What increasing power outages tell us about grid modernization

Winona Rajamohan

Content Marketing Manager

The North American Electricity Reliability Corporation (NERC) released its annual summer reliability report in May 2022 which warns of a heightened risk of electricity blackouts in the summer months. In this blog, we dive into how upcoming grid expectations are signaling utilities and their technology partners to explore new opportunities for collaboration

📝 A (clickable) summary of what's ahead:

John Moura, NERC’s director of reliability assessment and performance, told media outlets that the current state of the grid is “out of sync with the underlying realities and the physics of the system.”

The report highlighted the following:

  1. The midcontinent ISO (MISO) will have 2.3% less generation capacity than last summer.
    To meet peak summer demand, MISO will need to depend on resources that can shift energy loads to avoid straining available capacity. These resources include demand response programs, managed EV charging, and behind-the-meter distributed energy resources (DERs).
  2. Drought conditions are increasing the risk of extreme peak electricity demand in high and dry temperatures.
    Dry conditions are impacting energy output from hydro and thermal generators in the Western United States, forcing utilities to depend on energy from fossil fuels to meet increased demand. Drought-induced wildfires in California have forced utilities to shut off power in high fire risk areas for resident safety. The Pacific Gas and Electricity Company (PG&E) told California regulators that aging equipment may have sparked the second-largest wildfire in the state’s history.
  3. Supply chain issues are impacting transmission expansion projects
    Utilities are no exception to the worsening supply chain issues this year. The report states that product unavailability, shipping delays, and labor shortages are impacting grid reliability for the summer. A purchasing agent for Denison Municipal Utilities in Iowa tells the American Public Power Association that wait times have been on the incline, with orders placed at the beginning of 2021 only coming in nine months later.

What this means: Grid modernization is a top priority

Upcoming summer power outages echo a recurring call for grids to move away from outdated energy distribution systems. Some components of grids in the US are over a century old, while 70% of transmission and distribution lines in the country are in the second half of their lifespans.

The outages in Texas last February are a prime example of how traditional power systems aren’t equipped to handle drastic and unprecedented weather changes. Temperatures below 20°F didn’t just cause spikes in demand. Grid equipment froze over and the production of natural gas dropped by almost 50%. Operator-initiated load shedding was called for in certain service areas. Combined with the collapse of grid equipment, the blackouts spread to 11 million residents across a span of three days.

The pressure is on for grid modernization, and it’s driven by two primary goals:

1️⃣ Equipping grids with more clean and renewable energy resources 🌳

2️⃣ Increasing grid reliability with hardware-agnostic integrations to balance supply and demand across available resources ☁️

The business opportunity for grid flexibility

Traditionally, utilities have shaped energy generation to meet demand. Today, grids are rehauling legacy systems so demand can be shaped according to available supply.  77% of utilities surveyed by the Smart Electric Power Alliance (SEPA) introduced DERs into load-forecasting processes so demand can be properly funneled into a wider energy resource mix.

What does this energy mix look like?

CNN highlights Bronzeville as an example, a neighborhood in Chicago using microgrids to prepare in the case the larger grid can’t meet summer demand. This microgrid consists of solar panels on the rooftop of a public housing complex, batteries to store solar energy, and natural gas generators. These sources connect and share power with the main grid, but can also operate independently during blackouts using the energy stored in the battery.

Grid flexibility is an immense project — but it can’t be tackled by grids alone. 90% of leading utilities leverage technology partnerships with other companies to adopt more software-friendly infrastructure.

“Digital solutions present a major opportunity for utilities to increase revenue and lower emissions,” says Eileen Waris, principal at Energize Ventures.

“As transportation electrifies, we can expect a 20 to 40 percent increase in demand for electricity in the U.S. alone. The utilities that develop leading strategies in grid flexibility and managed charging will be well-positioned to capture this demand, optimize grid flow and contribute to decarbonization.”

Here are three ways companies are partnering with utilities today.

APIs

Utilities are working with more fragmented energy sources today than ever before, making it difficult to predict overall load capacity and available options to cater to excess demand in high-risk periods for the grid, like warmer and colder seasons.

APIs allow two or more software applications to communicate with each other, giving grids a hardware-free path to communicate with IoT-connected devices that can greatly impact grid load, like electric vehicles. Technology partners are brought in to help grid operators offload the effort of building and maintaining these integrations themselves.

APIs give demand response programs granular and high-quality data directly from each vehicle, which utilities use to analyze load forecasting patterns and create digitized user experiences for customers. Businesses also leverage APIs to provide utilities with simple hardware-free access to grid modernization resources.

