By Terry Mohn
This new Act is aimed at moving the United States toward greater energy independence and security through increasing the production of clean renewable fuels and the efficiency of products, buildings, and vehicles, promoting research on and deploying greenhouse gas capture and storage options, and improving the energy performance of the federal government, while also protecting consumers. It includes sizeable incentives to utilities for new investments in smart meters, smart grid technologies and other advanced operational technologies.
Some of the notable smart grid provisions include:
- Up to 20 percent reimbursement for advanced metering and other smart grid technologies (note, however, the funds require appropriation before agencies can budget their use)
- Creation of a Smart Grid Advisory Committee and a separate interagency task force
- Funding for smart grid demonstrations
- Development of interoperability standards.
In a companion tax bill that has not yet been passed, stakeholders are asking the government to authorise accelerated depreciation for smart grid-related investments. The current state of technology within a typical office place shows computer systems generally are depreciated over 5-7 years, because it is well known that technology advances occur very rapidly and obsolesce quickly. It no longer makes sense for utilities to depreciate assets over 40 years when those very assets are built with computers and high speed communication systems.
IMPORTANCE OF SMART GRID TECHNOLOGIES
A smart grid is the nation’s electricity transmission and distribution network modernised using the latest digital and information technologies for enhanced operational monitoring, control, and intelligence. The enhanced capabilities of a smart grid are aimed at greatly improving reliability, security, and efficiency of the electric grid, while minimising its environmental impact. Modernising any industry through new technologies is an evolutionary process; so also the resulting smart grid must evolve. The “end state” of a smart grid, therefore, is not characterised by the extent of technology penetration; instead, it is characterised by the system’s ability to meet the key defining functions:
- Detect emerging problems and fix them before they seriously impact quality of service
- Offer extensive measurements, rapid communications, centralised advanced diagnostics, and feedback controls that quickly return the system to a stable state
- Re-route power flows, change load patterns, improve voltage profiles, and take other corrective steps, within seconds of detecting a problem
- Enable loads and distributed resources to participate in operations
- Use modern tools to improve design and operation with reliability, security, efficiency, and safety as fundamental values.
An illustration of the impact smart grid technologies can have on electric distribution is distributed energy resources (DER). DERs offer consumers access to renewable and clean energy. A well integrated distributed generation system has the potential to provide benefits to both utility operations and customers while introducing alternative service solutions for providing safe and reliable energy. The smart grid combines energy storage, generation and management with communication systems, visualisation and real time control to automate and self-heal the grid. Distributed generation (DG) systems, a subset of DER, are comprised of a wide range of electricity generating technologies, from renewable energy technologies like solar photovoltaics and small wind turbines, to fuel cells, natural gas microturbines, internal combustion engines, combined heat and power (CHP) applications, and diesel generators. Development of other enabling DERs, such as energy storage, can help optimise the use of renewable energy and reduce local peak loads.
Deployment of DER integration technology can bring about further benefits in the form of vehicle to grid interfaces, particularly for plug-in hybrid electric vehicles (PHEV) and other hybrids, to serve as peak load shaving entities. DER integration also leads to grid frequency regulation (i.e. to match small differences in load and generation profile), and reduction in spinning reserves, such as standby resources that are required to come on line in case of an emergency.
Further exploratory projects include the study and development of distribution automation, advanced grid control devices, demonstration of DER-based microgrids, visualisation and advanced communication technologies. Nationwide, several utilities are working independently to evaluate these technologies. In order to include as wide a stakeholder audience as possible, it is necessary to also include local universities, research institutes, device manufacturers, automotive OEMs and other industry participants. Additional development of protocols and standards for the DER interface and demonstration of DER technologies are yet needed.
GROWING INDUSTRY ATTENTION
Incorporating advanced information technologies into the power grid requires significant engineering on a scale not previously applied. The industry will take on a systems view towards interoperability between information technologies and business operational technologies. A “systems view” takes a holistic and objective approach to a subject, including technical, economic, regulatory, political, and societal aspects. It includes the recognition of the power system as one integrated machine having many interdependent parts, a recognition that solutions can come from a wide and diverse range of sources, the desire to identify key ingredients needed to reach the desired end state, and the development of those ingredients in the right sequence. It also includes a development approach that optimises the total system rather than the individual parts. The systems view also takes into account the full range of costs and benefits to society associated with the provision of reliable power. Due to the complexity of this evolving system, many stakeholders are critical to its success.
