Balancing the Reliability Crossover: Investing in Last-Mile Infrastructure to Enhance Grid Resilience and Reduce Operating Costs

By Dave Herlong
Ubicquia Chief Operating Officer

The electric grid is often called the world’s largest and most complex interconnected machine. This machine touches every aspect of our lives. It’s primarily invisible until the lights flicker or go out. And while it may be inconvenient for most of us, these flickers and outages can wreak havoc on hospitals, factories, communications systems, and data centers.

Even momentary flickers can shut down a manufacturing process or take down an MRI system. These hiccups and outages occur primarily in the last-mile connections to homes and businesses, impacting critical services like hospitals, water systems, and communications. That last mile, the distribution infrastructure, is where 90% of outages occur and where increased investment will yield significant returns.

The Reliability Crossover: A Call for Strategic Investment

In terms of investing, utilities have spent billions upgrading and hardening generation and transmission systems to make the massive blackouts, which impacted entire cities and event states, a thing of the past. These investments have paid off with fewer large-scale outages and reduced operating expenses in the generation and transmission segments of the grid.

The Bipartisan Infrastructure Bill grants have also provided billions for increasing generation and transmission capacity to meet growing demands and harden the grid against severe weather across transmission lines, substations, and distribution feeders. Yet, the last-mile distribution systems have not seen the same level of investment.

This last mile of this complex interconnect machine to the meter has felt the impact of lower capital investment with larger numbers of outages and higher operating expenses (OPEX) due to restoration and maintenance costs. While fewer customers are impacted, the pain is felt across communities by residential customers and businesses.

I refer to this imbalance between heavy capital investment (CAPEX) in generation and transmission infrastructure, and the corresponding rise in operating expenses and outages in the last mile, as the reliability crossover. Figure one illustrates that while large-scale outages have decreased, OPEX related to last-mile infrastructure has surged due to increased restoration costs and frequent outages. Figure two details the impact of the crossover.

Closing the Gap with Smart Transformer Technology

Utilities have made investments in last-mile infrastructure. They’ve spent a considerable sum undergrounding lateral lines and installing smart meters in homes and businesses, engaging customers in understanding and managing their power consumption.

Utilities have placed power quality meters at critical customer locations to watch for electrical issues, such as sags, which can impact operations. Line sensors, fault detectors, and automatic restoration switches have been placed throughout the distribution network. Yet, reliability and visibility gaps remain because one of the essential elements of the last mile, the distribution transformer, remains unconnected and invisible.

Sitting on poles, on the ground or underground, between the substation and the meter, these silent workhorses step down high voltage electricity to make it useable for homes and businesses. Yet they are maintained on a set and forget or run to failure mode. With a history of high reliability and longevity, this model worked almost too well.

A 2020 U.S. Department of Commerce study found that the average age of in-service transformers was 38 years, which is near or even past design life. The Electric Power Research Institute (EPRI) estimates that grid transformation and renewable energy integration may further shorten the lifespan of specific transformers or cause capacity deratings, straining available capacity.

Post-pandemic supply chain challenges have dramatically increased the cost of new transformers and more than doubled delivery lead times. Utilities are now paying more attention to their distribution transformers and how they can optimize their use, extend their lifespan, ease DER integration, and address the massive demand increase of data centers, crypto mining, and next-generation manufacturing.

Shifting Investment to Unlock Business Value Through Advanced Analytics

Addressing changing and increasing demand will require investments in generation and transmission capacity while reducing costs and outages in the distribution infrastructure to ensure reliable, high-quality power delivery. Achieving this goal requires a shift in the reliability crossover.

Utilities can recognize significant operational and cost benefits by investing in making their distribution transformers smarter with advanced sensor and communications technology and data science. A substantial amount of grid data can be collected from the transformer and processed through machine learning to gain visibility into load profiles, transformer health and longevity, and grid issues such as faults, transients, and sags, to name a few.

Connecting distribution transformers delivers insights about what’s happening from the substation to beyond the meter. Other data, such as weather, satellite and drone imagery, and GIS, can be integrated to paint an even more complete picture.

Integrating other data sets delivers analytics that matter and the ability to measure what matters to reduce outages and OPEX. Just a small sampling includes:

• Vegetation encroachment
• Fault detection and isolation
• Power diversion and theft
• DER integration and unplanned loads (such as EV charging)
• Sags and swells
• Oil leaks
• Transformer health, performance, and inventory (outage predictions)
• Digital inspection of transformers
• Location of damaged transformers and poles

Figure three above demonstrates how correlating transformer data and other data sources delivers business value with a comprehensive view of the grid that pinpoints problems before they become outages or impact a customer’s business operations. That value is vastly increased in storm preparation, response, and recovery. The list is only limited by the development of use cases, machine learning, and data science.

Boosting Reliability and Customer Satisfaction

Shifting capital expenditures to the last mile, particularly distribution transformer monitoring, can balance the reliability crossover and reduce operating expenses by replacing physical inspections and scheduled vegetation trimming with digital inspections. Condition-based maintenance and upgrades can eliminate unplanned outages and reduce truck rolls while increasing customer satisfaction.

Vital power quality elements such as load balancing, instant notification of sags or transients, and harmful harmonics enable utilities to increase satisfaction ratings with their commercial and industrial customers. Having accurate and timely insights improves planning for expansion and adding new processes and encourages a strong partnership with business customers. For example, load and power quality data can become essential as utilities negotiate rates and forge deeper customer relationships in response to the rapid growth in data centers.

Transforming the Reliability Crossover

Utilities are at a pivotal moment where shifting CAPEX towards last-mile distribution infrastructure, particularly through smart transformer investments, can address the reliability crossover. This strategic reallocation will not only reduce operating costs but also improve customer satisfaction by minimizing outages and ensuring high-quality power delivery. As the grid evolves, advanced analytics and machine learning will play an increasingly vital role in maintaining grid reliability, meeting demand, and fostering strong partnerships with business customers.

This blog is part of the series Grid Resiliency in a Changing Energy Landscape, written by Dave Herlong. Read the first article in the series: Grid Management Ensures Stability During Disasters – and Everyday

About the Author
Dave Herlong

As Chief Operating Officer at Ubicquia, Dave Herlong oversees the Smart Lighting, Smart Grid, and Public Safety business segments. He brings almost 30 years of experience from Florida Power & Light Company (FPL), where he held leadership roles in Distribution Operations, Construction, Streetlights, Vegetation, Smart Grid, and Cyber Resiliency. As Senior Director of FPL's Control Center and later as Executive Director of Smart Grid and Innovation, Dave was instrumental in modernizing the U.S. electricity delivery infrastructure. He is a five-time U.S. patent holder, a certified Six Sigma Black Belt, and holds an Executive Certificate in Strategy & Innovation from MIT.