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Part 1: Smart Grid Addresses Energy Efficiency, Power Quality and Reliability Issues
Part 2: Real-Time Pricing and Demand Response
Part 3: How Smart Grid Impacts Facility Management
By Brandon Lorenz, Senior Editor
December 2009 -
Power & Communication Article Use Policy
There are 18 million reasons to start gathering information about the so-called smart grid. In late October, President Barack Obama visited the nation's largest photovoltaic array in Florida to announce the release of $3.4 billion in grants under the American Reinvestment and Recovery Act to spur the growth of the smart grid.
The grants — which are matched by another $4.6 billion in private investment —Êwill be enough to fund the deployment of 18 million smart meters, among other projects.
"That's 10 percent of all the meters in the country," says Lindsay Audin, principal with consulting firm EnergyWiz. "That's going to have an impact." With those meters, the nation will come one step closer to transforming its electricity grid into a smart grid.
The term "smart grid" is a deceptively simple phrase used to describe a complex idea. The easiest way for facility executives to think of Smart Grid is to consider it as an upgrade to the nation's electric generation and distribution infrastructure that sends power and data on the grid in two directions instead of just one.
The goal is to improve the metering and control of the power flow, says Audin.
Smart Grid has several goals, among them better security, better support for renewable energy, and of course, real time communication. One goal that can help facility executives understand Smart Grid is the push to improve the efficiency of the nation's power grid.
According to the Galvin Electricity Initiative, an astonishing two-thirds of the energy embodied in fossil fuel used to generate electricity is lost in generation and delivery.
Though much of the loss is in the form of waste heat, roughly 5 percent comes through line losses in the distribution system. Officials with the Federal Energy Regulatory Commission (FERC) indicated in testimony before Congress in 2007 that making the grid even 5 percent more efficient would save 42 gigawatts of electricity, an amount equal to 42 coal power plants.
All of that waste comes at tremendous cost. To cite one example: When Wisconsin-based We Energies fired up its new coal power plant in October, the construction cost totalled $2.3 billion and counting, according to local reports, making it the most expensive construction project in the state's history. That cost, of course, is borne by local ratepayers.
But waste isn't the only problem. As many facility executives know, the electrical grid is actually becoming less reliable even as demands for clean, reliable power increase. (A July 2009 Department of Energy report summarized three national power quality studies conducted over time since the 1960s by concluding that power quality is worsening).
What's more, digital equipment is significantly more sensitive to voltage disruptions than the equipment used in commercial and industrial facilities 30 years ago.
Reliability problems crop up not only in the form of interruptions but also as poor power quality. Though the grid is 99.97 percent reliable, interruptions cost the economy $150 billion annually, according to a 2008 estimate from Galvin.
The grid bears much of the blame. According to Galvin, the average substation transformer has been in service two years longer than its designed life. And from 1988 to 1998, the grid expanded at half the rate of new power generation.
"As much as we might like to believe we do, we don't have a do-nothing option," says Dan Delurey, executive director of the Demand Response Coordinating Committee. "A do-nothing option ignores where we are going with regard to electrical demand and what is going to happen with blackouts and rolling brownouts."
The Northeast blackout of 2003 illustrated just how costly the current approach to power delivery can be. The four-day blackout in August affected more than 50 million people in the Eastern United States and Canada, according to the North American Electric Reliability Corporation, causing $4.5 billion in economic losses.
On a business level, Galvin estimated in 2008 that one hour of downtime can cost a cellular communications company $41,000. A brokerage operation stands to lose $6.5 million per hour.
While facility executives often have backup systems in place in mission critical systems, such systems aren't always failsafe either. As the 2003 blackout illustrated, not all facilities are designed to operate for days off the grid during a severe outage.
Even with all the money being poured into Smart Grid development through the American Recovery and Reinvestment Act of 2009, the Smart Grid won't materialize overnight.
One reason is because the electrical grid has so many different players. For a smart grid to function, each group of stakeholders needs to have a way to interact and communicate with the other seamlessly.
And so far, the interoperability standards aren't in place.
"One lesson we've already learned is that there are a lot of different pieces to the Smart Grid and you have to attack them in concert to do it right," says Dan Delurey, executive director of the Demand Response Coordinating Committee.
The process was accelerated by the Energy Independence and Security Act (EISA) of 2007, which designated the National Institute of Standards and Technology (NIST) as the agency responsible for developing protocols and standards for information exchange.
NIST has identified seven stakeholders: customers, markets, service providers, operators, bulk generators, transmission carriers and distributors. Each has a need for interoperability with another party in the system.
"Involving NIST was a huge boost to the industry," says Matt Wakefield, program manager for Smart Grid demonstrations, Electric Power Research Institute. "They are working to really fast track standards and protocols."
Facility executives who have two BAS systems in one building and have struggled with interoperability can imagine the scope of the challenge as it applies to the power grid. Unfortunately, interoperability isn't the only obstacle.
Even after all the NIST stakeholders come to agreement, each state's public service commission will need to implement new regulations to harness the full potential of Smart Grid. Right now, there is a lot of variation.
In Illinois, for example, even though the state has been deregulated, there is a law on the books that prevents companies from adding extra meters to a multitenant building, says John Kelly, deputy director of the Galvin Electricity Initiative.
"I think there are some very smart people who are continuing to improve restructured markets to allow them to be a part of the smart grid system," Kelly says. "The real challenge is in the structured markets. That's where the difficulty is because the utility owns the generation and the grid, and that makes it harder for the customer to participate."
Despite the challenges of weighing in on the process, this is the time for facility executives to do just that, since the final format of the Smart Grid hasn't yet taken shape. Utilities are slow to change, says Kelly, but ratepayers can push them to get more aggressive.
Changes won't happen overnight, but facility executives who get involved now can be among those who determine the pace and direction of smart grid development.
— Brandon Lorenz