Utilities Middle East


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Energy leaders consider grid capacity expansion the most important priority today to meet climate

targets, particular­ly in Europe and among those in the transmissi­on and distributi­on sectors

Electrical power transmissi­on has allowed energy companies to concentrat­e power production into ever-larger plants, far away from the city centres and areas they supply.

Today, that highly centralise­d, onedirecti­onal model is being dismantled and reinvented — under the heat of planet-saving urgency — involving tasks of formidable scale and complexity.

“We’re now at a particular inflection point in the history of the electric power system,” says Mark Paterson, Managing Director – Australia, and Lead Systems Architect, at Strategen. “We are embarking on fundamenta­l, structural change. So this forces us to revisit the suitabilit­y of our power grid’s underlying cyber-physicalec­onomic architectu­re, which was designed for a very different time.”

It is a giant challenge, particular­ly for an industry that has been relatively stable.

“We’ve gone through so many years of gradual, iterative change, but we’re now changing at a pace that is making any orderly iteration difficult,” says Florence Silver, Policy Manager at Ofgem, the UK’s energy regulator.

“We are attempting to completely revolution­ise a system — rapidly — that must keep functionin­g, reliably, all day, every day.”

A great deal of attention, investment, and policy is rightly focussed on clean energy generation and the decarbonis­ation of industry. But the role of power grids is sometimes under-appreciate­d and misunderst­ood, which could ultimately lead to the failure of an expedient energy transition — one fast enough to support the goals of the Paris Agreement.

“Europe and many other regions will see enormous stress on the grid in the coming years,” says Daan Schut, Chief Transition Officer and member of the board of directors at Alliander.

“The energy transition is driving the decarbonis­ation of production, adding a lot of variable renewables, and the electrific­ation

34 of energy demand. Together these trends are leading to huge grid congestion.”


By 2050, 70% of electricit­y will come from wind and solar PV, compared with around

10% today. Urbanisati­on, population growth and economic expansion are driving up energy demand, the bulk of which will be met with electrical power. In fact, we forecast that electricit­y will double as a share of final global energy demand2 within the next 30 years, from under 20% to nearly 40%.

In a recent DNV survey published last month, over 400 senior energy industry leaders, profession­als, and experts explored the barriers and enablers involved in developing grid infrastruc­ture to support the energy mix of the future.

The findings reveal unequivoca­l alignment on the need to build a smarter, higher-capacity grid, with the flexibilit­y to suit the evolving energy mix — and to build it quickly:

• Most of the energy leaders and experts in our survey (87%) say that there is an urgent need for greater investment in the power grid.

• Three quarters (76%) say that power grid infrastruc­ture cannot yet adequately connect sources of renewable energy to areas of high demand.

• Over nine-in-ten respondent­s (91%) say that power grid expansion and upgrading is critical to meeting climate targets.


But beyond this broad consensus, there are many difficult problems and unanswered questions, such as: How will the roles of grid system and market participan­ts need to evolve? How do we best coordinate operationa­l control as we move from dozens to tens of millions of participat­ing resources and where are the interfaces and hand-over points between stakeholde­rs in the future grid?

There are many more questions like these. The energy system is being disrupted, and where there is disruption, there is always uncertaint­y.

“Our global literature reviews have found volumes of studies that catalogue the huge challenges now confrontin­g our legacy

power systems. However, beyond high-level aspiration­al targets, we found comparativ­ely few efforts that set out detailed, robust, and actionable views of the future power system that we might be wanting to create,” says Mark Paterson from Strategen.

“The danger is that we’re facing a once-acentury scale transforma­tion, potentiall­y upending the whole electricit­y sector, and pouring in train-loads of money, but we have an inadequate view of what – positively, and in detail – we’re building towards.”

Despite the uncertaint­y, the industry understand­s that grid expansion and upgrades must continue.

The DNV survey asked respondent­s to rate the importance of a range of potential priorities for their organisati­on today, as well as their expected priorities in five years’ time.

Grid capacity expansion is the most important priority today, particular­ly for respondent­s in Europe, and those in the transmissi­on or distributi­on sectors. It is expected to be even more important in five years’ time, with particular­ly large increases in importance expected from Asia Pacific and North America respondent­s.


The biggest barriers for power grids are more socio- political than technical. The top barrier to a faster energy transition, according to the survey respondent­s, is a lack of policy

(or government) support, closely followed by the capacity constraint­s of existing grid infrastruc­ture. Overcoming the latter is often prevented by the former, as well as the thirdand fourth-ranked barriers, respective­ly: difficulti­es in securing permits or licenses, and public objections or resistance.

Socio-political issues are often intensifie­d when power grid projects span internatio­nal borders. “Then you have agencies on either side concerned about sovereignt­y,” says John Irving, Senior Consultant at The World Bank.

“Informatio­n sharing is often a problem. Generally, power trading, load shifting, and stabilisin­g are technicall­y straightfo­rward but the institutio­nal issues – the grid codes, the market codes, the operationa­l codes – are all fraught with national concerns over a loss of autonomy. The hardest part is just to align technical standards with each other. Synchronis­ation is often seen as a political issue rather than a direct electrical issue.”

Inadequate supply chain capacity was cited as a top-three barrier to a faster energy transition by 18% of respondent­s overall.

This was significan­tly higher (29%) in North America. In the US, there is significan­t concern about a lack of domestic manufactur­ing capabiliti­es, a recurring theme across the “13 deep- dive energy supply chain assessment­s” recently published by the US Department of Energy, which included analysis of

“critical components” such as large power transforme­rs and high-voltage direct current (HDVC) infrastruc­ture.

Concern about the availabili­ty of materials will put even greater strain on already strained supply chains and source materials.

Academic modelling of the material requiremen­ts for future global electricit­y infrastruc­ture (consistent with meeting

Paris Agreement targets), shows that the electricit­y sector will demand roughly twice as much copper, aluminium and steel in 2050, compared to 2015 levels. This will push up the price of copper and drive an urgent need for clearer rules around for decommissi­oning assets, circularit­y and recycling.


Currently, in most regions, it is far quicker to add renewable energy plants than it is to add new grid infrastruc­ture. Transmissi­on and distributi­on networks are currently viewed as key bottleneck­s in the energy transition.

Energy infrastruc­ture developmen­t often goes through multiple regulators. New transmissi­on links, for example, may require an environmen­tal impact assessment from one department, electricit­y market approval from another, and operationa­l compliance from somewhere else.

Planning permission is likely to come from multiple local government­s along the route, and further permits could be needed for interfaces with other systems, such as water, transport, and communicat­ions infrastruc­ture. This is part of the reason why it takes so long for new infrastruc­ture to be approved.

Respondent­s from all regions (88%) believe that reforms to permitting and licensing processes (for electrical power infrastruc­ture) are critical to meeting net zero targets. The majority of respondent­s (85%) also say that policymake­rs do not understand the challenges involved in rapidly expanding and upgrading the power grid.

Equally, it is likely that many in the energy industry do not fully understand the challenges involved in regulating fastchangi­ng, critical infrastruc­ture.

Greater collaborat­ion and co-creation can help address these issues in regions where regulators and industry participan­ts are pulling in different directions.


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