Curbing Cooperative Consumer Costs with DLR

Although a critical asset base, in the US and elsewhere, electricity transmission infrastructure is struggling to keep up with a rapidly evolving market. Extreme weather events, the rise of distributed renewable generation, the roll out of electric vehicles, and the rise of data centres are among many factors that are having a massive effect on the operation of the transmission and distribution system, much of which is also ancient and in need of replacement. These factors are expected to become even more significant over time given the demands for greater electrification associated with the clean energy transition and the widely anticipated growth of power-hungry sectors such as AI.

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The net result is the pressing need for a huge increase in grid investment. According to the US Energy Information Agency (EIA), capital spending on the distribution system was the main driver behind increases in electricity spending over the last two decades, rising by 160% between 2003 and 2023. However, more than 20% of this increase occurred between 2022 and 2023 alone, as utilities spent some $50 billion upgrading equipment and installing new lines.  

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Former President Biden’s Investing in America agenda saw more than $30 billion from the Bipartisan Infrastructure Law and Inflation Reduction Act earmarked for transmission infrastructure for new and upgraded lines, including nearly $3.5 billion announced in late 2023 to strengthen grid reliability and resilience across 44 states.  

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At the same time as grid investment costs are rapidly increasing, the costs associated with poor grid infrastructure are also mounting. A recent report from S&P Global, for example, notes that cumulative day-ahead grid congestions costs in the US reached $11.6 billion in 2022, nearly double the expenditure of a year earlier. Ultimately, every last dime of this additional cost is borne by the end consumer.  

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The grid challenge for cooperatives

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With pressure mounting on all electric utilities to deliver enhanced performance and services while limiting the costs to consumers, electric co-ops and particularly rural co-ops are finding they are more exposed than larger more urban-focused entities. Electric co-ops account for more than a third of the US electric utility industry, serving more than 42 million consumers and millions of homes, businesses and schools across 47 states. Unlike larger profit-making investor-owned utilities, many electric cooperatives are entirely non-profit and are owned and governed by their customers. Indeed, many cooperatives owe their very existence to the fact that profit-making ventures see limited value and investor returns in serving rural areas and without cooperatives many such communities would still be without energy services. Utility co-ops don’t necessarily pay dividends but rather use any returns on their services to fund further infrastructure investments.

Given many of these cooperatives serve more sparsely populated rural communities the investment costs for grid enhancements weigh more heavily on individual consumers. For instance, rural communities, given their geographical spread, will typically rely on longer transmission lines which also have the potential to generate more pain points. Even incentive programmes such as the $10.5 billion Grid Resilience and Innovation Partnerships (GRIP) programme - which is designed to enhance grid flexibility and improve the resilience of the power system against extreme weather - will be unlikely to reach many rural entities. The cost impact on co-op customers is thus already substantial and is widely anticipated to grow sharply in the years to come.  

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The scale of network investment required under a business-as-usual approach is not only prohibitively expensive but also risks significant service disruptions given the extensive timeframes needed for grid enhancements to be completed. Faced with these challenging economic constraints while still required to manage the changing energy landscape, provide an effective service, and resist the increasing grid congestion costs, electric cooperatives are looking at smarter ways of managing their transmission and distribution assets in order to maximise their value while minimising the need for additional capital investment. One approach that is attracting significant traction is the use of Dynamic Line Rating (DLR).

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‍Uncovering hidden grid capacity

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While the costs of grid congestion are very real, capacity constraints may not be as grounded in reality as they at first appear. In fact, grids actually often have more capacity hidden in plain sight within established safety margins. These margins are based on the most extreme conditions to ensure reliability in all weathers and vary only on a seasonal basis using static assumptions on temperature and wind considerations. The ratings reflect the changing tensile strength and clearance requirements of transmission lines with higher temperatures and wind speeds reducing the physical transmission capacity. However, by more accurately assessing the transmission capacity under actual ambient conditions safety and reliability can still be assured but additional transmission capacity can also be delivered.  

