The Bottom Line on the New Energy Economy
Smart Grid as Enabler

Smart Grid - "Enabler of the New Energy Economy"

                                                                                  Today's Grid --  not so Smart  Smart People Say......
    Graphic: U.S. DOE

April 27, 2009
by Craig Severance

Over the last couple decades we have seen a revolution in communications with the Internet, digital cell phones, GPS, YouTube, and a host of applications the digital era has enabled. 

However, your electric utility still has to count on customers calling in to let them know about power outages, and still has to send meter readers to know how much you have used each month.  

As an electric customer you are equally in the dark.  You have no idea how much your refrigerator or air conditioner consumes, or what would be the most effective way to cut your electric bill.  If you use power at night when it costs the utility far less to generate, you don't get a discount because your meter has no clock.  All you or your utility know is the total kWh's you consumed each month -- long after the fact, when it is too late to do anything about it.

Because customers receive no price signals that consuming electricity at peak times is very expensive, utilities are forced to build new power plants, just to have enough capacity available for a few dozen hours per year of peak demand.  All utility customers now pay this huge cost as part of average rates. 

The need to use renewable sources of power is also a major problem for today's electricity grid.  One of the largest and cheapest renewable power sources -- wind energy -- produces electricity only when the wind blows.  The windiest locations are also hundreds of miles away from large cities, where the power is needed most.  Bringing power from these remote locations, and finding ways to store it for use when needed, are challenges to expanding renewable's share of electricity production.

Change is Coming.  This is all about to change, spurred by the push to use more renewable energy and implement energy efficiencies, and with help from billions in the Economic Stimulus package.  Utilities are now poised to begin a massive upgrade of electric meters and the electricity transmission and distribution grid, with a number of technologies collectively referred to as the "Smart Grid".  While this upgrade is expected to cost billions of dollars to implement nationwide, it will save even more.

Smart Meters.  The heart of the new Smart Grid will be "Smart Meters" that establish 2-way communication between the utility and the customer.  Because the utility has very different costs to generate power at different times, everybody will save if electric usage can be cut during the highest-cost times.  The utility will transmit different rates/kWh at different times of the day or week -- information the customer can use to take advantage of the cheapest rates.

The Smart Meter will keep track of usage at these different times and tally up a bill, for automatic billing without meter readers.  Smart Meters will also tell the utility when power has been lost at that location, so the utility will know immediately when & where a power outage occurs. 

This type of meter has been available for many years, but installations have until recently been mainly limited to small pilot projects.  In mass production, the Smart Meters are expected to cost under $200 each, which should translate into a monthly charge of  less than $2 on customer bills.  The benefits to all utility customers --  and opportunites for each individual customer to save --  should far exceed this small charge.

Smart meters -- even with no change by customers -- will save general utility operating costs for meter reading, and help utilities track operations much more efficiently.  However, these savings are not enough to justify the expense of replacing every electric meter in the country.  Much larger savings will come from how customers respond to the information about kWh usage and Time of Use Pricing that Smart Meters enable.  

Customer Master Energy Controllers.  Located inside the building, your Energy Controller will show information about your usage, and allow you to set up automatic cost-saving responses to electric rates.

Whereas now you have to wait till your monthly bill arrives to know your electric use, the new Controller will be able to show your monthly usage as it happens.  Many families and businesses may decide to cut electric usage or shift it to low-cost times of use if they know their monthly bill is going over budget. (If only my cell phone company provided automatic warnings on my teen daughter's minutes!)  

The Controller will show current electric rates, so you know when would be the best time of day to use the cheapest rates, and when to try to cut use because of higher rates.

Many Controllers will be incorporated with programmable thermostats, that you can set to operate at different temperatures at different times of the day, and/or to respond to high rates.  For instance, your controller might ask if you want to set your air conditioner at 78 degrees instead of 75 degrees during high-cost times of the day. The Controller would then automatically implement that change without having to monitor rates yourself. 

Master Energy Controllers will also work with new programmable appliances.  To save money on your electric bill,  you could automatically adjust electric usage of those appliances to minimize use when electric rates are high. For instance, I don't care what time of day my freezer runs most, so long as it keeps my food frozen.

Plug In Electric Vehicles.  One of the best uses of Smart Meters and Master Energy Controllers will be to coordinate the charging of plug in electric vehicles (EV's). 

