U.S. utilities are gaining valuable lessons from technology developments abroad.
Charles W. Thurston is a Fortnightly correspondent based in Sonoma County, Calif. Email him at firstname.lastname@example.org.
The assumption that the United States is the world’s technology development leader does not necessarily hold up in the fast-changing global utility sector. R&D and implementation of advanced metering, grid automation, energy efficiency and a host of other fields is progressing rapidly around the world. Indeed, countries in Europe, Asia and other regions are taking a leading role in developing, testing and adopting new technology that cumulatively yields the smart grid.
“Greater automation, procedural discipline and better information management are coming together for non-U.S. utilities, which is driving more rapid technology adoption,” says Ali Ipakchi, the vice president of integration services at KEMA Consulting in Oakland.
Building out electric systems from greenfield conditions permits many developing countries, such as China, to adopt the latest technologies. U.S. utilities, with decades-old T&D infrastructure, have a more difficult task in developing the business case for installing new technologies. Yet the opportunities presented by these technologies have led many U.S. utilities to launch upgrade programs recently. And the successes of central utilities in other countries have encouraged leading American utilities to reorient system planning from the top down, in a holistic vision of the future.
The U.S. utility industry, with its hundreds of operating utilities and complex regulatory structures, seems unlikely to implement technology advancements as quickly and decisively as do central government-controlled utilities in some other countries. But U.S. utilities are benefiting from the experiences of their international peers, as they apply lessons from abroad to grid development in America.
“North American utilities have a lot to gain by working with their international counterparts,” says Mark Lauby, manager of reliability assessments at the North American Electric Reliability Corp. (NERC) in Princeton, N.J. “While the North American electric industry has developed specific strengths, like workforce optimization, utilities from other parts of the world have developed different strengths.”
According to NERC, notable examples of global leadership in key new technologies include: Europe in energy efficiency generally; China and India in advanced flexible AC and high voltage DC (>750 kV) transmission systems; China and Russia in ultra-high voltage (1,000 kV) AC transmission; and Denmark, Germany, the Netherlands and Taiwan in variable-resource integration (see Figure 2). “In Korea, ongoing government-funded research is geared toward providing the plug-and-play utility systems of the future,” Lauby says.
Another example, outage performance management, has placed Taiwan’s TEPCO at the global forefront of system reliability. While U.S. utilities generally operate with a System Average Interruption Duration Index (SAIDI) of 120 to 160 minutes, European utilities have reduced that figure to the 60-to-80 minute range, and utilities in Asia, Singapore and Hong Kong have kept SAIDI to a single digit, while TEPCO has a target of 5 minutes or less (see Figure 1).
Perhaps the best known non-U.S. utility technology program is the advanced meter infrastructure (AMI) system developed by Italy’s ENEL, which includes some 30 million smart meters. Now running for about five years, ENEL’s program has been emulated across Europe, which has leapfrogged AMI development in the United States, where the advanced-metering trend began. “Today, Europe is about two to three years ahead of the United States in smart metering,” says Jeff Lund, vice president of network energy systems at Echelon Corp. in San Jose.
The Case for Isolation
In fact, some U.S. utilities are looking abroad for instances of technology deployments. ENEL’s project, for example, helped Southern California Edison sell its 5-million meter AMI proposal to the California Public Utilities Commission. “The ENEL project was probably the most advanced in smart metering in the world at that time,” says Rob Wilhite, KEMA’s vice president of intelligent networks and communications.
But in general, utilities in the United States have not embraced new technologies being employed overseas. Their reticence is caused by a variety of factors, with both positive and negative implications for customers and shareholders. The primary limits to adoption include cost, testing, regulations and a lack of awareness.
Cost is the classic reason U.S. utilities have been slow to adopt new technologies, irrespective of whether utilities are using them overseas. “A lot of the new technology has been cost-prohibitive, but over the last few years, many costs have come down,” says Hugh Bridgen, director of metering and technical services at Chatam-Kent Services, in Chatam, Ontario. “When we started looking at advanced metering, it would have cost $300 just for the meter itself, but now meters sell in the $100 range.” C-K Hydro uses an AMI system developed by Tantalus of Burnaby, B.C., which has added to the 1 million smart meters now deployed in Ontario.
Hidden costs of electronic systems also can outweigh hardware and installation costs, making business cases elusive. “Costs for new AMI will not be dominated by installation, but rather by communications and integration costs,” Lund says.
The need for field testing also delays implementation. Staged implementation programs that result from the need for field testing also can cause utilities to commit to technology that will be obsolete by the time it is installed. “With some newer technologies, there is a fair amount of uncertainty in terms of how well it will perform,” says Wilhite.
And unlike the United States, where technology trends are driven more by industry priorities than government requirements, regulatory mandates in Canada, Asia and the European Union are a driving force behind smart grid initiatives. “The utility business cases for advanced metering in the European Union depend on energy savings, because of the mandate to reduce end-user energy bills and to reduce the carbon footprint,” Lund says.
