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Grid Modernization – Optimize Opportunities and Minimize Risks

Buckle-up for the acceleration in electric utilities.

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  • Grid modernization has profound impacts on people, process, and technology.
  • The impacts are not fully understood by electric utilities.
  • IT and OT leaders lack tactical insights to collaboratively enable the business to transform.
  • IT and OT leaders have not recognized the urgency of developing future talent for the digital utility journey.

Our Advice

Critical Insight

IT/OT plays an essential role in empowering the grid modernization journey to secure the infrastructure, maximize big data, and build a customer-centric platform to bridge utilities, customers, and partners.

Impact and Result

Info-Tech’s deep-dive trends report Grid Modernization: Optimize Opportunities and Minimize Risks investigates strategic foresights and highlights the impact of grid modernization programs on people, process, and technology for IT/OT leaders in electric utilities. Our goal is to guide you through the transformation journey by providing you practical insights.

  • Demonstrate a sample of cost-benefit analysis metrics to support Smart Grid technologies and applications.
  • Provide insights of pitfalls to avoid prior to embarking on a grid modernization roadmap and tactful implementation plans.
  • Identify the readiness checklist for IT/OT leaders to guide organizations in required changes to people, process, and technology.

Grid Modernization – Optimize Opportunities and Minimize Risks Research & Tools

1. Grid Modernization deck – This strategic foresight trends deep dive report provides practical insights and readiness checklist to help IT/OT leaders in electric utilities to de-risk grid modernization projects.

This deep-dive trends report provides insights on the lessons learned and potential risks associated with grid modernization projects for electric utilities. Built on expertise from industry practitioners and technology vendors, the readiness checklist on people, process, and technology identified in this report will help IT/OT leaders better prepare for any grid modernization projects.

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Grid Modernization: Optimize Opportunities and Minimize Risks

Buckle up for the acceleration in electric utilities

Analyst Perspective

Smart grid is not the latest hot topic in the electric utilities sector. However, its long-lasting impact on utilities and customers has shifted the conventional paradigm for good. With the rate of adoption of distributed energy resources to the grid, many emerging players are participating in the ecosystem within a traditionally monolithic industry.

IT and OT leaders together are expected to form a stronger union as the enablement backbone to support grid transformation that the business is often leading. As a result, IT and OT teams are being tasked with implementing and supporting various grid technologies and applications without being fully prepared for the substantial implications involving people, process, and technology.

Info-Tech's industry research on grid modernization explores the cost-benefit analysis of grid modernization programs and their unfulfilled great promises. Combining the lessons learned from previous projects, and perspectives from industry practitioners and technology vendors, this report assists IT/OT leaders to optimize and de-risk any future grid modernization projects by providing you with a practical readiness checklist to guide your team and the business throughout the journey.

This is a picture of Jing Wu

JING WU
Principal Research Director,
Utilities Research
Info-Tech Research Group

Executive Summary

Your Challenge

  • Grid modernization has profound impacts on people, process, and technology.
  • The impacts are not fully understood by electric utilities.
  • IT and OT leaders lack tactical insights to collaboratively enable the business to transform.
  • IT and OT leaders have not recognized the urgency of developing future talent for the digital utility journey.

Common Obstacles

  • Executives often underestimate the IT and OT involvement needed to support the grid modernization program.
  • Organizations are hesitant to change and not ready to pivot to the IT/OT convergence.
  • Executives do not fully embrace the importance of a customer-centric culture shift to support the grid modernization program.

Info-Tech's Approach

  • Demonstrate a sample of cost-benefit analysis metrics to support smart grid technologies and applications.
  • Provide insights of pitfalls to avoid prior to embarking on a grid modernization roadmap and tactical implementation plans.
  • Identify the readiness checklist for IT/OT leaders to guide organizations about required changes in people, process, and technology.

Info-Tech Insight

  • IT/OT plays an essential role in empowering the grid modernization journey to secure the infrastructure, maximize big data, and build a customer centric platform to bridge between utilities, customers, and partners.

Energy is in transition with an unreversible paradigm shift from the customer lens

Smart grid

Old paradigm

  • Deliver unidirectional power from utilities to customers
  • Dispatch meter reader and connect/disconnect
  • Bill once per month with a simple rate structure
  • Access call center agent services

New paradigm

  • Bidirectional electricity and information exchange between utilities and customers
  • Real-time meter reads and remote connect/disconnect
  • Various billing rate plans with more reading frequency
  • Customer omnichannel platform
  • "Amazon-like" services

Info-Tech Insight

A fundamental shift requires organizations to evaluate their priorities and strategies for digital utility transformation.

