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Digital Transformation at the Grid Edge

image credit: Greenbird Integration Technology

Edge computing is becoming more and more relevant in the current business climate.

A Gartner study estimated that 75% of enterprise data will be generated at the edge - that is, data created outside of centralized servers and the cloud - by 2025. Companies are expected to spend 30% of their IT budgets on edge computing within three years, say the experts at Red Hat.

We’re already seeing this happening in utilities. Disruptive solutions like smart meters and smart grids are forcing energy companies to rethink their strategies. They need to revamp their operations to work with new energy models and remain competitive in rapidly evolving markets.

What is the Grid Edge?

The role of the grid edge in future energy ecosystems

The role of the grid edge in future energy ecosystems

The grid edge refers to technologies working near or at the end of electrical grids. New processes and business models surfacing from grid end solutions are part of the definition as well.

Why Should Utilities Care About the Grid Edge?

New Energy Models

Grids are centralized, meaning that power is generated from the center and relayed to consumers through distributors and service providers. This model is going out of favor as it does not effectively integrate new technology. It takes too much effort to modernize centralized power stations. Utilities can do the same at the grid edge for less and with fewer risks.

This is why the energy industry is moving towards decentralization. Distribution centers should be broken down into smaller hubs close to consumer locations (see distributed energy resources). Not only is this sustainable due to less energy loss and pollution, but it also eases innovation as there is greater flexibility due to fewer working parts.

The opportunity from this development is too lucrative to ignore. The energy industry is set to gain $2.4 trillion in value from the grid edge over the next ten years. Utilities will realize significant gains if they pursue digital transformation at the grid edge. Bigger consumer pools, more lucrative (and sustainable) business models, and better data analytics are just some of the potential benefits.

Projects like the Brooklyn-Queens Demand Management program (BQDM) and California’s Demand Response Auction Mechanism (DRAM) are prime examples of the grid edge being utilized to great success. The former saved ConEd, New York’s leading utility, $1.2 billion from not having to construct new substations.

The Data Boom

The explosion of data at the edge is not slowing down anytime soon. The Internet of Things (IoT), IT/OT convergence, and other technological shifts only add to the overwhelming quantity of data in the energy ecosystem today.

Utilities need to prioritize collecting, analyzing, and interpreting the wealth of information at their disposal. This enables them to extract valuable insights to better understand what the market wants while improving their internal processes through continuous feedback.

Failing to capitalize on this will cause utilities to lag behind more enterprising rivals or innovative startups that can turn grid edge data into valuable solutions for the energy industry.

These two factors alone prove why companies must place the grid edge at the forefront of their priorities.

How Can Utilities Pursue Digital Transformation at The Grid Edge?

Digital transformation at the grid edge is not just about ‘doing it’. Utilities must transform internally to champion innovation and embrace a startup approach throughout the entire organization. That begins with adopting a digital DNA.

Digital-driven utilities will gain a serious advantage over less proactive competitors. They’ll be able to react quickly to changing tech trends. Their IT infrastructure is flexible enough to meet changing consumer demands. More importantly, they are hungry for innovation and will always look to improve even if they’re the best among their ranks.

Utilities can also transition to new business models seamlessly once they’ve established a concrete digital DNA. Energy companies can no longer rely on traditional revenue streams to sustain themselves. The future of the energy industry calls for innovative platform utilities as consumers gain access to more service providers than ever before.

This model is in sync with new products and services resulting from new energy models. Energy-as-a-service, for example, is perfect for platform utilities as it allows them to generate the same level of revenue they do today - if not more - even in light of reduced consumer spending.

The aggregation of consumer information can then be exchanged in value with partners and other energy companies, creating a data economy that further guarantees the financial stability and sustainability of utilities in the future.

That said, revamping infrastructures to facilitate grid edge technologies is not easy. With today’s centralized energy system evolving towards the distributed Internet-of-Energy (or Energy Cloud), so does the utilities’ infrastructure have to evolve too. Exponential volumes of “big data” must be crunched, processed even faster and shared across system and network boundaries to create insight and action in real-time. To realize the true benefits at the grid edge requires an information management infrastructure that is secure, reliable, elastic, scalable, high performant, flexible and cost effective.

Frederik ten Sythoff's picture

Thank Frederik for the Post!

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Matt Chester's picture
Matt Chester on May 29, 2020

Utilities can also transition to new business models seamlessly once they’ve established a concrete digital DNA. Energy companies can no longer rely on traditional revenue streams to sustain themselves. The future of the energy industry calls for innovative platform utilities as consumers gain access to more service providers than ever before.

This is really interesting, especially in the utility field since utilities had for decades been doing the same thing with slight improvements over time. It seems we're finally at the stage of rapid transformation, and it's a good point that to best set up for that utilities can and should reconfigure the building blocks of their business. Not only to adapt for what's possible today but to prepare for what may become possible in the future. 

Frederik-- do you think utility executives are embracing this new mindset, or is it still an uphill climb to get away from 'the way we've always done it'?

Frederik ten Sythoff's picture
Frederik ten Sythoff on Jun 2, 2020

It’s still a climb, a long one, however we clearly see that utilities have taken the first steps. We see to that the pandemic and the consequences that followed have given utilities a little push to speed up their digital activities.

Matt Chester's picture
Matt Chester on Jun 2, 2020

We see to that the pandemic and the consequences that followed have given utilities a little push to speed up their digital activities.

This is an interesting trend-- particularly in areas of customer service and workers out in the field. These digital changes may have been in the back of leaders' minds at the utilities, but suddenly they were thrust to the forefront. A small amount of lemonade, perhaps, from the past few months that have been filled with lemons (to say the least)

Lois Myers's picture
Lois Myers on May 29, 2020

Who owns the Grid in Texas? (ERCOT) Thank you!~

Lois Myers's picture
Lois Myers on Jun 1, 2020

Matt, I had already read your answer, as it was in one of sentences in your Article.  So am trying to ask again, please, Who owns the Grid in Texas? and/or who owns ERCOT? Also, you mentioned DNA-- what is that in technological terminology? Thank you, Lois 

Matt Chester's picture
Matt Chester on Jun 1, 2020

Perhaps this is helpful to your question of who 'owns' ERCOT:

ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.

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