Smart Grid Operational Services Leveraging Technology To Transform Td Operating Models POV


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Smart Grid Operational Services Leveraging Technology To Transform Td Operating Models POV

  1. 1. Energy, Utilities and Chemicals the way we see itSmart Grid: LeveragingTechnology to TransformT&D Operating Models
  2. 2. ContentsIntroduction 3The State of the Market 4 Regulation and Legislation 4 Global Climate Change 4 Customer Expectations 5 Aging Infrastructure 5 Power Quality and non-technical losses 5The Opportunity 6The Vision 7The Roadmap 10The Business Case 11Starting the Transformation Journey 12Glossary 14©2007 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.
  3. 3. Energy, Utilities and Chemicals the way we see itIntroduction What will the future hold? Another key indicator of future This is a question we would all like direction is actions being taken by answered with some assurance. As we legislators and regulators. This year we all know, it is nearly impossible to have seen the United States House of predict the future but it is possible to Representatives pass the Smart Grid look at trends and activities taking Facilitation Act of 2007. place in our lives and get a good This legislation provides a nationwide indication of the direction we are focus on the development of an traveling. The same is true in the Electric Smart Grid. In Europe similar electric utility industry and the future efforts are underway, in parts of Asia of the electric distribution grid. the situation is even more advanced, Tokyo has completed the It is clear that dramatic change is implementation of a smart grid. The coming in the future for the electric only sure thing is that doing nothing is utility industry and the way energy is not an option since an increasing generated, delivered and consumed electricity demand is pushing the aging substantially changing the whole electric grids to the breaking points; business model. This change is coming the current state of the electrical to a piece of the industry that hasn’t infrastructure is not sustainable. To been known for radical change over its change its course, utility companies 120 plus year history. Electric must embrace a fresh approach to distribution has been basically the managing the grid, peak demand and same industry since the time of Edison system security - one that will drive and Tesla, both would easily recognize market efficiency while supporting what is installed today. The utility economic, environmental and social industry is often accused of being slow priorities. to adopt and resistant to change, a new study by Platts and Capgemini suggests just the opposite. According to the study, in which more than 120 senior executives at U.S. and Canadian utilities participated, a majority of the surveyed executives reported that they are embracing new technology as a means of improving overall grid performance.Smart Grid: Leveraging Technology to Transform T&D Operating Models 3
  4. 4. The State of the MarketThe reality is that the compliance- technologies – meters by 2010. Again Ontario is abased industry in which utilities the market/retail side is the primary power constrained market with strongoperate doesn’t offer enough incentive beneficiary. resistance to any new power plantfor consumers, regulators or utilities to construction.take the difficult steps necessary to Despite these current realities, amake electrical energy markets operate number of internal and external factors In a number of states in the US, theefficiently. are converging that will enable and regulators have implemented incentive provide the right types of incentives for based rates to force utilities to improveI Consumers want lower prices, higher utilities, regulators and consumers to reliability to their customers. quality service and absolutely expect adopt innovative approaches to the power to flow 24x7. In Quebec and Manitoba in Canada, demand management and marketI Some regulators impose long-term efficiency. Those factors will drive the the regulators are pushing forward rate caps in an attempt to please electric power infrastructure to distribution automation and smart grid consumers. radically change. initiatives to allow for the placement ofI Regulated rates are not tied to distributed generation and to improve wholesale markets where utilities Regulation and Legislation reliability of the grid. purchase all or a portion of the power Governments around the world are making energy conservation, energy Global Climate Change they sell. independence and global warming As a society, we increasingly recognizeI Incentives for consumers to conserve how burning carbon-based fossil fuels top-of-mind issues. A wide range of are not significant enough to change adversely affects the environment. taxes, legislation and other policies their behavior. Momentum is building on many fronts designed to reduce the combustion ofI Regulators impose conservation fossil fuels are being considered across to limit carbon emissions. program requirements on utilities, the globe. Government, major corporations, and as a result, utilities suffer from citizen groups and utilities alike are decreased revenues which are directly The Smart Grid Facilitation Act of promoting environmentally-friendly, tied to consumption. 2007 establishes a Federal Grid green solutions. Utilities are lookingI Networks are constrained enough Modernization Commission, requires for alternative generation that will that true pricing is not possible – the (unlike EPACT 2005) utilities to force the grid to become much more Enron games in California show what consider ways to encourage Smart distributed. Many are insisting that happens when the incentives are high Grids, energy efficiency and demand behavior must change and adoption of enough for market participants. response; it provides a nationwide a conservation culture is critical. focus on the development of a SmartI Construction difficulties linked to Current generation stations are located Grid. In California the California complex local regulations. close to where the demand for power Public Utility Commission (CPUC) –I Public resistance to the addition of Energy Action plan I and II required all is, in many cases it is close to major new transmission lines, while they utilities to submit a business case, the cities and major transportation routes want the power, they do not want to goal is