🌎 The nuts and bolts of grid tech

The grid serves as the underlying infrastructure for the climate transition — tethering us all via overhead and underground wire and fiber. For a 2050 net-zero future, we’ll need an electricity grid large enough that its untangled cables would be long enough to stretch all the way to the sun. 

Last week, we got in tune with power markets to set the stage for a reliable, resilient, and decarbonized grid. To get there, the grid requires constant attention to balance the flow of electrons. Ensuring grid reliability, resilience, and security is a balancing act between assets, systems, and participants. As electricity demand rises to meet population growth and the electrification transition, so does the need to expand and strengthen the grid.

To quantify that growth requirement, the International Energy Agency (IEA) pegged the gap at 80 million kilometers of new power lines that will have to be built or upgraded globally by 2040. And power lines are just the rails — not to mention all of the accompanying hardware, software, and services that create a reliable, resilient, clean, and accessible grid.

If reaching net zero means electrifying everything, investment in grid tech will be crucial. Accordingly, this year we’ve seen an uptick in public and private interest. In the US, for example, the Department of Energy (DOE) announced $3.5B for grid upgrades as part of the Grid Resilience and Innovation Program (GRIP).

A physical and digital matchmaker

While the grid serves as the underlying infrastructure, the power markets keep the entire operation humming by performing two key functions. First, they use price signals to influence market behavior, just like other commodity markets. Second, they act as a matchmaker between electricity buyers and sellers in order to balance the flow of electrons in real time. 

This balance is reflected as two layers: 

Physical layer: The underlying infrastructure that allows electricity to flow from generation to end use. This is the equipment, systems, and structures including transmission lines, distribution lines, transformers, and substation equipment.

Digital layer: The data, analytics, and digital processes that allow for the pricing, management, and operation of the grid. In most cases, the electrons sold to you from a residential solar roof won’t be the same ones that you’ll receive. It’s a transaction in the digital layer that represents this movement.

Here, we’ll focus on the physical layer — and more specifically, grid hardware. We’ll walk you through the Sector Compass, how the market works, the key technologies and players, and what to take away.A quick tour of the power value chain 

The grid follows a four-step value chain. Whereas the power markets followed a fairly linear operation in the past, a more digital, distributed, and decarbonized grid creates a more complex and sometimes circular set of flows. As demonstrated by the bi-directional arrows, power doesn’t necessarily have to flow from generation straight to end use. 

As residential, commercial, and industrial customers install distributed energy resources (DERs), or build virtual power plants (VPPs) or microgrids, they transition from being continuous power consumers to more flexible sources of power demand and, in some cases, even power generators themselves. But how do grid operators know how to work with this additional flexibility and generation and pull these capabilities into the grid? On the market framework diagram, this is highlighted by a Data arrow that feeds back into the Interconnection stage. This data exchange allows end-users with on-site flexible demand, generation, and storage capabilities to offer ancillary and grid flexibility services [read more about grid services in our power markets explainer]. 

Weak links in the value chain 

Grids face challenges specific to each step in the value chain. 

Generation: Utilities, independent power producers (IPPs), and others generate electrons from fossil, nuclear and renewable sources.

• Interconnection queues: Grid connections have not kept up with renewable project investment and construction. The backlogged interconnection queue is more than the grid’s existing capacity at the end of 2021. Why the hold up? Connecting new generation assets to the grid is a delicate process. Grid operators need to ensure the new asset doesn’t cause disturbances or outages, and that it is tuned to match the frequency, voltage, and phase of the grid. This takes time and modeling, and is a key factor in lengthening interconnection wait times.
• Inertia synthesis and management: Remember Newton’s First Law of Motion, an object in motion stays in motion? Inertia is created by rotating generators (such as those from fossil turbine generators), and provides stored energy to keep the grid stable and going, even if generators are offline. With more renewable generation sources coming online, stabilizing the grid becomes more difficult. Solar is connected to the grid without any rotating masses and wind is not connected directly to the grid, which therefore means they both provide little to no inertia. 

Transmission: Power is sent from power plants over long-distance, high-voltage lines to substations, where the voltage is stepped-down to go through the distribution network.

• Congestion: Transmission lines can become overloaded, resulting in power that cannot be delivered to end users. Overloading happens when transmission lines cannot cope with power demand and line capacity is reached.  
• Losses: As electricity travels through wires, not all power makes it from point A to B. ~5% of electricity transmitted in transmission & distribution (T&D) in the US is lost, often as heat, and especially in aging transmission lines which can be well over 50 years. 
• Physical threats: Risks caused by physical hazards such as vegetation growth threaten power transmission. Overgrown vegetation, severe weather, or other events can cause damage to transmission lines leading to outages and create a feedback loop for further devastations, including wildfires. 
• Long permitting timelines: Building new transmission (and distribution) infrastructure is challenging, further complicated by NIMBYism and the difficulty of securing Right-of-Way (ROW) agreements over long distances. Not only does this require working with numerous local, state, and federal agencies, but it also means getting buy-in from all the stakeholders involved—from the utilities, to the regulators and landowners.

Distribution: Utilities move power from substations to end users across shorter distances at lower voltages.

