Navigant Research Blog

Integrated Demand Side Management Gathers Steam Through Targeted Approaches

— March 17, 2016

Network switch and UTP ethernet cablesIntegrated demand-side management (IDSM) has been a topic among DSM professionals and utilities in the United States for a decade. However, efforts to integrate energy efficiency and demand response (DR) in utility programs thus far has been challenging, and little progress has been made. Traditionally, energy efficiency and DR have been siloed within utilities, with misaligned goals and barriers to transferring funds between programs. Yet, the integration of DSM programs has become increasingly popular, especially in places such as California, where the combination of these programs has been used as a fundamental part of the state’s energy planning and strategy.

There is no standard definition of IDSM at this point in time, but the most common definition combines energy efficiency and DR technologies. There is also an aspect of integrating electric and gas DSM programs. More recently, integration has evolved to include other resources such as energy storage, solar, and fossil fuel-based distributed generation. The key drivers for advancing IDSM include technical, policy, and economic factors, such as increasing DSM goals and regulatory pressures, program cost reduction potential, targeted DSM, grid modernization, and smart thermostats.

Barriers to Overcome

However, the slow rate of IDSM program development points to a number of barriers to be overcome. These include utility organizational structures and budgets that are siloed and hard to cross-promote; energy audits that don’t consider both types of measures; cost-effectiveness and measurement and verification challenges with accounting for both types of benefits and potential double-counting; vendor conflicts of interest; and niche, early-adopter customer markets that may not accurately reflect the mass market potential for these offerings.

The move toward targeting DSM to specific distribution-level areas with high load growth or infrastructure constraints appears to be a growing trend. Historically, DSM programs were administered state- or utility-territorywide as a means to reduce overall system energy usage. As the electric grid has aged and general load growth has slowed due to economic conditions and the success of large-scale DSM programs, a more discreet form of DSM may be more effective and efficient. Even if systemwide load growth slows, many utilities will still have areas on their network with higher growth rates due to residential or commercial development.

An all-of-the-above DSM approach is valuable in such cases, since it may be unrealistic to have separate energy efficiency and DR vendors and marketing efforts to a small geographic territory. A combined effort makes sense so as to not overload customers with multiple messages. The concept of a non-wires alternative (NWA) has entered the lexicon, where a utility will look at other means of meeting its reliability requirements at a lower cost than a traditional distribution capital expenditure upgrade. Utilities such as Con Edison, National Grid, and Central Hudson have recently initiated such targeted DSM programs to address acute system needs.

Navigant Research’s new report, Integrated Demand Side Management, covers these topics and case studies in addition to forecasting of future growth of IDSM. As utility models, policies, and technologies evolve, the integration of various resources will only increase in practice and importance.


With Renewables Revolution Comes Industry Debate

— June 15, 2015

Alongside the renewables revolution, the energy industry has found itself in the midst of a substantial debate.  And this is not just in a technical sense; it’s in an economic and existential sense, as well.  The technical considerations of integrating renewables can be highly variable from one geography and transmission and distribution (T&D) network to the next. Similar to economics, which are also bound tightly to policy, the existential debates have been grounded upon anything from environmentalism and perceptions to differing levels and sources of information, etc.  Because of this complexity, I do not envy those bodies currently tasked with pulling together an effective plan of attack to promote and support integration of renewables and distributed energy resources (DER).

The first need to address is gaining a stronger understanding of what is occurring at the edge of the distribution grid from an electrotechnical perspective in real time or near real time, or establishing highly comprehensive network monitoring and accurate situational awareness.  This is then followed by implementing appropriate and cost-effective control and support solutions. It sounds easy, but it is far from it. Traditionally, the sector of the distribution grid past the distribution substation has not been monitored and controlled according to actual conditions—at best, assets have been programmed to react according to sensed or forecasted conditions. The concept of developing a real-time model of more centralized parts of the network is only something that has been achieved in the past decade.

But grids that have high penetration of DER and renewables require comprehensive monitoring and situational awareness right down to the resource itself—that eerie last mile of the grid.  This is because the intermittent nature of renewables and the presence of bidirectional power can easily disturb voltage profiles, creating issues with stability and capacity in the distribution network.  The utility needs to be able to sense these disturbances before it can figure out how to cope with them.

As an analyst for the energy and utilities industry, I have watched renewables and DER-enabling technologies over recent years as they’ve transgressed from theoretical to real, tested, and in a growing number of cases, proven as effective.  Recently, the information, operational, and communications (IOC) technology sectors have produced a number of unique offerings for real-time network monitoring and situational awareness.

Diverging Perspectives

In the running for success, there seem to be two general schools of thought—the centralized enterprise approach, filled by distribution management system vendors, and a school of more alternative solutions that can act as distributed standalone systems or can sit on top of an enterprise system.  A commonality between both categories is that they largely revolve around the integration of a greater number of devices (both DER and new networked equipment such as sensors and power electronics), and they rely on big data analytics to develop situational awareness in an unpredictable DER environment.

