The power-delivery system represents one of the most asset-intensive industries on the planet, and reliable daily operation requires an in-depth understanding of how these assets perform. An asset is defined as a physical resource, but for those managing a utility’s assets — transmission lines, distribution circuits, transformers and circuit breakers — these physical resources might feel more like liabilities. This may be particularly true when considering most utilities have a hodgepodge of parts and pieces making up their systems, often with little more than spreadsheets and flow diagrams to keep track of them.
Add to that today’s shifting priorities, regulatory changes, customer demands and financial pressures, and it is no wonder so many managers feel lost in this sea of uncertainty. Because asset decisions affect many business practices, it is important utilities understand the need to invest in an integrated approach to modernize the system to maintain the performance and health of their assets. This is especially true in power delivery, which is such a patchwork of old and new components that make up the T&D infrastructure.
Cash flows can depend on what type of maintenance philosophy is appropriate for the mix of components found on each individual system. Utilities should not gamble on what part is about to fail and how that failure will impact the local system, the regional network and the national grid. Effective asset management is an investment that pays large dividends with reduced risks, but there is the perception the electric utility industry is tightfisted when it comes to spending money, which is not true. Investing in infrastructure is key to maintaining the ability to transfer electrons, which is the only function that generates revenues for T&D utilities.
Utilities and operators have a long history of investing in the T&D infrastructure, but many critics think it is not happening fast enough. Some uninformed naysayers feel the industry is not investing in the infrastructure at all. There are even some groups who talk about how Edison would be right at home in today’s substations and generating plants, inferring old-fashioned and outmoded facilities.
While this is definitely not the case, we do move slowly, which may give those unfamiliar with the dependability requirements of regulators and customers that impression. It really is the nature of the electric power industry, not to mention the delays brought about by permitting, environmental studies and regulatory approval. So much depends on electricity being there when the switch is closed, which means utilities work in a manner that must be well thought through and carefully executed. Also, utilities invest in systems that are expected to perform for a minimum of 30 years, so they have an incentive to ensure they purchase quality products and systems.
After all, this is the industry where 99.99% reliability (available all but 52.56 minutes a year) is not good enough. The industry strives to improve to the coveted five nines (99.999%) goal. This equates to a cumulative downtime of 5 minutes and 15 seconds a year or less, but the more complicated the system, the harder it is to reach such a goal. Outages have certainly gotten everyone’s attention, and there is other data to tell utilities their reliability from the many evaluation systems and surveys available.
The Council of European Energy Regulators (CEER) recently published its “6th Benchmarking Report on the Quality of Electricity and Gas Supply” in 2016. In this report, CEER separated outages into planned and unplanned events. This report indicated that unplanned interruptions varied by the reporting country and fluctuated from 10 minutes to 1100 minutes. In the U.S., the annual “Eaton Blackout Tracker” reported electric customers in the U.S. experienced power outages that vary based on location, too. The report stated 3571 outages took place in 2015, and the average duration was 49 minutes.
Both reports indicated geographical location and the size of the network (load and circuit miles) being rated have the biggest influence over the availability of power supply. Other studies reveal the grid’s continuity of supply also is affected by new regulations, new technologies, and new operating strategies such as incorporating intermittent renewables and meeting more stringent reliability standards.
However, the bottom line is that a great deal of pressure is being exerted by outside forces — including regulators, stakeholders and customers — for the industry to invest more money on infrastructure to improve the robustness of the grid. Interrelated to this idea is the fact that managing the utility’s assets has been defined as the most critical problem for utilities in the digitized grid. This is especially true when considering the aging components that comprise so much of today’s T&D infrastructure throughout the world.
Outdated and aging infrastructure is frequently cited as one of the biggest threats to the global energy supply by many research and professional organizations, such as the American Society of Civil Engineers (ASCE), Edison Electric Institute (EEI) and Electrical Power Research Institute (EPRI).
Asset investment played an important part in ASCE’s 2017 Infrastructure Report Card, giving the U.S. energy system a D+ for its lackluster condition and performance in 2016. ASCE reports a great deal of the T&D lines were constructed in the 1950s and 1960s, and — with an average 50-year life expectancy — many components are beyond design life. ASCE also stated these aged facilities were not engineered to meet today’s demanding requirements.
