“The challenge is that it is often difficult to quantify Smart Grid investments’ benefit to the economy”

Exclusive interview with Dieter Gutschow, Managing Consultant, Eon Consulting, South Africa, who along with a senior Eskom representative will present a presentation on:  “Quantifying the benefit of different smart grid technologies for overhead lines” during the Smart Grids/T&D track at African Utility Week.

1) Can you give us some background on the presentation topic?

A Smart Grid is an electrical grid that uses information and communication technology (ICT) to automatically collect, process and act on information related to the generation and consumption of electricity. It can help utilities and customers to more effectively monitor and manage energy usage and costs, and to improve electrical network efficiency and reliability.

Worldwide, electrical utilities are embarking on Smart Grid pilot systems to demonstrate the technology and to assess if there is a business case to be made. Eskom has been researching and deploying a number of different Smart Grid technologies on its transmission and distribution networks for a number of years.  These technologies include smart meters, distribution automation, substation automation, integrated auto-reclosers and Fault Path Indicators (FPIs).

In general there is a high degree of confidence that the technology will work successfully; however, the challenge remains to quantify the business case for investing in new Smart Grid technology.


2) What are the main challenges here?

The main challenge with quantifying the costs and benefits of proposed Smart Grid investments is that most of the new technologies do not directly contribute to an increase in revenue or sales.  In fact in some cases, such as smart meters and home automation, greater consumer awareness about their energy use could actually result in a reduction in utility revenue.

Typically Smart Grid investments can only be cost-justified on a Cost of Unserved Energy (COUE) basis, i.e. the total benefit of the utility’s investment to the end-consumer (and the greater economy) is larger than the cost of its capital investment.  Examples include investments that can help improve the performance and reliability of the electrical network to reduce power interruptions and/or limit the impact of such interruptions on customers.

The challenge is that it is often difficult to quantify Smart Grid investments’ benefit to the economy, because there are no commonly accepted and/or robust methodologies to translate Smart Grid benefits into economic value-add.  The result is that utilities often struggle to move their Smart Grid initiatives, such as smart metering and distribution automation projects, beyond the pilot phase.


3) Can you give us some case studies/success stories?

At the African Utility Week we’ll present an Eskom case study that explains a methodology for quantifying the benefit, in tangible terms, of increased network visibility on Medium Voltage lines, through the installation of auto-reclosers, SCADA (Supervisory Control and Data Acquisition) and FPIs.


It will be explained how the implementation of Smart Grid technology on overhead lines can improve SAIDI (System Average Interruption Duration Index), which is one of the main performance metrics used by utilities and regulators to measure and report network reliability. In addition it will be shown how the economic benefits in terms of the COUE can be calculated for different investment scenarios.


4) What will be your main message at African Utility Week?

The main message will be a robust methodology for quantifying the benefits of Smart Grid technologies that improve network performance on overhead distribution lines, and how this can be applied to justify and prioritize Smart Grid investments.


5) Anything you would like to add?

The content of this paper is deemed relevant at a time when many utilities in Africa are pondering Smart Grid investments, while having limited access to tools or methods to justify such investments. It is believed that the information shared will lead to new insight into the quantification of network performance improvement that will enable wise capital investments.


6) Eon Consulting

Eon Consulting provides pragmatic management consulting services and solutions to businesses in the Energy, Finance and Transport Infrastructure Sectors.  Our experienced team of experts develops clear and curve-leading strategies to help address strategic, tactical or operational challenges, enabling business to succeed by implementing solutions that add tangible value.

Our Smart Grid experience includes:

  • Smart Grid strategy development
  • Power network reliability and performance modeling
  • Substation Automation system design
  • Distribution Automation design, implementation and evaluation
  • Smart metering planning and feasibility studies
  • Smart grid communications
  • Planning and optimization of reclosers and fault path indicators on overhead lines
  • Grid connection of renewable generation
  • Integration of Operational Technology (OT) and Information Technology (IT)


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