Energy Transition

Energy transition: Getting our grids fighting fit for an electrified future

The clock is ticking to electrify as much of our daily lives as possible for the green energy transition.

The clock is ticking to electrify as much of our daily lives as possible for the green energy transition. Image: Siemens

Matthias Rebellius
Member of the Managing Board; Chief Executive Officer, Smart Infrastructure, Siemens AG
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Energy Transition

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  • Energy security measures worldwide accelerated decarbonization funding after Russia's weaponization of gas supplies over the Ukraine war.
  • But while the generation of clean energy is important, digitalizing and expanding our electricity grids is also vital for the green transition.
  • Only with smarter, digitalized and expanded electricity grids will we create a decarbonized, resilient and secure electrical network for a net-zero future.

With European summers in full swing, our reliance on gas wanes as the warmer weather heats our homes and our businesses. It also reminds us of the tough winter we faced when Russia weaponized the gas supplies to numerous countries, forcing governments to act swiftly both in terms of financial aid and long-term scenario planning.

As a result, energy security measures around the world have accelerated decarbonization investment to the tune of $1.7 trillion in 2023. This figure is significantly outpacing investment on fossil fuels. While $1 trillion will be spent on fossil, annual clean energy investment is expected to rise by 24%.

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What's the World Economic Forum doing about the transition to clean energy?

Earlier this year, at the G7 meeting in Hiroshima, Japan, world leaders gave more certainty to the phasing-out of fossil fuels, along with more commitments to keep this trend of accelerating clean alternatives. Continuing to deliver on this trajectory means immediate action from governments and the private sector.

Europe, the United States, India, China and Japan have all signalled major investment for decarbonization plans, with one of the most significant coming from the Biden administration in the form of the Inflation Reduction Act.

US citizens can get $14,000 in direct consumer rebates for families to buy heat pumps or other energy efficient home appliances, along with larger initiatives like 950 million solar panels, 120,000 wind turbines, and 2,300 grid-scale battery plants all by 2030.

Digitalization of clean energy systems needed

However, while the generation of clean energy is important, the digitalization and expansion of our electricity grids is also of equal value. Without the veins and arteries of a system, the organs can become less effective.

Simply adding more energy generating assets to a grid is not a solution. Weak grid infrastructure, legacy issues and an ageing system can all hamstring the green transition irrespective of the latest floating wind turbines or gigantic solar arrays.

There is almost 1,500GW of distributed energy resources stuck in the interconnection queue. Already today grids are the bottleneck to the energy transition.

According to the Energy Transitions Organization, about $3 trillion will be needed to be spent on new infrastructure, as well as generation, each year until 2050 to finance the transition to build a totally net-zero economy.

The result would be an electricity grid that could stretch to the sun – a distance of some 152 million kilometres – to meet the demands of a net-zero world.

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National governments around the world are already finding this task increasingly daunting. In Norway for example, power demand is set to grow by 60% by 2050.

Over the last four years, Norwegian grid operator Statnett has received requests for grid connections that have been the equivalent to a doubling of power demand from electricity.

As a result, their plan is to invest over £7bn into the power grid to add new substations and larger cable projects. Statnett is preparing plans for 10 regions in Norway, defining 20-year strategic phases to meet the different needs of their customers.

The scale of this transition is like nothing seen before for our built electrical environment.

Speed is a critical factor for the energy transition

The construction of new grid projects is expensive, and they take a lot of time. Grid operators therefore need to find tools that enable them to improve their grids as quickly as possible while achieving maximum output with minimum effort. This is where digitalization can play a huge part.

One way of achieving this is through digital twin technology. For example, Siemens is working with American Electric Power (AEP) to create a digital twin of the largest transmission system in the US.

Digital twins are virtual computer models of whatever they are modelled upon, be it a factory, a town or a grid. They can be used to simulate future scenarios, model live data and are ultimately living, or live, replicas of the physical world.

But while the generation, transmission and distribution of electricity is of critical importance, understanding usage in low voltage (LV) networks is crucial.

Distribution system operators have little to no visibility where the assets are, let alone knowing how much power they produce or consume, making it impossible to predict the behaviour of the LV grid.

LV Insights X from Siemens aims to bring detailed low-voltage monitoring capabilities pulling together data from supervisory control and data acquisition (SCADA), meter data management and the internet of things to enable grid operators to reliably assess the grid state.

By considering usage and consumption data (e.g. from smart meters), the distribution operations can be confident targeting the right grid segments. Full visibility into the current grid state and capacity limits means they can streamline the long line of interconnection requests and know exactly where and when to invest, as well as detailed usage patterns thanks to the digital twin.

No energy transition without transmission

My belief is that while governments are quickly setting goals for the number of turbines installed, the square footage of solar deployed, or the number of electric vehicles sold, we need to be looking at the very real challenge presented in grid capacity.

We need to optimize the use of the existing grid wherever possible. But how can you optimize if you have no visibility of what's going on in the first place? This is where digitalization can offer the answer.

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How is the World Economic Forum facilitating the transition to clean energy?

Digitalization can help operators to be more efficient, reducing transmission losses, routing electricity flows in a more demand-oriented way and making grid operations more transparent.

As the more laborious task of new pylons, cables, and substations takes place, full visibility and optimization is essential to squeeze more from our existing grids.

The clock is ticking to electrify as much of our daily lives as possible. Only with smarter, digitalized and eventually enlarged energy grids, can we truly tackle the concept of geographical capacity and unleash the full power of a decarbonized, resilient and secure electrical network, ready for our net-zero future.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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