Major Disruptors Driving the Smart-Grid Transformation

This is an image of a thought map for Major Disruptors Driving the Smart-Grid Transformation

The evolution of "smarter" grid technologies and applications

Smart grid – The Department of Energy in the United States describes "smart" electrical grids as allowing electricity and information to flow in a two-way exchange between the utilities and customers. It consists of a network of communication, automation, controls, computers, and new technologies and equipment working together to make the electricity grid more efficient and more reliable, more secure,, and greener. [U.S. DOE, 2022]

  • The level of maturity in terms of control and automation increases over time.
  • Large-scale deployment is often driven by government funding programs.

Progression of smart grid technologies and applications deployment

  • Advanced Meter Reading (AMR)
  • Outage Management System (OMS)
  • Geographic Management System (GIS)
  • Supervisory Control and Data Acquisition (SCADA)
  • Asset Management System
  • Mobile Workforce Management System
  • Telecommunication
  • Network Topology
  • Advanced Meter Infrastructure (AMI)
  • Advanced Sensors
  • Distribution Automation (DA)
  • Demand Response
  • Distribution Management System (DMS)
  • Energy Management System (EMS)
  • Customer Portal
  • Data Analytics
  • Cyber Security
  • Substation Automation
  • Enterprise Asset, Work and GIS Management
  • Self-Healing Grids(FLSIR)
  • Volt/Var Optimization
  • Customer Omnichannel
  • Advanced Demand and Response
  • Distributed Energy Resource Management (DERM)
  • Advanced Distribution Automation (ADA)
  • Advanced Data Analytics (AI/ML)
  • IT/OT Cyber Security
  • Advanced Distribution Management System (ADMS)
  • Microgrid
  • AMI 2.0
  • Advanced Sensors and Intelligent Protection Devices
  • Advanced Inverter Functions (AIFs)
  • Advanced Telecommunication

[Natural Resources Canada, 2019; U.S. DOE, 2022]

Global smart grid investment grows and propels technology advancement

This is a picture of a bar graph showing the smart grid global investments in billions of USD, from the years 2014-2021

The U.S. is planning to spend even more aggressively in developing grid infrastructure to build resiliency against various disruptions. This follows the previous insurgence of government funding of industry investments as part of the American Recovery and Reinvestment Act of 2009.

The new funding injection has a diversified portfolio, including grid hardening and weatherization, and developing advanced cybersecurity technologies. The previous wave of investment focused largely on AMI deployment.

Global investment in smart grid has climbed back after a couple of consecutive low years due to the Covid-19 pandemic.

U.S., China, and Europe continue to lead, driving the market size growth.
Investments should triple by 2030
to meet the Net Zero Target in the 2050 scenario.

$7.86 billion
U.S. smart grid investment grant as of 2016

$17.6 billion
U.S. infrastructure investment in grid infrastructure and resiliency planned between 2022-2026

[Source: DOE 2018; NCSL ]

Lessons learned from earlier projects in Europe

Smart grid projects, including research development, demonstration, and deployment, have been happening worldwide for a couple of decades. There is great value in reviewing, understanding, and sharing what lessons have been learned and how we can avoid common pitfalls and de-risk future projects.

Smart Grid Project (2002-2012) in Europe scope:

1.8 billion
spent and 80% funded by public.

Over 281 projects
across 30 countries and the majority of them are smart metering rollouts.

35 months
is the average project duration.

Key lessons learned:

  • Lack of standards caused interoperability challenges for DER interconnection, smart devices, EV communications, and IT applications.
  • Lack of clarification of roles and responsibilities caused limited participation from retailers, service providers, and aggregators in projects.
  • Private investments were deterred due to the lack of certainty over sharing costs and benefits.
  • Lack of diverse strategy caused resistance in customer participation. Skepticism among different customer segments developed over smart grid projects.

Lessons learned from government trial in Australia

Smart Grid, Smart City Project (2010 - 2013) in the Australia scope:

480 million AUD
total investment of which $100 million AUD came from Federal Government.

$28 million AUD saved
over 20 years in areas such as improving network reliability by detected and restored network faults faster.

7 type of projects
in grid application, customer application, distributed generation, distributed storage and supporting information, communication technology platforms, and electrical vehicles.

