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Aging assets: Why utilities need smarter solutions

Author:
Ted Zalucki
Published on: 
April 20, 2021

Utilities know that they need to take proactive steps for resiliency. In Canada and the United States, there is an urgent need to maintain aging facilities in the face of pressing issues like climate change and intensifying weather events. This is complicated by the constant pressure to reduce rates. If everything is getting older, and we need to spend less to keep rates low, that only means that reliability will certainly suffer. There are only so many efficiencies that can be achieved before things are at risk of not being done at all.

A 2020 report from the American Society of Civil Engineers reported that customers will experience $85 billion in annual losses from unreliable electricity, this is double the number reported in 2011, and likely even higher today given the massive change in how our world goes to work. The current situation in Texas is further proof that greater resiliency within utilities is needed more than ever before.  

Canada isn’t in a much better position either. Investment in Canada’s electrical grid was high in the 1970s and '80s, as power producers attempted to meet a surge in demand. However, this investment led to overbuilding and oversupply. While this helped keep the cost of electricity low for several decades, these facilities are now well past their prime, and they need significant investments to replace and repair them. What complicates things more is that we need to use the system we inherited from the past boom to also work for us in the current electricity market.

Following best practices like conducting regular asset assessments, examining supply chain sourcing, and planning for known risks, while also keeping costs to a minimum is a near-impossible feat. Reports suggest that Canada's power grid needs an annual $15 billion investment until 2030 to strengthen its infrastructure. We're already behind.

The truth is, no utility can afford to follow best practices like a power producer or user may be able to do with a much smaller volume of infrastructure. These tasks require human resources, budget, and resources that are often out of scope for utilities. Planning for resiliency usually takes a back seat to more pressing matters, like connecting the overwhelming number of DERs appearing on the network.

The result? Plans are written down but are not being followed. Simultaneously, systems installed in the fifties, sixties, and seventies aren’t getting any younger or more reliable. According to an analysis by Climate Central, major outages (affecting more than 50,000 homes or businesses) became ten times more common from the mid-1980s to 2012. Weather-related outages doubled between 2003 to 2012.

The scale and pace at which many utility assets are failing is a challenge for even the best-run facilities. It can feel almost comical in some ways, as if you’re fixing a leak in a pipe, only for another one to appear on the other side.

Fortunately, there is a solution: work smarter, not harder. Rather than running around putting out fires or throwing renewal dollars at the degrading asset-of-the-month, it’s essential to take a step back and develop a clear strategy to prioritize your investments according to needs and risk factors that align with your current circumstances. Plus, if utilities prioritized data management and analysis, they could have concrete facts and figures to support their price increase requests during rate filing periods.

Take asset management, for instance. Currently, there are no standardized criteria for assessing the health and condition of power system assets to determine their end of life and to support infrastructure maintenance decisions. As a result, utilities spend a ton of time, resources, and money during regulatory hearings, debating over utility or expert predictions, budgets and project scopes.

Now, what if you could employ a risk-based test to ensure that your available resources are being allocated toward assets that are in the worst condition or carry the most risk? At Engineered Intelligence Inc. (EII), we help utilities with automated technologies that perform Asset Condition Assessments (ACA) which offer valuable insights into an asset’s health. With this data, you can assess the asset’s effective age, its remaining useful life, and when it needs to be repaired, refurbished, or replaced. More importantly we automate the business justification for each of those decision alternatives.

We also know that utilities need to validate renewal investments during rate application cycles and illustrate how these improvements ultimately benefit their customers. In these scenarios, we help our clients work smarter by producing data-driven insights that will back up their empirical data assumptions. We also set them up for success by implementing easy-to-use forecasting and tracking tools that they can use to evaluate and report on future performance.

As assets continue to degrade, it’s more crucial than ever for utilities to plan for resiliency properly. However, it’s hard to do this work on a tight budget. That means that utilities need to show the impact that increased investment can have on the security and stability of often-dated infrastructure. And because your organization already needs more planners than you have, an automation that reduces the cost of planning can help you do more planning with less effort.

If you’re a utility leader stuck in the “too many declining assets, not enough budget” loophole, know that there is a way out. EII’s total lifecycle support solutions help utilities assess where maintenance is most optimally dispatched, all the way to outage optimization, to make the best use of their capital and resources.

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