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Evaluating the Business Case for Smart Grid Investments

Evaluating the Business Case for Smart Grid Investments. Smart Grid Research Consortium Conference & Workshop Rosen Shingle Creek, Orlando, Florida October 20-21, 2011. Jerry Jackson, Ph.D., Leader and Research Director Smart Grid Research Consortium, 37 N. Orange Ave, Suite 500

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Evaluating the Business Case for Smart Grid Investments

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  1. Evaluating the Business Case for Smart Grid Investments Smart Grid Research Consortium Conference & Workshop Rosen Shingle Creek, Orlando, Florida October 20-21, 2011 Jerry Jackson, Ph.D., Leader and Research Director Smart Grid Research Consortium, 37 N. Orange Ave, Suite 500 Orlando, FL 32801 Jjackson@smartgridresearchconsortium.org 979-204-7821

  2. Welcome • Conference coordinator Amy Heineman • Hotel amenities • A “different” smart grid conference

  3. Conference Sponsors Silver Sponsor Bronze Sponsors Media Partners Smart Grid Research Consortium www.smartgridresearchconsortium.org Thursday, October 20, 2011

  4. Conference Topic Areas • SG technology and applications overviews issues/developments • SG coop and municipal experiences • Do’s and don’ts and suggestions from industry experts • Several “outside the box” presentations Objective is to provide an enjoyable, informative and interactive experience for all attendees

  5. SGRC Background • Smart Grid Research Consortium • Members include coops, municipal and other public utilities • Initiated at Texas A&M University in 2010 • Established as an independent research consortium January 2011 • Consortium approach: Individual members provide limited financial support to share in the results of a larger-scale research and applications project. • Objective: To provide utility member support in evaluating smart grid investment and strategies

  6. How Best to Support Coop/Public Utility Smart Grid Investment Analysis? • Given: ΣBenfits > ΣCosts for some subset of SG technologies/programs for most utilities • Question: Which technologies/programs and what implementation strategy? • Difficulties • SG impacts all utility operations • Interactions, synergies • Continuing technology development, cyber security, etc • Investment timing matters • Utilities are different • No commonly accepted cost/benefit framework

  7. The Consortium Answer • Smart Grid Investment Model TM • Quantitative cost/benefit framework • Includes all important technologies/programs from back-office to substation/feeders/inpremise • Models utility-detailed monthly customer class end-use hourly loads (e.g., residential AC) • Applies Exel interface

  8. Our Experience Identified Important Elements in Conducting SG Investment Analysis • Paper: “Score Your Smart Grid IQ (Investment Quotient)” • Six categories • AMI/DA Investment/Planning Scope • Customer Engagement Investment/Planning Scope • Other Financial Items • Utility Customer Detail • Investment Analysis Quantitative Framework • Ease of Use/User Interface/ Results Presentation • Score sums to maximum of 100

  9. Example

  10. Example

  11. Message Behind the SG IQ • “Comprehensive quantitative smart grid investment analysis and planning is required to identify appropriate utility-specific functionality and a roadmap to achieve that functionality with minimum cost.” • The analysis framework should include: • All important related technologies and programs • All recognized costs and benefits • Utility-specific detail and unique characteristics • Recognition as a long-run IT/planning resource requirement • Easy-to-use, intuitive interface • Recommendation: Each utility should consider assigning interface/maintenance responsibility to at least one “go-to” individual. • Continue financial evaluation after project implementation • Continuously evaluate strategy options

  12. More Generally, • Conceptualizing all of the elements involved in the SG transformation as a financial modeling process helps to: • See the big picture with respect to the SG transformation • Consider impacts on current and future infrastructure that might be otherwise overlooked • Consider important financial aspects of a smart grid strategy that may have been overlooked • Provide a critical-thinking framework for assessing and evaluating industry changes propelled by SG technologies & Programs

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