Energy Efficiency is Not a Zero-Sum Game for Utilities

Utility energy efficiency programs are popular with both customers and regulators, and many of these programs also succeed from the utility perspective. When customers use less energy, their monthly bills decrease — and so can utility revenue. Fortunately, voltage optimization technology allows utilities to achieve energy efficiency across the entire grid, on both sides of the meter.

When coupled with proper rate recovery, voltage optimization can yield substantial benefits for both utilities and consumers. Furthermore, voltage optimization positions utilities to cost-effectively modernize their power grids. Adding up all of the benefits of voltage optimization can clarify a broader vision of energy efficiency for utilities, regulators and ratepayers.

Fundamentally, voltage optimization leverages automation on distribution voltage control devices (such as switched capacitor banks, metering, voltage regulators and LTC’s) to reduce the flow of reactive power (VAR) on a circuit. Typically, voltage optimization involves lowering voltage (within regulatory limits), which reduces both behind-the-meter energy consumption and utility distribution losses. Increasingly, voltage optimization under certain conditions requires increasing voltage. For example, when more renewable resources (such as rooftop solar) are connected to part of a distribution grid, and cloud cover in that location reduces solar power production, the utility must increase voltage locally to compensate.

Beyond increased energy savings, voltage optimization can help utilities address several important challenges. For example, this technology can support these common utility objectives:

• Non-wires alternative for grid expansion, or asset deferral
• Peak demand reduction
• Increased integration of renewable resources
• Rate recovery for smart metering and other smart grid investments
• Advancing key principles of energy equity by delivering energy saving investments strategically in underserved communities

At times, voltage optimization has saved more than 3% of energy supplied to implemented circuits without requiring any customer action, and with no negative effects to devices behind the meter. Many devices run more efficiently at lower voltage.  Advanced voltage optimization solutions also help utilities more strategically position controls and devices on the grid. This dynamic and adaptive solution supports automatic response to real-time data from sensors and smart devices at the grid edge. This keeps power flowing at the lower end of the mandated voltage range, reducing line losses and end-use energy consumption.

Key challenge: Rate recovery for voltage optimization
“Traditionally, regulators have encouraged or mandated utilities to implement energy efficiency programs,” said Steve Tyler, head of product development for DVI, a voltage optimization software provider. “Electric utility efficiency programs have focused mainly on behind-the-meter measures, like energy-efficient appliances or winterization, since that’s what tends to be most familiar to regulators.”

Clarifying the long-term systematic benefits of voltage optimization can encourage regulators to approve rate recovery for this proven energy efficiency solution, as part of the fixed-cost portion of retail tariffs. This mitigates financial impacts to utilities, while increasing benefits to all stakeholders.

Some states have taken a more proactive approach to grid-side, front-of-the-meter energy efficiency. For example, in Illinois, legislation that took effect in 2017 revised that state’s energy-efficiency standard 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.” Ameren Illinois, one of the state’s largest investor-owned utilities, initiated a program to cost effectively deploy voltage optimization across nearly one half of its circuits operating at less than 20 kV by 2025, reaching nearly 65% of its customers. This is expected to save an estimated 421 GWh annually; up to 1.5% of distribution system energy. (This does not include energy from customers with peak demand exceeding 10 MW, who are ineligible for energy efficiency programs.)

Aside from energy savings, a key operational benefit of Ameren’s new voltage optimization system is the detailed, real-time visibility it provides into the grid.

“The advanced visibility is a huge improvement,” said Andy Parker, manager of distributed energy resources and voltage optimization for Ameren Illinois. “Some of our substations did not have SCADA metering; we used to rely on models. It’s a game changer for us to see real voltage levels not only at substations, but also on specific line devices. Among other benefits, this gives us the option to plan preventive maintenance based on data, not just on pre-set schedules.”

A more efficient grid is a greener grid
A more efficient grid also is intrinsically greener. “When you reduce both voltage and consumption, that comes straight off the fossil fuel portion of the existing generation portfolio,” said Tyler. “It immediately cuts out 100% of carbon emissions from all the energy being saved. It also expands grid capacity so more renewable resources can be connected — for pennies on the dollar compared to other ways to add capacity.”

“We now have much more insight into power flows at the substation and device level. Our system engineers and planners appreciate that.” said Parker.

The advantages of voltage optimization extend beyond investor-owned utilities. For instance, cooperative and municipal utilities use this solution to reduce their demand charges when energy is scarce and costly. Even if these utilities have not yet fully deployed smart metering, they still can benefit from voltage optimization. Areas where smart meters are not deployed do create blind spots, but this increased uncertainty can be addressed with more conservative voltage optimization strategies.  The resulting grid efficiency gains can support the case for completion of smart metering rollout.

Tyler observed that voltage optimization strategies are essential for grid modernization and a renewable energy future. “When you’re constantly adding more distributed and renewable resources to the grid, that adds volatility,” he said. “If you can accurately measure and control your voltage profile, it can potentially help accommodate more DERs on the grid.”