Rick Cowburn, Principal – Vidya Knowledge Systems

SmartGrid Applications – Introducing Change in a Conservative Industry

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)