EEI’s “2016 Transmission Projects at a Glance” report agrees that the electric infrastructure needs modernizing and upgrading to meet the 21st century electric demands, but does not agree utilities have not been investing in their systems. The report points out EEI members are making significant investments in smart grid assets to make their systems more robust, resilient and dynamic.
Also, an EPRI report discussing integrated operations and maintenance maintains modernization investment is taking place. EPRI said, “The amount of information-producing technology relating to equipment and equipment condition continues to expand.”
Supporting the position the industry is indeed investing in the grid, the International Energy Agency (IEA) reported approximately US$5 trillion will be invested in T&D infrastructure globally from 2015 to 2030. In addition to the IEA study, the Northeast Group LLC published a detailed report last year titled, “Global Electricity Transmission and Distribution Infrastructure Dataset (2016-2026).”
Northeast Global made several notable observations in the report concerning how the grid asset investment is being spent. The report stated, “The global T&D infrastructure market currently represents $282 billion in annual investment, split between traditional infrastructure (transmission and distribution substations and power lines) and smart infrastructure (distribution automation) as well as new and aging equipment. Traditional infrastructure investment currently makes up 92% of total new annual spending, but smart asset investment will rise to over 17% of total new T&D facilities investment by 2026.”
This is a very insightful statement by Northeast Global. Utilities and operators are poised to shift their spending in traditional asset investment to smart grid technology by 17% in the next nine-plus years, which will improve their managing abilities.
Adding Smarter Assets
This shift shows an increasing need for additional information about the condition of system components. Fortunately, many pieces of new equipment now being installed have built-in intelligence. T&D grid modernization now includes technologies that have the ability to make systems more self-aware and make sense of the data being gathered. In some parts of the world, utilities are investing specifically in assets with sensors to increase their ability to see how those assets are performing, while others are getting the technology because it is built into the equipment.
Therefore, the key question is, are the utilities taking advantage of all aspects of that technology or are they only focused on adding circuit miles to the balance sheet? Some insight from the executive suite is available in the recently published “2016 Strategic Directions: Electric Industry Report,” produced by Black and Veatch (B&V).
The B&V report is a yearly snapshot of the power-delivery system based on 700 respondents, which shows trends taking place in the industry. According to this year’s B&V report, “Utilities have an appetite for smart, connected products and services to solve their most pressing issues around reliability and resilience.”
The report also stated, “Electric utilities are charged with preparing their infrastructure to accommodate new demands on the grid. At the same time, asset management has increasingly been leveraged to help utilities with the long-term decision-making associated with the regulations and the changing energy market.” Using these technologies to operate their systems efficiently and avoid unnecessary risks is fundamental to asset management in the 21st century.
The report also discussed regulatory requirements that are raising asset management questions. Regulators are becoming sensitive to grid reliability and the interdependence of aging assets and grid resilience in the equation. As a result, some jurisdictions are requiring utilities to update (that is, invest in) their infrastructure to improve reliability, and regulators are asking utilities to trace faults to specific assets, which can be extremely difficult in a silo-oriented asset spreadsheet environment.
These issues also are increasing the awareness of asset monitoring systems for regulators and utilities alike, which could be a solution for both groups. At many utilities, asset knowledge is spread among service providers, stored in engineers’ computers, and locked in accountants’ spreadsheets and managers’ flowcharts. Capturing this knowledge and making it usable is a crucial challenge.
Therefore, B&V asked its survey respondents if their utility had an organization or department that was completely responsible for asset performance, health and/or reliability. Of the respondents, 48.6% said their utility had a responsible entity. What was really significant, 31.1% said they did not have a specific group, but they shared the responsibility across the enterprise. Only 14.1% said they did not have anyone charged with asset management. The takeaway is that an asset management function is important to 79.7% of the electric service providers surveyed.
To move forward, utilities must invest in managing systems that bring together dissimilar technologies for a better understanding of the increasingly complex T&D asset base.
The need for the enterprise to share asset information across the organization is happening slowly. Utilities are realizing they must invest in systems that feature connections between IT and OT at both the technological and organizational levels. These systems can generate tremendous amounts of real-time data, giving the utility situational awareness and visibility across the organization.
