Analysis Zpryme - Border States...• Utilities are well-established with foundational smart grid technologies, such as SCADA (71%), GIS (80%), OMS (72%) and CIS (70%). Other technologies

1 Rural Smart Grid Survey | November 2015 etsinsights.com | zpryme.com | smartgridsummits.com

Rural Smart Grid Report November 2015

Analysis Zpryme


•  Executive Summary 3

•  Methodology 4

•  Key Findings 5

•  2015 Survey Results 8 •  Survey Basics 8 •  Smart Grid Overview 12 •  Smart Grid Technology 18 •  Smart Grid Challenges 27 •  Smart Grid Spending 30

Table of Contents


Zpryme and the Rural Smart Grid Summit (RSGS) completed a smart grid survey of 70 U.S. rural electric cooperatives and found that cost poses the most significant challenge for smart grid initiatives. Despite challenges with cost, many electric cooperatives are embracing smart grid technologies, particularly AMI meters and data analytics.

Key Takeaways

•  Nearly all electric cooperatives have some sort of smart grid effort. Many are at the stage of deploying multiple applications (31%) up from 21% last year. Pilot projects are also growing from 8% last year to 16% this year.

•  With renewables, 30% of cooperatives have not taken them on yet. The large amount of cooperatives working on them cover both centralized and distributed generation. Storage is still not a reality for most cooperatives.

•  Smart grid also includes customer engagement tools. Electric cooperatives use their websites the most, followed by email and social media. Many admitted that they need to increase their customer engagement efforts.

•  In the next 24 months, 49% of electric cooperatives are spending $1M to $5M, and in the next 36 months 20% are spending $5M or more.

Executive Summary


Zpryme and the Rural Smart Grid Summit (RSGS) conducted the survey in September and October 2015. The survey consisted of 42 questions about smart grid initiatives at rural electric cooperatives in the United States. A total of 70 cooperatives responded to the survey.

•  Data reported in this report are a percent of the total respondents.

•  Respondents’ top three areas of expertise are engineering (42%), operations (41%), and information technology (34%).

Methodology


•  With the importance of AMI, electric cooperatives most frequently mention AMI as a top smart grid technology (63%). However, as more AMI projects roll out, utilities are diversifying their efforts—AMI is down from 91% last year.

•  The top benefits for smart grid remain foundational benefits, including restoration time reduction (58%) and improved power quality (44%). Another important benefit includes analytics-based decisions (38%).

•  Nearly all electric cooperatives have some sort of smart grid effort. Many are at the stage of deploying multiple applications (31%) up from 21% last year. Pilot projects are also growing from 8% last year to 16% this year.

•  In the longer term, smart grid remains a priority for nearly all electric cooperatives. For most (59%), it will be a moderate priority and for one-third of respondents it will be a high priority.

•  When communicating to customers about the value of a smart grid, most utilities communicated cost savings (49%) and opportunities to reduce peak demand (42%). GHG emissions reductions did not enter the conversation often (3%).

Key Findings


•  Utilities are well-established with foundational smart grid technologies, such as SCADA (71%), GIS (80%), OMS (72%) and CIS (70%). Other technologies on the horizon in the next three years include infrastructure protection (41%).

•  Most utilities are tackling AMI/AMR projects right now, but nearly every utility sees more advanced grid efforts—such as EV programs (77%) and dynamic retail rates (83%)—on the horizon.

•  Opportunities for cloud-based and SaaS solutions are growing. Many utilities are considering them, but others are not sure. Concerns include loss of control, liability, security and privacy of customer information.

•  As electric cooperatives take on AMI, most of them have already reached the majority of their customers (58%), and many more plan to reach the majority of their customers in the next five years (28%).

•  Smart grid also includes customer engagement tools. Electric cooperatives use their websites the most, followed by email and social media. Many admitted that they need to increase their customer engagement efforts.

Key Findings


•  With renewables, 30% of cooperatives have not taken them on yet. The large amount of cooperatives working on them cover both centralized and distributed generation. Storage is still not a reality for most cooperatives.

•  EVs are a hot topic, and approximately 42% of cooperatives are working on a program or expect to within the next five years. Top concerns with EVs include the robustness of distribution networks (50%) and accidental peaks (23%).

•  Looking ahead, in the next three years 41% of cooperatives expect to integrate distributed generation, 14% expect to integrate energy storage, and 10% expect to integrate customer owned microgrids.

•  Even with the opportunities of a smarter grid, there are still challenges. The most significant challenge is budget limitations (69%), followed by concerns around technology maturity and availability (61%).

•  Despite challenges, there is smart grid spending at electric cooperatives. In the next 24 months 49% are spending $1M to $5M, and in the next 36 months 20% are spending $5M or more.

