You've developed a smart grid roadmap and business case or you have deployed advanced metering infrastructure (AMI) and smart meters. Now what?
Justifying AMI solutions used to be easy. There were clear benefits and costs. If it penciled out, you went forward. You took the risks, controlled the execution, and benefitted from the results. But challenges arise when you attempt to apply traditional cost-benefit analyses to smart grid investments, as the benefits can add up to more than just the utility’s operational benefits.
A smart grid promises many things: increased reliability, customer engagement in conservation initiatives, a cleaner environment, the ability to support a significant rollout of electric vehicles, and new ecosystem of jobs to support automated control of electric loads, not to mention a reduction of greenhouse gases (GHG). To quantify the benefits of an integrated smart grid properly, you will need to look beyond the walls of your utility—what we call incremental business analysis, or “Smart Grid Business Case 2.0.”
New regulations complicate matters further and are one of the primary reasons why smart grid cost-benefit analyses must be different than traditional investment analyses. Most U.S. states have legislated renewable energy portfolios, and a significant percentage of states have mandated additional energy-efficiency and demand-reduction objectives.
A useful framework for creating a roadmap and business case
West Monroe Partners has used this Smart Grid Assessment Profile (S-GAP) process successfully to create smart grid roadmaps and business cases:
- Assess current network, customer initiatives, and processes.
- Create a consensus view of the future state solutions, customer programs, and technologies.
- Create a smart grid roadmap that includes the technologies, activities, and customer programs that bridge the gap between current and future states.
- Create a comprehensive business case model, including incremental capital and expenses to execute the smart grid roadmap. This business case model should include the operational, energy, and demand savings, as well as key societal benefits such as reliability, reduced GHG emissions, energy savings associated with electric vehicles.
As you develop a business case, make sure that you have access to the following key areas of expertise—inside or outside your organization—to optimize the benefits for both your utility and its customers:
- AMI and MDMS technologies
- System integration from meter to cash
- Cyber security (NIST and NERC CIP Compliance)
- Wired and wireless communication technology
- Information technology infrastructure and components
- Utility business process analysis and design
- Substation and distribution automation
- Asset health management
- Distributed generation programs
- Demand Response Programs
- Energy Efficiency Programs
- Security designed into the solution from the beginning
- Consumer program development, delivery, and education
- Project management and business intelligence
Technology elements and considerations
As you explore potential elements of your smart grid roadmap, it is helpful to look at the applicability of upgrading or adding the following smart grid elements:
- Customer information system (CIS)
- Advanced metering infrastructure (AMI)
- Meter data management system (MDMS)
- Smart meter installation
- Home area network (HAN)
- Load control management system (LCMS)
- Time-of-use and critical peak pricing rate structures
- Demand response programs that encourage energy savings, load shifting and behavioral change
- Geographic information system (GIS)
- Distribution automation (DA)
- Substation automation (SA)
- Conservation voltage reduction (CVR) application
- Enterprise asset management system (EAM)
- Outage management system (OMS)
- Distribution management system (DMS)
A successful smart grid roadmap and business case should establish a realistic timeline and sequence of projects. The roadmap should not deploy projects far in advance of the benefits it will produce, but it does need to establish which projects are associated with which benefits so that projects may be sequenced properly.
For more information about creating a comprehensive smart grid business case and roadmap, please contact Tom Hulsebosch