The value of smart grids in meeting the rapidly rising ...€¦ · authorities within the smart grids space as the most fundamental point of takeoff. An AMI is defined as “an integrated

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In this study, smart grids as an enabler in addressing the challenges faced within municipal electricity distribution departments (MEDD) are investigated based on the deployment of an advanced metering infrastructure to leverage on smart asset management, customer services, engineering and field services, and systems operations. The sustainability of MEDDs hinges on people, processes and smart technology.

South African municipalities have the mandate for the distribution and reticulation of electricity; they purchase electricity in bulk and resell it to their customers. In an ideal case, the mark-up or tariff is a function of each individual municipalities’ cost of supply to the different types of customer segments or, simply put, a cost-based method. Various factors presently inhibit municipalities from delivering on their mandate; this will be briefly discussed in this paper.

The purpose of this paper is to highlight the challenges and opportunities of deploying smarter distribution grid concepts and technologies within municipalities in South Africa. Deploying an advanced metering infrastructure (AMI) is the very first building block within a municipal distribution network, it is crucial to use smart technology as an enabler for change. However, smart technology void of people and processes is like having a hat without a head to wear it upon. As MEDDs embrace smarter technologies, their human resources must develop together with internal business processes to enable the successful implementation and sustainability thereof.

Four broad smart grids areas have been identified as critical to business sustainability wi th in MEDDs, namely; smart asset management, customer services, engineering and field services, and systems operations. These areas only focus on smart technology as an enabler for change. The other two areas, people and processes, must not be overlooked as international studies have showed that these areas strongly determine the sustainability of smart grid projects.

For the purpose of this paper, we will focus on the distribution grid, sometimes making reference to generation and transmission for discussion purposes only. This is not

The value of smart grids in meeting the rapidly rising electricity demandby TM Yusuf and M Bipath, South African National Energy Development Institute

Considering the present context of aging infrastructure, high electricity cost and insufficient generation capacity, what is the value of smart grids in meeting the rapidly rising demand?

to give a perception that South Africa has gotten it 100% correct at those segments of the electricity grid, but rather to make the discussion more relevant to its intended audience.

Smart technology

What is smart technology? For the purpose of this paper, smart technology is the use of specific smart grid applications within MEDDs to enhance the grid visibility, control, and automation of critical grid systems. The deployment of an AMI is considered by many authorities within the smart grids space as the most fundamental point of takeoff. An AMI is defined as “an integrated system of smart meters, communication networks and data management systems that enable two-way communication between utility and customers. Customer systems include in-home displays, home area networks, energy management systems, and other customer-side-of-meter equipment that enable smart grid functions in residential, commercial, and industrial facilities” [1]. In South Africa, the AMI standards and specifications have been drafted and published by the NRS049. This is a priceless piece of work providing an overview of system requirements like the meter functionality, customer interfaces, appliance control, supply capacity control, connect/disconnect in case of change of ownership or non-payments, optional payment mode, under-frequency supply control, mobile customer interfaces and the AMI master station [2]. For the purpose of this paper, we are going into the details of the NRS049 standard specification. However, it must be mentioned that the significance of an AMI as a subset of smart grids cannot be over-emphasised. An AMI is the building block upon which we now build other smart technologies like the four aforementioned smart grid areas (smart asset management, customer services, engineering and field services, and systems operation).

When we say that an AMI must be deployed as the fundamental building block of the municipal electricity distribution network, we have factored in the deployments of smart meters which come with multiple benefits such as remote connect/disconnect, temper detection, supply capacity control, diverse

payment mode, appliance control, over voltage and supply outage. The smart meter can assist in reducing operational costs, and remotely address faults more effectively and efficiently.

Many studies have shown that with the successful deployment of an AMI, electricity distribution departments can have as many as 70 added benefits. These benefits include; remote meter reading, bi-directional metering, near real-time customer information, connectivity verification, geo-location, power quality monitoring, phase balancing, load balancing, distribution asset load monitoring, work dispatch management, demand limiting, outage notification, system protection, substation automation, tariff design, time-of-use pricing, and many more [2].

