In the United States, utility industry
forces are driving substantial changes
in strategy for T&D businesses. The
U.S. Energy Policy Act of 2005 mandates
improved infrastructure and reliability.
Energy costs are rising. Higher energy
prices overall reduce consumer energy
demand and potentially pull down utility
revenue. Smart metering and demandresponse
programs are expanding to
satisfy customer demands for conservation
opportunities. Rate cases to cover
increases in nonenergy-related costs are
becoming more difficult to push through,
making operational cost reductions more
important.

The lack of investment in aging T&D
assets over the past 30-plus years
has resulted in major reliability and capacity
problems in certain regions. Significant
staff retirements over the next 10 years
will remove critical knowledge and experience
from utilities if not addressed.

The utility industry seeks new ways to
overcome these challenges. Investments
are being made by utilities in automation,
remote monitoring and control systems,
metering, analytics, communications and
IT infrastructures, and the digitization of
many of their processes. A better level of
connectivity and observability across the
electricity supply chain is being sought.

To achieve this, one must have common
standards. Industry standards promoting
connectivity continue to gain well
deserved attention. There are many industry
groups actively working on data model
standards and communications standards
such as found in the ICA, IEEE and IEC.

Industry bodies such as the IntelliGrid
Consortium are moving ahead with fast
simulation and modeling, distributed
energy resources and consumer portal
projects. The GridWise™ Alliance is progressing
with grid-friendly appliances/
price-sensitive control systems. Other
efforts are emerging, boosted by the
Energy Policy Act of 2005.

All of these factors and more are driving
the era of the digital utility. Many in
the industry are seeing the need and the
value for these investments. The utility
industry is starting to embrace its digital
age and learn from the successes and
failures of other industries that have digitized
and automated before them. After
all, information is power, which has always
been the case.

Recent Developments

Intelligent grid or smart grid strategies
are emerging in the electrical utility
industry. These strategies are used to
align and optimize grid-related investments
across the utility within a common
framework.

They are aimed at the development
of an intelligent utility information network
(IUN), which enables more realtime
operational intelligence, connectivity
and observability further down into
the grid and across the electricity supply
chain. This allows the utility to achieve
greater reliability and efficiency from their
assets and operations and provide a better
quality of service to their customers.
Figure 1 gives an overview of some utilities
and their respective investments in
their modernization. There are a growing
number of utilities investing in the development
of an enterprise strategy. Within
the context of the strategy, investments
in one major functional area can be incrementally
increased to gain further return
for other functional areas in the utility.
For example, utilities investing in AMI are
taking a hard look at their communications
infrastructure strategy. They assess
whether there could be an incremental
investment made in communications that
might benefit other functional needs.

A well-designed and well-built intelligent
utility network can produce a broad range
of strategic and operational benefits for
the utility and its customers, depending
on its focus and the business priorities of
each utility. An IUN will benefit different
utilities in different ways. It is not a onesize-
fits-all solution.

Some common characteristics of an
intelligent utility network are listed below:

• Increased use of automation and digital
  technologies to continue to improve
  reliability, efficiency and service;
• Functional area process and technology
  investments made as part of common
  interlocked utility IUN strategy;
• Common information architecture, IT
  and communications infrastructures,
  common processes and common
  standards across the utility;
• Common governance models required
  to manage IUN investments;
• More real-time grid observability smart
  sensors, monitors and meters;
• Tighter linkage between customers,
  assets and grid operations with
  increased customer control, services
  and options; and
• Increased use of analytics for decision
  support and automation.

An intelligent utility network can be broken
down into five major blocks, as shown
in Figure 2. These blocks are: grid equipment
and sensors; communications infrastructure;
IT infrastructure; information
systems; and analytics.

An IUN is the network through which
the monitoring, analysis, control and management
of many of the functions of a
utility will occur. It is the network through
which the flood of field monitoring data
streams are channeled, stored, combined,
analyzed and transformed into actionable
information streams and then channeled
to the appropriate person or application in
order to support timely decision making.

An intelligent utility network enables
the ability to supply the right information,
to the right person, at the right place, at
the right time – in a more standard, common,
cost-effective and organized fashion
and can provide a higher level of observability
over the entire electricity delivery
supply chain system.

Return on the Intelligent Utility Network Investment

The most important element to manage in
a utility is information. It is this information
that is used to manage the grid, the
assets and service to the customer. All this
has to be done in a manner that meets the
requirements of the utility leadership, the
regulators and the shareholders. It is used
to achieve improvements in operations,
efficiency, reliability and service.

It is critical to be able to access, analyze
and control information, within time
frames that are required for a utility to
manage and operate a real-time electrical
grid. This level of challenge and coordination
can only be achieved through a common
intelligent utility network that connects
to all parts of the utility.

If each utility function were allowed
to automate and digitize independently
and make investments in technologies
and process improvements as it saw fit, a
utility would end up with its next generation
of functional silos with some vertical
benefits achieved but little benefit across
the utility as a whole. A major benefit of
an IUN is the ability to reuse and leverage
these investments across all the functional
areas, as they will be based on common
rules, governance, standards and
infrastructures.

There are many examples of IUN benefits
and the value of how information can
be used across a utility. Figure 3 depicts a
scenario relating to an outage, real-time
asset monitoring and how the initial data
from the field is used by the various utility
functions and the actions taken and
benefits gained.

The IUN allows the utility to relate
real-time asset health to grid operations
through the development of equipment
condition monitoring. Real-time knowledge
of asset health allows the ability to
sweat the assets while controlling operating
risks. Strategies can be employed to
increase asset life through better management
and maintenance. With better information
regarding risk and return, capital
and O&M spending can be optimized.

