The missing piece of the grid puzzle

“We have the technologies and the capabilities but need to resolve the investment outlook,” says Estibaliz Goñi of i-DE in a conversation with Jonathan Spencer Jones.

i-DE, Iberdrola’s Spanish distribution business, manages approximately 40% of Spain’s distribution network covering 270,000 km of lines across its 200,000 km2 service area.

Like other European distribution operators, the company faces significant challenges including transforming from a ‘network operator’ to a ‘system operator’ and meeting demands for a net-zero transition by 2050.

The growing demand for small distributed PV, electric vehicles and heat pumps, along with the need for widespread electrification, is driving the necessity for substantial investments in grid infrastructure.

In Spain, for example, under the draft national Integrated Energy and Climate plan, the required investments in the transmission and distribution grids are estimated at €53 billion between 2021 and 2030, or approximately €5.3 billion per year, much of which (70%) will be needed in the distribution network.

This means doubling the current investment limit in the country. Estimates from the International Energy Agency go even further: it foresees $0.70 of investment in networks for every dollar invested in renewables in this decade, increasing this ratio to 1 in the next decade.

“We have a huge challenge ahead of us in terms of investments,” says Estibaliz Goñi Gaztelu, i-DE’s Director of Processes and Technology, pointing to the competing areas of grid modernisation, automation and the underlying digitalisation.

“These are all intertwined – the transmission grid needs to be expanded to connect new sources of clean energy and the distribution grid needs to be prepared with more flexibility and cybersecurity for the distributed generation.”

She further emphasises the necessity of balancing investments between modernisation and resiliency to improve the quality of service and increase its flexibility.

“Ultimately, customers should be at the centre in every decision we make. For example, if we want to improve the quality of service, we need to modernise our network if we want to keep it resilient and reliable. Also, we need to reduce the environmental risks – a core value for us that should be key for every utility company.”

Goñi says that digitalisation is essential for the transition from DNO to DSO, and that to advance in this area, innovation is mandatory.

“We are adamant about innovation, and the flagship for us is our Global Smart Grids Innovation Hub, which was created in 2021 and is consolidating our position as a global centre of innovation and knowledge on smart grids.”

She explains that the Hub, located at the company’s headquarters in Bilbao, is a private-public initiative between i-DE and the Provincial Council of Biscay, and is comprised of an ecosystem of collaborators including vendors, manufacturers, academia and start-ups.

Indeed, any organisation that feels it can contribute to its aims and benefit from the collaborative opportunities it offers can also extend to Iberdrola’s activities outside Spain, such as in Latin America.

“It’s not just innovation for the sake of innovation,” Goñi says. “We work hand in hand with this huge ecosystem to promote innovation, and we look for marketable solutions to fit this innovation into the grid.”

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Innovation at i-DE

With the creation of the Global Smart Grids Innovation Hub, i-DE aims to double the number of innovation projects in smart grids, where more than 120 projects have been identified for future development of grid digitalisation solutions, integration of renewables, deployment of electric vehicles and energy storage systems.

Artificial intelligence is currently prominent among these kinds of projects, with examples including its use for network operation (the Automatic Replenishment Algorithm), asset management and predictive maintenance as well as vegetation management, which in turn enables improved quality of service and prioritisation of investments.

Another example is the Innovation Data Space (IDS), a virtual laboratory where real data sets are shared in safe conditions in order to speed up AI-based innovation. More than 30 external companies are ready to use this lab to test their algorithms.

Images – captured by drones, satellites, mobile field applications or other methods – can be mined and leveraged by AI to improve asset information and business processes. In addition, generative AI initiatives are being developed to aid field workers in searching for the right procedures to enhance safety and effectiveness in field operations.

Customers at the centre

Customers are at the centre of these projects, with Goñi commenting that digitalisation is as much about them as it is about devices and the grid.

“We have the customers deep in our minds when we digitally size processes. In particular, we invest a lot of time and effort in improving the customer experience with our applications, such as providing real-time access to their smart meter data and enabling them to be in control with the way they consume energy,” she says.

Another area she mentions is outage service restoration, which has led to online provision of planned-maintenance maps.

“We are very proud of the algorithms we use to provide expected restoration times, and we’ve made huge improvements over the last five years in the way we calculate this,” she comments, noting that the information is useful not only for individual customers but also for communities and policymakers.

“At the end of the day, we feel that we need to lead the market as we play a leading role in the energy sector, and we want our entire ecosystem to accompany us. We feel that the energy transition is not progressing at the right pace, and the targets are getting out of reach, if we don’t speed up.”

Goñi says Spain currently faces a specific investment challenge, with a cap on investment and a low rate of return compared to other countries – both of which she hopes will be changed before the next regulatory period, which commences on 1 January 2026.

“We want to put more investment into the network, but we have this cap. We are pinning our hopes on improvement in the next regulatory period, and we also want to be able to make anticipatory investments.”

She adds that this issue is not unique to i-DE and Iberdrola but is applicable to all Spanish energy companies, which have collectively submitted their proposals to the regulator, the Comisión Nacional de los Mercados y la Competencia (CNMC).

A delay in the investment pace will put the energy transition at risk. This could result in lost opportunities for the country as a whole, impacting customers as well as Spain’s competitiveness and energy security.

Challenges and opportunities

Data is key for companies such as i-DE. Goñi says the company defines itself as data-driven and has designed and implemented a data governance model.

“We have a number of policies and procedures in place to ensure the quality and integrity of data, and to make it available to support decision-making processes across the organisation and to share through the innovation Hub,” she says.

“We also are working hard in terms of awareness to make sure that people have the digital skills they need to manage data properly, with the landscape of European common data spaces evolving rapidly.”

She also comments that the wider shortage of digital skills is becoming ever more apparent, and that there is a need across the whole ecosystem for more effort towards reskilling and upskilling the workforce.

“All of us across the value chain – network operators, manufacturers, universities and policymakers – need to develop this talent, as it is getting more and more difficult to recruit.”

A second major challenge is the long lead times, in some cases more than ten years, for construction, permitting and connections of projects.

“This is a barrier for the necessary pace of electrification and renewable integration. It is the paradox we are living. Customers want new connections, but find out that there is a lack of capacity in the network.

“So we need to make sure the grid is prepared in a timely manner. If we don’t speed up, it will become the bottleneck.

Collaboration is critical at local, national and European levels as we have the opportunity, before it becomes too late.”

Originally published on Enlit World.