ROI - Financial Benefits of Using Power System Analytics for Mission-Critical Applications

September 13, 2012

Topics Covered

Circuit Breakers

Siemens USA

Conclusions

Stranded Capacity

Maintenance

Overview

Overview

Paladin Live Return on Investment: Overview The state-of-the-art practices for operation of critical power facilities have known – but unnecessary – limitations resulting in the loss of multiple millions of dollars per year

Human Error

Simulation Software

Stranded Capacity

Introduction:

Power Analytics will produce and sponsor four webinars in 2012. These will be supported by co-sponsors within the “Clean Tech Cluster” organizations in San Diego and Raleigh. The Raleigh cluster is new and is being organized by the Wake County Chamber of commerce. Each webinar will feature a panel of subject matter experts. The panel will be composed of four experts plus a moderator. This is a wide audience where we have different levels of expertise in specific areas. This webinar is an overview of how to measure the ROI for mission critical facilities.

The Problem: • Owners of critical power facilities do not use their full system

capacity

•No ability to monitor and measure real-time capacity limits

•Lack of hard facts drives caution, drives underutilization,

a.k.a. stranded capacity

•Consequence: Facility expansion occurs before needed,

eroding value of money

• Power system owners have no real-time means to optimize

energy usage

•Evaluating energy strategies requires laborious (costly)

engineering studies

•Operators closest to energy usage have no vehicle to assist

in cost reduction

•Consequence: Lack of real-time insight results in loss of

thousands per month

The Problem (cont’d):

• Power system owners do not have tools to prioritize, plan, and

practice maintenance actions

•Quantitative evaluation for criticality is limited, resulting in

unnecessary costs

•Available tools do not support situational awareness /

reduction of human error

•Consequence: Unnecessary labor costs and downtime run to

100s of thousands

The Goal: Real Dollars Returned

• Optimize Energy Strategies • Run simulations to determine optimal on-

peak / off-peak source and loading plans

• Plan and Practice Maintenance

Actions • Reduce costs related to system conditions

caused or exacerbated by human error

• Prioritize Maintenance Activities • Quantify the criticality of maintenance

and pay only the overtime you truly need

• Increase System Capacity and

Facility Life • Use real-time power analyses to determine

true system capacity and extend facility life

Typical annual savings of $400,000. Typical payback period of 1.1 years

$100k $300k $800k

$50,000 - $300,000+

$50,000 - $200,000+

$25,000 - $100,000+

$800,000 - $5,000,000+

Topics Covered

Circuit Breakers

Stranded Capacity

Overview

Stranded Capacity Conclusions

Maintenance

Maximizing Useful Life of Facilities through Recovery of Stranded Capacity

Human Error

Simulation Software

• Most power system owners use 70-80% or less* of true

capacity before bringing additional capacity online

• Remaining 20-30% is reserved as margin of error due to uncertainty

• Uncertainty exists because real-time capacity cannot be measured

• Capacity cannot be determined for normal operations

• Capacity can certainly not be evaluated for contingency operations

• Model-validated simulations allow determination of true

dynamic capacity during both normal and contingency

conditions

• Recovering just 5% of stranded capacity can mean a delay of months

or even years until new capacity must be installed or built to meet

rising demand

• With construction budgets in excess of 100 million dollars, delays of

just months translate to significant return on future value basis

Paladin Live ROI

Recovering Stranded Capacity > Overview

* Source: HP EYP Mission Critical

Months

Planned capacity limit to

allow margin of

error

Paladin Live ROI

Recovering Stranded Capacity > FV / NPV Details

Capacity used at IOC 60% or less

Capacity remaining

at IOC

Facility planned to reach initial capacity target of

80% after 36 months

Achievable capacity limit using simulations at 85%

Delay to build based

on simulations

• General assumptions • $122 million dollar Tier III data center project

• Interest rate (APR) after inflation at 1.6%

• Target load at initial operating capability is 60% *

• Maximum capacity limited to 80% *

• Assuming 36 months to capacity limit **

• Paladin Live assumptions • Simulation capability identifies consistently usable capacity as 85%

