Understanding what smart grid means for utilities

Utilities today must decide whether to move ahead and invest in new technology that bears some risk, or to replace infrastructure with older, but more established equipment. (Artwork by R.W. Beck)

Ask a utility professional to define "smart grid," and chances are, you will get a stammered explanation or even perplexed silence, because the industry has yet to come up with—or even agree on—what the smart grid is.

Part of the problem is that a smart grid is not a single concept or technology, but rather like a basket containing various balls. The Illinois Smart Grid Initiative describes the "basket" as the modernization of the electric system through integration of new information-age technologies and strategic public policies to deliver more efficient operation, more efficient use of grid assets and more cost-effective expansion of the electric grid for the benefit of both the utility and the consumer.

The "balls" fall roughly into three categories:

• Smart devices

• Two-way communications

• Advanced control systems

Some elements already exist and are being deployed and used by utilities, while others are still in development. The confusion occurs because most people refer to a particular technology when they talk about the smart grid, rather than an entire system—never mind the policies and outreach that will be necessary to make the system work. Utilities must overcome this confusion if the industry hopes to reach the vision of a grid that allows us to manage our resources more effectively.

Old grid just won't do

The reasons we need a smarter grid are threefold, according to Mark Gabriel, senior vice president of energy for infrastructure consultant R.W. Beck. "First, customers want new ways to do business with all of their service providers," he said. The Internet and cellular communication have changed the way consumers buy everything, from groceries to vacations, and they are going to expect the same kind of control and flexibility from their utilities. "The old grid system won't be able to meet those expectations."

System operations and reliability are the second issue. "We have to maintain the infrastructure—that's a fact of life," Gabriel stated. "And if you went to replace your computer, you wouldn't buy one that's 10 years old. You would get the state-of-the-art model that is compatible with the programs and equipment that everyone else is using."

Finally, Gabriel noted, inevitable carbon legislation will demand that we use the grid more creatively. "The reality is that we will be building fewer conventional power plants and relying more on renewables, many of which are intermittent resources. You can't do that without a smart grid."

Getting there from here

The good news for utilities is that a smart grid can be reached incrementally—in fact, it can't be built all at once, said Gabriel. "The smart grid requires the integration of many elements, so it has to happen over a period of time," he explained. "Utilities will be able to add appropriate technologies in a 'no regrets' fashion."

It is already happening, helped along by funding from the American Recovery and Reinvestment Act, but also by simple attrition. When building a new substation or replacing an old transformer and the surrounding components, a utility has the choice of building the old way or adding intelligence at that level.

"Those are assets that will be on the system a long time, so it is important to look forward and choose equipment that provides the most functionality," advised Dave Berg, R.W. Beck national director of rates valuations and finance. "Even if you can't use the function initially, system components have a lifespan of up to 40 years. Don't box yourself in."

Western customers get on board

Among the forward-looking utilities are several Western customers, including Anaheim Public Utilities, Salt River Project and Turlock Irrigation District. Most of those projects focus on the proven technology of advanced meter reading (AMR). That makes sense, said Berg, who spoke at the Minnesota Muncipal Utilities Association on what the smart grid means to public utilities. "Utilities will be solving more and more of their power supply problems on the customer side of the meter, and AMR gives customers and utilities the ability to communicate with each other," he observed.  

"This technology provides customers with a better understanding and management of their consumption, and more hands on control over the cost of their monthly bills," said Jerry Forte, Colorado Springs Utilities' chief executive officer.

The municipal utility started its AMR project four years ago, and has only 80,000 meters left to install. At full deployment in 2010, more than 530,000 smart meters will have been installed.

In South Sioux City, Neb., AMR and load management technology offer a way of coping with demand that is expected to triple in the next three years. A feasibility study the city commissioned to determine the cost and payback of adding those capabilities to its grid put a $4 million price tag on the upgrade. The city has an extensive fiber optics network and high penetration of non-line-of-sight wireless services, so most of the infrastructure is already in place. "The study showed that would be a sound investment for the city, and most importantly, for our customers," said City Administrator Lance Hedquist.

Still, progress in implementing the plan has been slowed by the need to build a new electrical substation. Hedquist added that the city submitted a grant for some funding assistance under the stimulus program and is awaiting word on its application. 

Making the case

Clearly, bringing the grid up to 21st century standards will cost, and it will largely fall to utilities to explain to stakeholders why it will be worth the money.

As the Colorado Springs Utilities press release pointed out, its AMR system will give customers more control over their energy use, along with more accurate billing. Customers can expect quicker response to service problems, and the additional infrastructure will make it easier to add renewable generation systems to homes and businesses.

Lower labor costs, greater customer satisfaction and seamless load control associated with two-way communication add up to cost savings for utility and grid operators. The smart grid can make system planning and maintenance more efficient, while reducing theft and energy loss. Perhaps most importantly, utilities will be able to use existing infrastructure to effectively manage load, thus delaying or even avoiding building costly new power plants and transmission lines.

And the benefits keep rippling out through the community, the state and the environment. Greater reliability and shorter outages can reduce the burden on local fire, police and other city resources that must help with such events. A modern electricity infrastructure that supports the integration of renewable resources will help states meet mandates and reduce greenhouse gas emissions.

And there is much more, but the benefits of smart grid technology won't communicate themselves. There are plenty of resources—and, not surprisingly, conflicting information—on the Web. Read Web site of the Month: Smart grid round up to start your own research.

Resources

Illinois Smart Grid Initiative

R.W. Beck

American Recovery and Reinvestment Act

Minnesota Muncipal Utilities Association

Colorado Springs Utilities

People

Mark Gabriel

Dave Berg

Related articles

Energy Services Bulletin, April 2009
Advanced meters prepare Anaheim for smart grid future

Energy Services Bulletin, July 2007
Utilities manage loads, build relationships with TOU rates

Energy Services Bulletin, October 2009
Web site of the month: Smart grid roundup

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