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Power & Utilities

Electricity Networks Are the $1-trillion Question Behind the World's Net Zero Ambition

Europe's energy landscape is undergoing profound shifts. Volatile prices and mounting concerns about climate change are prompting each country to reevaluate the role of fossil fuels, renewables and the efficiency, safety, and sustainability of traditional power plants. In our new blog series, "Power Plays in EMIA," our experts delve into some of the critical topics at hand — from hydrogen to smart grids — and the technologies that underpin them.

In the coming decades, the power industry faces a crucial challenge: meeting the soaring demand for electricity without making the world any warmer.

Due to the growing adoption of electric vehicles and the industrialization of emerging countries, the International Energy Agency (IAE) believes that global demand for electricity could grow by 3.3% every year until 2050.1 But, in a warming world, satisfying this demand cannot come at the cost of a similar increase in greenhouse gas emissions.

This challenge is traditionally framed as a matter of energy sources and the transition towards renewable energies. But, to enable this transition, electricity networks will have to follow suit - and this is where smart grids come into play.

Smarter electricity grids hold tremendous potential, but challenges remain

By using sensors and digital technologies, smart grids promise to solve a key part of the problem: incorporating different energy sources in an adaptable way so that they can maximize the use of renewable energy sources while avoiding potential outages caused by their intermittency or any fluctuations in production or demand.

With sensors in place throughout the grid infrastructure, these intelligent networks can gather real-time data on electricity generation, consumption, and grid conditions and create two-way flows of electricity and information. This wealth of information enables power operators to optimize energy distribution, allocate resources efficiently, reduce waste and respond swiftly to changes in demand or supply.

However, implementing smart grids at scale has proven complex for three reasons: initial costs, cybersecurity concerns, and the greater complexity of operating and maintaining them. These three challenges are amplified by the decentralized nature of smart grids.

Are smarter networks more vulnerable?

Transforming an infrastructure as large and ubiquitous as electricity networks is no small feat. Beyond the large investment required to upgrade existing infrastructure, making the grid smarter requires a massive increase in the number of terminals - such as smart meters, sensors, or control systems - with significant interoperability challenges.

It also exposes them to a whole new range of cyber threats that take advantage of three factors.

First, increasing the number of connected devices leads to a much larger attack surface - and, because the data generated by these devices can lead to an increase or decrease in power generation, it is comparatively easier for malicious actors to use an attack to cause a blackout.2

For network operators, the increase in the number of devices also means that it is much more difficult to create and maintain a unified inventory of their endpoints. Such an inventory is crucial to be aware of potential vulnerabilities: a common axiom is that you cannot protect what you cannot see. Malicious actors can also take advantage of the greater number of actors involved to exploit poor cybersecurity practices and develop supply chain attacks.

And, because of the critical importance of electricity networks, such attacks could have dire consequences: in 2019, the World Economic Forum estimated that the cost of a cyberattack on the US smart power grid could reach $1 trillion.3

Bringing new technology to an aging network

Cybersecurity concerns aside, smart grids will also have to take into account an increasingly trying environment.

Their implementation will typically occur on top of existing, aging electricity networks. In many Western countries, electricity grids were built after the second world war. In France, for example, the electricity distribution network is fifty years old on average.4

Today, these networks are facing conditions for which they were not built - most notably the increased occurrence of extreme weather events. In 2023, Argentina, California and Canada all experienced large-scale blackouts caused respectively by heatwaves, wind storms and ice storms.

Equipping this aging infrastructure with the devices needed to turn it into a smart grid could add new sources of dysfunctions - and the industry may need to overhaul its maintenance practices to address them.

To maintain traditional networks, operators typically rely on scheduled maintenance and inspections. But, with the explosion in the number of connected devices, scheduled maintenance becomes costly and ineffective. Instead, they need to gather the data generated by these devices into a unified maintenance solution with top-of-the-line capabilities and use it to power advanced maintenance strategies - such as predictive maintenance and root-cause analysis.

Connected networks need connected workers

For operators, the shift will not solely be a technological one, but also a change in practices.

Today, maintaining traditional grids still frequently entails physical inspections carried out by field workers, using pen-and-paper processes. But the complexity of smart grids and the skill shortages already experienced by operators are rapidly making these a thing of the past.

Instead, operators are moving in two directions: first, they increasingly rely on remote monitoring, automation, and sometimes drones, to reduce the need for human on-site intervention. And, when human intervention is needed, it is performed by connected workers who can access sensor readings, operational data, and procedures via online platforms, such as j5 Connected Worker and AcceleratorKMS.

And changes extend far beyond field workers. For example, programs like the EU-funded SMAGRINET aim to provide electrical engineers with the skills needed to face the evolution of their work brought by the shift to smarter grids.

And, with new cybersecurity concerns and opportunities for data-driven decisions, the need for training or reskilling could extend to larger swaths of the workforce - and all the way to top management.


[2] See, for example: Krause T, Ernst R, Klaer B, Hacker I, Henze M. Cybersecurity in Power Grids: Challenges and Opportunities. Sensors (Basel). 2021 Sep 16;21(18):6225. doi: 10.3390/s21186225. PMID: 34577432; PMCID: PMC8473297.



About the Author

Peter is a senior industry consultant at Hexagon’s Asset Lifecycle Intelligence division. He is highly experienced in analyzing business processes and then managing business transformation through operational excellence. He has managed business transformation projects across Europe, The Middle East and Asia within aerospace, FMCG, defense and energy, in both the public and private sectors. He lives in Scotland.

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