Thanks to a perfect storm of advances in technology, communications and customer engagement, companies such as Amazon, Uber and Airbnb are upending entire industries by empowering consumers with more choices and greater convenience. The era of proactive customer relationships is having a profound impact on the electric utility industry, benefiting both customers and utilities. One such benefit is the opportunity to use customer-sited resources at the edge of the grid to improve system optimization by up to 20% — saving money and energy — while delivering on the promise of a two-way interactive grid. American Electric Power (AEP) has embarked on an important journey to build stronger partnerships with customers and to help lead the industry in creating a secure, reliable and cleaner energy future.
Distributed energy resources are a growing part of this new energy future. They have become more accessible, affordable and controllable, thanks to technology advancements, communications and controls. Many of these power-generating or load-managing resources are on the distribution system, often behind the customer’s meter. Utilities and customers, working together, are using these resources in new ways to optimize the entire energy value chain. However, without a strong and well-defined partnership between utilities and customers, these resources could instead create new costs and challenges for the system. To realize a 15% to 20% system optimization improvement, it is critical the industry originate and coordinate such initiatives.
AEP has strategic relationships with leading-edge technology companies to advance this new approach to optimizing the electric network. The focus is on transforming the grid into a conduit for multidirectional electricity, services and information flow. For example, AEP is working with Innovari, an edge-of-grid platform company, to develop solutions that will transform management of the distribution grid. This technology is enabling AEP to partner with commercial and industrial customers to manage their demand, aggregate their excess energy and dispatch it as a resource to the grid, creating a virtual power plant. Managing the loads and distributed energy resources as a virtual power plant can delay or eliminate the need to build new central station generation, substations and other infrastructure while providing unique energy services and savings to customers.
New Energy Future
Customers are demanding a greater role in the clean energy economy. While customers still expect utilities to deliver safe, reliable and affordable electricity, today they want even more. The generation fleet across the U.S. is changing as natural gas and renewable prices have become more favorable. New approaches to transmission design are increasing capacity, reducing land requirements and improving the aesthetics of the system. Distributed energy resources are being added at an increasing rate. And, perhaps most importantly, ubiquitous communications networks are enabling customers to engage with AEP in new and creative ways. While there is much more work to be done, AEP is excited to see the dramatic progress occurring within its communities and with its customers.
AEP has an opportunity to expand its partnership with customers beyond its traditional role as an energy provider. While AEP will always innovate to improve reliability and efficiency, today the utility is fundamentally changing how the grid works and how AEP interacts with each customer. The utility’s role is expanding and must include new products and services as well as the ability to deploy them in the most beneficial ways for all stakeholders.
Control the Grid Edge
AEP is enthusiastic about new technologies that enable access to capacity at the edge of the grid as well as provide a trusted and effective way to manage not only supply but also demand. AEP is deploying Innovari’s Interactive Energy Platform (IEP) to business customers in Indiana and working to expand it to other service areas. This big data capacity-optimization technology performs much like a peaking power plant and provides necessary capacity in real time. This platform is managed in coordination with utility operations from a highly secure control room environment that balances the needs of a new, distributed and increasingly intermittent renewable supply. The IEP is an intelligent platform developed with a machine-learning capability to analyze and continuously update the operational variations of all resources in both the utility and customer portfolio.
In addition to baseload generation plants that produce hundreds of megawatts, the future will focus on creating a new and dynamic supply of energy — in partnership with customers — a few kilowatts or megawatts at a time. Customers and communities will be able to participate in planning from the bottom up, instead of the top down. This approach will enable AEP to create dramatic improvements in the use of existing assets while also creating new opportunities for a more resilient and reliable infrastructure.
From a technical perspective, the IEP system uses a variety of smart agents, which are distributed throughout the network in partnership with customers. These devices feed information into a secure operations center, where capacity is aggregated and enabled for dispatch surgically on a single feeder or broadly as a virtual power plant. Innovari agents are a key tool in the capacity aggregation process and are attached to participant buildings to provide important system information back to the utility. This information includes real and reactive power, power quality, power factor and more.