Smart asset management

In the context of this paper, “during 2008, a study was done to determine the status of the distribution (municipalities and Eskom) maintenance, refurbishment and strengthening investments. The information derived from the study was then used to develop the Approach to Distribution Asset Management (ADAM), a multi-year integrated asset turnaround strategy. The backlog (2008) was calculated at R24,7-billion. During 2014, the study was reviewed and the latest available number reflects an investment backlog of R68-billion” [3]. Service delivery protests have continued to increase in number as the quality of services within municipalities continues to decline. The debt owed to Eskom by municipalities is on the rise and current accounts are hardly ever paid in full. Non-technical losses of electricity remains a challenge and the culture of non-payment for services by customers the norm. All municipalities irrespective of type are faced with the present energy crisis and the ever-challenging need to grow local economies and provide infrastructure and services [4].

Municipal electricity distribution assets must be maintained optimally. In the absence of a scientific methodology to determine the optimal level of maintenance, refurbishment and strengthening, there is a risk of either under-maintaining or over maintaining. Under-maintaining is common in South Africa due to a run-to-failure philosophy which is


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most prevalent in our utilities. Added to this is poor investment in maintenance. Smart asset management must differ in all traditional philosophies. Maintenance is not just about preserving a physical asset, but rather about preserving the functions of assets.

The core business of municipal electricity distribution departments is asset management. Electricity is the commodity, but the cost and investment in utility assets is enormous. These investment costs can only be recovered over many years of sales and careful financial management. Asset management is defined as a discipline related to managing enterprise assets over their lifecycle from design, build, procurement, operation, maintenance, modification and disposal [5]. Defining asset management in terms of smart grid technology is slightly more complex. Smart grid efforts have resulted in the creation of huge amounts of data due to the widespread deployment of automated metering, phasor measurement units and other intelligent electronic devices. Using this data to effectively manage assets with the objective of balancing performance, costs and risks in the context of shrinking budgets and tight regulatory requirements is the ultimate goal of smart asset management. The major differences between general asset management practices and smart asset management is the use of data analytics and the implementation of enterprise asset management where other municipal systems are integrated to optimise the system.

In the context of aging infrastructure, where the average age of electricity distribution assets in South Africa is in the order of 45 years as at 2012 [6]. Smart asset management can be leveraged to make these investments by introducing condition based maintenance (CBM). This is a maintenance strategy that monitors the actual condition of the asset to decide what maintenance needs to be done. CBM dictates that maintenance should only be performed when certain indicators show signs of decreasing performance or

upcoming failure. Checking a machine for these indicators may include non-invasive measurements, visual inspection, performance data and scheduled tests. Condition data can then be gathered at certain intervals, or continuously (as is done when a machine has internal sensors). CBM can be applied to mission critical and non-mission critical assets. Unlike in planned scheduled maintenance (PSM), where maintenance is performed based on predefined scheduled intervals, CBM is performed only after a decrease in the condition of the equipment has been observed. Compared with preventative maintenance, this increases the time between maintenance repairs, because maintenance is done on an as-needed basis.

CBM has its pros and cons. It reduces the cost of asset failure and improves equipment reliability, but it is expensive and requires knowledgeable professionals to analyse the data.

Maintenance history is another smart asset management tool that is very crucial. In most utilities human memory and hard filing is used to store such information. However, people come and go, and hard copies are damaged and get lost. It is also very difficult to analyse asset maintenance patterns and trends. Hosting asset maintenance history on a database is necessary to promote a central repository for all maintenance related information accessible to relevant parties. Asset management must follow a defined strategy fit for purpose and built strictly for a particular municipal electricity distribution department. This strategy must accommodate short-, medium- and long-term time scales. Short-term is related to operational issues of the network, medium-term asset management is associated with maintenance of system assets, and long-term asset management is concerned with the strategic planning of distribution systems [7, 8].

The formula for smart asset management is:

MP + TL + VR + TALC + BBT + TM = smart asset management

where MP = maturity profile of utility, TL= thought leadership, VL = value realisation, TALC = total asset lifecycle, BBT = best of breed technology, and TM = transformation management

Using the best of breed technology to drive smart asset management provides monitoring and tracking asset conditions near real-time. One of the major reasons why utilities require such information is because they want to ensure the security and reliability of the power supply. A question we must ask ourselves as utility managers is, do we really care about the security and reliability of supply or are we simply there to react to challenges as they present themselves? The number of customer interruptions is an indication of just how reliable a municipal electricity distribution network is.

Power system assets are monitored by the system operator through the supervisory control and data acquisition (SCADA) systems for real-time information. System interruption duration index (SAIDI) and system average interruption frequency index (SAIFI) figures are required to determine the reliability of supply. We do agree that generation and transmission contribute to the reliability at distribution level, but in over a year there has been no load shedding by Eskom and yet we have unplanned outages within municipalities.