From a workforce management perspective,
one obvious benefit is reduction
in frequency and duration of site visits
through remote monitoring and configuration.
When crews must be dispatched,
as in the case of an outage, sensing data
helps to pinpoint the location and cause,
allowing crews to be better prepared and
informed. With a common infrastructure
for utility applications and communications,
functionalities are common, data is
input one time and re-used many times.

Access to accurate historical operations
and asset data improves grid planning.
Capital expenditures can better be optimized
across the grid, allowing the utility,
in many cases, to defer or minimize capital
investments. More accurate design and
sizing decisions for equipment to meet
demand growth can be made.

The operator has fewer system blind
spots, thanks to intelligent devices, sensors
and meters. Faster detection, determination
of cause and localization of
outages is possible utilizing sensing data
and analytics. Load can be better balanced
and stability maintained. Power quality,
reliability and fault issues can be located
before they impact customers.

The intelligent meter is a portal to the
consumer. It provides a profile of customer
usage. Connect-and-disconnect as
well as load control can be accomplished
remotely. Time-based rates are enabled.
The operator has another intelligent sensor
on the grid. For the customer, this
means more choices about price and
service, less intrusion and more information
with which to manage consumption,
cost and other decisions. This is certain to
make regulators happy.

Planning and Development

A strategic focus should be applied. A
comprehensive approach to the development,
support and validation can yield a
blueprint for the development of the IUN.

Stage 1: Launch
The strategy is the end state – not the next
step. Pursuing incremental steps without
the benefit of the bigger picture can lead
to fragmented, suboptimal solutions. Conversely,
utilities often are overwhelmed
by the enormity of the transformation and
abandon it. Implementation can be incremental
and spread over time, as long as
each step is a part of the larger strategy.

The key to strategy development is
to focus on how the intelligent utility
network can enable your T&D strategy;
then determine which capabilities will be
required to achieve the strategy. Considering
these required capabilities, what are
your capability gaps? Finally, what are the
enablers for addressing these gaps and
establishing the required capabilities?
With these insights, the utility can establish
strategic goals, along with process or
investment strategies.

A road map development is an iterative
process with four steps:

• Road map development starts with
  consideration of the “as is” state of the
  utility, with respect to the five blocks
  of the IUN as previously discussed, as
  well as organizational structure, utility
  constraints, data flow models, current/
  planned projects, current standards and
  governance models in effect;
• A development of the “to be” state and
  the gap from the “as is” state determine
  the high-level applications, timeline,
  architecture and design specifications,
  based on technical requirements,
  resource availability, constraints and
  desired benefit timing;
• Costs and benefits are then estimated
  based on equipment/labor costs and
  the timing of benefits realization; and
• Finally, costs and benefits drive the
  business cases for the implementation
  options to build out.

The portfolio of business cases needed to
support the realization of a strategy should
meet the needs of four key stakeholders,
and can take several months to complete.
Senior management and Wall Street will
focus on ROI and financial risks. Internal
utility functions need to see how the IUN
will provide them with benefits so each can

be convinced to provide an appropriate
share of the funding. Customers should
understand how it might provide them
with improved service, increased reliability
and new products and services options.
Regulators will focus on increased reliability,
capabilities for time-of-use pricing
and other new pricing options, and higher
customer satisfaction.

Stage 2: Pilot and Validate
Pilot projects are used to validate and
mitigate technological, system and project
risks associated with the development of
an intelligent utility network. Pilot projects
are also used to better validate costs. The
pilot projects can reach from a single proof
point to the implementation of part of an
IUN to a limited small-scale deployment,
for example, in a neighborhood. The types
of piloting required depend on the flavor
of the intelligent utility network being
planned by the utility. It could be asset-centric,
customer-centric, operations-centric
or all three. These types of projects are
also a very good means for demonstrating
benefits to employees, management, customers
and regulators.

The utility should establish a formal
benefits realization framework and governance
structure in the pilot-and-validate
stage and keep it in place throughout
execution, to provide the governance, processes
and reporting needed to drive the
business case benefits.

Stage 3: Align
It is imperative to selectively transform
your processes and organization to align
with and take the maximum advantage
of the availability of an intelligent utility
information network while it is being
built out across the organization. Do not
underestimate the planning and efforts
required to manage such change in the
organization. Change management is a
very significant part of developing a strategy.
When employees are made part of the
design of the intelligent utility network and
embrace its information riches, then it will
be a success.

Stage 4: Execute
Execution builds on the pilots with a series
of projects that are carefully planned,
sequenced and coordinated based on the
road map. Figure 4 illustrates the complete
process from launch through execution.
The big-bang approach will not work;
this is evolution, not revolution. Careful
road map development and project management
is essential. Pilots will resolve
uncertainties and doubts. Benefits realization
will ensure that business case commitments
are attained. Change management
will assist in driving the necessary
transformation.

Conclusion

The intelligent utility network is now
becoming a reality. More and more
utilities are developing and implementing
modernization strategies. Government
and regulatory entities are embracing
the IUN as a means to mitigate growing
energy costs. Soon the intelligent utility
network will be the standard model for all
operators to meet.

The change will be transformational
and essential. To address the imminent
challenges of rising energy costs, aging
infrastructure and increased demand for
reliability, the electrical utility industry, like
other industries before, will adopt automation
and digitization in order to continue to
improve reliability, efficiency and service
to its customers.