Key lessons learned:

  • Most cost-effective approach requires further investigations although benefits were demonstrated by various advanced automation technologies.
  • Cyber security and data privacy should remain at the top priorities due to increased possibility of threats.
  • Interoperability standards should be developed collaboratively, not by a single authority, and leverage existing international standards.
  • Customer protection should be in place for vulnerable consumers.
  • A stronger policy mechanism should be assessed by jurisdictions even though dynamic tariff structures have proven to be beneficial.

Lessons learned from previous rollouts in the U.S.

Smart Grid Investment Grant Program (2010 - 2015) in the United States scope:

7.9 billion USD
invested and 57% of funds came from private investments.

228 utilities and organizations
Participated in over 99 competitively selected projects.

33% of total smart meters
installed in the U.S. were done as part of this program.

Key lessons learned:

  • Comprehensive communication systems enable multiple smart grid functions beyond electricity metering, such as water metering and internet services, etc. System integrations are key to the success of smart grid projects.
  • Internal collaboration and coordination are keys to success; new skillset training such as cybersecurity and data analytics are cornerstones for organizations to implement and support the project and deployed technologies.
  • There is no one-size-fits-all approach to customer education and engagement to overcome the steep learning curves. Customers always expect real-time access to their consumption data and cost. Efforts are required to address the often-marginalized communities. Financial incentives are the main driver that customers expect for the smart grid outcome.
  • Acceleration of grid modernization by 2-10 years due to the public-private partnership.

Worldwide progress across four aspects

From the earlier pioneers in Europe to the recent government funded acceleration programs, progress and improvements were made in the following aspects.

Technology development is diversified

Recent investments have a diverse portfolio that reflects the technology advancements in smart grid technologies. For example, the Canadian Smart Grid program (2018-2023) consists of various demonstration and deployment projects in energy storage, microgrid, Distributed Energy Resources Management System (DERMS), and Grid Monitoring and Automation [NRCAN, 2022].

Funding partnership boosting investment

Public-private partnership (P3) funding model has proven valuable to jumpstart progress in both research development and deployment projects. Collaboration between local, regional, and national grid operators is strengthening. Regulators are changing performance-based regulations to booster grid investments.

Interoperability and cybersecurity gaining focus

Huge emphasis has been placed on cybersecurity technologies to safeguard the critical electricity infrastructure. To solve the interoperability challenges, various industry standards were established and continue to evolve, such as DER interconnection standards, Inverter standards for both distribution and transmission network, application integration, EV plugin, and power network comminution protocols.

Customer engagement at the forefront

In a hybrid ecosystem, decentralized customers play an ever-growing role together with the centralized utilities to transform the grid.

Energy equity is advocated to ensure all consumer segments are engaged and benefit from the grid modernization journey.

Untapped potential remains to be explored

Utilities benefits

  • Improve reliability by leveraging various technologies' automation capabilities.
  • Achieve energy efficiency through voltage conservation.
  • Improve operational efficiencies by remote meter readings and connect/disconnect to save vehicle miles, labor hours, etc.
  • Avoid tamper through detection and notification, outage detection, voltage, and power quality monitoring.
  • Reduce peak demand with the integration of large-scale renewable energy systems.

Customer benefits

  • Reduce power outage durations and frequencies.
  • Access customer consumption data to make better choices of energy usages.
  • Save costs associated with real-time pricing and enabled demand response.
  • Allow prosumers to sell surplus energy back to the grid and ultimately lower power costs.
  • Improve customer satisfaction by participating in social accountability to reduce the carbon footprint.
  • Enable customer self-serve omnichannel interactions.

Untapped potential

  • Not all available embedded capabilities of smart meters have been leveraged, such as voltage level monitoring.
  • Not all collected data from systems such as SCADA, DMS and AMI is utilized to its full potential.
  • The dynamic pricing programs adoption rate could be increased.
  • More functions could be utilized between Home Area Network devices (HAN) and AMI devices.
  • More interactive capabilities could be made available through customer portals.
  • Interconnections between behind-the-meter energy storage and grid could be optimized.

[USEA, 2010; Utility Dive, 2020; GreentechMedia, 2020; PG&E, 2022]

Grid modernization is a complex and long-term investment

It is difficult to develop a reproducible formula to justify the investment because a lot of factors differentiate one utility's situation from others. Soft benefits are generally well understood and received by both regulators and customers. However, quantitative return on investment (ROI) is challenging to measure and report.