Customer services

Whenever we talk about smart grids, we are talking about a customer-centric electricity utility. The customer is king since they pay for the service. Involving the customer in how you structure a business helps in no small way in determining the success of your business. Maybe the question is, do we run MEDDs as business entities and treat the customer as king? That’s a topic for another paper. Customer services in the context of smart

Fig. 1: Advanced metering infrastructure networks and components (Source: Cyrill Brunschwiler 28 February 2013).

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grids and the value proposition revenue management is critical. How do you recover your revenue when you do not know your customer, when your bills are not delivered and are difficult to read and understand, when you only know of outages and faults when your customers inform you, and when you estimate their usage and inconvenience them? The customer’s information is not just for billing purposes. Understanding usage patterns and being proactive is key for dispute resolution. Customer services also include the meter data management system (MDMS), customer information systems (CIS), customer relationship management (CRM) and an interactive voice response (IVR) system. The MDMS becomes the heart of the customer services, data used by other sub-systems are hosted on the MDMS.

Revenue management encompassing revenue generation, collection, and protection is guaranteed by a fully functional customer services system in place. The benefits of such systems include and are not limited to; billing, outage notifications, tariff implementation, time-of-use pricing, real-time pricing, remote connect and disconnect, and many more. In the context of high electricity cost, improved customer services ensures that a few do not carry the burden of the lot, in the case that tariffs increase and paying customers bear the burden [9].

Engineering and field services

These are the tools required to carry out the day-to-day operations requirement of a smart utility. This includes mobile work-force management systems (MWM), work management systems (WMS), geographic information systems (GIS) and protection and control. In the context of high electricity cost, utility operations must be reduced to the barest minimum possible. The amount of field crew driving around to locate faults and customers,

the number of overtimes and cost for those overtimes must be reduced.

Distribution networks have a geographical reference and GIS can provide spatial information about utility assets of any sort. Ranging from underground cables, to meters, poles, switches, relays, and transformers, GIS can be used for location and condition of assets. Mobile work-force can use this information to locate layouts, customers or other assets within the network faster and more accurately. Integrated resource planning, scheduling, dispatching, mobile and business analytics.

Engineering services can leverage on this automated system to drive cost of operation down by increasing efficiencies across maintenance and operation staffs.

System operations

Visibility, control, and automation is what an advanced distribution management system (ADMS) gives a utility: real-time distribution management to monitor and analyse the network, easy operations, planning and optimisation of resources. We can define the systems operation as an advanced ADMS. This systems sits on as a software platform that supports the full suite of distribution management and optimisation. It includes functions like automated outage management system (OMS), SCADA, energy management systems (EMS), and demand management systems (DMS). The functions of the ADMS are to locate faults, isolation and restoration, voltage reduction, peak demand management, and more.

Deploying an ADMS is no small task. The system is only as solid and effective as the other utility systems that are integrated across. Systems operation become the make or break of the distribution system. Asset management can be addressed; cost savings in operations is

made possible, demand response in the case of load shedding by Eskom, a municipality can simply respond to strain on the national grid by load limiting its customers instead of being taken off the grids entirely for a few hours. When a municipality is taken off the grid for a few hours by Eskom and bulk transmission is restored, the municipality has no systems in place to systematically and gradually restore power. Substations, transformers and grid assets are brought back into service at peak loads, causing strain and damage to assets in most cases. This influences operation and maintenance costs, subsequently influencing tariffs.

People

The term “people” in this case includes customers and utility workforce. The old business model by utilities to be utility-centric by nature and design systems and services mainly around their own thinking and benefit is fast changing. Building the utility business upon the customer who pays the bills for utility commodities and services is the future of sustainable MEDDs.

The adoption of new and smarter technologies by MEDDs possess new challenges and opportunities for both the customers and utility workforce. With focus on the customer side of things, the introduction of smart meters, in-home display units, time-of-use tariffs, demand side management, and legal issues around the security and privacy of customer information to mention a few, are new developments stemming from the introduction of smart technologies. Managing the expectations of your customer base is critical. Adopting a customer-centric business model is key, where the municipal electricity distribution department provides an even greater resource option to customers while continuing to support both traditional and future goals of safety, reliability, affordability, rate stability and environmental sustainability. The quality of customer information for billing and managing customer relationships becomes the primary basis on which utilities guaranty not only their revenue from commodity sales, but the satisfaction and trust of their customers. Building a credible database of customer information and a customer management unit go hand in hand in enabling far reaching benefits for both the customer and utility. In this paper we will discuss further the customer information systems (CIS), a vital component of the meter-to-cash (M2C) value chain for electricity utilities and how it binds consumption and metering process to payment, collections and other downstream processes that affect an electricity municipal distribution department [10, 11].

