2010 Smart Grid

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S S UE B R I E F
February 2010
www.APPAnet.org
Smart Grid
Summary
Smart grid investments into the electric grid are often
touted by the national news media,in Congress and the
Administration.However,there is often confusion
about what the termmeans and often the reference to
smart grid intimates utilities and the electric power de-
livery systemare not functioning well,when,in fact,we
have an outstanding record of reliability.To the Ameri-
can Public Power Association (APPA),“smart grid”
means utilizing our existing infrastructure to its fullest
potential.In the past,technological advancements have
been focused on actual assets like transmission lines,
substations and the power plants.More recently the
focus in Congress,the Administration,and the media
seems to have turned to getting the “latest and great-
est,” as fast as possible and typically centered on the
consumer’s home.While we agree that advancing tech-
nologies have the ability to do more and make us
“smarter” about what is going on,the industry (and
how we use energy) does not often get credit for many
of the concepts already in place that make the grid run
“smartly.”
Electric utilities are also concerned that every small
advancement in technology be cost-effective and ready
for commercial deployment.It is also important to note
a difference between electric and telecommunications
technologies—while speed and impact are considered
best in terms of advancements in information technol-
ogy,the best advancements for electric utilities are
centered on safety and connectivity.Technological
advancements can often significantly improve the re-
sponse to any disruption on the grid,and improving
safety for our employees and public is of the utmost
importance to our operations.
Despite these concerns,APPA believes there is a
strong role for the implementation of smart grid tech-
nologies as long as they are proven and cost-effective.
Many of APPA’s members are leaders in implementing
such workable technology.
Background
APPA and its members have struggled with the amor-
phous definition of “smart grid” and the subsequent
confusion this has often caused in Congress and the Ad-
ministration involving both policy and funding matters.
APPA recently released a document entitled “Smart
Grid Essentials.” The intent of this document is to ex-
plain what smart grid is and what it can do to help con-
sumers,distribution systems,transmission systems and
generation operations.The document highlights the
changing relationship between the utility and the con-
sumer.In the past,the electric utility industry operated
in a linear fashion:utilities generated electricity that was
then transmitted first over transmission and then over
distribution lines to the end-use retail customer.With
evolving technology,including distributed generation,
renewable generation,increased ability to store electric-
ity,and two-way meter communications,the user and
utility can interact and modify consumption,impacting
overall demand for electricity over time.
When APPA’s members were surveyed regarding
their major objectives for implementing smart grid
technologies,they responded as follows:(1) maximize
the effective use and investment in existing grid assets;
(2) bring more detailed information about end-use
loads (i.e.,demand) and their effects on the systeminto
utility operations;(3) coordinate capabilities of high-
load appliances,consumers and distributed generation
Smart Grid
www.APPAnet.org
in order to assist in maintaining high systemreliability
while reducing customer costs;and (4) improve the
process of balancing energy supply with real-time de-
mands to minimize utility operating costs through
more effective load control and response.
Components of the electric grid that already exist or
are in place that are expected to grow as technology ad-
vances include:(1) intelligent home area networks and
appliances;(2) advanced metering systems;(3) two-way
communication between customer networks and the
utility;(4) processing of real-time information about
generation,distribution and transmission systems;(5)
use of data and systemcontrols to integrate customer
load into the distribution,transmission and generation
optimization process;(6) continued education of the
consumer to take advantage of the information and
choices available and;(7) data and information flow
across the utility.For those in the utility business,these
concepts are not new.However,improvements to these
areas certainly can make electrical systems smarter.
Congressional Action
During the 110th Congress,the Energy Independence
and Security Act (EISA) of 2007 was signed into law.
The goals of this legislation included fostering renew-
able fuels,increasing the energy efficiency of buildings
and vehicles,and enhancing the nation’s energy inde-
pendence.This legislation also includes a characteriza-
tion of what Congress should deemsmart grid—
increased use of digital information and controls tech-
nology;optimization of grid operations and resources;
deployment and integration of distributed resources,in-
cluding renewables;incorporation of demand response,
demand-side resources,and energy-efficiency resources;
integration of smart technologies (real-time,automated,
interactive technologies that optimize the physical oper-
ation of appliances and consumer devices) for metering,
communications,and distribution automation;integra-
tion of advanced electricity storage and peak-shaving
technologies;and development of standards.With those
characterizations,the legislation established “The Smart
Grid Investment Grant Program” under which the
Department of Energy would reimburse up to 20 per-
cent of qualifying smart grid investments.The Ameri-
can Recovery and Reinvestment Act of 2009 boosted
this programby providing $4.4 billion that is open to
utilities involved in smart grid development.The
legislation also expanded opportunities for smart grid
demonstrations that had a 50 percent cost-share
requirement and provided $100 million for worker
training for green jobs.A number of APPA members
have received grants under these programs.
It has also become increasingly apparent that new
smart grid technologies will have ramifications for grid
security and for how electric utilities might be regu-
lated in the future.These issues will continue to be ex-
plored in Congress—the cyber security of the grid has
already drawn intense congressional scrutiny over the
last few years.
APPA Position
APPA believes there is a role for the implementation of
smart grid technologies as long as they are proven and
cost-effective.We agree that the federal government
should play the lead role in defining exactly what smart
grid means so lawmakers,media,stakeholders,utilities
and their customers all have a common understanding
of the term.Many public power systems are already in-
vesting in communications systems to homes,distribu-
tion automation,advanced meters,customer-side
devices and other demand response applications that
might be labeled as “smart grid” technologies.How-
ever,we also agree that many components of the system
have yet to be developed.