Navigant Research Blog

Utilities Boost Efficiency with Smart CVR

— March 18, 2014

Dynamically optimizing voltage levels via sophisticated smart grid technologies, smart grid conservation voltage reduction (CVR) continuously reduces energy consumption and demand during peak periods, when electricity prices are inflated and demand may exceed the available energy.  At American Electric Power (AEP) in Ohio, 17 circuits have already been equipped and tested with smart CVR capability, and the initial results were so promising that AEP Ohio is now doubling down on this technology.  Utilidata will deploy its advanced CVR solution on 40 more circuits at AEP Ohio.  Ram Sastry, director of distribution services support at AEP, is confident that smart CVR will give the company’s energy efficiency program a turbo boost.  Also in Ohio, Duke Energy aims to have a systemwide smart CVR deployment (a project called Integrated Volt/VAR Control, or IVVC) in full production by 2015 to reach the state’s energy efficiency and peak reduction targets over the next 10 years.  Duke Energy used a small portion of the $200 million the company received in Department of Energy (DOE) smart grid investment grants to help finance the CVR investments in Ohio, one of many states that now incorporate CVR as an energy efficiency resource.

Untapped Potential

The DOE investment grants, combined with companies’ matching investments, are expected to result in the installation and/or automation of about 18,500 capacitors nationwide between 2009 and 2014, according to a recent presentation from the DOE.  (Automated capacitors play an integral role in most smart CVR projects.)  This is a large sample set of automated capacitors, serving as a nationwide demonstration of smart CVR, spurring osmosis between utilities and capturing interest from the National Association of Regulatory Utility Commissioners.  Not all 18,500 automated capacitors are to be used for smart CVR, but even if they all were, that would represent only enough capacitors to populate a small fraction of all substations and feeder circuits in the United States.  In other words, there’s a large, untapped market for smart CVR.

Government smart grid funding is nearing its end, but manufacturers and vendors of smart grid equipment and CVR software solutions will soon see a nice boost from increased adoption of smart CVR outside of DOE-funded projects.  Navigant Research’s Conservation Voltage Reduction report analyzes the market for smart CVR in North America.  While the market is still forming, revenue from smart grid equipment and software products dedicated to CVR solutions is expected to reach $30 million to $40 million this year.  With an intention to meet efficiency targets, most major utilities are already piloting various CVR control schemes.  As more large-scale deployments are expected to ramp up over the next few years, smart CVR component sales are expected grow into a $100 million market annually by 2017.  Total utility spending associated with smart CVR, including planning, installation and systems integration costs, could easily be 2 to 3 times higher.


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