BY WADE MALCOM, ACCENTURE
As utilities continue their transition from traditional networks to smart grid-enabled energy systems, there are growing pressures from stakeholders and regulatory authorities to demonstrate the value of the significant grid modernization investments made thus far.
To assess the returns on their smart grid investments, utilities must effectively and efficiently monitor and measure their smart grid performance.
That requires they apply the right metrics at the right time to understand the benefits and improvements that are being achieved.
To understand better how metrics are being used to track grid modernization and performance, Accenture surveyed executives from utilities around the world.
The results of Accenture’s survey, “Unlocking the value of metrics: Maximizing smart grid technologies for high performance,” suggest utilities can pursue several opportunities to assess the effectiveness of their smart grid performance more accurately and capture and articulate the returns on their investments.
Utilities are continuing to expand their smart grid efforts, but the realization of expected benefits is lagging behind investments.
This is common for large, complex capital projects, and this lag likely is extended because of the industry’s still nascent stage of smart grid implementation.
Accenture research, however, suggests it also might have to do with utilities’ not adequately or accurately measuring the right outcomes and indicators of success.
The first opportunity, therefore, involves developing better metrics.
Ten percent of survey respondents said they have all the information needed to assess their grid performance effectively. Most see significant room for improvement.
Two challenges stand out: One involves the difficulty associated with accessing and collecting information; the other is the general lack of benchmark data against which utilities can compare their grid performances.
Another issue that affects the value of performance metrics is the quality of the metrics inventory being employed.
As revealed by the survey, utilities typically look at measures of performance in several areas that together make up the operational benefits that can save utilities money.
These include transmission system effectiveness, power quality and distribution reliability, which is measured by tracking the extent of distribution automation, and penetration of intelligent sensors and processors, along with the number and nature of incurred disturbances.
End-use customer metrics also are important and cover a spectrum of traditional measures such as customer satisfaction.
The potential customer benefits of the advanced smart grid capabilities, however, are yet to be tracked in a meaningful manner.
Some 50 percent of utilities in Accenture’s research monitor energy savings, and one-third track customers who change their participation in smart grid programs.
Similarly, utilities are finding it difficult to measure their nonoperational benefits or, more broadly, the impact of their programs on society. There are several reasons.
For example, smart metering is an enabler for some societal impact benefits, but it does not ensure those benefits will be realized.
Other societal benefits are independent of the end users’ actions and are related only to what the utility does in reducing carbon emissions.
Complicating matters is that in some cases the demarcation between operational and societal benefits is not clear, which makes it difficult to know which metrics to employ.
Utilities can overcome issues with metrics quality in several ways.
For one, they can dedicate resources to develop a fair, consistent set of metrics to measure progress, performance and value.
As part of this effort, they can move beyond purely historical measures to focus on measures that can enable more accurate forecasts of future grid performance.
Utilities also should improve their examination of customer-related metrics.
By analyzing customer benefits as thoroughly as they do technical benefits and by looking more closely at the influence of customer choice on smart grid development, utilities can gain a much better understanding of the value of their past and future investments.
By developing an inventory of meaningful metrics, utilities can improve their insights into how the grid is performing and how that performance aligns to their smart grid business cases and desired outcomes.
Better metrics will take utilities only so far.
Equally important is the ability to use those metrics to continually drive performance improvements.
Many utilities lack the analytical tools and expertise needed to draw conclusions from the ever-growing number of data points available to them.
In addition, even when they have the tools and manpower to analyze information, many struggle with what they consider to be a lack of granularity in the measure.
Building the appropriate analytics capability starts with understanding the data sources that exist within each company.
With such an understanding, utilities can apply tools to build relevant metrics from sources with appropriate levels of granularity. These metrics typically fall into two categories.
“Build” metrics measure basis conditions and progress during a smart grid implementation. They are tailored to a utility’s circumstance and may include the number of smart meters installed, substations automated and dynamic pricing programs offered.
“Impact” metrics measure how and to what extent a smart grid affects grid operations and performance, or how it enables customer programs and behavior changes.
Examples of impact metrics include reductions in peak demand or greenhouse gas emissions, avoidance of maintenance costs, and the decline in the number of outage minutes reported per year in a given area.
In addition, linking the identified data sources is critical.
Consider the value of equipment status data, which is typically stored in an asset management system, maintenance system database or both.
That equipment’s utilization level might reside in the supervisory control and data acquisition (SCADA) system.
Linking these data sources could deliver significant value because doing so provides an excellent source of performance comparison across assets and potentially unlocks new ways of operating the assets to improve overall performance.
IMPROVE PERFORMANCE MEASUREMENT PROGRAM MANAGEMENT
Accenture’s research confirmed that ownership of activities related to tracking and managing smart grid performance metrics differs from one organization to another.
Respondents noted that responsibility for distribution-related metrics, for example, falls to their operations, planning, outage center, maintenance or customer service departments.
Societal impact metrics tend to belong to operations, planning or marketing. And although more than half of respondents said their customer service departments own end-use customer metrics, other departments such as operations and marketing have nearly as much responsibility. The lack of consistency around ownership of performance measures related to end customers makes it potentially more difficult to drive a holistic approach to engaging customers and providing next-generation customer choice.
Regardless of which organization owns the end-customer analyses, it is critical that these metrics are effectively disseminated to and used by all relevant departments.
Given the lack of established leadership practices in performance metrics governance, utilities have the opportunity to take the lead and establish their own.
At a minimum, utilities should consider establishing teams that comprise representatives from departments dedicated to metrics and performance measurement. Such teams serve a number of purposes:
- They can help utilities prevent and overcome the “silo thinking” that often causes metrics programs to fall short of their goals.
- They can develop or adopt frameworks and road maps to ensure that the performance measurement program is fully aligned to the business case and provides the insights needed to satisfy stakeholder expectations and regulatory requirements.
- They can ensure the proper frequency of customer-related performance measurements. Very few utilities measure their various end-use customer metrics more than once a year. Approximately one-quarter to one-third of survey respondents report annual measurements. And more than half indicated they measure less often than yearly. As the emphasis on the consumer experience rises, the frequency with which these critical measures are taken will accelerate.
START IMPROVEMENTS NOW
The surveyed utilities demonstrated significant differences when it came to what, how and how well they measured the performance of their smart grids, but they were unanimous in recognizing the importance of having and using metrics that help them accurately measure and manage the performance of their chosen grid technologies. The value placed on metrics likely will rise, given that more than 80 percent of survey respondents indicated they will increase their smart grid investments during the next five years.
Looking back over the past five years when significant smart grid investments began materializing around the world, we’ve seen different energy providers and regulatory bodies establish or adopt metrics to determine how well the grid operates in reliability and network availability. Such measures can help improve grid performance, but leading utilities seek to quantify even more meaningful smart grid outcomes.
The utilities that focus on strengthening what they measure, how they measure, and how well they oversee their measurement activities will enjoy a smoother smart grid transformation. They will be the ones to improve how and how quickly they realize benefits. And they will be the ones best positioned to achieve high performance.
Wade Malcolm is a senior executive in Accenture’s utilities industry group’s smart grid services practice. He leads the smart grid operational technology team in San Francisco.