Here’s how to build energy infrastructures fit for the future

(Extract from an article by Cedrik Neike, Member of the Managing Board, Siemens AG originally published on


One key characteristic of modern civilization is its dependence on critical infrastructures such as those used for providing power, transportation and water. These infrastructures are becoming increasingly complex, intelligent and interconnected.


Will these advances also make systems more vulnerable to technical risks and external threats? Or could growing technological sophistication actually make these integrated systems more resilient? The example of energy infrastructure reveals evidence of both aspects.


The transformation of energy


The world of energy is undergoing a massive transformation. It is moving away from fossil fuels and a centralized supply provided by a few power plants and towards renewable energy sources like wind turbines and solar power systems, in conjunction with storage technologies and a distributed structure.


On top of these significant shifts, a broad range of energy consumers are expanding the ways in which they use electricity – for example, in heat pumps, electric vehicles and power-to-X technologies. That’s why people around the world are increasingly talking about the emergence of an “all-electric society.”


This transformation presents us with major technical challenges. Uncoupling energy generation and consumption in terms of both time and space makes systems considerably more complex - and this complexity increases with every new distributed unit that is incorporated into the energy system.


Germany – an energy-transformation pioneer – had about 1,000 large power plants supplying electricity to its industrialized economy in the early 1980s. Today, it has 1.7 million ‘plants’ generating electricity, including many solar-power installations on the roofs of private homes. The resulting rise in complexity makes maintaining stable grid operation costlier and more difficult. In particular, the costs of expanding the grid and managing its capacities are climbing.


The more we know, the earlier we can react


On the positive side, these new assets – which now tend to feature digital connectivity – enable us to gain ever-deepening knowledge of the systems, especially in the case of systems that were not previously equipped with sensors. And the more we know, the faster we can detect problems and intervene with a remedy – or save time and money by performing maintenance or upgrades before a disruption occurs. So end-to-end digitalization and networking will not only offer greater efficiency and transparency, but will also provide a basis for creating infrastructure that’s more robust and more flexible – and thus more resilient.


In many cases, added technical complexity brings the advantage of greater flexibility. This flexibility then enables large, integrated systems to anticipate and prepare for problems and changes, adapt accordingly and rapidly recover from setbacks. In other words, enhanced flexibility translates to enhanced resilience.


Microgrids bring more flexibility


One example of how technological progress can boost flexibility and resilience can be found in New York City, where power was out for days in the aftermath of Hurricane Sandy. Following this disaster, a young startup called LO3 developed blockchain-based innovations for optimizing the local generation, storage and use of electricity.


The basic idea was to employ microgrids - small, local networks of electricity consumers - to enhance power-supply efficiency. Today, private homes are generating electricity that their neighbours a block away can also use, thus optimizing local supply channels. This distributed power supply system, controlled through blockchain technology, has proven that this approach can work.


As a next step, LO3 and Siemens intend to ensure that blockchain-based microgrids can even continue to operate during a blackout. On a larger scale, such microgrids could provide a sustainable way to secure a more reliable supply of power for large cities.


We’re already moving in this direction. Yet the steps being taken towards digitalization are often still limited to domain-specific data integration. What’s missing is across-the-board infrastructure networking – a form of connectivity that would yield genuine improvements and enhance the efficiency of urban systems.


Such smart city applications offer vast cost-cutting potential. The McKinsey Global Institute projects that savings for cities worldwide by 2025 could be as high as $1.7 trillion. An important factor for deploying such applications through the networking of urban infrastructures is the coalescence of buildings and power grids.


What makes infrastructures smart? Connecting buildings and grids


Buildings are ever-smarter and increasingly benefit from connectivity. Many modern buildings don’t just consume energy, they also generate it using local photovoltaic installations or heat-and-power combined cycles. In addition, they can then store or distribute energy in the form of electricity or heat. And buildings are now being integrated into the power grid by way of energy and data exchanges.


The energy system, for its part, is increasingly distributed. The power grid won’t end at an industrial plant or home. Its real terminal points will be the equipment that generates power on one end of the grid or consumes power at the opposite end. So full system optimization must go beyond the grid connection point.


Siemens wants to play an active role in shaping these developments right from the start. As a result, the company is combining its existing business operations in power grids, infrastructure and buildings to form a new “Smart Infrastructure” Operating Company that will open for business on April 1, 2019.


The interplay between power grids and buildings will yield greater efficiency in power generation and greater sustainability. In addition, it will open up new opportunities to develop resilience in the face of rising complexity. These advances will make future infrastructure both more digital and more resilient. (…)