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Smart Grid Introduction: Comparison

Smart Grid Expert Consultant Knowledge Series

Critical Information from the World of Smart Grid / Smart Meter


SECTION FIVE: Compare and Contrast: A Grid Where Everything is Possible.

The Smart Grid transforms the current grid to one that functions more cooperatively, responsively and organically.

SMART GRID FACT: Made possible by a smarter grid, DOE’s Solar Energy Grid Integration Systems (SEGIS) is a suite of tools, techniques and technologies designed to achieve a high penetration of photovoltaic (PV) systems into homes and businesses.

In terms of overall vision, the Smart Grid is:

  • Intelligent – capable of sensing system overloads and rerouting power to prevent or minimize a potential outage; of working autonomously when conditions require resolution faster than humans can respond…and cooperatively in aligning the goals of utilities, consumers and regulators
  • Efficient – capable of meeting increased consumer demand without adding infrastructure
  • Accommodating – accepting energy from virtually any fuel source including solar and wind as easily and transparently as coal and natural gas; capable of integrating any and all better ideas and technologies – energy storage technologies, for example – as they are market-proven and ready to come online
  • Motivating – enabling real-time communication between the consumer and utility so consumers can tailor their energy consumption based on individual preferences, like price and/or environmental concerns
  • Opportunistic – creating new opportunities and markets by means of its ability to capitalize on plug-and-play innovation wherever and whenever appropriate
  • Quality-focused – capable of delivering the power quality necessary – free of sags, spikes, disturbances and interruptions – to power our increasingly digital economy and the data centers, computers and electronics necessary to make it run
  • Resilient – increasingly resistant to attack and natural disasters as it becomes more decentralized and reinforced with Smart Grid security protocols
  • “Green” – slowing the advance of global climate change and offering a genuine path toward significant environmental improvement

Applied across various key constituencies, the benefits of creating a smarter grid are drawn in even sharper relief.

The Smart Grid as it applies to utilities.

Whether they’re investor-owned, cooperatively owned or public, utilities are dedicated to providing for the public good – i.e., taking care of society’s electricity needs – by operating, maintaining and building additional electric infrastructure. The costs associated with such tasks can run to billions of dollars annually and the challenges associated with them are enormous.

For a smarter grid to benefit society, it must reduce utilities’ capital and/or operating expenses today – or reduce costs in the future. It is estimated that Smart Grid enhancements will ease congestion and increase utilization (of full capacity), sending 50% to 300% more electricity through existing energy corridors.

The more efficient their systems, the less utilities need to spend. Given our nation’s population growth and the exponential increase in the number of power-hungry digital components in our digital economy, additional infrastructure must be built – Smart or not. According to The Brattle Group, investment totaling approximately $1.5 trillion will be required between 2010 and 2030 to pay for this infrastructure. The Smart Grid holds the potential to be the most affordable alternative to “building out” by building less, and saving more energy. It will clearly require investments that are not typical for utilities. But the overall benefits of such efforts will outweigh the costs, as some utilities are already discovering.

One afternoon in early 2008, the wind stopped blowing in Texas. A leader in this renewable energy, the state experienced a sudden, unanticipated and dramatic drop in wind power – 1300 Mw in just three hours. An emergency demand response program was initiated in which large industrial and commercial users restored most of the lost generation within ten minutes, acting as a buffer for fluctuations in this intermittent resource. Smart Grid principles in action.

The Smart Grid as it applies to consumers.
For most consumers, energy has long been considered a passive purchase. After all, what choice have they been given? The typical electric bill is largely unintelligible to consumers and delivered days after the consumption actually occurs – giving consumers no visibility into decisions they could be making regarding their energy consumption.

However, it pays to look at electric bills closely if for no other reason than this; they also typically include a hefty “mortgage payment” to pay for the infrastructure needed to generate and deliver power to consumers.
A surprisingly substantial portion of your electric bill – between 33% – 50% – is currently assigned to funding our “infrastructure mortgage,” our current electric infrastructure. This item is non-negotiable because that infrastructure – power plants, transmission lines, and everything else that connects them – must be maintained to keep the grid running as reliably as it does. In fact, the transmission and distribution charge on the electric bill is specifically for infrastructure.

