Grid modernization is not limited to replacing aging infrastructure. For electric utilities, it increasingly means building a system that is more flexible, data-driven, and capable of adapting to new demands. Utilities are being asked to do more with greater speed and precision.
In this environment, digital twins are emerging as essential tools that help bridge the gap between long-term strategy and day-to-day operations. They provide a virtual representation of physical assets and systems that can be used for real-time analysis, forecasting, and simulation.
As noted in Max Bill’s 2025 article, “Digital twins are at the frontline of electricity system transformation,” these tools are already helping utilities navigate complexity, evaluate future scenarios, and align capital planning with operational risk. The article argues that digital twins are not theoretical—they are quickly becoming a cornerstone of grid innovation.
Digital Twins in the Utility Context
Digital twins can be used to model individual substations, transformer fleets, entire feeders, or even interconnected grid segments. Their value lies in the ability to model what is happening now, understand what may happen next, and test what could happen under different conditions.
Why Digital Twins Are Gaining Momentum Now
Several developments are driving increased interest in digital twins across the utility sector:
- Greater availability of operational data from sensors, SCADA systems, and remote monitoring platforms
- The rise of distributed energy resources requires more localized and flexible grid planning
- Aging infrastructure, which demands condition-based maintenance and targeted capital spending
- Regulatory pressure for transparency and data-informed risk management
As utilities modernize their networks, they need tools that help them simulate decisions before committing to them in the field. Digital twins offer that capability. They enable cross-functional teams to operate from a shared, continuously updated source of truth that supports real-time decision-making and long-term strategic planning.
Strategic Value for Grid Modernization
For Strategy and Innovation leaders, digital twins are not only engineering tools. They represent a platform for collaboration, risk reduction, and resource optimization across the entire utility.
Some of the most important benefits include:
- More informed investment planning
Utilities can simulate scenarios such as DER growth, demand surges, or equipment degradation to determine where and when to invest in upgrades. This helps defer unnecessary capital spend and improves asset utilization.
- Stronger alignment between operations and planning
Digital twins give O&M and planning teams a common operational picture. This helps improve communication, prioritize maintenance, and strengthen decision-making under changing conditions.
- Improved regulatory positioning
Having a model that supports risk forecasting and resilience planning helps justify investment strategies and communicate with regulators.
Scalability Across Asset Classes
Digital twins can start with a single substation or transformer type and expand as more data becomes available, making them well-suited to phased modernization efforts.
Strategic Use Case: Modelling System Stress Before Capital Spend
Imagine a regional utility that is preparing for a rise in rooftop solar adoption. Substations serving fast-growing suburban areas are approaching their thermal limits during summer peaks. In the past, this would likely lead to a costly upgrade program to increase capacity.
Instead, the utility builds a digital twin of the affected substations and connected feeders. Using sensor data and load forecasts, it simulates heat stress, reverse power flows, and outage scenarios under different DER penetration rates. The model reveals that with minor reconfiguration and updated protection settings, capacity risks can be mitigated for the next 24 months.
This insight allows the utility to defer capital investment, prioritize targeted upgrades, and use remote monitoring to validate system performance. The digital twin enables a data-informed decision that saves money while maintaining reliability and safety.
Pilot Projects as an Entry Point
Digital twins can appear complex, especially to organizations with limited internal data integration or analytics resources. However, they are highly adaptable and well-suited to pilot programs.
Many utilities start by developing digital twins for a small number of substations or for one high-risk asset class. These pilots help evaluate value without significant upfront investment. They also help identify the internal capabilities and processes that need to be developed in parallel with the technology.
A successful pilot can support a roadmap for broader implementation, allowing utilities to scale thoughtfully based on results and internal readiness.
Next Steps
Digital twins are not a future vision. They are already helping utilities reduce capital risk, improve asset management, and increase operational insight. For Strategy and Innovation leaders, digital twins offer a tangible path to smarter planning and better coordination across departments.
As the grid becomes more dynamic and complex, utilities need tools that allow them to see what is happening now, anticipate what may happen next, and plan for a future that is no longer linear. Digital twins make that possible.
If modernization is your mandate, a focused digital twin pilot may be the next step toward building a more adaptive, data-driven utility.