What's the Buzz on Smart Grids?

CASE STUDY

h e existing elec trici ty infrastructure in the Un ited States is outda te d and in efficient. Energy com pa nies provide power to con su mers, but the grid pro vides no infor m ation abo ut ho w th e con sumers are usin g th at energy, makin g it difficult to develop m ore efficie nt approache s to distribution . Also, the current elec tric­ ity grid offers few ways to h andle power provided by alte rnative energy sources, wh ich are critical com po­ nents of mo st efforts to go "gre en ." Enter th e smart grid. A smart grid deliv ers electric ity fro m supplie rs to cons umers using digital technology to save ene rgy, reduce costs, and increase reliability and trans­ parency. The smart grid enables in formation to flow ba ck and forth b etwe en electric power providers and individual households to allow both cons umers an d energy com pa nies to make more intelligent decision s regarding ene rgy cons um ption an d production. Information from smart grids would show utilities when to raise prices when demand is high and lower th em when demand lessens. Smart grids would also h elp cons u mers program h igh-use electrica l applia nces lik e h eating and air condition­ ing systems to reduce cons um ption du ring times of peak u sage. If implemented nati onwide, proponents beli eve, sm art grids would lead to a 5 to 15 percent decrease in energy cons um ption . Electricity grids are sized to m eet th e m aximum electricity n eed , so a drop in peak demand would enable utiliti es to operate with fewe r expe ns ive power plants, thereby lowering costs and pollution . Another adva ntage of smart grids is their ability to det ect sources of power outages m ore quic kly and precisely at the individual household level. With such pr ecise information , utilities will b e able to respond to service problems m ore ra pidly an d efficiently . .

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Man agin g th e infor ma tion flowin g in th ese smart grids requires technology: n etworks an d switch es for power m an agement; se nsor and m onitoring devices to track energy usage and distribution trends; systems to provide energy suppliers an d cons umers with us age data; com m unic ations systems to relay data along the entire ene rgy supply syste m; and systems linked to pro grammable applia nces to run them when energy is least costly .

If consum ers h ad in-h ome displays sh owing h ow much energy they ar e con sum ing at any m om ent and the price of th at energy, th ey are m ore likely to curb their consum ption to cut costs. Home th ermostats an d applian ces could adju st on their own automatically, dep endin g on th e cost of power, and eve n ob tain th at power from nontraditional sources, su ch as a n eighbor's roo ftop solar pan el. In stead of power flowing from a sm all number of power plants, the smart grid will make it possibl e to h ave a dist ributed ene rgy system. Elec tricity will flow from homes and busin es ses into th e grid, and th ey will us e power from local and faraway sources. Besides in creasing energy efficien cy, converting to smart grids along with other relat ed ene rgy initiatives could create up to 370,000 jobs. That 's why pion eering smart grid proj ects su ch as SmartGridCity in Bould er, Colora do, are att racting atte ntion . SmartGridCity repres ents a collabo ration by Xcel Energy In c. an d residents of Boulder to test th e viability of smart grids on a sma lle r scale. Participa nts can check th eir power consu m ption lev els an d costs onli ne, and will soon b e able to program home appliances over the Web. Cus tomers access th is in formation an d se t goals and guide lines for their h om e's en ergy usage through a Web portal. They also have th e option of allowing Xcel to remotely adj us t th eir thermostats during periods of high demand. SmartGridCity is also atte m pting to turn h omes into "m iniature power plants" using solar-powered battery pa cks th at "TiVo electric ity," or stash it away to use at a lat er tim e. This serves as b ackup power for h om es using the packs, but Xcel can also tap in to th at pow er during times of peak energy con sum ption to lessen the overall energy load . Xcel will b e able to remotely adjus t th ermostat s and water h eat ers an d will h ave much better info rmation ab out the power cons um ption of th eir cons ume rs . Bud Pet erson, ch an cellor of th e Un ivers ity of Colorad o at Boulder, and hi s wife Val h ave worked with Xcel to turn their home into the prototyp e residence for the SmartGridCity project. Their h ouse was supplied with a six-kilowa tt photovoltaic system on two roofs, four thermostat s.contro lle d via the Web, a plug-in hybrid electric veh icle (PHEV) Ford Escape, and other high-t ech , smart grid-com pa tible features . Xcel em ployees ar e able to m onitor peri ods

