Lessons to Be Learned from a Demand Response Implementation
- Written by Robert M. Simpson III
Make sure top management is onboard from the start; spell out all the operational implications of investments made; see that qualified managerial staff are available to complete all required tasks; adopt a business process methodology; and, not least, have a comprehensive plan.
In 2008, Progress Energy initiated the Smart Grid/Distribution System Demand Response (DSDR) project in the Carolinas as the first step in its long-range smart grid strategy and as part of its balanced energy strategy to meet the future energy needs of its customers. The DSDR project is designed to reduce generation requirements during peak load conditions by controlling voltage using real-time power flow analysis of the distribution grid.
To that end, we are installing an integrated system of electric equipment and operating controls to deliver the equivalent of 300 MW of power at times of peak load by the end of 2012, to avoid the cost of constructing two combustion turbine peaking generators.
The decision to launch this project was made in response to a public commitment by Progress Energy to support constructive, environmentally-friendly regulatory and legislative policies by using the least-cost mix of demand-side management and supply-side resources to meet customer load growth. This includes a goal to deliver 1,000 MW of future capacity needs through demand-side management and energy efficiency programs.
The DSDR Project will meet 25 percent of that commitment using techniques that will be "transparent" or invisible to customers, requiring no active intervention on their part, while providing a cost-effective alternative to building traditional peak generation.
By leveraging smart grid technology, Progress Energy will be able to manage the voltage level on its entire distribution feeder system, which totals 51,000 miles (82,100 kilometers) of distribution line spanning a 34,000 square mile (88,000 square kilometer) service territory. System voltage will be lowered to 315 transmission-to-distribution substations and the magnitude of the voltage drop along over 1,100 distribution feeders will be controlled, while staying within the regulatory requirement for customer voltage.
Those measures will allow us to lower peak demand while maintaining voltage quality for all distribution customers, and deliver a peak load reduction capability of over 300 MW by the end of 2012. This requires an advanced system of electric equipment and operating controls with the following essential components to optimize performance of the distribution system:
- Feeders that have been conditioned to flatten the voltage profile through the use of line voltage regulators, line capacitors and load balancing
- a distribution management system to manage power flow in real-time
- a sophisticated network of sensors to provide feedback
- a high-speed communications network between the distribution management system and the electrical equipment located on the distribution feeders
- secure information technology architecture to ensure data is retrieved and applied so that it can operate and control the distribution system to reduce voltage and achieve the expected MW reduction.
All of these components are critical to achieving the business benefit of avoided generation cost when we routinely operate the demand-response system while experiencing heavy loads during peak times of the day to mitigate the need for peak generation resources. In other words, the system will be activated as a virtual generator, just like a fast-start combustion turbine.
As we near the completion of the DSDR project later this year, we have turned our attention to sharing our best practices and experiences with the industry. Here's what we've learned since initiating the DSDR project in January 2008:
- Begin by gaining the commitment of the senior level and the financial experts in your company. DSDR didn't make sense to our financial experts at first, so they had to make a commitment to learn more about the engineering side. We had to be patient with their "push-back" and learn new ways to explain technical concepts. Eventually, they were able to make an informed decision. You need to have a "bomb-proof" business case to enable your senior and financial leaders to make informed decisions. In the end, it's not about getting what you want, but about your senior and financial leaders doing the right thing.
- Before committing to a smart grid project, invest time to fully understand how investments can and must change the way an electric utility operates. The "distribution grid of the past", with passive parts, has dispatchers using an outage management system to react and dispatch an order when they find out something happened. Smart grid investments will take you to a distribution grid of the future, with active parts, and you'll need people that can perform at a high level of competence to actively engage in managing, operating and optimizing the performance of the grid.
- A smart grid project team must be staffed with people with project management experience, equipped with effective processes, tools and controls. This includes an effective governance structure, execution plans and risk management processes, as well as the knowledge, skills and tools to keep scope, schedule and budget tied together. This way, integrated progress towards project goals can be monitored and managed.
- Smart grid investments require a commitment to process, recognizing the required changes for your business. In our case, DSDR has to achieve the MW savings that we had committed to deliver to regulators, customers and the company. We needed a proven methodology for change—a business process management methodology—to identify the processes that would be significantly affected by DSDR so we could put them in place to ensure the business benefits are realized when DSDR is operated. Because project success will be measured in MWs saved, the smart grid technology and the employees and organizations within the business must perform in concert. Business process management is the tool that endowed the business with an understanding of what was needed and why.
- You must have an effective plan to manage the change inherent to smart grid investment and to ensure that the workforce is ready to operate your new grid. To quote a well-known book on project management, "Success of a project like this shouldn't be measured at deployment, but after in production for a while." With DSDR, the business imperative is to realize the MW benefits and sustain them for the life of the asset. We hired a change management leader to drive a commitment in the organization to link people, business process management and the smart grid technology to make sure everybody is on board. In addition, we are verifying that the custodians of the DSDR asset are ready to assume ownership of it once it is implemented and that they are capable of safely and efficiently operating DSDR in a sustainable and environmentally-friendly manner.
Smart grid investments require taking more risk and careful assessment to ensure prudence that is supported by a strong business case. Smart grid investments are different—they're complex, without blueprints, and require strict project management and execution. In the end, we believe smart grid investments are a responsible use of environmentally-friendly technology and resources that can maximize efficiency and help meet peak demands.