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Modern Grid Improvements Drawing Billions of Dollars

4 min read

In the utility industry, the ongoing pursuit of greater efficiency and reliability drives many large-scale capital improvements.

Technological advances allow utilities and operators to keep costs low to consumers, who typically pay for the projects through rate increases. Since 1990, the average cost of residential electricity in Arkansas has risen from 8.07 cents per kilowatt-hour to 9.59 cents in 2013, making it one of the cheapest in the country, according to the U.S. Energy Information Administration.

The state’s electrical grid and the infrastructure it connects with in other states have been bolstered by billions of dollars in improvements in recent years.

From new computer modeling to upgrading building materials to maximize efficiency, utilities and operators around the state are focusing on ways to modernize the grid.

Hugh McDonald, president and CEO of Entergy Arkansas Inc., said the company is in the middle of a planned $2.4 billion investment in capital improvements in generation, distribution and transmission projects, which began in 2014 and will run to 2017.

Those infrastructure projects include deploying improved technologies. McDonald pointed to new generators that are 30 percent more efficient than the older technology as an example of such innovations. The utility is also deploying more renewable energy, including a proposed 81-megawatt solar energy plant in Arkansas County.

“We’re much more heavily involved in promoting energy efficiency for our customers than we have been in our history. … When we’re planning for the long term, what our generation needs will be, necessary to meet the demand of our customers, energy efficiency is an important component of that,” McDonald said.

McDonald said Entergy is also building new substations around the state to keep up with demand, including facilities in El Dorado and off Lawson Road in West Little Rock. The utility expects to spend between $600 million and $650 million on transmission projects alone by 2017.

“What this ultimately does, the question of what’s in it for our customers, that is the ability to meet new demand, the ability to grow. … This will allow us to be able to serve the next Big River Steel whether that growth is in Entergy’s service territory or a municipal or co-op service territory,” McDonald said. “A stronger transmission, more reliable transmission grid, enables all of those territories to grow, benefits all of those territories whether we serve them or not.”

Severe weather has also played a role in Entergy’s grid improvements. The April 2014 tornado that struck Mayflower wiped out a substation there and required a complete rebuild. McDonald said the utility deployed all new technology at the facility, including the latest pole designs and breakers.

The utility’s membership in the Midcontinent Independent System Operator has also led to increased efficiency, with Entergy customers saving an estimated $46 million in its first year, the company announced last month.

Forward Thinking

Katherine Prewitt, the senior director of South Regional Operations at MISO, said the operator uses both real-time and long-term technologies to measure use and prepare for the future. Some tools MISO deploys can run 11,000 to 12,000 different contingencies, allowing it to plan for the future and deploy resources accordingly.

MISO also uses tools called synchrophasors, which collect data from hundreds of devices, 30 times per second, creating a detailed picture of usage trends.

“The power industry has never been seen as a sexy field … but what people don’t understand is just how much opportunity there is for innovation in the power industry with all the new technology — synchrophasors for example, all the wind power, solar’s getting a whole lot better,” Prewitt said.

Nick Brown, the CEO of Southwest Power Pool, said the regional transmission organization had set aside $8 billion in infrastructure projects for a 10-year period beginning in 2007. About half of those projects are already in service, while the rest are either under construction or nearing the construction phase.

Brown said SWPP also uses computer modeling to forecast demand, measuring generation, substations, loads and transmission lines. But he said that all of the industry also benefits from studies performed by the Electric Power Research Institute, which is based in Palo Alto, California.

EPRI was formed after a mass blackout in the northeast United States in 1965 and performs research and development on various aspects of electricity generation and distribution.

Brown said that besides the computer models that have “revolutionized” forecasting, utilities and operators now have improved designs for towers, insulators, substations and breakers.

Limit on Building

While utilities and operators tout advances in technology and the ability to roll out new building materials and designs, the cost and benefit to the consumer must be presented to state regulators for approval.

John Bethel, the executive director of the Arkansas Public Service Commission, said the commission reviews potential projects by weighing all of the impacts on consumers to “ensure investments are reasonable and cost effective.”

Brown said that while wind and solar energy have received more attention in recent years, and those projects receive praise from some proponents, he still believes consumers benefit from a variety of power sources. He said all generation sources, including coal, have a place in a “well-balanced” energy portfolio.

“The actual numbers prove it out that we’ve made tremendous strides in both energy efficiency and how to utilize distributed generation to benefit the utility and benefit end-use customers. But you need it all,” Brown said.

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