For MEDDs, the workforce is engaged in asset management, substation inspections, meter installation and replacement, normal

Fig. 2: Fully integrated enterprise asset management system.



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day-to-day field operations, data analytics, and meeting regulatory requires with the sole purpose of improving business efficiency and customer satisfaction.

There are five important attributes to look out for when building or maintaining a world class team according to Meghan M. Biro: talent, passion, attitude, aptitude and fortitude. For the purpose of this paper, I will focus on aptitude and fortitude, the former meaning skills as the bottom line and the latter meaning good old-fashioned hard work. Smart technology empowers municipal electricity distribution department workforces, however, we must keep in mind the loss of critical skills and knowledge, training to improve the upgrade the skills of the existing workforce and deploying integrated systems to enhance business efficiency and human performance. This integrated system can be broadly captured under enabling visibility, control, and automation across municipal business value chains, where business units work as integrated units with the sole purpose of municipal sustainability.

Engineering and IT, field crews, maintenance managers, facility managers, finance officers, service desk technicians, operations, legal and regulatory, municipal executives, etc. work in an integrated manner with mobile devices, work orders and forms, dashboards, time and attendance tracking, and inventory and procurement logs, all integrated into back-office systems [12, 13].

Processes and policies

With the introduction of smart technologies comes the need to redesign the old and design new business processes and polices within MEDDs. Some may call this change management but it is a lot more complex and intense than that. Sometimes, it is about creating a new business process to compliment the introduction of a whole new system into the work space.

Processes and policies around smart grids must address every single aspect of the utility that is impacted by the introduction of smarter technologies. To put this in clearer terms, the introduction of smart grids within municipalities changes the operations of virtually every single business unit within the structures of a municipality. Customer safety in terms of data protection and privacy, and comfort in terms of better services must be ensured. Silent features of smart grids like cyber security emerge as you introduce smart technologies and a host of remote devices inter-connected via communication networks. The municipal IT departments are no longer just departments focused on keeping office data networks up and running, servicing computers and other IT hardware and software functions, they become departments tasked with the operations of all sorts of wired and wireless technologies, the selection of service provider solutions fit for purpose, and the choice of network architectures that meet executive strategic direction and vision.

Municipal by-laws also have to speak to smart grids implementations. Internal polices like what the functions of individual departments are with regards to the implemented systems is required. Managements and employee’s key performance indicators must speak to their new roles and responsibilities. Dashboards for respective municipal staff must be designed to provide the required and appropriate information. One of the most important elements of going down a smart grid path is setting out a vision for smart grids within a municipality, this vision must capture the present state of affairs of functional departments, financial status, and the why smarter technologies need to be deployed. Carrying along every member of staff is also critical, meaning that this vision must be documented and introduced with top management sign-off.

There is no doubt a lacking from national

government in providing clear and precise policy and regulatory frameworks to guide municipal entities, however, municipalities as a separate arm of government must rise up to the challenges and charter its way forward within the limitations of its mandate.

Recommendations

l Start with the end in mind. What do you want to achieve by introducing smart technologies?

l A turnaround strategy is required for service areas – electricity, water, rates etc. via revenue enhancement and asset management.

l Address the basics first.

l Implement scalable metering infrastructure with prepayment capabilities.

l Cleanse system and field data generation.

l Integrate propriety and legacy systems into a centralised repository.

l Create visibility for executive management (dashboard).

l Create efficiency in existing processes and the work force.

l Reduced operational costs.

l Improve customer services and community engagement.

l Implement staff capacity, skills transfer and training programmes.

l Integrate projects into municipal staff KPA/KPI.

l Address the amount o f change management required.

l Risk assessment is key. Determine what is best for you, and don’t copy others.

l Research, development and demonstration projects are necessary.

l Document processes and keep record of decisions. Share information and make it a culture within the organisation. Information is priceless.

l The customer is still king, run a customer centric business.

l Determine your technical losses and non-technical losses.

l Determine your cost of supply, and other operational costs.

l Capital intensive projects should be well thought of and structured to show benefits and also cut across the entire value chain.

l Quantify maintenance backlog and budget to clear backlog.

l Implement bad debt provision, credit and debt collection policies, and factor in the multiyear price determination debt.

l Perform a smart grid maturity model assessment before you embark on a smart grid initiative.

l Before you talk about smarter distribution grids, you must address the basic fundamentals of the utility business. The MEDD must have a level of maturity that allows it to venture into optimising its network and operations

l Proper customer information and segmentation is key.Fig. 3: The IT/OT convergence of systems, fully integrated across an electricity utility.

