May 21, 2018
Terry Nielsen discusses how DERs are making it easier to value stack the business case for ADMS.
Recently I had the honor of teaching a course on ADMS through EUCI. Every time I teach the course, I find that I learn quite a bit as well, and this year was no different.
First some background, from my experience over the last decade of working on multiple ADMS business cases, they all have been very different, and often challenging. Each utility has different circumstances and business drivers, and the trick has been to find the one or two drivers with high value and a good rate of return. Some were based upon using Volt/VAR optimization for Conservation Voltage Reduction (CVR), which required a slow path to full deployment after a small pilot project is done to validate the returns using a vigorous Measurement and Verification (M&V) process that is then provided to the regulator for approval to go-ahead with full deployment. Others, have found that reliability and resiliency focused functions like outage management process improvements that improve customer satisfaction or an automated Fault Location, Isolation and Service Restoration (FLISR) approach that can positively impact outage metrics were the key to building the business case that provided a reasonable rate of return.
The grid scale battery and energy storage vendors have, out of necessity, been successfully working with utilities to justify the costs of their solutions by assisting them in building business cases using value stacking, essentially finding multiple uses for the storage such as reliability, providing ancillary services to the wholesale market, and deferring capital expenditures for capacity improvements.
In the ADMS world, building business cases with the equivalent of value stacking has been difficult to sell to risk adverse senior management. The incremental returns from value stacking for an ADMS often requires additional data, additional field hardware, or additional effort for each proposed value. This additional work and cost then invokes the general fear of trying to do much at one time, or to use a common, perhaps overused business idiom, a fear of creating a project that is attempting to “boil the ocean”.
In the article I wrote titled “Advanced Distribution Management Systems Necessary with Increased DERs”. In Natural Gas & Electricity publication, I wrote that DERs were shifting ADMS justifications to a case that ADMS is simply a necessity for distribution operations. Something akin to giving back office workers PCs with email and an office suite. People may still be writing a business cases for PCs and office suites, but these days it is pretty much assumed that PCs are needed for back office workers, so it is not a hard business case to sell. Much like an accountant who might be able to do some tasks with pen and paper, or a paper and a calculator, there are certain things that are just not practical to do without spreadsheets or modern accounting software. Running a distribution system with DERs is getting to that point, it is just not practical to run one when there is lots of DER present and no ADMS.
Another way to look at it, just like the battery and storage vendors are doing, DERs make it easier to value stack the business case for ADMS.
How does this relate to last week’s EUCI course on ADMS and DERMS? One of the case studies presented was from a utility that had initially developed a business case for ADMS a few years ago, but was unsuccessful in getting it approved by management. After making a second attempt more recently, they were successful and used a value stacking approach. What was most interesting, is that the common thread for most of the stacked values was that DERs were driving the business to point where doing their job without the ADMS was becoming more difficult, if not impossible. For instance, the identified that it was becoming difficult to operate the system safely without an ADMS. They were successful and able to value stack many of the basic ADMS functions based upon changes created by DER penetration. Even more importantly, they managed to use some of the knowledge they had gained from the first unsuccessful business case to do things ahead of time that reduced the risk for their ADMS deployment, so that the second time around the stacked values had fewer incremental costs.
Terry Nielsen, GridBright EVP of Utility Solutions