completion of a 20 million that makes it easy to move fuel to the see the lines. smart meter deployment prior to the central stations. On the contrary, green end of 2012. This deployment is power exists where nature put it, inIncentives for grid operators will many cases long distances from major mandated not for utility billing, but fordepend on the ownership model, in demand locations, meaning that the demand response in a powerNordics where grid operator is a power from wind farms will have to constrained market.monopoly there are very few incentives travel long distances to the commit to lower prices for the In Ontario, Canada the Energy This transportation may be on majorconsumer, their primary interest is Conservation Responsibility Act from high voltage routes, or it may be on theefficiency, quality, control and low the Parliament issued a directive distribution network. The best place inoperating cost. In situations like this imposing conversion of meters. The the world to make solar power is in thethe grid operators are only indirectly schedule is to convert all meters deserts near the equator, hot, drytied to the consumptions – and they (residential and business) to smart locations that have few electricare not benefiting from those new 4
  5. 5. Energy, Utilities and Chemicals the way we see itconsumers. That means either moving In many household cable television Power Quality and non-technicalthe people or moving the power to the and internet access cost much more losseslocation. than electricity. It used to be that residential customers mostly used power in lighting, heating,The ability to build conventional fossil Aging Infrastructure refrigeration, and analogfuel based power generation will Much of the transmission and entertainment. Today there isdecline over the next decade, already distribution infrastructure is more than increasing use for digitalmore than 50% of the coal fired power 50 years old and was designed to entertainment. Harmonics and otherplants that have been announced to be provide power in a different era. For power quality issues were confined, tobuilt in the US over the last 5 years many years, utilities typically a large extent to the industrial segmenthave been cancelled. It is not that the underinvested in the grid of power delivery and so could beuse of coal is being reduced – rather – infrastructure or neglected to make the handled with a small number ofthe rate that the use of coal will go up significant, ongoing investments industrial sized solutions. Today withis slowing down. With Green house required to sustain the infrastructure Plasma televisions, and othergases being a high priority topic, the over the next decade. As a result, most electronic devices creating harmonics,ability of utilities around the world to utilities are now at a crossroads, facing the problem has moved frombuild as much fossil fuel generation as a decision that will be crucial to their manageable to unmanageable.they like will be constrained by futures. Additionally, the non-technical lossesenvironmental concerns. By 2030, it are climbing and many utilities are justmay be very difficult to build new Aging Workforce starting to understand the real extentfossil generation in most of the A significant percentage of the current of the non-technical losses. In thedeveloped world. utility workforce is nearing the age of today world the extent of both retirement. In some companies more problems is mostly reported by urbanCustomer Expectations than 70% of the workforce will retire myth and small samples, but there is aAs household electricity consumption between 2001 and 2010. With the loss growing body of evidence that in thisincreases year over year, peak loads are of these resources comes the loss of a case the smoke hides a growing fire.increasing and changes in huge pool of operating and networkconsumption patterns are causing load knowledge. Much of this knowledgefactors to decrease. At the same time, has not been adequately captured inconsumers expect higher quality corporate records. It will be necessarypower to operate the increasing to capture this information and be ablenumber of digital devices that we to communicate it to a whole newamass each year. Finally, consumers are workforce. This is also compoundeddemanding this improved quality at by the fact that the current generationthe low, stable price levels of the past has been raised on a differentwhile, at the same time, wanting a communication media. Today’s papervoice in how the power they consume maps and network diagrams meanis generated. nothing to them. They are use to computer access and graphic userThe fastest growing sector for power interfaces. A means will have to beconsumption is residential. created to quickly and cost-effectivelyCommercial and Industrial customers train these new resources. This changehave the financial incentives needed to is driving up the need to provide datareduce power consumption. to the field workforce at a rapid rate.Residential customers to a large extentstill see power as a low cost necessity.Smart Grid: Leveraging Technology to Transform T&D Operating Models 5
  6. 6. The Opportunity Nobody can tell you today exactly The technologies for tomorrows Smart what technologies the future Smart Grid are evolving and being created Grid will incorporate but we have been today. But, based on a report by EPRI - able to compile a list of key more than 7,000 pilots are underway characteristics. We expect each utility today and more than 1,000 of them are to have its own version of the Smart more than a decade old. There is only Grid but it is clear it will have the one utility that has truly created a following characteristics: smart grid, that one is Tokyo Electric I Autonomous restoration, Power, and their implementation is specific to the needs of Tokyo. I Resist attacks – both physical and Technology will continue to advance, cyber, and utilities will continue to invest. I Supports distributed resources – This is not a revolution, but an (generation, storage, demand evolution. Any deployment of a new reduction), smart grid technology will probably be I Supports renewable energy sources, measured in years or decades, rather I Provides for power quality, than months. Since utilities mustThe regulatory environment and the invest today the key is to build a vision I Provides for security of supply,convergence in the marketplace have and architecture that allows them tocreated