RESEARCH REPORT Executive Summary: Asset ... Elberg Senior Research Analyst Bob Lockhart Research...

Richelle Elberg

Senior Research Analyst

Bob Lockhart

Research Director

Executive Summary: Asset Management and Condition Monitoring Grid Sensors and Software Solutions for Transmission and Distribution Networks: Global Market Analysis and Forecasts

NOTE: This document is a free excerpt of a larger report. If you are interested in purchasing the full report, please contact Navigant Research at [email protected].

Published 1Q 2014

RESEARCH REPORT

Asset Management and Condition Monitoring

©2014 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system, or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

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Section 1 EXECUTIVE SUMMARY

1.1 Overview

The concept of asset management is evolving rapidly for all industries, but particularly for electric utilities deploying smart grid technology. In the past, asset management within a utility may have meant something as simple as a spreadsheet populated with asset counts, purchase dates, expected life, and suggested maintenance schedules. Today, the notion of asset management has broadened dramatically. Asset management can be interpreted to include the management of intangible assets, like human capital and information technology (IT) resources, and it extends beyond grid assets to include vehicle fleets, buildings, and corporate equipment, such as computers and communications networks.

Within the power grid, asset management for most utilities today is handled with what is commonly called a run-to-fail strategy. Particularly in the distribution network, where asset value is generally low and failure is not considered as disastrous as in the transmission network, many utilities have not been motivated to incorporate sensing or monitoring technology into their networks – despite the growing availability of new solutions. Many of these devices and solutions have been relatively expensive and, for regulated utilities, developing a defensible return on investment (ROI) analysis or rate case has been challenging. Only now are prices for sensing and monitoring devices falling to the point where a credible economic case for deployment can be made. To date, the business case for asset management and condition monitoring (AMCM) solutions has been utility- or situation-specific.

That said, with the advent of the smart grid – and the deployment of communications networks that enable advanced metering infrastructure (AMI) and distribution automation (DA) programs – the inclusion of sensing or monitoring is starting to make more economic sense. Furthermore, the benefits of more refined grid operations are increasingly recognized, not only by financial stakeholders, but also by regulatory bodies concerned with electric rates for customers and the reliability and efficiency of the power grid overall.

As such, asset management in 2014 is often discussed in conjunction with condition monitoring, which then expands to include topics like analytics, condition-based maintenance (CBM), and predictive maintenance. AMCM solutions encompass physical devices (sensors, intelligent electronic devices [IEDs], smart meters, etc.) that may share real-time or near real-time data with the operations center. AMCM solutions also include software solutions like asset management systems (AMSs) and, increasingly, analytics solutions that draw on AMI, DA, AMSs, supervisory control and data acquisition (SCADA), and data from other systems. Ideally, all of these solutions work in concert to provide management with a holistic view of the current and expected performance of the grid and its critical components.

In short, AMCM is a large and growing topic that is undergoing a period of rapid change. For electric utilities faced with aging infrastructure, aging (and retiring) personnel, an increasingly



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two-way grid, and increased pressure for not only better efficiency and reliability, but also profitability, better AMCM may prove to be indispensable.

In this report, Navigant Research describes a variety of AMCM solutions and where they are needed in the grid. Significant market drivers and applications are discussed and challenges to deployment are outlined. Key vendors are profiled and several utility deployment case studies are examined. Finally, the markets for condition monitoring sensors in the grid and asset management software solutions, including asset-management-as-a-service (AMaaS) and analytics, are forecast through 2023. Sensor forecasts are segmented by location in the grid, including transmission and distribution (T&D) substations, transmission lines, distribution lines, and distribution transformers.

1.2 Key Trends and Challenges in AMCM

Despite great promise and attention being received in the market today, AMCM solutions are not widespread, nor are there any true standout solutions. The market is virtually greenfield (beyond transmission substations) and vendors and utilities are working hard to understand when and where AMCM investments make the most sense. Navigant Research noted the following key trends and challenges in its research of the AMCM market:

» Sensor penetration today is very low in the grid, with the exception of in transmission substations. Even for high-value assets like large power transformers, the penetration of sensors that monitor a range of characteristics, such as dissolved gases or temperature, is estimated at less than 20% in the United States and Europe. In other regions, penetration is even lower.

» Investment is occurring only where the asset being monitored is very high value (e.g., large transformers) or on particularly troublesome circuits/feeders. The business case is not yet clear for the entirety of the distribution network and all of the equipment found there. Yet, as sensor prices fall and reliability and efficiency become higher priority for utilities and regulators, willingness to invest is expected to grow.

