COMPLIMENTARY EXECUTIVE SUMMARY

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EXECUTIVE SUMMARY INTRODUCTION

Methodology and a look at study respondents Defining analytics and grid analytics

Table of Contents

MARKET ANALYSIS
Traditional business drivers prevail and everyones chipping in Utilities are more focused on improving data than analytics capabilities Grid optimization is the bigger focus Challenges revolve around dollars and people Some activity now, but significant spending on the way

GRID ANALYTICS: BOOTS ON THE GROUND

A large investor-owned utility tackles grid optimization and asset management
H. Christine Richards Lead analyst crichards@energycentral.com 720.363.6531 Mike Smith Principal-in-charge msmith@energycentral.com 916.458.6204 Guy K. Anderson Analyst Kim Gaddy Analyst

A large investor-owned utility finds multiple grid analytics uses for smart meter data A medium public utility focuses on grid optimization with a spillover into assets

THE SOLUTION AND SERVICE PROVIDER LANDSCAPE APPENDIX A: APPENDIX B: APPENDIX C:

Utility in-depth interview summaries and analyst notes Solution and service provider summaries Online survey questions and answers

www.utilityanalyticsinstitute.com

APPENDIX D: Analyst biographies

The Utility Analytics Institute Reports are a publication of Utility Analytics Institute Group, a division of Energy Central. This report is Copyright 2012, Energy Central. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express permission of Energy Central. Factual material contained herein is obtained from sources believed to be reliable, but the publishers are not responsible for any errors or omissions contained herein.

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List of Figures & Tables

Figures
Figure 1. Respondents by organization type Figure 2. Respondents by services oered Figure 3. Respondents by utility type Figure 4. Respondents by utility company size, metered customers Figure 5. Respondents by region Figure 6. Respondents by primary job responsibility Figure 7. Respondent level of responsibility Figure 8. Utility analytics denition Figure 9. Key grid analytics areas Figure 10. Importance of grid analytics business drivers Figure 11. Role of business divisions in grid analytics Figure 12. Importance of grid analytics characteristics Figure 13. Importance of data for grid analytics Figure 14. Primary focus of grid analytics initiative Figure 15. Other areas covered by grid analytics initiative Figure 16. Challenges with analytics initiatives Figure 17. Presence of a grid analytics initiative planning and deployment Figure 18. Grid analytics project status Figure 19. Approximate US $ value of current or planned projects Figure 20. Utility analytics value chain Figure 21. Respondent participation in grid analytics planning/execution Figure 22. Grid analytics deployment Figure 23. Primary focus of grid analytics initiative by company ownership Figure 24. Primary focus of grid analytics initiative by company size Figure 25. Primary focus of grid analytics initiative by region Figure 26. Other areas covered by grid analytics initiative by company ownership Figure 27. Other areas covered by grid analytics initiative by company size Figure 28. Other areas covered by grid analytics initiative by region Figure 29. Grid analytics project status by company ownership Figure 30. Grid analytics project status by company size Figure 31. Grid analytics project status by region Figure 32. Approximate US $ value of current or planned projects by company ownership Figure 33. Approximate US $ value of current or planned projects by company size Figure 34. Approximate US $ value of current or planned projects by region Figure 35. Importance of grid analytics business drivers by company ownership Figure 36. Importance of grid analytics business drivers by company size Figure 37. Importance of grid analytics business drivers by region Figure 38. Importance of grid analytics improvements by company ownership Figure 39. Importance of grid analytics improvements by company size Figure 40. Importance of grid analytics improvements by region Figure 41. Challenges with analytics initiatives by company ownership Figure 42. Challenges with analytics initiatives by company size Figure 43. Challenges with analytics initiatives by region Figure 44. Importance of data for grid analytics by company ownership Figure 45. Importance of data for grid analytics by company size Figure 46. Importance of data for grid analytics by region Figure 47. Importance of grid analytics characteristics by company ownership Figure 48. Importance of grid analytics characteristics by company size Figure 49. Importance of grid analytics characteristics by region Figure 50. Role of business divisions in grid analytics by company ownership Figure 51. Role of business divisions in grid analytics by company size Figure 52. Role of business divisions in grid analytics by region Figure 53. Grid analytics spending changes over next one to two years by company ownership Figure 54. Grid analytics spending changes over next one to two years by company size Figure 55. Grid analytics spending changes over next one to two years by region Figure 56. Grid analytics spending changes over next three to ve years by company ownership Figure 57. Grid analytics spending changes over next three to ve years by company size Figure 58. Grid analytics spending changes over next three to ve years by region

