With each power outage, it is becoming clearer to businesses that our aging grid isn't prepared to meet the growing demand for electricity and renewable energy sources. The good news is that technologies currently exist to help commercial and industrial customers bridge the gap to grid modernization, setting the stage for an equitable energy future with reliable power, cost-efficiency, and a reduced carbon footprint.
Let’s explore the opportunities and challenges of modernizing the grid and available technologies so that together, we can create a more sustainable energy future.
Understanding Grid Modernization
What began as a patchwork of isolated systems serving small clusters of consumers has expanded into vast interconnected networks covering entire regions, mainly driven by industrial growth over the last century.
But as demand for electricity has grown, so has the complexity of our grid, with innovations like enhanced transmission systems and centralized control centers to manage power flow.
Challenges to Grid Modernization
Today’s grid, what we call Grid 2.0, isn't prepared for a future that requires reliable alternative power sources, such as renewables. Our current challenges include:
Aging infrastructure – Nearly 70% of transmission lines in the U.S. electric grid are more than 25 years old, all of which will require extensive replacement.
Interconnection bottlenecks – Research from Lawrence Berkeley National Laboratory found that the waiting list for transmission interconnection studies for solar, storage, and wind projects grew by 30% in 2023. Historically, the longer these interconnection study requests take, the more likely they are to be canceled and withdrawn, while projects that reach development are taking longer to get to commercial operation.
Financial investments – There are many different estimates right now about how much capital it will take to successfully modernize the grid and fully phase in clean energy: management consulting firm McKinsey estimated in a 2022 report that it would cost an average $9.2 trillion per year between 2021 and 2050 to make the net-zero transition, while the IEA estimated that spending will rise to more than $4 trillion in 2030 in their "net zero emissions" scenario.
Meanwhile, ex-BP CEO John Browne recently estimated that it will cost £2.7 trillion ($3.4 trillion) per year to limit climate damage and move us toward what he called climate correction. The Biden Administration’s Bipartisan Infrastructure Law, signed in November 2021, allocated $1 trillion in public funding toward energy projects, with 40% of it launched by January 2023. While these numbers differ widely, the story is clear: more funding is needed, both public and private, to upgrade our energy systems.
Integrations with public utility – Distributed and renewable energy resources need to be able to integrate with public utilities, but there are two challenges to this: the current grid doesn’t have the physical capacity, and as the share of renewable energy supply increases, the lack of real-time network management at low voltages could lead to network instability and disruption, per a study from McKinsey.
Cooperation across the supply chain and demand response networks – The vast network of the grid represents a diverse group of stakeholders, ranging from governing bodies to energy producers to consumers, each with their own priorities, resources, and incentives. It will take unprecedented cooperation between these groups to make grid updates that bring resilience and reliability to everyone, everywhere.
Fixing this aging, complex grid will be so costly and time-consuming that it’s not realistically possible to rely on it as our main power source.
The next evolution of the power grid is about prioritizing energy efficiency to meet the demands of an increasingly digital society, reducing strain on centralized utility systems, and leveraging automated technology that can integrate variable sources of renewable power now.. Time is of the essence, and we need to speed up on implementing flexible and practical solutions for grid modernization.
Key Characteristics of a Modernized Grid
First and foremost, a modernized grid means resiliency and reliability for everyone, everywhere, all the time, especially in times of emergency, regardless of their location and income status.
Some other characteristics of a modernized grid include:
Flexibility, Redundancy, and Demand Response are necessary to meet fluctuating energy demands and mitigate the risks of system failures with backup sources. Together they will also empower customers to actively manage their energy consumption, fostering a more efficient and resilient grid.
Cooperation on the Path to Net Zero Efficiency for its own sake isn’t good enough; the new grid needs to integrate with renewable energy sources to help C&I customers meet ambitious ESG goals and help us collectively reach net zero by 2050.
Manageable Costs For All Customers (Energy Equity) The U.S. Bureau of Labor Statistics revealed that the average utility bill in the United States increased by 16% over the past year, and many energy experts predict electricity prices will continue increasing. An equitable transition requires measures to ensure that the least well-off in all societies are able to benefit from the lower operating costs of clean and energy-efficient technologies.
Enhancing Grid Stability with Distributed Energy Resources (DERs)
Demand Energy Resources (DERs) are small power generation or storage facilities located close to the load it serves, like rooftop solar panels or battery storage systems. They’re essential for modernizing the electric grid because they offer new capabilities, especially for C&I customers, including:
Energy Storage Solutions - One key benefit of DERs is their ability to store excess energy during low-demand periods and utilize it during peak times, making it easier for C&I customers to optimize their site's energy use, access backup power in case of grid outages or disruptions, and reduce overall electricity costs.
Demand Response Programs & Renewables - Today's DER technology includes tools for producing electricity as well as those that can control and balance demand on the grid. This gives C&I customers the ability to actively manage electricity consumption in response to grid conditions and price signals. Because DERs can facilitate renewable energy integration with the grid, customers can choose whether to pull power from the grid or renewables, depending on market prices.
Microgrids & Energy Autonomy - A microgrid is a system capable of separating itself from the main electric grid and using DERs to operate when an outage is detected. C&I customers can leverage "behind the meter" microgrids to create an autonomous system that can run independently from the main grid, which is especially helpful in preventing operational damage or revenue loss during a power outage on the main grid.
DERs not only provide efficiency, cost savings, and stability to the C&I customer that uses it, but it decreases strain on the public utility grid, creating more stability for consumers across the region.
The Rise of Virtual Power Plants
DERs can be grouped together into Virtual Power Plants (VPPs) to provide an alternative source of energy independent of the grid and increase the mix of renewable energy.
It's clear from the U.S. Department of Energy’s recently-published report about virtual power plants (VPPs) that VPPs will play an important role in bridging the gap between growing energy demand, current grid capabilities, and the need for clean energy. C&I customers in particular can leverage VPPs to achieve energy autonomy, sustainability, reliability, and cost savings.
Virtual Power Plant Challenges
Most VPPs are owned and operated by a utility, consisting of decentralized assets and sometimes operated via third-party software.
While these utility-owned VPPs are a step up from basic grid access, customers are still at the mercy of the utility, with no way to manage where they draw power from or when. There are also potential security vulnerabilities associated with VPPs, like hacking, that should be cause for concern.
Beyond Virtual Power Plants: Meet Virtual Utility®
Power interruptions can be costly, from healthcare facilities caring for vulnerable patients to manufacturing lines that take time to reboot, losing valuable production time and products. Backup generators have been the primary form of protection against outages for many businesses, but there are better ways to find reliable, uninterrupted power.
Meet Virtual Utility®, designed to give customers complete energy choice and control. With Virtual Utility®, customers have greater ownership and control with a centralized system on site, effectively creating the power of a public utility right at the customer’s facility.
The heart of Virtual Utility®, the patented R3Di® System, is a power generation and energy storage system that can operate in-sync with the power grid and or independent from it, providing a reliable energy solution in an uncertain future.
The other key component of Virtual Utility® is the Grid Response Optimization of Virtual Energy (GROVE), the operational hub for distributed assets, including the R3Di® System. With real-time grid information, asset health monitoring, and remote dispatching capabilities, customers have complete autonomous control over their energy supply and mix and greater security protections.
Learn more about Virtual Utility® so that your company never misses a beat.