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of hi gh power cons um ption and how m uch energy the Pete rsons' Escap e is using on the road. A digital dashb oardin the Pet erson s' hou se displays power us age in formatio n in dozen s of different ways-live hou seh old cons um ption an d production, store d backup power, and carb on emis­ sion reduction s translated into gallons of gaso line and acre s of trees saved each year. The dashboard also allows th e Peters ons to program their home thermostat s to adjus t th e temperature by room, time of day , an d season . Since the proj ect b egan in the spring of 2008, th e Pet ersons have b een able to reduce their electricity u se by on e-third. Xcel is n ot alone. Hundred s of technology com pa­ nies and almost every m ajor electric utility company see smart grids as th e wave of the future. He igh te ni ng inte res t is $3.4 billion in fed eral eco no mic recovery money for smart grid technology . Duke Energy sp ent $35 million on smart grid ini­ tiati ves, in stalling 80,000 smart m et ers as part of a pilot project in Charlotte, North Carolina, to prov ide business and residential customers with up -to-th e­ mi nute informati on on their energy use, as we ll as data on ho w much their appliances cost to ope ra te . This h elps th em save money by curb ing usage during peak times when rat es are h igh or by repl ac­ ing in efficient applia nces. Duke now plans to spe nd $1 billion on sensors, intelligent m et ers, and other upgrades for a smart grid serving 700,000 cus tomers in Cin cinnati. Florida Power and Light is budgetin g $200 millio n for smart m et ers cove ring 1 million hom es and busi­ nesses in th e Miami area over the n ext two years. Center Point En ergy, which services 2.2 million cus­ tomers in th e m et rop olitan Hou ston area, is plannin g to sp end $1 billion over the n ext five years on a sm art grid . Altho ugh residential cus tomers' m onthly elec tric bill s will b e $3.24 hi gh er, the com pa ny says this am ount will be m ore than offse t by energy sav­ in gs. Pacific Gas & Electric, which distributes power to Nor thern and Central California , is in the pro cess of ins talling 10 million smart m et ers by mid-20l2. Google h as develop ed a free Web service calle d PowerMete r for trackin g energy us e online in h ou ses or busin esses as power is cons umed. It expects othe r com pa nies to build the devices th at will supply data to Powe rMete r. There are a number of challe nges facing th e efforts to implem ent smart grids. Changing th e infrastructure of our electricity grids is a dauntin g task. 'TWo-way m eters that allow in formati on to flow b oth to and from h om es n eed to b e ins talle d at any h om e or building th at uses electric power-in other

words, esse ntially everywhere. Another challe nge is creating an intuitiv e en d-u ser interface. Som e Smart GridCity particip ants reported that.the dash­ bo ard they us ed to manage th eir applia nces was too confus ing and high-te ch . Even Val Pet erson admitted th at , at first , managin g th e information abo ut h er power usage supplied through the Xcel Web portal was an intimidating pro cess . The smart grid won't b e cheap, with estimate d costs runnin g as hi gh as $75 billion. Met ers run $250 to $500 each when they are acco m pa n ied by new utility bill in g systems. Who is going to pay the bill ? Is the ave rage cons umer willing to pay th e up front costs for a smart grid system an d then resp ond appropriat ely to price signals? Will cons umers and utility com pan ies get the promised payb ack if they buy in to smart grid technology? Might "sm art m et ers" be too intru sive? Would cons umers really want to entrust energy com panies with reg ulating th e energy usage in side th eir homes ? Would a highly com pute rize d grid in crease the risk of cybe rattac ks? Jack Oliphant, a re tiree living n orth of Houston in Spring, Texas, b eli eves that the $444 h e will pay Ce nter Point for a smart m eter won't j ustify the expe nse. "There's no m yst ery abo ut h ow yo u save energy," h e says. "You turn down the air co n di­ tioner and sh u t off so me lights. I don 't n eed an expe nsive m eter to do that ." Others h ave pointed out other less-exp ensive m ethods of re ducing energy co ns u m ptio n . Marcel Hawiger, an atto rney for The Utility Reform Network, a San Francis co · co ns umer advocacy gro u p, favors expan ding exis ting air con di tioner-cy cling programs, where utilities are able to con trol air con ditioners so they ta ke turns com ing on an d off, thereb y reducing demands on the electric syst em. He b eli eves air co n ditio ner con tro lle rs , wh ich con trol temperature se tti ngs an d com pressors to re duce overall energy costs, pro vide much of the b enefit of sm art m eters at a fraction of their cost. Cons umer advoca tes h ave vowe d to fight sm art grids if they bo ost rates for customers who are unabl e or unwilling to use Web portals and allow energy com panies to control aspects of their appliances. Advocat es also argue th at smart grids re pre se nt an Orwellian intrusion of peopl e 's right to us e their appliances as they see fit witho ut disclosin g facts ab out their usage to others. A prop osal by officials in California to require all new h om es to have remotely adjustable th ermostats was soundly defeat ed aft er critic s worrie d abo ut th e privacy im plica tion s.

Energy companies stand to lose money as individuals conserve more electricity, creating a disincentive for them to cooperate with conservation efforts like smart grids. Patience will be critical as energy companies and local communities work to set up new technologies and pricing plans.
Sources: Rebecca Smith, "What Utilities Have Learned from Smart­ Meter Tests," The Wall Street Journal, February 22, 2010; "Smart Grid: & Reasons Why IT Matters," CIG Insight, March 24,2010; Yuliya Chernova, "Getting Smart About Smart Meters," The Wall Street Journal, May 10, 2010; Bob Evans, "IT's Dark-Side Potential Seenin SmartGridCity Project," Information Week, March 24, 2009; Bob Violino, "No More Grid-Lock," Information Week, November 16, 2009; K.C. Jones, "Smart Grids to Get Jolt from IT," Information Week, March 23,2009; Rebecca Smith, "Smart Meter, Dumb Idea?" The Wall Street Journal, April 27, 2009; Stephanie Simon, "The More Your Know ..." The Wall Street Journal, February 9,2009; and Matthew Wald and Miguel Helft, "Google Taking a Step into Power Metering," The New York Times, February 10, 2009.

CASE STUDY QUESTIONS
1.' How do smart grids differ from the current

electricity infrastructure in the United States?
2. What management, organization, and technology

issues should be considered when developing a smart grid? 3. What challenge to the development of smart grids do you think is most likely to hamper their development? 4. What other areas of our infrastructure could benefit from "smart" technologies? Describe one example not listed in the case. 5. Would you like your home and your community to be part of a smart grid? Why or why not? Explain.