If nothing else, the COVID-19 pandemic has reinforced the critical importance of accurate data sets and sophisticated computer modeling in planning, preparing and reacting to dire scenarios. In the utility sector, where extreme weather events have always posed a large and growing risk, data analysis and modeling are emerging as essential tools to help direct investment toward asset hardening as an effort to stay ahead of the effects of climate change.
Modeling New Approaches in Florida
Perhaps no region of the country is more attuned to weather threats than Florida and utilities there have long been engaged in programs to make their systems more resilient.
Now, thanks to an advanced Storm Resilience Model designed by our team, we are testing and proving important new ways to help Florida’s utilities both reduce system restoration costs and shorten the time customers are without power. By leveraging detailed utility and non-utility data sets, we have the ability to take a whole new approach that promises to develop customer centric multi-billion-dollar capital programs for utilities as well as other critical infrastructure industries.
Sophisticated data analysis made possible by computer modeling technology can provide unparalleled opportunities to reduce costs of system restoration in the most rational way and to do so without overburdening those who ultimately pay the bills.
Uncertainty Modeling is at the Heart of Our Utility Methodology
Designed to calculate storm hardening benefits for the thousands of projects utilities could conceivably undertake, the model projects the range of potential impacts from future storm events based on decades of Florida storm data available from the National Oceanic and Atmospheric Administration (NOAA). These historical events are the basis to project future “worlds” of potential storm events with a range of intensities that can be expected over the next 50 years.
We know major storm frequencies, paths, and intensities are challenging to predict, especially with the growing impact of climate change. Further, we know the value of hardening investment is directly linked to types, frequencies, and impacts of major storms events. That’s why we have designed the model to provide the flexibility needed to account for a range of future scenarios where future risk levels are elevated both in terms of storm magnitude and frequency. These future “worlds” of major storm events could include all the possible combinations of storm events ranging from tropical depressions to category 5 hurricanes, higher frequency to lower frequency, greater impact to minor impact and everything in between. We believe investment decision making should include understanding a “world” that is extremely unfavorable, average, and generally favorable. This provides a more holistic view of the potential benefits of hardening different parts of the system; substations vs. transmission circuits vs. distribution feeders vs. distribution laterals.
Customer Focused Resilience Investment for Business Justification
Our core metrics for modeling benefits are storm restoration cost savings and customer minutes interrupted (CMI). By putting the customer at the center of all data analysis and programming, the ideal investment level and hardening investments can be identified and justified at all levels. Our model inherently thinks in terms of customer benefits and then defines the benefit on the basis of assets that impact service to the customers.
Proper scoping of each hardening project is critical because we must balance capital deployment efficiency with resilience benefit efficiency. There are many competing interests that need to be balanced. For example, we know that costs are minimized when all assets in one area are replaced together. However, we know assets with the best resilience benefits are spread across the entire system and could cost more to harden. Additionally, we know that if one weak link is not hardened, the outage risk is not mitigated and customers will still experience an outage.
Calculating Benefits of Resilience
We attempt to address two crucial questions: Just how much future system restoration cost can be avoided, and how much benefit to CMI can we achieve?
Based on projections of our model, total invested capital in a storm resilience program can be expected to reduce future restoration costs from 30% to 55% and CMI by approximately 32%. Our data enables us to calculate a monetized value of these savings and benefits based on the U.S. Department of Energy’s Interruption Cost Estimator, a widely used tool developed for the utility industry.
Our model is designed to pick the sweet spot of capital investment that yields the optimal benefits before crossing the point of diminishing return where additional investments result in relatively few benefits in terms of future restoration costs or reduced CMI.
This is likely to be the question of most significance to system planners, utility executives and regulatory authorities because it’s all about achieving the best balance of customer benefits and reduced future restoration costs.
Our model cannot be a substitute for actual human judgments on appropriate levels of investment in system resilience. Like any model, it is simply a tool designed to provide all the information within a range of scenarios. We believe utility planners and stakeholders better serve customers when electric system investments are organized to link a collection of assets that serve customers to projects and when those asset investments can enable calculated benefits for affected customers.
Much like planning for pandemic scenarios, it all boils down to how much risk is tolerable for utility customers and the cost to buy down that risk, given the near certainty of the next catastrophic event.
Power system resiliency is a key component of critical infrastructure development today.