SmartGrid Applications – Introducing Change in a Conservative Industry
Rick Cowburn, Principal – Vidya Knowledge Systems
FALSE HOPES & UNWANTED OPPORTUNITIES
• Two case studies introducing analytics to the electric power industry • Based on 30 years of senior level experience • Taking advantage of structural change to change the industry paradigms
Electric Industry Restructuring - 1996 • Created hourly spot power market • Proposal to CEO: • An hourly power market needs hourly customer meters • Hourly data analytics is a key competitive advantage
• Installed Alberta’s largest ‘smart grid’ system • From 25,000 data points / year to 100,000,000 data points / year
Pool Prices – April 18 – April 14 2001
False Hopes for ‘Smart Grid’ • IF price changes too rapidly for Demand response THEN
Demand response is impractical
HENCE Demand-side analytics are an autopsy .
• Advanced metering is dead in Alberta for economic reasons Pity…
Unwanted Opportunities • If you have a 20 year old house, it is served by a 20 year old distribution system • Why does your distribution bill go UP every year ? • Because you are subsidizing the distribution systems in the new parts of town, thank you very much
• Why do we have this lunatic cross-subsidization ? • Because utilities didn’t have data to do it any other way • HAD to average costs across the whole service area
The New World of Asset Data • Utilities are now integrating their data resources • Geographic Information Systems (GIS) can now provide asset details (type, age, original cost) AND connectivity (who uses what asset)
• Utilities now have a data platform for analytics • Can work out asset costs for each individual customer • Price fidelity is an absolute axiom of competition -price distortions do incalculable market damage
Introducing Change • In 1997 (when nobody was watching) for large customers true distribution costing was introduced • An initial shock of adjustment
followed by…
“Isn’t that how it’s supposed to be? User Pay?”
• 15 years later the data is finally available for all customers AND ?
An Unwanted Opportunity • The vultures can’t feed • Neither utility shareholders NOR equipment vendors stand to gain from this opportunity
• Change is stressful • Industry old-timers would have to learn new skills
• Customers don’t know • Everybody just grumbles and pays the bill…
Truth Advances One Funeral at a Time A new scientific idea does not triumph by convincing its opponents who declare themselves enlightened -Rather its opponents gradually die out, and the upcoming generation grows to trust its truth right from the beginning Max Planck, 1933
Experiences • If you can’t do the business case with hard numbers on one computer screen find a better career path… • If the market’s old and cold, don’t quit your day job (but keep your passions burning)