• Faults and outages: Equipment failures, caused by aging equipment or physical damage, are increasingly common and can lead to outages for consumers. 
• Increased demand: Population growth and the electrification transition are driving more demand on the grid. Utilities now face added pressure to manage increased line congestion while also reducing outage times and handling equipment upgrades and installations.
• Pollution risk: Switchgears, which are devices that isolate faults, have traditionally been insulated with Sulphur Hexafluoride (SF6). This greenhouse gas is 23,500X more potent than CO2e.  

End use: Residential, commercial, and industrial consumers use power for various applications.

• Increased participation: End users are shifting from being passive consumers to active participants in the grid. Power from DERs, VPPs, and vehicles-to-grid (V2G) has meant more electrons flowing from the end-user back into the grid. This bi-directional flow has put added pressure on the grid, both to accommodate this additional power and to effectively manage the increased flexibility and load.

The power players in grid tech 

Transmission and distribution are ripe for innovation, offering the largest opportunity  to improve overall grid capacity, flexibility, and resilience. A robust physical grid layer characterized by optimized and modern transmission and distribution infrastructure, is a prerequisite for a more digital, distributed, and decarbonized grid. 

Certain grid hardware technologies are leading this charge, seeking to solve the most immediate issues that are holding the grid back. They provide direct solutions for aging infrastructure or solve high-priority challenges such as congestion and seamless renewables integration. 

Here, we’ll walk through some of these key technologies and who is pushing the state-of-the-art forward.

Advanced Conductors

Many power lines are aging past their best before date. Designed and installed in the mid-20th century, this system of power lines is deteriorating fast and unable to cope with the pressures of  increased demand. As power lines age, they become more inefficient due to prolonged usage, and natural, repeated wear and tear. 

This materializes into two common problems: 1) Declining power capacity where power lines can no longer carry as much power for the same buck and 2) Increasing power losses where more energy is dissipated as heat, rather than being transferred down the line. 

Advanced Conductors are next generation wires or technologies that replace these existing lines and can carry more capacity with greater efficiency. Adding them to the grid requires no major physical overhauls and when compared to installing new power lines, avoids lengthy permitting times. They serve to provide operators with an immediate solution to optimize existing transmission corridors. Thus, replacing old power lines is low-hanging fruit for operators who want to increase capacity, alleviate congestion, and reduce losses.    

• Key innovators: VEIR has developed a cooling technology that enables existing power lines to operate at 5 to 10 times their current transfer capacity. TS Conductor has developed a lightweight, core-based advanced conductor capable of reducing losses by up to 50%. 
• Putting it into practice: National Grid has partnered with VEIR to pilot their cooling technology that enables superconductivity in transmission lines. Starwood Energy and TS Conductor have entered into a joint venture to build superconducting transmission lines.

Inertia Synthesis and Control 

As more renewables connect to the grid, inertia levels decrease. The rotating fossil turbine generators provide stored energy through inertia which is particularly useful during grid outages and asset failures. However managing and knowing levels of inertia at a specific time to keep the grid stable has become increasingly difficult. 

Inertia Synthesis and Control equipment is a collection of sensors and measurement devices that detect levels of inertia in the grid. Think of these as stethoscopes that listen in on the grid to detect changes in stored energy. They help operators detect drops in inertia levels, especially when faults and outages occur. Being able to accurately detect changes in inertia levels helps operators respond to faults and outages. If inertia level drops, operators can quickly respond by switching on generators.      

• Key Innovators: Reactive Technologies has developed a modulator which sends energy pulses at the grid to detect inertia levels. ThirdEquation is working on a solution that clips onto grid edge equipment that measures and reacts to changing inertia levels. 
• Putting it into practice: Reactive Technologies has partnered up with The Taiwan Power Company (TPC) to identify hidden inertia and maintain grid stability as more renewable generation comes online. 

Advanced Transformers 

Similar to other grid assets, existing transformers, that step up and down voltages for transmission and distribution respectively, are aging. They represent important interfaces as power moves across the network that ensure that each part of that system is set to the right voltage. Like aging joints, they have become increasingly rigid and cannot cope with variations in the loads that the modern grid requires. To add to these pressures, transformers are increasingly difficult to replace as they are often large power systems that are custom-made depending where they sit in the grid. 

Advanced Transformers are next generation transformers, typically with interchangeable plug-and-play designs that reduce delivery and installation costs and times. Most of these new transformers are digitized, allowing operators to monitor their health in real-time and predict faults ahead of time. Compare this to existing transformers that are notoriously analogue and provide limited visibility for operators. Some Advanced Transformers also offer software-based dynamic scaling, stepping up or down to  multiple voltage levels, to enhance power movement and cope with multiple loads.  

• Key Innovators: IONATE has developed a smart hybrid transformer that acts as a drop-in replacement for existing transformers. General Electric has developed next generation transformers that offer monitoring capabilities for operators, giving better control over them. 
• Putting it into practice: IONATE’s transformers are being tested by EDP in Spain and with E-REDES in both Portugal and Spain. General Electric has been awarded a bulk order by Amprion for its Advanced Transformers with delivery commencing in 2025.

