Stress Testing the Grid With a Digital Twin (Xcel Energy)

Modern power grids are incredibly robust, but they are still vulnerable to the elements.

Power lines can go down in a storm. Transformers can overheat on a hot day.

And during wildfires, utilities are often forced to shut parts of the grid down entirely. For most of the grid's history, utilities learned about problems after they happened.

But that's changing.

Now utilities can simulate a heat wave or surge of electric vehicle charging and see the stress before it hits.

That shift from reacting to problems to rehearsing them is what this episode is all about.

Today's guest is Markus Johanson, who works on grid strategy and digital systems at Xcel Energy, one of the largest utilities in the US. In this conversation, Markus explains how tools like digital twins, for example, virtual models of the grid, are changing how utilities plan for worst case scenarios and why reliability today depends as much on software and forecasting as it does on steel and concrete.

But before we start, I have something to ask you. We want to give transmission a glow up, and we want you to tell us what's working and what isn't.

So we will put the link to a survey in the show notes. If you could take three minutes to fill it out, we would be very thankful. Thank you. Anyway, I'm Alejandro de Diego, and welcome back to transmission, this time with Marcus Johansson.

Welcome, Marcus. To kick us off, can you tell us what Excel does and what your specific role within the organization is?

Sure. Thank you, Alex, for this opportunity. I'm happy to be here. Good morning to all.

I'm Marcus Johansson. To answer your question about Xcel Energy, Xcel Energy is an investor owned utility that operates in eight states within the North Americas or within the United States of America. We are in the business of generation, transmission, distribution to the end customer. So we kind of run the whole gamut.

We have plants across all of our eight states that generate power via coal, via nuclear, via hydro, and many other ways. The eight states we operate in are South Dakota, North Dakota, and Minnesota, which form our Northern States Power Company of Minnesota, Wisconsin and Michigan, which part which is our Northern States Power Company of Wisconsin, in Colorado, which is our public services company of Colorado, New Mexico and Texas, which is a part of our Southern Public Services. We have about four million electric customers and about two million gas customers. And so my role is I am part of the technology and security services.

I'm a director within that area, and I lead the digital transformation and grid modernization effort, and I recently took over the wildfire mitigation efforts that have a techno technology angle as well.

So you mostly focus on transmission and distribution. Is that correct?

It's across the board. It's transmission distribution. Wildfire goes across all of our business uses as well.

Okay. First question that comes to my mind after hearing the massive footprint that XO Energy has. I can imagine that the different power companies that you have in the parent company operate completely differently. How do you coordinate between each other, and what different strategies does each of them follow?

So it's a great question. So our our effort has always been to standardize across the different com operating companies. So what I would say is if you were to draw some of the business processes end to end, if there are twenty pieces to that business process, about fifteen of them are probably the same, and then five steps within that process may be different based on geography, based on the regulation, based on other aspects. So to handle that, we have opco presidents that work with the regulators and determine what are the appropriate steps or processing that need to be followed by operating company.

Okay. Understood.

I want to jump to the next question, which is that, as you mentioned, you work on grid modernization. Lots of utilities have smart meters and dashboards Already in place. In plain English, what is Excel's digital twin or the grid work that you do?

And what is it a twin of? And what can it do that normal analytics can't? If you would compare departments with the utility departments, where do you stand out and what's your differential?

Yes.

So with the grid modernization effort and digital transformation, we we initiated an effort called Aegis, Advanced Screen Intelligence and Security Okay.

Which was a ten a two billion dollar effort over the last ten years, which rolled out AMI two dot o, which which is our smarter meters. So going back to your question about what is a digital twin, it's a great one because digital twin means different for different people. For a manufacturing facility, a digital twin is about the manufacturing process.

So what it means for a utility is a virtual replica of the distribution of the transmission network, which includes feeders, substations, circuit breakers, reclosers, what have you. It is a virtual replica of that. So now your question about how is it different from analytics or dashboards? So my answer to that would be dashboards are static information. You pull out the data and you you see it, you may drill down, and you get that information.

