Grid Assurance™ speeds grid comeback, addresses resiliency mandates

(Story by Stephen Ostrander)

AEP and seven other companies today announced formation of a company that will hasten responses to major events that damage the electricity grid by providing transmission-owning subscribers faster access to domestically stored vital equipment.

Joining AEP in signing a memorandum of understanding to create Grid Assurance™ are affiliates of Berkshire Hathaway Energy, Duke Energy, Edison International, Exelon, Eversource Energy, Great Plains Energy and Southern Company.  Grid Assurance filed a petition (declaratory order) with the Federal Energy Regulatory Commission (FERC) June 9 seeking confirmation that the new company can be part of a utility strategy to effectively address grid resiliency mandates.

Grid Assurance will own and provide subscribing utilities access to a domestic inventory of vital spare transmission equipment, such as transformers and circuit breakers for substations, whose replacement requires lengthy lead-times.

Grid Assurance, a limited liability company, will offer subscribers a cost-effective solution for responding to prolonged transmission outages after events such as natural disasters, terrorist or criminal attacks, cyberattacks or geomagnetic and solar storms.

“The electric power industry takes very seriously its responsibility to provide a safe, reliable and affordable electricity supply,” said Scott Moore, vice president of Transmission Engineering and Project Services who serves as executive sponsor of Grid Assurance. “This is a great example of our industry’s continued commitment to work together with governmental agencies to enhance the resiliency of its critical infrastructure.”

Benefits of Grid Assurance

Grid Assurance will own and provide subscribing utilities access to a domestic inventory of vital spare transmission equipment, such as transformers and circuit breakers for substations, whose replacement requires lengthy lead-times. For example, the typical lead-time for production and delivery of a large transformer is five to 16 months,* partly due to its probable manufacture overseas and transportation issues. In 2010, about 85 percent of the nation’s demand for power transformers (60 MVA and above) was met by foreign producers.**

To speed delivery to subscribers the company will store and maintain its inventory of spares in strategically located domestic warehouses and provide logistical and transportation services. Compared to “going it alone,” Grid Assurance subscribers will enjoy lower-cost grid recoveries because of faster access to critical equipment, economies of scale, increased buying power, and long-term relationships with vendors.

Grid Assurance will expand the existing inventory of spare equipment in the U.S. In April, the U.S. Department of Energy (DOE) reported, “Key industry sources have identified the limited availability of spare LPTs (large power transformers) as a potential issue for critical infrastructure resilience in the United States.”*

Assuring grid resiliency

Grid Assurance addresses vulnerabilities in the nation’s grid emphasized in the recent DOE report.* The DOE called transmission transformers one of the grid’s “most vulnerable components.” Current grid protections, the report added, “….may not be adequate to address the security and reliability concerns associated with simultaneous failures of multiple high-voltage transformers.”

Grid Assurance services will complement the Edison Electric Institute’s existing Spare Transformer Equipment Program (STEP), which provides utilities transformers of limited voltages after a presidential declaration of a national emergency caused by terrorism. Beyond that, Grid Assurance will offer subscribers equipment (transformers, circuit breakers and other items) from an inventory matching their needs after a broader spectrum of qualifying events.

Overcoming hurdles

Grid Assurance’s action at FERC addresses potential regulatory uncertainties that could be an impediment to prospective utility subscribers. In its declaratory order, Grid Assurance asked the federal regulatory body to acknowledge that its service is “a permissible element of a mandatory physical security plan” required by the North American Electric Reliability Corporation, specifically reliability standard CIP-014-1.***  Grid Assurance asked FERC to act on its petition within 60 days.

Subscription is available to any transmission owner or transmission developer in the United States, including investor-owned utilities, government-owned utilities, rural electric cooperatives and merchant transmission companies.

Contingent on regulatory approvals, Grid Assurance anticipates accepting subscribers and identifying inventory in 2016.

Did you know?

Weather-related outages cost the U.S. economy an estimated $20 billion to $55 billion annually.*

A report by Lloyds of London estimates that a large geomagnetic disturbance event could cost more than $2 trillion and lead to disruptions lasting up to two years.**

Sources

* U.S. Department of Energy, Quadrennial Energy Review: Energy Transmission, Storage,
and Distribution Infrastructure, April 2015. References of this report that appear in the text also can be found in the Grid Assurance declaratory order.

**Grid Assurance Petition for Declaratory filed at FERC on June 10, 2015

***NERC Reliability Standard CIP-014-1 requires utilities to enhance physical security measures for the most critical bulk-power system facilities and lessen the overall vulnerability of the system against physical attacks. The standard becomes effective October 1.