Taking A Sustainable Approach to Grid Modernization Investment Planning

It has already been established that the current transmission and distribution (T&D) grids are obsolete. But the move away from this obsoleteness is not far behind either. Global investment in T&D systems at the end of the last decade reached well above $250 billion. It is projected to reach over half a trillion US dollars by 2040. And if we talk about the global investment in all energy-related projects, the number reached well over a trillion US dollars by 2021. It only stands to question where such colossal sums of capital are going towards.

Let us look into some of the factors driving the need for grid modernization and the investment strategies and policies devised to cater to each one.

Improving Grid Reliability

Increasing and evolving consumer needs are dictating the direction that the power industry is taking. T&D operators, designers, and engineers are continually having to reconsider the safety, reliability, and resilience of the current system. The second half of the last decade was rife with extreme weather conditions. These events, coupled with the advent of the Covid-19 pandemic, have reassured the need for increased grid reliability. Appropriate investment decisions are hence required to address these concerns.

The Polish National Electric Power System

The Polish transmission grid, for instance, is currently capable of sustaining the security of the country’s electrical supply. However, in extreme weather conditions and the projected increase in demand, threats to the security of this electrical supply are imminent. In such prospects, investments to expand and modernize the 400 and 220 kV transmission grids will be required in addition to improving the export and import capability of the National Electric Power System.

Integrating Smart Technologies

Advancements in renewable energy technologies bring with them both challenges and advantages. The increased T&D capacity in response to the energy produced by such means is imposing great pressure to modernize the grid.

Furthermore, grids are now having to integrate Distributed Energy Resources (DERs) in their T&D systems. Storage solutions like electric vehicles (EVs) and battery technology are making long-distance T&D a much easier prospect than it ever was before. But the integration of such smart technologies, in addition to advanced metering, requires state support in the form of economic frameworks and legislations.

The U.S. Government’s Efforts Towards Grid Modernization

The North American electric grid is truly one of the most expansive and marvelous of its kind. Taking a look at the grid modernization plans that the Department of Energy (DOE) and the Office of Electricity (OE) are devising give us quite the insight on the future of investment in smart grids. The OE is known to have invested in the research and development of advanced technologies and analytics that help the grid both directly and indirectly, the latter by policy-making activities. The U.S. government is also known to back efforts for modernizing the U.S. grid such as the passing of the Energy Independence and Security Act of 2007 that provided legislative support for such national grid modernization efforts.

The DOE also devised an economic evaluation framework to help with investment decision-making. This framework is divided into three stages of planning, deployment, and evaluation. It instructs stakeholders to perform objective-setting, coordination, identification of investment needs, objective linking, investment evaluation, and finally investment execution.

Adhering to ESG Obligations

Ever-increasing pressure from communities, non-profits, and even consumers themselves has been one of the major driving factors for the move towards a modern grid. Environmental, Social, and Governance (ESG) goals have risen in their ranks of importance and are impacting how and where investment decisions are made.

The energy industry is also transitioning to cleaner and greener alternatives. And while the environmental aspect of it is definitely the major driving factor, the associated increase in energy generation is not to be taken lightly either. Moreover, customers are increasingly demanding for more digital solutions, both for increased accessibility and transparency.

American Policy-making for Climate Action by the Power Sector

In addition to the grid modernization efforts outlined above, the U.S. government also signed a $550 billion Bipartisan Infrastructure deal in August 2021 that gives great attention to job-building and overall infrastructure improvement. $15 billion from this sum goes towards developing electric vehicles and busses for the express purpose of addressing the climate crisis. However, the most striking aspect of this deal is the whopping $73 billion being invested towards clean energy transmission in America. This was powered mostly by the Texas power outages earlier last year that revealed the inadequacies of the antiquated power grid. This sum is said to be for investment in next-generation clean energy technologies including those involved in carbon capture, hydrogen utilization, and nuclear energy generation.

Furthermore, another policy, Clean Energy Payment Program deployed in October 2021, is aimed at significantly reducing the greenhouse gas emissions associated with the electric power sector. Under this policy, the DOE encourages utilities to adhere to their climate change remediation targets by issuing grants to those that are successful. Such policies further enhance grid up-gradation potential and help utilities integrate both proven and newer technologies in an attempt to rectify the climate crisis.


The traditional production of electricity far from its consumers is no longer the case. The depletion of resources ignited the drive for more efficient methods of production, transmission, and distribution. For utilities to stay competitive or even exist in the changing business and resource landscape, they are having to adapt. This need paved the way for grid modernization efforts which, as expected, cost quite a sum to finance and necessitate efficient investment planning.

Leaving traditional investment planning techniques behind, Aptimize brings forwards innovative technology and helps you devise a value- and risk-based approach to asset management. It also helps you visualize all your assets in one, clear-cut place from where you can decide which data is most important to you and accordingly make informed investment decisions.

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