» Sensor technology remains relatively expensive and in the distribution network in particular, a run-to-fail mentality persists. Many utilities today still consider this a valid operating model, particularly where communications networks are absent from the grid. As communications capabilities proliferate, AMCM will become more attractive as an incremental, value-add solution.

» Most AMSs available today were not designed for condition-based monitoring. New data provided by sensors in the grid (including smart meters and some DA devices) is being pulled into software solutions that were originally designed for a planned maintenance program rather than a dynamic, condition-based maintenance program. In many cases, newly available data is not yet being leveraged to its full potential, though newer AMSs support applications like conservation voltage reduction (CVR) that can create value. Some installed AMSs, however, may not be equipped to handle the volume and type of data provided by new sensors and grid visibility.



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» Asset health centers and managed solutions are being offered by a growing number of grid vendors and service providers. Particularly for smaller utilities, such outsourced solutions may prove attractive. AMaaS is gaining traction, conceptually if not in practice, though concerns over data security remain.

» Operational silos within utilities remain an obstacle to the full promise of emerging AMCM solutions. In order for utility management to achieve the holistic view noted above, true information and operational technology (IT/OT) convergence must occur, with AMSs and analytics programs drawing data from and sharing it across departments ranging from generation down to the meter/retail groups.

» Operations staff may not trust the data provided by sensors in the grid. Control room personnel and managers in charge of asset planning, field crews, and inventory will have to grow comfortable with the output from both physical sensing and analytics solutions, particularly for predictive maintenance, in order for the full benefits of AMCM solutions to be achieved.

» AMCM is getting much attention in North America and Europe, but other regions have other priorities today. Financial pressures in the United States and burgeoning distributed generation (DG) in Europe give countries in these regions greater motivation to explore AMCM solutions.



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1.3 Market Forecast

Navigant Research forecasts that the global market for AMCM devices and solutions will more than triple between 2014 and 2023 to nearly $6.9 billion, with nearly half of the revenue generated by software solutions. On a cumulative basis, the market for AMCM devices and solutions will exceed $49 billion through 2023. The market for distribution network devices is expected to grow particularly rapidly, as is the market for dynamic line rating (DLR) sensors for transmission networks.

Chart 1.1 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, World Markets: 2014-2023

(Source: Navigant Research)

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

($ M

illio

ns)

Software and Analytics

Sensing Hardware



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Section 8 TABLE OF CONTENTS

Section 1 ........................................................................................................................................................... 1

Executive Summary .......................................................................................................................................... 1

1.1 Overview ............................................................................................................................................ 1

1.2 Key Trends and Challenges in AMCM .................................................................................................. 2

1.3 Market Forecast ................................................................................................................................. 4

Section 2 ........................................................................................................................................................... 5

Market Issues .................................................................................................................................................... 5

2.1 Overview ............................................................................................................................................ 5

2.1.1 The Evolution of Asset Management and Maintenance ................................................................... 5

2.1.2 Asset Management, Condition Monitoring, and Condition-Based Maintenance ................................. 6

2.1.2.1 Sensors ................................................................................................................................... 7

2.1.2.2 Asset Management Systems, Analytics, and Predictive Maintenance .......................................... 7

2.1.2.3 Asset-Management-as-a-Service .............................................................................................. 8

2.2 Market Drivers .................................................................................................................................... 8

2.3 Market Challenges ............................................................................................................................. 10

2.4 Applications ...................................................................................................................................... 10

2.4.1 Failure or Outage Reporting ......................................................................................................... 10

2.4.2 Fault Location, Isolation, and Service Restoration ......................................................................... 11

2.4.3 Dynamic Line Rating .................................................................................................................... 11

2.4.4 CVR ............................................................................................................................................ 11

2.4.5 Non-Technical Loss Prevention .................................................................................................... 12

2.4.6 Intermittent Renewable Energy ..................................................................................................... 12

2.4.7 EV Charging ................................................................................................................................ 12



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2.4.8 Fleet and Field Crew Management ............................................................................................... 12

2.5 Regional Drivers for AMCM ................................................................................................................ 12

2.5.1 North America ............................................................................................................................ 12

2.5.1.1 AMCM Deployment Case Study: American Electric Power ......................................................... 13

2.5.1.2 AMCM Deployment Case Study: Consolidated Edison ............................................................... 13

2.5.2 Europe ........................................................................................................................................ 14

2.5.3 Asia Pacific ................................................................................................................................. 14

