According to the report’s annual survey of electric, natural gas and water utilities, respondents see improved reliability, operational efficiency and concerns about aging infrastructure as driving distribution modernization efforts. Last year, the industry named increased monitoring, control and automation capabilities as the primary driver; this year, that response fell to fourth place.

Things have changed since the smart grid was first mentioned. Initially comprising primarily smart metering programs, today’s smart grid must accommodate the densification of digital devices across the grid to improve reliability and support the advancement of DER. But truly delivering the grid of the future will require more than just integrating a laundry list of shiny new features and technologies — it will require that utilities implement a sweeping shift toward digitalization, embracing and investing in the organizational transformation and large-scale integrated communications networks that will bring it all together.

Going forward, fully integrated communications infrastructure will be critical to support utilities’ demands for reliability and efficiency. This means not only upgrading the operational assets — the poles, wires, distribution switches and regulators — but also implementing advanced communications systems capable of supporting millions of digital devices required for the future distributed utility system.

The modernized grid of tomorrow must be built on a strong communications network that takes into consideration all the necessary applications — the automation, analytics, asset management and security — that enable a robust utility operation.

To achieve this, one-third of survey respondents said they plan to spend more than $200 million to modernize their distribution infrastructure over the next three years, while 30 percent plan to spend $50 million to $200 million, and one-fifth of respondents will spend $10 million to $50 million. The industry should expect to see communications infrastructure comprise a growing chunk of this investment.

Interestingly, survey respondents see three groups leading this effort: operational technologies, IT/communications, and security/privacy. From an organizational standpoint, this makes sense; these groups are uniquely positioned to connect a utility’s traditionally siloed departments and serve as the catalyst to encourage utilities to adopt new technologies.

But that’s not to say barriers to modernization don’t exist. Budget concerns remain No. 1, along with managing competing priorities, regulatory hurdles and a lack of resources and expertise. Paying for these upgrades will be the biggest future challenge. Not only do utilities have to find the funding, but they must accurately understand and capture the total capital infrastructure investment.

But once utilities achieve these steps — and find the appropriate resources and expertise and make the necessary investments in communications — they will be in a much better position to see smart distribution infrastructure come to fruition. The 2020 Strategic Directions: Smart Utilities Report touches on all these topics and much more.

• Grid Modernization. The move to the digital grid is upon us, propelled by the promise of new technologies, devices and speed. Survey data shows that utilities are “all in” on grid modernization plans, and regulators are slowly moving in that direction. But the key to turning vision into reality comes down to next-level planning to truly enable decentralization.

• Advanced Distribution Modernization. Tight budgets are keeping many utilities from deploying comprehensive distribution modernization solutions. While cost concerns are understandable, much is at stake: Outdated mechanical breakers that have been the hallmark of today’s aging infrastructure
  are testing grid resilience, as are increasing amounts of DER on the grid.

• Integrated Systems Planning. For decades, utilities have operated in silos, with each department focused on its own corner of the business, not sharing information, processes or tools. But that’s changing, and utilities today are starting to break down silos and operate more cross-functionally as they work to meet the challenges of DER and non-wires alternatives to traditional utility resources.

• Network Management. Increasingly complex and proprietary systems make network management a giant headache for system operators. With more and more devices being installed on these systems, 24/7 network operations centers and security operations centers are rapidly gaining favor; however, end-to-end network management strategies to unify these investments will be critical.

• Private Networks. Utilities value owning their own assets, and that holds true for network communications. Our survey shows sustained interest in the deployment of private fiber as a communications solution to support distribution automation. But respondents remain concerned that their existing wireless infrastructure isn’t meeting coverage and capacity needs and also cited obsolescence and lack of original equipment manufacturer (OEM) support.

• The Future of 5G. The promise of next-generation 5G connectivity is expected to hasten wide-scale adoption of the Internet of Things, introducing new technologies that offer untold benefit. But implementing 5G at scale will require extensive collaboration — particularly among carriers and utilities, not to mention local communities, state and local permitting policies, regulators and technology integrators.

• Resilience Planning: Power and water providers are dedicating themselves to rooting out their assets’ biggest vulnerabilities. Today, utilities not only are embracing data, but they’re using it to strengthen assets while making them more cost-efficient and sustainable. Resilience goes a long way toward assuring ratepayers that they can count on their utilities to respond in economically, environmentally and socially responsible ways.

• Cybersecurity: U.S. utilities are on guard, painfully aware that hackers intent on disrupting electric and water plants always lurk. This vigilance is essential as the nation’s power networks become more integrated and complex, given the proliferation of DER and the industry’s embrace of internet-connected sensors. And to little surprise, utilities are getting wise to the need to beef up their defenses.

• Risk Management for Transmission and Distribution: Under the constant threat of significant disruption from record-setting weather events, utilities are wrestling with how to manage risks to ensure reliable service. Regulators, shifting customer expectations and environmental compliance may be driving a lot of the discussion, but utilities aren’t sitting idle; instead, they are migrating to risk-based management programs in an attempt to keep the lights on.