Benchmarking Large AMI and Smart Grid Programs
Successful smart grid solution implementation is the result of many factors that go well beyond the technologies themselves.
by Mark Michaels and Tom Gallegos, Black & Veatch
Successful smart grid solution implementation is the result of many factors that go well beyond the technologies themselves. Successful project implementation requires vigilant work by all members of the team from start to finish. Wildly successful projects guard against complacency by continuously asking that all-important question: Are we doing the right things, in the right sequence, at the right times?
For utilities where implementation of advanced smart grid technologies is under way, projects can be enhanced by periodically validating and reassessing the critical elements driving success. For utilities that are ready to take the initial steps to evaluate their options or begin a project, a thorough and open assessment of their readiness can be applied and can provide insights that will contribute to long-term success.
Benchmarking of a smart grid implementation can be accomplished through comparison to best practices, as well as to other utilities’ experiences. (Refer to the checklist at the end of this article to benchmark your project against industry standards.) Successful smart grid projects typically examine industry-accepted benchmarks whose key elements include:
- Business opportunity assessment
- Business process redesign
- Change management
- Customer communications and engagement
- Project implementation framework
- Program and project management
- Performance metrics
Business Opportunity Assessment
Understanding project costs and benefits is essential for smart grid implementation success. The business case must accurately and honestly assess the total costs of the project and potential benefits. It also must accurately account for the fundamental changes to the utility’s operations that are expected to occur with successive implementation of each project phase. At this up-front stage, it is critical to have the buy-in of the impacted organizations including commitment from key stakeholders.
The range of underlying benefits and costs can vary significantly by project and utility, making it essential that these be examined in the context of your utility’s operational, strategic and regulatory drivers.
Assessing costs. Benchmarking costs is important but challenging. Project cost is influenced by various factors. For example, a seemingly simple benchmark that looks at the average cost per meter or average cost per customer can be influenced by utility-specific circumstances: How mature is your utility’s infrastructure? What is the relative age and flexibility of the underlying information technology architecture upon which the smart grid solutions will be implemented? Will the proposed solutions be primarily owned and operated by the utility or will portions be outsourced? What financial contribution is the project expected to make for using, refreshing or expanding portions of the existing utility infrastructure such as the communications network, or expanding it with new capabilities and functionality? What level of expertise resides in-house to manage the project, and what level of third-party support is expected?
Achieving solution benefits. Benchmarking benefits is equally important but can be tricky. This involves the benchmarked value and the ability and preparedness of the utility to achieve the benefit goal. How realistic and achievable are the proposed benefits? Has your utility performed an accurate assessment that properly classifies each benefit as hard, soft, societal, etc.? What categories of benefits will be considered, such as organization operational improvements, as well as new customer services and products? Are the benefits achieved on a one-time or recurring basis, and in which parts of the organization do they accrue? If, for example, labor savings are projected for the reduction of field metering and related services, does the impacted organization support these and does the utility’s long-term budget plans reflect the work force reduction this benefit implies? Have previous investments in predecessor technologies such as automated meter reading (AMR) reaped some portion of the expected benefits, and are you able to distinguish the incremental benefits expected of the planned smart grid solutions?
Business Process Redesign
Successful project implementation and benefits realization requires understanding of the utility’s current, or “as-is,” business processes, the potential business process impacts, and the future state, or “to-be,” business processes that the solution is expected to enable.
Business process engineering and redesign examines the expected business and operational benefits and provides critical inputs to the design of the systems and solution integrations that are necessary to achieve these functions.
Honest and thorough business process design and verification provides the framework for the underlying project design and changes therein, which results in successful achievement of critical project requirements. Assessing and adjusting your utility’s business processes is an iterative activity that should be performed continually to ensure the appropriate combinations for success are achieved.
The implementation of smart grid technologies touches virtually all parts of the utility. Successful smart grid solution implementation is not based solely on technology, but rather is based on how well the utility’s employees and customers adopt and embrace the solutions these smart grid technologies enable.
Change management recognizes the company culture and represents the structured approach that leads employees, interested stakeholders and customers through the successive project phases to successful implementation.
Success is measurable in many ways, especially by the degree of success that the utility achieves as it moves from its current-state practices, through the temporary or interim states that are necessary during deployment, through final completion and sustaining adoption. Change management is a perpetual process.
Customer Communications, Engagement
Working with change management, successful project implementation requires proactive, careful communication with customers. Smart grid technology projects create profound changes to business as usual within the utility and require a skilled utility work force that understands how to implement the solutions effectively to ensure maximum engagement with customers. Lessons abound throughout the industry of successful implementations built on outstanding communication and the pitfalls encountered when such communication is absent or misdirected. Positive examples include Web portal implementation, advance customer notifications, customer education sessions, robocalling and evolving game approaches.
