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Europe’s electricity grid should go digital to match climate ambition, but regulation must follow suit

The energy transition is at a crossroads where stagnating electrification is dulling our most cost-effective tool to decarbonise. We could use a boost to help ramp it up – a digitalised electricity distribution grid is that boost.

Pressure on Europe’s current power infrastructure is mounting. A new system is emerging from the traditional transmission-heavy model where nearly 70 per cent of new renewable energy connections to the grid will be at the distribution level. Meanwhile, consumer demand for technologies such as electric vehicles (EVs), heat pumps and rooftop solar is increasing and extreme weather events and cyber-threats are becoming more prevalent. As a result, distribution system operators (DSOs) are assuming a more significant role in facilitating the green transition at a time of increased challenges.

Yet, Europe’s grid connection rate is falling behind the demand for new customer connections. Current infrastructure and technology systems are often decades old and not fully equipped to make use of the countless data points added to the grid system. Flexibility management is also not mature enough to cope with future needs. To enable this evolution, DSOs must expand, modernise and digitalise the grid.

Our latest Grids for Speed report found that the distribution grid will necessitate annual investments of 67 billion euros from 2025 to 2050, with 8 billion euros of the annual expenditure dedicated specifically to grid digitalisation and smart meter deployment.

grid

As we expand the grid, bridging the digital gap in building, maintaining and operating grid infrastructure is crucial. So, how do we address this gap across all aspects of DSOs?

The key lies in leveraging existing advanced technologies while bringing regulation on board.

DSOs’ appetite for more digitalisation is real…

As part of our Wired for Tomorrow study, we surveyed around 30 DSOs across Europe to gauge their digital maturity level and technological readiness. We found that regardless of their current digital maturity level, DSOs are eager for more digitalisation. This means integrating cutting-edge digital methods and technologies into the grid during the building, operating and maintenance phases.

Digitalising the building step is especially important as our study shows digitisation is much more underutilised. Untapping this potential would significantly speed up the connection processes and reduce costs.

gridFrom basic implementations to highly advanced systems, there are many innovative and forward-looking tools to make our grids go digital. Let’s explore further and highlight some of the key digital tools our study uncovered.

To streamline grid construction, accelerating permitting through digitalisation is essential. EasyPermit is a tool that automates the entire permitting process, reducing project approval times, standardising information, and enhancing collaboration. This leads to faster approvals, increased project capacity, and a cost reduction of 30 to 50 per cent. Given the EU’s goal to have final energy demand served by 42.5 per cent by renewable energy by 2030, tools like EasyPermit are crucial for doubling capacity in less than six years.

When a power outage occurs at the low voltage (LV) levels, getting the lights back on is challenging for DSOs due to low grid visibility. Implementing LV automation and sensors, like Siemens’ Gridscale X LV Management software, can significantly help DSOs by enhancing visibility without changing existing processes, leading to better prioritisation, clearer impact assessment and up to a 30 per cent reduction in outage times. This also improves regulatory reporting, customer satisfaction and decision-making for grid investments.

Keeping on the operational stage, transmission and distribution operators struggle with integrating renewables and maintaining reliable energy transmission due to inefficient data use. The Enline Cloud-Based Digital Platform employs digital twin technology to create real-time replicas of physical assets to show when and where it is safe to increase capacity on a line to reduce congestion. This improves transmission capacity by 21.1 per cent and reduces operational costs by 10-15 per cent.

Last of the examples, the Smart Execution suite addresses both operational and maintenance inefficiencies caused by fragmented digital tools. This suite provides a comprehensive set of mobile applications for various operational activities, enhancing coordination and safety while improving efficiency and service quality. It creates a unified ecosystem, reducing risks and aligning processes across countries.

However, the benefits of these technologies simply can’t be fully realised without addressing current challenges to digitalisation.

Siloed data

Another challenge in managing the grid is integrating operational technology (OT) data with IT systems. System operators gather various data on different power parameters, such as frequency and voltage, from grid assets like substations and smart meters. Yet the software used to manage this OT data often differs from traditional IT systems. This discrepancy prevents the exchange of data that could foster learning and enhance grid efficiency, as the two systems are incompatible.

Integrating the two systems would offer numerous benefits. It can enable advanced digital solutions such as fraud detection, predictive grid maintenance, virtual automation platforms, advanced metering, and streamlined cross-domain analytics, leading to a highly digitalised, self-healing electricity network.

However, cybersecurity concerns complicate the technical task of integrating these separate data systems, since converging them would increase the vulnerabilities of the system if not done properly. Therefore, we should aim for more integration while maintaining the cybersecurity of these systems.

Regulation falling behind

Our surveyed DSOs concurred that slow and lethargic regulation is the largest external challenge to digitalising the grid, followed by a skills shortage. Additionally, 24 per cent of DSOs are frustrated by the lack of clear guidelines on their future roles, which further slows regulatory progress. On the contrary, where regulation is clear and supportive of investments, such as in the cybersecurity sphere, digital maturity is highest across DSOs. To digitalise ten 10 million kilometres of power lines across Europe, regulation must play a more enabling role.

Being a natural monopoly, DSOs can only invest as permitted by national regulatory authorities (NRAs), who currently only approve infrastructure expansion after a formal connection request, rather than ahead of time, causing long delays and increased costs. With future demands set to rise significantly, it’s crucial that DSOs are permitted to invest proactively in grid digitalisation and build-out. To do so, national authorities should encourage digitalisation investments by ensuring appropriate compensation for DSOs.

Prioritising innovation is essential for grid digitalisation. Policymakers should focus on clarifying the AI Act and its definition of safety components while at the time implementing measures to enhance grid observability through smart meters. In parallel, the tsunami of new legislation introduced under the twin green and digital transitions must be coherently implemented across sectors, avoiding overlaps and inconsistencies.

We need to turn the potential of advanced digital tools into reality to get our grids up to speed with the energy transition. Our DSOs have shown a strong appetite for digitalisation. Let’s fill their appetite with concrete incentivise, rapid implementation and forward-looking legislation that can pave the way for a truly future-ready grid infrastructure.

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