There are generally two types of smart grid deployments: those with smart meters only, and those that also implement distribution automation (DA). The first has an automated metering infrastructure (AMI), a grid populated with intelligent endpoints that transform the utility’s data collection. The second transforms the way a utility tackles outages (and improves grid efficiency) by automating the entire distribution infrastructure – from the substation down to the new endpoints. DA is the brains and backbone that enables and controls a neural network of power distribution.
The U.S. Department of Energy’s Smart Grid Investment Grant (SGIG) program has transformed around 10,000 distribution circuits to date. As the SGIG program nears completion, vendors and utilities are taking aim at hundreds of thousands of aging, poor-performing circuits across the world. And distribution automation will play a crucial role in upgrading these antiquated systems.
The Navigant Research report Distribution Automation analyzes and forecasts the global DA market, covering switchgear, intelligent electronic devices, communications, and popular systems such as integrated Volt/VAR (IVVC/CVR), fault detection/isolation, and feeder protection/control (FLISR). Navigant Research forecasts that global DA revenue will grow from $6.3 billion in 2013 to $11.3 billion in 2020. Reliability, a theme throughout the report, is more relevant than ever as utilities and regulators try to strike a meaningful balance between cost and benefits for smart grids.
Upping the Value
In a recent blog, I wrote about the outages during the tornados in Oklahoma. A regulatory filing from OG&E shows a guaranteed utility savings of over $10 million in 2013. (Not bad, since utility benefit estimates tend to be conservative.) DA deployments will also reduce outage times –saving OG&E customers many times that amount every year. Reduced outage time is a real benefit, but because the benefit of avoided outages does not affect rates directly, they cannot be included in the formal cost/benefit business case. The Oklahoma Corporation Commission tracks outage durations in Oklahoma, and will find some great benchmarking tools in the SGIG reports to estimate customer benefits.
Lessons learned from smart grid deployments, backed by billions in Department of Energy (DOE) grants and company matching, are being tallied and molded into available best practices. At the 2013 Smart Grid Distribution Automation Conference chaired by Navigant Research, the DOE presented initial findings on reliability improvements. Data from four projects showed that the average outage duration dropped 18%. The DOE findings suggest how utilities and regulators could consider the value of reduced outages. More specifically, the DOE suggests using a value of service (VOS) coefficient of $373 per hour (technically per kilowatt-hour) for customers in the commercial customer class (that’s up from $250 in my previous blog). The VOS coefficient is a metric used to describe the estimated average customer interruption cost. An 18% improvement in VOS – reducing the annual outage duration from 100 minutes to 82 minutes – results in a combined annual total VOS improvement of $45 million for 20,000 commercial customers with an average load of 20 kW.
VOS improvements justify significant investments in DA. Such proven reliability improvements are likely to result in favorable rate case rulings for more utilities as regulators are directed by their bosses – the customers – to modernize an aging infrastructure and allow utility investments in grids that are brilliant throughout.
Tags: Demand Response, Distribution Automation, Finance & Investing, Smart Grid Infrastructure, Smart Utilities Program, Utility Innovations
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