2.5.4 Latin America .............................................................................................................................. 14

2.5.5 Middle East & Africa .................................................................................................................... 15

Section 3 .......................................................................................................................................................... 16

Technology Issues ........................................................................................................................................... 16

3.1 Power Grid Overview ......................................................................................................................... 16

3.2 Sensing and Measurement in the Grid ................................................................................................ 18

3.2.1 Physical Monitoring ..................................................................................................................... 18

3.2.2 Electrical Monitoring .................................................................................................................... 19

3.2.3 Chemical Analysis ....................................................................................................................... 19

3.2.4 Self- or Remote-Powered Devices ................................................................................................ 20

3.2.5 Emerging Technologies ................................................................................................................ 20

3.3 AMCM in the Transmission Network ................................................................................................... 21

3.3.1 Transmission Substations ............................................................................................................ 21

3.3.1.1 Transformers .......................................................................................................................... 21

3.3.1.1.1. Bushings ........................................................................................................................ 22

3.3.1.2 Current Transformers and Voltage Transformers ....................................................................... 22

3.3.1.3 Relays/Intelligent Electronic Devices ........................................................................................ 22

3.3.1.4 Circuit Breakers ...................................................................................................................... 22



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3.3.1.5 Batteries ................................................................................................................................. 23

3.3.2 Transmission Lines ...................................................................................................................... 23

3.3.2.1 Synchrophasors/Phasor Measurement Units ............................................................................. 25

3.4 AMCM in the Distribution Network ...................................................................................................... 25

3.4.1 Distribution Substations ............................................................................................................... 26

3.4.2 Distribution Lines/Feeders ........................................................................................................... 27

3.4.2.1 Distribution Transformers ........................................................................................................ 28

3.4.2.2 Reclosers ............................................................................................................................... 29

3.4.2.3 Sectionalizers ......................................................................................................................... 29

3.4.2.4 Fault Indicators ....................................................................................................................... 30

3.4.3 LV Networks ................................................................................................................................ 30

3.4.3.1 Smart Meters .......................................................................................................................... 30

Section 4 .......................................................................................................................................................... 32

Key Industry Players ........................................................................................................................................ 32

4.1 Overview ........................................................................................................................................... 32

4.1.1 ABB ............................................................................................................................................ 32

4.1.2 Alstom Grid ................................................................................................................................. 33

4.1.3 Ametek Power Instruments ........................................................................................................... 34

4.1.4 AT&T Wireless ............................................................................................................................ 34

4.1.5 Capgemini ................................................................................................................................... 35

4.1.6 Cooper Power Systems ................................................................................................................ 36

4.1.7 GE .............................................................................................................................................. 36

4.1.8 GRIDiant ..................................................................................................................................... 37

4.1.9 GridSense ................................................................................................................................... 37

4.1.10 IBM ............................................................................................................................................. 38



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4.1.11 IntelliSAW ................................................................................................................................... 38

4.1.12 OptiSense Network ...................................................................................................................... 39

4.1.13 S&C Electric ................................................................................................................................ 39

4.1.14 Schneider Electric ....................................................................................................................... 40

4.1.15 Schweitzer Engineering Laboratories ............................................................................................ 41

4.1.16 Sentient Energy ........................................................................................................................... 41

4.1.17 Siemens AG Energy Sector .......................................................................................................... 42

4.1.18 Silver Spring Networks ................................................................................................................. 42

4.1.19 Tollgrade Communications ........................................................................................................... 43

4.1.20 Verizon Wireless ......................................................................................................................... 43

4.1.21 Other Industry Participants ........................................................................................................... 44

Section 5 .......................................................................................................................................................... 46

Market Forecasts.............................................................................................................................................. 46

5.1 Introduction ....................................................................................................................................... 46

5.2 Market Forecast Methodology ............................................................................................................ 46

5.3 Global Market Outlook ....................................................................................................................... 48

5.4 Regional Analysis .............................................................................................................................. 51

5.4.1 North America ............................................................................................................................. 52

5.4.2 Europe ........................................................................................................................................ 53

5.4.3 Asia Pacific ................................................................................................................................. 54

5.4.4 Latin America .............................................................................................................................. 55

5.4.5 Middle East & Africa .................................................................................................................... 56

5.5 Conclusions and Recommendations ................................................................................................... 56

5.5.1 Recommendations for Utilities ...................................................................................................... 57

5.5.2 Recommendations for Vendors ..................................................................................................... 57



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Section 6 .......................................................................................................................................................... 58

Company Directory .......................................................................................................................................... 58

