The Digital Utility: New Value and Risks
What is a digital utility or a digital organization? At the risk of significantly over-simplifying the business of some of the most successful organizations in the digital age (enter your favorite example here….), a digital utility enables innovation through simple digital transactions with stakeholders.
The number of transactions a utility completes on a daily basis are vast and complex and there are no signs of that slowing down, especially when distributed energy resources (DER) such as Solar Photovoltaic (PV) systems, are added to the mix. These resources can add significant value to the grid, but without the right architecture, they can also create risks. Most residential PV systems deployed today are not designed to communicate or transact with electric utilities. However, with the increasing adoption of DER like PV, utilities will need to monitor and manage the power produced by increasing numbers of DER because the operation of the electric power grid obeys the laws of physics, and these laws dictate that the total power produced must equal the total power consumed at all times and thus these DER systems may need to be managed.
The number of transactions a utility completes on a daily basis are vast complex and there are no signs of that slowing down
For example, in Japan due to the rapid growth of DER, the country has enacted the “360 rule.” This rule states that any DER system on the grid, including individual PV systems, must have the ability to curtail or reduce 50 percent of its capacity on an hour-by-hour basis, up to 360 hours-per-year in regions where grid stability may be at risk. Managing these reductions requires that previously unconnected systems will need to communicate with utilities.
This is a complex integration task where DER such as PV will be deployed, likely for decades, in an environment where communication and security technologies will surely evolve. This makes data and network architectural decisions extremely important. In an effort to help inform utilities, the EPRI paper “The Value of Direct Access to Connected Devices” summarizes approaches and potential impacts of those architectural decisions in the following table.
“Mathematically speaking,…” the paper states, it “…is less about what is on store shelves at a single point in time and more about the practicality of managing the collective set of devices that have come off those shelves over a 20 year span of time. Developments that lack open, standard, direct access risk the accumulation of ‘architectural debt’ – a term referring to future costs and business impacts that may result from present integration decisions.”
To further address these challenges and turn DER into grid assets which can create new opportunities, EPRI recently commenced a multi-year, collaborative research project with electric utilities to build industry knowledge about Information, Communication, and Cyber Security Architectures for DER Integration.
Decisions about digital technology investments are being made broadly across organizations. However, it’s not just about using digital technology to become a digital utility, it’s about implementing fundamental computer science principles in architecture and in procurement requirements to enable successful digital transformations.