The power production capabilities across the world have continuously been on the rise. Even with such an increase in energy production, many countries are facing energy deficit issues. In some countries due to limited supply, the energy prices have skyrocketed. Power authorities are placing their bet on new smart grid technologies to solve the existing problems in the power industry. Data analytics and automation technologies have enabled power companies to implement an efficient smart grid infrastructure. Smart grid provides benefits such as quick electricity restoration after power disturbance, reduced peak-time demand, integration of large-scale renewable energy systems, and reduced operations and management costs. However, implementing smart grid poses its own set of challenges. Here are some of the challenges faced by the energy industry companies while implementing smart grid systems:

High operating cost

As per the recent Reuters report, implementing smart grid system in the US National power grid will cost up to $476 billion over the next 20 years. The necessity of a large communication and distribution network escalates the capital and hardware costs significantly. Apart from such infrastructural costs, energy companies will also have to invest heavily in smart grid R&D to assess the evolving benefits and costs.

Transition from legacy systems

Data management will pose a big challenge in the implementation of a smart grid. It accounts for all aspects of collecting, analyzing, storing, and providing data to users and applications. Additionally, it also includes data transition from old legacy systems. This in particular is a big challenge as old legacy system usually cannot be retrofitted with new technologies, which brings the need for entirely new technological solution. Companies also face issues when the volume of data grows from multiple sources such as vendors, municipalities, power utilities, IPP, and consumers at an unprecedented rate.

Complexity of smart grid

Smart grid is a complex machine that takes in input from multiple sources of data to efficiently distribute energy at a speed of light. The complexity arises as a result of multiple data sources, which will complicate the power distribution process. The smart grid has to take into account user behavior, human responses, as well as intelligent and automated responses, gathered from the analysis of massive amounts of data. On top of that, the power companies and government will have to take decisions based on financial constraints and environmental requirements.

Cybersecurity and data privacy

Another challenge faced by the energy industry during implementation is the prevention of damage to, exploitation of, unauthorized use of, and restoration of electronic information and communication systems. Companies are facing issues to ensure confidentiality, availability, and integrity of customer and operational data. Since the smart grid is a widely interconnected system, privacy is of significant concern for the power companies. The problem arises when assigning multiple levels of access to information for various stakeholders.

For more information on challenges in implementing smart grid, smart meters, advanced metering infrastructure, and demand response:

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