Tables
Table 1. Grid analytics sub-segment denitions Table 2. North American grid analytics spending, 2011 to 2016 ($M) Table 3. Provider grid analytics coverage, and solutions and services provided Table 4. Respondents by organization type Table 5. Respondents by utility type Table 6. Respondents by services oered Table 7. Respondents by utility company size Table 8. Respondents by region Table 9. Respondents by primary job responsibility Table 10. Respondent level of responsibility Table 11. Respondent participation in grid analytics planning/execution Table 12. Grid analytics deployment Table 13. Primary focus of grid analytics initiative Table 14. Other areas covered by grid analytics initiative Table 15. Grid analytics project status Table 16. Approximate US $ value of current or planned projects Table 17. Importance of grid analytics business drivers Table 18. Importance of grid analytics improvements Table 19. Expected outcomes from grid analytics initiatives Table 20. Challenges with analytics initiatives Table 21. Utility challenges with stang and skill sets for analytics Table 22. Importance of data for grid analytics Table 23. Importance of grid analytics characteristics Table 24. Role of business divisions in grid analytics Table 25. Grid analytics spending changes over next one to two years Table 26. Grid analytics spending changes over next three to ve years

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North American grid analytics spending will grow by 33% per year from $215 million in 2011 to $902 million in 2016

EXECUTIVE SUMMARY
Welcome to the action-packed sequel to our rst report, Market Outlook and Forecast, where we tackled the topic of analytics as a whole. This time around, were taking a bite o the analytics marketplace to explore grid analytics in greater detail. Utilities are starting to build advanced analytics capabilities on top of their existing asset management, SCADA and outage management systems. Were here to explore how utilities are taking their grid analytics to the next level. To learn about grid analytics in the utility industry, we talked with more than 160 utility companies and close to 20 solution and service providers.

Definition
Grid analytics enables utilities to ensure better planning, design, construction, operation and maintenance of utility transmission and distribution networks. These analytics applications do not include real-time grid control systems, including distribution automation, substation automation and SCADA. We segment grid analytics into two key areas: Asset optimization: Analytics that assist with optimizing the performance and reliability of grid assets. This area includes categories such as transformer management, substation management, and overall transmission and distribution asset management. Grid optimization: Analytics that assist with optimizing the operation of the grid to minimize power losses and maximize eciency and quality. This area includes categories such as outage management, system modeling, power quality optimization, advance distribution management, and analytics for real-time applications.

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47% of utility companies have some sort of grid analytics project either under way or in the planning stages.
Key Findings
Traditional business drivers prevail and everyones chipping in Were nding that despite all the advancements out there in grid analytics, very traditional business needs are still fueling these analytics initiatives including improving customer service, increasing reliability and improving performance. Its important to understand not only the reasons why utilities are investing in analytics, but also who is helping to drive those investments forward. Not surprisingly, engineering and operations are considered to be the most important business areas for grid analytics. However, information technology is a close third, which shows how important the interaction between operational and information technologies is to move forward with grid analytics. Utilities are more focused on improving data, then analytics capabilities We determined that utilities are still more likely to be focused on data management as opposed to analytic applications. Utilities place a higher importance on data characteristics, such as the capability to bring together data from across the company and accessibility to near real-time data, than they place on more advanced analytics capabilities. The ability to bring together data from across the company tops the list of important grid analytics characteristics. Utilities are focusing on a variety of data sources both old and new. These data sources include substation, meter and historical SCADA and distribution automation data. Grid optimization is the bigger focus When we looked at the primary focus of utilities grid analytics initiatives, we determined that grid optimization ruled the
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roost. About 17% of utilities focused on asset optimization compared to 72% that made grid optimization the main focus of their initiative. However, grid analytics initiatives for utility companies typically dont just cover one area other areas are certainly a part of the formula. Around 30% to 40% of utilities are pursuing some of sort of asset optimization eort in addition to their primary focus. Challenges revolve around dollars and people Even with the promising reasons to move forward with grid analytics, utilities still face challenges in forging ahead with their initiatives. About 36% of utility companies point to budget availability as a key challenge with grid analytics initiatives. Second on the list is the lack of necessary skills and sta, which tends to impact small utilities and public utilities more than their larger, investor-owned counterparts. Some activity now, but significant spending on the way Grid analytics projects are still young, but we will see signicant upticks in spending in the near-term. Overall, about 47% of utility companies have some sort of grid analytics project either under way or in the planning stages. Of the utilities involved with analytics, about 54% of those companies are in the process of implementing the projects, with another 32% percent of those companies reporting that their projects are more than 50% complete. About 41% of the utilities have plans to start a grid analytics project, with 67% of those planning to start in the next 12 months. Between 2011 and 2016, we predict that North American grid analytics spending will grow by 33% per year, growing from $215 million 2011 to $902 million in 2016. We expect to see an increased focus on grid optimization, which will account for

