GE Energy
Session 1 of a 5 Part
Series on the Smart Grid
The Smart Grid … Lunch and Learn
Session 1: The Smart Grid and its
Benefits
1
Smart Grid Learning Series
Session 1: The Smart Grid and its Benefits
Session 2: The Smart Grid… The Consumer View
Session 3: The Smart Grid… The Distribution View
Session 4: The Smart Grid… The Transmission View
Session 5: The Smart Grid… The View from Rural America
2
Session 1: The Smart Grid and its Benefits
Topics:
The Grid … An Overview
The Benefits of a Smart Grid
Good Things Enabled by the Smart Grid
•
Renewable Intermittent Generation. i.e. Wind
•
Renewable Dispatchable Generation i.e. Landfill Gas, Geothermal
•
PV Solar
•
Plug In Vehicles
•
Demand Side Management
Calculating the Benefits of A Smart Grid
•
Utility Benefits
•
Consumer Benefits
•
Societal Benefits
Impact of Policy Discussion
3
Introduction
Electricity changed the world
A whole new
world
of opportunity
came into view
5
Add more capacity whenever needed
… power more opportunity. No
worries.
6
What worked in the past won’t work anymore
Old grid structures need to be updated
New grid structures are being built at
record paces
The strain on resources, fuel, siting,
building and maintenance are
overwhelming
7
Soaring energy demand
World energy consumption
forecasted to triple in
about 40 years
Source: U.S. Army Corps of Engineers ERDC/CERL TR-05-21
8
Electricity prices on the rise
U.S. sees 6.5%
spike in ’09
electric bills
6.5%
Source: EIA (Energy information Administration)
9
Outages affect everyday life … every day
Woman in iron lung dies
during a power outage
Los Angeles, CA
5/29/08
Power outages force
evacuation of Woodstock
hospital
7/30/08
Chicago, IL
Lights out in Vancouver after
underground fire
Thousands in left without power
Vancouver, Canada
6/14/08
Trip on Mexico's transmission
line causes national power
outage
5/26/08
Mexico City, Mexico
Power outage disrupts Hynix
DRAM production
South Korea, Korea 5/22/08
Storm knocks out Euro 2008
TV feed worldwide
6/25/08
Vienna, Austria
Power outages widespread
in Texas after Dolly
7/25/08
Harlingen, Texas
South Africa’s power outages
create national emergency
Johannesburg, South Africa 2/13/08
Hours-long power outages anger, frustrate
Pakistanis; government pushes daylight
savings
6/1/08
Islamabad, Pakistan
10
Green energy takes center stage
National Geographic
Time
Magazine
Changing climate
How to win the
War on global
warming
Vanity Fair
April 28, 2008
Green Issue
April 2008
The Economist
The future
of energy
Hispanic
Business
Going Green
May 2008
June 21, 2008
May 2008
11
Electricity … Poised to change the world
again
“We can’t solve
problems by using the
same kind of thinking we
used when we created
them.”
- Albert Einstein
12
Time is now … to shape the market
“…updating the way we get our electricity by starting to build
a new smart grid that will save us money, protect our power
sources from blackout or attack, and deliver clean, alternative
forms of energy to every corner of our nation.”
-from transcript of America’s Recovery and Investment Plan
The American Recovery and Reinvestment
Act of 2009
9 Pay down the cost of smart grid
investments
9 Matching grant program
9 Funding pool for pilot projects
13
Today’s Grid
Today’s grid … an engineering marvel
15
Grid inefficiency
Source: AEP PUC Hearing
16
Aging assets
Transformer failure rate
100%
80%
60%
40%
20%
0%
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
Age in Years
17
The Smart Grid
What is a Smart Grid?
The integration of two infrastructures… securely
Electrical infrastructure
Electrical
Infrastructure
Information
Infrastructure
Sources:: (1) UtilityPoint, by Ethan Cohen 7/18/0 (2) EPRI® Intelligrid
19
Why?