Section 7 .......................................................................................................................................................... 61

Acronym and Abbreviation List ....................................................................................................................... 61

Section 8 .......................................................................................................................................................... 65

Table of Contents ............................................................................................................................................. 65

Section 9 .......................................................................................................................................................... 70

Table of Charts and Figures ............................................................................................................................. 70

Section 10 ........................................................................................................................................................ 72

Scope of Study ................................................................................................................................................. 72

Sources and Methodology ............................................................................................................................... 72

Notes ................................................................................................................................................................ 73



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Section 9 TABLE OF CHARTS AND FIGURES

Chart 1.1 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, World Markets:

2014-2023 .................................................................................................................................... 4


2014-2023 ................................................................................................................................... 49

Chart 5.2 Annual Revenue for Power Grid AMCM Devices and Solutions by Region, World Markets:

2014-2023 ................................................................................................................................... 50


2014-2023 ................................................................................................................................... 51

Chart 5.4 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, North America:

2014-2023 ................................................................................................................................... 52

Chart 5.5 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, Europe: 2014-2023 ..... 53

Chart 5.6 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, Asia Pacific:

2014-2023 ................................................................................................................................... 54

Chart 5.7 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, Latin America:

2014-2023 ................................................................................................................................... 55

Chart 5.8 Annual Revenue for Power Grid AMCM Devices and Solutions by Category, Middle East & Africa:

2014-2023 ................................................................................................................................... 56

Figure 3.1 Sensing and Monitoring in the T&D Grid, North America ................................................................ 16

Figure 3.2 Examples of Dissolved Gas Analysis Devices ................................................................................ 20

Figure 3.3 Transmission Grid and Line Voltage in the United States ............................................................... 24

Figure 3.4 Example of an HV Line Sensor ..................................................................................................... 24

Figure 3.5 Examples of Distribution Network Sensors .................................................................................... 25

Figure 3.6 Examples of Distribution Feeder Devices ...................................................................................... 28

Figure 3.7 Examples of Pole-Top and Pad-Mounted Distribution Transformers, North America ........................ 28



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Figure 3.8 Traditional Fault Indicator ............................................................................................................ 30

Figure 4.1 AHC Information Flow and Analysis .............................................................................................. 33

Table 3.1 Physical Measurement and Applications ....................................................................................... 18

Table 3.2 Electrical Measurement and Applications ...................................................................................... 19

Table 4.1 Other Industry Participants ........................................................................................................... 44



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Section 10 SCOPE OF STUDY

This Navigant Research report examines the global marketplace for asset management and condition monitoring devices and solutions. The “Market Issues” section of the report outlines the drivers behind increased demand for visibility into the grid and smarter asset management solutions. Section 3, “Technology Issues,” describes the types of sensors and solutions available and where they are useful in the power grid. Market participants are listed and profiled in the Section 4, “Key Industry Players.” Finally, details on market sizing for 2014 to 2023, segmented by region and by device type/location in the grid, are provided in Section 5, “Market Forecasts.”

SOURCES AND METHODOLOGY

Navigant Research’s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Research’s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community.

Additional analysis includes secondary research conducted by Navigant Research’s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report.

These primary and secondary research sources, combined with the analyst’s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Research’s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients.

Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.



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NOTES

CAGR refers to compound average annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2014 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.



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Published 1Q 2014

©2014 Navigant Consulting, Inc. 1320 Pearl Street, Suite 300 Boulder, CO 80302 USA Tel: +1.303.997.7609 http://www.navigantresearch.com

This publication is provided by Navigant Research, a part of Navigant Consulting, Inc. (“Navigant”), and has been provided for informational purposes only. This publication is intended for the sole and exclusive use of the original purchaser under terms and conditions agreed to by the parties. This publication may not otherwise be reproduced, recorded, photocopied, distributed, displayed, modified, extracted, accessed, or used without the express written permission of Navigant. Navigant makes no claim to any government data and other data obtained from public sources found in this publication (whether or not the owners of such data are noted in this publication), and makes no express or implied warranty, guaranty, or representation concerning the information contained in this publication, its merchantability, or its fitness for a particular purpose or function. Any reference to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply an endorsement, recommendation, or favoring by Navigant. Navigant does not assume, and hereby disclaims, any liability that may result from any reliance on or use of any information contained in this publication, or for any loss or damage caused by errors or omissions in this publication. If you do not have permission from Navigant covering this publication, please refrain from accessing or using this publication. Please contact Navigant at [email protected] to obtain permission to use this publication.


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