the majority of the growth in this space, as well as continued growth for asset optimization areas. Outage management and distribution automation advances will play a signicant role in the growth of the grid optimization area in the near-term.

Conclusions
The grid analytics market is rapidly changing, but even in this state of ux, utilities can take action to prepare for the take-o of grid analytics initiatives: Address staffing needs. Utilities should focus on building the necessary talent base within their companies to address grid analytic needs, or consider how an outside company can provide the skills and knowledge to eectively move forward with grid analytics initiatives. For providers, this is an opportunity to help utilities address stang needs through hosted solutions and services. Establish grid analytics next steps. Many utilities have been focused on customer analytics, and will get to grid analytics next. However, now is the time to begin planning for grid analytics initiatives, particularly as utilities are building the analytics foundations such as databases and information architectures that will ultimately inuence their grid analytics initiatives. For analytics providers, this is an opportunity to help guide utility companies in their plans for grid analytics initiatives. Limited budgets just mean prioritization. Utilities should target grid analytics areas that will oer the most signicant impact for a utility, such as problematic feeders or circuits, and then ensure that solution for the targeted area is scal5 able so it can serve future needs.

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INTRODUCTION
Welcome to the action-packed sequel to our rst report, Market Outlook and Forecast, where we tackled the topic of analytics as a whole. This time around, were taking a bite o the analytics marketplace to explore grid analytics in greater detail. Utilities are starting to build advanced analytics capabilities on top of their existing asset management, SCADA and outage management systems. Were here to explore how utilities are taking their grid analytics to the next level. To better understand this emerging and rapidly evolving analytics market, we at the Utility Analytics Institute, a division of Energy Central, are creating a series of in-depth reports that will explore critical developments in the analytics marketplace. The reports include: Annual Market Outlook and Forecast available now Grid Analytics February 2012 Customer Analytics May 2012 Best Practices & Case Studies August 2012

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Respondents from 160 utility companies participated in our online survey.

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In this report, well walk you through: The denition of grid analytics The drivers, issues and growth in the grid analytics marketplace The stories of utilities moving into grid analytics The solution and service providers in this space As you go through this report, please note that we worked hard to provide you with the most essential analysis and guidance youll need to be successful in the grid analytics marketplace. For those data hogs out there and you know who you are we also provide: Appendix A: Summaries for utilities we interviewed in depth Appendix B : Service and solution provider proles Appendix C: Each online survey question along with the answers we received to those Appendix D: Analyst biographies

In this section, we take a closer look at what utilities we connected with and how we ensured we got the right people in the right companies to discuss grid analytics. Utility companies only, please As you can see in Figure 1, out of the 358 total online survey respondents, about 160 were utility companies. We didnt allow the nonutility respondents to continue on with the survey. Solution and service providers who tried to get in on this survey were oered a chance to speak their minds in a separate interview. The report primarily focuses on the use of grid analytics in electric utilities (as shown in Figure 2), almost all of our utility respondents provided electric service, but note that many respondents also provided other services. Slicing and dicing the utilities We not only wanted to see what utilities as a whole are thinking, but what dierent types of utilities are thinking. We rst sliced

We completed more than 20 in-depth phone interviews with utilities that focused on the qualitative aspects of the grid analytics marketplace.

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Methodology and a look at study respondents

Lets take some time to better understand who we were talking with to develop our ndings. To learn about grid analytics in the utility industry, it made sense to go talk with utilities that are diving into analytics and a lot of them. We rst conducted an online survey, which covered the questions listed in Appendix C, and received responses from about 160 utility companies. We then completed another 20 in-depth phone interviews with utilities that focused on the qualitative aspects of the grid analytics marketplace. We also talked with close to 20 solution and service providers in the grid analytics space to learn about their oerings.

