The energy transition: Global trends and challenges impacting the utility industry

HOST: Hi, I'm Robin Elerick, content marketing manager for Eaton, here with another 10 in 10 podcast. Today, demand for power is rising and renewable energy is taking center stage, while grid infrastructure is under pressure to keep pace and cyber threats are ever-present. Today we're talking with Patty Siefert, offer management director for Eaton's digital office, about the importance of taking a systematic, holistic approach to managing the grid.

Patty, thanks for joining us. We have just 10 minutes and 10 questions, so let's get to it. Patty, can you tell us a little bit about Eaton's perspective on the energy transition?

PATTY SIEFERT: Over the past 20 years, the utility industry really went through a monumental shift. Smart meters pretty much became the norm. Generation resources, once found only on the transmission site, can now also be found on the distribution site. Even residential customers can have to own solar panels, generating energy and feeding back into the system.

These distributed energy resources are often highly variable since they rely on solar and wind and can be customer owned as well. So the grid was a one-way system, where electricity was generated at the power plant and then propagated through the transmission distribution system to the end user. It's now a two-way system, with intermittent distributed energy generation along its network.

So Eaton is thinking of everything as a grid. What is changed at one point of the network can impact the other parts of the system. It will not be sufficient to just deploy measuring devices, but it will require a sweeping shift towards digitalization. So that the devices are smart enough to react instantly, the data gets communicated through the network fast and reliable, to monitor the network and take action immediately.

HOST: So talk to us about how utilities are being impacted by this shift.

PATTY SIEFERT: Which I thought we just talked about. One of them is our aging infrastructure, with a quarter of the transmission infrastructure being over 50 years old and many of them over 40. Another challenge is that the average US utility worker is over 50 years old, and it's estimated that 25% of the utility workers will be leaving the workforce in the next five years. Further, customer expectations have changed regarding electricity. We rely on electricity much more heavily than ever before in history. Outages are not acceptable anymore to the customer.

HOST: It seems these changes are going to be a huge undertaking for the utilities. Let's go through each of these and see what we can uncover. How can the aging workforce issue be resolved?

PATTY SIEFERT: Yeah, it's definitely a big concern on how we keep this knowledge in-house when the workforce begins to retire. One way to capture this type of knowledge is by using data insights and involve these workers when we build and interpret AI results. In this way, we can create applications that can make recommendations for best course of actions, and enabling new field workers to make smart and faster evidence-based decisions using AI. Also we can make the devices at the edge smarter so that the system can react faster, without human interaction being able to shut off the smallest areas where potential hazard is seen, and without electricity in such a way that the fewest customers are impacted.

HOST: What is driving the adoption of renewables in various regions around the world?

PATTY SIEFERT: Yeah, they're different. In the US, customers are demanding cleaner, greener ways to keep the lights on. We want to get away from fossil fuels to reduce greenhouse gas and slow down the impact of global warming. To get there, many of the states and federal institutions have implemented policies to reach these goals. For example, New York revised its clean energy standard to require 100% carbon-free electricity from both renewables and nuclear energy by 2040. The European Union has directives that 32% of energy has to come from renewable sources in 2030.

In Africa, the driver is a little bit different. Some of them still don't have electricity at all, or if they have electricity it's available just intermittently. For example, Nigeria has more than 50% of the time no electricity where an electric network exists. Outages are part of daily life and people are using diesel generator when energy goes out, which, again, impacts global warming and the health of these people. An option for Africa is to invest into local microgrids to provide them with energy.

HOST: How does the shift towards DERs impact grid performance and how utilities do business?

PATTY SIEFERT: Many of these DERs are variable because they are driven by sun or wind, so it's peak load and not a base load. This means we have to find ways to store this energy when surplus energy gets generated, so we can have access to this energy at night or when the wind doesn't blow. So this is where batteries, fuel cell storage of electricity as heat in rock come in place.

HOST: So with the shift toward renewables, there's a bidirectional energy flow happening. What does that mean, and how will it influence the way utilities do business and affect their customers?

