The changes in the energy landscape have been well documented. To one degree or another we are all participating in what has become known as the “energy transition.” Indeed, this transition is changing and challenging many of the operating assumptions that have guided utilities for decades. Nowhere is understanding these challenges more critical than in how a utility forecasts its energy needs. As distributed energy resources (DERs) continue to grow at accelerating rates, the need to embrace new forecasting technologies and processes is imperative. This is where net load forecasting enters the picture.
Turning Forecasting on its Head
Historically, utilities have conducted what is generally known as a “top-down” forecasts. Here, utility forecasting teams, which can include a cross-section of disciplines including economics, engineering, operations, and planning, look at high-level data to build a long-term energy forecast. The high-level data points can include generation data, weather data, and demographic and economic data for the service territory. From this data, with some time-tested assumptions about economic and load growth, the forecasting team produces a long-term forecast that typically looks out as many as 20 years into the future.
This methodology has worked well for decades, providing forecasts that have driven generation planning and capital planning to ensure that the lights stayed on today and well into the future. The challenges arose when DERs started to grow to where they were accounting for a growing percentage of the overall generation mix, creating a very different forecasting dynamic.
A few data points that demonstrate how DER growth is changing the game for utilities includes:
- DER generating capacity growing from 264 gigawatts in 2015 to an estimated 387 gigawatts in 2025 (Source: Wood Mackenzie).
- Legislative and regulatory actions that practically guarantee DER growth well into the future. Examples here include the California mandate for electric vehicle-only sales starting in 2035, numerous state regulator renewable portfolio standards, and the US Inflation Reduction Act of 2022 that is directing over $360 billion to the energy transition, much of it in support of the growth of DERs.
While the U.S. and in fact most of the developed world continue to move deeper into the energy transition, and for good reason, the engineering and capital planning questions need to be answered ASAP to ensure reliability and resiliency in this new energy landscape. This is where having the forecasting process turned on its head comes into play.
A New Forecasting Foundation, From the Bottom Up
All of this change in generation sources with the accompanying need for a more robust distribution infrastructure has created today’s energy forecasting scenario that has literally turned traditional forecasting methodologies on its heads. But how do utility engineers, planners, and leaders know how much of this infrastructure to build out, when to build it, and how much it will cost to meet these new needs? The numbers tell us this is no trivial task.
A recent article in the Wall Street Journal cited just a few of the challenges in meeting the needs for distribution infrastructure. This includes ensuring that the distribution system can take on the new load that comes with EVs. The Journal reports that “…charging an EV can require a major boost to the electricity-transmitting capacity of the wires and transformers serving an EV-owning household—a 70% to 130% increase, depending on the power of the charge.” (Wall Street Journal, 2023.) This begs questions like “what happens if a household has two EVs?” or “What happens if an entire group of homeowners being served by the same transformer buy EVs within a few days or even weeks of each other?”
While not as likely to produce catastrophic incidents as with EVs, DERs have their own challenges. For example, as rooftop solar grows – as is the case here in California where I am based, driven largely by the legislative and regulatory environment – what will be the infrastructure needs for new subdivisions where rooftop solar is mandated, or for older neighborhoods where rooftop solar growth continues? (How this will be paid for is another question, as all of those electrons that the utility used to sell and deliver are now being generated at each customer site, is another question for another day.)
Planning From Bottom to Top
These DERs challenges are at the core of one of the newer capabilities that leading utilities are starting to deploy: net load forecasting.
Net load forecasting uses massive data sets and advanced analytics to forecast the difference between the total electricity demand, and the electricity generated from DERs, enabling more precise distribution system and capital planning for timeframes of up to 20 years. This capability will be a critical success factor for utilities as their DER penetration grows, creating complex generation and grid operations scenarios.
Mark Konya is a professional engineer and an Advisory Industry Consultant at analytics giant SAS who has been working in the utility industry for over 40 years. His experiences include distribution engineering and operations, where he has seen the evolution of energy forecasting and how this impacts reliability. He commented on how he sees net load forecasting playing a key role in the utility of the future: “Energy forecasters have had a front row seat to the evolution of DERs and their impact on grid operations, capital planning, and generation planning. As our industry moves deeper into the energy transition, we are seeing the impacts – both potential and real – that this is having on a utility’s ability to be prepared for a very different future. You can’t have a reliable distribution system unless you plan to have a reliable distribution system, and net load forecasting is the path to reliability in a DER-rich future.”
Mark also commented that it’s not enough to recognize the need for net load forecasting. Utility leaders and planners need to have some of the basic building blocks in place. These include:
- Governed, secure, flexible, distributed data management capabilities suited for the massive data sets that are now typical for utility distribution systems
- An analytics platform that is robust and scalable, with the ability to rapidly ingest and process millions of rows of data
- A distribution circuit power flow modeling solution that can leverage large data sets to identify violations of design, protection, and operating limits
- A capital planning solution that can provide the precision insights that will enable the critical capital planning for utility leaders to be able to plan for and invest in a very different future
- A documented distribution planning process consisting of guidelines, policies, and procedures which direct relevant activities and ensure the quality of process deliverables
As our examples demonstrate and as our colleague Mark Konya points out, preparedness for this new energy landscape is of paramount importance. This requires not only new systems and processes, but new ways of thinking across the utility enterprise. Indeed, DER-driven changes are driving new requirements across technology, data, people, and process paradigms at utilities.
These DER-driven changes are happening, arguably faster than one might think. With a 140+ year track record of delivering electricity reliably, affordably, and safely, a safe bet is that utilities and their leaders will step up to the net load forecasting world and continue to deliver on their mission successfully.
Note: Mike is Principal at KLN Group. He can be reached at [email protected].