By Guerry Waters, Oracle Utilities
Utility missions are changing. Once, they focused on delivering reasonably priced power. Now, their missions are evolving to encompass sustainable use and environmental improvement.
Smart grids are helping utilities achieve this expanded mission, but they come at a relatively high price—especially for those utilities funding the advancements themselves without the help of government grants. Utilities will need to invest heavily in new hardware, software, business process development and staff training to fundamentally shift how they operate. Customer investments in home area networks and smart appliances also will be sizable. Learning to change the energy and water consumption habits of a lifetime could prove even more formidable tasks.
Smart grid business software can ease the cost and difficulties inherent in a needed transition to a more flexible, reliable, responsive electricity grid. Justifying its implementation, however, requires understanding of the benefits it will bring—benefits that can help customers, utilities, communities and the world address global issues such as energy security and climate change while minimizing costs and maximizing customer convenience.
Addressing Growing Energy Demands
Smart grids can serve as the central focus of utility initiatives to improve business processes. Many utilities have long wish lists of projects and applications they would like to fund to improve customer service or ease staff’s burden of repetitious work, but they have difficulty cost-justifying the changes, especially in the short term. Adding smart grid benefits to the cost-benefit analysis frequently tips the scales in favor of the change and can significantly reduce payback periods.
One of the biggest smart grid payoffs is improved demand management. If utilities can more efficiently leverage existing infrastructure to distribute power during high demand—for example, powering air conditioning units in the middle of a heat wave—they can avoid building additional plants and physical infrastructure.
Utilities must size their assets to accommodate their highest peak demand. The higher the peak rises above base demand:
- The more assets a utility must build that are used only for brief periods—an inefficient use of capital,
- The higher the utility’s risk profile rises given the uncertainties surrounding the time needed for permitting, building and recouping costs,
- The higher the costs for utilities to purchase supply because generators can charge more for contracts and spot supply during high-demand periods.
Smart grid business software—including outage and distribution management, meter data management, customer care and billing, mobile work force management and asset management applications—can work together to help utilities minimize the impact of peak demand. It can enable a variety of customer-facing programs that reduce peak demand, including time-of-use pricing and critical-peak pricing. These programs charge customers more when they consume electricity during peak periods. Pilot projects indicate that these programs are successful in flattening peaks, thus ensuring better use of existing transmission and distribution assets, as well as generation assets.
Ensuring Regulatory Compliance
Governments around the world, including the U.S., are creating guidelines and mandates regarding smart grid adoption. For example, to foster smart grid technologies, the U.S. Department of Energy (DOE) has issued guidelines for their research, development and demonstration. The European Union (EU) is mounting similar initiates to ensure that smart grids accommodate Europe’s generally competitive markets while keeping pace with aggressive EU de-carbonization plans.
With smart grid business software, utilities can ensure compliance with private contracts and regional, national or international requirements by:
- Monitoring fulfillment of contract terms,
- Monitoring regulations imposed on customers, such as maximum use during specific times,
- Using accurate time-stamped event history derived from intelligent devices distributed throughout the smart grid to monitor and report reliability statistics and risk compliance, and
- Automating business processes and activities that ensure compliance with security and reliability measures.
Strengthening Customer Connections
Another benefit associated with smart grid deployment is the ability to build stronger customer relationships. Smart grid business software—including integrated meter data management and customer care and billing applications—enable utilities to initiate two-way conversations with customers, saving consumers money and delivering more transparency for end users.
When do utilities need to focus on customer relationships most? During blackouts—when customers are likely upset and impatient.
Blackouts are one of the primary pain points for electric utilities and customers. The DOE, for instance, estimates that power outages and interruptions cost Americans about $150 billion annually. Smart grid business software can help ease this costly burden.
First, it helps utilities identify outages more quickly. The software uses sensors to pinpoint outages and nested outage locations.
Second, smart grid business software permits utilities to ensure outage resolution at every meter location.
Third, it enables utilities to size outages more accurately, permitting them to dispatch crews that have the required skills, in appropriate numbers.
Finally, smart grid business software provides updates on outage location and expected duration. This information, which can be displayed on outage maps for customer and public-service use, helps call centers inform customers about the timing of service restoration.
Another way smart grid business software improves the utility’s ability to communicate with customers and improve efficiency is by reducing the cost for utilities to connect and disconnect customers. Meters capable of remote disconnect can virtually eliminate the costs of field crews and vehicles previously required to change service from the old to the new residents of a metered property or (where permitted) disconnect customers for nonpayment. Also, with the software, utilities can resolve reports of voltage fluctuation by gathering and reporting voltage and power quality data from meters and grid sensors, enabling utilities to pinpoint reported problems or resolve them before customers complain.
Finally, smart grid business software has the capability to detect and resolve nontechnical losses (e.g., theft). Smart grids can identify illegal attempts to reconnect meters or to use electricity in supposedly vacant premises. They can also detect theft by comparing flows through delivery assets with billed consumption.
Furthermore, smart grids facilitate outreach to customers. By monitoring and analyzing consumption over time, utilities can identify customers with unusually high usage and contact them before they receive a bill. They can also suggest conservation techniques that might help to limit consumption. This can head off high-bill complaints to the contact center. Such high-usage or “additional charges apply because you are out of range” notices—frequently via text messaging—are already common among mobile phone providers. With the capability, utilities can help customers identify appropriate bill payment alternatives (budget billing, prepayment, etc.). It can also help customers find and reduce causes of overconsumption. There’s no waiting for bills in the mail before they even understand there is a problem. Utilities benefit not just through improved customer relations but also through limiting the size of bills from customers who might struggle to pay them.
Facilitating the Use of Renewables
Harnessing renewable energy sources through the use of business software is another facet of the smart grid equation. Generation from wind and solar resources is a popular alternative to fossil fuel generation, which emits greenhouse gases. Wind and solar generation might also increase energy security in regions that currently import fossil fuel for use in generation. Utilities face many technical issues as they attempt to integrate intermittent resource generation into traditional grids, which generally handle only fully dispatchable generation. Smart grid business software solves many of these issues by:
- Detecting sudden drops in production from renewables-generated electricity and automatically triggering electricity storage and smart appliance response to compensate as needed,
- Supporting industry-standard distributed generation interconnection processes to reduce interconnection costs and avoid adding renewable supplies to locations already subject to grid congestion,
- Facilitating modeling and monitoring of locally generated supply from renewables and thus helping maximize their use, and
- Increasing the efficiency of net metering.
During nonpeak periods, such techniques enable utilities to increase the percentage of renewable generation in their supply mixes. During peak periods, smart grid business software controls circuit reconfiguration to maximize available capacity.
Achieving this broader view of the smart grid will require complex task prioritization and business process orchestration. Few utilities are structured so executives and staff can comfortably address those goals. Staff members and departments rarely grasp the demands and constraints on other departments’ processes and objectives. For smart grids to succeed, all groups must unite in a common vision. That means turning the current diverse electrical network, with its multiple generating units and transmission lines, into a unified network that communicates intelligently and functions more organically and responsively.
A commitment to that vision will maximize the benefits utilities and customers receive when an information-rich delivery network connects customers to electricity choices and thus turns information into power. Ready or not, the smart grid revolution is coming, and utility business software will play a critical role.
Guerry Waters is vice president, industry strategy at Oracle Utilities.