Low cost CVR may make the business case for AMI, research consortium finds

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A joint AMI and low cost conservation voltage reduction (CVR) enabled with smart meters can provide a compelling business case for many of utilities, a new study from the Smart Grid Research Consortium (SGRC) has found.

Many electric cooperatives and public utilities have rejected AMI systems because the expected meter-related benefits are not compelling enough to outweigh costs.  Adding demand response savings boosts benefit-cost ratios, but the uncertainty and long lead times surrounding these programs add more risk. Adding distribution automation benefits and costs including customer valuations of improved reliability provide added costs and benefits but leave utility decision-makers skeptical.

Instead of this approach and starting with a joint AMI/low cost CVR strategy, the low cost CVR provides significant benefits, and because it is enabled with smart meter data, more than makes up shortcomings in the stand-alone AMI business case for many utilities without going on to more speculative smart grid benefits, the summary report reads.

In this context a low cost CVR strategy averages about $15,000 per feeder for controls, communications and installation with no new investments in voltage regulators or capacitor banks. It uses smart meters for voltage metering, retrofitted controls and communications to existing feeder equipment, where appropriate, and lowers and “tightens” grid voltage control during peak periods.

The study is also applicable to cooperative and municipal-scale utilities, with the representative utility having about 60,000 customers with system load shapes consistent with a moderately hot and humid climate reflecting about 85% residential, 10% commercial and 5% industrial loads. The utility purchases its power and faces a peak demand charge of $12/kW with a one year ratchet that applies the previous year’s average 4-month summer peak to each month of the current year.

Among the business cases considered, paybacks are 5.5 and 7 years for 2 and 3% voltage reductions respectively, with benefit-cost ratios of 1.76 and 2.3, compared with 0.7 for the AMI case alone.

“This study turns the traditional smart grid business case analysis approach on its head,” said Dr. Jerry Jackson, SGRC leader and research director. “The great thing about this new strategic approach is that we can verify costs and benefits of individual AMI and CVR elements with considerable certainty prior to initiating the project. In addition, the low cost CVR component can be developed simultaneously with the AMI implementation avoiding the long delays that many utilities are experiencing with customer engagement infrastructure development.”

The CVR strategy requires utility distribution information including some voltage-demand experiments, which is inexpensive to collect and analyze.

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