Energy efficiency is typically a crucial goal of such government mandates. “I have not seen the business cases for these technology adoptions work unless there is some form of energy reduction or peak demand shifting benefit,” Wilhite says. “An operational benefit is not enough to justify the business case.”
Another reason many U.S. utilities are slow to adopt new technologies is that traditional lines of departmental operation can limit cross-departmental project evolution. A customer service unit, for example, might not see the value of an investment in smart metering if the benefit is perceived to accrue within a load management center. “In the United States, utilities rely more on people’s experience for management, with an incumbent-based operation, than Asian utilities, where operational discipline is high,” Ipakchi says.
In the same sort of cross-jurisdictional conflict, a state located between a new wind farm and its ultimate consumer base might not see the value in building transmission lines across its territory. Thus federal regulatory initiatives or regional pacts may be necessary to foster grid enhancements that involve otherwise isolated utilities or states—both of which are more complicated than top-down planning that occurs in many other countries.
But perhaps the biggest reason U.S. utilities are slow to adopt new technology is a simple lack of accurate information. “There are a lot of myths surrounding new technology that utilities need to get their arms around, so that they can see if it’s real or not,” Lauby says. “That’s why we are forming a task force to bring experts from overseas to meet with U.S. utility people, to help characterize what they need to look at in terms of long-term planning and operations.”
Utilities frequently find difficulty measuring the monetary value of adopting new technologies. Still, some early programs have shown strong economic inducements. In Ontario, where the province mandated the use of smart meters for all customers by 2010, the estimated cost is in the neighborhood of Cdn$2 billion. “For that investment, projections are that over a 10-year period or so, the province will be able to defer some Cdn$25 billion in new generation costs,” Bridgen says. “That’s where the real return comes in.”
An even more rapid return is being tallied in Italy, where ENEL’s estimated E 2 billion investment is yielding a savings of some E 500 million per year, according to Lund at Echelon. The company provided AMI technology for ENEL, among the 1 million meters it deployed in Europe.
“Advanced metering does much more than just meter how much power is used or co-generated,” Lund says. “It also measures voltage, current, phase, and things that may not be a component of the customer bill, but that will provide a better understanding of how a utility’s grid is functioning so it can tell them more about where and how they need to plan investments for building out the grid.”
The societal value of high system reliability is more difficult to measure than economic value, but analysts say such considerations will become increasingly important in the United States, as they already have in Asia and parts of Europe.
Planning the Future
Although U.S. utilities might not be as quick to act as their international counterparts, experts agree the U.S. utility industry is moving into an accelerated part of the adoption curve—particularly in grid automation technologies, now that telecommunications costs have declined and services have improved. “Many U.S. utilities will be jumping into big programs,” Lund says. “But we are a little more conservative here than overseas, so they’ll want to pilot before going to mass deployment.”
Such efforts as Duke’s Utility of the Future project (see sidebar) and demonstration centers like those at CenterPoint Energy, Oncor and other utilities also will educate consumers and encourage U.S. utilities to adopt new technology sooner, notes Wilhite. Additionally, government programs at both the state and federal levels might drive forward technology development and implementation.
“Utilities in California used to spend large sums for new technology R&D, but between R&D and implementation is the Valley of Death,” says John Wilson, an advisor to California Energy Commissioner Art Rosenfeld in Sacramento. “With the advent of restructuring, utilities didn’t want to continue carrying the expense of R&D, so the California Energy Commission inherited the initiative.”
As part of the California Commission’s Emerging Technologies Coordinating Council, Pacific Gas & Electric is tapping state tax funding to bring U.S. and foreign technologies to its customers in a variety of projects. In one such program, hotel room energy usage could be cut by up to 40 percent through the use of occupancy sensor switches, which can shut off air conditioning and lighting automatically.
“This technology is common in Europe, but has not yet been adopted by hotels in this country,” says John Mejia, PG&E’s program manager for emerging technologies resources. Cumulatively, these projects could contribute up to 50 percent of the utility’s overall goals for energy efficiency, depending on market acceptance.
Ultimately, market forces will determine how development dollars are spent. For example, if utilities fail to offer enough energy efficiency capabilities to their customers, someone else will.
“A separate market that offers home-based technology options may develop, in which white goods have the hardware and algorithms embedded directly,” Wilhite says. “If not, there may be a third-party market for direct control of these devices, which could match up with energy service providers through unregulated utility subsidiaries or other energy service providers.”
And regulation is expected to drive more technology adoption as energy efficiency—including key performance indicators—and carbon-emission limits gain importance in public policy. “Federal standards (including estimates) on renewable generation and their impact on the grid may be underestimated, since some of these assets are far removed from the grid,” Wilhite says. “Bringing distributed resources into the grid will change power flow planning for the future.”