Smart Grid Helps Address Peak Demand Through Demand Response
Another element of smart grid is demand response. The California Public Utilities Commission defines demand response as "the resources that allow end-use electric customers to reduce their electricity usage in a given time period, or shift usage to another time period, in response to a price signal, a financial incentive, an environmental condition or a reliability signal."
The smart grid and demand response systems promise to offer facility managers a real opportunity to reduce their energy use when demand is greatest and costs are spiking, Audin says. Until now, many meters only conveyed usage patterns over the course of a month or similar time period. "With smart meters and wireless communication, we can bring real-time awareness," he says. That kind of awareness of energy load at the micro-level offers tremendous opportunity to manipulate loads, he says.
Moreover, the information on energy consumption patterns and costs provided via the smart grid should enable facility managers to implement changes that would have minimal impact on their operations, Gravely says. For example, by monitoring signals received from the utility, a facility manager may decide to divert some operations that aren't tightly scheduled to night hours, rather than during more expensive peak periods, while leaving in place just those operations that need to be completed during the day.
Because of its potential to allow energy users to save money without greatly sacrificing performance, the U.S. smart grid market is forecast to rise from $5.6 to $9.6 billion between 2010 and 2015, GreenTech Media reports.
To be sure, the pace of change varies. In some states, regulations provide utilities with an incentive to encourage efficiency. In others, the utilities have greater incentive to encourage electricity consumption, McGowan says.
California is one leader in the smart-grid arena. The California Public Utilities Commission estimates California Senate Bill 17 will mean an investment of $6 to $8 billion dollars over ten years to modernize the state's electric grid. The bill required three of the state's largest utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — to put together smart grid plans that outline initiatives geared to demand response, the integration of distributed generation, and advanced outage and distribution management, among other capabilities.
Nevertheless, challenges lie ahead for the move to smart grid technologies and systems. "The technology is ready for prime time. What isn't is the regulatory and legal policy," McGowan says. For instance, not all utilities have established time-of-use rates, so that they can charge energy consumed during periods of high demand at higher rates.
Culture and the power of existing habits also come into play. Several years ago, some utilities tried instituting mandatory time-of-use rates in customers' residences. "People freaked," Audin says. As a result, a few of the utilities reverted to flat rates and made time-of-use rates voluntary, at least in residences.
And, much like concerns over cell phones, some observers wonder if the wireless meters that are part of the smart grid system pose a health risk. "What happens to the guy on the other side of the wall (from the meter)?" Audin asks. "You can't prove a link, but that doesn't mean that it's safe."
For most facility managers, however, a more immediate concern is the potential hype factor. For instance, some companies selling energy-saving smart grid tools may base projected savings off patterns of energy use that aren't typical, Audin says. When that's the case, the actual payback period may be longer than the calculations would suggest.
Despite these concerns, the use of smart grid technology can benefit facility managers. The greatest opportunity is to better manage energy use and costs. Another potential plus is marketing facilities as environmentally responsible. "Buildings that don't invest in better information systems regarding their energy use will be left behind in terms of rent, occupancy, and value," Henderson says.
To capitalize on these opportunities, facility managers should be aware of smart-grid activity and programs occurring in their area, particularly if they are able to adjust demand, Audin says. Their local public utility commissions should have this information.
"It's a time of opportunity for building managers; time to learn enough to know they can reduce energy costs," Gravely says.
Karen Kroll, a contributing editor for Building Operating Management, is a freelance writer who has written extensively about real estate and facility issues.