What a digital twin does with that virtual replica is is basically helping us run simulations and scenario analysis.

So it's basically taking our operational data, asset health data And all laying on top of that environmental data, be it climate, be it weather, and then we can run simulations in case of weather events, like thunderstorms, blizzards, or wildfire events, it tells us or it helps us decide mitigation activities. If it is wildfire, do we go into enhanced power line safety settings or public safety power shutoff, which I'm sure you will ask me more about?

Yes.

Or otherwise, we need to do active preventative maintenance. If a wooden pole has a life of forty years, now with these simulations and scenario analysis, it tells us do they need to be replaced at thirty five years because they are deteriorating faster, because of climate, because of weather, what have you. So the normal analytics that we run doesn't allow us or doesn't give us all the scenario planning and analysis, if you will.

So you mentioned two use cases, wildfire mitigation and then predictive maintenance.

Correct.

Are there any other use cases? And who within the company makes a daily use of that digital twin? Yes. There are other use cases.

So the the wildfire and predictive maintenance are is right in the front end.

It's kind of real time, near near real time actions to be taken. The digital twin is also used by grid engineers and also by our grid planners, which is a part of our integrated system planning team, and also rate case analysts.

So I'll go by each one of them.

The grid engineers so when we deployed AMI with our smarter meters, we are getting interval reads every Sorry.

Excuse me. Could you explain what AMI is?

Yeah. AMI is advanced metering infrastructure. It stands for that. It's basically a smarter meter wherein we can communicate with the meter, and the meter communicates back with us. I see. And it sends us readings on fifteen minute intervals.

So with that information, now we know how much is the customer utilization. So our grid engineers working with the control center operators can run simulations. One quick example I can give you there is, if there's a community of two hundred homes, now we know what is the load needed there. What's the transformer there?

What's the feeder there? But now, we can run simulations to say, suddenly, there are twenty more new EVs coming into that community. How is the load gonna change? Can the transformer handle that load?

Or do we need to maintain that transformer, change the oil, what have you? Or do we need to replace that transformer? So grid engineers are using the digital twin in that simulation exercise.

The grid planners now can do the planning. If a new solar farm or wind farm is coming in or a cluster of EVs are coming in, now they can run simulations of how to change the grid to maintain the reliability and and stability standards. So that's how the grid planners, long term planning, they're using it. Our rate case analysts, because now our regulatory environment is changing, we as utilities are being asked to provide more information, more reports, and more data.

So our rate rate case analysts can take the AMI information, for example, feed it back to the regulators. And it's an ongoing collaboration with our regulators or PUC. As we put together new rate cases, we're using this data to build rate cases. So to give you an example, in the past with smart meters, we used to get a read once a day.

Now we are getting it ninety six times a day.

So we have a lot more data. We can forecast the load. We can put that into a rate case where the load is higher and we need to invest into infrastructure. It helps us that data backs that up so we get less questions. It's more collaborative with the regulators and the views.

Within Excel, we serve final customers.

You're on the retail side as well.

Correct.

If you would explain how your work impacts a final customer, normal person living in their house, how would you tell it to them? What would be the key takeaways for them to remember of the work that you do for them?

So I'll say at least two things in my mind. So with with our digital digital transformation grid modernization effort ages, when we deployed our AMI meters or AMI two dot o meters, we are getting information from the meters which is called last gasp, and that we get when the meter is de energized. Sometimes it's momentary that it's only for a few seconds and it comes back up. But other times when it is sustained, it is an outage.

So in the past, customers used to call us to say there is an outage. But now with the EMI two dot o meters, we know before the customers that there is an outage, a sustained outage, a nested outage, or what have you. So now we can send our remediation team, the fleet operations to those places to take care of the outage, which means what? Which means faster response times, faster remediation, less customer minutes out. Yes. So customer benefits by shorter outage times.

