Navigant Research Blog

A Tragedy of Interests in Stalled Exelon-Pepco Merger

— March 17, 2016

modern square and skyscrapersExelon Corp.—the technologically progressive parent company to Commonwealth Edison (ComEd), PECO, and Baltimore Gas and Electric (BGE)—has faced multiple setbacks in its bid to integrate Pepco, which would make for the largest utility merger to date in North America. In 2014, Exelon’s and Pepco’s boards of directors unanimously approved a cash-based merger between the two companies. Both have been early smart grid movers, with Exelon’s subsidiary ComEd being among the technological leaders in both smart grid and smart cities innovation, and BGE receiving $200 million in Smart Grid Investment Grant (SGIG) funding for 2008-2012. Pepco Holdings, Inc. (Washington, D.C.) received over $50 million from SGIG for investments in advanced metering infrastructure, distribution automation, and customer experience improvement.

Ratepayer Advocacy, of Sorts

Following over 12 months of negotiations with the District of Columbia Public Services Commission (PSC), the merger has been delayed due to controversy over the insulation of residential ratepayers through 2019. The original plan, heavily advocated by D.C. mayor Muriel Bowser, had negotiated over $78 million to support environmental projects, low-income assistance, and workforce training initiatives, while funding a cap on residential rates for the next 4 years.

The PSC’s argument in rejecting the merger was that the plan created an imbalanced structure of support for residential ratepayers that federal funds and private businesses already supported. As such, it countered with a plan to place the $78 million in PSC-controlled escrow accounts, with none of that being set aside specifically to offset rate increase.  That plan has been rejected by Bowser, for the obvious reason that it removes her core requirement of placing financial protections on rates for citizens.

In order for the merger to continue, all nine parties involved in drafting the original version must agree to a revised merger proposition. And consensus among these groups, including the Apartment and Office Building Association (which supports the PSC ruling and protests the lack of assurances against commercial rate increases), and the D.C. Office of the People’s Council (which has rejected the PSC’s proposed changes reason similar to Bowser) might be a taller order than had been originally anticipated by the companies.

 

India’s 100 Smart Cities Program Spurs Investment and Criticism

— October 28, 2015

Narendra Modi, India’s new prime minister, has embraced technology more so than any of his predecessors. With 15.7 million followers on Twitter (I was happy when I reached 100) and more than 30 million Facebook followers, the global leader recently made an imprint on the high-tech epicenter of Silicon Valley, visiting a number of companies there last month to talk about how technology can help India face difficult social, economic, and environmental issues. His 100 Smart Cities program is a landmark of this philosophy, aspiring to develop new urban spaces to support overwhelming population growth, adapt to climate change, and create a modern economy. But many have asked if this program really has the capability of supporting these development needs, and if it is instead channeling funds away from areas that desperately need support.

Modi introduced his program in June of 2015, just a month after taking office, pledging a short term investment of $1.2 billion for the planning of projects across the country to be completed over the course of 7 years. Other countries such as Japan, the United Kingdom, Singapore, and the United Arab Emirates have also promised billions in investments. Indian cities planned for upgrades and development are predominantly located in the economic corridor between Delhi and Mumbai, as well as in Special Investment Regions and Special Economic Zones where there are fewer restrictions upon international business and investment.

The program’s flagship city of Dholera, located in Modi’s home state of Gujarat, has been in planning mode since 2009 and is currently under construction, with completion expected in 2020. Plans for the megacity include a modernized smart grid infrastructure that supports high levels of renewables and a citywide communications infrastructure and smart city platform that supports both public and private sectors.

Challenges Loom

But aside from Modi’s smart city plan is the fact that much of India will still remain severely underdeveloped. A number of Indian and international development groups have spoken out about the negative impacts of developing isolated super cities while the rest of the country remains underdeveloped and without adequate public infrastructure and access to utilities. Large parts of the country still need to be electrified, and many that are suffer from as much as 40% capacity losses from theft. This has led to a troubled financial state for many of India’s utilities, which are expected to struggle to balance these issues and attract financial support for smart infrastructure investment.

Developing smart cities as a top-down initiative leaves room to overlook the ground-up steps required to effectively meld together technology and community interests. Without citizen participation as an integral part of planning, even if citizens have access to smart city infrastructure to some degree, what are the chances that it will be relevant to them? This is a concern particularly with the country’s poorest citizens, which remain a majority of the population in the country, and may face loss of farmland in areas where smart cities are scheduled to be developed on top of it. Additionally, a large part of this population is dispersed among the outskirts of many cities—how can centralized smart infrastructure provide support to those that can’t easily access it? Modi’s planning, as big and impressive as it sounds, still has some issues to address in order for it to enable economic growth for all of India’s citizens.

