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7 Reasons

Why GridInvestment Fail

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⊡7 Reasons Why GridInvestment Fail

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PitFall : Vendor/ Integrator businesscase analysis

Utility often rely on vendors or system integrator to provinvestment business system. Since these organization financial interest in moving project forward, a conflict-ofin inherent in this practice.

Recommendation : ngage third parties who has no finterest in the project to provide an unbiased financial evof the smart grid project

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PitFall : Absence o ris! analysis

!hange in wholesase power cost structure, uncertaincostumer demand response participation, and many othecan result in considerable uncertainty over estimated resmart grid invesment.

Recommendation : Smart grid business case analysisinclude ris" analysis associated with uncertain parametassumption,applied in the analysis. Scenario analysis help impact of uncertainty while value-at-ris" analysis ptraditional financial ris" analysis.

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PitFall : Failure to #uantiy uni#ueutility and costumer characteristic

#usiness case analysis often apply industry average parand estimaters that poorly represent actual utility characS$R! e%perience show that average cost& benefit parametpoor job of reflecting actual utility cost and benefit. #est

re'uires an objective evaluation of the business casavailable utility data.Recommendation  : ma"e sure that the business case e%plicity 'uantifies these benefits for your utility rathrelying on estimates from other utilities.

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PitFall : %ub&ective system integrator/'rime contractor selection(

%electing a system integrator/ 'rime contractoa''roving subcontractor based on name recogsales re'resentative) relationshi' or other sconsideration is dangerous(

Recommendation  : don*t automatically assume +big name, 'rime contactor or subcontractodeliver all 'roduct and service -ithout com'li.he smart grid is relatively ne- a'lication area th+sha!e out, non 'erorming com'anies both larsmall( hec! many reerence(

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PitFall : %ot-are 'erormance ailure(

Smart grid depend on software& () performance. (f your capability have not been successfully applied by several li"e your, proceed at you own ris". Software is notoriously to implement and modify for different application.

Recommendation  : ma"e sure that you tal" with softwarvendor whose application are semilar to yours to ensurdelivery and acceptable capabilities.

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Inade#uate 'ost2A3I im'lementationstrategies(

*any smart grid business plans rely heavily on post-+*( from costumer engagement& demand response, + anowever, program development and implementation planidentified and scheduled to limit implementation delays.

Recommendation : ma"e sure that post-+mi benefappropriately considered with program developmeimplementation plans clearly identified and scheduled implementation delays.

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Insu5cient utility due diligence(

)his last category is a catchall that capture all those thiutilities should consider including elements from some ofitem above. )here are li"ely to be option that are not offefavored proposal that should be considered.

Recommendation : each utility should retain an independent evaluation firm for its due deligence or develohouse team of smart grid project participant from the application areas who have responsiblility for assessievaluating.

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“THANK YOU

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