Customer participation

A 2020 survey found that consumer awareness and advocacy for local utility climate initiatives ranged from only 18 to 32 points on a 100-point scale. Software partners help utilities increase customer participation by optimizing program goals and user experiences with customer motivations.

What does it mean to tap into motivating factors for customer participation?

Research has shown that some customers engage more with demand response incentives emphasizing environmental benefits as opposed to financial benefits. Apps like Optiwatt encourage better EV charging habits by giving customers a dashboard view of insights most relevant to them, like the time they need to spend charging, the money they’ve saved, and the emissions they’ve reduced.

A simple enrollment and onboarding experience is another driver of participation. DERMS platforms like EnergyHub help utilities elevate program design through better customer enrollment. They found that lengthier sign-up processes and form fills can reduce customer participation by 46%. EnergyHub solves this pain point by automatically retrieving and maps data with customer consent for a more frictionless registration process.

Electric vehicles

In a webinar on smart charging hosted by Smartcar, we found that more than 40% of our attendees were monetizing smart charging programs while 14% had plans to do so in the near future. When asked about the biggest challenge to implementing a smart charging program, integrating with electric vehicles came out on top.

A growing number of EVs on the road signifies a growing source of energy that can influence grid loads, especially during periods of higher outage risks. But utilizing Level 2 chargers to coordinate EV communication isn’t accessible for every vehicle owner and utility territory.

Vehicle telematics enables utilities and energy businesses to develop vehicle-to-grid (V2G) technology, which can be implemented in a few different ways:

  • ⏳ To schedule charging during hours when electricity demand is lower: Software applications use EV APIs to automate charging schedules during hours when demand is lower, like in the middle of the day as opposed to after 5 pm.
  • 🍃 To optimize charging for clean energy: The duck curve is still a prevalent problem that holds a greener grid back. Grids can deploy managed charging programs that automatically start and stop vehicle charging during hours when solar energy is available for use.
  • 🔋 To store excess renewable energy: EV batteries are used to store renewable energy during the day so it can be used later when demand begins to climb. EV batteries expand on common storage options like chemical battery and hydro storage, which are more difficult to obtain at high volumes.
  • ⚡ To discharge electricity from the grid during peak demand periods: Bi-directional EV charging isn’t available in all EVs, but utility providers are looking into it as a viable solution as EV sales become a more common vehicle choice. V2G plans are already in the works in California, with the state approving $11.7M for EV pilot programs to provide backup power to the grid.

A to-do list for every utility partner

Grid modernization efforts are relatively new and still ever-growing, which means that programs — which are often subject to regulatory hurdles and lengthier stakeholder alignment processes — need the agility to consistently iterate on integration quality, grid efficiency, and customer impact. If you’re partnering with utilities for grid modernization efforts and demand response programs and services, here are a few lessons we’ve learned:

✅ Help your partner visualize success at scale

Show your utility partners how you can provide them the flexibility to expand the scope of their demand response programs. For example, EV integrations are labor-intensive, with one vehicle brand alone requiring up to three engineers to develop a reliable integration. Utilities benefit more from partnering with businesses that can provide them with a ready-built integration architecture that can be adapted to program needs. This demand contributed to a 70% increase in venture capital funding last year for startups focused on vehicle-to-grid power.

✅ Empower your partner’s roadmap with high-return projects

35% of utilities in a PWC survey cited conflicting priorities as a primary challenge for grid modernization efforts. Your goal as a partner is to help them tackle high-impact projects that would otherwise be sitting on the backburner. The growth of the API landscape helps energy and utility programs bring together the knowledge of software developers, equipment manufacturers, customer engagement leaders, and clean energy experts. Prove to your partners how your core competencies can streamline operational capability, win the buy-in of stakeholders and communities, and go to market faster with lower overhead costs.

✅ Commit to maintaining the data privacy of utility customers

Cybersecurity threats to power systems and infrastructure are a major point of concern for utilities. Obtaining customer data without consent, whether for active demand response or passive load analysis, heightens the vulnerability of sensitive information falling into the wrong hands. Show your partners what measures you’ve put in place to retrieve data from residents and vehicle owners in a utility territory, like consent management flows, API token management processes, and compliance certifications.

To learn how Smartcar helps utility partners, download our energy and utilities whitepaper to see how you can use connected car APIs to:

  • Offer smart charging solutions
  • Power demand response programs
  • Manage your in-house fleet
  • Collect EV driver consent for shared data
Everything you need to know about car APIs. Delivered monthly.

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