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So does that make the business case a slam dunk? Sadly, nothing's that easy in electric power, especially when regulators are involved. But there is lots of help and advice available. We've assembled some of the best into this resource kit.
Background
The groundbreaking San Diego Smart Grid Study of 2007 may seem like ancient history now. (Speaking of history, we gave an “early warning” about this trend back in 2006.) But the study remains essential reading because it raised the issue of adding societal benefits to the business case. Until then, most rate cases were based solely on the direct benefits to the utility itself, ignoring the many advantages to ratepayers and the community at large. Study co-author Steve Pullins wrote a column for SGN at the time about the study’s implications for the smart grid business case. He noted that the study revealed "making a business case has less to do with the cost of technologies and integration, and more to do with what is within a rate case. It’s disappointing that the ‘traditional’ practices of regulators and utilities can stand in the way of engineered solutions that benefit society.”
Four years later we’re seeing more and more utilities trying to incorporate not just utility benefits but also societal benefits into their business cases. After all, avoiding costly power outages and improving power quality are important benefits to any society, anywhere.
Your best business case resources
Regulators have the final say as to what gets allowed and what does not. But to help the process, we pulled together some expert perspectives and resources about making the business case for distribution and substation automation.
· Distribution automation market growth. There have been numerous forecasts on DA growth in recent months, including this from analyst Bob Gohn at Pike Research: "For utilities, DA deployments can yield significant cost savings through measurable improvements in operational efficiency, reliability, service quality, and energy conservation – all of which can contribute to customer satisfaction. In many cases, we expect DA will yield stronger return on investment than smart meters or other high-profile smart grid initiatives." Most of the utility spending will be for distribution switchgear, including upgraded distribution transformers, reclosers, sectionalizers, disconnect switches and fused cutout switches, according to Pike. Newton-Evans Research Company is also bullish on DA, with a new report out that estimates the current North American spending for substation automation and integration programs at more than $500 million, with an overall potential market size of nearly $10 billion. The report indicates 60 new transmission substations and 170 new distribution substations are on the drawing board for construction by 2013.
· Six steps to smart grid integration. Utility industry veteran Fred Jennings of R.W. Beck offers a blueprint for building a DA business case in this article from Electric Power & Light. He notes that “distribution challenges bring technical risk in having to make strategic bets that hold open the greatest opportunity for future needs as they unfold. Strategic bets have a down side. The breadth, complexity and costs of IT investments associated with full smart grid deployment demand a careful approach to its business integration into the distribution automation arena.”
· Utility business case analysis. Chris King of eMeter presented his analysis of 50 utility business cases during a webinar we presented on the business case for smart meters. While the focus was smart meters, he also touched on line loss, conservation voltage reduction and costs/benefits of utility operational efficiencies and grid efficiencies in general.
· Communications for distribution automation. Writing for Electric Power & Light on the communications piece of DA, Bob Uluski and Grant Gilchrest admit the biggest challenge remains the business case. However, they note: “Many utilities are beginning to realize that DA, when based on a well-planned communication network, can be the foundation of a truly intelligent grid: one that does not just react to emergencies, but predicts and prevents them.” (Note: In addition to the ELP communications piece linked above, we recommend a DA smart feeders presentation Uluski made to the Northwest Public Power Association. It’s packed with great information.)
· Smoothing the rocky road to distribution automation. This case study tells the story of a major northeastern U.S. utility’s path to automating its entire distribution and service restoration system. The project ultimately involved the addition of hundreds of breaker reclosers and other devices and integrating all that equipment into the distribution system.
· Smart grid roadmap, DA and the business case. How a regional utility developed its smart grid roadmap is the point of this case study, but a key piece is the role DA should play and the business case considerations for such investments.
Also worth a mention: The Distribution Automation 2011 conference coming up later this month in New York City plans to devote two days exclusively to DA. They will be offering experiences on the economic justification of DA systems, how these systems have had a knock-on effect on reliability statistics and streamlined outage management operations, as well as the difference that DA has made to voltage control for smoothing of intermittent energy sources and protection of critical assets.
What have we missed? If you can offer insight into the DA business case, please use the Talk Back form below to share your thoughts with the utility professionals and consultants who read SGN.
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