The key difference is that one simultaneously manages the utility network as a whole—a highly complex process—but one that has the potential to optimize goals across the organization.  The other one acts as a standalone solution that is isolated to a smaller number of use cases depending on technological and organizational needs and can be a much smaller overall investment that achieves required results—but there is so much gray area surrounding the efficacy of each approach.

Navigant Research’s recent report, Grid Edge Intelligence for DER Integration, provides an overview of these different technology segments and competitive analysis for different companies involved in the fast-growing market for technologies that integrate DER.


Smart Grid Deployments Moving Ahead in Latin America

— June 3, 2015

Smart grid deployments in Latin America have struggled to gain traction in recent years compared to North America or Europe. But that is starting to change. Significant projects in two countries—Brazil and Mexico—are moving ahead, with vendors being selected in recent weeks.


Eletrobras, Brazil’s leading electric utility, has chosen several technology vendors for a smart grid project that involves six of the utility’s distribution subsidiaries. The utility selected Itron’s new OpenWay Riva solution that enables a single network to support two communications technologies (radio frequency and power line carrier) in the same device. The result is an adaptive system that can dynamically choose the best path for communicating based on network conditions, type of data, or application requirements. The solution is supported by Cisco’s IPv6 network infrastructure.

Other vendors selected for the Eletrobras project include Siemens, Telefónica, and Telemont. Approximately 115,000 endpoints are expected to be deployed at the six subsidiaries in the states of Alagoas, Piaui, Acre, Rondonia, Roraima, and Amazonas. The goal of the project is to reduce theft of service, a chronic problem in Brazil. Full implementation of the project is expected to be complete in 2017.


In Mexico, Comisión Federal de Electricidad (CFE), the state-owned electric company, has selected a number of vendors for its smart grid project in Mexico City’s Central District. Silver Spring Networks was chosen to provide its IPv6 network, which enables connectivity to cabinets that house a group of centralized meters. In addition, vendors chosen to support the project include Elster and Tecnologias EOS. Elster will provide its EnergyAxis software and field network devices in addition to its REX2, A3 ALPHA, and mREX2 smart meters. A total of 300,000 meters are expected to be deployed, according to Elster. Similar to Eletrobras, the goal of CFE’s project is to reduce theft of service, which can be substantial. Nearly 15% of CFE’s total electricity production was lost due to theft or defaults in 2013, according to the utility, and in some areas of Mexico City, that figure surges to more than 35%.

Theft Reduction and More

Clearly, the main driver for smart grid deployments in these two projects is the same: theft reduction. But beyond that, the technologies being deployed lay a foundation for additional smart grid applications. For instance, Eletrobras has indicated it will add outage detection and analysis along with improved transformer load management. And while these two projects do not necessarily portend a wave of similar deployments, they do represent a next step toward grid modernization by leading utilities and are likely to be imitated by others across Latin America in coming years.


States to Utilities: Modernize the Grid

— January 21, 2014

My recent blog discussed California’s roadmap for integrating demand response (DR) and energy efficiency (EE) into its markets.  Around the same time, at the end of 2013, New York and Massachusetts released orders requiring significant structural changes in the way their electric utilities operate and how demand-side resources are incorporated into the wholesale and retail markets.  It’s valuable to look at these developments as a trend rather than isolated cases.

The New York Public Service Commission’s order approving the state’s EE programs for the next year is typically a rubber stamp.  This time, however, it included some strong language about the future role of EE and DR will play as central components in grid planning.  “The Commission and other policy makers can no longer afford to think of energy efficiency and distributed clean energy resources as peripheral elements of the electric system that require continuous government support.  Rather, the time has come to manage the capabilities of these customer based technologies as a core source of value to electric customers.”  The Commission, therefore, will begin “articulating the broad policy based outcomes” for these clean energy resources that “will result in timely decisions regarding changes to our regulatory model, including performance and outcome based incentives, that will be required to achieve our broad policy objectives.”

10-Year Plan

The Massachusetts Department of Public Utilities, meanwhile, released a long-awaited order on its Grid Modernization program that took place over the past year.  This order establishes four grid modernization objectives: reducing the effects of outages, optimizing demand, integrating distributed resources, and improving workforce and asset management.  The department proposes to require each electric distribution company to develop and submit to the department a 10-year strategic grid modernization plan that includes a comprehensive advanced metering plan.  It plans to address three other specific topics in separate proceedings: time varying rates; cyber security, privacy, and access to meter data; and electric vehicles.

Massachusetts is further along on specifics, but the message is clear that both states see the need for drastic changes to their utility regulatory frameworks.  While some people talk about these developments as the death of the utility industry, California, New York, and Massachusetts all seek to include the utilities as part of the future solution.  They don’t expect instant changes, but they will require faster action than the typical utility is used to.

External market forces may push things even faster than that pace, however, so utilities must become nimble, not relying on the regulators to protect them.  Distributed generation in the forms of solar photovoltaic and combined heat and power will continue to proliferate due to economic and environmental drivers.  Businesses and consumers will demand better service, access to data, and flexible pricing options.  The potential for increased storm activity will necessitate more resilient systems.

The states may make the most public news for grid modernization, but utilities will thrive by staying one step ahead of the regulators and helping to craft their own futures.


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