

Marc Delandre: Even if each utility has its own roadmap, the target is more or less the same. The market is huge, but all the utilities are facing the same problems: strong investment for electrification, renewables, charging points for electric vehicles, and so on.

Enedis is not a technology supplier; we are a customer. But we know almost perfectly the problem of the grid and how to manage the grid. So I think that all together with all the partners, we will be able to define the best solution for the coming years.

Paul O’Shaughnessy: I’ll give a more specific story, about digital twins. Advantech had a customer, a distribution operator, that had a resilience issue in terms of connectivity to its remote assets. And there were three primary issues: One was the geography itself: the terrain; one was environmental: the weather; and the other was geopolitical, in terms of cybersecurity.

And we worked with that DNO and another partner to come up with a solution that would use one of our software platforms—for device management—that uses digital twin modeling to ensure that the devices being deployed on the assets were secure and that the only way changes could be made was from the network-operation center. We developed it with this customer over a two-year period and rolled it out to 5,000 assets.

This is, of course, a very big conversation, but are there any final thoughts to add for now?

Ian Fogg: I’ll add that there’s a lot more in the CCS Insight report that we haven’t even touched on, and it’s all modularized to make it easy to digest.

But I think the bigger idea here is that there is transformation happening throughout the grid; we’re in the middle of a period of quite rapid change. And it’s strategic for this industry, but this industry is critical for so many other industries.

Philippe Vié: I would like to speak to those that are making the change, meaning the transmission and distribution grid operators. You are the key enablers of energy transition. Without you, without electric grids, no energy transition is possible. So you need to move forward fast, definitely. But for that you need a consistent roadmap, revised as needed. And you need to join standards—E4S and other alliances—for effort sharing and for investment reduction.

Paul O’Shaughnessy: When I talk internally, I talk about a marathon and not a sprint. But I think we’re now at a point where—to Philippe’s point—we need to accelerate. And the way to accelerate is through direction and priorities. The alliances are working to give us some of that, but I think to really get clear direction and priorities we need many more of the people who run the grid, the DSOs, to come join us and help us on the journey.

Valerie Layan: First, digital, end-to-end architecture for the grid is the best way to optimize all the investment along the life cycle—CapEx and OpEx. Then standardization—having a unified, open approach—is vital for making that modernization journey efficient. Leveraging the successes of digitization of other sectors is also very valuable in this journey.

And, finally, collaboration is key. We have to unite the OT companies, IT companies, the end user, the different experiences into one group. E4S is perfect for that as a body to ensure that we take all the knowledge from the different perspectives and build the smarter grid of the future.

Marc Delandre: Electricity is magic. You can do almost everything with electricity. You can do heating, air conditioning, lighting, cooking. You can use electricity for a car, for trains, and so on. Electricity can be generated by nuclear plants, by solar panels, by wind farms, and so on.

So to conclude, I would say that we have in front of us a long and challenging and amazing journey.