a great opportunity for the I Supports lower operations costs, leverage today’s investment whileelectric utility industry to recreate itself I Minimizes technical losses, maintaining flexibility to evolve theand transform the “Electro-mechanical I Minimizes manual maintenance and Grid as technology advances. To waitGrid” into “Digital Smart Grid.” intervention. for the “perfect answer” is not acceptable, since the perfect answerIf we are going to embrace the Smart To deliver on those characteristics, a will never appear.Grid we first need to understand grid with more intelligence has to beexactly what is it. Many industry designed. The challenge is very clear;groups (more than 40 at last count!) the old electro-mechanical networkhave been formed to help define a cannot meet the needs of the newvision of the future Smart Grid. Most digital economy. The future gridof these efforts have been focused should be able to produce faster faultaround the technology. While the location and power restoration, henceSmart Grid will utilize the latest lesser outage time for the customer andtechnology to achieve its goals, it is not manage many small power generationjust about technology. Implementation sources.of the Smart Grid will require acomplete rethinking of the utility The system network architecture willbusiness model and business need to change to incorporate multi-processes. way power flows, and will be much more intelligent than a series of radial lines that just open and close. The future data volumes will require large data communications bandwidth and communication network technologies will be a key. 6
  7. 7. Energy, Utilities and Chemicals the way we see itThe VisionIn order to make meaningful progress functions include operational and utilities, but the effort to transform antoward addressing the current grid monitoring activities like load electric power grid into an intelligentchallenges and delivering on the future balancing, detection of energized power grid involves much more thangrid characteristics, Utilities should downed lines, and high impedance just hardware and software. Figure 1focus on four main activities: faults and faults in underground “Smart Grid Conceptual Architecture” cables. Non real-time functions provides a conceptual view of all the1. Gather Data: Data will be collected include the integration of existing and components that will be needed to from many sources on the grid new utility databases so operational deliver on the Smart Grid vision. (Sensors, Meters, Voltage Detection, data can be fused with financial and etc.), in-home sensors for high other data to support asset utilization Grid Hardware: Sensors on existing consuming appliances, and external maximization and life cycle hardware on the grid, from meters at information like weather. management, strategic planning, the home to reclosers and maximization of customer satisfaction, sectionalizers, transformers and2. Analysis / Forecasting: The data substations will need to be deployed in and regulatory reporting. that is gathered from all those a prioritized fashion. The easiest way sources will be analyzed – for Electric utilities already have many of to do this is to change the purchasing operational and business purposes. the data sources needed to support standards for new and replacement For operational purpose analysis analytics for these functions, but these equipment to include the sensors, so will have to be done in real-time or data sources are usually siloed and, that they are automatically deployed near real time and for business therefore, very difficult to combine. with each device. Then you can fill in analysis purpose analysis can be Worse, the operational data is usually with additional sensors as required as a done on non real-time data. sequestered in the Supervisory Control retrofit. They key is to understand and Data Acquisition (SCADA) system what sensor readings can bring3. Monitor / manage / act: In the and not readily available to support operational value to your smart grid operational world data that comes analytics or business intelligence tools. effort, there is no reason to bring back from the grid hardware will trigger a data that you can not act on, either predefined process that will inform, Some elements of an intelligent power billing a customer, changing settings in log or take action. Those are SCADA grid already exist in most electric the grid, or planning maintenance. applications that sits at the operation center and use for monitoring the Transmission and Distribution Grid. Figure 1: Smart Grid Conceptual Architecture In the business analysis world the data is analyzed for usage and rate purpose.4. Rebuilding the grid to support bi-directional power flow and transfer of power from substation to substation: The first three steps will have little impact to the end customers, if the information that is collected and analyzed can not be acted on. This will be the most expensive part of the smart grid deployment and will in most cases take 20 years or more to complete across a whole service territory.These activities fall into both real-timeand non real-time categories. Real-timeSmart Grid: Leveraging Technology to Transform T&D Operating Models 7
  8. 8. Communication Backbone: To Data Management: Smart Grid will be applications in this category aresupport all those data sources on the the largest increase in data any utility SCADA applications that sit at thegrid a communication infrastructure has ever seen; the preliminary estimate operation center and used formust be in place. A wide range of at one utility is that the smart grid will monitoring the Transmission andwired and wireless communications generate 22 gigabytes of data each day Distribution Grid.technologies are available to transport from their 2 million customers. Justdata. There are more than 20 collecting the data is useless – knowing 2. Front Office: Those functions thatcommunication technologies that an tomorrow what happened yesterday on help the business operate beyondelectric utility might consider the grid does not help operations. Data management of the grid in real timeincluding MPLS, WiMax, BPL, optical management has to start at the initial – load data to feed to forecastingfiber, mesh, WiFi and multi-point reception of the data, reviewing it for models that support generationspread spectrum. There is no perfect events that should trigger alarms into planning and spot market