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Nov 21, 2013 (3 years and 6 months ago)

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Realizing the “Smart Grid”:
What It Will Take

RMEL

105th Annual Fall Convention

September 8, 2008

Vail, Colorado

ROBERT W. GEE

PRESIDENT


GEE STRATEGIES GROUP LLC

2

Overview


What is the “Smart Grid”? What are its characteristics, and
what technologies does it cover?



What are the federal and state responsibilities in deploying
the Smart Grid?



How will Advanced Metering Infrastructure (AMI) change the
utility paradigm?



What are the challenges to Smart Grid/AMI deployment?




3

Origins Of The “Smart” Grid


Early 2000’s


Increasing awareness of aging power delivery infrastructure to meet surge in electricity demands and
digital technologies



June 2001: EPRI Report stated that power outage and power quality disturbances cost US economy $120 billion
annually for all business sectors



Security and vulnerability of power delivery system heightened after 9/11



January 2002: EPRI launched “Consortium for Electric Infrastructure to Support a Digital Society (CEIDS)” to
promote public/private partnerships to digitize power delivery system (now called “Intelligrid”)



President George W. Bush, Feb 23, 2002, Radio Address:


“America can’t meet tomorrow’s energy needs with yesterday’s infrastructure.”



Energy Secretary Spencer Abraham, May 8, 2002, releasing the DOE National Transmission Grid Study :


“America’s electricity infrastructure is ill equipped to sustain our country’s needs today, and wholly insufficient to
handle the growth in demand that is projected over the next few decades.”



2002 National Research Council Report commissioned by the National Academies:
“Making the Nation Safer: The
Role of Science and Technology in Countering Terrorism”

recommended technology be developed “for an intelligent,
adaptive power grid”






4

What Does The System Look Like Today?


“ . . [L]ocal distribution systems
that connect the power supply to
each consumer are effectively a
last bastion of analog,
electromechanically controlled
industry. This is a particularly
notable paradox given the fact
that the nation’s electricity
supply system powers the digital
revolution on which much of the
current and future value
depends.”

--

The U.S. Electricity Enterprise: Past, Present, and
Future Prospects, Galvin Electricity Initiative (August
2005).

Central Plant

Step
-
Up

Transformer

Distribution

Substation

Receiving

Station

Distribution

Substation

Distribution

Substation

Commercial

Industrial

Commercial

Residential





5

What is the “smart grid”?


Definitions and characteristics vary among stakeholders



In H.R. 6, The Energy Independence and Security Act of 2007 (EISA),
Congress defines the “Smart Grid” as embracing:



. . . increased use of additional information controls to improve operation of the electric grid; optimizing grid operations
an
d
resources to reflect the changing dynamics of the physical infrastructure and economic markets, while ensuring
cybersecurity; using and integrating distributed resources, including renewable resources; developing and integrating
demand response, demand
-
side resources, and energy
-
efficiency resources; deploying smart technologies for metering,
communications of grid operations and status, and distribution automation; integrating “smart” appliances and other
consumer devices; deploying and integrating advanced electricity storage and peak
-
shaving technologies; transferring
information to consumers in a timely manner to allow control decisions; developing standards for the communication and
the interoperability of appliances and equipment connected to the electric grid; identifying and lowering of unreasonable or
unnecessary barriers to adoption of smart grid technologies, practices, and services.



This is too wordy



Fundamentally, it involves the integration of advanced communications
and information technology into the electric grid (from generation to
consumer) for enhanced grid operations, customer services, and
environmental benefits.


6

Vision of the “Smart Grid”:

7 Characteristics


Enabling informed participation by customers



Accommodating All Generation and Storage Options (“Plug & Play” Capable)



Enabling New Products, Services and Markets



Providing the Power Quality For the 21
st

Century



Optimizing Asset Utilization and Operating Efficiency



Addressing Disturbances


Automated Prevention,

Containment, and
Restoration



Operating Resiliently Against Attacks and Natural Disasters (“Self
-
healing”)

Source: DOE Smart Grid Implementation Workshop June 2008


7

Schematic of the Smart Grid

Source: EPRI (circa 2002)

8

Smart Grid Technology Areas


1.
Advanced Metering Infrastructure
(AMI)


Smart Meters


Two
-
way Communications


Consumer Portal


Home Area Network


Meter Data Management


Demand Response


2.
Advanced Distribution Operations
(ADO)


Distribution Management System with


advanced sensors


Advanced Outage Management (“real
-
time”)


DER Operations


Distribution Automation

Source: NETL Modern Grid Strategy

3.
Advanced Transmission Operations
(ATO)


Substation Automation


Geographical Information System for Transmission


Wide Area Measurement System (WAMS)


Hi
-
speed information processing


Advanced protection and control


Modeling, simulation and visualization tools


4.
Advanced Asset Management
(AAM)


Advanced sensors



Integration of real time information with other
processes


9

Organizations Working on Smart Grid Today

FERC

DOE
-
OE

Grid 2030

GridWise

Alliance

EEI

NERC

(FM)

DOE/NETL Modern
Grid Strategy

GridWise

Program

GridWorks

NW
GridWise
Testbed

GridApps

CERTS

DOE
-
OE

CEC PIER

NYSERDA

CPUC

AMI

Galvin
Initiative




EPRI

Intelligrid




PSERC

NIST




GWAC







Utility
AMI





Open
AMI


CEC PIER

EPACT05
Hearings

Nat'l
Labs

EISA
-
2007

IEEE


DOE

Smart

Grid

Task

Force


Source: Eric Lightner,

DOE Office of Electric Delivery and Energy Reliability

9

10

EISA: The Federal Role In Deploying The Smart Grid


Policy Statement:



It is the policy of the United States to support the modernization of the electric transmission and distribution system to ma
int
ain reliability and infrastructure protection.