When millions of us get home from work on a hot summer afternoon and plug in our EV's to charge overnight, the extra spike in demand could severely stress the utility and even cause brownouts.   However, if you don't care what time of night your car is charged, you could have the Energy Controller wait until lower rates are available, usually in the middle of the night. (Much better than setting your alarm to wake you up at 1 a.m. to go plug in the car.)

Some energy planners dream of a day when the substantial battery capacity of your EV could be used both ways -- not only to charge the car, but to feed back power to the electric grid when the utility is willing to pay you more for it.  For instance, if your utility was willing to pay you 25 cents/kWh for power from your car battery on a hot summer afternoon, which you got by charging at only 10 cents/kWh at night, would you take this offer? 

Before you answer, consider that your EV battery has a set life of several thousand charging cycles before it would need to be replaced.  How likely are you to sell the utility some of those "charging cycles"?  My belief is the average EV driver will want to use their Master Controller to find the cheapest times to charge their vehicles, but won't opt to sell battery-stored power back to the utility because it would shorten their car's battery life.  However, if the EV battery was so good that it had significantly more charging cycles than a normal driver would ever use, this dream of "grid-tied" EV's may eventually come to pass.

Customer's Own Power Sources.  Another great use of the Master Energy Controller will be to optimize use of your own electricity generated on site. 

A good example is your solar photovoltaic (PV) system.  Without a programmable thermostat, on a hot summer day your air conditioner is likely to run the most from about 2:00 PM to about 6:30 PM.  However,
this is not when your PV system is generating its maximum solar output.

If you want to avoid purchasing electricity from the utility on a hot summer day, your Master Controller could set your air conditioner to drop the building down to 72 degrees from 11 am - 3 pm (Daylight Savings Time), when your PV panels are generating their highest output.  Then, after 3 pm when the solar panels' output is dropping, you could back off the air conditioning and allow the temperature to gradually rise upwards to 78 degrees -- "coasting" on the coolness built up from your own power generation.  

This pattern -- most beneficial for you the customer -- is also best for the utility, as you would be avoiding using power exactly when most other customers are demanding peak power from the utility. 

An added benefit from increased numbers of customers generating their own power will be decreased line losses and distribution line costs for the utility.  Whenever power is generated on-site, there are no line losses and a decreased demand on the utility's transmission and distribution network.  These savings will help lower electricity bills for all the utility's customers.

Storing Solar and Wind Energy.  A major problem with utilities using more than a small percentage of electricity from variable power sources such as solar PV panels and wind turbines is the inability to match renewable power generation with the demand for power.

Simply put, the sun doesn't always shine and the wind doesn't always blow.  When these sources are available, they are now used by feeding their power into the grid and reducing generation from load-following power plants.  However, relying on variable sources for more than about 20% of total power will typically require that a utility must be able to store excess electricity for later use.  Since renewables will eventually need to supply 100% of our power, we need the Smart Grid to be able to do this.

We know how to store energy, but the cost of doing so has until now been prohibitive except in specialized applications, or where a unique resource such as a hydroelectric dam was available. 

Large-scale energy storage systems of a centralized nature include Compressed Air Energy Storage (CAES), whereby excess power is used to compress air at high pressures into caverns.  When power is later needed, the compressed air is released and heated using a moderate amount of natural gas, and run through a turbine to generate power. 

Another centralized energy storage system is pumped-water hydroelectric.  Often used with an existing hydroelectric dam, pumped-storage systems pump water uphill to the dam's upper reservoir during periods of off-peak power or excess electricity generation from renewables.  When power is needed, water is simply run through the dam's generators.  While hydroelectric dams are few and far between, a variation concept idea by Riverbank Power would drill new very deep caverns underneath just about any river or body of water, which would fill up (generating power) when demand was high, and be pumped out using excess or cheaper power during off-peak periods. 

Another energy storage method with wide possible use lies in new battery technologies now being implemented to stabilize grids, as these can be used in a distributed fashion, at the substation level.  This is particularly important in areas where customers are installing distributed power generation such as PV systems. Unlike CAES or pumped hydro, battery systems can be used anywhere, without a special geological resource such as a cavern or body of water.

Advances in battery technology, together with the attractiveness of renewable sources, have now progressed to the point where utility-scale battery storage is now feasible.  Companies such as
Xtreme Power and BPL Global have developed utility-scale storage systems that allow a utility to store surplus power for later use, level off loads, and make use of renewables.  These technologies allow the utility to reduce or ultimately eliminate the need for "Peaking Power Plants" with their high costs. 