powercommunications method. The one best outage management systems and other purchases or demand managementchoice for how to communicate with real-time systems, then and only then, programs. These uses of data arethe electric grid does not exist, and should normal data processing start. typically same day, same hourwith the exception of satellite, there is Storing over 11 Gigabytes a day per applications, but there is time tono single system today that covers the million customers is not typically scrub the data and even try again towhole service area of a utility’s grid, useful, so a data storage and roll off get information from the field.including adequate coverage to handle plan is going to be critical to managing 3. Back Office: Those are all the nonevery meter and other device that the flood of data. Most utilities are not real-time applications that providemight be deployed. The future data ready to handle this volume of data. rate analysis and/or decisionvolumes will require large data For a utility with 5 million customers, support, based on the processing ofcommunications bandwidth and they will have more data from their intelligent Smart Grid data. Thecommunication network technologies distribution grid, than Wal-Mart gets analytics functions transform datawill be the key. from all of their stores and Wal-Mart into actionable information. This is manages the world’s largest dataAny smart grid initiative will have to where the accountants, engineers, warehouse.pick 2 or 3 communications methods planners and standards engineersand mix and match as required to get Knowledge Continuum: Data coming will go for the data they need to doto the level of coverage required, some from the field has different values to their jobs.may be owned and operated by the different parts of the company to Most of the Smart Grid applications atutility (e.g. fiber to the substations) different users on different timing. the knowledge continuum layer are inand some may be commercial Outage data is best served to the their infancy and innovation is highlynetworks (e.g. cellular phones). outage management system as rapidly desired. The applications listed below as possible. Load information might beData Standards: These data sources are some of the applications that might best served on a 15 or 30 minute not always communicate via comprise the smart grid capabilities. Engineering analysis may not find theycommon standards. The two dominate have useful data until they have a full I Distribution Monitoring and Controlstandards are the common information year of data available to analyze. This System (DMCS): This is the mastermodel (CIM) standard and Multi Speak. continuum can be simply system that takes feeds from all theBoth define a standard data interface characterized into three major other systems in the grid, to provide athat supports batch and real time data categories: single view of what is going on in theexchange. Multi Speak originate with grid. Normally the distributionthe National Rural Electric Cooperative 1. Operational/Analytical: Those are operations manager would be sittingAssociation and CIM is an open-source all the real-time/near real-time at a console with this as his primarystandard through the IEC. Those data operational type of applications. view on the status of the grid.standards will need to define a Those are the application that I Distribution Substation Monitoringstandard data structure for each data monitor / manage and act base on System (DSMS): This system wouldsource on the grid to communicate. events that comes from the smart bring back and manage all of the data grid hardware. Most of the from the substations and feed the 8
  9. 9. Energy, Utilities and Chemicals the way we see it DMCS. It would also relay the orders systems – data flows in from the failures, and the DSMS for the same to the controls in the substation. meters and is managed within the purpose. With many utilities there are multiple system. MDMS were designed to I Minor Equipment Monitoring System vendors of substation equipment collect information from metering (MEMS): This system monitors already installed. Consequently, there systems that were designed purely for capacitor banks, transformers, might be two or more copies of the billing. With the change to the voltage regulators, re-closers, DSMS in operation to allow the requirements that the utilities are sectionalizers, and other minor legacy equipment in the substations placing on metering systems – equipment that are outside the to continue to perform. demanding operational abilities in substation fence. The systemI Automated Feeder Switch System addition to billing support – MDMS supports the DMCS with fault reports (AFSS): This system would monitor, systems are finding that they have and in the cases where the minor operate and control the automated significant gaps in the ability to equipment has controls, allows for feeder switches. Typically it would be support the new requirements. Real- operation of those controls. autonomous in its control and time and full two way round trips to I Smart Grid Planning System (SGPS): operation, feeding changes to the the meters in near-real time are This system records long-term trends DMCS. Unlike many beyond what the current generation and fault patterns so that they can be implementations today, it would not of MDMS systems were designed to reviewed by planning and only balance substation and system support. This rapid change in engineering as a baseline for load but have the ability to balance requirements is forcing rapid construction, maintenance and other circuit loadings between phases, a reengineering by MDMS vendors. activities. functionality that wise future grid I Distribution Forecasting System I Smart Grid Operational Data Store designers will leverage. (DFS): This system would take (SGODS): This system houses the Distributed Generation Monitoring information from the DGMS and theI historical data from all the systems System (DGMS): This system would MDMS to support load and supply that are used to manage the Smart monitor the status of the various forecasting on the grid. It is expected Grid. This allows data mining, distributed generation sources on the to be a bottom-up system that would engineering studies, regulatory grid. It would feed status to the use the actual data from the points on reporting (e.g. IEEE SAIDI, CAIDI, DMCS and to the Distribution the grid to supply forecasts