Smart Circuits

Volt VAR Optimization

Looking up at the 120-foot pole at Elcona Station in Elkhart, Ind. The station is part of Indiana Michigan Power's volt var optimization project, a distribution automation system.

Applying technology on our distribution system allows us to monitor and more tightly control voltage, which creates energy and demand savings for customers. Known as Volt VAR Optimization (VVO), this technology has proven its technical viability in achieving demand and energy savings.

Typically, distribution lines deliver electricity at a voltage between 114 and 126 volts. Using the full range of voltage is common practice in our industry; it has been a way to ensure the strength of the voltage between the point of origin and the customer. But studies and our experience have demonstrated that optimizing voltage – delivering electricity at the lower end of the range – reduces customer energy demand and consumption, and thus lowers their bills.

VVO is a unique type of energy efficiency and demand reduction. Energy companies can identify the areas where the greatest increases in efficiency can be achieved, and it doesn’t require participation or behavioral change by customers. Upgrading the circuits with VVO control equipment enables other grid efforts to improve reliability and outage restoration with relatively small incremental investments.

To help us advance this technology, we signed a research and development agreement with Utilidata, a supplier of voltage optimization and digital automation systems for our industry, to accelerate the application of digital control technologies to high-value smart grid solutions. AEP is providing Utilidata access to our operations and planning expertise to help guide the next generation of grid applications. The goal is to bring innovation to the market faster.

This is an example of the mutual benefits of energy and technology companies working together to develop the modern grid. We need each other to test and standardize technologies that smoothly integrate with the grid and give customers the flexibility they want. By working together, we fulfill a mutual need and achieve a common goal.

Of the approximately 6,000 circuits on our system, we have deployed VVO on approximately 90 circuits. Because VVO is such an effective tool in achieving demand and energy savings, it can have an immediate negative impact on a company’s financial results since most of the costs associated with serving customers don’t decrease as customers use less electricity.

VVO is a next-generation energy efficiency program, and regulators should support it in the same way they historically supported other energy efficiency programs. This is simply another tool in the toolbox that enables AEP to create energy and demand savings for our customers. And there is widespread support for this approach.

In November 2012, the National Association of Regulatory Utility Commissioners (NARUC) supported the adoption and deployment of VVO. In addition, the National Electrical Manufacturers Association supports NARUC’s call to advance VVO technologies.

Within AEP’s service territory, the Michigan Public Service Commission and the Indiana Utility Regulatory Commission have approved plans for Indiana Michigan Power Company to qualify VVO as an energy efficiency program. The Oklahoma Corporation Commission has also approved VVO for the Public Service Company of Oklahoma. In February 2017, the Public Utilities Commission of Ohio approved AEP Ohio’s request to implement phase two of its smart grid program, which includes installing VVO on approximately 160 circuits. Pilots are also being planned in other AEP operating companies.

We are actively discussing the application of this technology with regulators and stakeholders and need their support to enable us to achieve the significant levels of energy and demand savings that we know are achievable without financial harm to AEP.

Smart Grid Growth

AEP began laying the groundwork for a modern grid with our smart grid initiative several years ago. Grid infrastructure modernization was needed to allow us to realize the many potential benefits of the smart grid. AEP continues to deploy smart grid technologies across our service territory, with regulatory support.

Smart meters – a critical step in creating a smarter network – establish a two-way data connection between AEP and our customers, which is increasingly important as smart appliances and devices need more information from the grid to function optimally. Having smart grid technology helps us to pinpoint sources of customer outages with greater speed and accuracy, improving outage restoration capabilities. Through 2016, we have installed more than 1.6 million smart meters across our system and plan to deploy nearly 900,000 additional meters in Ohio.

Distribution automation circuit reconfiguration (DACR) is an important grid technology that significantly improves reliability of the power grid through real-time monitoring and reaction. DACR continuously monitors for potential electrical faults and isolates portions of the network when a fault occurs, strategically rerouting electric loads to available circuits to maintain energy delivery to the majority of customers. This is known as a “self-healing” system.

A smart grid has the ability to locate and isolate problems within the network as they occur. With DACR, we can effectively split the network into islands that would be managed separately to prevent a larger event, such as cascading outages. As the repairs are made, controllers would prepare the island to rejoin the larger grid.

In February 2017, the Public Utilities Commission of Ohio approved AEP Ohio’s smart grid Phase 2 plan to install 894,000 smart meters and DACR and VVO equipment on 250 and 160 circuits, respectively, across the company’s service territory. The implementation of these technologies over the next six years will help us meet customers’ growing expectations of keeping the power flowing while having more information and choices to help them save money and energy.