The Critical Role of Interoperability for Utility Grid Investments
This week the National Institute of Standards and Technology (NIST) published the fourth and latest release of the Smart Grid Interoperability Framework. This revision incorporates evolving technology and power system architectures as context for describing a new set of interoperability perspectives. The importance of grid technology interoperability can be examined from many angles including better integration of utility-scale clean energy technologies, compounding environmental benefits of customer-sited resources, avoiding infrastructure upgrades and decarbonizing connected infrastructures.
This is important planning information for utilities as interoperability will place downward pressure on information, integration, coordination, and transaction costs, opening up new value propositions. The researchers point oy that some resource pairings for which coordination would presently prove uneconomic will — through greater interoperability and improved cost structures — be able to serve customers more frequently, leading to higher capacity utilization.
Economic Value Proposition
In terms of economic value, the report advances that although specific interoperability costs and value metrics are difficult to quantify, utilities and equipment manufacturers have reported to NIST that their costs for integrating non-interoperable equipment and systems ranges from $140 million to $1 billion per year per firm. With that in mind they report that the scale of these outlays indicates an interoperability value proposition that could exceed estimates of $10 billion in interoperability-derived annual savings in the U.S. electric power industry.
From the start of the technological grid modernization market interoperability has been a key component, ensuring that the technical and economic benefits from grid modernization flow across stakeholder interests throughout the evolution of the electricity system. Right now utilities are investing in substantial updates to their infrastructure, and customers are increasingly seeking to achieve additional savings and benefits from investments in DER. Interoperability driven by open standards can help lower transaction and implementation costs associated with DER and other investments. In the snapshot diagram below, we highlight some of the major updates, the economic value proposition and an example of merging considerations, namely near- and medium-term grid functions that could be developed to mitigate some of the uncertainty and operational challenges emerging in the grid, grouped by implementation time-constant. Although this is not a comprehensive set of grid functions, the listing is indicative of the diversity of functions and grid services that are or could soon be regularly provided across the system.
Cross functional Utility Importance
The report is required reading for utility grid technology architects, cyber professionals and finance departments. The NIST Smart Grid Conceptual Model is updated to reflect technology and platform-driven emerging capabilities in the Customer and Distribution Domains as well as the structural reorganization of a system more reliant on shared infrastructures and distributed resources. The concepts laid out in the Framework provide a foundation from which the smart grid community and NIST can advance grid modernization and realize the full set of interoperability benefits and opportunities. For the utility, architecture and operations need to accommodate both new and legacy devices in an evolving environment which is being rapidly influenced by policy and market decisions. Interoperability reduces limitations caused by asset specificity, and in this way facilitates combinatorial innovation and value stacking which can improve stakeholder value propositions across the sector. As per the report key updates are seen across three domains.
Generation Domain
Changing scale — the domain name has been updated to Generation including DER to explicitly acknowledge the growing diversity in scale and utilization of grid resources.
Technology diversity — the number and types of generation technologies has been expanded, to reflect the growing diversity of U.S. generation assets
Physical siting — the Generation including DER domain has been elongated to represent the geographic and topological diversity of included technologies. Icons representing large scale generation technologies are physically closer to the Transmission domain, and smaller scale or more modular technologies are physically closer to the Distribution and Customer domains.
Customer participation — resources provided by the customer, whether generation or demand management, are included as one of the many resource options available in the Generation including DER domain.
Distribution Domain
Expanding role — the Distribution Domain has been made larger and placed more centrally within the Conceptual Model to reflect the growing responsibilities distribution systems have for optimizing grid function.
Improved sensing — sensing in distribution systems (represented by the icon of an overhead line fault detection device) is important to improving state awareness, a prerequisite for optimizing grid function.
Controllability and intelligence — computer servers represent the growing availability and use of real-time data for intelligent control of distribution grids.
New actors — historically the province of distribution utilities, service providers and other actors are increasingly providing equipment to and services for the distribution grid as indicated by the new link between the Distribution and Service Provider Domains.
Customer Domain
Distributed operations — with active energy management possible at the grid edge, operations, control and automation enter the customer domain as represented by the computer monitor replicated from the Operations Domain.
Customer diversification — from multi-family dwellings to commercial and industrial facilities and campuses, the Customer Domain has been updated to reflect many types of customers served by and interacting with the electrical grid and energy markets.
Looking Forward
As utilities look to further invest in grid technologies, they should track the interoperability of their plans closely. This will undoubtedly place downward pressure on information, integration, coordination, and transaction costs, ultimately opening up new customer and utility value propositions.