Cost-benefit analysis is not the only approach that utilities have successfully used to gain the approval from regulators. In many cases, the following perspectives have been used to support the decision-making processes: cost-benefit analysis, end of lifecycle replacement, loss of knowledge due to retirement and aging workforce, foundational investment to address DER disruption, technology investment for reliability challenge, modernization to support public policy, sustainability objectives, and customer needs. [Bain & Company, 2018; Advanced Grid Research (DOE), 2020]

Business case demonstration:

BC Hydro Power Smart Logo

Smart Meter Program business case
(Deployment time frame 2011-2012):

  • About $1.6 billion benefits over 20 years in areas including operational efficiencies, energy savings, revenue protection, and capacity savings.
  • $520 million Net Present Value (NPV) through fiscal year of 2033.

[BC Hydro, 2010]

Duke Energy Logo

Florida AMI Program
(Deployment time frame 2018 - 2021):

  • AMI deployment at a cost of $336 million was approved in 2017 with limited details and without a cost-benefit analysis.
  • Utility reported to the Commission less than 2000 opt-out customers out of 1.8 million eligible customers as of September 30, 2021.
  • Smart Meter is the default standard after December 2021 and time of use rate will be introduced.

[Duke Energy Florida, 2018]

Ausgrid Logo

ADMS business case
(Deployment time frame 2019 – 2024):

  • Replacing existing distributed network management system with a full ADMS deployment net cost of $55.1 million in total.
  • Detailed analysis was provided with an NPV of $22.8 million over 15 years, which was the assessed project life.

[Ausgrid, 2019]

Identifying the right metrics is the key

Utility-specific details to support your own business case is crucial even though insights from other project deployments are beneficial. To get the regulators' approval, utilities are often expected to develop a thoughtful plan upfront to achieve both short-term and long-term value. Although the business case for each grid modernization project is different, the following cost and benefit (monetized and unmonetized) metrics from many AMI deployments shed some light on the level of specifics required to help justify the business case.

Benefits Metrics
Operational efficiency and cost savings
  • Reduction in truck rolls and staff time of manual reads and connect/disconnect customers.
  • Reduction in customer billing inquiries by providing self-serve tools.
  • Cost reduction in procurement and maintaining meter-reading handhelds.
Improve reliability
  • Reduction in field crew time to identify the outage locations by remotely interrogating meters to narrow down the fault areas.
  • Reduction in outage time impacting customers and avoiding financial penalty in service quality metrics.
  • Interval and register data to assist in more accurate load study.
Energy and capacity savings
  • Improve transformer load and voltage optimization analysis to reduce cost to optimize the infrastructure upgrade cost.
Revenue protection
  • Cost avoidance from electricity thefts from meter tampering.
  • Improve measurement accuracy to recover revenue from unaccounted energy use.
Customer benefits
  • New rate structure and services available.
  • Achieve public policy objectives.
Cost Metrics
Devices and infrastructure
  • Communication network cost - Procurement of AMI communication network routers and collectors and labor cost to install and configure.
  • Data backhaul cost.
  • Meter Installation cost – new meters, replace legacy meters, and install and configure meters.
  • Installation vendor labor cost for massive meter rollout.
  • Meter lab set-up cost for meter engineering and testing.
  • Write-off costs for legacy meters and systems if applicable.
IT/OT application and integration
  • The AMI/MDM software and maintenance fee as well as lifecycle upgrade implementation project cost.
  • Cost of IT integration project with the billing system and other systems when applicable.
  • Cost of developing customer portal to gain access to data.
Support and resources
  • Cost to hire business FTEs for on-going management and operation of the AMI network and devices.
  • Cost to hire IT FTEs to support and troubleshoot AMI head-end systems and its integration with other systems.

[McKinsey & Company, 2020; Aclara, 2017]

Determine your value proposition to align with your organizational drivers

The business cases benefits must align with your organizational vision and mission, and are driven by your organizational objectives. Grid modernization programs create value for electric utilities by transforming the value stream of transmission and distribution, and retail and customer services. The use cases of the grid modernizations could vary for each organization.

  • HSE and ESG
  • Operational Excellence
  • Customer Experience
  • Risk and resilience
  • Business growth
  • People and Culture

Primary use cases of grid modernization strategy in U.S. as of 2017

This is a bar graph with the following data: Cyber and physical security	69.5%; Distribution automation	66.1%; AMI	52.5; Data analytics	47.5%; Distributed energy resources integration	45.8%; Substation automation and integration	44.1%; Underground network monitoring	18.6%;

Source: Black & Veatch via Statista, 2018

Visit the Define Your Digital Business Strategy Blueprint

Smart grid maturity to business capability alignment

The Software Engineering Institute (SEI) has made the most referenced Carnegie Mellon University's Smart Grid Maturity Model (SGMM) an open-source tool. Organizations can use this tool to identify gaps and prioritize initiatives to improve operations.

