by Lance Irwin, Schneider Electric
The rapid evolution in the energy market is creating a din of noise that could distract electric utility managers into missing the big picture and lead them to wandering in the forest of indecision and missed opportunity.
Energy providers’ market expectations are changing, but utility infrastructure is not designed to meet these new expectations. In most markets, a buyer simply would upgrade to a more compatible system or replace the system altogether. Energy suppliers, however, do not have that luxury. They must maintain the design to allow for service continuity and to protect their significant investment while building patches to make the system more compatible with the market needs. As a result of this patchwork approach, market development, innovation and the economy in general typically slow.
Interoperability is gaining momentum to help utilities weave new market needs into their existing design, rather than bolt-on, expensive, unreliable work-arounds, allowing them to improve operations, drive efficiencies, ensure compliance and mitigate carbon legislation risks. The temptation for utilities is to focus on technical issues and benefits of interoperability while ignoring their business implications. Instead, business processes and needs should be considered at the same time as technical needs to get full interoperability benefits.
The business of electric utilities is keeping the lights on. Many in the industry then wonder, “How could interoperability help my core business?” There are many methods to improve performance indices, such as the System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI), or to manage assets better. Whatever technical solution, the ability to weave that solution’s outputs into the existing electrical network, communications network and analysis systems to meet the market need will impact the utility’s business.
Interoperability addresses total ownership cost and the risk of stranded assets because of market evolutions. The stranded assets could be devices or software, but they also could be human resources who have dedicated their careers to a particular technology or standard and are now irrelevant in the marketplace.
A counter example is that utility engineers prefer long-term purchase agreements with vendors to reduce the cost of learning new configuration tools, terms, definitions and documentation. Interoperability promises to allow users to choose a system based on the market need, not process ease.
System efficiency is a matter of fit and cost. Consider a Facebook user who wishes to post pictures to his wall to add more detail for his friends. Our newly connected user owns a film camera, but the market need—how he shares his life with friends and family—has changed and requires digital images.
He will have many options to consider, but he most likely will choose the option that best fits his technical ability and the ease of the process. In this scenario, interoperability allows him to consider the solution’s benefits and costs without being overwhelmed by technical specifications of operating systems, protocols and other engineering details.
Similarly for electric utilities, a shift toward interoperability is needed if the smart grid is to move beyond pilot projects and think tank presentations.
Today, questions abound about who will pay for what and who will garner the benefit of smart grid technologies. It is obvious from recent regulatory cases in Maryland and other states that many questions exist without suitable answers, such as: Does every home need a smart meter? Do utilities want to own and support in-home devices? Do consumers want to let utilities own devices in their home? Will building owners and tenants risk comfort for energy savings? Is it possible to use load as a resource in reserve markets?
Interoperability promises a technical solution to make smart grid a reality. Utilities, however, must consider interoperability beyond their own borders and into consumers’ systems and processes. Once the business processes are interoperable, the technology can be deployed, and all participants in the market can benefit.
Power quality is another fundamental utility role. The advent of intelligent electronic devices has relegated power quality to the realm of specialists trained in analyzing complex waveforms and special applications used only when a problem arises from a particularly nasty customer load. New intermittent distributed energy resources, however, are forcing planners to reconsider network design and operation simply to maintain the quality of supply. Another force disrupting this basic utility functionality is the need to optimize use of the distribution assets.
In Europe and Asia, we’ve seen a move to more monitoring and better-defined compliance standards for power quality applied to consumers and suppliers. The introduction and enforcement of these regulations adds another layer of complication to the value chain and begs for interoperability to help push the players beyond a narrow, technical focus to a broader focus on solving the business need for all parties most efficiently.
Mitigate Caron Legislation Risks
New generation investments are required to meet the gap between supply and demand. Legislation inspired by climate change, whether pending or enacted, has restrained the development of conventional fossil-fueled power plants. Utilities must consider renewables and demand management as a greater part of their portfolios. Each resource brings issues, and alone, neither completely meets market needs.
Renewables bring intermittency and have fostered storage technology efforts to help offset the variable nature and more stringent grid codes that force operators to behave more like conventional generation. It is possible to monitor these resources, report their compliance to the grid connection code and operate them to behave more like conventional generation. Interoperability can reduce engineering effort, add flexibility to the control and provide a tighter link between the load and generation, thus helping utilities move closer to grid parity and further market acceptance.
Likewise, small distributed generation business cases can be enhanced through interoperability by giving the utility more visibility and possibly control. The ability to offer operational choices for small distributed generation owners could be important because tariffs could vary depending on the installed system’s capability. Interoperability would allow the owner to take advantage of new tariffs as the market need changes or the value of the generation resource increases.
In addition, demand management brings about a market model change. The new participant, called a prosumer, becomes more of a partner than a customer. Pervasive monitoring will be required to provide a near real-time view of the availability of load that can act as a reserve or be called upon to offset unexpected renewable energy output shortfalls. How the data from building management systems, weather forecasts, generation monitoring, transmission line monitoring, building modeling systems and other sources will interweave is the responsibility of interoperability. Just like for our Facebook user, building owners and tenants won’t want to be concerned with how it all works; they just will want to know that they have options to participate in the market so they can choose the most efficient method for their business need. Interoperability will allow them to choose between a simple notification via text message all the way to a fully automated system making decisions based on up-to-the-second information and pre-determined boundaries for security, comfort or other parameters.
Bringing About Change
The rate of change in the electricity market has far outstripped the life cycle of its operational systems. This poses an increasing problem for utilities that must decide where to spend precious budget to remain competitive. In addition, there is an intensifying layer of technology, legislation and standards that are evolving in and around the market. What should a utility do? The temptation is to focus on technology details, but successful utilities will determine their fate by understanding interoperability in solving market needs. They will develop a long-term strategy that assesses their operational and technical ability today and where it must be in the future. Interoperability is a critical lever to higher business efficiency. Utilities that take advantage of this will set themselves up for successful long-term growth despite rapidly changing market conditions.
Lance Irwin directs the global strategy for Schneider Electric’s power monitoring business for utilities and renewables markets. Reach him at email@example.com.
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