THE SMART GRID AND THE
UTILITY OF THE FUTURE
Alison Silverstein
alisonsilverstein@mac.com
Gulf Coast Power Association
May 30, 2008
1
Overview
What is the smart grid?
2. Detour 1 -- Interoperability
3. Detour 2 -- Regulation and smart grid
success
4. Plans and promises v. current reality -what’s actually happening in smart
grid investments?
1.
2
Elements of the smart grid
Smart grid = an electric system that leverages
technology and physical assets with:
! Distributed, granular information (grid conditions,
electricity costs across time and place) available to all
grid actors (including many consumers and devices)
! Advanced hardware (power electronics, more
efficient generation, meters, appliances and end-use
devices, communications networks) and intelligence
embedded across the network
! Advanced software (better modeling and data
analysis, linkage between applications, comm’ns)
! Advanced materials (cables, silicon,
superconductors, semiconductors)
Smart grid will encompass and enable efficiency, demand
response, renewables, distributed generation, PHEVs, all linked
by interoperability
3
Energy Independence and Security Act of 2007
Section 1301 – Statement of Policy
National policy to support the modernization of the nation’s
electricity T&D system … that can … achieve each of the
following, which together characterize a smart grid:
1.
2.
3.
Digital information and controls
Dynamic optimization with cyber-security
Deployment and integration of distributed resources and
generation, including renewables
4. Use of demand response, demand-side resources and EE
5. Smart technologies for metering, grid communications and
distribution automation
6. Integration of smart appliances and consumer devices
7. Advanced storage and peak-shaving technologies, including
PHEVs and thermal-storage A/C
8. Give consumers timely information and control options
9. Develop standards for communication and interoperability of
appliances and eqpt connected to the grid, including grid
infrastructure
10. Identify and lower barriers to adoption of smart grid technologies,
practices and services
4
EISA 07 Smart grid definition (Sec 1306)
The term Smart Grid Functions shall include:
1.
Ability to store, send and receive digital information (prices, costs,
electricity uses, time of day, nature of use) through a combination of
devices
2.
Ability to do above to or from a computer or control device
3.
Ability to measure and monitor electricity use as a function of time of
day, power quality, source and type of generation, etc
4.
Ability to sense and localize disruptions or changes in power flows and
communicate on such instantaneously to enable automatic protective
responses
5.
Ability to detect, respond to, recover, etc. relative to security threats,
including cyber-sec and terrorism
6.
Ability of appliances and equipment to respond without human
intervention
7.
Ability to use digital information for grid operations that were previously
electromechanical or manual
8.
Ability to use digital controls to manage and modify demand,
congestion, and provide ancillary services
9.
Other functions the Secretary may identify
5
Detour 1 -- What is interoperability?
Interoperability is:
1. The capability of systems or units to provide and
receive services and information between each
other, and to use the services and information
exchanged to operate effectively together in
predictable ways without significant user
intervention.
2. The seamless, end-to-end connectivity of hardware
and software from customers’ devices through the
T&D system to power sources, coordinating energy
flows with real-time flows of information and
services.
6
What are the benefits of interop?
Systems with high interoperability have:
" lower equipment costs
" lower transactions costs
" higher productivity through automation
" more conversion of data and information into insight
" higher competition between equipment suppliers
" more innovation of technologies and applications
Think telecom, finance, and the internet -- all rely on
common principles and architecture and grew with
detailed protocols and standards
7
Details of interoperability
!
!
!
Technical interop covers the physical and
communications connections between and among
devices or systems (e.g., power plugs and USB
ports)
Informational interop covers the content, semantics
and format for data or instructions flows (e.g.,
accepted meanings of human and computer
languages and symbols)
Organizational interop covers the relationships
between organizations and individuals, including
business and legal relationships and institutions
(e.g., ownership, regulation and market structures).
Find more on interoperability at www.gridwiseac.org
8
Detour 2 -- regulation and the
smart grid
! When
can markets and technology
evolution get it done and when can
regulators get it done faster?
! What tools do regulators use to effect
policy?
9
Minimum requirements for smart
grid -- which do regulators affect?
Red = Regulator can mandate, enable, fund or block
Black = Regulator can help but market could get around
1.
2.
3.
4.
5.
6.
7.
8.
Time-varying price and grid condition signals
Customer ability to receive those signals
2-way communication from the customer’s meter across
the T&D system to grid operators, and out to generation
assets
Controllability and responsiveness for many devices
across T&D, generation and customer end-uses
Grid-side ability to use the data -- high-volume analytical
and transaction processing for grid, market and device
operations and forecasting
Cost recovery method for the T&D owner
Benefits that customers value from participating in these
transactions (energy bill, comfort, GHG impact, control)
Standards and protocols to accelerate interoperability
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and marketability
Mechanisms utility regulators use*
!
Incentives for desired action
–
–
–
–
–
–
Cost recovery assurance - capital and expenses
Higher rate of return on desired capital investments or actions
Ratebase (earn a capital return on) program expenses
Management pay linked to preferred goals
Shareholder rewards for performance above targets
Calculate profits foregone from EE/DR and pay to utility (e.g.,
Duke or PG&E avoided cost calculation)
– Single-purpose rate proceedings and tariffs
!
Remove barriers to desired action
– Decoupling (remove incentive to sell more energy) by linking
profits to number of customers rather than volume sold
– Shift more costs to fixed charges and reduce variable costs
(rate design, but motivates utility)
– Improve benefits in C-E evaluation of desired actions
* All these are to manage the utility, not to manage the program or advance
technologies and measures.