While Xtreme Power quotes costs running from about 2 to 9 cents/kWh of electricity output from storage using its technology, these costs can pay for themselves as they enable a more efficient grid operation, and access to zero-fuel-cost, zero-greenhouse-gas renewable energy sources.  When compared with
new nuclear power's costs of from 25 to 30 cents/kWh, a new solar or wind farm can provide power at a lower overall cost per kWh, even if some fraction of its kWh's need to be cycled through energy storage.  

Transmission Lines From Renewable Resources.  The wind blows just about all the time in some parts of the United States, such as the Great Plains and offshore on the Continental Shelf.  Similarly, the sun shines just about all the time in places like the Nevada desert. 

We are not going to encourage everyone to move to Fargo, N.D. or Tonopah, NV to take advantage of these abundant renewable power resources.  The nation needs to expand its transmission grids to carry large amounts of power from remote places to the power-hungry large metropolitan areas where most electricity is consumed. 

The final piece of the Smart Grid, therefore, is a national electricity grid that for the first time will allow significant amounts of power to be transmitted from one region of the country to another.  

Beyond simply connecting, such a large Smart Grid will also allow for averaging of weather effects.  Over a large geographic area, for instance,  the wind will almost always be blowing strongly somewhere.  More demand centers would also be connected, so that during periods of peak production from renewables there will be more places to utilize the power immediately without the need for storage.

The Federal Energy Regulatory Commission (FERC) is now processing applications from several large new "transmission superhighway" projects (e.g. the
"Green Power Express") whose purpose is to bring wind energy from wind-rich states to major load centers.  FERC and the Interior Department have also now published new guidelines for wind, wave, & ocean current developments on the Outer Continental Shelves

Global Warming Benefits of Smart Grid.  Because the Smart Grid enables customers to reduce demand, enables utilities to use their more-efficient generators, and enables a far greater percentage of renewable power sources to be used, the Smart Grid is seen as the key enabler of solutions to reduce global warming.

In his study entitled "How Green is the Smart Grid?" published in the April 2009 edition of Electricity Journal (subscrptn req'd.), Ryan Hledik,Associate with the Brattle Group,  estimated that implementation of all the Smart Grid technologies (as spelled out above) could achieve by 2030:

  •  A reduction in annual power sector CO2 emissions of nearly 16%, "equivalent roughly to taking 93 million cars off the road in that year or shutting off 129 coal plants"
  • A reduction in the annual growth rate of power sector CO2 emissions from 0.7 %per year to -0.1% per year, essentially flattening CO2 emissions
  • An overall reduction of 4.7 billion metric tons of CO2 between 2010 and 2030

This is a big change from Business as Usual.

Bottom Line for Electric Customers.  No one is promising electricity rates will go down overall, but many customers will have new opportunities to save by using electricity at the lowest cost times. This is particularly true for customers who have their own solar PV systems, who tend to feed electricity into the grid during the day and draw most of their electricity from the grid during off-peak hours. It will also be far easier to know when your electric bill is going over your budget and take action before it is too late.

"This is not just a utility problem, it's also a consumer opportunity... We're not looking for ways to increase rates so customers can pay...but actually looking for ways customers can save money." -- Audrey Zibelman, Pres. & CEO, Viridity Energy, speaking at Chadbourne & Parke Smart Grid forum April 22, 2009

If Smart Grid is not implemented, rates will rise far faster than most electric customers can tolerate. Very expensive new power plants may continue to be needed if electric consumption continues to rise unabated.  Peaking power plants would continue to be needed, perhaps even more so as renewables are brought into the mix.  Plug-in Electric Vehicles are needed to solve our oil problem, but their use would likely be discouraged by utilities because of the potential of millions of customers plugging in their cars all at the same time leading to power brownouts.  Many forms of renewable power would be limited to a small role in electric generation because there would be no way to use the renewable electricity in large amounts, or to bring it to where it is needed.  Overall, electric customers would continue to pay increasing rates, for dirty power. 

With Smart Grid technologies implemented, however, a much greener electric grid with more opportunities for customers to save will become available.

Which would you rather have -- the Smart Grid, or the Not-So-Smart Grid?


 This Article was originally posted on April 27, 2009. 

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