The Digital Transformation of Energy Grids

According to the IEA, investments in grid-related digital technologies have grown over 50% since 2015. Of this figure, more than 75% were injected into distribution, which is a key area for integrating renewable sources and managing energy more effectively at the local level.

Almost every industry today is undergoing digital transformation to some degree and scale. This transformation couldn’t be more urgent than it is in energy — an industry that faces significant issues like emissions and ever-growing demand, among others.

As the International Energy Agency (IEA) emphasises, digital technologies have many benefits. They can improve grid reliability, reduce emissions, and promote energy efficiency.

How essential is grid modernisation

Grid modernisation is an important aspect of the energy industry’s digitalisation. 

According to the IEA, investments in grid-related digital technologies have grown over 50% since 2015. Of this figure, more than 75% were injected into distribution, which is a key area for integrating renewable sources and managing energy more effectively at the local level.

The increase in digital grid spending can also be attributed to the rise of electric vehicles (EV) and the needed charging infrastructure. In 2022 alone, global investment in EV charging infrastructure doubled.

In the same year, the number of smart power meters surpassed 1 billion, representing a tenfold increase since 2010. Apart from smart power meters, substantial investments are being poured into analytics, asset management, and power quality for grid operations. Spending on these aspects has more than doubled from $680 million in 2016 to $1.48 billion in 2022.

But what makes a grid system modern and digital? 

There are key technologies to consider. 

First, smart meters and sensors. These devices provide real-time data on consumption patterns, empowering both consumers and operators to make data-driven decisions.  

Meanwhile, substation automation systems (SAS) use advanced sensors and control systems to manage substations remotely. This automation improves efficiency by streamlining time-consuming tasks and reducing error rates. A vital component of SAS is digital switchgear, which continuously monitors equipment health and can predict potential failures. 

Artificial intelligence (AI) and machine learning (ML) are at the heart of modern energy grids. 

AI and machine learning allow for complex data analysis to predict energy demand and optimise resource allocation. By analysing historical data, these technologies help grid operators identify patterns and anticipate peak demand. Ultimately, they improve grid stability and reduce operational costs.

Middle Eastern countries stand as good examples

The Middle East is one of the regions that is accelerating its digital transformation for its energy market. Primarily, this is driven by Middle Eastern countries’ intensified efforts to meet their clean energy targets, all while responding to rising power demands. 

According to Middle East Energy’s Grid Modernisation Report in 2022, the region could experience a 3.3% annual increase in power demand until 2030. There are various reasons for this: population growth, increasing industrialisation, and the electrification of key sectors, such as transportation. 

With such a surge in demand for electricity, there’s a need to embrace digital solutions to ensure reliable, efficient, and low-carbon energy supplies.

The United Arab Emirates (UAE) is one of the countries leading the region in this regard. For instance, Dubai Electricity and Water Authority (DEWA) has committed to a comprehensive smart grid strategy, with an investment of up to $2 billion over multiple phases through 2035. As part of this initiative, DEWA has already installed more than 2 million smart electricity and water meters across Dubai. 

Saudi Arabia is another notable example. The country’s National Digital Transformation Unit spearheads digital initiatives, with specific mandates for implementing SAS in high-voltage substations.

Infrastructure projects like NEOM and the Red Sea City further the need for advanced grid technologies, including virtualisation and smart meters. 

In 2021, the Saudi Electricity Company (SEC) installed over 10 million low-voltage (LV) smart meters. The company also signed contracts totaling $720 million with both local and Chinese companies to supply 60,000 smart devices, further expanding the country’s digital grid capabilities.

Cybersecurity is a priority

In the future, the world will see more energy grids becoming digitalised. And as that reality unfolds, both the public and private sectors must not ignore cybersecurity.

When cyberattacks kit energy infrastructure, the risks are significance. Sensitive data can be exposed, and critical operations can face disruptions. Both of these consequences lead to substantial economic losses.

Like other regions in the world, the Middle East can address these risks by embedding cybersecurity into grid modernisation plans from the outset. 

Countries in the region are doing their part. For instance, DEWA’s focus on in-country cloud storage aligns with its cybersecurity policies, which require critical data to be stored domestically. Similarly, in Saudi Arabia, strict data protection guidelines discourage storing sensitive information on foreign cloud platforms. This has led to a growing emphasis on local data storage solutions, ensuring that vital information remains secure and closer to home.