February 6, 2014
The Smart Grid Research Consortium (SGRC) announced results of a recently-completed study that identifies a new smart grid investment strategy that can transform a poor AMI business case into an attractive investment. Many electric cooperatives and public utilities have rejected AMI systems because expected meter-related benefits are not compelling enough to outweigh costs. Adding demand response savings boosts benefit-cost ratios; however, the uncertainty and long lead times surrounding these customer engagement programs add more risk. Adding distribution automation (DA) benefits and costs including customer valuations of improved reliability provide added costs and benefits but leave utility decision-makers skeptical.
A new SGRC study shows that joint AMI and low-cost conservation voltage reduction enabled with smart meters can provide a compelling business case for many of these utilities with little risk.
The study summary whitepaper is available at http://www.smartgridresearchconsortium.org/amicvr.pdf
'This study turns the traditional smart grid business case analysis approach on its head,' says Dr. Jerry Jackson, SGRC Leader and Research director and the whitepaper author. Instead of viewing AMI as the foundation, then adding demand response and then distribution automation benefits and costs, we started with a joint AMI/low-cost conservation voltage reduction (CVR) strategy as the foundation for the business case. We found that low-cost CVR provides significant benefits and, because it is enabled with smart meter data, more than makes up shortcomings in the stand-alone AMI business case for many utilities. We did not need to go on to more speculative smart grid benefits.
'The great thing about this new strategic approach is that we can verify costs and benefits of individual AMI and CVR elements with considerable certainty prior to initiating the project. In addition, the low-cost CVR component can be developed simultaneously with the AMI implementation avoiding the long delays that many utilities are experiencing with customer engagement infrastructure development. The CVR strategy requires utility distribution information including some voltage-demand experiments; however, this information is inexpensive to collect and analyze with our Smart Grid Investment Model.'
This study and its implications for utilities are noteworthy for six reasons:
- The AMI/low-cost CVR strategy reflects a new paradigm for smart grid business case analysis
- The analysis quantifies an often omitted contribution of smart meter data,
- Results illustrate the incremental financial value of limited, low-costs CVR grid improvements enabled by smart meter data,
- The financial value of this strategy is easy to verify beforehand,
- The CVR portion can be implemented simultaneously with the AMI implementation, and
- Contributions of smart meter-enabled CVR can turn a negative AMI business case positive.
The take-away from this study and white-paper is that utilities who have considered AMI investments and found the business case lacking should reconsider a combination AMI/low-cost CVR business case.
About The Smart Grid Research Consortium and Study Author
The Smart Grid Research Consortium (SGRC) is an independent, objective research and consulting firm with headquarters in Orlando, Florida. The SGRC provides electric cooperatives and public utilities smart grid investment analysis and project support at all smart grid development stages.
The SGRC was established in 2010 and is currently completing its twentieth smart grid investment analysis project. Each investment analysis project applies the SGRC Grid Investment Model (TM) and extensive knowledge of coop and municipal/public utility smart grid investment issues to provide the most cost-effective and comprehensive smart grid business case analysis, strategy development and implementation support.
The SGRC maintains each utility's Smart Grid Investment Model to ensure that any future analysis can be completed without "reinventing the wheel," saving both time and money required to maintain up-to-date business case assessments recognizing new technologies and vendor proposals.
The SGRC is managed and its research is led by Dr. Jerry Jackson, an energy economist with more than thirty years' experience in new energy technology market analysis, financial model development, utility program development and project management. He was previously a professor at Texas A&M University, chief of the Applied Research Division at Georgia Tech Research Institute, and president of a consulting firm where he has worked with utilities, state regulatory agencies, equipment manufactures and others in addressing energy industry issues.
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