Figure 1. Respondents by organization type

9% 21%

45%
19%
Utility Consulting firm

6%
Government agency Other

Note: See Question 1, Appendix C for additional detail.

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Figure 2. Respondents by services offered

100% 80% 60% 40% 20% 0%

Electric

Gas

Water

Wastewater

Solid waste

Note: See Question 3, Appendix C for additional detail.

Figure 3. Respondents by utility type

9%

10%

our respondents by company ownership structure, which we ultimately segment into investor-owned and public utility companies. This slicing is important because these groups face dierent inuences and challenges from negotiating with regulators to answering to a city council to satisfying shareholders. As shown in Figure 3, approximately 60% of the utility respondents were from investor-owned utilities. The remainder included 22% from municipalities, 9% from cooperatives and 10% representing district or federal organizations. Going forward, we fold municipalities, cooperatives and district/federal organizations into a single category of public utility companies. Once we sliced, then we diced the utility companies by their size. The utilities represented a wide range of company sizes, which we measured by the number of customers. As you can see in Figure 4, utilities with 1 million or more customers represented 43% of the respondents, which is a good representation because these utilities are typically the major players and inuencers in the marketplace. We also captured many other important segmentations. For the rest of the report, we take the size segmentations shown in Figure 4 and cluster them into large utilities, or those with 500,000 or more customers, medium utilities with 100,000 to 499,999 customers, and small utilities with fewer than 100,000 customers. Another wrinkle for utility segmentation is the region in which most of their customers are located. You can see in Figure 5, that we have a utilities from all over the United States participating in the survey. We also had about 17% of respondents hail from outside United States. Going forward, we combine Canada and International into International, and then we roll California, the Northwest and Southwest into the West.

22%

60%
Cooperative District/federal
Note: See Question 2, Appendix C for additional detail.

Investor-owned

Municipal

6% 5%
Figure 4. Respondents by utility company size, metered customers

9%

18% 19%

43%
100,000 - 499,999 Fewer than 10,000

1,000,000+ 50,000 - 99,999

500,000 - 999,999 10,000 - 49,999

Note: See Question 4, Appendix C for additional detail.

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Not just companies, but people count Its important to understand not only the types of utility companies were talking with, but who within the utility company is providing us information. The people part of analytics is crucial to success of utility analytics initiatives. So we looked at respondents in terms of what business areas they worked in, and what level of responsibility they held within the company. Respondents primarily represented the three company business segments youd think would be involved with grid analytics. As you can see in Figure 6, approximately 40% of respondents came from operations, another 24% from engineering and 18% from information technology. We also understand how grid analytics impact people with a variety of job responsibilities. As shown in Figure 7, we obtained representation from across the responsibility spectrum with approximately 15% executives, 45% managers and supervisors, and the remaining 40% lling technical or sta positions.

11%
Figure 5. Respondants by region

7%

7% 7% 11%

26%
11% 24%
U.S. Southwest Canada U.S. Northwest U.S. Northeast U.S. California

U.S. Midwest International U.S. Southwest

Note: See Question 5, Appendix C for additional detail.

Figure 6: Respondants by primary job responsibiity

8%

7% 4%

18%

39%

24%
Operations Other Engineering Customer Service Information Technology Maintenance
Note: See Question 6, Appendix C for additional detail.

Defining analytics and grid analytics

Before we get too far down the path of grid analytics, its important to revisit the basic denition of analytics. Analytics are technologies, services and processes that enable utilities to transform data into actionable insights. This transformation includes four key areas: Collecting, managing, cleaning and storing data Extracting and analyzing data Reporting analysis results Making decisions and taking action

Figure 7. Respondents level of responsibility

15%

40%
Manager/supervisor

45%
Technical/staff Executive

Note: See Question 6, Appendix C for additional detail.

