It’s 2020, and the world has transformed faster than anyone could have imagined. Technological advances have surpassed most people’s wildest dreams, and have helped to improve everyday lives and business processes for the better. We can communicate with loved ones across the world at the touch of a button, and collect seemingly endless amounts of data to make user experiences better.

Despite these technological advancements, many utility companies continue to use legacy systems that don’t address the industry’s new challenges. To understand this issue better, this blog will examine the history of how traditional energy systems work, how these energy systems tend to limit utility companies from growth and efficiency, and also look at what modern tech solutions are available to address these limitations and improve energy efficiency.

Legacy energy systems – what are they? 

In the early days of legacy energy systems, there was a large cost associated with development. Because of this large cost, many power systems were initially run and sponsored by governments.

Over time, we have seen a mix of public and private ownership – although legacy systems still remain (generating power in one area and transmitting/distributing everywhere else). For example, in Ontario where there is a large amount of water, that water has traditionally been used to generate energy using hydro plants. Infrastructure is required to move power from its creation point to other locations and cities. Meaning, power is created in one location, and moved to another – usually where the majority of consumers are.

This rings true across many jurisdictions, however the source of energy may differ from water. Other energy sources include options like natural gas, nuclear energy, and coal (although more and more jurisdictions are working to eliminate coal as an energy source).

The fact remains, old legacy systems are often built based on fossil fuels, and therefore are more harmful to the environment. Thankfully, with the development of different technologies and IT infrastructure, the energy industry has gone through a revolution. People are more aware of their carbon footprint, and have started looking for ways to combat their carbon footprint. Many consumers are either using renewable energy or making better choices about how they use and consume energy. For example, by participating in conservation programs, using smart devices and appliances, or shifting the time of day when they use electricity.

What challenges do utility companies face by using legacy systems?

One of the biggest challenges that utility companies face when stuck using legacy systems is the fact that these systems are not able to handle the two-way energy power flow. For example, there are unpredictable amounts of energy in systems that have added solar power. Legacy systems will malfunction if there is too much power – which can cause outages and blackouts.

Another challenge, simply put, is that legacy systems are old.  For example, think about the huge power lines built from Niagara to Toronto – these are old, and therefore require frequent maintenance.  Energy management systems typically used are also outdated, and do not offer simple tools to review data and plan accordingly.

Many energy utility business models also do not allow for more sustainable and efficient energy systems to be created. Utility companies have recently had a huge push from regulators to help solve greenhouse gas emissions, but first those regulators need to change regulations and incentives to guide utilities in the right direction. Policies and regulations need change in order to properly maximize the opportunities for cost-effective DER. Many distribution utilities are not incentivized to support DER (rather, they are some serious disincentives). In fact, as Power System Operations and Electricity Markets states, the disincentive for utilities can be strong because “the loss of sales on every kilowatt-hour (kWh) of self-generated electricity is a kWh of sales that has been lost by the utility or its affiliate.”

Without this government push, utility companies may not invest in renewable energy options on their own because of the risk and high investment required. Knowing that renewable energy sources make up two-thirds of Canada’s electricity, and that renewable energy generation grew by 18% between 2010 and 2017 (with solar and wind accounting for the largest growth), it’s clear that these regulations need to be set in place to support utilities.

Another example from the United States shows that California passed legislation in 2018 to commit to 100% zero-carbon energy supply by 2045, which helped to put pressure on utilities to work to solve greenhouse gas emissions problems. Whereas other U.S. states like West Virginia that do not have state-backed financial incentives or policies for energy efficiency give large customers the opportunity to opt out of energy efficiency programs managed by utilities companies.

How can new, modern solutions help utility companies to enable growth and efficiency? 

Traditional systems are okay, but it’s important for utility companies to look at alternative, modern energy solutions to plan for today and the future. Many existing planning and energy management systems simply don’t have the capabilities to analyze both traditional and modern solutions.

Thankfully, there are new energy management systems that help utility companies to look at their grids holistically. These systems allow utilities to quickly review and analyze data easily, make better investments, and plan for reliable and high-quality energy. New systems can also help utility companies to operate the grid better in real-time rather than just plan the future of the grid.

Out with the old, in with the new (it’s up to you!)

With the insights from this blog, you can assess the current practices and systems at your utility company and decide whether or not keeping your legacy systems is the right move for your business. Keep in mind that there are new, innovative technological solutions to help you better plan and manage your grid for improved system performance, energy efficiency and cost-effectiveness.