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Known as DLR, this concept can deliver multiple consumer benefits. Energy bills typically include a cost associated with the energy consumed and the wholesale market price but this includes any function associated with congestion. A second component is related to infrastructure maintenance and any costs of expansion or enhancement. Installing DLR can allow more power to be pushed through an existing line under all but the worst weather conditions though which immediately reduces any potential grid congestion costs. Furthermore, by optimising the performance of existing assets under real time conditions, certain capital expansions may not even be needed. Whether building entirely new transmission lines or fitting new conductors to an existing corridor, both are costly and time-consuming endeavours which can take many years to complete. The outcome is future energy bills are simultaneously lowered by both a capital investment element and a capacity constraint element.

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Ampacimon, for example, deploys its patented sensors to deliver accurate measurements of ambient conditions that is then coupled with big data analytics and weather forecasting for precise asset optimisation. With wind and weather data and devices and software providing accurate real-time insights into line conditions we are able to provide instantaneous line ratings. It’s a model that can see power lines transport up to 40% more power than under standard operating conditions. While Dynamic Line Rating cannot necessarily eliminate all future grid investment requirements or capacity constraint costs, a nominal 40% reduction in such expenditures for consumers is substantial.

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A study in success

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One cooperative that is already benefitting from Ampacimon’s DLR system is Basin Electric Power. A non-profit generation and transmission cooperative founded in 1961, Basin serves some 3 million consumers across nine mid-Western states and owns and maintains more than 2,500 miles of high-voltage transmission lines. In 2024 Basin installed DLR capabilities to enhance its grid operations in northwestern North Dakota. Working in collaboration with Western Area Power Administration (WAPA), Basin installed 19 DLR devices on WAPA’s 75-mile-long Williston-to-Charlie Creek 230 kV line. The move allowed more power to be transmitted along this important transmission link without the need for additional investment. For perspective, Basin is also building two new 345 kV transmission lines and several substations in western North Dakota to maintain reliability which will cost roughly $500 million.  

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“By investing in initiatives like this DLR project, we are aiming to take full advantage of the transmission capacity of these facilities. The goal is to fully utilise the capability of the transmission system we have in place, maintain reliability, and to minimise congestion on our grid. The utilisation of that existing capacity ultimately helps keep costs low to maintain affordability for our members and rural America," said Jeremy Severson, Basin Electric’s Vice President of Transmission. He added: “Within days of installing the Ampacimon DLR system we saw significant capacity gains which equates to savings to our members”.

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More DLR functionality is also being installed with two additional line segments and 50 miles of existing line set to be monitored with thesystem. As Severson further noted: “We will see if there are more congested transmission facilities or other critical lines that could take advantage of this technology”. There are clear benefits. Towards the end of 2024, for example, Basin announced a planned rate increase of 6.5%, noting that among the primary drivers impacting its rates are load growth and investments in reliability including transmission.

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Regulators aim to build a better grid

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Recognising the benefits that Dynamic Line Rating can deliver, regulatory authority the Federal Energy Regulatory Commission (FERC) has introduced several rulings to ensure it is adopted by utilities across the US.

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Under FERC ruling 881, which passed in late-2021, transmission system operators are to consider solar heating during daylight to their hourly line ratings. These so-called Ambient Adjusted Ratings (AARs) requirements are a less sophisticated approach to line ratings than DLR – they don’t include wind characteristics or on location sensor data for example - but nonetheless are an important measure designed to unleash hidden transmission capacity. Transmission system operators must implement the FERC ruling no later than 12 July 2025, a deadline which is proving challenging for even the largest operators.

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More recently, in June 2024, FERC announced a draft Advance Notice of Proposed Rulemaking (ANOPR) to build on the ruling 881 and require transmission operators to use the more advanced DLR approach. The draft ANOPR proposes a framework of reforms that would require transmission line ratings to reflect solar heating as well as wind speed and direction for certain lines in windy and congested areas. While each transmission line is unique ‍typical capacity gains with AAR are about 5-10% while DLR often delivers around double that with about 20-40% gains.

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Given the regulatory imperative and the multiple critical drivers behind the need for grid enhancements, the role of DLR is certain to grow. The changing characteristics of the electricity sector mean that more accurate assessment of actual grid capacity based on real-time ambient conditions is a clear route to savings for electric cooperatives and their owner consumers. More grid capacity is available and without the need for lengthy and costly capital investments. Even the smallest cooperatives and transmission asset owners can benefit from optimised transmission assets. The value is hiding in plain sight.