Upgrading the grid: new technologies are needed to expand electrification on the path to net zero

Achieving net zero by 2050 requires major changes to the global energy mix, which today accounts for roughly 75 percent of greenhouse gas emissions. In a simplistic sense, two things need to happen:

1. Fossil fuel-reliant end-uses within industry, buildings and transport need to convert to run largely on electricity (or, alternatively carbon-neutral fuels like hydrogen and renewable natural gas), and

2. Massive amounts of CO2-free generating capacity must be built to power new and existing uses of electricity.

To meet this change, it’s estimated that global annual capital investment in low-carbon technologies must grow from about $1 trillion in recent years to a sustained average of $3.5-$4.0 trillion per year through 2050 (ETC, BNEF, IEA, IRENA).

Sometimes overlooked in the net-zero discussion, however, is the significant need to invest in new transmission and distribution (T&D) infrastructure. According to a recent assessment, over 25 percent of total annual investment must go to reinforcing and expanding the networks that connect electricity supply and demand.

But building new T&D infrastructure is difficult and takes time. Planning, permitting, procuring, and constructing an interstate electric transmission line in the United States involves numerous local, state and federal stakeholders and can easily take five to 10 years. This limitation is a key contributor to the ever-growing US renewable interconnection queue. There’s increasing concern that a failure to adequately upgrade the grid will impede our ability to achieve net zero.  

Even assuming much-needed regulatory reforms continue to occur (like FERC’s recently issued Order 2023), new grid technologies have an important role to play. My colleagues and I at National Grid Partners (NGP) are tracking 70 companies developing innovative hardware and software solutions for transmission and distribution. We’ve invested in six of the most promising: CNIguard, Exodigo, LineVision, Sensat, SparkCognition, and TS Conductor. They largely focus on maximizing the value of existing networks or facilitating the accelerated deployment of new infrastructure.

This blog post is the second in a series on startup solutions for decarbonizing the energy and utility industry. The first post covered our high-level framework for categorizing the more than 500 startups we’re monitoring across three dozen relevant technology areas. Today’s post surveys the landscape of emerging grid technologies and highlights collaborations we’ve helped broker with National Grid’s US and UK electric business units.

Most electric grids were designed and built decades ago. At the time, electricity was generated by a few large, primarily thermal power plants located far from consumers. Demand was predictable and composed largely of electro-mechanical loads, like the induction motors used to power compressors in a refrigerator or the pumps in an industrial process.

Today, solar and wind farms make up a majority of annual new capacity additions in the US and UK. These resources are variable and have low physical inertia compared to fossil- or nuclear-powered steam turbines, whose rotating masses of steel help maintain a consistent frequency on the grid. On the demand side, there’s been a proliferation of power electronic-based devices like LED lightbulbs and server racks in data rooms, which reduce the inertia of load on the network. And the growth of distributed energy resources like rooftop solar, behind-the-meter storage and EVs make demand less predictable and increase the likelihood of surplus power flowing back onto the grid.

Managing these supply- and demand-side stresses requires three elements: Greater visibility, enhanced analytical and modeling tools and new control capabilities.  

Visualize

Historically, utilities have had limited visibility into their T&D networks. In the 1970s and 1980s, they began deploying SCADA systems to monitor operating conditions primarily at transmission substations. Then in the late 2000s, the US stimulus package following the Great Recession ushered in a wave of smart-meter deployments, which took until this year to hit 80 percent penetration.

More recently, startups and established companies alike have introduced sensor-based technologies to continuously monitor other types of network equipment, promising enhanced situational awareness. Utility assets range from overhead lines and underground manholes to distribution transformers and even poles. More than a dozen companies sell sensors that monitor the electrical, physical, and local environmental conditions of overhead lines. This information enables a range of utility use cases, including fault detection and localization, conductor health monitoring, vegetation encroachment detection and dynamic line rating.

LineVision, from our portfolio, has developed a low-cost, non-intrusive sensor that enables utilities to expand the current carrying capacity of existing transmission lines. It does so by monitoring conductor line sag in real time, allowing the current rating of lines to be adjusted when weather conditions permit. Following an initial deployment with National Grid in the US, National Grid Partners helped introduce the startup to our Electric Transmission business in the UK. LineVision’s first UK deployment is poised to help unlock 600 MW of offshore wind capacity that would otherwise be curtailed, reducing the cost of electricity to UK citizens in the process.  

Analyze & Model

Greater situational awareness creates an opportunity to improve the process of planning and operating the grid with better analysis and modeling. New data sources and horizontal technologies like artificial intelligence and cloud computing are helping enhance the functionality of traditional utility software tools, such as outage- and distribution-management systems.

These emerging technologies are also yielding new capabilities and tools. There are multiple companies, many of them startups, focused on helping utilities and renewable project developers plan and forecast the market and the physical effects of changes in power generation and demand.

As for real-time operations, there are startups whose software is designed to help utilities evolve from asset owners to fully distributed system operators. They aspire to help utilities orchestrate the operation both of their own assets and of customer-distributed energy resources for the benefit of the wholesale market and local distribution networks.

