The State of the Grid and Its Impact on BusinessPosted to S&C Electric Company in the Grid Professionals Group
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- May 26, 2021 5:57 am GMTMay 18, 2021 3:51 pm GMT
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This item is part of the Special Issue - 2021 - 05 - Grid Modernization, click here for more
It’s no secret the grid we have is not the grid we need. What was originally designed as a robust system effectively delivering electricity and meeting customer demand is now falling short because the pace of change for technology is accelerating. From increased demand, higher expectations surrounding reliability and resiliency, new regulatory practices, and disruptive technologies being added to all points on the grid, electric utilities are feeling pressure from all angles to keep up.
Modernizing the grid, the largest machine in the United States, requires a strategic approach to help ensure customer loads are supported. However, many commercial and industrial (C&I) companies are continuing to feel the pain of routine outages.
For the past four years, S&C has conducted research on the state of commercial and industrial power reliability, and the results are shocking. These C&I companies use more than 60% of the electricity generated in the United States, reinforcing the idea that reliable power is a critical component for business success. Unfortunately, many of these businesses are having difficulty receiving the power reliability and resilience they need.
When the grid was first developed, businesses looked a lot different than they do today. Assembly lines in manufacturing settings were manual, not automated. Hospitals relied on paper charts to keep track of patient records, not Internet-enabled tablets. Schools used textbooks, pencils, notebooks, and chalkboards to complete their lessons. Today, most educators are navigating remote or hybrid computer-based learning environments.
Even retailers have seen significant changes over the years. What may have been a cash-based business in the past is now dependent on credit card chip readers, QR codes, and online ordering systems. A power outage 40 years ago would certainly be inconvenient for most businesses, but it wouldn’t necessarily bring operations to a halt.
Today, it doesn’t matter whether the duration of an outage lasts a few moments or a few hours, they all have an impact on business. The world is living through Industry 4.0, the fourth industrial revolution, where businesses across all industries are using advanced technology to increase productivity, improve quality, and better meet customer needs. The reality is these technologically advanced businesses are at a disadvantage by continuing to plug into “Grid 1.0,” a system still reliant on conventional fuses and reclosers.
For the fourth consecutive year, S&C’s report concluded that C&I reliability is not improving. In fact, it exposed a widening gap between the energy reliability these companies need and the ability of utilities to meet those needs.
Of the companies surveyed, 44% indicated they lost power at least monthly in 2020, more than double from 21% in 2019. When asked specifically about momentary outages lasting 5 minutes or less, 40% of companies reported these types of outages were their most typical, up from 20% the previous year.
It’s becoming increasingly clear that businesses cannot tolerate these power interruptions. Even a momentary outage that only lasts a minute from a utility perspective can result in extensive system resets and business delays for a C&I company. These outages are more than frequent nuisances; they are expensive.
C&I companies are poised to lose up to $2.6 million annually if they see even one short-duration outage per week costing $50,000 in lost operations. This has long been associated with the cost of doing business, but these companies are growing to expect more from their utilities, and they are willing to pay for it. Most companies indicated they are willing to pay a premium to their utility to improve their reliability. Despite this willingness, 31% of respondents indicated they are not given the opportunity to discuss reliability concerns with their utilities, pushing many companies to explore solutions on their own.
The challenges these companies are facing are unfortunately a problem of the time. The grid simply hasn’t caught up to meet the power needs of energy consumers. It’s important to remember that C&I companies don’t operate in a vacuum—they are on the same grid and using the same electricity as residential consumers. When a C&I company experiences an outage, the surrounding area served by the same feeder is likely experiencing an interruption as well. The cost of outages may come with a bigger price tag for a large business versus a suburban home, but the pain of momentary and sustained outages is not lost on residential consumers, especially as the trend of working from home continues.
Utilities have spent decades investing in their transmission and generation systems, but many of the challenges the grid is facing today are located on the distribution system—the last mile of the grid. Until utilities place an increased focus on modernizing their distribution systems, the gap between the energy reliability consumers expect and receive will continue to grow. Placing an increased focus on this location does more than just benefit a utility’s customers and improve customer satisfaction, it benefits a utility’s bottom line while paving the way for future system improvements.