by Charlie Richardson, Utilities Lead, Accenture Australia & New Zealand and Tony Histon, Transmission & Distribution Lead, Accenture Asia Pacific, Middle East & Africa
As an essential service, energy providers need to be amongst the most resilient businesses in the world. With COVID-19 being the latest in a series of events that have severely tested our ability to operate in a “business as usual” environment, Charlie Richardson and Tony Histon share their thoughts on how the energy industry can prepare itself for and cope with the unexpected.
The severity and frequency of extreme weather events, such as last summer’s devastating east coastbushfires, has placed increased pressure on utility companies to respond with greater network resilience and flexibility.
Yet alarmingly, recent Accenture research has revealed only a quarter of utility executives feel their organisations are well prepared to deal with the operational and financial challenges that arise from such black swan events.
A business strategy that focuses on reliability is no longer enough. Utilities must shift their focus from reliability to resilience.
They must take the lead to overcome the new, harsh realities of severe weather and black swan events such severe cyber attacks and the ongoing COVID pandemic.
The harsh reality
We are living in a new, harsh reality. More frequent and severe weather events are increasing the scale of outages and impinging on restoration efforts.
The proliferation of distributed generation– such as solar and wind – is causing fundamental changes to the electricity system, creating new requirements in the pursuit of a net-zero-emissions society.
Utilities are also battling to maintain insurance and financing at competitive rates; and evolving regulatory compacts are expanding the scope of many utilities’ responsibilities.
Many regulated industries are called to take on leadership roles in the communities they serve offering affordable essential services during good times and bad.
This, along with the steep costs of maintaining aged transmission and distribution assets, is putting utilities at a tipping point – and it’s only expected to get worse.
Accenture’s recent survey revealed 92 per cent of utility executives expect extreme weather events to increase and worsen over the next decade.
With extreme weather recognised as the new reality, companies must respond in new ways. Reliability, while a valuable and continually necessary foundation for utilities, is no longer effective enough to combat the new landscape – we must instead focus on a plan of resilience.
Reliability vs resilience
Until now, most utility companies have focused on reliability: minimising the frequency and duration of outages by planning for an anticipated set of fault scenarios.
Wide-spread issues resulting from disasters have often been considered infrequent anomalies.
Today, utilities need to design and operate for resilience: maintaining a sustainable business and effective service under the threat of more frequent major events.
They must shift focus from developing reliability tactics, to developing a strategy for addressing wider issues and frameworks needed for a business focused on resilience.
To start, it’s imperative that the C-level focused on resilience. Once it’s created, it must be embedded company-wide, including within all governance, processes and structures.
From there, all stakeholders – both internal and external – must be involved in regular dialogue, keeping informed and regularly engaged and updated as the strategy evolves.
Once this is in place, utilities should also partner with meteorological experts to map potential future weather scenarios and develop a system to understand the impact of various events.
This should also coincide with advanced analysis of a broad range of contingencies resulting from faults and demand fluctuations.
Finally, utilities should engage in regular and open discussion with regulators to discuss means of measuring and incentivising resilience.
Establishing these foundations will confirm the business has all the data, frameworks and tools to make decisions based on a strategy of resilience. Once this has been achieved, utilities can move on to the next step – building a more resilient network.
The resilience network
Once the foundations of resiliency have been set, there are three broad areas for utilities to improve their network. Firstly, they must harden the network through traditional approaches.
This includes the undergrounding of assets, pole replacements and developing flood defences. Utilities must also fortify their restoration effectiveness by strengthening the capability to reduce outage time to the minimum.
Finally, and most importantly, utilities must develop greater system flexibility. Developing flexibility is vital – it is what will limit the impact of extreme events. Flexibility can be achieved with:
» Systems that automatically reconfigure the network to use redundancy
» Distributed energy resources that provide localised support
» Customer programs that manage consumption, considering prevailing constraints and microgrids that at certain times may operate
independently from the broader grid.
Being flexible can allow a more cost effective and adaptable approach to responding to high impact events such as cyber attacks, extreme weather and bushfires.
Flexibility also supports the wider agenda when it comes to greater active management of the network to provide cost-effective support for renewable generation, electric vehicles and customer or community-owned batteries.
System flexibility– with digital solutions
A flexible approach to resilience should be supported by digital investments that strengthen the network and ensure restoration effectiveness.
With a connected communication infrastructure that allows high-bandwidth and low latency communication, network flexibility can be utilised for control and visibility on the grid.
We’ve already seen some utilities look into pervasive visibility and control, such as the Urban Futurability project by Enel in Sao Paulo.
Their goal is to build a resilient, sustainable urban electricity system, which includes a network of about 5,000 grid sensors that feed information through the digital system, providing real-time data for all stakeholders.
Another great example is in Europe, where grid flexibility improvements have been prioritised as a means of more effectively integrating distributed energy resources, addressing bottlenecks in the grid, lowering costs and reducing congestion.
The goals may differ across Europe, but all agree increased resilience is vital for limiting the effects of extreme weather conditions, improving the ability to avoid outages, accelerating incident recovery and promoting renewable generation.
Becoming an organisation focused on resilience will have its challenges – it is a formidable part of the journey for any utilities business.
We simply cannot wait any longer; too many utilities are at the mercy of increasing extreme weather events, which highlights the vulnerabilities of a business and, at worst, can cause irreversible damage.
Resilience planning will also help utilities prepare for events such as the current global pandemic, which has shifted demand patterns, interrupted supply chains and changed safe working practices.
Now, more than ever, its imperative utilities take the lead – championing strategies for resilience to deliver sustainable and effective customer services.
Utilities must marry their resilience strategies with digital solutions that allow the flexibility needed to truly manage extreme events and mitigate potential damage.
By using the three elements of resilience – the foundations, the network and emerging solutions – utilities will develop robust, effective strategies that will set the trajectory for growth.