IBM has spent the past decade advancing smart meter and digital grid technologies around the world, including playing a key role in designing the "Smart Grid Maturity Model" that helped guide investment strategies for hundreds of millions of dollars in U.S. federal energy infrastructure and modernization recovery funds in the wake of the 2008 financial crisis.
Brad Gammons, global managing director for IBM’s Energy, Environment & Utility Industry practice, believes the technology giant will have an even greater impact in how electric utilities respond to mounting operational and reliability challenges emerging from climate change impacts and mitigation strategies in the decades to come.
This will include solutions to manage and orchestrate the rising share of intermittent renewable energy powering the grid, as well as distributed energy resources and the substantial growth in electricity demand to come from the electrification of transportation and low-temperature heating.
Gammons is one of the top energy industry executives speaking at next week’s virtual Grid Edge Innovation Summit 2020. He shared his views in an interview with Greentech Media last week. Here is a transcript of that conversation, edited for clarity and length.
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GTM: How would you summarize IBM’s impact in enabling innovation in the utility enterprise, and how are you refocusing that work based on the needs of utilities today and in the near future?
Gammons: There is an initiative we have launched that sort of summarizes a lot of that transformation. It’s something we have named “Electrifying Energy: Sustainably Fueling the Future.” And what it really focuses on is the integral part that the electric network and power suppliers will play in driving deep decarbonization of the global energy system. This level of decarbonization requires the continuous integration of new renewable energy sources into the grid, the electrification of sectors like transportation and building heating, and the digital capabilities that enable utilities to serve as energy integrators — effectively managing and orchestrating the growing number of clean and distributed energy resources, all while maintaining a reliable and resilient grid.
Utilities need to adapt their networks to the increased usage that we will see with the electrification of transportation and of heating for buildings and manufacturing processes in the future. There’s work that must be done to allow the participation of new forms of balancing resources. They’re not going to want to use a lot of gas plants and coal plants as traditionally done, which means these ancillary services will be coming from battery storage or demand response mechanisms. There’s this new ecosystem emerging that will participate on top of the digital overlay that has overlaid electric networks since the term "smart grid" was first used in 2006.
Ever since the early 2000s, the utility network has been an internet-of-things network; it has been intelligent and followed the digital roadmap. Of course, it has stayed a little behind other industries in terms of digital transformation at times because of its nature as critical infrastructure. But now, I would say that the network is heavily overlaid by a digital fabric that is allowing a new business ecosystem to emerge, new business models and business platforms on top of it, and ultimately increased participation in the electric system — whether that’s energy management services, balancing services through battery storage and distributed energy resources, or electric vehicle charging services.
GTM: What do you see as the biggest opportunities that will come out of this?
Gammons: Allowing these new service providers to participate in that same digital overlay that connects the network to provide enhanced services that improve the reliability and resilience of the network. Utilities can now understand their assets better, know their condition better and become smarter in how they deploy capital to build resilience in the network in the face of climate change impacts. They can also do a better job of optimizing operations so they meet their social compact of safe, affordable and reliable energy. And at the same time, they are playing a key role in decarbonization in the midst of all this. The idea that digital platforms are going to help utilities enable deep decarbonization has reached its time.
I think what has changed in the last 20 years is that the intensity of the demand from societies, governments and businesses to address climate change is forcing this evolution at a faster pace. The word is never revolution in this industry, it’s evolution — but the evolution is moving much faster. All of it is on the same path, the same thread that says we have to do things differently much earlier than we thought or wanted to at one point in time.
GTM: What are some of the tangible ways IBM is contributing to this transformation?
Gammons: Taking in our history at IBM, we were huge participants in the smart grid. Globally, we’ve rolled out 130 million smart meters now, and we were the developer of the Smart Grid Maturity Model that was turned over to Carnegie Mellon’s Software Engineering Institute (PDF). Over 200 utilities have used the model, and we’re in the midst of updating it to this new reality of a much more digital, interconnected and ecosystem-driven energy system that has an existential issue to deal with, which is climate change. We’re offering our solutions to help with resilience, collaboration and participation in this new energy network while keeping the social compact of reliable, secure, cost-effective — and now clean — electricity.
