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TRANSCRIPT
David Shpigler
Evaluating the Operational, Financial, and Environmental Impact of
Smart Metering
The Shpigler Group
• Environment – Utilities are being pressured from many fronts to adopt business practices to respond to global environmental concerns
• Customer Demands – Higher expectations for reliable service in a digital economy have given rise to a more demanding customer
• Energy Concerns – Need to respond to energy issues by adopting business practices that provide assurances that energy can be delivered to end-users reliably, continuously, and cost-effectively
The drive to pursue status as a “Next Generation”utility is based on the realities of a rapidly changing
market dynamic
Source: PJM
- Legacy Operations - - Next Gen Operations -
Tomorrow’s utility will look different that today’s utility
Generation Trading T&D Retail
• How can we plan for resource requirements?
• How can we achieve maximum efficiency?
• How can we manage our cost structure?
• How can we increase profitability per customer?
• How can we use product portfolio to maximize market reach?
• How can we deal with customer churn?
• How can maximize profit potential?
• How can we address volatility?
• How can we better predict market needs and trends?
• How can we achieve operational efficiency?
• What capital programs are optimal to pursue?
• How can we use automation to achieve goals?
At all corners of the energy industry, operators and providers are seeking opportunities to enhance
their ability to thrive in a new paradigm
How can we leverage our existing market position to maximum benefit in the face of restructuring in the energy sector?
What is the optimal market approach to drive customer behavior?
How can we best allocate resources within the company to ensure market success?
Today many utilities are asking questions related to how to best position themselves in the market
Enhanced Go-To-Market
Strategy
Market Mix
Resource Planning
Brand Management
Value Creating Opportunities
Value Creating Opportunities
Supply Automation Advanced Metering Infrastructure
Supply Control and Optimization
• Outage avoidance and fault location• Labor cost savings • Load management and reliability• Improved customer satisfaction• Achieve better asset utilization• Faster service restoration
• Reduced cost of meter reading, billing, servicing, etc.
• Information to utilities and customers• Theft and tempering detection• Implementation of time driven pricing to
reduce energy costs• Customer satisfaction through improved
information, choice, and service• Information management
• Fault detection and outage avoidance • Substation diagnostic and monitoring• Better quality power• Improved system reliability• Reduced failures• Cost savings through reduced labor hours
Smart metering can serve as the platform for a number of different applications that can be
developed in a smart grid deployment
The smart grid will allow utilities to tackle the key challenges of today head on while restructuring the
central approach to electric delivery
Smart metering often serves as one of the key foundational pieces of an overall smart grid plan
SupplyAutomation
Supply Optimization and
Control
• Controllers• Monitoring Devices • SCADA• RTUs• Switches• Capacitors• Volt/Var Control
• Sensors• Filters• Recloser Controls • Capacitor Controls • EMS• Restoration System• Smart Appliance
Communication Network
Advance Metering
Infrastructure & I/O Devices
• SCADA / Data Collection
• RTU / Transmitters • Advanced Meters• Sensors• Surveillance Cameras
• Wireless• Radio Frequency • Fiber Optics • LAN• PLC• BPL• IP/MPLS
Basic Automation Advance AutomationModerate Automation
Self-HealingGrid
• Self-Performance Optimization
• Robustness• Preemptive Reaction
to Potential Problems• Self-Restoration
The business and operational plan can allow utilities to migrate meters from a “cash register” to an
automation sensor
Evolving Role of Metering
� Intelligent Grid Sensor
� Demand Mgmt� Gateway to
home automation� Cash Register
� Off-Cycle Reading
� TOU Rates� Load Modeling
� Networked Data Collection System
Technological Capabilities
Customer Interests
� Drive-by Automation
� Improved Cash Register
� Basic Metering� Cash Register
Technology
Val
ue
Ch
ain
(P
artn
er)
Inte
gra
tio
n
Prepaid metering programs
Time based rate support
Outage and restoration notification
Self serve customer usage portals
Remote (automated) service connect/disconnect
Advanced distribution management
Self healing distribution systems
Load Modeling
Demand Response
It is incumbent upon each electric utility measure the expected financial and operational impacts of
smart system deployment
Smart Grid Business Model
Prepared for: Prepared by:
Business Case Results ($MM)
Core Rural Urban Undeveloped Developed Distribution Integrated
Ten Year Cumulative Benefits 510.9$ 604.6$ 448.5$ 663.2$ 391.2$ 475.2$ 579.9$ Ten Year Cumulative CapEx 469.1$ 568.2$ 421.2$ 494.3$ 356.4$ 469.1$ 469.1$