Successful smart grid project implementation requires a tightly integrated plan whose framework necessitates ranging expertise from virtually all core lines of the utility business, yet provides the flexibility to adapt to inevitable changes. In developing a cohesive smart grid implementation framework, it is useful to think through the project life cycle and phases. Figure 1 represents a common industry smart grid implementation approach.
The suggested project life cycle represents a logical sequence to accomplish the smart grid project’s goals and objectives:
- These are initially defined by the business case and smart grid vision task in the vision/select phase.
- This is followed by the plan phase, in which the solution is fully defined in all dimensions to establish the project baseline, including business process, solution architecture, detailed requirements and project management deliverables such as the master schedule.
- The design phase is where the underlying design of smart grid technologies is devised and information technology elements such as the MDMS, energy Web portal and DRMS are configured.
- These elements come together in the build and run phases, where the system is built, technologies and solutions are deployed and all components are taken through increasingly larger elements of test. Testing progresses from verifying functionality and integration to validation of integrated business processes.
- The final stage is when the fully validated solution is made operational and your utility uses the system in day-to-day operations.
Program and Project Management
Success is incumbent upon successful implementation of sound program management principals. Comprehensive planning is needed, beginning with development of a smart grid technology implementation plan (see sidebar). Other critical project management practices include development of and tracking to a reasonable, appropriate scope of work (SOW), work breakdown structure (WBS), baseline schedule, financial and resource plans, requirements traceability matrices, integration and test plans and other project management plans (e.g., risk and quality plans). In addition, management, oversight, scope and timing are key elements that often slip, so vigilance is necessary.
Project success also depends on identifying, planning for and addressing key regulatory issues and drivers. Important considerations include state and federal mandates or incentives, opt-in and opt-out provisions and the potential acceptance or rejection of proposed cost-recovery mechanisms.
Well-defined performance metrics define and support successful smart grid solution implementation. Metrics should be defined clearly to allow the utility to measure progress at key implementation phases and determine the expected results are achieved.
Key performance indicators also should be adopted to assess and measure the attainment of benefits achieved compared with the expected benefits derived during the business case assessment. Finally, customer satisfaction surveys can be restructured to measure the impact and adoption of smart grid investments by customers.
The advancement of smart grid technologies and solutions will reshape the future landscape of utility services profoundly. Smart grid projects almost by definition are transformational and have the potential for significant positive impacts on the organization. Conversely, challenged projects can have significant negative impacts, and these projects require attention to the items mentioned. Assessing your project’s success can help maintain focus and avoid missteps.
Good questions to ask periodically include:
- Are we being too aggressive or conservative in our approach to costs and benefits?
- Based on others’ experiences, is our effort proceeding at the appropriate pace?
- What unexpected internal requirements, external requirements or both have others needed to address?
- Have we adapted our business processes to the changes smart grid solutions bring, and are we ready to take full advantage of these new solutions?
- Is our utility work force trained and ready to embrace the changes these solutions require?
- Are we communicating effectively with customers so they can benefit fully from these investments?
- What lessons can be gleaned from other utilities to reduce risk in our smart meter program?
These insights will guide utilities in all stages of examination and implementation of smart grid solutions through assessment and validation of their opportunities for increased success by exploring whether they are doing the right things, in the right sequence, at the right times.
Benchmarking Large AMI and Smart Grid Programs Are you doing the right things, in the right sequence, at the right times?
Technology Implementation Plan
A successful smart grid solution implementation is the result of comprehensive planning that starts by establishing the key foundational elements, implementing them in the right sequence, and successively integrating and testing new applications and programs that are layered on one another. A successful smart grid technology implementation plan also provides the mechanism to adapt the plan to inevitable changes.
Foundational elements typically include metering and other endpoint devices, communications, geographic assessment, AMI and MDMS and might expand to include energy Web portal, demand response solutions, distribution automation, distribution management systems, etc. A comprehensive implementation plan further breaks down and integrates these foundational elements into a series of smaller projects, or releases, which define entrance gates, required baseline functionality and exit criteria that denote the successful completion and transition from one phase to the next. For example, advanced billing capabilities such as time-of-use or critical-peak pricing often are carefully planned for later project releases after foundational capabilities such as customer data presentment and basic data collection and billing capabilities (e.g., consumption, demand and interval data) are in place. These release plans also take into account the potential impact of other utility initiatives. For example, if your utility is planning a significant rate hike or implementation of tiered or time-based rates during the smart grid implementation, the release plan should contain mitigating strategies to address these factors and assure utilitywide success with all initiatives.
Mark Michaels is an executive consultant at Black & Veatch. He has 30 years in utilities and telecommunications with a primary focus on smart grid and AMI solutions. He has a bachelor’s degree in mechanical engineering. Reach him at firstname.lastname@example.org.
Tom Gallegos is a project manager at Black & Veatch. He has 30 years of experience in the utility industry with extensive experience managing large-scale smart meter deployments. Reach him at email@example.com.