for etc.) and other activities where large Forecasting System. demand and for supply. amounts of historical data are usefulI Automated Meter Operations System I Smart Grid Work Management for analysis. (AMOS): This system is the real-time System (SGWMS): This system is monitoring system for meters and used to manage work orders for parts The Smart Grid will be built as a series other devices deployed beyond the of the Smart Grid sensor network of related projects, with each project meters in the field. Its job is to (meters, controls, communications bringing a large amount of value to the manage the meter operations, network, etc) that are in need of utility, ultimately transforming from conduct outage determinations, maintenance or repair. It would focusing on energy value to focus on manage demand management events normally feed the overall distribution information value while touching and and communicate to end user work management system. changing many of the utility processes devices. It feeds the Outage I Communications Network as you know them today. The key first Management System (OMS) and the Monitoring System (CNMS): This step is to collect the timing and data DMCS. system talks to the various requirements and determine what the communications vendors systems to communications backbone will needI Meter Data Management System determine communications outages to look like, otherwise, every project (MDMS): This system would be and manages the information on will be burdened with that aspect and responsible for management of the communications outages. It feeds the the business cases for each will be data collected from the automated DMCS information on much harder. meters deployed in the field. The primary purpose of this system is to communications blackout areas, the support billing operations. MDMS AMOS to allow for the removal of systems are expected to be one-way communications related meterSmart Grid: Leveraging Technology to Transform T&D Operating Models 9
  10. 10. The RoadmapAs utilities face the growing pressures means of providing high speed infrastructure that you build forof electricity distribution in the 21st Internet, Voice over IP (VoIP), Video AMI/DRI will form the foundation forcentury, difficult issues are sure to arise on Demand (VOD) and other future Smart Grid initiatives. If youlike regulatory barriers and financial broadband services to home and start with other smart grid buildingconstraints. The technical challenge is business - to augment the Smart Grid blocks (e.g. automated feeder switches,very clear; the old electro-mechanical business case. distribution automation, etc) then theydistribution network cannot meet the should take into account the otherneeds of the digital economy. The Many utilities today are starting down blocks you might put in place, likebusiness challenge for the electric the road of Smart Metering (AMI). AMI. This approach has a lower totaldistribution utility executives and Smart metering comes in many flavors cost of ownership when compared toregulators is the timing when to seize with very different capabilities. The more traditional integrationthe opportunity before it becomes a traditional systems installed by several alternatives. Utilities will experienceproblem. The confusing patchwork of utilities in the last 5 years will not significant cost savings and benefitsoverlapping federal, regional, state and advance smart grid very much, since utilizing this integration infrastructuremunicipal agencies and on top of this they are designed to report daily or less as complex legacy applications like CISthe industry is neither fully regulated frequently. It is very hard to do real and billing systems are replaced ornor completely deregulated cause time operations and short-term unbundled and new applications likeinvestors and entrepreneurs to often forecasting based on data that is days grid monitoring, analysis and controlhold back investments in Smart Grid. old. It is also very hard to do real are implemented.In the past regulators reward investor- demand management on the grid orowned utilities for building new power management of small distributed While each utility will have someplants but not for energy efficiency or generation sources, with data that is variations, the business casegrid automation, this environment is days old. For AMI to be effective, the framework is one that is wellchanging very rapidly in the last whole system needs to be able to understood by the captains of theseveral years. report at each interval. This means that industry: utility executives, regulators, the AMI system has to be designed, and government/owners. In today’sFrom a financial point of view the grid including the backbone multi-stakeholder, balanced scorecardis capital intensive and faces problems communications, to support regular world, business cases are no longerimposed by utilities’ constrained reporting based on the operating pure numbers games. Planners andbalance sheets and difficulty to finance intervals of the utility. In France that is analysts constantly struggle attemptinglarge projects like the Smart Grid. half-hourly, in Ontario the wholesale to put dollar values on non-economicWithout regulatory push and ability to market operates on a 15 minute cycle, political, societal, environmental costsrecover some of the investments IOU’s and in most of the rest of the world and benefits.will not be able to take on large Smart hourly is the typical operating cycle.Grid projects. Utilities that have Even receiving outage information anregulatory approval for AMI will be hour late is not as helpful as it can beable to leverage their infrastructure for operations in communicationbackbone and data management Utilities should start by designing aframework to get incremental benefits secure, robust, scaleable andfrom grid operations by implementing extendable integration infrastructureSmart Grid solutions like substation based upon reusable industry standardand feeder automation, grid operations services, data and message structures.and intelligent application. In North At the rate that technology is changingAmerica Capgemini is exploring Capgemini believes that this approachalternative financial models like is the best solution for criticalrevenue generating concepts – use the integration infrastructures. If you startelectric grid to offer and alternative with AMI, the integration10