11
Mechanisms utility regulators use
(2)*
! Mandates
– Specifications for acceptable investments (e.g., smart meter
functionality)
– Order specific actions (e.g., smart meter adoption, DG
interconnection, EERS)
– Create a non-utility administrator for EE/DR
– Create a system benefit fund to pay for the desired goal
!
Penalties
– Disallowance for imprudent investments
– Take away earnings from shareholders
!
Education, brow-beating, bully pulpit, stalling
– Customer education (advertising, PR, energy labels, Energy
Star)
– Public and private pressure on utilities
– Do a study
* All these are to manage the utility, not to manage the program or advance
technologies and measures.
12
Other regulatory options
!
!
!
!
!
!
!
Utilities expected to spend >$31 billion on new
transmission and buy >40 million new meters by 2010.
Deny full cost recovery for investments in non-smart
assets and devices
Guarantee recovery for smart grid investments (no
“gotchas”)
Require minimum %s of EE and DR in resource portfolios
Accelerate interoperability standards and protocols and
specify basic functionality requirements for grid devices
(EISAct 2007 jump-start, fund acceleration of IEEE efforts,
and link to NERC reliability standards)
Tie DR achievements to wholesale market mitigation
(more DR = higher price caps)
Change cost-effectiveness rules and tests (and benefits
included) for EE, DR and smart grid investments
Performance incentives for improved efficiency within
utility grid (G to T to D)
13
EISA Sec 1307 – State consideration of SG
New requirements under the Public Utilities Regulatory Policy Act (PURPA)
say that within 2 years, states should consider adopting these
requirements:
! PURPA (16) -- Smart Grid Investments
– Utilities must consider smart grid investments before proceeding with
“traditional” investments
– Utilities are authorized to recover costs of smart grid investments
– Utilities can recover remaining book value of infrastructure made
obsolete by SG
! PURPA (17) -- Smart Grid Information
– Purchasers shall get direct access, in writing or electronically, to
information including:
• Time-based wholesale electricity prices and retail rates
• Usage
• Electric prices updated no less than daily, with hourly prices and
day-ahead projections where possible
• Sources and emissions of utility electricity
• Electronic (internet) access to the above, and user privacy
14
EISA Sec 1305 – Federal action on interop
NIST to develop a framework for interop for the smart
grid, report to Congress in one year
The interop framework shall be flexible, uniform and
technology-neutral, including but not limited to
information management techs, designed to:
1.
2.
3.
Incorporate all resources, both generation and demand
response and energy efficiency
Accommodate regional differences and technology innovations
Consider using voluntary uniform standards that accommodate
mass-produced appliances and equipment that are
manufactured to respond to grid emergencies and price signals
to curtail or shed full or partial load or provide ancillary services
FERC to adopt standards and protocols as necessary to
insure SG functionality and interop in interstate
transmission and regional, wholesale electric
15
markets
Smart meter promises v. present
Big smart metering plans, but not much on the
ground yet:
!
!
!
!
!
If all announced AMI deployments occur, over 40 million new
advanced meters will be deployed between 2007-2010; 61.4
million projected by 2013.
In 2007, only 16 million smart meters installed (6% of all meters
in US. 18% of utilities now in final stages of AMI deployment;
many more with smart meter pilots. Highest deployment rate
today among coops and munis and in PA and WI -- but many
utilities with smart meters don’t yet have smart time-based rates.
AMI in place now -- KCP&L, Puget Sound, PECO, PPL, WE
energy, WI Public Service, Austin, Oncor
Big AMI plans -- PG&E, Consumers Energy, SCE, SDG&E,
Ameren, PEPCo, BGE, Oncor, Hydro One, AEP, FP&L,
Centerpoint, …
No standards or common functionality for advanced meters yet
(defined in TX)
16
Smart grid plans v. present
Again, big talk but actual implementation is spotty with no
end-to-end integration:
!
!
!
!
!
Demand-side integration -- only 4 large curtailment providers,
doing DR mostly to relieve grid emergencies (ENOC, COMV,
ESC, Site Controls). Smart communicating thermostats starting to
go in (CA, MD, NJ, Austin), no home automation networks, no
grid-connected devices, no standards for these. Little yet of price
signals, communications, or enabling technologies to let users
make and execute their own decisions about energy use.
T&D automation -- isolated applications and pilots; not enough
data collection, communication or operational analysis to make it
work yet (on the way in Oncor, Centerpoint, Southern, TVA,
ConEd)
DG integration -- little DG, minimal coordination (going in DTE)
PHEVs -- planning and pilots only (good in Austin, CA)
Interoperability and standards -- growing awareness and progress
(new Energy Act - NIST, GWAC, IEEE, growing community
interest across utility-buildings-appliances-vendor space)
17
The utility of the future -- roles
Combination of three businesses -- energy,
information and infrastructure
! T&D wires company
! Retail electric provider
! Information manager and relationship broker (not
just command and control, but biological,
collaborative, cooperative)
! Risk manager
! Power portfolio manager
! Broker, facilitator, integrator, intermediary
! Socially designated change agent
18
The utility of the future
!
!
New products, features, business models enabled by
information and device capabilities for customers, the
utility and partners
– Third party energy management
– Metering and energy portal to devices and
customers
– DG aggregation and resale
– Energy information services
Utility leveraging better info, analytics, automation
can improve maintenance, increase worker
productivity, enhance asset performance, manage
load and reliability better, decrease new capital
needs, decrease T&D costs and losses
19
The utility of the future and…
! Customers
! Content
! Etc.
20