Key Findings


Survey Basics


Number of Customers

Residential

37% Up to 500

3% 50K+ 7%

500-1K

31% 1K-5K

13% 5K-10K

7% 10K-25K

3% 25K-50K

Commercial & Industrial

20% 1K-5K

9% 5K-10K

27% 10K-25K

24% 25K-50K

10% 50K-100K

4% 100K- 250K

3% Up to 1K

4% 250K+

The survey included diverse respondents in terms of company size. Roughly half of respondents have between 10,000 and 50,000 residential customers, and 37% have up to 500 commercial and industrial customers.


Utility Location

7% Pacific

14% Mountain

24% West North

Central

9% West South

Central

18% East North

Central

10% East

South Central

16% South

Atlantic

3% Mid-

Atlantic

0% New

England

Electric cooperatives in this survey came from all over the U.S., with the largest representation from the West North Central region (24%).


Engineering

Operations

Information Technology

Other*

Customer Service

Maintenance

Functional Area of Expertise

42%

41%

34%

28%

24%

21%

*Board Member/Director, Policy, Management, AMI, Metering, Marketing, Strategy/Oversight

Respondents’ top three areas of expertise are engineering (42%), operations (41%), and information technology (34%). In the “other” category several respondents also note more specific expertise, such as AMI and marketing.

10 20 30 40


Smart Grid Overview


Top Smart Grid Applications

AMI

Distribution Automation/Grid Optimization

Meter Data Management

Demand Response

Advanced Services*

Renewable Energy Integration

Data Analytics

Distributed Energy Resource (DER) Integration

Home Area Networks/Energy Mgmt. Systems

AMR

Broadband Connectivity (FTTX)

Microgrid Integration

Grid Storage

63%

44%

42%

35%

32%

24%

21%

14%

11%

10%

9%

7%

7%

*Prepay, TOU, Real-Time Pricing

With the importance of AMI, electric cooperatives most frequently mention AMI as a top smart grid technology (63%). However, as more AMI projects roll out, utilities are diversifying their efforts—AMI is down from 91% last year.

10 20 30 40 50 60


The top benefits for smart grid remain foundational benefits, including restoration time reduction (58%) and improved power quality (44%). Another important benefit includes analytics-based decisions (38%).

Top Smart Grid Benefits

Reduction in Restoration Time

Improved Power Quality

Analytics-Based Decision Making

Increased Visibility and Control

Energy Efficiency

Customer Choice, Engagement and Retention

Ensuring Future Energy Demand Met

Integration of Distributed Generation & Storage

Reduction in Forced Outages and Blackouts

Hedge Against Rising Costs & Brown Power*

Increased Asset Life

Increased Security

Other

58%

44%

38%

27%

24%

21%

21%

20%

20%

17%

11%

11%

8%

*And other traditional generation sources

10 20 30 40 50 60


Smart Grid Deployment Status

31% Multiple Applications

27% Planning Stage

17% Large Scale Deployment

14% Pilot

6% No Strategy

6% Approving Budgets

Nearly all electric cooperatives have some sort of smart grid effort. Many are at the stage of deploying multiple applications (31%) up from 21% last year. Pilot projects are also growing from 8% last year to 16% this year.


Future Importance of Smart Grid

How important are smart grid projects relative to your overall business plan in the next 24 to 36 months? 59%

Moderate 35% High

6% Low

0% Not a

Priority

In the longer term, smart grid remains a priority for nearly all electric cooperatives. For most (59%), it will be a moderate priority and for one-third of respondents it will be a high priority.


Smart Grid Customer Education

Cost Savings for Customers

Reduction in Peak Energy, General Load

Increased Customer Participation

No Outreach

Addition of Green Energy

Reduction in Blackouts/Brownouts

Next Generation Consumer Technologies

Reduction in GHG Emissions

49%

42%

42%

34%

18%

16%

10%

3% 10 20 30 40 50

When communicating to customers about the value of a smart grid, most utilities communicated cost savings (49%) and opportunities to reduce peak demand (42%). GHG emissions reductions did not enter the conversation often (3%).


Smart Grid Technology


Smart Grid Program Status

Now

3 yrs

10 yrs

5 yrs

10%

21%

35%

12%

22%

20%

18%

27%

18%

17%

8%

18%

25%

28%

21%

8%

25%

16%

36%

16%

17%

3%

70%

6%

17%

41%

36% 31%

29%

19%

10%

10%

72%

9%

14%

2% 3%

5%

16%

24%

35%

19%

71%

12%

9%

6% 2% 2%

2%

80%

54%

28%

11%

6% 15%

3%

10% Never 100

80

60

40

20

Utilities are well-established with foundational smart grid technologies, such as SCADA (71%), GIS (80%), OMS (72%) and CIS (70%). Other technologies on the horizon in the next three years include infrastructure protection (41%).


AMI AMR Centralized Renewable Generation

Distributed Renewable Generation

EV Demo or Program

Dynamic Retail Rates

100

80

60

40

20

0 Now

6% 3%

15%

14%

4%

1% 3%

29%

49%

16%

22%

13%

19% 17%

16%

7%

11%

25%

23%

23%

22%

26%

Never

29% 19%

6% 9%

Smart Grid Program Status, Cont.

