No transition without transmission: innovation needed for the electricity grid

No transition without transmission:

innovation needed for the electricity grid

by Anandhi Gokhale, Investment Manager, Energy

South Australia is a sunny place—so sunny that nearly half of all households in the state have rooftop solar panels, a key lever in the energy transition. Promoting rooftop solar can help lower costs, improve reliability of the electricity grid and energy security, and advance the battle against climate change. Indeed, South Australia produces so much energy from solar energy that it exports a huge amount of it to Victoria, a neighboring state.

But in November 2022, South Australia went dark. Severe storms caused major damage to poles, wire, and other grid infrastructure across the state plunging over 80,000 homes into darkness. A major interconnector that connected South Australia to neighboring Victoria collapsed, leaving the state of South Australia as an “island”. Despite having plenty of rooftop solar with the potential to keep the lights on in a majority of the homes, there was simply too much power being generated and nowhere for it to go. The regulator was left with no choice but to shut off a massive chunk of rooftop solar to prevent a more widespread blackout.

Fixing problems like this requires recognizing that the current electricity grid is not suited to handle the new energy future that South Australia embodies. The spread of solar panels, batteries, electric vehicles, heat pumps, and other distributed energy resources (DERs) is both juicing demand and sending electricity surging into the grid from various sources, where once it originated only from large power plants. If not handled properly, the result could be chaos, with pieces of physical grid equipment degrading or breaking down altogether.

Fortunately, grid managers hoping to avoid this outcome have strategies they can turn to. In fact, the Australian regulator and grid operators are leading the charge in tackling this head-on to avoid another disaster like in November 2022. These largely fall into three categories: data acquisition and analytics, dynamic controls, and business model innovation. In all categories, new innovations are transforming grids from relatively static, one-way, analog systems of energy delivery into dynamic, bidirectional, and digitized platforms for all manner of energy services.

Data acquisition and analytics of the electricity grid

Data is king, yet data in the distribution grid is sparse. So-called “smart meters” may be a familiar sight, but even in places where such devices are ubiquitous, regulations often limit their use to billing only. They also seldom provide the real-time data that grid operators need.

This is where new, tech-enabled service providers are making inroads. Some provide sensors that measure power flows at the neighborhood transformers to provide utilities total transparency across the network. Equipped with new data, grid operations can prioritize capital expenditures on neighborhoods with higher DER penetration rates and where failures are more common to ensure grid resiliency.  Others combine data from weather predictions, power substations and more into an intelligence model that leverages machine learning to provide utilities with visibility into how demand is evolving in their geographic area. This can improve both supply-demand balancing and the cost-effectiveness of upgrades to the existing grid.

Dynamic controls to stabilize the electricity grid

With the data and analytics piece in place, operators can turn to stabilizing the grid by actively controlling and orchestrating how electricity flows throughout the grid. This is especially crucial during extreme weather and other instances of energy stress, as South Australia experienced in 2022. Rather than taking a “sledgehammer” approach and simply shutting down every solar panel, operators could partially curtail the flow of energy from each individual panel. Under this kind of orchestration strategy, households still have enough energy to keep their lights on, but electricity will not flood the grid and damage equipment.

This requires innovation in power electronics. Power electronics are foundational to smart grids, and innovation in semiconductor materials, components and systems like smart inverters, volt-VAR controls, are essential to enabling real-time, dynamic grid management and controls. Such solutions could significantly reduce the headaches that utilities are facing as DERs proliferate.

Business model innovation

The final piece of the puzzle is bringing the end-consumer into the discussion. Take the example of partial curtailment mentioned above. Why would consumers agree to let utilities take control of their solar panels? They need some kind of incentive—lower energy bills, say, or other perks. Energy retailers are leading the charge, innovating with business models that offer consumers attractive incentives in exchange for giving up control of their home energy systems through smart thermostats, batteries, flexible EV charging, etc.

Distribution grid operators too are recognizing that consumers are key agents in the grids of tomorrow. Much like their transmission counterparts, who already run sophisticated energy markets, distribution grid operators are now developing localized demand-side flexibility programs to increase DER adoption while empowering consumers.

Ushering in a new era

Taken together, these three pillars are unlocking the vast potential of the energy grid to accelerate the shift away from fossil fuels. The old era depended on large power plants often powered by coal or natural gas. The new one will see utilities and consumers connect a range of decentralized resources to create so-called virtual power plants. It all promises a future that’s cheaper, more stable and grounded in the actions needed to achieve a carbon-free world.

Download the pdf presentation: No transition without transmission

Check out our portfolio company, enspired, who has grown quickly to be a major player in this space: Enspired secures €25m for battery storage energy tech | Sifted