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Change Must Be Part of the Modern Electric Utility’s DNA

Utilities appear to be aligned on the importance of grid modernization as a principal means of preparation for the future.

There was a time, not too long ago, when many folks thought of electric utilities and their employees as not only essential and skilled, but also stale and rigid — even prehistoric in terms of business structure, technology usage, and outlook. To be honest, things stayed relatively static in the electric industry for many years, even after other utility sectors such as communications and transportation began transitioning to various states of deregulation. Maybe we did get a bit complacent. But all of that was eons ago compared with today’s speed of advancement in technology and consumer expectation in the electric power sector. Now utilities are truly driven, often by outside forces, and the question becomes, will yours be driven to further excellence or be driven out of business?

Before everyone gets all flustered at the above comments, let’s clarify that there is no question that electric utilities have always been conscientious about reliability, quality, and safety. However, it’s like a switch was flipped sometime in the last 15 or so years, catapulting most electrics into overdrive in many respects. Numerous factors are likely to have contributed: a growing urgency to replace aging systems; a call to arms to adopt new technology; multiple natural disasters that made resiliency a much higher priority; and customer driven demand for improved service, more choices, and lower bills. An early result of the movement, possibly a galvanizing driver, was the call to arms by the U.S. Department of Energy (DOE) to build a “smart grid.” The DOE described the smart grid as a system that employs digital communications technology, information systems, and automation to detect and react to changes, improve system operating efficiency and economy while maintaining high system reliability. The Electric Power Research Institute (EPRI) estimated in 2011 that the implementation of a fully functioning smart grid would cost between US$338 billion and US$476 billion spent over a period of 20 years.

Utilities of every size, organizational structure and demographic appear to be aligned on the importance of grid modernization as a principal means of preparation for the future. Estimates of US$100 billion per year in spending by U.S. electric utilities in smart grid technologies and cleaner generating assets have eclipsed earlier spending estimates. The question utilities must now continually ask themselves is whether they are making the right choices given customer expectations, regulatory trends, and competitor positioning. This is very important given the level of capital investment required and the constant balancing needed to ensure rates stay in line with expectations from a range of stakeholders.

Many companies began their smart grid journey with the deployment of advanced meter infrastructure (AMI). According to the Edison Foundation Institute for Electric Innovation, nearly 70% of U.S. households will be served by smart meters by 2020. Smart meters may be viewed as the gateway technology for improving communications between electric companies and their customers as well as the most effective means for utilities to learn more about how their principal product is being used. Following smart meter deployment, or in rare cases in lieu of smart meters, utilities have made their studies and strategic bets on the best upgrades for their systems.

The APS did a detailed study to evaluate its strategic needs, focusing on the rapid growth of solar distributed energy resources (DERs) on its system and a significant seasonal population. It selected five foundation technology components upon which to build its flexible grid program: energy management systems (transmission); AMI; advanced distribution management systems (ADMS) (distribution); communications infrastructure; and advanced analytics.

CenterPoint Energy developed a comprehensive vision of smart grid upgrades and enterprise-wide operational and customer solutions to respond to extreme weather risks posed by its gulf coast location. Starting with AMI, the company implemented an ADMS, which drives outage management and a mobile data system for the crews and trucks, and provides communication with approximately 2000 intelligent grid and other automated switching devices on its system. In addition, CenterPoint implemented a power alert service customer communication system with natural language computer response functionality.

When choosing smart grid technologies utilities are increasingly presented with high-power analytics and machine learning capabilities that further enhance system performance like the touchless substation being tested by the Public Service Electric & Gas Co. (PSE&G), or the advanced demand response pilot by the Portland General Electric Co. (PGE). Where will it all end? The exciting and possibly intimidating truth is that it will never end. If technology continues to advance and stakeholder expectations continue to change, electric utilities must continue to adapt and advance, or another provider will take their place.

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