In the face of ‘a perfect storm’ new research from Accenture examines resilience of utilities

When the hundred-year storm happens every five, and pandemics enter the lexicon, utilities must be ready to respond—and fast. Investing in grid resilience is no longer optional—it’s essential—in a world where COVID + hurricane season = potential outage at the local hospital, it becomes critical. With utilities providing a vital service, whatever the weather, their ability to flex to any scenario is being tested to the limit. Accenture recently launched the sixth edition of our Digitally Enabled Grid research, which illustrates the need for utilities to shape resilience-oriented plans and take investment proposals to regulators with new urgency. But it’s a big ask for utilities, whose operations are under unprecedented stress. Here I want to reflect for a moment on the landscape and the way forward for proactive resilience.

The perfect storm is hitting utilities—meanwhile, they’re more essential than ever

It’s self-evident that extreme weather events are increasing. To note the World Economic Forum’s 2020 Global Risks Report has identified extreme weather in their top 5 most likely risks, for the past few years. Utilities know that too, and more than 90 percent of those interviewed for our research expect these events to worsen over the next 10 years. In North America, where I live that figure was slightly above the global average, at 93 percent. And empirically, I also know this to be true in my hometown in Maryland, with two “outlier” (once in a hundred years) storm events hitting in less than five years, decimating local businesses and flooding homes (I would argue the hundred-year storm needs a new name) And as I write, I’m depending on my utility’s grid to keep me working at home, and reflecting on how an outage would affect us all emotionally and logistically, at a time of heightened anxiety and new day-to-day constraints.

In this context, utilities’ importance is being amplified in a totally unpredicted way. And at the same time, their normal processes and coping mechanisms are falling away. Example: in a secondary event, an electric utility would normally restore power, faster, by pulling in crews from other states or neighboring locations. But when social distancing gets added to the mix, those extra crews may not be accessible so easily. A scenario that previously took x days to fix, may now take x + n days. Now add to that, one of my clients in a COVID hotspot is working with employee absences from sickness and infection.

<<< Start >>>

<<< End >>>

Enter resilience—not just reliability—for this new paradigm

For many years, utilities were operating in a reasonably simple, one-way transmission flow. (The metaphor I find myself using is: until a few years ago, if Alexander Graham Bell and Thomas Edison emerged from their time machine, Bell wouldn’t even recognize the smart phone we all have come to depend on, or have a hope of an internship in a Telco, but Edison would recognize the components of a utility grid and walk into a COO role!) But the shift to a complex, multi-directional flow happened rapidly, distributed generation in some cases, even individuals using rooftop solar selling power back to the grid and many other factors arriving at once—leaving the industry trying to play catch-up. So complexity is rising, extreme weather is no longer “outlying”—and yet there is no standard definition of resilience in the utilities industry.

So what does it really mean to be resilient, and how do you measure 1) resilience itself and 2) its value to society at large? NREL is trying to quantify the latter of these two. In our research, only 35 percent of respondents agreed that, to a great extent, the societal value of resilience was agreed with regulators and customers. But this kind of consensus is crucial for the investment business case. After all, when success equals the absence of disruption, and the ability to absorb stress unnoticed, the business case is challenging.

Now is the time for utilities and regulators to cut through the confusion

We are at the tipping point for utilities to cut through the confusion between reliability and resilience, and make resilience discussions front and center with regulators. It’s about articulating the value of resilience-based investments, and the more nuanced metrics for success. After all, what is the price of flexibility, adaptability and maintaining supply to critical customers? And the ROI is different as a result: it’s not just about how many power outages have been avoided, but new metrics around ability to withstand extreme weather events and absorb the uncertainty successfully. This takes a lot more thinking about, Former Illinois Commerce Commission Chair Brien Sheahan calls it “intellectual gymnastics”.

And utilities’ proposals for investment should consider technology explicitly as an accelerator for resilience—with remote image based damage assessments by drone, AI, and remote crews increasingly part of the narrative. Technology can put substance around these amorphous ideas of resilience and make the blueprint real for regulators. And regulators are increasingly receptive to these new types of conversations. But don’t forget to bring customers into the dialogue about why resilience is important—and the need for significant and ongoing investment, plus the potential cost to the consumer. Might customers accept a 5-cent increase in cost to avoid a 5-day outage? Arguably, with stakes higher than ever, consumers may be increasingly willing to collaborate. The time is now for utilities to take control of their journey toward resilience.

Investment in resilience is now the biggest imperative for electric utilities. Contact me to find out more about how to become truly resilient for the future.

Amol Sabnis

Managing Director – Global Lead Transmission & Distribution

Subscription Center
Subscribe to Accenture's Utilities Blog Subscribe to Accenture's Utilities Blog