DOE Tasks:



Submit Smart Grid System Report after first year and every two years



Form Smart Grid Advisory Committee



Manage Smart Grid Task Force comprised of DOE, FERC, and National Institute of Standards and Technologies (NIST)



Lead Smart Grid Technology Research, Development, and Demonstration program



Submit Study of security aspects of Smart Grid systems



Submit study of effect of private wire laws on CHP facilities



NIST: Coordinates development of framework for protocols and model standards for information
management for interoperability of smart grid devices and systems



Secretary of Energy shall establish a program to reimburse 20 percent of qualifying Smart Grid
investments


as yet unfunded





11

State Responsibilities for Smart Grid
Deployment under EISA Section 1307



PURPA Directive
--

each state must consider requiring electric
utilities to demonstrate that, prior to investing in non
-
advanced
grid technologies, Smart Grid technology is determined not to
be appropriate



States required to consider allowing recovery of costs of
qualified Smart Grid investments and recovery of remaining
book value of assets made obsolete by Smart Grid



Requires consideration within first year of enactment, and
concluded in 2 years



But state commission answer to all of these could still be: “NO”



12

The Landscape for AMI


Automatic Meter Infrastructure (AMI)



First generation “smart grid” technology


Will pioneer the “platform” for customer interface with emerging
technologies



Currently, 74 “Smart Grid” initiatives in 33 states, which include utility
-
sponsored Automatic Meter Infrastructure (AMI) pilot programs at
different stages



California taking most aggressive approach in authorizing deployment
and cost recovery of AMI; other states (DC, Maryland, Michigan, Texas)
have pilots underway



One estimate: 50 million existing meters replaced by “smart meters” by
2010 at $18 billion cost (Deutsche Bank)

13

AMI Deployment: a New Utility Paradigm


DYNAMIC PRICING

DEMAND RESPONSE

NEW SERVICES



REVENUE DECOUPLING


SMART METER/AMI

14

Essential Smart Grid Elements

TECHNOLOGY


REGULATORY


POLICY


CUSTOMER

SUPPORT/

INVOLVEMENT


MANAGEMENT

CULTURE


BUSINESS


CASE

SMART GRID


REALIZATION

15

Challenges to Smart Grid Deployment


Technological



Lack of consistent standards and protocols means most systems can communicate only with
technologies developed by same manufacturer



Limits interoperability of Smart Grid technologies and limits future choices for new
technologies



Need to “future proof” technology or risk having technology choice rendered obsolete



Management Culture



Some utilities embarked on aggressive deployment strategies (e.g., those exclusively in wires
business)



But most risk averse, not wanting to bear entrepreneurial and technology risks; not customarily
“early adopters”



Timing of market entry is key


not too soon or risk making ‘wrong choice” on technology





16

Challenges (con’t.)


Regulatory Policy/Business Case Alignment



Groundwork essential to support utility capital expenditures



Regulators will be focused on cost
-
to
-
benefit ratio of capital expenditures, and not
necessarily on utility’s revenue growth potential



Will regulators recognize societal benefits?



Cost allocation issues between customer classes benefiting from technology



Regulatory support essential for creation of new services envisioned from emerging
technologies



February 2007 NARUC Resolution
--
guidelines for state commissions seeking to
deploy “cost
-
effective AMI includes consideration of “intangible benefits”, timely
cost recovery of AMI expenditures, and accelerated cost recovery of existing
metering infrastructure to generate cash for AMI deployment




17

Challenges (con’t.)


Customer involvement and support



Early Pilots
--

too early to tell whether customer
involvement can be sustained year to year



Uncertainty whether costs can justify benefits



Question of whether technology will create a “digital
divide” between higher income and lower income
customers



Will customers be better off with new technologies?

18

Final Thoughts


Experience from AMI pilots needs to be validated and tested



Lessons learned from multiple Smart Grid initiatives needs
to be shared


a collaborative information clearinghouse is
being planned for establishment by DOE/EPRI




Consensus on the value of advanced Smart Grid
technologies will be required of all stakeholders (utilities,
regulators, customers) for merits to be realized

19

Robert W. Gee

President

Gee Strategies Group LLC

7609 Brittany Parc Court

Falls Church, VA 22304

U.S.A.

703.593.0116

703.698.2033 (fax)

rwgee@geestrategies.com

www.geestrategies.com