  • Organization and Structure
  • Grid Operations
  • Customer
  • Value Chain Integration
  • Strategy, Management, and Regulatory
  • Work and Asset Management
  • Technology
  • Societal and Environmental

SGMM Maturity Level [CMU, 2011, 2018]

This is an image of the Business Capability Map for Smart Grid Maturity Level.

Info-Tech Insight

Assessing your maturity level alignment with business capabilities is crucial to develop a vision and roadmap of your grid modernization journey.

Build an IT/OT strategy to enable your business to transform

  1. Brainstorm IT/OT initiatives using the goal cascade framework to prioritize key areas requiring IT/OT support.
This image shows the link between: Business goals; Business Initiatives; Business Capabilities; IT/OT Capabilities; IT/OT Initiatives; IT/OT Goals
  1. Refine the IT/OT initiatives list by leveraging the key takeaways of this research.
    • Enable grid modernization by transforming people, process and technology and maximizing the investment.
    • Readiness checklist to prepare IT/OT leaders.
    • Top three grid modernization IT/OT focus areas.
  2. Enable grid modernization by transforming people, process and technology and maximizing the investment.
    • People
    • Process
    • Technology

Develop talent and transform organizational structure to support grid modernization

Grid modernization and the advent of IIOT have forced electric power utilities to review their IT and OT organizations. Regardless of the rate of IT/OT convergence, business and technology leaders cannot ignore the urgency of developing skillful resources to enable grid modernization.

IT team

  • Project Management Office (PMO)
  • Architect
  • Security Specialist
  • Developer
  • Network Specialist
  • Report Developer
  • Database Administrator (DBA)
  • Server Administrator

OT and business team

  • Business Project Manager
  • Power Engineer/Designer
  • Communication Specialist
  • Control Operator
  • SCADA Technician
  • GIS Drafting Technician
  • Field Crew

Digital team

Grid Modernization PMO: IT PMO + Business Project Manager
Grid Architect: IT Architect + System Planning Architect + Electrical Engineer/Designer
Grid Security & Ops Team: IT Security Specialist + SCADA Technician/Engineer + OT/IIOT Security Specialist
Model Integration Team: IT Developer + GIS Drafting Technician + Model Manager
Grid Infrastructure Team: IT Network Specialist + Server Team + Communication Network Specialist
Grid Control Operation: Control Operator + Grid System Engineer + Grid Field Technician + Field Crew
Grid Analytics Team: Report Developer + DBA + Data Scientist + Business Data Analyst

Info-Tech Resource:

The roles highlighted in light blue are the evolving new roles that organizations are often lacking. The integrative skill set requirements are a common theme across all business and technology areas to support the grid modernization journey.

Approach talent development with an open mind

The evolution of grid modernization technologies and application deployment will drive the organizational structure change either organically or forcefully. Re-alignment of the organizational structure will clarify the lines of authority, roles, and responsibilities to deliver services effectively.

The challenges lie with finding the right talent.

92%
Percentage of U.S. electric utilities which agree that acquisition of new skills and has a significant organizational impact as a result of smart grid technologies adoption.
Source: Syracuse University, 2015

With the demand for integrated skillful talent, organizations are facing various challenges. According to the Info-Tech Utilities IT Staffing benchmarking report, talent shortages are found across multiple areas:

  • Staffing deficit concerns strategy planning areas such as enterprise architecture and talent management.
  • Utilities IT teams struggle with data-related functions which are a strong indication of upskill requirements.
  • Security is a major priority and Utilities IT teams need to take immediate action to set up best practices.

"Utilities are struggling to find skillful and knowledgeable talents to manage complex intelligent systems. Willingness to learn and adaptability to changes are equally important as technical skill sets."
– Digital Grid, Schneider Electric

Readiness checklist to start building your talent pool

Like the implementation of any grid modernization technologies and application, the cost, time, and effort required to develop the right talent are substantial.

Electric utilities are often surprised by the level of gaps during projects and find themselves scrambling to shuffle already lean teams to make do. The following checklist is to help you be better prepared prior to embarking on the journey.

Assess talent gap

  • Partner with HR to conduct a needs/skills review against the future digital team and create competitive offerings against other industries in the global market.
  • Analyze skills required and changes in reporting structure and in some cases, re-purpose FTEs for the new roles.

