Utilities are under more pressure than ever to increase energy efficiency, to help meet steep decarbonization targets. This requires utilities to expand how they pursue energy savings. Traditionally, utilities have satisfied energy efficiency mandates mainly via behind-the-meter measures, delivered through customer programs. But today, utilities have a new opportunity to save up to 4% energy supplied to the entire grid, with advanced voltage optimization (VO) technology.
The vast majority of direct dollar savings from grid-wide VO (also referred to as Conservation Voltage Reduction, or CVR, when deployed to achieve energy savings) are realized by customers, through lower energy bills. However, unlike behind-the-meter energy efficiency programs, this need not detract from the utility’s bottom line. As an enabling technology which supports the growth of renewable resources, energy storage, and new load types (such as electric vehicle charging), VO can be an essential investment in the power system of the future.
Grid-wide VO is a front-of-meter solution that does not require a utility to develop and market programs, engage customers and maintain their participation. However, unlike traditional customer-facing energy efficiency programs, VO is implemented by operational utility departments. How can utilities help grid operations personnel embrace a new responsibility for energy efficiency?
Changing the Utility Energy Efficiency Mindset
“At a lot of utilities, when people say ‘energy efficiency’ they still think ‘behind the meter.’ They assume it’s mostly about lighting, HVAC and appliances — and perhaps somewhat about industrial and commercial equipment.” said Steve Tyler, head of product development and engineering for DVI, a leading provider of advance VO solutions. “It’s not always easy to broaden that mindset. Especially when, apart from customer programs, almost every utility department is focused strictly on delivering reliable power to the meter.”
Shifting some responsibility for energy efficiency to grid operations teams can increase reliability in an important way: reliability of energy savings. “Program teams don’t control customers. If customers are not sufficiently motivated to participate, the program won’t deliver fully on its savings goals,” said Tyler. “Fortunately, the people whose job it is to control the grid are in an excellent position to optimize efficiency at the grid level. They don’t have to persuade a substation to save energy. They just install the right equipment and controls to make it happen.”
This doesn’t mean that grid-wide energy efficiency requires zero persuasion, however. Most utilities can only spend capital to procure new technology when regulators will allow rate recovery for that investment. So far, it’s common for regulators to be unaware of the substantial energy-saving potential of modern VO solutions. If they’ve heard of VO at all, they may not understand how VO can now support efficiency and decarbonization mandates. This can complicate approval of utility investments in VO.
Voltage Optimization, Then and Now
For decades, utility engineers deployed a much simpler form of VO to address voltage “trouble spots” on specific feeders — or occasionally as a blunt instrument to compensate for reduced power supply during emergencies. Only recently has VO technology emerged specifically to enhance everyday efficiency across the grid.
The centerpiece of modern VO technology is sophisticated automation software that monitors data from substations, sensors and smart meters, and manages distribution voltage-control devices (such as load tap changers and switched capacitor banks) in response to real-time grid conditions. This allows the utility to continuously maintain voltage at the low end of the mandated range, from the substation all the way up to the customer meter. Modern VO reduces line losses and smoothes the voltage impacts of fluctuating supply and demand. If a large load suddenly comes online (such as a stadium sporting event), or if cloud cover temporarily decreases solar panel output, voltage delivered to nearby customers remains constant. Without such tight gradual control, temporary over/undervoltage conditions can impact customer equipment behind the meter.
“The current standards that mandate a fairly broad range of acceptable voltages on a power grid are artifacts of the past,” said Todd Headlee, director of DVI. “They reflect a time when the technology did not exist to control voltage more tightly. Those days are gone.”
Updating Regulatory Frameworks for Innovation
A supportive regulatory framework can be the key to rapidly realizing energy savings on a vast new scale. Such regulatory frameworks focus on results (increased energy savings, expanded capacity for grid modernization and resilience, and decreased carbon emissions), and creates more freedom for utilities to propose innovative technologies and strategies to deliver those results.
While regulatory bodies can propose such updates, real change is more likely when a state passes legislation or issues policy guidance that directs regulators to support innovative approaches to energy efficiency. For instance, in Illinois, the 2016 Future Energy Jobs Act included this provision: “The State's existing energy efficiency standard should be updated to ensure that customers continue to realize increased value, to incorporate and optimize measures enabled by the smart grid, including voltage optimization measures, and to provide incentives for electric utilities to achieve the energy savings goals.”
“Regulators can choose to reward utilities for doing the right thing, or at least not penalize them for it,” said Tyler. “When regulators won’t work with a utility, to give them credit, then that energy-saving technology only represents an expense and a revenue loss. What business would voluntarily reduce its income?”
Executive Vision for Utility Energy Efficiency
Utilities respond to more than external mandates. Leadership by utility executives can foster a more cohesive vision of energy efficiency and other strategic goals that constructively resolves conflicts between the interests of various departments.
For example, Dominion Energy emphasizes core organizational values across the company, including the “One Dominion Energy” vision: “Our shared mission and purpose transcend organizational boundaries. Teamwork leads to strong, sustainable performance.”
“Basically this encourages all Dominion employees and executives, to see how their department, project or job helps other parts of the company — and vice versa. All parts of the business support the whole,” said Tyler.
A holistic vision of mutual benefit across the utility gains widespread staff acceptance when regulatory incentives are not creating rifts between departments. However, even in the absence of a supportive regulatory framework, a utility can make progress via effective executive champions. In particular, finance executives have considerable power to unify a utility around efficiency and future-proofing the power system.
“Every utility has someone who is responsible for the whole enterprise. Finance cuts across every department, even if just for determining their budgets,” said Tyler. “The more arcane or technical an option sounds, the more likely it is that a strong impetus for it will come from finance. When finance executives recognize future savings or opportunities, they can usually find creative ways to get around obstacles.”
[LIVE WEBINAR] A More Efficient Power Grid
Wednesday, September 15 | 2pm ET
Duration: 1 hour
Can't make the live date? Register and we'll send you a link to the recording.