And also with this digital twin, we are able to identify preventative maintenance that can be done sooner. So hopefully, we don't have outages for the customer. Again, weather events we cannot control, so there are gonna be outages, which leads to the next point, which is with wildfire mitigation, that digital aspects of it, we are able to predict and simulate if there is gonna be a wildfire event, how far the wildfires are going to be spreading across. Those simulations help us inform the customers if you're gonna have a public safety power shutoff event. That way, are actively communicating with customers, so customers are not surprised in it. Again, it improves our relationship with the customer.

And because of it, it all could also increase our safety, reliability, and resiliency.

Okay. All of the work that you are doing through the ages initiative that you mentioned that costed two billion dollars and other initiatives that you might be working on, What does it translate to in quantifiable results? Do you have any numbers behind backing the work that you're doing?

Yes. As I mentioned, it improves our SADI safety metrics Yes. Because we are doing preventative maintenance, reduced outage time, and all that. It also reduces the truck rolls. So since we know exactly where the outages are, the teams are going to the right place. They are not fig trying to figure out within a half a block or a block radius. So reduced truck rolls leads to improved productivity and reduction in o and m.

But when when looking at metrics of all of these initiatives, actual numbers of, let's say, capital decisions that have been better made optimized through the data that you got or avoided operation maintenance costs or reliability reliability metrics of number of outages in a give the specific time frame.

Can you give us any of those developments of the numbers throughout time? How they have improved?

So I don't know about the SADESafy ones, but I can say that we have with the reduction of the truck rolls, we have saved about fifteen percent of our overhead maintenance costs when it comes to the outages. Okay. Capital investments. So with the digital twin approach, we are able to optimize where we wanna invest capital that is going to improve our resilience.

So again, there is a ten to fifteen percent improvement in that capital investment as well. Those are the numbers I can give you because other numbers may be more specific and Yeah. They might not be published, so I cannot disclose those numbers. Understood.

How would you say does the initiatives that you are doing with the Nexo stand out compared to the competition to other utilities? What do you do better? Or what are you doing that others might not be doing?

So I would say utility peers are sort of on the same planning field, if you will. But what Xcel is doing is we have our twenty fifteen net zero carbon goals.

We were the first in the utility industry to set those goals.

So that's and that's where we are doing majority of our investments in solar, in wind, etcetera. The other thing I would say is also this digital twin concept. We started with at a smaller scale with AMI, or advanced metering infrastructure. But now we want to expand that to a broader digital twin.

So to quote in our leader's words, Todd Connor, who's the SVP of distribution, we are trying to build Sin City three thousand, which is going to accommodate for weather risk

Which eventually will become all hazard risk, our load risk, our vegetation risk, and our structural risk. So we are embarking on this broader journey of a broader distribution network digital twin. So we can do actively reliability, resiliency, and fragility modeling. So we can proactively do all the things that we had planned for.

So I think that's one of the key differences as compared to other utilities that we are wanting to be on the cutting edge and change our mindset to be on that cutting edge versus utilities traditionally have been the fast followers to the cutting edge, if you I see.

One more topic. Everyone's talking about it, AI. Within this digital twin, are you implementing AI models in any way to automatize processes or for other use cases?

It is in the works. We are actively looking at ML and AI. We are getting so much data now. As I mentioned, AMI data, which is ninety six times or from the previous times.

We are getting sensory data from our gridware sensory devices. We are getting vegetation data from satellite and our vendors as well. We are getting weather data from five different sources. So we're getting tons and tons of data.

So to process that data, we don't have an option but to use ML and AI.

I see.

And you will always try to keep a human in the loop when implementing?

Yes. Absolutely. Human is always in the loop.

Okay. Understood. Now jumping onto the personal side, why are you doing all of this? Why did you decide this career path? And what keeps you keeps your motivation up on a daily basis?

That's an excellent question. So why did I join utilities? Utilities, I joined because it had stability.

But at the same time, as somebody said, it was a two hundred year sleeping giant.

Now that has woken up, and there is nothing but disruption innovation in the utility industry. So that excites me and motivates me more that I am going to be on the cutting edge of this energy transition with an angle of sustainability.