  11. 11. Energy, Utilities and Chemicals the way we see itThe Business Case System benefits are those benefits that initial technology investments will can be achieved through the require a ROI but utilities must operations of the grid system like remember that these initial reduction of congestion cost, reduction investments build the smart grid of restoration time and reduction of infrastructure that will position them operations and maintenance due to for larger future ROI for smaller predictive analytics and self healing incremental investments. Current attribute of the grid, reduction of peak projects that can be positioned for demand, increase integration of regulatory rate relief (i.e. smart distributed generation resources and metering) should be considered in higher capacity utilization and light of the long term advantage as well increased asset utilization. Societal as the immediate return. The question benefits are those benefits that accrue for any investments today should be: to non-utility stakeholders (i.e. the does it leverage the utilities position in region at large) and represent such the future? things as fewer outages resulting in avoidance of lost revenue to local Sequencing and running the smart gridGetting a handle on the smart grid businesses, job growth, and an increase program as deployment programs overbusiness case is tricky; there is no in high-tech businesses that require a long, steady period of time representsconsensus on what kind of benefits to and value high power reliability the lowest risk. However, programsexpect. Early business cases at several (e.g., biotech, pharmaceutical and longer than 3 years have a tendency toutilities show a range of partial and full research and development) and the become sluggish and are open to manydeployment concepts using different resultant economic development changes in scope, which can greatlystandards and – most interestingly – attributes. There are other areas that reduce the effectiveness of the overallanticipating different results. That will benefit from smart grid concepts – program.makes comparing these business cases one example is asset management thatdifficult. It is very obvious that there is is an important component of theno one-size-fits-all recipe for utilities to holistic smart grid approach.develop a business case and aroadmap, each utility must take stock It is obvious that smart gridof its current efforts, strategy, investments will pay – in the long runinfrastructure, and regulatory – dividends to utilities, shareholders,circumstances while tailoring a smart- customers and society at large. Thegrid technology road map and business smart grid serves an important role incase to meet particular circumstances. facilitating energy efficiency programsHowever, recent study by The Energy and distributed/renewable energyPolicy Initiative Center in San Diego integration: both key trends that willfrom October 2006 outlines a scenario help ensure improved environmentalof smart grid implementation on the outcomes in the future. However theSan Diego electric grid. This study capital costs and operations andshows that an initial $490M maintenance costs are substantial andinvestment would generate $1.4B in this level of effort is very challenging toutility system benefits and nearly $1.4B a utility especially considering otherin societal benefits over 20 years. significant projects in progress. EachSmart Grid: Leveraging Technology to Transform T&D Operating Models 11
  12. 12. Startingthe Transformation Journey A strategic focus should be applied governance. The gaps between the “as- when developing the Smart Grid is” and “to-be” determine the high- transformation roadmap. Recent level timeline based on requirements, workshops run by Capgemini for a resource availability, constraints, and number of utilities around the world, desired benefit timing. have shown that smart grid is strategic in nature and requires involvement Common Infrastructure: Pilot from a broad cross section of the projects are used to validate and company. AEP and EdF are both taking mitigate business process, technical, this approach to the smart grid, with adoption, cost and project risks the initiatives being driven by senior associated with the Smart Grid. They executives in the company. A can reach from a limited small-scale comprehensive approach to the deployment to a large end-to-end development, support and validation deployment. It is very important that can yield a blueprint/roadmap for the very early on during the pilot the development of the Smart Grid. utility will establish a formal benefits realization framework and governance Capgemini Smart Grid roadmap has structure so they have a way to three stages (1) planning – includes evaluate the success or failure. It is developing the Smart Grid strategy and imperative to address the change blueprint, (2) common infrastructure – management aspects of the program as includes experimenting and piloting early as you can and selectively with different technologies, transform the processes and establishing the benefits realization organization to align with and take the framework, and change management maximum advantage of the availability planning, and (3) execution – includes of the Smart Grid. Do not building the foundation and Smart underestimate the planning and efforts Grid applications. required to manage such change in the organization, employees should be Planning: Pursuing incremental steps made part of the design. without the benefit of the bigger picture can lead to suboptimal Execution: Execution is a series of solutions. Implementation can be projects that are planned, sequenced incremental and spread over time, as and coordinated based on the roadmap long as each step is a part of the larger that was defined in the planning stage. strategy. The key to developing your The Smart Grid foundation and Smart Grid strategy is to focus on how application will be built as a series of it will enable your Transmission and related projects, with each project Distribution (T&D) strategy then delivering some value, this is evolution determine the required capabilities. At not revolution. Careful roadmap this point the utility can establish development and project management strategic goals, along with process or is essential. investment strategies. As part of the planning stage the utility will start with the “as-is” and “to-be” states with respect to process, application, data, organization, standards, and12
