Considerations in Developing a Smart Grid Strategy and Roadmap

It was only just a few years ago when the industry buzzword was Enterprise Asset Management (EAM). When the EAM trend was in full gear, it seemed that almost every vendor in the industry touted its products and solutions as an EAM offering. This, of course, presented a challenge to the utility industry since there was no clear definition of EAM. And although there was lots of validity to the claims of benefits gained through an EAM solution, the approaches and strategies for deploying an EAM system varied widely depending on the solution provider. Energy Management System (EMS), Outage Management System (OMS) and Supervisory Control and Data Acquisition (SCADA) vendors approached it from the point of view of real-time monitoring, management and control of the network. Work Management System (WMS) providers claimed the benefits of EAM were achieved by automating and optimizing the work-order processes within a utility. Mobile dispatching software vendors claimed an EAM strategy was all about optimizing the order processing and field crews scheduling so assets could be better managed. GIS vendors offered that EAM was best achieved by improved tracking of the utility’s T&D network and associated field assets. Performance dashboard solution providers claimed that without a performance monitoring dashboard, an EAM strategy would be remise of its true benefits – after all, one needs to keep track of numerous performance indicators in near-real-time in order to proactively improve system reliability. Others approached EAM from the point of view of field inspections and conditioned-based maintenance practices. In truth, all of the above played important roles as utilities began to form EAM practices within their organizations. And the focus ultimately shifted toward a disciplined approach for portfolio optimization and applying strategies related to the entire asset lifecycle investment and work planning decisions.

What held true then, holds true today for the newest industry buzzword – “Smart Grid.” The biggest challenge is to have a common vision for the Smart Grid around which the industry can align itself. The definition of “Smart Grid” is still somewhat unclear across the industry. Each utility seems to have its own definition – or areas of prioritization. Advanced Metering Infrastructure (AMI), Meter Data Management System (MDMS), Home Area Network (HAN), Energy Management System/Distribution Management System (EMS/DMS), Distribution Automation (DA), Substation Automation (SA) and Demand-side Management (DSM) technology providers claim that they offer Smart Grid solutions. But without a clear definition, developing a strategy and roadmap for Smart Grid can be a daunting task. Indeed, Smart Grid is a reality with today’s technology and solid system engineering. These Intelligent Infrastructures combine business systems with specialized energy distribution automation devices to form an integrated electric and communications network, which bridge and support the interactions between the energy producer and consumers. Energy distributers will be able to communicate in real-time with their customers and, under certain demand-side management programs, even control customer usage. But where should utilities start to build the right foundation for a Smart Grid?

To achieve the right foundation, one needs to first take a holistic view of the future of Smart Grid. What’s driving it and what are the ultimate objectives and benefits to be gained? Secondly, one needs to develop a strategy and a roadmap in order to move forward.

Why Smart Grid?

It’s safe to say that t oday’s grid is aging and becoming more unreliable, and in turn costing utilities and consumer billions of dollars. It also does not address the 21 st century’s increasing demand for power supply. Over the next 10 years, power demand is expected to increase by roughly 19% while supply is only expected to increase around 6%. Modernizing the grid will lead to substantial benefits, including improved reliability, security and safety. It would also be more environmentally friendly.

Increases in functionality have been particularly evident in the arena of AMI. Meters are now “smart” with data storage, remote disconnect/reconnect, voltage monitoring, net metering, remote firmware upgradeability and full two-way communications. All of which have made building the business case much more compelling.

Additional advances made in DMS, wireless mesh grid communication networks, substation automation equipment and Intelligent Electronic Devices (IEDs), and the need to automate their management are also making this a reality. Furthermore, the utility commissions are making it economically feasible to deploy territory-wide wireless communication infrastructures and encouraging ‘green’ behavior.