I looked at the numbers recently, and there’s about $6.6 trillion worth of currently active and planned projects in electricity supply and delivery around the world. It just gives you a sense of the scope of the electric system, its size and scale. It gives you an idea of the size of the system we’re talking about and of the importance of this digital fabric that informs and helps orchestrate how it functions. Deploying that amount of capital for something that makes society run.
GTM: There is also a need to integrate the flexibility of edge-of-grid assets in new ways to offset the increasing intermittency of the renewable grid supply, as well as manage the very assets themselves that are going to be multiplying the load.
Gammons: There is a lot of work we are doing in Europe at the edge of the network, mostly related to blockchain, IOT, EV charging, balancing services with aggregated car batteries, taking loads from buildings and aggregating them as a flex service, and participatory peer-to-peer energy exchange. [Examples include work in Denmark’s capital city of Copenhagen using blockchain technology to enhance visibility and valuation of building’s flexibility; another blockchain-enabled use case is being demonstrated with three European transmission system operators, dubbed Equigy, to use EVs and other behind-the-meter resources to balance the grid.]
These are just two examples at the edge of the grid, but we follow the whole value chain. We do a lot of work with the large wind operators on the generation side — how they place and deploy the wind turbines, how they manage the turbines, how they forecast how much power they’re going to create, and what the demand is in the marketplace. But there are a lot of tools to forecast, and our understanding of supply makes a big difference.
Owning Maximo, our enterprise asset management application, also helps our clients understand how to maintain their producing assets to get the best efficiency out of them. Another thing that goes into knowing how much energy I’m going to produce is knowing the health and condition of the asset that is producing it. You want to know how much energy is needed, how much is wanted, what are the best assets to use to produce that energy with, and what is the best time to deploy them — which goes into the energy-trading portion of all this. Energy trading is all about delivering the commodity to the market at the right time at the right price. We fit in that universe every step of the way.
In the traditional network sense, which is mostly focused on asset performance management, we help distribution utilities better manage transformers and substations and other equipment, and help deploy their workers in a safe, effective way. That is more important than ever because protecting critical workers in today’s world is as important as the asset itself. That’s what we call "enabling the field force," or field service management. COVID-19 has accelerated utilities’ use of digital technology for their employees and in how they communicate with their customers. And utility CEOs will tell you the same thing: In a way, COVID-19 has accelerated what were three-year digital reinvention roadmaps into six-month and one-year roadmaps.
GTM: It’s interesting to think how all the work you’re doing might help inform the regulatory processes that sometimes seem to be lagging behind technology developments, in terms of figuring out how to create regulatory structures that will allow the flexibility being enabled by the digital evolution of loads and resources to be brought to the fore.
Gammons: When PG&E first rolled out their smart meter program 15 years ago, one of the biggest challenges back then was how to get the regulator on board and understand the value to the consumer and the network. So we worked on the Smart Grid Maturity Model, and we used that tool when Obama announced the 2009 American Recovery and Reinvestment Act as a way to articulate to regulators why you’d invest in these things. It proved the need and the impact and the gaps that utilities had: Here’s the opportunity, here’s where the utility is and here’s is the outcome this technology could produce.
We have now just started a Smart Grid Maturity Model 2.0, looking at how that couple of trillion dollars of digitalization investments are being put to work now. We’re trying to answer the question: What does it mean if the electric industry is going to be the hub of decarbonization through the electrification of other industries like transportation and building heating? What has to happen to the software application suites that utilities are running? What kind of regulatory models do you need to adopt for distributed resources if they’re going to be dispatchable, reliable services you’re using for grid balancing? We need trusted, neutral data that regulators can use to make informed decisions. We did that back in the smart meter era — we worked closely with the public utility commissions in Texas, New Jersey and all of the PJM territory.
GTM: Do you believe the role IBM played in the ARRA stimulus era may be due for a recap under the Biden administration?
Gammons: Absolutely, we’re very optimistic. We’re having many discussions with the DOE because we see a change with the new administration. If you look at Europe, green investment after the onset of COVID is around 530 billion euros, and that’s above typical investment. You’re going to see a massive amount of green investments coming out of the Biden administration. We’re gearing up for that.
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IBM will be joining ComEd, U.K. Power Networks, Dominion Energy, PG&E, Eaton, S&C and other leading grid players for GTM's virtual Grid Edge Innovation Summit on December 1-3, 2020. For more information and to register, click here.