The need for innovation and progress does not come without a price. The need to identify all the positives and possible pitfalls prior to execution is essential in determining whether a project may live up to expected financial and operating results. Detailed and fact-based financial modeling tools are typically used to evaluate the expected performance of a given project or initiative.
An investor owned utility was seeking an opportunity to develop 'smart grid' capabilities through the introduction of a comprehensive Distribution Automation initiative. Key areas of interest included enhancements in advanced metering, circuit automation, substation performance, work scheduling, and back office efficiency.
Electric, gas, and water utilities have been operating for over a hundred years, and in many respects, the methods of delivering service to customers have remained unchanged during that time. However, a major shift is evolving within the industry, resulting in the need to employ new technologies, develop new business processes, and dramatically reshape the industry, as utilities pursue the vision of the ‘Next Generation Utility’. To evaluate the needs for our client, The Shpigler Group embarked on a major fact-finding effort, working with utility subject matter experts to identify the true, present state operating characteristics and potential areas for improvement. We worked with each affected group and developed scenario analyses for each case to evaluate the potential impact of a smart grid. We also gathered data from external sources as a way to consider the real-life experiences of other utilities that have already automated portions of their operations. Based on the research gathering phase, we designed a total network approach that accounted for all of the desired elements of the effort.
Once we determined the optimal network approach, we needed to ascertain the nature of the business potential. Once again, we worked with internal subject matter experts to gather needed data about the operations of the electric utility to determine the potential for distribution automation applications. We considered a number of scenarios in the analysis, including hybrid system designs, differing rate base scenarios, and network staging options. In the end, we formed a business plan that was based on developing five distinct sources of value through the use of the network.
With all of the data and analysis complete, we developed a complete solution based on two key metrics: (1) the most appropriate network infrastructure approach, and (2) the characteristics of different business models.
Based on the results of our analysis, the client determined to pursue a smart grid system involving advanced metering infrastructure and distribution automation. The AMI portion of the network was designed and deployed in stages over a period of two years, resulting in 100% system coverage. State regulatory approval was granted, resulted in the client being able to receive a forward-looking surcharge for the deployment capital. Initial deployment of the Distribution Automation design has begun, with distribution analysts and engineers having been assembled to support the network deployment. Cost savings and efficiency improvements experienced to date have been in line with forecasted projections.
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