The key to a successful Smart Grid strategy for each enterprise is to first examine its people, processes and policies. A full understanding of the corporate environment and the business objectives is the foundation for a successful solution. Therefore, it’s best to start out by clearly defining the drivers and associated cost/benefits in support of such a strategic roadmap; a roadmap which encompasses all aspects of the utility enterprise, including asset efficiencies, operational effectiveness of the utility, distribution automation practices, delivery and demand side management best-practices, and the all important “meter-to-cash” processes.

A well thought-out and planned Smart Grid roadmap needs to focus on the convergence of the numerous interrelated business processes with the supporting IT Infrastructure needed – both in the near as well as long-term to mitigate risk, while maximizing the potentially significant investment needed for success. This requires a systematic approach that starts with understanding the business objectives and the organizational impacts, followed by a business strategy for achieving the best ROI. Only then can utilities implement information systems and technologies that are appropriate to support their Smart Grid strategy. The Smart Grid strategy must effectively leverage existing functionalities from numerous enterprise systems including advanced metering infrastructures, meter data management systems, customer information and billing systems, geographic information systems, maintenance and inspection plan modeling applications, network and load analysis systems, work management systems, energy and distribution automation management systems, material management systems and supply chain management systems.

Synergist Benefits Considerations

The right Smart Grid strategy can appreciably increase utility service reliability and quality, improve operational efficiencies and customer response, and facilitate greater energy efficiencies. There are some key benefits of leveraging technology convergence. Integrating Smart Metering, Distribution and Substation Automation, SCADA, DMS applications, Demand Response (DR), and EMS applications to support broad functional requirements transcends the traditional boundaries of any single system. In an integrated environment, these systems work in concert to deliver a full range of advanced benefits.

Most of these technologies are currently deployed in various degrees in utilities. A Smart Grid builds upon benefits realized by each technology via an integrated infrastructure aimed at realizing incremental benefits in customer service, operational efficiencies, asset effectiveness and environmental impacts. It will e nable active participation by consumers by allowing them to have access to their consumption patterns: to see what they use, when they use it, and what it costs. This active participation will bring tangible benefits to both the grid and the environment, while reducing the cost to deliver electricity. A Smart Grid will also support various generation and storage options, by seamlessly integrating central and distributed generation and storage systems. It will allow the l arger central power plants, including renewable energy sources such as wind, solar and advanced nuclear plants to play a bigger role in the grid. Further advancement will also support an increase in the number of distributed generation sources.

The Smart Grid will also provide improved power quality that is much needed for today’s digital economy. By integrating the various technologies, utilities will be able to have improved monitoring, diagnoses and response to power quality issues. Additional benefits will be seen through optimized asset utilization and operational efficiencies. This includes improved load factors and lower system losses, increased energy delivery through existing T&D network, more efficient infrastructure capital investments, intelligent monitoring and diagnostics, and improved outage management.

In addition to being better equipped to respond to system disturbances, the Smart Grid will be “self-healing” – by performing continuous self-assessments on the various grid components and proactively taking measures to prevent disruptions such as scheduling condition-based inspections and condition-based maintenance activities, minimizing outage impacts, and providing rapid restoration. Lastly, we cannot forget the positive impacts on the consumer. Smart Grid, mainly through AMI/MDM functionality, will provide many positive consumer benefits such as TOU rate options, better outage/reliability, prepayment, and net metering (for cogeneration).

Technology and Integration Considerations

As noted earlier, developing the roadmap for Smart Grid is dependent on the integrations of a wide-range of technologies. Multiple systems need to be integrated to provide maximum benefit. The roadmap to achieve this will require several major “milestones” including successful deployments of an AMI, next generation distribution and transmission operations, and next generation Asset Management systems. It’s also critical to note that an essential component of the Smart Grid is a fully-integrated communications infrastructure, allowing for a dynamic and interactive real-time exchange of information by the various intelligent electronic devices such as smart meters, control centers, power electronic controllers, protection devices and the end-users.

The prevailing belief in the industry is that AMI will be the foundation of a Smart Grid. Today’s AMI empowers the customer and supports grid operations. It provides operational costs savings and many customer services benefits. The key components include smart meters, under the glass turn on/shot off (TOSO), two-way communications, DR, DSM programs and HANs.

