Distributech 2018 was held this year in San Antonio, Texas from January 23rd -25th, where IHS Markit analysts Camron Barati, David Green, and Thomas Frashier were on site across the three days to meet with thought leaders and cover the latest technology trends in utilities.
The three D’s of the changing power grid
The conference kicked off with an impressive keynote session during which several progressive utilities were recognized for industry-leading innovative projects. Right from this moment, the clear theme of software and Distributed Energy Resources (DER) emerged and would dominate the rest of the show.
However, it was the keynote presentation from Gil Quinones, President and CEO of the New York Power Authority (the largest state-owned electric utility in the United States) that really marked out the three challenges for progressive utilities that would be repeated across the following three days:
- Decentralization – the increasingly distributed nature of all grid assets, including generation and storage.
- Digitization – the new language to describe the IoT revolution and the ability to create digital models for real-life assets
- Electrification (or to IHS Markit, ‘Decarbonization’) – the increasing use of renewable energy sources such as solar PV and the general focus on green energy.
Quinones described the challenges they faced in attempting to prioritize these goals while also pursuing aggressive energy targets for 2030; to have 50% renewable integration, 40% greenhouse gas reduction and a 23% overall power usage reduction.
Digitization was the first priority of many utilities present
Onto the show floor and it was clear that in 2018, Distributech had evolved into a software-driven show. Digitization can only be realized when a utility has a strong software solution to make best use of the data available.
This itself is an interesting shift from the ‘IoT’ dominated shows of recent years, where vendors were quick to highlight their connectivity above all else. Whilst the first challenge for many utilities present was still to generate more data to work with (especially in the distribution grid), there is an increased understanding that simply addressing connectivity in isolation is not enough. Instead, the most progressive utilities are now looking for a combined vision from vendors for three areas:
- Multi-application communication networks (e.g. for AMI, distribution automation and workforce management);
- Vendor-operated maintenance of the digital security of that network even as an increasing number of applications begin to rely upon it;
- A software layer and/or managed service offering to make intelligent use of the data that is created.
With this in mind, it was interesting to note the strong presence from telecoms companies at this year’s show including the likes of Cisco, Nokia and Verizon. Network as a Service offerings to electric utilities remains increasingly big business and will account for 58% of all AMI-related managed service spend between 2016 and 2023, according to the IHS Markit Electric Grid Managed Services Report – 2018.
The challenges of Decentralization and Decarbonization go hand in hand
If software was the main product of the show, then Distributed Energy Resource Management Systems (DERMS) systems were the poster-child for Distributech in 2018. DERMS were advertised in every corner of the exhibition hall, touting both the environmental and operational benefits.
In one conference session, the question was posed: ‘Is innovation fundamentally opposed to reliability?’ One panelist’s response was a qualified ‘yes’ - Matthew Ketschke of Con Edison provided an example where a secondary grid had been designed with the purpose of limiting backflow, but now as they are looking to improve a distributed energy system in their grid, this has been a complicating factor to DER integration.
The conversations between vendors and utilities seem to be at early stages, certainly whilst the majority are just starting to realise the significant challenges involved – but IHS Markit expects DERMS to be a strong theme across the rest of the 2018 event schedule.
Decentralisation for the vendor supply chain too?
Across all themes it seems there may be more challenges in the near future than easy victories, in particular how the integration of distributed/decentralized new assets will continue to challenge utilities business models and the way they engage their customers.
However, it seems that decentralization could also be set to take on a secondary theme within the supplier base too. Despite the usual marketing pitches vendors offering the end-to-end turnkey solution for all software and network challenges, the phrase ‘vendor neutral’ appeared in almost every conversation too.
In such a complex and evolving utility landscape, it seems that vendors are increasingly focused on their core offerings and solving the smaller issues well, rather than tying utilities into large offerings that solve large issues badly. The ideas of vendor neutrality and interoperability are clearly focused on the requests of the utilities themselves. In the world of decentralization, digitization and decarbonization, Distributech 2018 points to an open and co-operative future more than ever before.