Shawna Smith-Dias Research Paper Draft

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21 Νοε 2013 (πριν από 3 χρόνια και 8 μήνες)

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Shawna Smith

Research Paper Draft

BIS 421

Spring ‘10

Smart Grid Incentive
: Who is Responsible

The existing utility infrastructure in the United States delivers electricity from points of
generation to consumers through
200,000 miles
of high
voltage transmission lines and 5.5
million miles of local distribution lines
. T
housands of generating

are linked through this
to factories, homes

and businesses.

Distribution is accomplished via two primary
systems: the transmission

system delivers electricity from power plants to distribution
substations, and the distribution system delivers electricity from distribution substations to
consumers. America’s traditional electrical grid is the largest and most complex interconnected
nergy network

on Earth

a marvel t
he National Academy of Engineering
has deemed

greatest engineering achievement of the 20

the largest industrial investment in the
history of humankind (Weeks).
But this marvel is fast approaching a day
when mounting
and increasing demand

test its
. With an imminent need to rethink the
system from the ground up we are forced, in effect, to develop a smarter grid

The traditional electrical grid was constructed of intricately interdependent components
and operates on a rapidly shrinking margin of error.

That is to say, that

the bigger the system
expands nationwide to meet population and development growth, the mor
e inevitable its collapse

as a reliable provider of our energy needs

ith the technology of homes racing ahead at
broadband speed,
the existing power grid is stuck in the days of rotary
dial phones (Kingsbury,
2010, p.1).

Something must be done if we ar
e to avoid more frequently occurring system
failures, such as

the colossal blackout

of 2003
, whe

50 million Americans lost power due to a
simple error at the power plant in Ohio. The

and expens

of the grid are a
tremendous drain on

l resources throughout the world.
As we

more and more
dependent on electricity to perform even the most

daily tasks, the grid's inevitable
shortcomings will take a toll on populations around the globe.

The solution is t
he smart grid


r elec

distribution network

romises to
make energy delivery

more reliable, efficient, cleaner, and cheaper
. These benefits−
and the
pressing need for a newly

designed system−
are very real
, but they are not without substantial
costs. Estimates

of the upfront investment that must be made to modernize the

grid range from a

$100 billion
, according to Energy Secretary Stephen Chu, to an astounding

trillion dollars
, according to

the Electric Power Research Institute (EPRI)

While fe
w might
quibble with the long
term benefits that will result from this investment
, there is a fundamental
standing in the way of smart grid development that surprisingly few people have
given thought to: who will be the proponent of smart grid t

The traditional economic model of supply and demand does not seem to supply a ready
answer. Normally, an increase in demand
by consumers, say for electricity,
will be met with an
increase in investment by those able to profit from it, e.g., t
he utility companies. However,
neither group seems to be a strong candidate for
championing the smart grid system. Consumers
will certainly benefit from decreased energy costs in the future if a more efficient system is put
into place. But most electric
ity consumers are, it seems, short sighted and would be opposed to
substantial upfront costs now in exchange for the promise of cost savings in the future. People
also move around, which could give them less incentive to make an investment that they will
reap the benefits from.

It is also difficult to see what financial incentives would prompt utility companies to
invest in the smart grid. After all, how many companies would foot the bill for expensive
changes that have the intended purpose of reduc
ing the demand for their product in the future?
utility companies are going to be the ones pushing for change there will have to be a more clearly
defined benefit for them to do so.

Nor is it clear that governments at either the state or federal leve
l will be able to push
through this change if public sentiment is not behind it. Officials are, after all, accountable to
their constituents and will have to be mindful of that fact in designing our nation’s new energy
infrastructure. If government is go
ing to be the impetus of change it is going to have to come up
with a way to justify the cost to those who are able to vote them out of office at the next election.

What this paper seeks to explore is how these three groups−consumers, energy
companies, a
nd government−
have acted to promote the development of a smart grid, evaluate
their motives and likelihood of success, and then finally to suggest ways that they may be
incentivized to support smart grid initiatives in the future.






Obama administration

unched a clean
energy grant

for advanced electricity grid
, $11 billion dollars

dedicated to the grid within the stimulus package.
The smart grid is
advancement in technology, of monitoring from the output of energy to the c
onsumption using
megabytes of data to move and control megawatts of electricity. The president Barack Obama is
urging Congress to pass legislation in the new technology as wells as incentive programs.
the advancement of the smart grid
, will

there be
controlled rates, in comparison to
existing systems.



The Smart Grid
similar to the traditional grid consists of a dozen little components such
as advanced smart metering infrastructure, consumer system sensors, electric distribution syste
upgrades, electric transmission system upgrades, equipment manufacturing (smart appliances),
and integrated/ crosscutting system designs.

These components
of the Smart Grid
are currently
being designed and tested
in Florida, California, Texas and Illino
is through the clean energy



Utility companies are creating consumer incentives to promote the implementation of the
smart grid. Why are utility companies promoting incentive packages to sell more efficient
energy, resulting in less
energy, less consumption and ultimately less profit?



The assumption is most of the money for the grid would come from power companies
and private investors, but the cost is eventually passed onto consumers in the form of bigger
electricity bills. The added cost to the consumer will appear in the line on your

electric bill called
transmission and distribution. That's the added cost you pay each month to maintain and renovate
the grid.