• Resulting delay to build is 9 months

Paladin Live ROI

Recovering Stranded Capacity > Example

* Typical data center value. Source: HP EYP Mission Critical ** Typical data center value. Source: Ponemon Institute

Future Value is $123,471,832 for a return of $1,471,83

Topics Covered

Circuit Breakers

Siemens USA

Stranded Capacity

Overview

Simulation

Software

Simulation Software

Maintenance

Human Error

Conclusions Using Simulations to Optimize Energy Usage for Recurring Savings

• Current evaluation of energy strategies is like driving by rear-

view mirror • Owners have limited ability to determine what energy usage should be based

on the design as influenced by changes to sources, loads, and configurations

• Strategies are routinely determined on the basis of anecdotal prior experience

• Strategies are vetted by committee and then tested operationally

• Post-experiment data is used to validate or reject the approach

• Meanwhile, the dollars have been saved – or lost

• No prior assurance of success… the process can drag out over multiple

attempts

• Meanwhile, those closest to the system conditions that influence design

energy assumptions – the operators – have limited input to energy planning

• Operators can and do report historical usage on a daily, weekly, or

monthly basis

• Operators lack the tools to quantify the effects of system configurations

on usage

Using Simulations to Optimize Energy Usage

In Blackboard, the system depiction is

interactive

Blackboard Simulations > Layout and Features

The analytics panel reflects the results of AC advanced power

flow and voltage stability calculations

Breaker and switch positions can be adjusted

via the lower panel

Loads can be adjusted on the basis of % rated

Using Simulations to Optimize Energy Usage > Interface

The top panel displays actual energy usage

aggregated from the data historian, with utility rates and penalties schedule applied

The bottom panel displays identical

information, but using model-validated analytics

based on the current Paladin Live simulation

The Paladin Live Energy Management screen allows

pre-validation of energy strategies via simulation

Alternate energy strategies are then simulated in

Blackboard using model-validated analytics, then compared to the actuals

Using Simulations to Optimize Energy Usage > Benefits

The end result can be a determination that some strategies will save significant energy costs, resulting in an easy-to-calculate payback period

Actual energy usage and utility information is

entered from top panel or utility bill: days in billing period, rate and penalty information, on- and off-

peak demand and PF

Blackboard Simulations > Uses of Analytics Panel

The voltages and analytics also reflect

the simulation

Where adjustable loads are present,

Blackboard adds an assessment of the loading due to the

simulation

Topics Covered

Conclusions

Human Error

Human Error

Using Simulations to Reduce Human Error During Maintenance Operations and Emergencies

Simulation Software

Stranded Capacity

Overview

Maintenance

• Blackboard allows you to simulate human-

system interactions under normal and

contingency conditions to reduce unplanned

downtime • On average, datacenters have unplanned downtime costs of $505,502 per year *

• Year-to-year, human error accounts for about 25% - 50% of data center outages *

• Applied to average yearly downtime costs, this equates to $121,320 – $242,640

Reduce Costs Due to Human Error > Overview

* Ponemon Institute, Calculating the

Cost of Data Center Outages, February 2010 and 2011

• Blackboard simulations can help you reduce

human error via improved training / pre-

maintenance walkthroughs • Effective training can reduce accidents caused by human error 51-81 percent 1

• Effective training requires that:

• Workers understand the big picture of which their activities are a part 2

• With Blackboard, workers can see the system-wide effects of maintenance actions in advance

• Workers have practiced their specific tasks recently 3

• With Blackboard, maintainers can conduct dry runs of MOPs in coordination with operators

• Workers have an understanding of contingency responses 4

• With Blackboard, teams of operators and maintainers can rapidly develop an understanding

of unplanned events and develop and practice responses in advance

1 FAA Human Factors, team performance / CRM effectiveness evaluation, www.hf.faa.gov 2 D. Gaba, Simulation Center for Crisis Management Training in Health Care, VA Palo Alto & Stanford University 3 Training Requirements in OSHA Construction Industry Standards and Training Guidelines, www.osha.gov 4 Robert B. Kelly, Industrial Emergency Preparedness, Wiley, 1989

