Why Aren't We More Focused on Reducing Power System Losses?

Dec. 19, 2017
We can’t yet change physics, but power companies have more tools than ever to reduce system losses using smart grid technologies

Based on EIA figures for total retail electric sales in the U.S. in 2016 and the average retail price of electricity during the same period, the value per year for total system losses in the U.S. is an astounding $19 billion dollars. This figure is based on EIA’s latest calculation of a total average loss factor for the U.S. of 4.7 % in 2015. There are many ways to calculate system losses, so your numbers may differ from the above, but any way one looks at it the numbers are HUGE! Are we doing enough to reduce system losses?

Anyone who has worked on the design of transmission and distribution systems or equipment is well aware of the losses that add up as we move power from the point of generation to use and transform it to useful voltage levels for consumers.  Power loss is dependent on the configuration and characteristics of the network as well as the mode of operation. The major amount of losses in a power system is in primary and secondary distribution systems. Some losses on a network are fixed and others vary based on the current flow. Variable losses are proportional to the square of the current, so an increase in current leads to a greater increase in losses. The sum of the fixed and variable losses is referred to as technical losses. Non-technical losses involve metering, accounting or theft related losses. We will focus here on technical losses.

Technical losses can be reduced in many ways, including but not limited to increasing cable size, reducing cable length, adding a parallel feeder, proper location of distribution transformers, maintaining a proper power factor such as by adding capacitors, minimizing cable splices and ensuring all connections are of high quality, replacement of deteriorated cables, balancing feeder phase current and loads,  employing programs such as time of use rates and curtailment programs to optimize load factors and upgrading transformers and substation auxiliary equipment.

System loss analysis is an important function in the utility business. As identified above, there are many factors that impact losses, so there are numerous variables that must be analyzed to arrive at loss figures for an individual system.  Historically, the determination of system losses on a utility system was laborious and expensive.  Consequently, utilities may have waited for extended periods such as the next general rate case filing to update their loss estimates.  However, accurate system loss information is necessary for ensuring accurate supply procurement and determining the value of various system improvements.  Network losses are an important consideration when evaluating system upgrades and making decisions about programs that alter total demand such as demand side and distributed energy alternatives as well as conservation programs. Utilities also need well documented loss data in order to make cost recovery cases as part of rate filings.

The growing adoption of smart grid technologies both increases the importance of routinely evaluating system losses and simplifies the exercise. Formerly static and predictable energy usage levels and patterns have given way to more rapid changes in both power usage and power qualities that can affect system losses. Thankfully, one smart grid technology, advanced meter infrastructure, can assist with system loss analysis. Ameren Services recently shared its experience utilizing AMI data and a powerful data management platform to calculate system losses on every part of the Ameren Illinois grid in near real time.  According to this article, the tool will allow Ameren to produce system loss studies essentially on demand as well as perform other highly valuable functions such as truing-up regional grid energy market settlement calculations.

Other smart grid technologies also can help to reduce system losses. Ameren eventually intends to use its AMI data and analytics package to determine optimal locations for DERs, which can help reduce losses in a number of ways. Distribution management and automation technologies, demand management systems and energy storage are just a few of the growing list of smart grid technologies that can help reduce power losses by leveling, reducing or improving the quality, and thereby the efficiency, of power flows.

We can’t yet change physics, but power companies have more tools than ever to reduce system losses using smart grid technologies, advanced operating systems and third party providers such as DERs.  Even that first big step, determining where losses can be economically reduced, is much more manageable.  More than a few electric providers are tackling system losses in concert with other modernization improvements.  Tell us what your organization is doing to reduce system losses. 

About the Author

David Shadle | Grid Optimization Editor

Dave joined the T&D World team as the editor of the Grid Optimization Center of Excellence website in January 2016.

Dave is a power industry veteran with a history of leading environmental and development organizations, championing crucial projects, managing major acquisitions and implementing change. Dave is currently a principal at Power Advance, LLC, an independent consulting firm specializing in power project development, research and analysis, due diligence and valuation support. Dave is also a contributing consultant for Transmission & Distribution World. Prior to Power Advance, Dave held business and power project development positions with The Louis Berger Group, Iberdrola Renewables, FPL Energy and General Public Utilities. He is a graduate of Pennsylvania State University, the New Jersey Institute of Technology and Purdue University.

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