Remedy required core skillsets

  • Start with outcome-driven collaboration across multiple teams, instead of focusing on the organizational reporting structure.
  • Define SMART metrics of the services to be delivered by various teams and set the right expectations from the beginning.

Diversify talent development plan

  • Start forming the collaboration from project inception to completion and solidify the structure for on-going operational support.
  • Leverage project implementation phase as the training ground to develop skills for the talents.
  • Diversify sources of talent recruitment and development. For example, collaborate with local colleges to develop curriculum for specific needs to operate the modern grid.

Maximize the value of the best of breed IT/OT core processes

Hiding behind the "air gap" figuratively and literally, OT has been operating with a focus on control and availability to support real-time critical control systems. IT, on the other hand, emphasizes the integrity, security, and tiered availability model following industrial standards such as COBIT, ITIL, PMI to govern all core processes for decades.

IT core process

  • Project Management Government
  • Enterprise Architecture
  • Risk Management
  • Security Management
  • Release Management
  • Change Management
  • Business Intelligence and Reporting
  • Data Quality
  • Service Desk

OT and business core process

  • Business Continuity
  • Disaster Recovery Planning
  • System Planning
  • Engineering Standards
  • Field Commission
  • Business Communication

Digital core process

Grid Modernization Program/Profile Management
Grid Program Financial Management
Grid System Architecture and Design
Grid Cyber Security Management
Grid Analytics Data Governance
Grid Support Management
Grid Control Room Operations
Grid Field Operations
Grid Business Risk and Continuity Planning
Grid Change Management (internal & external) : marketing, communication program, communication outreach and training

When it comes to maturity of governance, OT can benefit from IT practices. When it comes to services responsiveness, IT can benefit from OT practices. Investment beyond physical assets such as core processes re-engineering will be rewarded.

Re-design key areas to align with grid modernization needs

Organizations who are already having difficulty in managing their core IT processes effectively are facing even more pressure to transform to support grid modernization programs. Challenges also create opportunities to revamp the whole process to re-align and improve efficiency overtime.

This image contains a color coded summary of IT Process Optimization Focus Areas in the shape of a Periodic Table.

According to the Info-Tech Utilities IT Management and Governance benchmarking report, the following areas are prime candidates to start the
re-design:

  • Planning and architecture domain are rated less important and of low effectiveness by Utilities IT.
  • Configuration management impacting planned downtime on interdependent applications is lacking.
  • Business intelligence and reporting is suffering in Utilities IT.

Readiness checklist to start re-designing your core processes

Due to the interdependencies of systems and teams introduced by complex smart grid technologies, silo-processes become detrimental to the effectiveness and efficiency of the grid operations. Process-engineering must be iterative during and after the project implementation in order to reach its maturity level.

  • Conduct a maturity assessment of key processes and highlight interdependencies outlined in the previous slide.
  • Document process ownership across key areas with the acknowledgement from IT, OT and business stakeholders when it comes to data ownership and cybersecurity.

Improve key areas

  • Adopt well-established IT project governance practices for large cross-functional grid modernization projects.
  • Re-design processes in the areas of application support, budget and planning, cyber security, and data ownership for your grid modernization program.

Adopt an iterative approach

  • Set an open mindset from the beginning on the processes reengineering journey and get ready for re-tuning.
  • Define a review cadence of the new processes and conduct effective lessons learned and action on areas for improvements.
  • Develop a baseline and periodically review benefits.

Growing interdependence of digital applications and technologies

The lines between physical devices and software are becoming blurred morphing into digital assets. Nowadays, electronic devices such as instrumental, equipment, sensors, meters, and even cars have intelligence. They are always connected as "on-line" with much more complex manufactory design to install, configure, commission, support, and troubleshoot.

System and data are interconnected and dependent on various components functioning harmoniously.

Info-Tech Insight

The Four Vertical Technologies permeate across the boundaries of soiled systems and network zones that create tighter interdependencies on each other.

Cyber security

Communication network

Enterprise integration

Grid analytics

Business application

  • GIS
  • Asset and work management
  • Mobile workforce
  • Meter data management
  • AMI head end
  • Customer portal
  • CIS

Real-time supervision and control system

  • SCADA
  • DMS
  • OMS
  • DERMS

Digital asset and traditional asset

  • Grid edge devices
  • Fault indicators
  • Smart meters
  • DERs
  • Transformers
  • Poles and wires
  • Switching cubicles
  • Substation

Enhance technology to enable advanced capabilities

This is an image of a bar graph showing the most at risk from cyberattacks of the smart city services.

