The Debate about Smart Grids Continues

Stephen DeAngelis

May 27, 2009

The stimulus package passed earlier this year by Congress contains funding for smartening up America’s power grid. An office park in northern Kentucky, sponsored by Duke Energy, is one of several proof-of-concept projects currently underway [“Stimulus Dollars Energize Efforts To Smarten Up the Electric Power Grid,” by Peter Slevin and Steven Mufson, Washington Post, 10 March 2009]. Slevin and Mufson describe some of the inventions that will help make the grid smarter:

“One gizmo allows you to run the dishwasher when electricity is cheapest. Another decides when to fire up the water heater if you plan on a 6 a.m. shower. Another routes solar energy from a rooftop panel to a battery in your garage and the wiring in your house. Outside, towers equipped with sensors tell the electric company exactly where a storm has knocked out power. The power grid itself can react to trouble, rerouting juice from a healthy part of the system or isolating itself to prevent a larger meltdown.”

They go on to define what the term “smart grid” means:

“Smart grid refers to an array of switches, sensors and computer chips that will be installed at various stages in the energy-delivery process — in power stations, in electricity meters, in clothes dryers — in the next two decades, if the vision holds and the technology works.”

I believe the first time I discussed smart grids was in a post entitled GE, Google, and Grids. I further discussed smart grids in a later post entitled Building Up rather than Bailing Out. Thanks to IBM and General Electric television commercials, a lot of people have been hearing about the benefits of smart technology. Not everyone, however, believes that smart grids are a good way forward [“The Static Over Smart Grids,” Heather Green, BusinessWeek, 13 April 2009 print issue]. According to Green, utility companies are in favor of smart grids while consumer advocates worry about fluctuating energy prices. She writes:

“Can technology make the U.S. more energy-efficient? President Barack Obama certainly hopes so. As part of the $787 billion stimulus package, the Administration is allocating billions to subsidize the purchase of new technologies by utilities across the country. The idea, Obama said earlier this year, is to ‘make our energy bills lower, make outages less likely, and make it easier to use clean energy.’ But there’s a hitch. From California to Colorado to Maine, consumer groups are expressing concerns about these efforts. In particular, they’re leery of giving utilities the ability to change electricity prices on the fly, jacking rates up on hot summer days, for instance. Most utilities are prohibited from using variable prices now, but the flexibility to raise rates for a community as demand rises is essential for utilities to get the full benefit of new technology. Consumer groups worry these so-called smart-grid technologies are just another way for utilities to make extra money off consumers. … The controversial aspect of smart meters is that they let utilities create real-time markets for electricity, with prices that could vary by the minute. If demand is low on a cool fall night, prices are low. But if demand surges during the summer as people blast the air conditioning, the utility can raise prices in the region to discourage usage. That saves utilities money because they wouldn’t have to build power plants to meet high demand. And, supporters argue, consumers would learn to conserve energy. … Consumer advocates have a different perspective. … An elderly woman home alone on a summer day could see rates in her community triple or quadruple without being able to do much about it.”

Green reports that there are “three ways to introduce flexible pricing.” States “could mandate it for all customers; they could have it be the default but allow customers to opt out; or they could make flexible pricing a voluntary program that customers choose to join. Studies have shown the mandatory and default options result in the biggest drops in energy use. But consumer groups vow to fight those approaches.” She goes on report that utility companies, while not thrilled with it, believe they could still benefit from the voluntary program. She concludes that politicians will likely move cautiously to implement any scheme as long as the recession lingers. The Economist believes that it is about time for the American power grid to get a facelift [“Smart move,” 21 March 2009 print issue].

“America’s power system has changed remarkably little over the past century, with centralised utilities delivering electricity to passive consumers. A smart grid would use digital technology to collect, communicate and react to data, making the system more efficient and reliable. For example, sensors would help utilities locate problems and fix them quickly—power cuts now cost businesses more than $100 billion each year. A nimble grid would integrate electricity from both predictable sources, such as coal, and fickle ones, such as the sun and wind. Meters, to monitor both use and prices, would give consumers more control over their electricity bill. Advocates predict that some consumption would move to cheaper, off-peak hours, easing congestion and reducing the need for new infrastructure. Consumers would save money and emissions would fall. Installing smart meters in 25% of American homes, GE estimates, would be equivalent to removing 1.7m cars from the roads. Plug-in hybrids, meanwhile, could charge at night, when demand is low, and even pump power back to the grid while parked during the day.”

The article notes that there are a number of pilot projects testing the technologies that will coordinate a smart grid, like the one in Kentucky. They single out two projects, one at the Illinois Institute of Technology and the other in Boulder, Colorado, where Xcel Energy, a utility, is trying to transform the city “into what it calls the world’s first ‘smart grid’ city.” Although the magazine applauds these efforts, it believes that the time has come to scale up and move forward with smart grid technology. The article concludes:

“At the national level, standards are needed so that innovations can interact seamlessly. The National Institute of Standards and Technology, part of the Commerce Department, is expected to present only a rough framework by the summer. The momentum for a smart grid continues to build.”

Another pilot project is being conducted by Current Group, a Germantown, Maryland, based technology firm. The company “has taken over a nondescript house in Bethesda and turned it into a laboratory for smart-grid technology” [“Engineering a Smart Grid For Energy’s Future,” by Kim Hart, Washington Post, 27 April 2009]. Hart reports:

“Smart-grid projects require many components — digital meters and software systems, for example — allowing both smaller and larger firms to compete. Current started out aiming to provide broadband service over power lines, but shifted to providing the grid communications system when utilities’ adoption of Internet via power lines was slower than expected. GridPoint, [which provides software and information technology services to help run the smart grid and is part of the Boulder project mentioned by The Economist], initially produced appliances to store energy produced by solar panels.”

I believe that it’s not a matter of “if” smart grids will be created but “when.” With utility companies facing opposition to new power plants [see, for example, by post entitled The Conundrum of “Clean Coal”] and usage continuing to rise, smart grids offer a way to mitigate the effects of potential power gap while things get sorted out. If plug-in automobiles do ever catch on (and that’s a big “if”), then a smart gird will be absolutely essential for keeping the system up and running. I agree with The Economist that America is long overdue for an overhaul of its electrical grid system and that overhaul needs to include smart grid technologies. I believe the grid will be smart enough to accommodate the elderly woman home alone on a hot summer day and still make the system much more efficient.