Intro to the Grid
•The Federal Energy Regulatory Commission
regulates the interstate transmission,
distribution, and wholesale selling of electricity
•State utility commissions regulate the retail sale
and pricing of electricity
•Utilities are allowed to pass on price increases
to consumers
•Without regulation, there would be little
incentive for utilities to operate efficiently
•Increases in costs such as facility expansion
must be approved by the regulating authority
•The addition of something like a “peaker plant”
is passed along to consumers
Energy consumption varies
Sources of Power at Varying Load
Seasonal Variation in Pricing
Things delivered to your home
What is the difference in production and
delivery of these three things?
Electricity cannot be stored in quantity
Why does storage matter?
• Power plants represent a
lumpy technology
• Huge investment and
“fixed” output
• Turbines can come on
and off line but take
considerable time to do
so
• What if you have a spike
in demand in a business
that cannot store
inventory?
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Peak demand generation
• One part of the solution for
demand variation is to build
peak demand power plants
• What are the problems with this
stand alone system?
– Asset utilization is not maximized.
Fixed prices are spread over
smaller number of units
– Small peaker plants are expensive
to run
– Variation in demand still exists
Why Grid?
• An electric grid allows
better demand fulfillment
and integration with
renewable sources
• Some generation facilities
may have excess capacity
while others have excess
demand
• Solution?
– Electricity trading helps
smooth out mismatches in
supply and demand
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Peak generation
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Peak generation
Peak generation
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Peak generation
Existing Power Grid
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http://www.npr.org/templates/story/story.php?storyId=110997398
Power Grid
• The system of multiple sources of supply and
multiple points of demand allow balancing the
variability in demand relatively sticky supply
• Transmission system operators try to coordinate
supply and demand
• T&D costs are about 30% of consumer electric bill
• A wholesale electricity market exists when suppliers
offer excess generation capacity to electric retailers
A simple grid
• The system, in theory, should be able
to reach market equilibrium assuming
we can calculate the price at each
node
• If the image at the right represents a power grid, several
paths connect the two red points to the right
• Between each set of nodes, transmission equipment
experiences loss as resistance converts some of the
electricity to heat – 6% of energy is lost in T&D
• This loss is equivalent to 63 million more cars on the road
• Lines are also designed with a maximum capacity
• not any path is a viable option depending on supply and demand
• Visibility of supply and demand is essential
Why Smart Grid?
• Since 1982 growth in peak demand has risen 25%/yr
more than transmission and distribution
• Reliability: Outages cost about $500/person/yr
– 41% more outages affecting 50,000+ people (1995-2000)
• Age: Expected lifespan T&D 40 years, average age 42
• CO2 Emissions: 40% from electric generation, 20% from cars
• Data Center Energy: Power quality critical, Demands doubling
every 5 years, Generation emissions close to airline industry
• Integration with renewable sources
• Security: Our current grid is centralized and thus at risk
– Natural disaster, terrorism
What is it?
• Demand response
– Customer controlled
• Behavior modification
• Home Area Network
– Utility feedback and variable pricing
• Smart Meters – allow detailed usage information, outage
identification
• Usage information allows utilities to charge based on time of use
• Addition of Distributed Renewable Generation
• Storage – PHEV’s? typically 95% of vehicles are parked
• Intelligent distribution devices and control systems
So Why is Cisco Interested?
"Our expectation is that this network will be 100 or 1,000 times
larger than the internet," said Marie Hattar, vice-president of
marketing at U.S.-based Cisco Network Systems Solutions. "If
you think about it, some homes have internet access, but some
don’t. Everyone has electricity access — all of those homes
could potentially be connected."
Distribution and Transmission Data
• Our Grid
• Denmark is a leader
in distributed grid
generation
• Significant
communication and
control
infrastructure is
needed
Home metering
• Many utilities want better visibility on usage
to support variable pricing, allocation, etc
• Austin Energy installed 500,000 meters and
sampled every 15 minutes. Annual data
storage went up 10x (200TB)
• In a 2009 study by the Federal Energy
Research Committee estimates a roughly 75%
rollout would mean organizing and managing
100 PB of information within 10 years
Home Area Networks
• Multiple visions exist regarding
integration with the grid
• Conservation and balance of
energy through smart
appliances
• Appliances which can be
controlled remotely either by
you or utility
• Appliances which you can
allow to turn themselves on or
off depending on utility price
Examples of HAN applications
All are consumer Opt-In
• AC metering. Utilities cycling AC off for short periods
or adjusting the temperature a couple of degrees
• Washers, Dryers, heat pumps, etc which turn on
when energy price levels hit a certain point
– Almost all
• Refrigerators that cycle differently based on usage
PHEVs and GRID
• EVs and PHEVs represent an opportunity for
smoothing on the grid
• 85% of cars are usually parked
• PHEVs represent a storage opportunity for
utilities
– Charge when demand is low
– Draw if when demand is high
• Your thoughts?
Other Big Opportunities
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Data Center Expansion
Data Organization and Retention
Data Privacy
Data Mining
Consumer Driven?
• Meta analysis of 9 studies across 3 countries
report an average of 3.8%* savings
• In aggregate this is significant, but for the
individual consumer … ?
• One in three utilities lacks confidence that
regulators are going to make it easy to recover
cost of implementing grid projects
– Regulators in many states have told utilities to redraw
smart grid plans to push consumer benefits higher in
to do lists
* My June bill was $230…I would have saved $8.75. Do I buy new GRID enabled appliances?