The agents also enable the integration and balancing of edge-of-grid resources for improved grid performance. For example, the agents connect utilities to customers to create capacity from distributed generation, balance intermittent solar photovoltaic and wind power, or even optimize battery energy storage. The energy agents are embedded with technology from National Instruments. Modular hardware platform and system design software, such as LabVIEW, enables rapid innovation for these devices, ensuring they will provide significant intelligence from the edge of the grid.
To provide the required capacity at a designated time, the IEP system conducts events to acquire and aggregate power. The IEP selects a combination of agents — each represented by a brick (capacity and duration) — that are assembled to meet the dispatch request. This process ensures capacity certainty because the IEP manages a site based on real-time information and learned site capability, whereas a traditional demand-response solution could not offer capacity certainty because it does not notify in real time.
For example, at the start of an event, where 350 kW is requested for a period of two hours, the request may be targeted at a specific feeder or an aggregate need across any portion of the grid. The system selects a combination of devices, which are assembled to meet the dispatch request. The real-time monitoring of each individual device is presented as aggregated capacity continuously over the period of the event. Verification occurs at the end of an event. By supporting micro (feeder-level) events, multi-megawatt (substation) events and 10/100 multi-megawatt (system-level) events, AEP can dispatch capacity when and where its customers need it.
Integral Roles by All
Using the combined resources of the utility, customers and communities creates the opportunity to develop an evolving grid in more cost-effective ways than ever before. Utilities and regulators are the stewards of the system providing the lifeblood of the economy and modern life — electricity. It is critical to partner with regulators so they can support the pace of change as well as new and different approaches that will benefit customers. While change must occur, it cannot happen without collaboration.
Technology in Action
Technology alone is rarely a good answer; instead, it must be used and adapted to meet defined goals. At AEP, technology serves the collective needs of customers and communities, benefiting more than a single interest. The utility’s goal is to meet the needs of everyone served by the grid.
AEP is implementing the IEP system at several of its operating companies. This innovative approach has numerous benefits and is offered to customers at no cost.
Customers reap the rewards of saving energy through what is called a light-touch approach. The light-touch approach means customers have access to an energy expert who will work with them to establish a predetermined energy management plan. Each customer approves what level of impact on their facilities is acceptable. In many cases, people inside the facility may not recognize something has changed. Typical energy management plans may include, but are not limited to, slight adjustments to building temperature and lighting levels activated during peak load periods or even while absorbing wind energy in shoulder months.
Customers also have the option of scheduling or initiating a load reduction at any time, which is a win-win for the utility and the customers. Customers may access a building web portal that gives them control to adjust settings at any time. Prior to a peak load period, customers are notified through the building portal and may opt out of any event. Customers who need to opt out in the middle of an event easily can do so with just the push of a button. The possibilities are endless when AEP customers are treated as partners.
A real advantage of the program is the ability to aggregate savings from many different locations during each event. While the savings from one specific location may range from 50 kW to 100 kW, an AEP customer services group is working closely with Innovari to engage a broad range of customers across hundreds or thousands of facilities in each project.
The Journey Forward
The evolution of the grid is well underway, but the mission is still the same — to provide safe, reliable and affordable energy for the benefit of all. AEP will enable a clean energy future, something customers expect, through a variety of cleaner and distributed energy resources. AEP is proactively working with customers to get in front of these developments.
AEP has been focused on improving the customer experience, and technology is accelerating the effort. The IEP is a good example of a technology innovation that serves multiple purposes for the benefit of AEP and its stakeholders. It provides the utility control at the edge of the grid, which helps the utility to build more engaged relationships with customers.
AEP is committed to using innovation in partnership with customers and communities to deliver a new energy future. One thing is certain: Change will not wait. Policy and planning must move at the pace of technology to drive change and ensure success. AEP is moving forward and embracing the edge of the grid to meet customers’ desire to engage in this new, connected energy future. The journey forward, built on stronger partnerships with customers and communities, will result in benefits for all. ♦
Bruce Evans is the senior vice president and chief customer officer for American Electric Power, overseeing customer services, marketing and distribution services, technology business development, and infrastructure and business continuity. Evans is the former president and COO for AEP Texas. He holds a bachelor’s degree in finance from Hardin Simmons University and an MBA degree in finance from Dallas Baptist University. He attended the advanced management program at Harvard University.