PATTY SIEFERT: Bidirectional flow and to many new devices and the amount of data that is collected means utilities have to change the way they do business. Most utilities have operated in silos up to now, keeping the data they needed within their groups. This mentality, where every group has its own goals, does not help to share information across departments.

Often the different groups also use different tools and processes, which also makes it challenging to share data. One utility I worked with had even to vegetation management departments-- one for transmission and the other one for distribution. When trying to, for example, deal with wildfires, these systems have to work together, and the data has to be shared to get an overall view of the situation on hand.

When we begin to think of everything as a grid where everything is connected, and changes on one point can impact other parts of the system, we have to be able to, for example, automatically detect, locate, and isolate faults and limit the number of customers impacted. So this, as well, applications like FLISR or DA come in place.

HOST: Cybersecurity has not traditionally been a primary concern for utilities. But the global shift towards digital connectivity has made it critical to industries across the board. How can utilities guard against cyber threats?

PATTY SIEFERT: Yes, that's correct. With more integrated networks and the sheer amount of devices being installed on the distribution system, there are more and more entry points to hack into the system. And hence, cybersecurity begins to be very important requirement for most utilities.

60% of the US utilities reported attempted ransom attacks in 2020. That is up from 45% in 2019. Many utilities also have embraced internet-connected sensors, which explain attacked surface. And so utilities begin to realize they have to beef up their security system. Some even look into cybersecurity operations centers, which are tightly integrated with the utility power network and communication operations system to monitor any potential threats.

HOST: What more can you tell us about the impact of aging infrastructure?

PATTY SIEFERT: The concern about the aging infrastructure is driving the grid modernization. The combination of an aging network with global warming is a big challenge. We have droughts in the West which lead to wildfires, while at the same time in the Midwest, we have flooding, and in the Southeast, we see increased tornadoes. All these events can cause major power outages, and the utility have to get the network up and running as fast as possible or deal with unhappy customer.

In a situation where the utility turns off the power as a preventive measure-- like here where I live in California, we have regular PSPS events, which stand for Public Safety Power Shutoffs, which means the power shut off so no wildfires can be ignited by sparks from the electric network. These events can last for days where the customer has no electricity.

So utilities have to work on network resilience so that less and shorter power outages occur in case of major weather events. The grid as we know it is outdated, and it has to be digitalized, modernized, and hardened to withstand the challenge as we begin to face now and in the future.

HOST: With the increase of electric vehicle adoption, how does the expansion of charging infrastructure impact the utilities?

PATTY SIEFERT: So electric vehicle adoption is definitely picking up. Bloomberg expects annual EV sales will rise to 10 million in 2025, to 28 million in 2030, and to 56 million in 2040. Regulatory requirements also push for EV, like here in California, we have an executive order that requires that by 2035, all new cars and passenger trucks sold in the state have to be zero-emission vehicles.

This means that electric consumption will increase. Electric vehicles in a household can double the electricity consumption of that household. This will mean that many residential customers will add more solar systems and batteries to the household, increasing the renewable resources.

This will help to reach our sustainability goals but could also impact the reliability of the grid. Utilities would want to provide incentives-- for example, specific EV rates that are low if the end-user charges a car in the early morning hours or late evening hours and not at 6:00 PM when everybody gets home, cooks, or does laundry-- so that the load can be shifted to the later time in the day.

So being able to balance an impact load with the right measures will become significant.

HOST: Thanks, Patty. To close it out, what does the future of the utility look like?

PATTY SIEFERT: Global warming, customer demands, new DER system coming online will require utilities to evaluate and adapt system planning and operation capabilities to ensure reliability, support customer choices, and meet regulatory requirements. Modern urban utilities will have to invest in modernizing the grid, investing into grid automation, planning, FLISR technology and other applications that use device data to analyze the situation and provide insight that will help to monitor and operate the network in a timely and efficient way.

Further, advance communication system capable to support millions of digital connected devices will be critical for the future of distributed utility systems.

HOST: Thanks for joining us today, Patty. The energy transition is definitely challenging utilities to explore new ways of operating and doing business. To learn more about how we're helping utilities prepare for a new energy future, visit Eaton.com/BrightlayerUtilities.