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Figure 8 summarizes the utility analytics denition in terms of functions, technologies and business applications, and the roles of people and process. Note that we divide analytics functions into three areas: grid analytics, customer analytics and other analytics. In this report, we focus on the grid analytics area. At a high level, the grid analytics subset enables utilities to ensure better planning, design, construction, operation and maintenance of utility transmission and distribution networks. These analytics applications do not include real-time grid control systems, including distribution automation, substation automation and SCADA. However, data generated from these control systems can be and often are used for analytics applications. As with smart grid, folks in the industry are quick to tell us that grid analytics, in some

form or another, have been around for years. Yes, there have been various grid automation and analytics eorts out there, but grid analytics today are moving us toward a new level of sophistication and complexity. In the beginning Utilities have taken on dierent methods to optimize their grid operation and assets for years. On the grid optimization side, utilities have used SCADA systems, distribution automation and energy management systems, but those systems focused more on control. For example, take SCADA, which has been around since the 1960s when simple input and output devices remotely monitored operations in industrial applications. The rst signicant deployments of distribution SCADA began in the late 1980s and early 1990s when companies could deliver economical SCADA systems on low-cost hardware architectures. These systems helped utilities control the grid in near real-time, but they werent meant

to store large amounts of information for analysis purposes, and still relied on human operator interface to make decisions. For asset optimization, indeed utilities have operated asset management systems for a long time. However, these systems primarily operated as information repositories for assets. These systems maintained a record of individual assets for data points such as acquisition cost, original service life, remaining useful life, physical condition, and repair and maintenance activities. Maintenance practices primarily focused on time-based maintenance, or performing maintenance on assets at regular intervals. However, many utilities realized that assets rarely fail in a statistically predictable fashion. Utilities then started moving toward condition-based maintenance, or monitoring an asset to determine its current condition. This task is dicult, though, without connections between asset management systems and the real-time data available through control and monitoring systems, such as SCADA and energy management systems. How things are changing Todays grid analytics applications build upon these grid control and asset management foundations by increasing automation in decision-making, improving connections among data sources and, perhaps most importantly, oering better predictive capabilities. Diving a little bit deeper, as you can see in Figure 9, we segment these increasingly sophisticated analytics into two key areas: Asset optimization: Analytics that assist with optimizing the performance and reliability of grid assets. This area includes categories such as

Figure 8: Utility analytics definition

Collected data

Grid analytics Hardware

Customer analytics

Other analytics

ANALYTICS

Software Services Process People

Actionable insights

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transformer management, substation management, and overall transmission and distribution asset management. Grid optimization: Analytics that assist with optimizing the operation of the grid to minimize power losses and maximize eciency and quality. This area includes categories such as outage management, system modeling, power quality optimization, advanced distribution management, and analytics for real-time applications. Table 1 denes each of these asset optimization and grid optimization categories.

Figure 9: Key grid analysis areas

Asset optimization
Transformer management Substation equipment management

Grid optimization
Outage management

System modeling

Overall transmission and distribution asset management

Power quality optimization

Advanced distribution management Analytics for real-time network operations

Table 1: Grid analytics sub-segment denitions

Asset optimization Transformer management Substation equipment management Analytics that monitor transformer health, diagnose or predict transformer problems, and assist utilities with prioritizing and planning for their transformer eet maintenance and replacement needs. Analytics that monitor substation equipment health, diagnose or predict substation equipment problems, and assist utilities with prioritizing and planning for their substation equipment maintenance and replacement needs. Analytics that monitor T&D asset health, diagnose or predict T&D asset problems, and assist utilities with prioritizing and planning for their T&D asset maintenance and replacement needs. These T&D assets include any equipment that is not inside the substation fence and not a transformer. Analytics that assist with the identication of power outages and restoration of power. Major functions include locating outages, identifying source(s) of outages, prioritizing restoration eorts, estimating restoration times, and managing crews assisting in restoration. Analytics that model transmission and distribution systems to assist utilities with designing and conceptualizing new grid systems and components, and understanding how those changes will impact existing networks. Analytics that improve power factor, reduce technical losses, minimize power losses, reduce energy consumption through voltage reduction, reduce monthly peak load charges, and evaluate present peak load system design. Applications include volt/voltampere reactive (VAR) optimization (VVO) and dynamic voltage optimization. Analytics that oer real-time operational analysis and optimization functions for the distribution network. These analytics can cover a variety of areas including, but not limited to, distribution state estimation, crew management, fault location and isolation, service restoration, load allocation, predictive feeder load ow/peak planning, switch order management, and price-sensitive load modeling. Systems can also include electric vehicle, microgrid and distributed generation support. Other analytics that support real-time network operations, including real-time power dispatch.

Overall transmission and distribution asset management Grid optimization Outage management

System modeling

Power quality optimization

Advanced distribution management

Analytics for real-time network operations

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Report contributors H. Christine Richards Lead analyst Mike Smith Principal-in-charge Guy K. Anderson Analyst Kim Gaddy Analyst