76% 77%

3 Yrs

5 Yrs

10 yrs

17%

Most utilities are tackling AMI/AMR projects right now, but nearly every utility sees more advanced grid efforts—such as EV programs (77%) and dynamic retail rates (83%)—on the horizon.


Smart Grid Implementation Options

Cloud-Based Solutions

Software-as-a-Service (Saas)

Managed Services (Outside Providers)

100

80

60

40

20

0

No 4%

Yes 63%

Not sure 32%

Yes 54%

No 3%

Not sure 43%

Not sure 40%

No 12%

Yes 49%

Opportunities for cloud-based and SaaS solutions are growing. Many utilities are considering them, but others are not sure. Concerns include loss of control, liability, security and privacy of customer information.


Timeline for Reach of Smart Meters

When will smart meters reach the majority of your customers?

58% Currently Reach

18% Next 3 Years

10% Next 5 Years

4% 10+ Years

10% Next 10 Years

As electric cooperatives take on AMI, most of them have already reached the majority of their customers (58%), and many more plan to reach the majority of their customers in the next five years (28%).


Customer Engagement Tools

Company Website

Social Media

Voice Recognition

Text Email Mobile Apps

Extensive

Never

Rarely

Some

Regular

4% 4%

15%

45%

31%

10%

20%

44%

20%

12%

1%

26%

39%

22%

35%

12%

18%

21%

15%

28%

12%

12%

26%

13%

26%

23%

7%

23%

6%

30%

100

80

60

40

20

Smart grid also includes customer engagement tools. Electric cooperatives use their websites the most, followed by email and social media. Many admitted that they need to increase their customer engagement efforts.


3% YES Centralized

& Distributed Generation

WITH Storage

31% NO Not At

This Time

24% YES Centralized Generation, NO Storage

21% YES Distributed Generation, NO Storage

16% YES Centralized Generation

& Distributed Generation, NO Storage

0% YES Distributed Generation

WITH Storage

6% YES Centralized Generation

WITH Storage

Renewable Generation Initiatives

With renewables, 30% of cooperatives have not taken them on yet. The large amount of cooperatives working on them cover both centralized and distributed generation. Storage is still not a reality for most cooperatives.


Electric Vehicles

3% < 1 Year

50% Distribution Network

Robust Enough

58% Never

23% Next 5 Years

11% Already Begun

6% < 2 Years

23% Avoiding

Accidental Peaks

26% Other*

3%

*Not Enough Demand, Cost, Remoteness/

Long Distances, Battery Storage In

Cold Climate

Enough Generation for

Massive Rollout

EVs are a hot topic, and approximately 42% of cooperatives are working on a program or expect to within the next five years. Top concerns with EVs include the robustness of distribution networks (50%) and accidental peaks (23%).


Implementation Next 3 Years

Distributed Genera8on Integra8on

41%

Centralized Renewable Integra8on

Energy Storage

Integra8on Electric Vehicle & Smart Charging

Customer Owned

Microgrid Integra8on

27%

14%

10% 11%

40

30

20

10

Looking ahead, in the next three years 41% of cooperatives expect to integrate distributed generation, 14% expect to integrate energy storage, and 10% expect to integrate customer owned microgrids.


Smart Grid Challenges


Smart Grid Concerns

Budget Limitations

Technology Maturity/Availability

Cybersecurity

Business Model

Unknown Customer Adoption

Lack of Interoperability Standards

Lack of Skilled Employees

Privacy

Regulatory Approval

Other*

69%

61%

41%

37%

31%

24%

20%

14%

7%

6% *Time/Other Priorities, Opt-Outs

10 20 30 40 50 60 Even with the opportunities of a smarter grid, there are still challenges. The most significant challenge is budget limitations (69%), followed by concerns around technology maturity and availability (61%).


Smart Grid Skill Gaps

Systems Integration

Data Analytics

IT Network Management

Customer Engagement

Utility Process Design

Systems Engineering

48%

10 20 30 40 50

Organization Design/ Change Management

Project Management

Other* *Knowledge Sharing, No Skill Gaps

39%

39%

30%

28%

27%

23%

20%

7%

Technology challenges are also reflected in workforce gaps. Companies are facing difficulties finding individuals with the skills needed to effectively take on systems integration (48%) and data analytics (39%).


Smart Grid Spending


24% $1M–5M

70% <$1M

6% $5M–10M 4% $10M+

43% <$1M 41% <$1M

49% $1M–5M

38% $1M–5M

4% $5M–10M 17% $5M–10M

Smart Grid Spending

12 Months 24 Months 36 Months

3% $10M+ 100

80

60

40

20

Despite challenges, there is smart grid spending at electric cooperatives. In the next 24 months 49% are spending $1M to $5M, and in the next 36 months 20% are spending $5M or more.


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Documents

Analysis Zpryme - Border States...• Utilities are well-established with foundational smart grid technologies, such as SCADA (71%), GIS (80%), OMS (72%) and CIS (70%). Other technologies