  13. 13. Energy, Utilities and Chemicals the way we see itMost utilities have successfully Reduce operating expenses: In most IOU’s capital spending hascompleted some Smart Grid projects. Automated meter management will failed to keep pace withHowever, the process is not a lower operation and maintenance straightforward annualized renewal.straightforward, standalone, install- costs, reduce theft and improve The annual network renewalsome-technology project – it is a revenue collection. Remote asset investment of a typical IOU is aboutBusiness Transformation of the electric monitoring will help avoid emergency one percent of its asset base, thisdistribution utility - the ultimate target maintenance and replacement of amount to a renewal cycle of about 100is reinvention of the electric utility. The assets. years – well beyond the design lifetransformation will reach an audience span of network wide as it is deep – from the board Higher grid reliability: Accurateto the field worker and from the utility demand forecasting will improve real- As your firm faces the growingto the customer, regulator, elected time configuration of the network, pressures of electricity distribution inofficial, supplier, educator, and society allowing components to operate within the 21st century – business as usual isat large. The Smart Grid will enable their actual capabilities. Detailed, real- no longer an option – you probably arenew applications we cannot yet time information from the sensors on asking your self:predict. Underneath all mission the grid will prevent blackouts I How to respond to the growth ofsetting, strategic planning, organizing, whenever possible, and to keep them distributed generation?controlling, and coordinating lie the as short as possible when they occur. I How do I meet today and future peakbusiness, people, and technical demand? Productive People: Excellentparadigms – how a firm’s executives, information and good displays help I What do I need to do to prepare tomanagers, and workers perceive the people do their job, better and faster the smart grid transformation?utility world now and into the future. with fewer safety issues. Smart grid is I At the rate that smart grid technologyThis transformation is certainly a tall not just about technology, there is lots is changing, what is the best scalableorder, but Capgemini believes utilities of technology available, it is also about and interoperable solution?can meet all of their priorities and people, people who can do their job in I Who needs to be involved in thelikely realize a host of other benefits. a more professional fashion with less smart grid planning?One example of a technology is smart guessing and less concern about who can respond to a specific situation. I How do I involve the regulator?metering. Let’s look at how it canimpact your company from a smart Today much of the success of the I How do I make the training andgrid perspective. distribution grid relies on people who process changes that are needed? have decades of experience, and areReduce capital expenses: Lower peak closing in on retirement. Replacing thisdemand by using smart meters and experience in today’s world isimprovement in load management. impossible; it will take mostImprove asset utilization by replacing companies years to recover from thecomponents that are approaching the loss of this knowledge. Technology isend of their annual life spans. Support never a substitution for motivated anddistributed generation with remote involved people, but good informationasset monitoring and control. can help them do their jobs better.Smart Grid: Leveraging Technology to Transform T&D Operating Models 13
  14. 14. GlossaryAmerican Electric Power (AEP): Broadband over Power Line (BPL): Demand Management: EnergyIOU in Columbus, Ohio - provides Also known as power-line internet or demand management, also known aselectricity to customers in Arkansas, Power-band, is the use of Power Line demand side management (DSM) orIndiana, Kentucky, Louisiana, Communication (PLC) technology to Demand Response InfrastructureMichigan, Ohio, Oklahoma, provide broadband Internet access (DRI), entails actions that influence theTennessee, Texas, Virginia, and West through ordinary power lines quantity or patterns of use of energyVirginia. consumed by end users, such as Customer Average Interruption actions targeting reduction of peakAdvanced Metering Infrastructure Duration Index (CAIDI): Reliability demand during periods when energy-(AMI): Means the infrastructure measure - CAIDI is the average number supply systems are constrained. Peakassociated with the installation and of hours per interruption. These demand management does notoperation of electricity metering and indices are electric utility industry necessarily decrease total energycommunications including interval standards. CAIDI and ASAI are consumption but could be expected tometers designed to transmit data to reported on a rolling 23-month reduce the need for investments inand receive data from a remote locality. average. networks and/or power plants.Alternative Generation: Generation California Public Utility Electricity de France (EdF):of electricity from nature (green Commission (CPUC): The PUC The main electricity generation andgeneration) that does not emit large regulates privately owned distribution company in France.amount of CO2 in the atmosphere, telecommunications, electric, naturalexample are solar, wind, hydro etc. gas, water, railroad, rail transit, and Energy Conservation Responsibility passenger transportation companies, in Act: The Energy ConservationAverage System Availability Index addition to authorizing video Responsibility Act received Royal(ASAI): Reliability measure - ASAI is franchises. The CPUC serves the public Assent in March, 2006. Under the Act,the percentage of time the power interest by protecting consumers and ministries, agencies and broader publicsystem is available. These indices are ensuring the provision of safe, reliable sector organizations will be required toelectric utility industry standards. utility service. prepare energy conservation plans on aCAIDI and ASAI are reported on a regular basis, and report on energyrolling 23-month average. Customer Information systems consumption, proposed conservation (CIS): Software application that measures, and progress. The proposedBalance Scorecard: A concept for address the customer interaction call Legislation also provides themeasuring whether the activities of a canter, billing, etc for gas, electric and framework for the governmentscompany are meeting its objectives in water utility companies. commitment to install 800,000 smartterms of vision and strategy. By meters in Ontario homes andfocusing not only on financial Common Information Model (CIM): businesses by 2007 and to have themoutcomes but also on the human a standard developed by the electric installed in all homes and businessesissues, the balanced scorecard helps to power industry that has been officially by 2010.provide a more comprehensive view of adopted by the Internationala business which in turn helps Electrotechnical Commission (IEC),organizations to act in their best long- aims to allow application software toterm interests. exchange information about the configuration and status of an electrical network.14
