For more than a decade, utilities have anticipated that greater use of intermittent power generation, such as from solar and wind, and smart energy devices like thermostats and battery storage, would bolster the business case for enterprise-grade distributed energy resource management systems (DERMS) and advanced distribution management systems (ADMS).
While the need for climate action is more urgent than ever, utilities have been reluctant to move forward with such investments due to their relatively high risk, and to avoid getting locked into technologies that may turn out to be irrelevant.
In the IDC Analyst Connection report, “Digital Strategies for Utilities to Successfully Navigate the Energy Transition,” John Villali, Research Director, IDC Energy Insights, IDC, answers questions from CGI about digital strategies for utilities as they work toward their energy transition goals and initiatives.
Highlights from this Q&A include:
Key factors driving utilities to invest in digital solutions
Utilities foresee strains on the power grid and must stand ready to modernize and improve grid operations to ensure reliability for when strains become apparent. Rethinking of power grid operations strategies requires both technology and tactical changes to manage networks effectively. Additionally, customer needs and expectations are driving new digital approaches for utilities to support their energy consumption, effectively interact with them and incentivize them to participate in clean energy programs. Government policy and legislation aimed at reducing carbon emissions are also driving increased investments in digital solutions that help utilities navigate the energy transition.
DERMS and ADMS increase preparedness for energy transition-related disruptions
Among the many digital solutions to ensure readiness for the energy transition, utilities must explore going beyond traditional distribution management and will need to invest in ADMS and DERMS. These systems help utilities monitor and control the distribution system, track and restore distribution system outages and manage behind-the-meter distributed energy resources (DERs). Other customer programs and policies, such as time of use rates (TOUs) and demand response programs, are also helping utilities shift demand to maintain system reliability, avoid or defer grid investment and create greater operational and economical optimization of the power grid.
How DERMS and ADMS help utilities reduce cost and add value
Both ADMSs and DERMSs are helping utilities achieve greater overall efficiency and optimization of their distribution systems, which can have a positive impact on utility rates. These technology platforms help distribution system operators manage supply and demand, and can help defer capital cost investments, such as replacing substations or transformers, as well as defer capital expenses at the grid edge, while enhancing reliability and minimizing post-outage recovery efforts. DERMS can also enhance energy-as-a-service opportunities for utilities, increasing their cash flow and supporting increased customer engagement.
When to invest in DERMS and ADMS
For more than a decade, utilities have foreseen strains on the power grid due to the increase in penetration of behind-the-meter solar PV generation, as well as the increase in penetration of intermittent generation on wholesale power markets (e.g. utility-scale wind and solar PV). However, the strains caused by these market trends have not become as apparent as anticipated. For this reason, utilities have been reluctant to invest in DERMS and ADMS.
Now, more strain is expected from electrification of transportation, which is now seeming unstoppable. Both investing rate-payer dollars prematurely and waiting too late to deploy solutions to manage the grid come with risks and consequences. Traditionally, utilities and utilities commissions will not invest in energy transition readiness without sufficient certainty of reward, which is why they typically prefer to participate in pilot projects that have lower financial consequences. However, recently there has been a shift away from small-scale pilot projects toward full-scale DERMS and ADMS deployments that provide flexible and modular options. With these options, utilities are able to adapt and grow over time, keeping pace with increases in DER and electrotechnology penetration.
What to look for in ADMS and DERMS solutions and vendors
Flexibility, in both solutions and vendors, is key for utilities looking to prepare and invest for the energy transition. Utilities should identify ADMS and DERMS solutions that offer modular applications and flexible deployment models, which provide options for how the solution is deployed and how much investment is needed, both now and in the future. Additionally, utilities should seek technology vendors that are able to adapt to evolving communication standards, as these vary by region and DER asset. Further, when investing in ADMS and DERMS solutions, utilities should partner with an experienced enterprise systems integrator that provides a tailored technology roadmap and supports the interconnectivity of ADMS and DERMS solutions with core legacy operational systems and applications.
Data governance helps maximize value of ADMS and DERMS investments
In IDC’s 2022 Future of Operations Survey, over 30 percent of utility respondents indicated that one of their biggest challenges to achieving operational excellence and resilience is their access to data and visibility of operational performance. As utilities adopt and implement these digital solutions and integrate them with their legacy systems, they will need to ensure the high quality and accessibility of the data from these core interconnected systems. Clean, reliable data will not only support successful integration of these legacy systems, but will also help to maximize the value of utilities’ ADMS and DERMS investments.
Download the full IDC report for a deeper dive into how digital strategies are helping utilities navigate the energy transition.
Take a prudent approach to ADMS and DERMS with CGI
CGI helps utilities take a modular, prudent and paced approach to deploying ADMS and DERMS solutions. We work with clients to establish a business strategy and digital roadmap to ensure readiness for a sudden, quick increase in DERs, EV charging and other electrotechnology adoption, while at the same time reducing the risk of sinking cost into digital solutions that will be adopted prematurely, or be prematurely obsolete. Learn more.