Sep 27, 2025
Virtual Substations Are Here—And They’re Reshaping the Grid
Software developers, cybersecurity experts, and others in the computer industry have been working with virtual environments for years. Virtualization allows for more effective server provisioning, which has given us cloud computing. Virtualization is changing other industries too, and it has finally found its way into substation engineering.
A May 2025 blog post on the Nokia website breaks down virtualization in the energy sector from the standpoint of modernizing the operational technology (OT) so critical to utilities and their operations. It's definitely worth a read if you're interested in understanding some of the finer details of why utilities are now getting into virtualization. But if you are not even sure what a virtual substation is, this post is for you.
A Basic Definition
A virtual substation is a digital substation built on advanced technologies. Its core protection, automation, and control systems are managed in a software environment rather than being totally dependent on hardware devices. Within the software are virtual hardware equivalents, running in the cloud and powered by some pretty impressive software engineering.
There are three points worth mentioning here:
Deployed in Virtual Machines – Physical relays, meters, and controls are replaced by software controls in a virtual substation environment. The substations run on what are called virtual machines (VMs). These VMs run on computer servers in the cloud.
Cloud Substation Management – Because physical components are replaced with their virtual counterparts, substation management no longer requires a physical presence. The virtual substation can be completely managed in the cloud, remotely, even for maintenance and upgrade purposes.
Governed by Standards – This new method of substation engineering is governed by industry standards. Standards like IEC 61850. Virtual substations are built to be secure, offering redundant IT architecture to maximize uptime and facilitate interoperability.
It's all made possible by a variety of digital sensors that keep track of everything in real time. Data from those sensors constantly streams to and from the cloud so that adjustments are made on the fly.
Key Benefits of Virtualization
If your career revolves around substation engineering, the benefits of virtualization should be apparent to you. At the top of the list is hardware consolidation. The number of physical components required in a virtualized environment is significantly fewer compared to the traditional substation. Less physical hardware also means:
Lower maintenance needs and costs
Less wiring for engineers to deal with
Easier deployment and upgrades
A virtual substation is a more efficient substation from a management standpoint because all management is both remote and centralized. Everything from upgrades to repairs and system monitoring can be handled in a remote software center rather than on-site.
Scaling is yet another important benefit. As with everything else in the cloud, virtual substations are easily scaled in either direction. Everything from new controls and protection systems are made better with automation. The entire system responds in a more agile way to both grid changes and evolving distribution requirements.
Not Without Their Challenges
As experts in substation engineering, we don't want to give the impression that virtual substations are perfect in every way. They are not. Indeed, they are not without their challenges.
Interoperability is one of the biggest challenges, and it will remain a challenge until the industry addresses differences in vendor platforms, software, device types, and so forth. Of course, cybersecurity is another challenge. Cloud environments need to be secured by the best hardware, software, and strategies to prevent cyberattacks that could cripple the grid.
Virtualization is making its way into substation engineering. While it's still relatively new, it's probably the future of local power distribution.
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