  15. 15. Energy, Utilities and Chemicals the way we see itEnergy Policy Act of 2005 (EPACT) Investor Owned Utility (IOU): Return on Investment (ROI):2005: A statute that was passed by the A utility owned by private investors, as A performance measure used toUnited States Congress on July 29, opposed to one owned by a public evaluate the efficiency of an investment2005 and signed into law by President trust or agency; a commercial, for- or to compare the efficiency of aGeorge W. Bush on August 8, 2005 at profit utility as opposed to a co-op or number of different investments. ToSandia National Laboratories in municipal utility. IOU is rarely used in calculate ROI, the benefit (return) ofAlbuquerque, New Mexico. The Act, the energy industry to refer to a an investment is divided by the cost ofdescribed by proponents as an attempt promissory note, and utility by itself the investment; the result is expressedto combat growing energy problems, typically refers to a public utility. as a percentage or a ratio.provides tax incentives and loanguarantees for energy production of Mesh Network: Mesh networking is a Customer Average Interruptionvarious types way to route data, voice and Duration Index (SAIDI): Reliability instructions between nodes. It allows measure - CAIDI gives the averageElectric Power Research Institute for continuous connections and outage duration that any given(EPRI): EPRI was established in 1973 reconfiguration around broken or customer would experience. CAIDIas an independent, nonprofit center for blocked paths by “hopping” from node can also be viewed as the averagepublic interest energy and to node until the destination is restoration time.environmental research. EPRI brings reached.together members, participants, the Smart Grid Facilitation Act of 2007:Institutes scientists and engineers, and Multi Protocol Label Switching H.R 3237: A bill in the US Congress:other leading experts to work (MPLS): is a data-carrying mechanism To facilitate the transition to a smartcollaboratively on solutions to the that belongs to the family of packet- electricity grid.challenges of electric power. switched networks. MPLS operates at an OSI Model layer that is generally Supervisory Control and DataGreen House Gases: Greenhouse considered to lie between traditional Acquisition (SCADA) Systems:gases are components of the definitions of Layer 2 (data link layer) SCADA systems are typically used toatmosphere that contribute to the and Layer 3 (network layer), and thus perform data collection and control atgreenhouse effect. Greenhouse gases is often referred to as a "Layer 2.5" the supervisory level and placed on topinclude in the order of relative protocol. of real-time controls.abundance water vapor, carbon MultiSpeak: MultiSpeak is a software WiFi: a wireless technology intendeddioxide, methane, nitrous oxide, and specification designed to help electric to improve the interoperability ofozone. The majority of greenhouse utilities, automate their business wireless local area network productsgases come mostly from natural processes and exchange data among based on the IEEE 802.11 standards.sources but is also contributed to byhuman activity. software applications. The MultiSpeak Worldwide Interoperability for specification helps vendors and Microwave Access (WiMax):Institute of Electrical and utilities develop interfaces so that A telecommunications technologyElectronics Engineers (IEEE): The software products from different aimed at providing wireless data overworlds leading professional vendors can interoperate without long distances in a variety of ways,association for the advancement of requiring the development of extensive from point-to-point links to full mobiletechnology. custom interfaces. cellular type access. It is based on the IEEE 802.16 standard.Smart Grid: Leveraging Technology to Transform T&D Operating Models 15
  16. 16. Gord Reynolds Practice Leader Smart Energy Services +1 416.732.2200 About Capgemini and the Collaborative Business Experience Capgemini, one of the Capgemini employs approximately world’s foremost providers 80,000 people worldwide and reported of Consulting, Technology and 2006 global revenues of 7.7 billion euros. Outsourcing services, has a unique way of working with its clients, called the With 1 billion euros revenue in 2006 and Collaborative Business Experience. 8,000+ dedicated consultants engaged in Energy, Utilities andChemicals projects Backed by over three decades of industry across Europe,North America and Asia and service experience, the Collaborative Pacific,Capgeminis Energy, Utilities & Business Experience is designed to help Chemicals Global Sector serves the our clients achieve better, faster, more business consulting and information sustainable results through seamless access technology needs of many of the world’s to our network of world-leading technology largest players of this industry. partners and collaborationfocused methods and tools. Through commitment to mutual More information about our services, success and the achievement of tangible offices and research is available at value, we help businesses implement growth strategies, leverage technology, and thrive through the power of collaboration.This Point of View is based on the vast experience and knowledge of the global networkof Capgemini. The authors wish to especially thank Tom Anderson and Joe DeCrowfor their helpful input based on their experience through conversations and suggestionson the topic. EUC20070918If you like to discuss ideas you can use to start your smart grid transformation pleasecontact us at