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Enjoy the conversation.

What is the part about Xcel Energy that excites you most looking towards the short to midterm?

What excites me most is Xcel is working towards the twenty fifty goals, but also proactively investing into the infrastructure.

Before we get the data center load in full swing, we are trying to stay ahead of it. So as you might have seen in our q three report that we are investing anywhere from fifty five to sixty five billion dollars into our infrastructure. So modernizing the grid, modernizing the infrastructure, that's what excites me in the midterm. And then there are active investments in AI. We are conducting AI workshops all around our organization to educate everyone about AI, how to use Copilot, how to use AI. So it becomes a part of our DNA, and we're not caught off guard. So I think those two aspects is a conscious decision on our on our leadership part to educate everyone, invest into enter our infrastructure.

That's what excites Okay.

I see. And if I can ask about those fifty five to sixty five billion dollars that you're gonna invest in in the upcoming years, is there a focus within all of the value chain that you provide, transmission, distribution, generation, retail, that you're gonna focus investments on?

I would say that the focus of that would be more on the transmission side, but at the same time, with our WMP, is our wildfire mitigation program that we have filed in Colorado and across other states

We are improving our distribution grid as well. Some places we are undergrounding. Some places we are making peer networks. We are installing reclosers and other devices. So we are enhancing our grid in distribution. I think the investment on the fifty five to sixty five billion may be more on the transmission side.

I see. Jumping to the final part, Marcus, is there anything you would like to pluck or promote to our audience?

As I said, we are building the SimCity three thousand.

So come talk to us, join Xcel Energy. If you get a chance, look at all the opportunities that Xcel has.

Great. And lastly, this is a question that we ask all to all of our guests. What is a contrarian view that you hold about the energy industry? Something you believe that not a lot of people would sure sure.

So this one is my opinion and our excellent energy stands. I will stand with start with that. And this one is gonna be a little bit of a longer answer because I've thought about it. So the in the last decade, there was a fundamental shift.

Utilities were used to a one way street. We generate power, we send it to the customer. In the last decade, it's become a two way street. With the distributed energy resources, so rooftop solar and EVs and other things, there is feedback back into the grid.

So it's become a two way strip. That's a fundamental shift. The second thing I would say is traditionally, utilities are asset owners and operators. Now with the digital twin and everything else around it, all the data that is collected, we need to have a mindset shift of being service orchestrators than just asset owners and operators.

And finally, I would say, which is a paradigm shift, and that is traditionally utilities take products, technology or what have you, from our vendors, Schneider's and Oracles and others. I think we are at a point where we need to have that paradigm shift to drive the need of these vendors of what we need. And also, the build question has come a lot into play because a lot of this is data products that we're building or we need, so we could build them into that ecosystem. So it is again fundamental shift, a mindset shift, a paradigm shift, and the last one is to build a collaborative ecosystem versus each each vendor playing their part.

Now we want a collaborative ecosystem where we ourselves should consider ourselves to be a vendor who can build the products.

Yes. I that's a very good view and I think that will make your daily life a little bit more complex, more complicated. Right? Because you will have to orchestrate between more Is correct?

That is correct.

Oh, I see that you're looking to the future with a lot of energy and I am. Very happy to see that. Yes. And is there anything hopeful that you think about the future?

You know, with the increase in load, everyone is concerned about data center load and all that. So what does the future look like? So I was talking to my son who's eleven year old About this topic. And he said, dad, I have a project at school where I'm going to be a mayor of a city for a day or for a month, what have you. So what he said is, I'm already looking at ways to make our city to be self sustaining with biomass, with geothermal, with solar, with wind. So in my mind, our future is bright because our next generation is already thinking about self sustaining cities even though there is data center load that's gonna take power away.

I'm very happy to hear that. And I think that's also sentiment that I share and that all of the young generations share so that we will work all together to reach those goals. Thank you, for joining us today. It was a pleasure.

Pleasure of mine. Thank you.