Enables …
Energy
efficiency
More
renewables
Consumer
empowerment
20
Growing Complexity In Modern Grids…
21
Capabilities required to manage the future grid
22
Flexibility for emerging capabilities
Wide-Area
Protection &
Automation
Wide-Area
Monitoring
& Control
Renewables
Smoothing
Delivery
Optimization
Reliability
Optimization
Renewables
Forecasting
Demand
Optimization
Asset
Optimization
23
Standards for open architecture
NERC
9Scalable
9Integrity
9Secure
9Ease of use
9Shareability
9Cost
effectiveness
9Ubiquity
9Openness
24
Smart Grid
Benefits
Increasing grid efficiency
Commissioner Wellinghof, U.S. Federal Energy
Regulatory Commission testifying to U.S. Congress,
May 2007
Smart Grid delivers:
9 Utility savings: $46MM/yr (2% total load reduction)
9 Environmental benefits: 290K tons of CO2 reduction
Source: Energy Information Administration & GE Estimates
26
Quantifying the benefits … demand response
Customers enrolled in direct load control programs, by
region
1,400,000
Customers
1,200,000
1,000,000
“Demand response is clearly the ‘killer
application’ for the smart grid.”
5 MM
customers
800,000
600,000
400,000
- Jon Wellinghoff, FERC Commissioner, Dec. 29,
200,000
2008
0
RFC
FRCC
MRO
SERC
WECC
NPCC
TRE
SPP
ASCC/HI
10000
41
GW
8000
6000
9Current DR programs can reduce peak load
demand by up to 41 GW (~6% of peak demand
for 2008).
9Utilities reported 13.6 GW of actual peak load
reduction in 2007.
9Smart grid-enabled DR programs may achieve
peak load reductions of 7%-22%1
4000
1Electric
Advisory Committee, “Keeping the
Lights On in a New World,” January 2009
2000
ns
e
C
R
d
an
ap
An
ac
ci
lla
ity
ry
Se
D
rv
em
ic
es
an
d
Bi
dd
in
g
M
ul
tip
le
R
O
ea
th
l-T
er
im
C
e
rit
Pr
ic
al
ic
in
Pe
g
C
a
k
rit
Pr
ic
al
ic
in
Pe
g
ak
R
eb
at
Ti
e
m
e
of
U
se
nc
y
ge
es
po
tro
l
on
C
d
D
em
tL
oa
D
ire
c
In
t
er
ru
pt
ib
le
0
Em
er
Potential Peak Load Reduction (MW)
Current potential peak load reduction, by DR program
12000
Source: FERC Assessment of Demand Response & Advanced Metering,
December 2008
Demand Optimization – Value to Consumer
Demand
Smart
Thermostat
Consumer
Interface
Smart
lighting
Smart Meter
Efficient
appliances
Pacific Northwest National Laboratory announces the
results of two studies demonstrating consumers and
information technology can play an active role in
managing the grid
“On average, consumers who participated in the
project saved approximately 10 percent on their
electricity bills”
28
GE roadmap for a Smarter Grid
What it is
Demand
optimization
Manage peak via control
of power consumption
Why
Utility Value/MM Customers*
Defer upgrades, optimize
generation & renewables
$16MM/yr, 51K tons of CO2
reduction+
Res. consumer savings up to 10%
Based on 1.6% peak load reduction using critical peak
pricing resulting in reduction in fuel costs and deferral
of generation capacity
Delivery
optimization
Reduce delivery losses in
distribution systems
Less energy waste and
higher profit margins
Asset
optimization
Prognostics for proactive
equipment maintenance
Reduced outages and
focused maintainers
Reliability
optimization
Wide Area Protection &
Control
Increased network
performance & reliability
Renewables
optimization
Use of Forecasting &
Smoothing
Compensation for
production variability
$7MM/yr,, 45K tons of CO2
reduction+
Based on 0.2% loss reduction and 0.5% CVR peak
load reduction resulting in reduction in fuel costs and
deferral of generation capacity
$11MM/yr, ~4.5 yr ROI
Based on system-wide deployment of advanced
transformer M&D resulting in transformer life
extension and reduction in inspection,
maintenance & repair costs
$7MM/yr
Based on the deferral of the capacity upgrade of
two 220kV transmission lines for 3 yrs (each line
30 miles long with a cost of upgrade of $1.5MM
per mile)
Key step for meeting RPS targets,
especially in areas with weak
grids
*Utility savings are approximate annual
savings per one million customers
+ $85/kW-yr peak generation capacity value
29
Policy Discussion
North American trends and drivers
State Programs and Policies…Dealing with generation in a carbon constrained world
State & Market Policy…… Wholesale markets still evolving
RPS…… Evolves to become one of the solutions for GHG emissions
Energy Efficiency & Demand Response…... Increasing use of programs, impact varies
Environmental Policy….. States tackling “sticky” issues
CO2/GHG Policy….. States feel the need to take action
CAIR/CAMR….. Cleaner air
Regulations to address water scarcity.….. Usage restriction may impact gen. type & output
Transmission Expansion….. Federal & state help on the way, conflicts & timing
Fuels, Supply, & Price….. Supply & Government policy driving the fuel of choice
Natural Gas….Takes on a bigger role in generation; Can supply match?