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l From the revenue generated, set aside a maintenance budget proportional to the size of your asset base and ring-fence this budget for only maintenance purposes.

Conclusion

Smart grids and the value proposition for municipal electricity distribution departments in the context of aging distribution infrastructure, high electricity cost and insufficient generation capacity to meet rising demand has been discussed in this paper, highlighting the opportunities that smarter technologies present. Deploying an AMI is critical and fundamental. A MEDD must leverage upon this investment and optimise its benefit to address asset management, customer services, engineering and field services and systems operation to its benefit.

There is no one-size-fits-all solutions for MEDDs, and we are not saying that smart grids are the silver bullet to all the crises within the distribution network. However, introducing people, processes and smart technology with the new business model of customer centric utility thinking guaranties business sustainability and efficiencies required to lower operations cost and improve revenue generation.

Lastly, it would be unfair not to say things as there are. It is my opinion that MEDDs will struggle to become sustainable business units if other business units like water, rates and taxes, sewage, etc. are not addressed in an integrated manner. Cross-subsidisation will hamper the effort of MEDD’s in achieving sustainability.

References

[1] US Department of Energy: Office of the Electricity Delivery & Energy Reliability, www.smartgrid.gov/recovery_act/deployment_status/sdgp_ami_systems.html, 2016.

[2] DV Dollen: “Survey of Advanced metering Infrastructure Applications”, Electric Power Research Institute. Technical update report, 2013.

[3] HPD Groenewald: “NRS049 – Advanced Metering Infrastructure (AMI) for Residential and Commercial Customers”, 2008.

[4] W De Beer: “Maintenance backlog impact on service delivery”, EE Publishers, www.ee.co.za/article/distribution-infrastructure-maintenance-backlog-impact-service-delivery.html, 2016.

[5] D Barry: “Asset Management Point of View”, IBM Global Business Service, www.fcm.ca/Documents/presentations/2013/AGM2013/Asset_Management_Point_of_View_EN.pdf, 2013.

[6] W De Beer: “Electricity distribution industry (EDI) infrastructure challenge or opportunity”, EE publishers. www.ee.co.za/article/edi-310-09-the-electricity-distribution-industry-edi-infrastructure-challenge-or-opportunity.html, 2016.

[7] M Shahidehpour and OB Tor: “Electric Power Distribution Asset Management” ELECO, Vol 5, 2005.

[8] H Trollip, A Butler, J Burton, T Caetano, and C Godinho: “Energy Security in South Africa”, MAPS, 2014.

[9] Maintenance Assistant: “Condition based maintenance and monitoring software”, www.maintenanceassistant.com/condition-based-maintenance/, 2014.

[10] M S h a h i d e h p o u r a n d R Fe r r e r o : “Chronological strategies for power system asset management”, IEEE Power & Energy, Vol (3), Issue 3, 2005.

[11] M Shahidehpour and Y Wang: “Communication and Control of Electric Power Systems”, John Wiley and Sons, 2003.

[12] T Kostic: “Asset management in Electrical utilities: How many facets it actually has”, IEEE Power Engineering Society General Meeting, 2003.

[13] GM Salaris: “From Smart Metering to Smart Grids: The Enel Vision”, IEEE ISPLC, 2011.

Contact Minnesh Bipath, SANEDI, Tel 010 201-4751, [email protected]

Powering Networks in AfricaOver the last century, we have built a global presence in the power transmission, distribution & generation sectors helping clients across Africa to modernise their infrastructure. In the last 10 years, we have delivered over 30GW of energy generation and over 2000km of transmission lines and associated infrastructure, assisting in meeting the continent’s power demands. mottmac.com

Powering Networks in AfricaOver the last century, we have built a global presence in the power transmission, distribution & generation sectors helping clients across Africa to modernise their infrastructure. In the last 10 years, we have delivered over 30GW of energy generation and over 2000km of transmission lines and associated infrastructure, assisting in meeting the continent’s power demands.

mottmac.com

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