Majority is not ready for Smart Grid

  • Only 15% of respondents have high confidence of data accuracy in their GIS data, which is fundamental for grid applications.
  • Only 1/3 of utilities update their GIS data within 10 days after work is complete.
  • 25% of respondents report that some data older than 6 months is not recorded in the GIS system.

(GIS Readiness for Smart Grid Report, ESRI, 2010)

Electricity grids are a target for cyber attacks

As of 2016, smart grids were ranked second for risk of cyber security attacks, behind public wi-fi networks.

Cybersecurity remains a key area for utilities to enhance.

Data quality is essential

Despite the optimism from GIS analysts, utilities are often surprised by the lack of data readiness.

Accurate and complete GIS network connectivity model, and comprehensive asset and engineering data are important.

"Expectations of organizations grow high but advanced functionalities demand good data, simply put."
– Digital Grid, Schneider Electric

Readiness checklist to deploy stepwise technologies

Due to the interdependencies of technologies across many layers of security fences both inside and outside of the perimeters of organizations, IT and OT technologies and applications should be viewed as digital solutions. Both IT and OT practitioners are often surprised by the level of dependencies grid modernization programs have created.

Assess integration, data and cybersecurity gap

  • Conduct a maturity assessment of integration and data management capabilities.
  • Conduct security maturity assessment for both IT and OT domains.

Address urgent needs

  • Prioritize data readiness and quality improvement to avoid it becoming roadblocks for project implementation.
  • Develop grid-level proofed integration capabilities to enhance existing enterprise integration framework.
  • Build a risked-based cybersecurity program leveraging built-in capabilities within grid solutions.

Plan for life-cycle management

  • Develop a grid modernization program budget that considers the increased cadence of technology upgrades.
  • Develop a roadmap and deploy technical modules step by step, working with trusted technology partners.
  • Coordinate IT systems upgrade and operational maintenance schedules considering the interdependencies of grid applications.

Technology cornerstones requires cross-functional collaboration

A grid modernization program requires collaboration from multi-discipline experts. While certain technologies such as RTU, submetering, battery, sensors are often led by electric utilities engineers, IT/OT practitioners will play a critical role in developing and supporting the following smart grid technology capabilities.

  • Cyber security
  • Grid analytics
  • Cloud adoption
  • Customer omnichannel

[International Journal of Smart Grid and Clean Energy (IJSGCE), 2020; McKinsey & Company, 2019]

Emerging cyber security threats call for IT/OT joint effort

Digital solutions are prone to attacks. With more and more digital solutions to automate from substations to field sensors over various communication networks, the vulnerabilities to cybersecurity attacks are increased. Data collected from intelligent devices such as EV, AMI, Home Area Network devices are susceptible to attacks. Utilities are scrutinized to protect customer privacy and data beyond billing purpose.

A cybersecurity strategy requires joint effort from IT and OT. Utilities in the U.S. have taken significant measures to fight cyberattacks. 81% of the utilities have plans to modernize IT and grid control systems and many of the respondents reported that a cyber security strategy is in place in their organization.

95%
Educated employees on how to avoid cyber threats.

89%
Developed a companywide cybersecurity strategy.

81%
Modernized IT and grid control systems.

Source: Utility Dive, 2020

Info-Tech Resources:

Grid analytics provides data-driven business insights

Investment in grid analytics is growing rapidly. Data sourcing from grid control systems and edge devices on top of the business applications contribute to the big data (with characteristics of velocity, volume, variety) challenges for utilities.

Data is not gold, but insight is. Unless data from all areas of devices and systems is integrated into the core business processes to create tangible benefits, the mass of data is only just noise.

Data accuracy is key. Electric utilities spend years preparing for the data prior to embarking on projects and find themselves continuing to invest in data quality improvement tasks. Organizations sometime jump into AI/initiatives without realizing that accurate data is a prerequisite.

This image contains a graph plotting global spending on smart grid analytics from 2012-2020.

Info-Tech Resources:

Leverage cloud offerings to your advantage

Grid modernization can benefit from the cloud. Cloud adoptions are happening within the electric utilities. The trend started from business applications and IT infrastructure. Grid modernization projects have demonstrated value of leveraging SAAS offerings such as a meter data management system (MDMS), AMI, and data analytics platform. Major cloud platforms including Azure, AWS and Google Cloud have NERC CIP compliant solutions.

Clearly define your cloud goals and drivers. Utilities are risk-averse. Not all workloads including business applications, IT infrastructure, and OT systems are ready for cloud migration. Identifying the key drivers for your cloud strategy will determine a tactical migration plan within your risk tolerance level.