National organisations have become prominent as they have built credibility and momentum over the past four years. They are now on the precipice of leading the nation’s energy sector into a new technology era. Last year, at 20 members strong, the GridWise Alliance worked closely with Congress to enact new legislation to modernise the grid. Today, at 46 members, the Alliance is making a profound difference in national policy. Members in this Alliance include the largest worldwide energy and technology corporations. In addition to advancing a national agenda towards grid modernisation, the Alliance recently announced the formation of a national smart grid policy centre that will develop business recommendations and create business cases leveraging new legislation and technology.
During the past four years, the Department of Energy (DOE) and national laboratories have concurrently developed a roadmap for implementing new technology into the grid. In October 2006, the GridWise Architecture Council held a significant constitution in Philadelphia. During that historic signing event, key stakeholders in the energy sector joined in agreement to focus on key principles enabling the advance of technology and its future interoperability. In November 2007, the GWAC held its next national event, Grid-Interop, for the purpose of revealing a framework of system and technology interoperability. The key objectives of Grid-Interop are to:
- Assemble ideas and resources to ensure interoperability
- Align stakeholders toward a vision for electric system interoperation
- Leverage the GridWise interoperability framework as an organising platform
- Engage and grow the electric interoperability community
- Identify valuable and immediate implementation areas
- Educate consumer groups of the need for an integrated electric system
- Establish policy frameworks to enable interoperability.
In 2007, the DOE-sponsored Modern Grid Initiative work group met with state regulators to explain the vision resulting from its two-year effort to develop a long term vision and framework to accelerate the nation’s progress toward achieving grid modernisation. The team is preparing for its next 10-year objectives. They focus on updating:
- A vision for the modern grid
- Characteristics of the modern grid
- Technologies of the modern grid
- Benefits of the modern grid
- The modern grid stakeholder community.
The Galvin Electricity Initiative seeks to identify opportunities for technological innovation in the electric power system (broadly defined) that will best serve the changing needs of consumers and businesses over at least the next 20 years. Of paramount importance will be ensuring that the electricity system provides absolutely reliable and robust electric energy service in the context of changing consumer needs. It coined the phrase “perfect power system” to capture the ideal power system of the future. Its attributes include:
- Cannot fail the consumer
- Environmentally sound and fuel-efficient
- Robust and resilient, able to withstand natural and weather-related disasters and mitigate the potential damage caused by terrorist attack
- Provision of affordable electricity to all consumers and allowing them to control their own energy use to the extent they choose.
OpenAMI is a user community affiliated with the UCA International Users Group, a non-profit organisation whose members are utilities, vendors, and users of communications for utility automation. OpenAMI is represented by a technical subcommittee focused on OpenAMI issues, working in coordination with the UCAIUG technical subcommittees representing the IEC 61850 and CIM user communities. The UCAIUG’s UtilityAMI User Community provides the high level advanced metering infrastructure and demand response system requirements input and oversight to the OpenAMI Task Force. OpenAMI, with 200+ members, has created three workgroups:
- UtilityAMI – functional requirements for smart meter deployments
- OpenHAN – functional requirements for smart home interoperability
- OpenSEC – security requirements for smart meter infrastructure.
THE SMART GRID ENABLED BY SMART METERS
Grid-wide integrated communications are essential to building a smart grid. Consider the analogy of a smart grid as the Internet for the power grid. It needs communications technologies to sense, meter and measure events. It is a digital two-way communication system that enables connection and disconnection of generation sources, while enhancing operator information. Through computer-based monitoring of the grid, utilities can dispatch distributed resources, incorporating advanced grid components such as energy storage and distributed generation. It leads to advanced decision support, using intelligent devices to guide grid operators and monitor semi-autonomous agent software.
Newer smart meter deployments enable this communication solution since most incorporate two-way communications between the utility and the digital electric meter. As a result, solid state meters are becoming more affordable, providing the ability to transmit and receive information from each meter to the utility. This allows for the broadcast of price signals to the meter as well as consumption and operational metrics from the meter. Today, it is common practice to gather data about an outage or poor electric quality direct from the customer, via a phone call to the utility. In the future, meters will communicate these problems to the utility, allowing quicker response.
Smart metering has gained support from a number of initiatives. For example, at its 2007 winter meeting, the National Association of Regulatory Utility Commissioners (NARUC) issued a resolution that recognised the benefits of advanced metering. The resolution calls for the elimination of barriers to advanced metering and recommends that state commissions provide investment incentives and accelerated depreciation to help utilities quickly recover their advanced metering investments.
