Stage one of smart grid, smart home was built on a foundation of smart meters and two-way communications (AMI-advanced metering infrastructure). On top of AMI we added demand-response (DR). This allowed your utility to control some part of your electrical demand. We'll refer to stage one as “DR-lite,” because there is much more to come. In stage two, we'll add more options for DR. We will also give you a birds-eye view of grid optimization (GO). Optimization was going on from the start, but you did not know about it, and didn't really care. In stage two, we'll also start to integrate a lot more renewable but intermittent energy sources to the grid.
As we head into stage two, let say you like what was happening in stage one: (check all that apply)
- Reducing your carbon footprint.
- Lowering your impact on the environment.
- Lowering your monthly utility bill.
- Getting an annual check from your utility for lets say $100.
After rolling out a million smart meters and 50,000 smart thermostats, a few years has gone by and your utility has its enterprise (software) applications in place to control all these devices. Your utility is ready for stage two and offers a you a variety of devices that can be used to reduce your electrical demand. You quickly sign up, because you are keen on the idea of (see checklist above). Plus you would not be reading this if you were not an early adopter.
Here's what the utility offers:
- In-home display with readouts on your energy use
- Web interface to see the same information on your PC and smart phone
- Smart plugs that go between your larger appliances and the outlet
- A $500 rebate on smart appliances such as a fridge, dishwasher, and dryer.
Being an environmentalist or a cheapskate or both, you sign up for the whole package. And since you last replaced your dishwasher in 1990, you go out and buy the new high-efficiency model from Whirlpool. The dishwasher connects wirelessly with your HAN (home area network) and therefore can send and receive signals to the utility. Your utility sends out an installer to make sure everything gets installed correctly. Remember, the telcos had to do truck-rolls for the first stage of broadband deployment – eventually they figured out how to make it easy enough for homeowners to self-install. The smart grid will follow a similar path.
At your request, the home display gets mounted on the kitchen wall where your phone used to be, back when you still had a landline. The display does not need the phone line, but it covers up the scar left from the old wall jack. Your installer inserts a chip-card into your dishwasher authorizing it to communicate with the utility. And one of the smart plugs gets inserted between your old electric dryer and its 240V outlet. The plug automatically connects to your home network, just like the new dishwasher. The installer also leaves behind a handout giving you the web address for a customized energy portal where you can monitor and control your electrical usage from any PC or smart phone.
On the dog days of summer and the icy days of winter, you are more than a customer. You have become a valued partner for your utility as it attempts to reduce both its costs and its carbon emissions. On that hot summer afternoon during a “super peak” when your utility is running out of megawatts, it sends the command to 1) raise your thermostat by two degrees, 2) delay your dryer for a couple of hours, and 3) put the dishwasher on hold. And you don't mind because 1) you barely notice the changes, 2) you are being paid for your flexibility, and 3) and on the rare occasion when these subtle changes do matter, you can push a button to override the utility's DR request. If your grandmother is at the house and you are away, you'll be able to push the override button from the convenience of your iPhone. Back at the utility, they just saved a bundle by not needing to buy super peak power on the spot market.
Our scenario focuses on the smart home, but in stages one and two, demand response may see its biggest payoff with commercial and industrial customers. Even though the long-term energy savings might be split equally between residential and commercial demand. It will be easier to implement demand response for a few hundred thousand commercial customers than it will be to implement it for a hundred million residential customers.
Time goes by and demand response is providing your utility with better load control each year. At the same time, another revolution is sweeping across the grid. During stage one, while your utility was installing two-way meters, it was also installing sensors, relays, voltage regulators, circuit breakers, and other grid devices. And each one of these is connected to the utility's digital network. As the utility's enterprise software capabilities have matured, its operations staff now has a real-time view of where the power is flowing, at what voltages, where the bottlenecks are building, and which lines are getting overheated (and therefore in danger of sagging into nearby trees). They know where power is needed and where an excess is being generated from rooftop solar systems. This so called “grid optimization” lets your utility:
- respond to peak demand loads more efficiently
- identify outages more precisely
- restore power more quickly
- switch generation to cost-effective and low-carbon fuels
- re-route energy to avoid bottlenecks and unnecessary strain
- eliminate “truck-rolls” with automated disconnects, reconnects, and troubleshooting
This part of the revolution will lack fanfare, but it will make the grid more responsive and more manageable. It represents a big change from the past. On the legacy grid, a bird flying around town might have had a better idea about what was going on inside the grid than your utility. In Boulder Colorado, Xcel Energy was so bullish on the benefits of grid optimization, that it built the business case for the smart grid investments primarily on the economics of optimization (rather than demand-response). In contrast to demand-response which helps utilities get through peak periods, grid optimization benefits accrue 24 hours/day, 7/days week, 365/days per year. At scale, the resulting savings will be in the tens of billions of dollars over the life of the equipment. To the extent that blackouts and brownouts can be avoided the long term savings are greater. The Electric Power Research Institute (EPRI) estimates power outages and disruptions cost the US more than $100B per year... that's PER YEAR.
During the several years of stage one, renewable energy generation was also growing rapidly. New wind farms were put into place, concentrating solar thermal plants are operating in sunny regions. More important, millions of homes have rooftop solar PV and thousands of commercial buildings and warehouses have rooftop wind and solar. When wind and solar represented a few percent of total generation, it was relatively easy for your utility to use this capacity whenever it became available. But with penetration pushing past 10% and needing to get to 20%, the legacy grid had no way to handle these large intermittent sources. Utilities had no way to know how much power these distributed sources were generating and little idea whether they were ramping up or down.
The smart grid's ability to let utilities absorb and use low-carbon renewable sources of power is the other big success in stage two. Only time will tell how soon this will become a major factor. A great deal depends on the declining cost curves for solar and its overall economics. But without a smart grid in place, we will be forever stuck with a low level of renewable integration. Geeks want to know a lot more about this, but most people won't care if they see their costs going down AND their electrical carbon footprint shrinking. Stage three is still a few more years down the road past stage two, but we can't wait so we'll talk about it next week. Stay tuned.