With demand estimated to double by 2050 – and more power plants, transmission lines, transformers and substations to be built – the costs of this “big iron” will also show up on your bill in one way or another. (The only difference this time is that global demand for the iron, steel, and concrete required to build this infrastructure will make these commodities far more costly; in fact, the cost of many raw materials and grid components has more than tripled since 2006.)

POWER SYSTEM FACT In the United States, the average generating station was built in the 1960s using even older technology. Today, the average age of a substation transformer is 42, two years more than their expected life span.

SMART DEFINITION: Real-Time Pricing – These are energy prices that are set for a specific time period on an advance or forward basis and which may change according to price changes in the market. Prices paid for energy consumed during these periods are typically established and known to consumers a day ahead (“day-ahead pricing”) or an hour ahead (“hour-ahead pricing”) in advance of such consumption, allowing them to vary their demand and usage in response to such prices and manage their energy costs by shifting usage to a lower cost period, or reducing consumption overall.

Now for the good news. The Smart Grid connects consumers to the grid in a way that is beneficial to both, because it turns out there’s a lot that average consumers can do to help the grid.

Simply by connecting to consumers – by means of the right price signals and smart appliances, for example – a smarter grid can reduce the need for some of that infrastructure while keeping electricity reliable and affordable. As noted, during episodes of peak demand, stress on the grid threatens its reliability and raises the probability of widespread blackouts.

By enabling consumers to automatically reduce demand for brief periods through new technologies and motivating mechanisms like real-time pricing, the grid remains reliable – and consumers are compensated for their help. Enabling consumer participation also provides tangible results for utilities which are experiencing difficulty in siting new transmission lines and power plants. Ultimately, tapping the collaborative power of millions of consumers to shed load will put significant brakes on the need for new infrastructure at any cost. Instead, utilities will have time to build more cost-efficiencies into their siting and building plans.

Consumers are more willing to be engaged.
Consumers are advocating for choice in market after market, from telecom to entertainment. Already comfortable with the concept of time-differentiated service thanks to time-dependent cell phone rates and airline fares, it follows that they just might want insight and visibility into the energy choices they are making, too. Enabled by Smart Grid technology and dynamic pricing, consumers will have the opportunity to see what price they are paying for energy before they buy – a powerful motivator toward managing their energy costs by reducing electric use during peak periods.

Currently, recognition of the time-dependent cost of energy varies by region. In areas where costs are low and specialized rates to this point non-existent, there is little interest or economic incentive on the part of the consumer to modify usage or even think about energy having an hourly cost. In California, on a hot afternoon, consumers are well aware of the possibility of a blackout driven by peak demand and familiar with adjusting their energy usage accordingly.

Efficiency is the way. 10% of all generation assets and 25% of distribution infrastructure are required less than 400 hours per year, roughly 5% of the time. While Smart Grid approaches can’t completely displace the need to build new infrastructure, they will enable new, more persistent forms of demand response that will succeed in deferring or avoiding some of it.

Given new awareness, understanding, tools and education made possible by a smarter grid, all consumers will be able to make choices that save money, enhance personal convenience, improve the environment – or all three.

The message from consumers about the Smart Grid: Keep It Simple. Research indicates that consumers are ready to engage with the Smart Grid as long as their interface with the Smart Grid is simple, accessible and in no way interferes with how they live their lives. Consumers are not interested in sitting around for an hour a day to change how their house uses energy; what they will do is spend two hours per year to set their comfort, price and environmental preferences – enabling collaboration with the grid to occur automatically on their behalf and saving money each time.

At the residential level, Smart Grid must be simple, “set-it-and-forget-it” technology, enabling consumers to easily adjust their own energy use. Equipped with rich, useful information, consumers can help manage load on-peak to save money and energy for themselves and, ultimately, all of us.

The Smart Grid as it applies to our environment.
While the nation’s transportation sector emits 20% of all the carbon dioxide we produce, the generation of electricity emits 40% – clearly presenting an enormous challenge for the electric power industry in terms of global climate change. Smart Grid deployment is a key tool in addressing the challenges of climate change, ultimately and significantly reducing greenhouse gases and criteria pollutants such as NOx, SOx and particulates.

