1 developing an investment strategy with the smart grid investment model tm jerry jackson, ph.d.,...

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Developing an Investment Strategy with the Smart Grid Investment Model TM

Jerry Jackson, Ph.D., Leader and Research DirectorSmart Grid Research Consortium, 37 N. Orange Ave, Suite 500

Orlando, FL 32801 Jjackson@smartgridresearchconsortium.org 979-204-7821

Smart Grid Research Consortium Conference & Workshop

Rosen Shingle Creek, Orlando, FloridaOctober 20-21, 2011

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Smart Grid “Best Practices”

• Smart Grid 1.0: ? 2010o AMI/smart meterso Customer pricing/engagement focus

• Smart Grid 2.0: 2010 o Distributed communication,intelligence and control throughout the

distribution system Substation, feeders Equipment in businesses and homes

o Integration of distributed resourceso Questions concerning customer program impact persistenceo Data & data analytics reflect new challengeso Smart grid options as part of a comprehensive, integrated strategy

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Expanding the Scope of SG Options Complicates Investment Decisions

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What Does This Mean for Utility Investment Analysis? • The good news

o AMI/smart meter costs/benefits more well definedo Growing number of DA “use cases”o Recognition that SG investments are complicated

• Challengeso Customer DM program benefits may decline over timeo Comparing metering/customer programs/DA applications

is difficulto Each utility is uniqueo Cost/benefit calculations are no longer simple

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Consider a Simplified SG Investment Analysis Question

• Utility considering AMI/smart meter, demand management and DA investments

• Which,if any, investments should be undertaken now

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Options?

AMI/Smart Meters

Communications/Software/Hardware

Customer Demand Mgmnt

Communications/Software/Hardware

Distribution Automation

Communications/Software/Hardware

Distribution Automation

Communications/Software/Hardware

AMI/Smart Meters

Communications/Software/Hardware

Customer Demand Mgmnt

Communications/Software/Hardware

Distribution Automation

Communications/Software/Hardware

?

?

?

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• Consortium’s SGIM considerso Costs and benefits of technologies/applicationso Unique utility/utility customer characteristicso Utility monthly hourly loads and SG load impacts

Avoided power purchase costs

• Conduct “what-if” scenario analysiso Quantitative model framework

Quantitative Financial Investment Analysis Provides Strategy Insights

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Example Coop Analysis Illustration

• “Representative Coop”o ~100,000 customers, 0.65 system load factor; $0.05/kWh, $12/kW

summer; $0.02-0.03/kWh, $6-8/kW spring/fall/wintero Residential: 70% customers, 60% kWh coincident peak kW

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SGIM Cost/Benefits Summary

AMI/Smart Meters Distribution Automation Customer ProgramsBenefits Meter reading Reliability Customer participation

Field services Improved power quality Customer satisfactionOutage restoration Field services Reduced power costsBilling services Outage restoration EnvironmentalTheft/tampering Environmental Distributed energy resourcesMeter accuracy Reduced capital costs Other/new servicesUncollectables Reduced O&M costsImproved cash flow Reduced power costsResource planing Distributed energy resourcesImproved transformer load management

Improved equipment management/planning

Costs Communications Communications CommunicationsSoftware Software SoftwareHardware Hardware HardwareManagement/Operational Management/Operational Management/Operational

Smart Grid Benefit Cost SummaryApplication Area

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• No Customer Programs

Replacing EM Meters With AMI Typically Provides Attractive Returns

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However, More Typical Coops With AMR Systems May Have Difficulty Justifying AMI

• PLC with remote connect/disconnect

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Customer Programs Can Improve AMRAMI Returns

• 20 % PCT/pricing + 30% cust engagement (5% AC/SH savings)

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Consider DA Impact of Conservation Voltage Regulation (Reduction), CVR

• CVR Advantageso No customer participation requiredo Options: manual adjustments full automationo Utility & customer savings

Source: RWBeck

kW kWh

Elec, No AC 0.40 0.25Elec, AC 0.35 0.40Non, AC 0.74 0.60Non, No AC 0.81 0.40

% Change in Voltage 1.00

Conservation Voltage Regulation factor (% change in kWh/kW from 1% change in Voltage)

VVC Objective: Maintain acceptable voltage under all loading conditions

Source: EPRI

Source: Distribution Efficiency Initiative Study

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• $50k/substation; 1% voltage reduction

How Does CVR Stack Up as a 1st Step ?

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• $250k/substation; 4% voltage reduction

More Extensive Conservation Voltage Regulation Saves Even More

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• Additional 1% voltage reduction using meters for EOL voltage• Without customer programs in this scenario

CVR Savings Can Justify a DA/AMI Initiative at the AMR Utility Even W/O Cust Programs

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Conclusions

• CVR turns out to be a better primary option in this situation than o AMI based on reasonably well-defined cost/benefitso Customer demand management programs based on impacts

and concerns over impact persistence• Advanced meters can be included in a CVR strategy

providing EOL measuring/monitoring in addition to traditional benefits

• Results depend heavily on customer end-use hourly loads and avoided costs

• Results can be expected to vary considerably from utility to utility depending on infrastructure and customer characteristics

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Consortium’s Smart Grid Investment Model Provides More “Real-World Detail”

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Along With More Insightful Graphical Results Presentations

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Smart Grid Investment Model Supports SG Investment Strategy Development

• Detailed characterization of utility infrastructure and customer characteristics

• Forecasting customer class-end use hourly loads and program impacts

• Incorporation of all SG technology/program impacts

• Ability to conduct alternative “what-if” scenarios