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Building the Next Generation Utility

Fundamental changes require bold strategies.

Fortnightly Magazine - January 2009

excellence techniques as a core part of their strategy to drive revenue growth through operational improvements.

The T&D Conundrum

The challenges on the generation part of the value chain intimately are tied to those found in T&D. Utilities are struggling to determine how to upgrade the existing grid, understand the threat of demand destruction so they can dimension the system for peak demand, expand and adapt the grid to cater for distributed generation and renewables, and enable evolving customer needs and expectations.

Theme 5: An integrated perspective on the smart grid will drive the future for T&D despite untested financial benefits and large technological uncertainty in the distribution system. The U.S. electrical grid was built during the middle of the 20th century. Now, more than 50 years later, infrastructure components are operating well beyond their designed lives. The past decades have been characterized by massive underinvestment in T&D. System upgrades are inevitable and overdue, and this is where smart technologies enter the equation. While many utilities refer to their AMI-smart meter programs as smart-grid programs, smart grid actually encompasses three major components: smart metering, smart grid and smart in-house technology.

Smart-metering technology is the starting point for any smart grid strategy. In the last few years the technology has reached a point where the business case for action is clear and supported by a broad range of benefits including improved data collection, remote connect and disconnect, better theft detection, more accurate load forecasting, improved power-quality monitoring and outage management, and superior customer service. In addition, smart meters support real-time pricing that will allow for peak load shaving and alleviate strain on the utility grid, thus improving reliability and decreasing outage frequency.

Smart-grid technologies are broad ranging and include distributed sensors, remote control devices, smart substations, power stabilization software and pattern recognition software, to name a few. The business case for smart grid technology is not yet as attractive as for smart meters due to the longer term and unproven nature of the benefits and uncertainty surrounding costs. However, numerous utilities, driven by a core belief in smart grid within the C-suite, undertake deployment pilots supported by a well founded, albeit long term, financial business case. Xcel Energy’s Boulder smart grid city pilot is one of the more significant examples today. In most of these early deployments, the projected benefits are tied to automatic detection and response to network problems and faults, reduced outage frequency and duration, decreased energy loss and theft, improvements in power quality monitoring and rectification and reliability, and reduced expenditure through condition-based maintenance.

Smart in-house technology is still in the early stages of maturity and includes programmable controllable thermostats, smart appliances ( e.g., PHEV controllers), communications hubs and home area networks. While we are still in early pilot stages, the benefits contemplated further reinforce those attained through smart metering by driving the next level of automated demand response.

Smart technologies will allow the customer to have a better understanding of electricity usage, which will translate into a reduction in the information asymmetry between the utility and its customers.