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 March 10, 2009
Smartening the Grid - What's at Stake

 GLOBE-Net - When President Obama signed into law the economic stimulus act, he opened the door for a massive infusion of capital to bring new forms of clean energy on line to reduce America’s dependency upon foreign oil, and to deploy technologies that would help reduce overall greenhouse gas emissions.

Of all the many initiatives that will be funded, none will have a greater impact in terms of bang for the buck than smartening up the nation’s 1960’s era electricity grid. Energy conservationists have always said the cheapest form of new energy is harnessing the energy that is now wasted, and our electrical grid wastes energy to the extreme.

Arguably one of the most significant technological achievements of the 20th century, despite its size, the national electricity grid system is actually quite dumb. Power usually flows one way, and utility managers receive little or no information about how well it’s being used or whether the amount of energy flowing to a particular region or city is too much or too little.

Parts of the system are under built, while others components cannot operate efficiently due to outdated regulatory constraints or fractured connectivity to other parts of the network.

This costs big time. One study found that transmission congestion currently costs consumers in the eastern United States $16.5 billion per year in the form of higher electricity prices alone.

"The grid is just another system, but the electric grid is operating blind," said Scott MacDonald, a partner with Emerald Technology Ventures, a Montreal-based venture capital firm that specializes in energy technologies in an interview with the Toronto Star.

His company and engineering giants such as Cisco Systems stand to gain from the billions of dollars earmarked in the economic stimulus package to upgrade the U.S. transmission infrastructure, including the addition of smart-grid technologies. Cisco’s leaders have identified the "smart grid" as one of the top company-wide initiatives to be pursued in 2009, and the most likely place to build a billion-dollar business in the next five years.

The vision of creating a ’smart grid’ is shared by other business giants such as IBM, Microsoft, Accenture, and Hewlett-Packard.

Smart grid companies garnered more than $200 million in venture capital investment in the third quarter of 2008, up from an average of $30 million in the 10 previous quarters, according to the San Francisco-based Cleantech Group.

A smart grid is one that incorporates information and communications technology into every aspect of electricity generation, delivery and consumption in order to: minimize environmental impact; enhance markets; improve service; reduce costs and improve efficiency.

The term "smart grid" is somewhat fluid, encompassing a mixed bag of technologies from smart meters in houses and businesses to area networks.

The true vision of the smart grid is a self-healing, automated grid that can manage complex flows of electrons, from the hundreds - potentially thousands - of large and small sources of power to the millions of homes, businesses, industrial customers and, potentially, electric cars that require that energy, notes Adam Stein a co-founder of TerraPass, a designer of energy saving consumer products.

In the Brave New World of tomorrow, one could envisage energy transfers between individual houses and the energy grid on a continuous basis, even drawing excess electricity from plug-in vehicles that have energy to spare that can be given back to the grid.

Such devices as smart meters, programmable thermostats, home automation software, are slowly coming on line - allowing consumers to participate in the smart grid by adjusting their electricity use automatically based on fluctuations in electricity availability or rates.

But the most desperately needed part of the smart grid, according to TerraPass are the transmission lines and control software that tie together far-flung renewable energy sources (such as wind and solar) and energy storage devices (such as electric car batteries).

Unlike the present crazy quilt system, a true smart grid will be able to move electricity from wherever it’s being generated to wherever it’s needed - potentially thousands of miles away.

As utilities undertake the very expensive business of modernizing their transmission and distribution networks the natural step to introduce microprocessor-based intelligent technologies that will allow them to monitor energy usage down to the millisecond, and to effect routing changes to meet crisis situations or to restore power when systems collapse.

Unlike phone or cable companies, which can pinpoint and often fix network problems remotely, a local electric utility often relies on phone complaints from customers to find out about outages on the network.  "They’re in the dark ages compared to the telecommunications network," says MacDonald.

So too, because of somewhat outdated design parameters, the grid often is poorly set up to accept power coming from alternative-energy sources, such as wind or solar energy farms. It has been estimated that a backlog of 300,000 megawatt s of wind projects is waiting in line for connection to the grid because of inadequate transmission capacity.

Demand-side management strategies have been tagged by many utilities as the preferred way to relieve the pressure for new energy generation while providing flexibility in the grid to accommodate new technologies.

But while innovative incentive schemes abound, the real savings are dependent upon the wide scale deployment of smart meters at the unit level - i.e. the home or office - that will send a steady stream of information back to the utility making it possible to read meters remotely and to determine more precisely the location of power outages.

Consumers benefit also, because smart meters give them detailed information on their electricity usage and can pinpoint areas of excessive wastage.

The U.S. Stimulus package provides $4.5 billion to Energy Department’s Office of Electricity Delivery and Energy Reliability to upgrade the nation’s electricity grid with smart grid technology and facilitate the development of related technologies, such as energy storage. The department recently announced its intention to issue a Funding Opportunity Announcement ("FOA") under the heading, "Smart Grid Demonstrations."

This program would provide funding under cooperative agreement arrangements for "regionally unique" projects in three general categories: Regional Smart Grid Demonstrations, Utility-Scale Energy Storage Demonstrations, and Regional Synchrophasor Demonstrations.

DOE hopes to fund projects that quantify the costs and benefits of the various technologies, verify their viability, and validate their business models for deployment around the country. The funds will also support implementation of the Smart Grid programs authorized by the Energy Independence and Security Act of 2007.

Former U.S. Vice President Al Gore wrote in a New York Times article last year on the need to build a unified national smart grid, one that could cost upwards of $400 billion. That estimate may be conservative. But the savings that could arise from smartening the grid are far greater.

Taken together, these features of a smart grid will facilitate both clean energy and energy efficiency, all while providing more reliable service. More importantly, there are substantial economic benefits in the form of new jobs and even new industries.

A Smart Grid Jobs Report, released by the GridWise Alliance earlier this year  says that an estimated 280,000 new jobs can be created directly from the deployment of smart grid technologies. The report explains that Federal investment in a smart grid could act as a catalyst for these planned and immediate direct jobs as well as spawn many indirect jobs. More jobs gains are possible in Industries related to the utility sector whose business will be accelerated by the adoption of smart grid technologies.

These industries include: 

  • Renewable Energy Source suppliers whose jobs would be stimulated and accelerated by the advancement of enabling technologies
  • Distributed Generation suppliers of products and services for which demand would increase as a result of increasing end-user demand for the products
  • Plug-in Electric Hybrid Vehicles (PHEV) providers whose products have a success dependency on supporting charging and billing systems

The Electric Power Research Institute (EPRI) has completed an analysis showing that deployment of a "smart grid" could potentially reduce annual U.S. energy consumption by 56 to 203 billion kWh in 2030, corresponding to a 1.2 to 4.3% reduction in projected retail electricity sales in 2030.

In addition, a smart grid can facilitate greater integration of renewable generation resources and greater deployment of plug-in hybrid electric vehicles. The combined deployment of seven applications enabled by a smart grid could reduce CO2 emissions by an estimated 60 to 211 million metric tons in 2030.

A recent DOE report reached similar conclusions, finding that by 2025, smart grid technologies could cut U.S. electricity consumption by 10%-15%, cut peak power demands by 25%, cut greenhouse gas emissions by 20%, drastically reduce power disturbances for businesses, and enable the delivery of high-quality power for digital electronic needs.

However measured, the benefits of smartening up the grid are enormous, making it a ’smart’ investment in these troubled economic times.