Smarter grid technologies combined with IT/OT systems enable engineers to boost the T&D system efficiency, increase its reliability and enhance its resilience, but the users need to have systems in place to manage this large amount of asset information being generated. EPRI pointed out, “This creates a situation in which management and personnel can quickly become overwhelmed with information if the proper processes are not in place to help manage this information.”
To better understand the connectivity taking place between IT and OT, ABB, Microsoft and Zpryme surveyed 221 utility executives from around the world in 2016. The goal was to learn more about their IT/OT approaches to asset monitoring systems, and the results were intriguing. Nearly every one of the respondents said asset management was a priority for their organizations, yet only 38% felt their technology and business groups worked fairly well together.
Another interesting survey response was the fact 45% of the executives reported the need for IT/OT integration varied from very important to extremely important to their organizations. The survey also found 41% thought their integration within the enterprise was going fairly well.
When the survey quizzed the executives about the influence of the Internet of Things (IoT) technology on their asset management operations, more than 50% thought it was important. Surprisingly, only 22% of the executives reported their organizations had an IoT asset management strategy in place, while 38% said their organizations plan to implement a strategy. With all the sensors, smart meters and monitoring systems, many felt the lines between IT and OT had blurred to the extent IoT made sense. Still, 42% of the executives reported their utilities had no plans for IoT asset management.
The results of the survey showed utilities worldwide have identified investments in management schemes will be increasing and IT/OT integration will be a key strategy for long-term capital planning efforts.
Assets Monitoring Assets
IT/OT systems are moving asset management in the direction of an end-to-end connected enterprise, which should increase efficiency and cost-effectiveness within the organization. These systems bring asset condition information from different areas within the utility to one main management system for an enterprisewide asset management network.
Navigant Research performed an investigation of the investment in asset management and condition monitoring (AMCM) technology taking place within the global utility industry, and found, “AMCM is evolving rapidly for all industries, but particularly for electric utilities deploying smart grid technology.” Navigant also found, “In the past, asset management within a utility may have meant something as simple as a spreadsheet populated with asset counts, purchase dates, expected life and suggested maintenance schedules. Within the power grid, asset management for most utilities is handled with what is commonly called a run-to-failure strategy.”
However, with the regulatory mandate of improving reliability and reducing outages, that strategy is no longer viable. Utilities and grid operators have invested in smart grid technologies with their interconnectivity, which is dramatically improving their asset management abilities.
Navigant also pointed out utilities are interested in applying AMCM solutions across the enterprise to take advantage of their investment in smart grid technology based equipment. Navigant reported, “This is needed to improve operational and capital costs by developing a predictive risk-based asset management strategy rather than the reactive one used today.”
According to Navigant, the global revenue for power grid AMCM devices and solutions is expected to grow from $2.1 billion in 2016 to $5.3 billion in 2025. Navigant also said AMCM is virtually a greenfield opportunity for vendors, as utilities work hard to understand when and where AMCM investments make the most sense. It noted the benefits of more refined grid operations are being increasingly recognized by regulatory bodies and financial stakeholders, but the business case for AMCM has been utility or situation specific.
Connectivity and Beyond
Globally, the grid is becoming smarter, more interconnected and getting larger. It has been estimated worldwide the electric high-voltage transmission network was approximately 3.42 million circuit miles (5.5 million circuit km) in 2014 — the last year for available figures. It also has been predicted the global grid will expand to about 4.25 million circuit miles (6.8 million km) by 2020. That is a lot of wire in the air!
All the recent indicators, surveys and reports show investment trends in the T&D infrastructure are up and will continue to expand for the next decade. As a result, there is a great deal of change and innovation underway in the technology that is managing those assets.
It is a given that asset managing technology investment decisions are shaping the future of the electric system. Utilities have invested in smart grid technology for many years, and asset management is taking advantage of it. Digital technology has paved the way for a new emphasis in technologically enhanced asset management schemes. These schemes are designed to provide utilities with end-to-end asset tracking.
Investments in asset management are streamlining operations, lowering maintenance costs and reducing risks to reliability while adding resiliency, and are the next logical step in the digitization of the grid. ♦