HVDC 

Generating capacity is projected to increase by between 55% and 108% by 2050 to align with demand. Congestion and losses can be improved by replacing current power wires with Advanced Conductors, but even with enhancements, existing capacity will be well below what is needed. The grid also needs to be expanded with new power lines, especially in the form of High Voltage Direct Current (HVDC) lines. 

Typically, operators have relied on High Voltage Alternating Current (HVAC) lines which have been cheaper and easier to install, as they don't require power conversion between Alternating Current (AC) and Direct Current (DC). However, with advancements in High Voltage Direct Current (HVDC) technologies, such as improved converters, long-distance power transmission has become more efficient. HVDC lines facilitate the integration of renewable energy projects located offshore, in other states, or even across national borders, expanding the potential beyond regional networks. Currently, the majority of operational HVDC projects are in China, with a smaller presence in Europe and the US. There are over 200 GW (58,000 km) of HVDC lines in operation and an additional 180 GW (45,000 km) planned.

• Key Innovators: ABB has worked on numerous HVDC links and supplies converters for HVDC projects. Xlinks aims to use HVDC subsea cables to connect renewable power projects to the grid rather than overhead lines.
• Putting it into practice: ABB has established multiple HVDC projects that connect power from offshore wind as well as being a supplier of HVDC components. Xlinks’ Morocco-UK power project plans to connect the UK to a large Moroccan solar and wind development using HVDC subsea cables. 

Dynamic Line Rating (DLR)

Historically, power lines have been monitored via Static Line Rating (SLR) and Ambient-adjusted Rating (AAR), which determine the maximum current that a transmission line can safely carry under a set of environmental condition assumptions, based on static historical and hourly data respectively.

Because operators don’t have a sufficiently precise picture of what’s happening to individual lines, they struggle to know the true capacity that is available at a particular moment and make changes to power flows that reflect the underlying thermal line or other conditions that reflect this available capacity. 

Dynamic Line Rating (DLR) technology forms the next era in real-time monitoring of power lines through sensors or drones that give operators direct visibility at the power line level. Analogous to blood pressure monitors, most DLR technologies can be retrofitted to wrap around existing power lines rather than being built into the power lines themselves. DLR technology gives insights on line conditions such as voltage, current, and frequency levels. This data can be used to determine power capacity and inform operators when lines are congested so that they can anticipate, react, and remediate issues. 

• Key Innovators: LineVision is working on first-of-a-kind non-contact DLR sensing technology. Laki Power offers clip-on sensors that wrap around power transmission lines.
• Putting it into practice: National Grid is working with LineVision to install non-contact DLR monitoring systems that mount on lattices, rather than on power lines themselves. Laki Power is piloting a clip-on DLR technology in countries such as Iceland, Greece, and Turkey. 

Key Takeaways

As a market participant, you should remember…

• Uptake takes time. Operators / utilities are often slow to test or procure new technologies that might jeopardize grid reliability or performance. Co-developing and co-engineering solutions with operators will help minimize this risk, as will technologies that can be retrofitted to enhance existing lines and systems. 
• Scout for specific entry-points. Opportunities to enter the grid hardware technologies market are larger in scope for specific areas. Look out for spaces where frequent replacement cycles occur and retrofits are possible.
• Downtime is a deterrence. Long outage times further deter grid operators / utilities from adopting new technologies. Many Advanced Sensing and Dynamic Line Rating (DLR) companies are working on non-contact and clip-on sensors which do not require any downtime during installation.
• Location, location, location. Different standards, regulations, and procedures produce uncertainty for technology providers in the grid sector. Lean on regulators like FERC for the US, Ofgem for the UK, and CRE for France.

As the market matures, be on the lookout for… 

• Corporate stronghold in mature technologies. In more mature and commercially proven hardware areas, such as HVDC, Power Flow Controls and Switches, and SF6-Free Switchgears, corporates like ABB, General Electric, and Hitachi Energy will continue to maintain their market stronghold given their existing economies of scale and customer relationships. 
• Innovator-operator development partnerships. For earlier-stage grid technologies such as Advanced Transformers and Inertia Synthesis and Control equipment, watch out for partnerships between technology providers and operators / utilities co-building and co-engineering hardware technologies. Companies with such a partnership should have an advantage as co-developing with operators / utilities allows for more buy-in from the start and a greater chance of success.
• Digitally-enabled hardware. Grid hardware is increasingly becoming an integrated solution that embeds and leverages software capabilities. Hardware technologies such as Dynamic Line Rating (DLR) and Advanced Transformers now offer digital capabilities through data and insights. 
• Swiss army knife approach. Some grid hardware can help solve more than one problem. For example, Advanced Conductors increase power capacity and reduce power losses, serving two capabilities for enhancing the grid. The same can be said for Advanced Transformers and Inertia Synthesis and Control equipment.    
• Grid reimagined as a network. Power flows will follow a network topology where the roles of the three musketeers (generators, operators, utilities) are becoming more blurred. To cope with the need for greater grid flexibility and these blurred lines, hardware that enables better control and switching will become the new norm.