Energy usage is increasing every day; a trend that we can expect to continue for the foreseeable future. To remain competitive in this environment, utilities need to become more efficient in their operations, reduce losses, and create more energy–and do all of this for less money than ever before.
At the same time, all utilities in the United States will embark on very substantial initiatives to deploy components of smart grid technology. Whether they involve advanced metering infrastructure (AMI), substation automation, distribution automation, Volt/VAR control, advanced network communications, or all of the above, these smart grid projects will touch everyone.
Smart grid is at the top of everyone’s mind today for a reason. It is not just an agent of change but a driver for complete transformation of the world’s electricity industry. Energy utilities must be able to look into the future, determine a list of certainties, assess their current state, and then create a roadmap for achieving their future vision. But, before starting down that path, they’ll first need to ask and answer some challenging questions?
- What is smart grid?
- What does it mean to our utility?
- What are others planning and doing?
- How do we stack up to others?
- What types of projects create the best benefits?
- Is there a positive business case?
- What are the hard and soft benefits to our utility and the consumer?
- How can we fund this?
- Which projects should we tackle first?
- How quickly must we implement them?
- How do we get regulators to approve this?
- Can we get federal grants for this work?
So, where do you begin?
This all sounds complex, but experience can help guide you through the necessary steps. West Monroe Partners has worked through this effort with a variety of investor-owned, cooperative, and municipal utilities—in the process creating an effective, efficient approach for defining a vision and the plans necessary to achieve it. These are the key steps we use in creating a smart grid vision and roadmap—the five- to ten-year framework that will guide your organization in the direction of its future vision.
Create your Smart Grid Assessment Profile, or “S-GAP”
Before you can define all the steps necessary to initiate advanced pricing programs, operate more efficiently, reduce line losses, support distributed and renewable generation on the grid, and manage new loads like those from plug-in hybrid electric vehicles (PHEVs), you will need a solid understanding of current operations.
West Monroe Partners typically takes utilities through a comprehensive set of interviews, involving all major departments. We then combine responses into an overall assessment of a utility’s “as-is” state, as well as a long-term vision of where each department would like to be in the future. This is the first step in what we call the Smart Grid Assessment Profile, or S-GAP.
From there, you can begin to identify key gaps that exist between your current operations and your future vision. This, in turn, will provide the foundation for developing your smart grid roadmap and then the business case summary you will need to get you started. Your business case will need to capture the estimated expenses and capital for all the items in the smart grid roadmap, as well as estimate the operational and customer benefits that will come from executing the roadmap.
What does this take?
Let’s face it, you will spend a lot of money and time to implement smart grid projects over the next 10 years. Do you have a plan? If you already do, great. If not, you will need one before you can move much further forward.
While this sounds like a pretty daunting process, it doesn’t have to be. West Monroe Partners has found that it is possible to refine this effort—from crafting initial questions, to gathering input and conducting a gap analysis, to producing a preliminary business case—into a six to ten week period.
Dan Belmont is a director in West Monroe Partners’ Energy & Utilities practice.