For the growing number of environmentally-aware consumers, a smarter grid finally provides a “window” for them to assess and react to their personal environmental impacts. Already, some utilities are informing consumers about their carbon footprint alongside their energy costs. In time, the Smart Grid will enable consumers to react in near real-time to lessen their impacts.

POWER SYSTEM FACT From 1988-98, U.S. electricity demand rose by nearly 30 percent, while the transmission network’s capacity grew by only 15%. Summer peak demand is expected to increase by almost 20% during the next 10 years.

SMART DEFINITION: Criteria Pollutants - Criteria pollutants are six common air pollutants that the scientific community has established as being harmful to our health and welfare when present at specified levels. They include nitrogen dioxide (NOx), carbon monoxide, ozone, lead, sulfur dioxide (SOx) and particulate matter, which includes dirt, soot, car and truck exhaust, cigarette smoke, spray paint droplets, and toxic chemical compounds.

For utilities, adoption of the Smart Grid clears the air on several fronts.

  • Energy efficiency: On the load side, consumers capable of exercising usage control are suddenly and simultaneously also able to exercise their environmental stewardship, resulting in tremendous consumer-side energy efficiencies.
  • Avoidance of new construction: Increased asset optimization made possible by a smarter grid means more reliance upon the most efficient power plants and less reliance upon the least efficient, more expensive-to-run peaker plants. Optimizing power plant utilization could also allow utilities to defer new generation investments or reduce dependence upon sometimes volatile and expensive wholesale markets. Utilities stand to benefit from lower costs, which increase profits.
  • The ability to effectively manage load with existing transmission and distribution infrastructure means that – ultimately – utilities would no longer have to build or could at least defer infrastructure to account for rapidly increasing peak demand.
  • Integration of renewable energy sources: Given the significant concerns regarding climate change, the need for distributed solar and wind power is critical. According to the European Wind Energy Association, integrating wind or solar power into the grid at scale – at levels higher than 20% – will require advanced energy management techniques and approaches at the grid operator level. The Smart Grid’s ability to dynamically manage all sources of power on the grid means that more distributed generation can be integrated within it.
  • Preparation for the future: A smarter grid is also a necessity for plugging in the next generation of automotive vehicles – including plug-in hybrid electric vehicles (PHEVs) – to provide services supporting grid operation. Such ancillary services hold the potential for storing power and selling it back to the grid when the grid requires it.

Enabled by new technologies, plug-in hybrid vehicles – currently scheduled for showroom floors by 2010 – may dramatically reduce our nation’s foreign oil bill. According to the Pacific Northwest National Laboratory, existing U.S. power plants could meet the electricity needs of 73% of the nation’s light vehicles (i.e., cars and small trucks) if the vehicles were replaced by plug-ins that recharged at night. Such a shift would reduce oil consumption by 6.2 million barrels per day, eliminating 52% of current imports. However, there is a lot more to realizing this potential than simply plugging in.

Without an integrated communications infrastructure and corresponding price signals, handling the increased load of plug-in hybrids and electric vehicles would be exceedingly difficult and inefficient. Smart Chargers, however – enabled by the Smart Grid – will help manage this new energy device on already constrained grids and avoid any unintended consequences on the infrastructure.

What might the longer-term future look like? It is a decade from now.
An unusually destructive storm has isolated a community or region. Ten years ago, the wait for the appearance of a utility’s “trouble trucks” would begin. The citizens would remain literally in the dark, their food spoiling, their security compromised and their families at risk.
Instead, with full Smart Grid deployment, this future community is not waiting. Instead, it’s able immediately to take advantage of distributed resources and standards that support a Smart Grid concept known as “islanding.” Islanding is the ability of distributed generation to continue to generate power even when power from a utility is absent. Combining distributed resources of every description – rooftop PV (solar), fuel cells, electric vehicles – the community can generate sufficient electricity to keep the grocery store, the police department, traffic lights, the phone system and the community health center up and running. While it may take a week to restore the lines, the generation potential resident in the community means that citizens still have sufficient power to meet their essential needs. This is power from the people. And it is coming.

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