Building on this foundation, the distribution, transmission and asset management systems will need to be enhanced and tightly integrated to achieve the full benefits discussed earlier. Smart Grid from a distribution operations perspective requires the integration of DMS, SCADA, SA, EMS, Phasor Measurement Units (PMUs), GIS, MDMS, AMI Infrastructure, MWM, EAM, WMS, load forecasting, weather forecasts, load profiles and OMS to support the following Smart Grid advanced applications:

• Fault location detection , isolation and automatic restoration
• Voltage/Var optimization will have large environmental impacts and support the digital economy with power quality improvements
• Optimized switching for load transfers
• Optimized switching for safely reversing operations: knowing ahead of time that after closing a switch, it can be safely opened again
• Managing islanded networks driven from independent power producers (IPPs) and distributed generation sources
• Managing operational-driven DR events
• Intelligent alarming
• Asset management
• Dynamic ratings
• Distributed Generation: Smart Grid networks will allow consumers to install generation such windmills and solar panels.

From a transmission grid point of view, the Smart Grid strategy needs to take into account the wide-spread deployment of IEDs and substation automation equipment inside of transmission substations. Bringing this data back continuously will be the next level of automation, enabling some key Smart Grid functions at the transmission level, including intelligent alarming, asset management/ condition-based inspections and maintenance, dynamic ratings, and state estimator.

It’s important to note that each of the above technologies must be carefully examined for selection or enhancements in order to ensure that the needed functionality exists. The roadmap will then need to prioritize and offer a realistic deployment and integration plan for the various technologies to avoid potential delays or costly mistakes that could make it prohibitive to attain a truly ‘Smart’ Grid.

Regulatory Considerations

Today, Smart Grid is a more proactive discussion between utilities and regulators. Utilities are spending considerable effort in developing or updating Smart Grid strategies as commissions are now activity pursuing them.

For widespread adoption of Smart Grid, the traditional practice of spending money to increase the rate base no longer applies. The rules of the game need to change to incentivize utilities to change their behavior developed over the last 100 years of business. Wouldn’t a new power plant be easier to develop for a utility? How, therefore, do utilities get incentivized to move forward with the Smart Grid? Certainly, the Energy Independence and Security Act of 2007 (EISA) could help with grants and the federal government could assist with faster depreciation schedules. Methods such as the “Negawatts” programs may be another game changer. By investing to reduce electricity demand instead of investing to increase electricity generation capacity, this "virtual generation" method can grow supply by improving the efficiency of existing electrical equipment rather than by building new power stations. If utilities can invest in DSM programs and gain a return on this investment in a similar fashion as a new generation facility, this could create a boom for DSM programs. However, if utility commissions do not incentivize their utilities enough to invest in all of the technologies and system integrations required to achieve a Smart Grid, this could certainly be a big obstacle to overcome.

Next Steps

There are many things to consider when developing a Smart Grid roadmap. The roadmap lifecycle starts out by developing a strategy that takes into account the internal and external drivers, the organizational impacts on people, processes, and policies, and the supporting IT infrastructure needed to make it all happen. These drivers and cost/benefit impacts then drive the development of a detailed business case and the supporting rate case with the regulators. Next steps include the upgrade and/or procurement of the integrated infrastructure components. These need to be accomplished in a prioritized and systematic way, along with some potential pilots to validate the technologies. The next step is full deployment, taking into account all the organizational change management components to insure a smooth deployment, while mitigating risk. But it doesn’t end there. Steps need to be put in place to continuously review the technology, measure the intended benefits to be realized, and ultimately launch a renewal or refresh of the technology as the next new buzzword hits the industry.

Contacts:

Mehrdod Mohseni, SVP, mmohseni@enspiria.com

Dave Elve, Strategic Accounts VP & Principal Consultant, delve@enspiria.com

Tom Helmer, Solutions Architect, thelmer@enspiria.com

www.enspiria.com