NPV 86.7$ 86.2$ 68.0$ 170.1$ 70.2$ 63.1$ 131.5$ IRR 13.4% 12.7% 12.8% 17.1% 13.5% 12.0% 15.8%Peak Funding 269.8$ 314.0$ 242.1$ 280.0$ 213.1$ 275.5$ 261.2$
Table
Core Rural Urban Undeveloped Developed Distribution Integrated
Ten Year Cumulative Benefits ($MM) $510.9 $604.6 $448.5 $663.2 $391.2 $475.2 $579.9Ten Year Cumulative CapEx ($MM) $469.1 $568.2 $421.2 $494.3 $356.4 $469.1 $469.1Net Present Value ($MM) $86.7 $86.2 $68.0 $170.1 $70.2 $63.1 $131.5Internal Rate of Return 13.4% 12.7% 12.8% 17.1% 13.5% 12.0% 15.8%Year 10 Bill Impact $4.37 $5.10 $3.79 $6.49 $3.43 $3.96 $5.23
It is very common to see metering programs taking a major portion of projected system benefits
Benefit Sources
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ion
s
Distributed Resources
Voltage Monitoring
Substation Monitoring &Diagnosis
FDIR & Load Management
Demand Management
Outage Management
Metering
Of course, each utility must consider the costs alongside the projected benefits they expect to
achieve
Cost Summary
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ion
s
Distributed Resources
Voltage Monitoring
Substation Monitoring & Diagnosis
FDIR & Load Management
Demand Management
Outage Management
Metering
In the end, we can see the financial impacts of developing a well-designed smart grid system
Base Case Smart Grid Financial Summary
$(10)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ion
s Benefits
OpEx
Net Income
CapEx
In addition to pure financial returns, each utility should also consider the environmental impacts
associated with their programs
Tons of CO2 Eliminated
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Carbon Value per Ton
$0 $20 $50$0 $20 $50
$449.5 $510.9 $603.0Ten-Year Benefits
($MM)$449.5 $510.9 $603.0
Ten-Year Benefits ($MM)
$45.2 $86.7 $149.0NPV ($MM) $45.2 $86.7 $149.0NPV ($MM)
10.9% 13.4% 16.9%IRR 10.9% 13.4% 16.9%IRR
Utilities can use their business cases to develop a strong value proposition for state commissions by demonstrating the positive impact to ratepayers
Projected Bill Impact of Smart Grid
$188.26
$187.86
$187.37
$186.80
$186.16
$185.63$185.30
$184.85
$184.40
$183.95
$181.00
$182.00
$183.00
$184.00
$185.00
$186.00
$187.00
$188.00
$189.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
While this particular design emphasized advanced metering, it is possible to design any number of systems based on the specific needs of the utility
Benefit Sources - Ten Year Present Value ($MM)
Metering, $154.5 , 49.9%
Outage Management, $9.8 , 3.2%
Demand Management, $15.6 , 5.0%
FDIR & Load Management, $20.1 ,
6.5%
Substation Monitoring and Diagnosis, $23.0 , 7.4%
Voltage Monitoring, $69.0 , 22.3%
Distributed Resources, $18.0 , 5.8%
Ultimately, metering-based initiatives can offer all of the relevant stakeholders a number of benefits
that can be measured
Utility Benefits
• Reduced peak demand
• Availability of excess generating capacity when needed
• Potential to improve overall cost efficiency
• Improved energy planning capability
• Improved system load factor
• Improved power quality characteristics
• Improved customer relations
• Improved asset utilization
• Overall demand “smoothing”
As a result, a complete business case analysis can be used to drive strategic decisions
Net Income
$(50)
$-
$50
$100
$150
$200
$250
$300
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ion
s
Benefits
OpEx
Net Income
Benefits vs. CapEx
$-
$50
$100
$150
$200
$250
$300
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ion
s
Benefits
CapEx
Cash Flow
$(350)
$(300)
$(250)
$(200)
$(150)
$(100)
$(50)
$-
$50
$100
$150
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Mill
ions
Cash FlowCum Cash Flow
Define Smart Grid Plan
DefineExpert Teams
Develop Business Case
Develop Technology and Database Plan
Produce Smart Grid Roadmap
• Develop senior level team
• Define funding strategy
• Define metric improvement
• Test plan with external stakeholders
• Develop short range plan
• Develop planning model
• Develop funding plan
• Present smart grid roadmap plan to executives and board
• Team for each functional area
• Define short and long term plans
• Review present initiatives to plan
• Define metrics and expense/ cost estimates
• Define external needs, software and hardware
• Utilize modeling for business case
• Establish schedule
• Review all present technologies for plan support
• Review all data needs and bandwidth requirements
• Develop a technology plan
The process is a gradual one that takes a number of steps, but proper planning up front can support a
utility as it progresses on its plan
1 2 3 4 5 6 7 8 9 10 11 12
Stage 1 - Define Smart GridDevelop Senior TeamDefine Funding StrategyDefine Metric ImprovementTest Plan with Stakeholders
Stage 2 - Define TeamsDefine TeamsDevelop ObjectivesReview InitiativesDefine Metrics
Stage 3 - Business CaseDefine External NeedsDevelop Financial ModelsEstablish Schedule
Stage 4 - Technology PlanReview Technology IssuesReview Data and Communication NeedsDevelop a Technology Plan
Stage 5 - RoadmapDevelop Short Term PlanDevelop Planning ModelDevelop Funding PlanFinalize Smart Grid Strategy
Month #
Sample high level project plan…
