Where’s the value?
Analytics create business value for utility grid & customer operations
Published In: Intelligent Utility Magazine November/December 2011
RECENTLY A FEW "NON-UTILITY" FRIENDS ASKED ME ABOUT what's going on in the utility industry. They had been hearing about smart meters and smart grid in the news (not surprisingly, they had not been hearing an abundance of good news), and some of them have had smart meters installed at their homes. After a lifetime of thinking about their utility on only two types of occasions and neither of those being particularly positive experiences (paying their bill and experiencing an outage), their skeptical curiosity seemed pretty rational.
After explaining what all of this smart grid and smart metering stuff is all about (and hopefully quelling their concerns), it begged a question for the industry: What now?
Approaching the value phase
We have all seen sweeping changes in the industry over the past few years as the smart grid era has gone from a concept to the implementation of an intelligent infrastructure and the installation of millions of smart meters. This has been more than a natural evolution of technology. New business processes and new job classes have appeared while old ones have disappeared, new operating and regulatory paradigms have emerged, and customer engagement is now more than a snappy catchphrase.
After going through the development and infrastructure phases of the smart grid era, utilities are now arguably on the cusp of the next major phase of smart grid evolution: the value phase. The illustration provides a summary of this evolution.
At the core of the value phase is the role that analytics will play in delivering value from the smart grid. There are massive volumes of data being generated from both the grid and customer sides of the smart grid. Utility managers now have the opportunity to leverage this data to effect significant improvements in grid and customer operations. The examples of how analytics will impact utility operations range from improving asset management processes and optimizing power flow on the "grid side" to revenue protection and demand response program design on the "customer side."
Identifying data analytics dynamics
By the way, this new age of analytics is not limited to utilities. It is difficult to not see analytics emerging across many different industries. For example, The Wall Street Journal recently reported that XO Communications experienced a cost savings of between $9 million and $13 million from a single analytics application geared toward reducing customer turnover. The book and subsequent movie Moneyball is a dramatic example of leveraging data analytics to literally "change the game."
The Utility Analytics Institute, a Division of Energy Central, is engaged in a year-long research effort, the Executive Insights Series, to identify the dynamics of this emerging area of focus, with research results to be published each quarter. The first deliverable from this effort, the Market Outlook & Forecast, was not available at press time for this issue of Intelligent Utility, but a glimpse at some of the preliminary results includes:
- Over two-thirds of survey respondents have started an analytics initiative in their organizations.
This will be growing toward 100 percent very quickly as more of the smart grid/meter implementations come online over the next one to two years.
- The leading hurdles to implementing analytics in their organizations are budgetary constraints followed closely by a lack of necessary staff/skill sets to be successful.
What is your organization doing to be prepared to meet the staffing demands of this new data-rich environment?
- Although numerous organizational drivers/champions were identified in the study, the leading primary drivers are the vice president, transmission and distribution (or related title) and the chief executive officer.
With this level of support, analytics is strategic, with a high visibility and correspondingly high importance.
- Approximately one in five analytics project are at the 50 percent or higher level of completion.
There is still a lot of work to do!
Adding more predictive capability
Charles Newton, president of Newton-Evans Research Company, has been studying grid operations for more than 30 years. On the impact of analytics on grid operations, Newton said: "As far as the control center is concerned, representing the operational IT side of grid analytics, this is a field wherein operations management and staff have been using analytics in one form or another for the past 20 years or more. State estimation is really a prime example of operational analytics, taking SCADA data and using it to try to identify what is actually happening throughout the grid based on several computed measurements.
"The current approach is to strengthen the near-real-time nature of state estimation and resulting analytics ever so more. Doing so provides some additional predictive capability, strengthens situational awareness and provides improved visualization into the network to operate the grid (controls) in an increasingly intelligent manner."
On the "customer side" of how utilities are leveraging analytics, Howard Scott, managing partner of Cognyst Advisors, tells us, "As the utility industry has evolved over the last five years, the metering function itself has hardly changed. The big change has been the ability to collect much more data and to remotely control and change how the meter assembles and reports this data. Furthermore, all this new data will now be correlated with other grid information to help the utility operate `smarter.'
"The challenge is that our industry does not have much experience analyzing all this data and extracting useful information from it. We will draw from experiences of other industries as they went through this evolution and add our own insights. However, we should assume that there will be false starts and some mistakes as we work through this process."
Taking a modular approach
Scott added: "The wisest path is to take a modular approach, so as we find useful analytics we can keep them and as we make mistakes we can easily discard them. The beauty of this evolution is that once the basic infrastructure tools are in place, the analytics will be much less expensive to produce and a large number of employees will have access to the collected information, thus ensuring that we can draw from the collected wisdom of many members of our industry."
As utilities continue to move forward in the smart grid era, analytics can be a significant differentiator for utility leaders who are looking to meet and exceed a variety of demanding expectations.
The possibilities are seemingly endless: operating costs can be maintained or lowered; revenue can be secured and increased; customer benefits can be realized; and environmental impacts can be minimized. It will be the actualization of analytics that will turn "possible" to "done."