The term “Smart Grid” refers to new power-distribution system technology that permits the flow of information from a customer’s meter in two directions: both inside the facility to thermostats, smart appliances, and other devices, and back to the utility. Expected benefits include increased grid reliability as additional information from the distribution system is available to utility operators. This technology will allow for better planning and operations during periods of peak demand, according to its supporters.
In last month’s Bottom Line Energy Issues, I introduced the latest news about Smart Grid developments and briefly mentioned the latest federal legislation that is now prodding it from research and development into institutional implementation (Energy Independence and Security Act of 2007, PL110-140) Following is some more about the law and what it presumes to accomplish – all of which will affect your bottom line. The main source for this information is a report, Code RL34288, prepared for Congress and issued in December 2007 by the Congressional Research Service, authored by Amy Abel, specialist in energy policy. But, a brief Google search of the Internet discloses that Smart Grid news and analysis is an increasing topic of popular interest among the trade press.
Maybe you already know this, but perhaps a review of the electrical system from the government report could provide a baseline. Most electricity in the United States is generated at power plants that use fossil fuels (oil, gas, and coal), nuclear fission, or renewable energy (hydropower, geothermal, solar, wind, and biomass). (There is some localized distributed power generated on-site, but that is not part of this analysis.) At the power plant, energy is converted into a set of three alternating electric currents (called “three-phase power”). In a three-phase system, the phases are offset 120 degrees from each other as the generator rotor spins through a full circle, with each phase producing a sinusoidal wave form of voltage and current. After power is generated, the first step in delivering electricity to the consumer is to transform the power from medium-voltage (15-50 kilovolt [kV]) to high-voltage (138-765 kV) alternating current. This initial step-up of voltage occurs in a transformer located at transmission substations at the generating plants. High voltages allow power to flow long distances with the greatest efficiency because transmission-line losses are minimized. The three phases of power are carried over three wires that are connected to large transmission towers. Close to the ultimate consumer, the power is stepped-down by a transformer at another substation to lower voltages, typically less than 15 kV. At this point, the power is considered to have left the transmission system and entered the local-distribution system for service to individually metered users. Service-protection breakers are located throughout the system, which are designed to shut it down under dangerous overloaded conditions. It’s in the distribution system that Smart Grid technology is being introduced.
Due to previous federal energy policies, states have the authority to regulate the system from end-to-end in vertically integrated companies, or to adopt a variety of deregulation schemes. Interstate-power transmission is regulated by the Federal Energy Regulatory Commission (FERC). About 18 states have required utility companies to spin off their generation assets into independent power producers and to operate primarily as regulated delivery companies. This has created a competitive generation business that sells power at wholesale prices into the grid system, giving consumers more choices in selection of power sources, wherever available (and encouraging more renewable-generation methods). But, the transition from controlled monopolies to competitive providers has been a rocky road with many disappointments for consumers, investors, and providers. The transmission system continues to become more congested; siting and upgrading transmission lines continues to be difficult. Efforts are being made in both industry and government to modernize electric-distribution equipment to improve communications between utilities and the ultimate consumer. Some utilities have been using smart meters that can be read remotely, primarily for billing purposes. These meters, however, do not provide communication back to the utility with information on voltage, current levels, and specific usage. Similarly, these meters have very limited ability to allow consumers to either automatically or selectively change their usage patterns based on information provided by the utility.