LNG.…. The backstop for NG; Are supplies secure?
Coal/IGCC ..… Uncertain future due to policy & technology constraints
Nuclear..…The holy grail with issues
Oil..…Small role but potentially significant
31
Importance of Policy Incentives
Source: EER
32
Optimizing our electrical infrastructure
Through knowledge and empowerment
System capacity
Demand
Time of use rates
Base rate
0
2
4
6
8
High
Peak
2X-4X
Base
3X–15X
Base
10
12
14
16
18
20
22
24
33
Regulation must reward utility efficiency
Per Capita Electricity Sales (kWh/person)
14,000
U.S.
10,000
CA
6,000
2,000
0 1960
1973
2008
34
Wind RPS and purchase obligations
Wind Issues/Outlook
US Wind Installations and RPS, 2008
High $/kw costs drives continued need for
subsidies
Capital dries up, Stimulus $$ need to start flowing
National RES policy needed to drive growth
Bottlenecks driving transmission needs
Cumulative Wind Power Capacity
Projected Growth, 2000-2020(MW)
Source: EER
Capital supply & transmission constrains growth
35
Energy efficiency and demand response
Trends/Observations
States trying to favorably impact conservation & efficiency
Energy Efficiency Resource
Standards
Proliferation of Energy Efficiency & Demand Response
programs
Electric consumers do not see utility wholesale cost volatility
Income factor impacting demand
Activists: ban new transmission to encourage efficiency in NE
Impact
EE program impact limited, lg. size housing dampens
results
CA programs have averted construction of 15 large power
plants
NY peak shaved by 1GW during peak period by DR
program
Industry recognizing DR is cost effective and profitable
States adding smart meters, transparent pricing
Source: Pew Center on Global Climate
Change
EE & DR Programs Impact Need for Gen. & T&D
36
Emissions, CO2 and GHG
Regional Initiatives, Driving Uncertainty
States & Provinces taking lead on legislation
State Regulatory Commissioners target CO2 emissions
Financial burden to consumers not clearly articulated
Shift to out of state generation…impact on system reliability?
Emissions’ leakage…cost of CO2 to be a major contributing
factor; Penalties
Legislation adds burden to the states
Generation mix critical to success
NG to play a major role.
Renewables becoming more important
Proven “clean technology” can revitalize Coal
Efficiency & Demand response programs become more critical
Meeting deadlines very challenging
RGGI
CO2 capped at 188 tons through 2014; capped at 169M tons by 2018
Midwestern Regional Greenhouse Gas Reduction Accord
Reduction of GHG emissions 60-80 % below 1990 levels by 2050
Western Climate Initiative
Reduction of GHG emissions 15% below 2005 levels by 2020,
industry wide.
Gas Generation & Renewables Big Winners
Sources: EPA, Pew Center on Global Climate Change; RGGI/WCI/CERA
37
Transmission expansion needed
Average Congestion and RMR Costs, 2001–06
$7
$6
9Stagnant investment over the past 15-20
years creates congestion and limits
renewable implementation
9EPAct 2005 created NIETC, FERC
backstop authority to site new transmission
lines
92005-09 Federal vs. States’ rights issues
$5
$$/MW
$4
$3
$2
$1
$0
PJN
CAISO
NEW YORK ISO
ISO NE
ERCOT
Transmission Projects Across N America
92000 investment level grows from $5B to
10B/yr by 2006, expected to reach to
~$13B/year by 2010 (2008 data)
9Total transmission investments of $150
billion through 2022 (2008 data)
Legislation & Investments needed to address
Congestion & Enable Renewables Growth
Sources:, EIA, CERA, CEC
38
Summary
Economic and environmental demands are forcing functions
Investment in technology can accelerate their adoption
The Smart Grid is dynamic and must be viewed as a system
Demand response is the 5th fuel … let’s compensate for it
Policy will drive behavior
39
Smart Grid Learning Series … next week
Session 1: The Smart Grid and its Benefits
Session 2: The Smart Grid… The Consumer View
Session 3: The Smart Grid… The Distribution View
Session 4: The Smart Grid… The Transmission View
Session 5: The Smart Grid… The View from Rural America
40