Reduce Costs Due to Human Error > Benefits

Mean annual reduction in human error costs of $129,182

Topics Covered

Human Error

Maintenance

Maintenance

Simulation Software

Stranded Capacity

Overview

Conclusions Using Simulations to Optimize Criticality and Labor Costs of Planned Maintenance Actions

• Maintenance costs usually second largest operational expense

• Inability to quantify criticality of maintenance action leads to

use of O/T

• Paladin Live allows owners and operators to determine

maintenance activity criticality by evaluating planned tasks

under all conditions • Operators can examine whether the breaker topologies, generation sources,

and load profiles expected during a planned maintenance action are tenable

• Operators can test this same temporary configuration under the more common

non-normal states, e.g., what happens if there is a loss of utility?

• Paladin Live can be used to better understand the exact

degree of risk • Owners only pay for overtime/double-time if the criticality is truly high

• If truly high criticality levels exist, operators know to investigate other profiles

Optimize Criticality (Costs) of Maintenance

• Using analytics-based simulations makes

more information available to decision-

makers, reducing uncertainty re: maintenance

criticality

Optimize Criticality (Costs) of Maintenance > Reducing Unknowns

Optimize Criticality (Costs) of Maintenance > Reducing Unknowns

Example MOP without simulations Example MOP with simulations

September 23, 2010 2010 Management Systems Summit

Topics Covered

Conclusions

Conclusions

Human Error

Simulation Software

Stranded Capacity

Overview

Maintenance

Case Study

• Example case

• General assumptions • Square footage: 100,000

• MW of useable UPS output: 5 MW

• Tier Level: Tier III

• Capacity assumptions • Data center cost: $122 M [4]

• Loading at IOC: 60% [3]

• Target loading: 80% [3]

• Achievable loading: 85%

• Interest rate (APR): 1.6%

• Time to target loading: 36 months

• New facility to add capacity

• Maintenance assumptions • Initially 75% normal, 15% overtime,

10% double-time with 10%

redistribution

• Mean reduction in human error for

both ranges

The Goal: Real Dollars Returned

• Optimize Energy Strategies • Run simulations to determine optimal on-

peak / off-peak source and loading plans

• Plan and Practice Maintenance

Actions • Reduce costs related to system conditions

caused or exacerbated by human error

• Prioritize Maintenance Activities • Quantify the criticality of maintenance

and pay only the overtime you truly need

• Increase System Capacity and

Facility Life • Use real-time power analyses to determine

true system capacity and extend facility life

Typical annual savings of $400,000. Typical payback period of 1.1 years

$100k $300k $800k

$50,000 - $300,000+

$50,000 - $200,000+

$25,000 - $100,000+

$800,000 - $5,000,000+

Benefits – Can you meet the goals defined? • Total savings can be achieved

• Stranded Capacity • Energy management • Human factors • Improved Maintenace

• Site specific savings can be calculated with a ROI calculator tool

For additional information, the presenters contact information is on the next slide. This is the 3rd of 4 webinars in this series.

Task Name Duration Start

Legacy System Interoperability &

Integration using gateways and

standards

Noon – 1PM Tue 5/8/12

Opportunities and Challenges of

Integrating Wind, Solar and other

Distributed Generation & Energy

Storage

Noon – 1PM Tue 8/7/12

Financial Benefits of Using Real-time

software in mission critical facilities Noon – 1PM Tue 9/13/12

Unlocking Microgrids - Microgrid

Strategies for Effective Cost

management of your Electrical

infrastructure

Noon – 1PM Tue 11/6/12

Name E-mail Phone

Doug Whitmer dwhitmer@poweranalytics.com (919) 848-6625

John Jennings jjennings@poweranalytics.com (919) 848-6625

Chris Sticht csticht@poweranalytics.com (919) 848-6625

Michael Haley mhaley@raleighchamber.org (919) 664-7042

Brent Wall Brent.wall@stratech.com (919)379-8330

Christopher Kirchner chris.kirchner@stratech.com (704) 357-2755

Presenters Contact information

Questions and Comments

Thank You!