From a 2007 FERC report, many states are authorising new smart meter deployments. Notable items include:
- PG&E received approval of its smart meter project application from the CPUC (note, they are now considering a change in technologies to their filing)
- SDG&E received approval of its smart meter project following a settlement with the utility, the PUC’s Division of Ratepayer Advocates, and advocacy group the Utility Consumers Action Network
- SCE requested approval for its Phase II AMI predeployment activities and cost recovery mechanism is pending before the CPUC.
- The state of Connecticut passed a new DR-AMI bill requiring utilities in the state to install new “smart” meters and associated technologies capable of measuring realtime prices by January 1, 2009
- Connecticut Light & Power submitted its AMI plan, which is pending before the state PUC.
- District of Columbia:
- The DC PSC approved a pilot programme which allows residential customers involved with the pilot to test three different pricing schedules.
- New York:
- New York State PSC issued an Order requiring electric utilities to conduct AMI cost-benefit studies and file comprehensive plans for development and deployment of advanced metering systems
- Con Edison and Energy East have filed their plans. In its plan, Energy East suggested that with approval, Rochester Gas & Electric and NYSEG could begin meter installation as early as 2008
- State of Texas passed legislation (House Bill 2129) in 2006 allowing utilities to use surcharges to fund advanced meters
- The PUC issued a proposed rulemaking listing minimum functionality criteria that utilities would be required to meet with their advanced metering deployments. The Texas rulemaking added several advanced capabilities to the minimum functionality criteria, such as two-way communications, capability to provide timely customer usage data to retail electric providers, capability for customers to receive pricing signals from their retail electricity providers or a designated customer agent, and the ability to upgrade capabilities as technology advances.
As electric vehicles enter the market, they may offer a hidden and potentially lucrative opportunity. California will allow “zero emission credits” for some vehicles that are powered by battery. This is a clear sign to automakers that incentives are real.
Some utilities anticipate special tariffs to be afforded to electric vehicles. Industry groups are developing the communication standards to measure both electric energy use and, when possible, energy supply afforded by vehicles. Starting as a smart metering design consideration for California investor-owned utilities, PGE, SCE and SDG&E began developing the techniques needed to measure electric power flow between the utility and the automobile owner. This, among other standards related to smart metering, is now under development by the OpenAMI’s UtilityAMI workgroup. Other contributing utilities include DTE, Consumers Energy, AEP and Duke.
THE YEARS TO COME
Smart grid stakeholders will be very busy during 2008 in a number of areas. The new energy law authorised, but did not appropriate, many of the funds needed to advance investments. Many organisations will work with Congress to ensure both that the tax bill is signed into law and the funds outlined in the Energy Act are appropriated. The DOE must convene both an interagency task force and a Smart Grid Advisory Committee.
As states continue recognising the benefits smart metering brings the public, many more deployments will commence. Smart metering is the enabler, through communications infrastructure, for the smart grid. Over the next three to five years, smart meter deployments will continue to dominate the news. As the enabler, wireless, mesh and BPL communication systems will dominate new infrastructure deployments. During the following five to seven years, legislative incentives can be expected to kick in. These will lead to improved risk profiles for utilities. In the future seven to ten years, high technology integration using standards is expected.
AREAS FOR INVESTMENT
Venture capitalists and entrepreneurs have already recognised the huge investment opportunities in the energy sector. Clean and green technologies are very interesting, in addition to the wealth of opportunity in basic smart grid technologies. Some areas of near term interest will be arbitrage systems for distributed energy trading. New technologies using motes, sensors, monitoring, and video will be emerging. Growth can be expected in distribution side management, outage management and geographic information applications. A huge area of concern and opportunity is securing this infrastructure from cyber attack.
In the area of smart meter technologies, growth in investments may be anticipated around digital components, portals, network management, tracking, geocoding, mesh radios and broadband over power line. New communication infrastructure for smart meters leads to smart homes. Website partnerships can be expected between end products and utility information of consumers. Consumers will want to calculate carbon credits and participate in new home healthcare services, as well as remote and on-site home monitoring and control applications.
Transitioning to this future can no longer be addressed by individual manufacturers or utilities. Collaboration towards a common vision is the only way this future holds merit. There are many ways to participate, so join the movement. It’s happening now!