The way we use electricity is changing. Electrification of energy-intensive industries and applications, such as transportation, manufacturing, and raw materials processing, is vital to achieving decarbonization targets and reducing greenhouse gas emissions from fossil fuels.
So far, residential and commercial demand response programs, along with efforts to improve efficiency, have allowed utilities to avoid large-scale infrastructure investments. But as demand grows in the coming decades, utilities will need to adapt, expand, and upgrade infrastructure.
These trends will create new challenges for utilities when it comes to operating and maintaining the generation, transmission, and distribution assets within their portfolio. And it will lead to more complex and distributed infrastructure as wind, solar, and other technologies become more widely adopted.
The Changing Demand for Electricity
Even as more of our lives have become dependent on electricity, consumption in developed countries has remained relatively stable. A 2021 IEA report, for example, found that annual electricity consumption grew at a rate of only 0.4 percent per year over 15 years, despite economic activity growing at an average rate of 1.6 percent.
Going forward, however, growth is expected to accelerate. In Ontario, the IESO projects that demand will grow by 1.7 percent each year until 2042, while a Canadian Government policy report projects that electricity demand could grow by 47 percent between 2021 and 2050 – equivalent to about 263 terawatts of added consumption.
The story is the same in the US, where usage is expected to increase by nearly 30 percent by 2050.
The electrification of energy-intensive applications, especially from electric vehicles and industry, is among the most commonly cited causes. Canada, for example, has set mandatory targets that all new vehicle sales must be zero-emission by 2035, driving a transition away from fossil fuels toward electricity.
While vital for reducing greenhouse gas emissions, these trends are set to put pressure on utilities and the electrical grid.
But total demand is not the only consideration for utilities. Changes in usage patterns caused by growing and migrating populations, new industries, and increased economic activity will all affect peak demand periods and change the locations where power is needed.
Electric vehicles, for example, will shift peak loads as people plug in their cars overnight, while the IESO points to innovations in the mining and steel industries, as well as the rise of working from home, as significant reasons for the expected shift.
The Success of Demand Response Programs
Demand response programs include anything that compels customers to change the way they use electricity. Examples range from variable rates that encourage off-peak usage for residential users to initiatives that reduce the speed and power of equipment for industrial customers.
Energy efficiency gains have also helped to mitigate the growth in demand. As customers switch to high-efficiency appliances or invest in smart home management systems, they help reduce the burden on the grid.
These programs have been incredibly successful at reducing peak loads, moderating variability, and delaying the need for large-scale infrastructure investments.
A recent report found that Ontario’s Save on Energy program reduced energy consumption equivalent to taking 1.7 million homes off the grid for a year since 2006. Similarly, in Texas, the ACEEE found that demand response programs could cut winter peak demand by 16,500 MW and summer peak demand by 8,800 MW at a fraction of the cost of building a new generating facility.
The Infrastructure Requirements for Future Demand
Though demand response programs buy time by mitigating growth in consumption, utilities will need to plan for both small and large investments in infrastructure over the coming decades. This may come in the form of new generating capacity, additional transmission and distribution substations, or expansions to existing infrastructure to account for shifting usage patterns.
Investments will also be needed as more renewable energy is introduced, and as localized production, such as rooftop solar, grows in popularity.
As the grid becomes more complex, the reliability of the systems that produce, transmit and distribute electricity is paramount. Remote monitoring systems, in addition to reducing the need for physical inspections, allow utilities a continuous, 24/7 view of high-value assets. With thermal and visual sensors deployed at critical locations, such as remote substations, generating facilities, or battery storage, utilities can automatically detect potential failures and dispatch technicians to conduct the repair.
Further, as smart-grid technologies and other sensors provide more data to operators, utilities can leverage specialized software solutions that consolidate data from multiple sources into a single view. By bringing everything into a unified dashboard, teams can quickly and easily understand the condition of the grid and take steps to respond to any issues.
Preparing for Electrification
Electrification is an exciting opportunity to reduce carbon emissions and transition away from fossil fuels. But as the added loads surpass the ability of demand-response programs to reduce and moderate usage, utilities will need to invest in both new and existing grid infrastructure.
With the right solutions and a shift toward a Condition-Based Maintenance strategy, utilities can prepare for the future of electrification while ensuring the reliable delivery of power to customers.