Laying the Foundation for Grid Modernization

Laying the Foundation for Grid Modernization

A modernized grid is the backbone of our energy economy—delivering safe, reliable, and resilient service; empowering customer choice; and providing the means to a cleaner and sustainable energy future. Across the country utilities are planning, budgeting, and building roadmaps to implement various grid modernization investments and efforts, as well as navigating regulatory commissions with the goal of creating more efficient and resilient operations that will save money for both energy users and suppliers. The national focus on grid modernization is exciting, but many smaller electric utilities are unsure of the first steps to take on this path. Getting started does require a certain amount of expertise, but utilities of any size can take the first step by performing a self-assessment of both short- and long-term needs, defining goals, and developing a business case to quantify and justify the investments necessary to achieve success.

Often the most obvious investment activity for a utility is implementing Advanced Metering Infrastructure (AMI). This is frequently the most understood and accessible technology for most utilities and their internal resources, but when it comes to determining how best to leverage AMI beyond its meter and billing activities, the process is not always clear. Before selecting an AMI technology and vendor, it is essential that utilities conduct a very structured needs assessment process and develop a business case. These two foundational documents are the building blocks for all future investment plans, serving as the basis for the RFIs and RFPs, as well as important project management tools during implementation to maintain budget and measure success. It is often helpful to work side-by-side with a partner familiar with grid modernization throughout the course of evaluating and deploying AMI to act as the owner’s representative as a utility absorbs new technologies and operational processes.

Evaluating short and long term requirements

The first step toward implementation should be assessing the current and anticipated needs of the utility and users. Start this process by asking questions like: Where is my utility currently in terms of technology, grid operations, and strategy? How does my utility compare with its peers? Where would we like to be upon completion of our modernization efforts?

The answers to these questions will help make clear what your utility’s needs are and start to identify investment priorities as the utility begins moving from where you are to where you want to be. These needs should be divided into short-term and long-term categories to aid with planning and prioritization. Some examples of areas to focus on for more immediate objectives could include obtaining the technology for AMI meters, meter data management (MDM), IT systems integration, and your service area network. When reviewing your utility’s specific needs in each of these areas, it is critical to ensure that decisions regarding the short-term investments will be, or can be, leveraged by the long-term investments. When considering any short-term investment you should be asking: “How will this support the long-term goal?”

Assessing your utility’s long-term needs goes beyond initial AMI-related investments to reviewing advanced capabilities of AMI that might be useful to your utility, like dynamic pricing and demand response equipment, home area networks, or GIS mapping. Additional grid modernization initiatives, such as Conservation Voltage Reduction (CVR), Distribution Automation (DA), or Distributed Energy Resources (DER) are also valuable things to consider at this stage. Identifying the timing and potential impacts of these initiatives will help you find the right solutions and technology for your unique objectives. For instance, it may seem obvious, but if CVR is a future goal, it’s important to choose an AMI system designed to be compatible with it.

Building a business case

A business case sets out the costs and benefits of the investments needed to begin implementing grid modernization efforts. Experiment with strategies for responding to those immediate and future needs, and calculate the costs and benefits for each. Net benefits determine the best scenario to pursue, given the specific needs and costs of your utility. A key factor in the business case development is identifying the respective roles of customer benefits and company benefits—AMI systems that help customers conserve may create value for customers, but create costs for utilities.

Understanding how to balance the customer and utility’s benefits will be an important and sometimes challenging step in developing the business case. Prioritizing findings from your needs assessment should make this step a bit more straightforward. Once needs have been evaluated and the benefits of different strategies articulated, the parameters of the project are much easier to establish, as will be choosing vendors and contractors that can best help with each utility’s unique grid modernization plan.

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Senior Client Manager
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