Gaining a better understanding of the Smart Grid

Understanding a smart electrical grid, known as the "smart grid," is easy yet made very complicated. The smart grid is a way of essentially customizing your energy use. The smart grid uses methods of efficiency to consume electricity that need more attention in Congress and the media. The article below expounds well into the complexities of the smart grid very thoroughly and helps to illustrate all of its semantics and details. In addition to the article, is a link to a recent Congressional Committee in the House and Commerce that addressed the notions of a smart grid. The Congressional Committee: Electrical Transmission Infrastructure, Regulators, and Continuation makes an effort to establish our grid's future. Many of the current energy issues are up for discussion in the hearing. To see the hearing, click here and find the flashplayer on the right side of the screen.

The Economist: Energy
Building the smart grid
June 4, 2009

AROUND the world billions of dollars are being invested in clean-energy technologies of one sort or another, from solar arrays and wind turbines to electric cars. In order to accommodate the flow of energy between new sources of supply and new forms of demand, the world’s electrical grids are going to have to become a lot smarter.

The grids themselves have changed very little since they were first developed more than a century ago. The first grids were built as one-way streets, consisting of power stations at one end supplying power when needed to customers at the other end. That approach worked well for many years, and helped drive the growth of industrial nations by making electricity ubiquitous, but it is now showing its age.

One problem is a lack of transparency on the distribution side of the system, which is particularly apparent to consumers. Most people have little idea how much electricity they are using until they are presented with a bill. Nor do most people know what proportion of their power was generated by nuclear, coal, gas or some form of renewable energy, or what emissions were produced in the process. In the event of a power cut, it is the customer who alerts the utility, which then sends out crews to track down the problem and fix it manually.

The cure, many believe, is to apply a dose of computer power to the grid. Adding digital sensors and remote controls to the transmission and distribution system would make it smarter, greener and more efficient. Such a “smart grid” or “energy internet” would be far more responsive, interactive and transparent than today’s grid. It would be able to cope with new sources of renewable power, enable the co-ordinated charging of electric cars, provide information to consumers about their usage and allow utilities to monitor and control their networks more effectively. And all this would help reduce greenhouse-gas emissions.

What exactly would a smart grid look like? Many of the changes would be invisible. On the transmission and distribution side, sensors and digital relays installed on power lines will enable utilities to operate systems with greater efficiency and reliability. Today’s supervisory control and data acquisition systems, for example, typically provide data on the state of transmission lines every four seconds. Devices called synchrophasors can sample voltage and current 30 times a second or faster—giving utilities and system operators a far more accurate view of the health of the grid. A broad deployment of synchrophasors could be used as an early warning system to help halt or prevent power surges before they develop into massive blackouts, says Jeff Dagle of PNNL.

Other smart-grid technologies would be more visible to consumers. Probably most important would be the introduction of smart meters, which track electricity use in real-time and can transmit that information back to the power company. Smart meters have been used by commercial and industrial customers for decades, says Eric Miller of Trilliant, an American company that installs communications networks and software to implement smart meters. But in recent years they have become cheap enough for wider deployment.

Smart meters establish a two-way data connection between the customer and the power company, by sending information over a communications network that may include power-line, radio or cellular-network connections. Once smart meters are installed, power companies can determine the location of outages more easily, and no longer need to send staff to read meters, or to turn the power on or off at a particular property. Smart meters also help to curtail the theft of electricity.

Eventually smart meters will communicate with smart thermostats, appliances and other devices, giving people a much clearer view of how much electricity they are consuming. Customers will be able to access that information via read-outs in their homes or web-based portals, through which they will be able to set temperature preferences for their thermostats, for example, or opt in or out of programmes that let them use cleaner energy sources, such as solar or wind power.

As well as giving utilities more control, smart meters also give them more flexibility. In particular, they can vary the price of electricity throughout the day in response to demand. Telling people that electricity is more expensive when demand is high will encourage them to do their laundry when demand has fallen and electricity is cheaper, says Rick Stevens of Hydro One, a power company in Ontario that has installed almost 900,000 smart meters to date and plans to start sending price signals to its customers in 2010.

This could be done by showing real-time price and usage information on a display so that consumers can decide whether to turn on the washing machine. Studies have found that when people are made aware of how much power they are using, they reduce their use by about 7%. With added incentives, people curtail their electricity use during peaks in demand by 15% or more. But eventually it should be possible to do it automatically, so that the dishwasher waits for the price to fall below a certain level before switching on, for example, or the air-conditioner turns itself down when the price goes up.

This is more complex than today’s pricing, of course, but customers will be able to save money if they are prepared to put up with a bit more complexity. “If you don’t want to participate, then you’re going to pay a much higher rate per kilowatt-hour,” says Peter Corsell of GridPoint, a company that has developed a web-based portal that lets people respond to price changes from utilities. “And if you want to opt in, you may save a whole lot of money.” During a one-year pilot study carried out by PNNL, for example, consumers reduced their electricity bills by an average of 10% compared with the previous year.

The advantage from the utility’s point of view is that it becomes easier to balance supply and demand by reducing consumption at times of peak demand, such as during very hot or cold spells, when people crank up their air-conditioners or heaters. As well as improving the stability of the system, it could also enable utilities to postpone the construction of new power stations, or even do without them altogether, by reducing the peak level of demand that they have to meet.

Implementing all this will not be cheap. A smart meter costs about $125, and can cost several hundred dollars more to install, once the necessary communications network and data-management software at the utility are taken into account. (Smart meters can collect customer readings as often as every 15 minutes, rather than every month, so utilities need new software to cope with all the extra data.)

The American government is spending some $4 billion from its economic-stimulus package on smart-grid initiatives, but providing a smart meter for every American home would cost far more: California’s investor-owned utilities alone are spending about $4.5 billion on deploying smart meters over the next few years. That implies that a nationwide implementation could cost around $50 billion. But PNNL estimates that $450 billion would have to be poured into conventional grid infrastructure to meet America’s expected growth over the next decade anyway. Mr Carlson, who now works for GridPoint, argues that a bit of thought is called for if the aim is to move to a new energy-management model, “as opposed to building more of what we’ve already got.”

One way to realign the public interest with that of the utilities is through a process called “decoupling” which breaks the direct relationship between electricity sales and profits.

As well as producing savings from improved operational efficiency, a smart grid could also save utilities money by reducing consumption, and with it the need to build so many new power stations. Reducing peak demand in America by a mere 5% would yield savings of about $66 billion over 20 years, according to Ahmad Faruqui of the Brattle Group, a consultancy that has worked with utilities on designing and evaluating smart-meter pilot programmes. Moreover, studies have shown that the best in-home smart-grid technologies can achieve reductions in peak demand of up to 25%, which would result in savings of more than $325 billion over that period, calculates Dr Faruqui. “Technology is expensive,” he says, “but not using it will be even more expensive.”

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