In Short : The power grid plays a pivotal role in achieving net-zero goals, serving as the backbone for the transition to renewable energy. Its modernization and integration of sustainable technologies are essential for ensuring a reliable, efficient, and decarbonized energy infrastructure that aligns with global efforts to combat climate change.
In Detail : Over the last decade, the world has become increasingly electrified. From electric vehicles to buildings powered by solar, electrification supports the path forward to a net-zero future. However, this behavioral shift has led to some interesting consequences. Grid capacity is very quickly being used up, and significant delays of additional connection requests from distributed energy resources (DERs) are becoming increasingly evident.
By 2030, the number of DERs is projected to increase by sevenfold, electrical vehicles by thirteenfold, and Europe alone will see up to 60 million more heat pumps installed. Being able to retire coal plants and other heavy emitters of greenhouse gases in favor of clean renewables is a good thing, but this has also led to unprecedented challenges.
A closer look: electrification & data centers
With the electrification of everything and increasing electricity demand, key challenges include grid capacity for DERs, and reliable power supply. For example, as regulators and grid operators plan for an even more electrified future, managing the reliable power supply of data centers is a main concern. Within this industry, electricity consumption continues to grow exponentially, however it is concentrated within a relatively small number of locations. This presents generation and distribution challenges in these cities, including Frankfurt, London, Amsterdam, Paris and Dublin. In the next years, even more capacity will be required – or the connection of data centers will be delayed by years.
The bigger picture: overloaded grids are a bottleneck to the energy transition
The electrical grid has already become a bottleneck in the energy transition, with millions of DERs connecting to grids today and more renewable energy being locally produced. Many power grids are at full capacity and will be unable to support the switch to renewable energy unless grid capacity is doubled over the next decade. For example, in a recent interview, Dutch Minister for Climate and Energy Policy Rob Jetten highlighted how the biggest hurdle for the Netherlands to reach its climate goals is an overloaded power grid, putting at risk the country’s transition away from fossil fuels.
How can we add grid capacity fast?
In the next ten years, we need to build a grid capacity that is equal to the existing grid that took us 100 years to build — a daunting challenge given grids are becoming more complicated to manage. To manage this, the industry needs a full reconfiguration. Building new grid infrastructure is a colossal task. It requires resources, space, political consensus, and time — which we do not have. According to the recent Infrastructure Transition Monitor, only one in five global executives believes that the implementation of smart grids is mature or advanced in the regions. So, what is the fastest possible way to increase this statistic, add grid capacity and cope with the increase in DERs? Technology and digitalization offer plenty of opportunities ahead.
Getting more out of the grid with software
With technology and the right data, it is possible to improve both real-time and short-term grid operations using load, generation, flexibility, and long-term investment decisions. Software makes it possible to achieve net-zero grids with lower costs and faster speed. This means utilities could already optimize the infrastructure they have today, reduce grid expansion projects, and increase hosting capacity significantly by as much as 25% to 50%.
Putting this into practice, there are three clear courses of immediate action:
1. Operate the existing grid closer to its physical limits
With software, it is possible to get more capacity out of existing assets. This means that grid operations can be expanded, technical losses reduced, and grid limits dynamically adjusted in real-time.
2. Use the potential of flexibility
Using the potential of flexibility, DERs can be turned into an asset and not a burden. With software, capacity expansions can be avoided or delayed, assets protected, their lifecycle increased, and the flexibility potential of DERs maximized.
3. Make the right investment decisions
This means investing CAPEX (capital expenditure) with maximum return. Thanks to the power of software, investments can be made where they are most urgent and with the highest return on investment, based on real load and better-informed planning scenarios.
Accelerating grid management
It is possible to unlock the potential of the grid fast enough whilst maintaining affordability and reliability. At Siemens, we believe that successfully managing the grids of tomorrow starts with software that is easy to deploy and easy to use. Following the design principles of Siemens Xcelerator, our products prioritize interoperability, allowing them to seamlessly integrate and create value in a holistic manner. They also provide the highest flexibility, with easily exchangeable components that guarantee scalability as customers’ needs change. Furthermore, our products are characterized by maximum openness. By offering open and standardized interfaces, we help our customers avoid vendor lock-in. Lastly, our products are available as a service, ensuring the fastest possible deployment, minimizing entry costs and risks, and adhering to high scalability and cybersecurity standards.
Grid software will be a game changer in accelerating the energy transition and boosting DER and grid hosting capacity as well as flexibility — but only if we have the right regulatory framework to support an extensive rollout, and scaling at speed.
Regulatory requirements to help the energy transition succeed
To move forward and bring the regulatory environment up to speed, we need to move from a CAPEX bias to TOTEX (total expenditure of capital (capital + operational)) compensation. This means setting the right regulatory incentives for Distribution System Operators (DSOs) and Transmission System Operators (TSOs) to acquire software products that enable flexibility, and add more grid capacity by squeezing more out of existing assets. The next suggestion would be to prioritize and promote the EU single market for digital energy solutions. Right now, a siloed, fragmented approach hinders the fast deployment of digital technologies. The third suggestion would be to enable the development of flexibility services. And the final option would entail focusing on data availability and ensuring data quality.
Ultimately, we have the technology to accelerate the energy transition, now we need to act.