Building the Business Case for Electric System Resiliency with Innovation of Supply
By Helen Platis, Stantec
Customer expectations of their electricity supply are much greater than they were 10 or 20 years ago. What are called 100-year storms now happen with increased frequency, while the customer’s need for assured access to temporary power has grown from a few hours to a few days and beyond.
In late December 2013, an ice storm that struck parts of the United States and Canada produced freezing rain that caused extensive damage to electric transmission and distribution infrastructure. More than a million residential customers were left without power over the holidays, with countless commercial and industrial customers experiencing costly disruptions. It was déjà vu for those who had weathered the ice storm of 1998, and yet 15 years later, we were no better prepared.
For our industry, issues of security of supply, alternative power sources and going off the grid have become more than academic exercises. Throughout the last century, North Americans had the luxury of taking power for granted. Regulators defined indexes for reliability, and electric utility companies were consistently able to meet or exceed established targets. Safety of supply and reliability of the distribution network were never in question, so no thought was given to the cost of these services. But driven by the twin forces of increased threats to electric systems and rising customer expectations, demand for reliability is outstripping regulators’ standards. Developers are starting to see merit in providing alternatives, and customers are willing to pay a premium to have access to them.
Combined heat and emergency power (CHeP) helps achieve that safety of supply by combining elements of traditional CHP with district energy, renewables, storage and microgrid technology. Customers who required emergency back-up power have traditionally relied on diesel, with the expectation that it will run for a few hours. These systems are not intended to support operations for prolonged periods, and are not environment-friendly. Emergency power for commercial applications was intended to provide essential services such as hallway lighting and use of fire pumps, with the expectation that normal power would be restored in short order. Now we strive for sustained occupancy that goes beyond temporary emergency services—allowing for the use of elevators, in-suite lighting, heating/cooling and hot/cold running water. As customers’ needs evolve, the industry must find cost-effective and efficient ways to deliver on these requirements. CHeP is one of those alternatives.
How does one make the business case for this investment? As with most things, we need to think about customer needs (and, thus, the direction of the market), and plan accordingly. Retrofits are possible, but resiliency should be built into the system design from the start. So why should an end user decide on a significant capital expenditure like CHeP that may or may not be required in the event of a potential future emergency? First, we need to stop thinking in terms of periodic use. Integrating these systems into the supply mix for daily operations can reduce demand charges, offset commodity costs and reduce overall utility bills in residential, commercial, industrial and institutional applications. When the cost of dealing with a significant shutdown is avoided, the business case for making the capital investment becomes even more evident.
With unprecedented pressures on electrical infrastructure, the costs of failing to appropriately develop reliable alternative-power systems will prove much more compelling than the costs of implementing them.
Helen Platis is a vice president of client development in Stantec’s Power & Energy group.