To date, we've invested in one company in this category, SparkCognition. They use AI to help asset owners move away from time-based maintenance to predictive maintenance, making use of real-time information on assets in the field.

This is also a category where we’ve facilitated introductions between National Grid and startups outside our portfolio. Two years ago, National Grid’s US integrated planning group approached our team for help. Energy networks have historically been planned independently. But as the owner of overlapping electricity and gas networks, the planning group foresaw a need to eventually design and operate our networks as one integrated system. How else could they estimate the cost and extent of electric network reinforcements needed to transition natural gas customers to heat pumps, renewable natural gas and carbon-neutral hydrogen?  

We vetted and introduced the group to several companies, including Encoord, whose software is designed to model coupled energy networks. National Grid went on to become a customer and perform a first-of-its-kind implementation.

Control

Control is the third element required to manage emerging electric system supply- and demand-side stresses. Over the last several years, National Grid and other utilities have pursued and received regulatory approval to invest hundreds of millions of dollars in so-called Grid Modernization initiatives. Control technologies like Volt/VAR optimization and the operational telecommunications networks to communicate with them are a major element of these programs.

In parallel, a handful of startups have developed the next generation of control technologies. These range from technologies for measuring and injecting artificial inertia onto the grid to devices for controlling the flow and quality of power at both the transmission and distribution level. National Grid’s electric transmission business in the UK is one of the first companies to deploy Smart Wire’s power flow control technology. These devices are being used to reroute renewable power from bottlenecked substations to nearby, under-utilized circuits, unlocking an additional 1.5 gigawatts of capacity.

To meet the rapid growth in electricity demand, National Grid says it will need to build five times more new electric infrastructure in the next eight years than it’s built over the last three decades.

Some of the capital must go to reinforcing the existing grid, but much of it is needed to expand the size of the network. Earlier this year, National Grid created a new business unit in the UK, Strategic Infrastructure, to deliver on what it’s coined “The Great Grid Upgrade.” This new group is responsible for delivering 17 major new projects, primarily geared at helping achieve the UK government’s ambition of connecting 50 GW of offshore wind by 2030. The group recently issued a call for supply chain partners to deliver on the first nine projects, representing £4.5 billion of network infrastructure construction.

Building new T&D infrastructure at unprecedented pace in populous and developed countries like the UK and US requires new ways of siting and designing towers, lines and substations. Traditional, manual approaches are too slow, siloed, and prone to risk. They’re also inadequate at comparing options and bringing local stakeholders along in the process.   

At National Grid Partners, we’ve invested in and facilitated commercial introductions for multiple promising startups focused on geospatial visualization, route planning, optioneering and design. Our portfolio company Sensat, for example, automates the infrastructure planning process by creating a high-resolution, multi-layered digital twin of a project, helping teams visualize and collaborate more effectively.   

The Great Grid Upgrade will also require next-generation T&D lines and new ways to install them. There’s a growing list of startups using new materials and designs to develop higher-capacity conductors (for use overhead) and cables (for use underground). Higher-capacity conductors are useful for reconductoring existing rights-of-way, as well as maximizing the value of new rights-of-way. New technology also is being developed to reduce the cost, risk and environmental impact of installing conductors and cables. This includes using drones rather than helicopters to string overhead lines and using trenchless tunneling systems to install underground lines.

TS Conductor and VEIR are two startups innovating to increase conductor capacity. TS Conductor, one of our portfolio companies, has developed a new type of high-temperature, low-sag composite conductor that’s lighter weight and can carry twice as much current as a standard line. With the opening of its first US manufacturing facility earlier this year, the company’s technology is poised to have immediate impact.

By comparison, VEIR is earlier stage but could deliver a further step-change improvement in carrying capacity, albeit not until the end of the decade. The company is developing a new, more cost-effective way to cool high-temperature superconducting lines, a technology that has the potential to carry 5–10x the power of existing technology. Late last year, National Grid Partners helped broker a collaboration agreement between the company and National Grid. The goal is to leverage National Grid’s engineering expertise to help accelerate VEIR’s commercialization timeline. In exchange, National Grid is getting an early look at a technology with potential implications for thousands of miles of lines the company operates in the US and UK.

Although often overlooked, major investment in new T&D infrastructure is critical to achieving net zero. BloombergNEF estimates the global electricity grid may need to double in length by 2050, reaching over 93 million miles in total – the distance between the Earth and Sun. Emerging grid technologies have an important role to play both in helping manage and optimize existing networks and in facilitating rapid further expansion of the grid. As the company’s eyes and ears in the external innovation ecosystem, National Grid Partners continues to scout for new and relevant technologies in this and other areas that can help National Grid lead the energy transition.  

In our next post, we switch focus to the demand side of the net zero equation. We’ll cover emerging technology and business model companies geared at decarbonizing energy use in buildings.

Kristian Bodek is an Investment Director at National Grid Partners. He focuses on energy and climate-related startups and is also responsible for National Grid Partners' limited partner investments in third-party strategic venture funds. Previously, Kristian was a senior member of the power practice at IHS Markit (now a part of S&P Global). He holds a BS in Physics from Bates College; MS degrees in Mechanical Engineering and Technology & Policy from MIT; and is a graduate of the Kauffman Fellows Program.