The Three Ds of Power Sector Evolution

Three Ds of utility disruption

Change is accelerating within all utility sectors, especially within the electric industry, and the Three Ds represent the driving forces of this change – decarbonization, digitization and decentralization.

Decarbonization refers to the growing interest and regulatory push to increase the percentage of electricity generated in the U.S. from renewable energy sources.  Digitization refers to the ability to harness network connectivity and sensor technology for increasingly real-time information and service, as well as to accommodate the inevitable growth in renewable energy.  Decentralization refers to the expansion of distributed assets and microgrids.  All are extremely important to the future of the electric utility sector.

How Utilities Can Manage the Three Ds

According to this article, the primary method for utilities to deal with the disruptive nature of the Three Ds is to upgrade equipment.

For example, utilities can work with third-party providers to digitize certain elements of their operations, helping reduce errors associated with manual tasks and increasing the predictive nature of maintenance activities.  In this example, the upgrades are not necessarily done to the physical asset itself; rather, it typically involves software to extract added value from existing internal systems.

Another example is utilizing special debt structures to enable equipment upgrades.  This helps utilities avoid sticker shock, as the idea is to spread the cost of the upgrades over a period of years.  There are many vendors that specialize in this type of financial structuring.  In fact, as of the time of this writing, now would be a perfect opportunity to explore such solutions, as interest rates remain extremely low, and the financing activity might even help free up funds for other initiatives.

In the final analysis, equipment upgrades could be an effective approach to dealing with the Three Ds, and there are options out there that can ease the financial and operational burden of doing so.  Now is the perfect time to explore the various solutions, as the Three Ds are not going away anytime soon.

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