Integrating Renewables into the Grid Emerges as Top Strategic Concern of Industry in Black & Veatch Survey

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Management consultants often invoke a metaphor--"building the plane while flying it"--as a colorful way to convince leaders and managers that they can't delay acting on a strategic initiative until every variable is known. Sometimes precision needs to give way to action.

The airplane metaphor is particularly apt for the Electric Power industry today, as leaders are hard-pressed to meet the competing imperatives of grid modernization, electric system resilience, decarbonization, integrating intermittent renewable generating resources to the electric grid, supply-chain issues, emerging technology and cybersecurity threats, to name a few.

For its annual report about the electricity industry, released September 11, Black & Veatch (Overland Park, Kansas) surveyed about 650 industry participants. Their list of top concerns varies slightly from year to year, but the top concerns in this year's survey should be familiar to most observers.

But there are some year-to-year changes. For example, this year's survey showed that integrating renewable generation into the grid is the highest overall concern of those surveyed, slightly outdistancing aging infrastructure, which has long been the top concern of respondents. Environmental regulations, planning for an industry in flux and distribution system upgrades and modernization rounded out the top five overall concerns of those surveyed.

Click on the image at right to see the top three overall concerns of respondents.

Focusing more narrowly on grid-related concerns, respondents said what was keeping them awake at night were: the evolving generation mix, with fewer traditional baseload units and more utility-scale renewable resources (47% said this was their top grid-related concern), followed by supply-chain issues for equipment (43%); and regulatory lag in meeting the needs for system changes (31%). Respondents were allowed to select up to three top concerns. Other top-three concerns included:

• Lack of sufficient transmission facilities and system control assets (23% said this)
• Lack of qualified workers to engineer, maintain and operate the more complex system (22%)
• Ability to invest in and maintain a more resilient grid (also 22%)
• Talent availability (20%), and
• Increases in distributed energy resources (DER) 15%

Click on the image at right to see a graphic on the three top grid-related concerns for survey respondents.

The survey asked respondents about what investments in technologies they intended to focus on over the near term (one-to-five years) and the long term (over five years). Those who were surveyed could select all options that applied. The top answers were:

• Utility-scale or distributed solar energy
• Transportation fleet electrification and/or charging infrastructure
• Conventional power generation (i.e. natural gas, nuclear, etc.)
• Distributed energy resources, and
• Advanced distribution management system (ADMS)

Click on the image at right to see what technologies respondents planned to invest in over the short term and long term.

When asked about grid modernization, respondents said the main drivers were:

• Renewable energy penetration
• Low-probability, high-impact events, also known as Black Swan events
• Building and transportation electrification
Transmission capacity saturation Increased DER penetration

Click on the image at right to see respondents listing of the importance of various drivers for grid modernization.

"Across the landscape of U.S. electric utilities," the report said, "no two words better encapsulate both the frustration and promise in tackling the growing need to update and harden chronically aging grid infrastructure against an onslaught of threats as well as to capitalize on emerging opportunities: grid modernization."

The report continued: "The demands for modernized grid infrastructure are real--and rising. Widening adoption of electric vehicles, distributed energy storage and solar photovoltaics will require more infrastructure to accommodate customer vehicle charging, decarbonization and reliability needs. The sector has reached a tipping point."

"After more than a decade of especially intense concerns about the resiliency of infrastructure that, in many cases, is past its prime, the chorus of calls to modernize is reaching a growing pitch. Federal lawmakers hear it and, with the stroke of President Joe Biden's pen, have greased the pipeline with billions of dollars of available funding to make change happen, though that infusion only now is beginning to flow."

Grid modernization holds out the opportunity for high returns, in the form of higher reliability and reduced operating costs. That is, assuming those investments are seen as "strategic" by regulators, bond analysts and customers. The federal Infrastructure Investment and Jobs Act (IIJA), passed in 2021, allotted nearly $65 billion to fund grid upgrades around the country. Although some utilities and developers have been actively chasing those dollars, Black & Veatch said utility respondents have expressed a need for more guidance from subject-matter experts about how to secure funding and strategize when and where to spend it.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).