This image contains a bar graph showing the projected cloud spending per company in UD utilities industry between 2018 and 2024

49.2%
of the respondents worldwide use cloud native technologies for remote monitoring, configuration, and analysis of operations for OT or CIS in 2021.

Source: Nozomi Networks; SANS Institute via Statista, 2021

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Omnichannel digital platform drives customer engagement

Omnichannel engagement means providing consistent two-way interactions with all customers via various channels. In order to build an effective strategy, utilities first must identify their customer demographics and their profiles about how different customers like to be interacted with.

Adopting design thinking using customer journey mapping is an excellent way to design your platform to meet the customers' needs, not just the utilities' needs.

Utilities are expected to be "always on" digital service providers as customer expectations have grown over time.

  • Electronic bill
  • Service agent
  • Email
  • Text message
  • Social media
  • Customer data and bill portal
  • Mobile app and alerts
  • Chatbot and
  • AI/ML
  • 24x7 Two-way digital energy control and trading

Data transparency and security, level of control, level of automation, and level of services and personalization have increased in importance over time.

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Outlook for IT/OT leaders

A cycle is depicted. In the centre of the cycle, is the term Grid Modernization Alliance.  Around it, are the following terms: Digital (IT/OT) team convergence; Industry research; Technology partners; Regulation alignment and influence; Peer connect.

It is a daunting task for IT/OT leaders to follow a clear vision and develop an effective grid modernization strategy, facing both internal and external pressure with competing priorities.

Collaboration is key. You are not alone in tackling this complex challenge. Electric utilities across the globe are working toward the future of utilities that are adaptable.

Changes are inevitable. IT/OT leaders need to be prepared.

Transformation needs a purpose and a plan. Leveraging best practices and research insights can help optimize the opportunities and minimize any risks along the way.

It is important for IT/OT leaders to form a circle of alliances throughout the journey, along with tactical technical readiness made available in this research.

Utilize this grid modernization report as an input to different blueprints

Grid modernization:
Optimize opportunities and minimize risks

This can be used as a standalone report, or an input to digital strategy, IT strategy, reference architecture, or more.

Utilities business architecture

  • Capability map
  • Key capabilities
  • Prioritization of capability gaps

Define your digital business strategy

  • Innovate the business
  • Transform processes
  • Build customer-centricity

Build a business-aligned IT strategy

  • Current state
  • Strategic initiative plan
  • Foundational elements

Future of UTILITIES TRENDS report

  • Challenges
  • Key IT element
  • Future trends

Contributing Experts

Craig Griffiths
Enterprise Technology Partner, DXC

Craig Griffiths is a technologist and leader with 20+ years of extensive experience across various industries and sectors. As an Enterprise Technology Partner at DXC, Craig works with technology teams and business executives across government and the private sectors to modernize their organizations.

Craig has spent much of the last decade leading information technology and operational technology teams in the design, installation, support and maintenance of critical infrastructure assets for transport for NSW and Ausgrid.

Craig is a graduate of University of New South Wales and Western Sydney University, holding multiple master's degrees in Cyber Security and Business Administration, in addition to a bachelor's degree in Information Systems.

Jean-Robert Coté
Management consultant FOR Utilities & Telecom

Jean-Robert Coté has over 25 years of experience providing management and OT consulting services to electric and gas utilities.

He has focused his solution architecture and subject matter expertise delivering grid modernization, advanced metering infrastructure (AMI), mobile workforce, outage management, work management, telecom, internet of things and IT Integration to many North American utility companies.

Oskar Borsos, Danilo bojovic, Nebojsa kurjakov, monika jovic
Product marketing managers, digital grid, Schneider Electric

A team of experts in digital grid with more than 70 years of combined experience in the industry. Power engineering practitioners with electric utility project delivery experience in software engineering, electrical engineering, project delivery, product management and the latest product marketing. The digital grid product marketing team specializes in domains including outage management, distribution management, Scada, systems integration, energy management, generation management, and microgrid management.

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Buckle-up for the acceleration in electric utilities.

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Author

Jing Wu

Contributors

Borsos, Oskar, Danilo Bojovic, Nebojsa Kurjakov, and Monika Jovic. Product marketing managers, digital grid, SCHNEIDER ELECTRIC

Cote, Jean-Robert. Management consultant for Utilities and Telecom

Griffiths, Craig. Managing Partner of Enterprise Technology PARTNER

Phillips, Doug, Jay Shah, and Kim E Park. Product marketing team, GE Digital

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