Advancing the Grid

Advancing the Grid

Location: New York
Author: Ken Silverstein, EnergyBiz Insider, Editor-in-Chief
Date: Thursday, February 26, 2009

Xcel Energy is rolling out sophisticated new technologies to enhance grid reliability and improve energy conservation. It says that the efforts will transform not just the utility but also the entire industry, which has seen little change during its long history. As such, the power company is installing "intelligent utility" technologies in Boulder, Colo. that can remotely monitor the system and will communicate with consumers to control energy usage.

An intelligent grid can screen power outages and manage supply and demand so as to maintain dependability. Operators are able to see the system in its entirety and to act in such a way so as to avert trouble spots and re-route power before there might ever be a blackout. And if the network were to become overburdened, the means would exist to send signals to grid operators and subsequently to end users to curtail consumption.

Federal lawmakers have taken a keen interest, realizing that a modern grid is essential to improving reliability and bolstering economic output. A multitude of states, meanwhile, are either considering or enacting laws to promote digital technologies. Massachusetts, for example, just adopted legislation to require utilities to perform time-of-use studies and adopt intelligent utility pilot programs.

"The analog grid has served its purpose for the last half century, but the future requires an integrated, digital smart grid," says Ray Gogel, vice president of customer and enterprise solutions of Xcel Energy. "This next-generation grid will allow customers to better manage their energy consumption while optimizing the grid through real-time generation management and distribution controls."

In the case of Minneapolis-based Xcel, 25,000 advanced meters will provide real time and high-speed two-way communications throughout the distribution grid in Boulder. Its substations will then remotely watch the system while thousands of control devices will be installed inside homes so that the utility can adjust consumers' energy use during peak periods. It's a multi-phased project that is expected to finish in December 2009.

The 2005 energy act started the evolution by requiring all utilities to explore time-of-use pricing that subjects consumers to market forces as a way to encourage conservation. The $700 billion revenue package that was signed into law last October goes further and lets any utility that invests in intelligent utility technologies depreciate those assets over 10 yea rs.

"One of, I think, the most important infrastructure projects that we need is a whole new electricity grid," says President Barack Obama, during a television interview. Such technology will allow more renewable energy, advance plug-in hybrid cars and in doing so, "create 5 million new jobs, just in new energy."

Expensive Undertaking

But creating a 21st Century transmission system is expensive -- as much as $450 billion, says the Pacific Northwest National Laboratory. Such an undertaking, however, could avoid temporary lapses in electricity flow that can cost untold sums in lost economic opportunity. It could also eliminate the need to build some new generation.

But who will pay for all this? Most of the improvements made so far have been in response to state laws requiring more energy efficiency. As such, the regulated utilities get to pass through their capital costs to end users.

"The entire electric utility industry nationwide is moving in the direction Duke Energy hopes to move in Indiana," says Jim Stanley, president of Duke Energy Indiana, which has proposed modernizing its distribution grid in that state.

For their part, most investor-owned utilities have the resources to make the essential upgrades and just about all of them are in various stages of testing, deployment and implementation of intelligent utility tools. For customers, it simply means they will get improved electric service reliability, as well as better and quicker responses to outages.

While the costs and logistical challenges are enormous, Ed Legge with the Edison Electric Institute says that it is vital that the industry move away from a mechanical era and into an automated one. Many state regulators agree and allow the expenses to be incorporated into the rate base. But Legge says that the battle must be fought in each jurisdiction, adding that that 90 percent of customers who participate in programs with their local utilities save money and conserve energy in the process.

In Pennsylvania, for example, utilities must begin installing smart meters at every home and business in an undertaking that is expected to last 15 years. It's a pursuit that the state says will initially cut peak energy use by 4.5 percent by 2013. And in California, utilities are rewarded for curbing their peak energy demand, motivating the three major utilities there to spen d $4.5 billion installing advanced meters.

The reality is that that the transformation of the transmission and distribution systems in this country will not magically materialize. It will, instead, be the culmination of multiple but separate contributions made by a range of utilities. The conversion has begun. But the colossal job means that all of the essential changes are decades away.

"If you are going to manage the grid then you have to know every source of power on it," says Eric Smith, director of the Structure Group's smart grid practice. "That provides better controls, better security and empowers customers to make better choices."

Some utilities are aggressively installing smart technologies. Others are taking a wait-and-see approach. Advances may be slow in coming but they are practically inevitable. Public policy will eventually inspire or necessitate it, recognizing that a 21st Century grid will lead to greater national productivity.