Grid modernization is having a profound impact on the nature and regulation of North American utilities. It represents a major change to the way energy is managed, distributed, and used—today and in the future.
Many utilities are facing significant challenges related to grid modernization and are finding that common approaches to investment planning are no longer sufficient or sustainable. Utilities must continue to evolve their planning processes in order to succeed and adapt as new challenges continue to emerge.
In a recent webinar, I spoke with Adam Brown, Director of T&D Asset Management at AES, and Gene Shlatz, Director of Energy Solutions at Guidehouse, to learn how organizations are developing more sustainable approaches to investment planning.
Grid Modernization Drivers and Challenges
Historically, utilities have focused on delivering safe, reliable, and affordable energy. In today’s world, this mandate is evolving. It now includes new levels of complexity which are forcing utilities to add “clean”, “resilient”, and “flexible” to their business metrics and sustainability targets.
In the following clip, Gene and Adam provide an overview of their definitions of grid modernization, setting the stage for the rest of the webinar discussion:
While grid modernization may mean different things to different organizations, all companies are facing similar challenges. First, the energy transition is moving quickly, and utilities must strike the right balance between cost-effectively managing the current business and investing in grid modernization to meet future demands. Second, there’s a new level of uncertainty that must be accounted for in the planning process. And lastly, a significant level of adaptation and transparency is needed to address evolving stakeholder expectations.
A More Sustainable Approach to Grid Modernization
Working with Copperleaf® and Guidehouse, Adam and his team at AES are developing a more effective method to address these challenges. Planning for grid modernization has led AES to establish a fully integrated planning and capital investment process, resulting in an increased level of visibility and transparency across the organization.
For AES, this level of transparency has unlocked an immense opportunity to make the highest-value investment decisions for the company’s number one stakeholder: its customers.
During the webinar, Adam and Gene highlighted several aspects of grid modernization investment planning, focusing in on one key step: optimization. In an era where projections for demand growth, electric vehicle adoption, and distributed energy resources (DER) involve uncertainty and variability, having the ability to evaluate potential scenarios and create an optimized plan is critical.
Value-based Decision Making
At AES, Adam and his team have uncovered a more effective way to forecast business outcomes by optimizing their investment plans and developing “what if” scenarios. This is made possible by leveraging the Copperleaf Value Framework—which enables AES to compare dissimilar investments on a common economic scale.
This approach provides improved transparency between different functions across the business where siloes previously existed. It also allows AES to consider all of the company’s strategic objectives—including those related to grid modernization—and confidently execute the most valuable plan for the entire organization.
In the following clip, Adam shares what optimization looks like at AES and how they’ve benefited from using a Value Framework:
Having all of our projects aligned through a common value framework and seeing everything in a single location gives us the ability to say, ‘If outcome A happens, what is the optimal investment strategy? What do we do, what do we not do, and why?
The Opportunity Ahead
AES has demonstrated that shifting to a more sustainable approach, with a value-based decision methodology, has opened the door to new opportunities. It’s clear the transformation to a clean energy future is accelerating, and the pace will continue to increase. One of the biggest themes we see Copperleaf clients like AES realizing is that grid modernization is not a problem—but an opportunity from a business, environmental, and societal perspective.
Worldwide, we are in the midst of an energy revolution that dwarfs the industrial revolution: human beings will for the first time not use fire, will not release carbon into the sky, to get most of our energy.
To learn more about AES’s sustainable approach to grid modernization investment planning, watch the full webinar:
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