 

Proposed ASHRAE Standard Enables Smart Facility to Smart Grid Communication

— August 24, 2015

The Facility Smart Grid Information Model devised by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the National Electrical Manufacturers Association (NEMA) is open for public review until October 6, 2015. The purpose of the standard is to define an information model to enable building automation systems and appliances in commercial, industrial, and residential facilities to manage electrical loads and generation sources in response to communication from a smart electrical grid. As a result, utilities and electrical service providers also receive information about electrical loads and distributed generation production. The standard is also under consideration for adoption as an international standard by the International Organization for Standardization.

The Benefits

An improved information model can be extremely beneficial to facilities. If energy characteristics of a facility’s energy consuming, storing, or producing systems can be tracked and communicated between the grid, facility managers will better understand what factors are affecting their energy consumption. They can then find ways to effectively reduce the energy consumption of their facility. The facility also gains the ability to receive information from the grid; information on supply shortages, real-time energy pricing information, or demand response signals can be received and adjusted for by facility operators. Enhanced grid communication will allow for operators to be more aggressive with energy management.

For utilities and energy providers, the information model enables communications with various facility types through a common protocol.  The energy providers can then more accurately forecast energy demands and responses to any energy supply constraints.

Interoperability

Smart grid cyber security and interoperability are challenges of great significance. Under the Energy Independence and Security Act (EISA) of 2007, the National Institute of Standards and Technology (NIST) is primarily responsible to develop the standards for information management to achieve interoperability of smart grid systems and devices. To generate the requirements needed for interoperability standards, a Smart Grid Interoperability Panel (SGIP) was formed by experts from the fields of communications technology, power and transmission, renewables, transportation, energy storage, regulators, consumers, and smart buildings. The Facility Smart Grid Information Model is a supporting effort by ASHRAE and NEMA to help the SGIP.

Enabler for Technologies

An approved and standardized information model will allow for enhancements to enabling technologies. Building automation system manufacturers can then enhance product offerings to better monitor and manage facility equipment with received information about supply shortages or real-time energy prices. Generation or storage systems can also be optimized for potential weather impacts or supply shortages. The Facility Smart Grid Information model is an important step toward information exchange between facilities and the grid. Looking ahead, it can drastically change the landscape of building energy management.

 

Smart Grid Demo Results Reveal Efficiencies, but More R&D Needed

— July 17, 2015

The Pacific Northwest Smart Grid Demonstration Project (PNW-SGDP), one of the largest in the United States, has been completed, and the project’s latest report shows a variety of new technologies can indeed reduce costs and improve energy efficiency. Additional research is required, however, to advance smart grid deployments elsewhere, according to project managers.

Transactive Control

One of the focal points of the 5-year PNW-SGDP was to evaluate a transactive control system in which decisions are distributed across the grid, even allowing consumers or individual devices to make informed choices about usage. This system is based on a two-way communication process that uses signals about the delivered cost of electricity and the amount of power needed by end devices, such as a smart appliance. The system shares information along the grid, from generation sources like dams or wind turbines to a residence. According to one of the models developed by IBM, peak demand in the Northwest could be reduced by 7.8% if 30% of the region’s grid used the necessary demand response (DR) equipment.

Saving Money, Energy

Some of the cost savings shown in the project were significant. For instance, smart meters with remote turn-on and turn-off functionality could eliminate more than 2,700 service calls a year and save an estimated $235,000 annually for Avista Utilities in its Pullman, Washington, service area. Avista also tested controls that lowered distribution system voltage by 2.1%, which would translate into about 7.8 GWh of annual energy savings, or about $500,000 in reduced annual costs for its Pullman distribution power lines.

Challenges

The project also uncovered some challenges for utilities. For instance, some of the participants were not prepared for the large amounts of data generated by the equipment, and occasionally data was mislabeled with incorrect units or times. In addition, a lack of technology standards made it difficult for various equipment to interoperate, which required extra effort to get products from different vendors to work together. Also, the relatively nascent market for the equipment created issues, especially when some manufacturers went out of business or stopped servicing their gear, and some of the equipment just failed outright.

The $179 million project, which was led by Battelle, included 11 utilities across five states (Idaho, Montana, Oregon, Washington, and Wyoming), the Bonneville Power Administration (BPA), two universities, and multiple technology companies. Funding came from the federal American Reinvestment and Recovery Act (ARRA), through the Department of Energy’s (DOE’s) Office of Electricity Delivery and Energy Reliability, and from matching money from participants.

The PNW-SGDP lays a foundation for further grid modernization. Other utilities and stakeholders can leverage these findings and adapt them for their own future needs. And though the research is not fully conclusive, as the report authors point out, there are useful baseline results to work from which can enable the next wave of grid innovation.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Smart Grid","path":"\/tag\/smart-grid?page=2","date":"2\/18\/2018"}