Smart Grid

Developing a Business Case for Grid Automation – How hard can it be?

Everybody is looking for economic justification to support their smart grid investment actions. While there is a need for prudency and accuracy in projecting all of the costs and in capturing and monetizing the resulting benefits associated with building greater grid resiliency the effort in doing so is not trivial.

A few years back, during the height of the frenzy associated with filing for grants under the American Recovery and Reinvestment Act (ARRA) for Grid Modernization a key driving factor that weighed into the award process, was being in a state that was “shovel ready”. This readiness implied that a level of diligence and analysis was completed; the economic assessment was done; the technology was selected and the only barrier to starting the project was obtaining approval to spend the money.

In retrospect, many of the projects that were submitted and that were subsequently approved were fast-forwarded. Some of the rigors of the detailed economic analysis and benefit assessments were “swagged” in order to be classified as being ready to start. Fifty-cent dollars subsidized by the government was a great motivator for action.

Kudos and accolades should be rightfully given to the Government and the DOE in driving this stimulus effort forward. Many of the advancements we see today in grid automation are a direct result of ARRA funds, an achievement that would not have been possible had the Smart Grid Investment and Demonstration Grants been mired in a lengthy bureaucratic machine.

However, now is the time to fully leverage these investments to further advance the vision of a truly Smart Grid. The industry needs to make better use of this new grid automation infrastructure that is at the core of a cohesive platform that is built on the concept now being called the Internet of Things (IoT).

For example, millions of smart meters now cover the US. The data gathered by these assets should now be used for additional purposes, such as power quality measurements and end of line voltage monitoring. Additionally, the communications infrastructures that provides the core of Advanced Metering Infrastructures (AMI) can support more than meter reading; they can (or should be) integral to a codified field communications design, which to fosters the potential for greater proliferation of Distribution Automation functions, such as Fault Location, Isolation and Service Restoration (FLISR).

Current actions being undertaken by many utilities to execute more accurate Conservation Voltage Reduction CVR programs are a prime example of the multiple use of the new technologies funded by ARRA, many of the cost justifications developed for AMI did not give fair consideration to this benefit. The investments being made in this space, demonstrates how access to timely data can spawn improved applications.

In a similar manner, the data that now resides in OMS and GIS applications can now can help pinpoint and identify feeders and customers in critical areas that would significantly benefit from greater use of switching and service management to provided greater fault tolerance treatment.

Yes, a valid business case justification should still come into play, and will be required by regulators, and stakeholders as a measure of prudency and diligence. This is especially true in a time when downward revenue pressures, greater customer quality demands and growth of microgrids places the traditional wires utility in a unique future investment position.

However, it is again time to take the leap of faith, much like the era of the ARRA, where although some of the cost benefit analysis efforts failed to monetize all of the salient benefits, we are today reaping unseen values from grid automation that result from using advanced technologies. With the advent of tools that capture, monitor and track field information, we can and should move forward with higher levels of performance confidence while not overly focusing on two-decimal places of accuracy in our models.

Peter Drucker’s suggestion of action which was Ready, Fire, Aim, can lead to the potential of a stalemate with regard to Grid Automation advancements if the process of readiness gets burdened in unnecessary labors of planning. Many hunters know that firing improves the accuracy of aiming, provided that they adjust their sights after firing.

I welcome your thoughts and comments.


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