Community Energy Drives Investment and Growth at Chattanooga

The city of Chattanooga saves on average US$60 million each year thanks to its new business model and infrastructure.
Published: Mon 11 Aug 2014

Our article on the US city of Chattanooga, Tennessee covered how its utility, Electric Power Board of Chattanooga (EPB) has significantly improved the reliability of its power supply by adopting a self-healing smart grid. [Engerati-Chattanooga’s Self-Healing Smart Grid is Paying Off.]

Expanding on the story we cover how the community’s energy initiatives have driven investment and growth in the city.

According to Danna Bailey, Corporate Communications at EPB, several factors drive this growth in the area-not just their newly developed energy and communications infrastructure. She says that this is just one driver of the growth. She says, “Chattanooga’s forward-thinking community leadership has worked collaboratively with citizens and businesses to create an area that has LOTS to offer, therefore spurring growth and investments.”

Other than its world-class electric power and communications infrastructure, the city has also developed a new industrial park, has a thriving entrepreneurial environment, and provides venture capital. “Add these to our centralized location in the southeast, access to a river and rail for transportation, Chattanooga is a great place for growth and investment,” says Bailey.

Energy Transition - A learning process

Bailey explains that EPB has learnt a great deal from its energy transition but points to a few high level lessons in particular:

  • Companies must be ready to make some serious changes to its company culture. Bailey says that EPB worked for years to establish an employee culture that could embrace change and make contributions to the project.

  • While EPB sourced outside expertise throughout the project, their people designed, built and currently maintain the systems that they put in place. Says Bailey, “We think it’s important to have people internally who have the knowledge and understanding to operate the system once the project is built.

  • Marketing and communications will be a new discipline that utilities will either have to learn or source externally. Having a whole new system in place requires a new level of marketing and communication than traditional electric power operations, explains Bailey.


Return on investment from distribution automation

EPB’s distribution automation project, which was completed in 2012, has had a dramatic effect on the duration of power interruptions even while it was still being built. While EPB hears anecdotal instances from their customers about savings to their bottom lines, EPB can only estimate community savings at this time, explains Bailey. She adds that the commercial and industrial sectors have reported improvements in productivity and reduction in product losses as a result of the improved reliability and power quality.

Many studies, aiming to quantify the cost of power interruptions to communities, have been conducted. The studies show that the US loses roughly US$80 billion each year as a result of power interruptions-this is cost for businesses and residences in lost productivity, lost wages, and lost product. Says Bailey, “If you take that figure and apply it to a service territory the size of ours, you can estimate that our community loses roughly US$100 million/year to power interruptions.”

Bailey points out that EPB is reducing outage duration by about 60% on average. Companies are responding to this improvement and are setting up business operations in the city. VW has already announced the expansion of their existing Chattanooga plant.

EPB measures the return on investment in three specific ways:

Improved operational efficiency – improved operational efficiencies are saving EPB roughly US$10.5 million per year.

Improved power reliability for the community-EPB estimates an annual community savings of roughly US$60 million.

Cash flow from the EPB Fiber Optics business into the EPB Electric Power business- since the fiber optic network is actually an asset of the electric power business, every time a new customer is signed up for EPB Fiber Optics services (very high-speed Internet, TV or phone), the EPB Fiber Optics brand pays the EPB Electric Power brand asset and allocation fees. Since EPB launched the EPB Fiber Optics business in September of 2009, the business has paid the EPB Electric Power business over US$83 million.

The availability of very high-speed Internet and smart grid are also generating interest from the startup community. One program in particular, GIGTANK, was formed in part because of the high-speed Internet availability. This year, the program’s third, included a team focused solely on smart grid and associated analytics.

Community Energy and social upliftment

There has been a level of upliftment at EPB as traditional job descriptions are changing with the advancement of technology, says Bailey. Data analytics is certainly one category as EPB has billions of data points available for analysis.

Another example of social upliftment is that the traditional electric power dispatch role – that historically used paper maps and radios to send line crews to manually switch around damage, is evolving into more of a system operator type role since the manual switching has now become automated.

In addition, EPB’s historically electric power customer service team has become an accomplished sales force.

Says Bailey, “We added a technical support staff, which is a new level of skill than was needed in the past. Our IT department, while traditionally managing databases, hardware and software is now learning to create consumer applications. I am sure similar things are happening in the community.”

In conclusion

Building a system like this is hard work, but it’s worth the work and the cost, explains Bailey. “Our business model works especially well because we’re using our fiber optic network for two different things: offering advanced communications services (bringing cash into the operation to help pay for the investment and offering platform for community innovation) and making smart grid reliability and services available to our electric power customers.”

“We think both of these assets are needed for communities to enjoy optimal growth.”