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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 [email protected] 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