Top Ten Things Consumers Want
from the Grid
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Data
Guidance
Reliability
Control
Comfort
Convenience – and ease of communication with
utilities
Cost Savings – return on investment
Environmental Preservation
National Preparedness
Thoughtful Roll Out
Findings from Focus Groups on Grid
• Smart Grid Awareness is low
• Consumers have a favorable impression of
Smart Grid
Smart Grid Awareness is Low
• Those who had at least heard the term associated smart
grid with the development of new technologies to improve
reliability, efficiency, billing accuracy, and energy
management.
• Those who had not heard the term were asked to speculate
on what a “smart” grid might mean. Their assumptions
focused on improved efficiency, providing more
information to consumers, environmental enhancements,
billing accuracy, and reliability.
• No one brought up concerns about privacy, health issues,
higher bills, etc.
Consumers have a Favorable
Impression of Smart Grid
• With a little prompting on smart grid, participants in focus
groups generally described their overall feelings as
favorable or very favorable.
• Some said they needed more information before
expressing an opinion.
• A few raised concerns about the costs of the
improvements.
• Based on the information provided, key value propositions
varied from person to person and segment to segment.
• No one brought up concerns about privacy, health issues,
higher bills, etc.
Willingness to Pay for Benefits Varies
• Most consumers feel the benefits are significant
but are not willing to pay more
• Some consumers were willing to pay $3-4/month*
for benefits of:
– Improved reliability and restoration
– Increased access to renewable energy
– Availability of better usage information and new pricing
options
– Reduced greenhouse gas emissions and reduced need
for new power plants
* The methodology asked if the benefit was not important, important at no cost,
willing to pay $3-4 per month
Negative comments less impactful than
positive: Most compelling arguments are:
• Smart grid will help prevent blackouts and restore
power faster if they do occur
• Existing components in T&D are decades old and
wearing out
• Power demands are continuing to grow. Adding
grid components will allow demand to be met
• Adding distributed grid will allow renewable
sources to be integrated
• Smart meters will allow consumers to see energy
consumption and make better choices
• A smarter grid is necessary to maintain competitive
advantage
Negative comments less impactful than
positive: Less compelling arguments are:
• Grid improvements are necessary to meet
demands from electric vehicles
• Smart grid projects will create tens of
thousands of jobs and bring $12 billion to
economy in next two years
• Improvements can provide information
instantly for dramatic increases in efficiency
Smart Meter-Enabled Programs
Appeal to Most Consumers
• Time of Use Pricing (TOU)and Peak Time Rebates
(PTR) appealed to over half of participants
• Interest in TOU and PTR is driven both by savings
and altruistic motives such as helping the
environment or preventing outages
• Visibility into pricing is important for TOU and
PTR so consumers can make better choices
• Those preferring PTR like the idea of responding
occasionally for a higher level of reward
Smart Meter-Enabled Programs
Appeal to Most Consumers
• Those who didn’t want to participate in TOU
or PTR cited lifestyle or lack or interest in
managing consumption
• None expressed concern about those who
may be negatively impacted by TOU or PTR
• Most say they are participating in normal
energy saving behaviors
• Many have programmable thermostats but
few use them
What Drives Consumer Adoption
Technology Adoption is governed by:
1. Perceived advantage
2. Risk factors
3. Ease of use
4. Timing of benefits
5. Observability
6. Trialability
7. Price
8. Fit with practices
Challenges with Consumer Adoption
Perceived Advantage
• In the focus groups most were not willing to pay
more, some would pay $3-4/month
• There is an expectation that there would be
feedback on usage allow them to save money
• This raises the questions on to pay the system
including HAN components
• It is difficult to gain support for investment in
systems which work rather well now. Utilities
have done very well in managing the systems so
any problems are somewhat transparent
Challenges for Consumer Adoption
Ease of Use
• Most consumers in the focus groups have
programmable thermostats, yet many do not
use them
• This represents an inconsistency with
consumers saying the want to save money, but
they will not invest time to program the
thermostat
Challenges for Consumer Adoption
Timing of Benefits
• Many of the benefits to investment of the grid
accrue in the future
• It’s difficult to get consumers to invest in
problems they are not currently experiencing
– When gas prices rise, fuel efficiency becomes a
problem. We know we need to reduce our
consumption of fossil fuels, yet investment to
move this direction has been slow
Challenges for Consumer Adoption
Observability
• Benefits to the smart grid are largely
transparent
– If my power went out every week, I would happily
pay to fix it
Challenges for Consumer Adoption
Trialability
• The ability to alter consumers behavior to
reduce energy consumption is something we
can’t try before we invest in Grid
• This represents a smaller issue and can
probably be overcome through
communication and demonstrations
Challenges for Consumer Adoption
Price
• Regulators are pushing utilities to show consumer
benefit for investments passed through to consumer
• Meta analysis of pilot studies show that average savings
is 3.8%.
• Simple awareness of consumption may alter some
lifestyle choices – we might use the delay setting on the
washer
• The HAN will probably emerge over a decade or more
– Only if the premium for Grid enabled is small
– Marginal benefit (payback) of enabling appliance is low
– Appliances last 7-14 years
Challenges for Consumer Adoption
Fit with Current Practices
• On a daily basis we do not think about our
power consumption so we are not used to
managing the process
• It may take a while before people do their
laundry overnight
– The capability to do this already exists