Grid Resilience Solution

Keeping stores of dedicated critical transmission equipment to respond to high-impact, low-frequency (HILF) events is a best practice modeled after other successful inventory stockpiling programs including those of the healthcare, military, oil drilling and nuclear power industries.

Subscribers to Grid Assurance do not have to wait on rail operators or local and state authorities to approve a plan to move their assets. Knowing the exact location of the assets allows Grid Assurance and subscribers to develop over-the-rail and over-the-road plans that can be preapproved by railroad, state and local authorities to move the transformer from the rail siting location to the impacted site.

Grid Assurance has done all this work up front and has detailed playbooks with routes that have been approved. The routes are also reviewed every 12-18 months with the rail operators to ensure they are still valid and updated when necessary.

Grid Assurance maintains a secure inventory of equipment to provide certainty of availability and ensures assets are operational and can be expeditiously delivered to impacted sites. Grid Assurance pools the needs of multiple companies, which allows transmission owners to share in this dedicated inventory and reduce the cost for providing this necessary service.

Grid Assurance’s dedicated inventory, located at strategic and secure sites across the country, is stored away from potentially impacted sites. It is maintained to manufacturer’s standards, with pre-planned logistics that allow subscribers to confidently develop detailed plans for recovery following a significant grid outage.

Grid Assurance’s dedicated team of experienced professionals ensures all equipment is maintained, transportation plans are developed and approved, and performance drills are conducted to assure full execution capabilities at those times when execution is vital to grid restoration. The team is prepared to respond immediately to events and to provide dedicated assistance to subscribers throughout the deployment and delivery of assets.

Utilities typically maintain some operational spares to replace equipment that fails due to normal wear and tear. However, it is undoubtedly more expensive for transmission owners and their customers to individually stockpile multiple, million-dollar pieces of equipment to prepare for full recovery following a high-impact event, which occur infrequently, compared to pooling their needs with other companies. By sharing inventory, Grid Assurance subscribers’ access to secure, firm inventory costs up to three to five times less than capitalizing additional operational spares on their own.

A transparent, cost-based structure, modeled after typical FERC transmission tariffs, provides certainty and clarity for the cost of the equipment. FERC’s approval of the Grid Assurance Subscription Agreement also provides certainty of its prudency and cost recovery.

Grid Assurance provides certainty that equipment will be available when needed for significant grid outages that may encompass multiple sites. Equipment is maintained according to equipment manufacturer’s recommendations and is checked by vendors. Maintenance records are kept, and all assets come with a fully transferable manufacturer warranty.

Grid Assurance develops a common specification for each equipment class that envelops the existing needs of subscribers and seeks to achieve greater ratings standardization. Since subscribers know the exact characteristics of the spare equipment, they can pre-plan how it performs on their system.

Grid Assurance has developed tools that help a subscriber determine their sparing needs for a multi-site event. These needs are calculated based upon probability of events and replenishment times. We developed a model to determine the inventory levels that Grid Assurance needs to maintain to achieve a 97-98 percent service level. These models help our subscribers understand their needs and provide an analytical basis for the inventory levels that Grid Assurance holds.

Utilities are among the most capital-intensive industries. Utilities typically maintain some operational spares to replace equipment that fails due to normal wear and tear. In numerous cases it is economically prohibitive (for some utilities it may be as high as three to five times more expensive versus pooling assets¹) for a utility to stockpile multiple spare assets, (often costing millions of dollars each), to prepare for full recovery from significant grid outages. Utilities’ access to capital funds is often constrained and prioritizing the use of these constrained funds is typically focused on grid projects that support growth and/or reliability necessary for their rate paying communities. It is difficult to allocate scarce capital funds for high-impact, low frequency events (extreme weather, cyber-attacks, physical attacks, etc.).

Footnote:

¹ Factoring in elements such as Cost of Capital, Overhead Costs, Storage Charges, Inventory Charges, Insurance, IT Support, etc. can lead to annual inventory carrying costs as high as 15-20%. This equates to the “cost” of those materials doubling every five years. Given these spares may be held in inventory for 15 to 25 years, the cost of those assets increases 3 to 5 times over their life in inventory. Sharing “pooled” assets among numerous Grid Assurance subscribers reduces expenses per participant.

Grid Assurance supports the broadest range of significant grid outage events including extreme weather events, physical attacks, cyberattacks, forest fires, earthquakes, geomagnetic disturbances, electromagnetic pulses and acts of war or terrorism.