BLUEPRINT FOR ENERGY
NORCROSS, GA - The Obama Administration’s
report, “A Policy Framework for the 21st Century
Grid,” is part of the President’s Blueprint for a Secure
Energy Future. The report highlights the opportunities
of a modernized electrical system, which can be
realized if we continue to invest in the technology,
education and research necessary to make smart grid
The report highlights the upgrades necessary
for a sustainable and secure energy future, and it
renews our nation’s commitment to that investment.
Perhaps most significant, the report targets the education
and innovation required to better inform energy
users and to enable greater customer participation
in meeting the challenges of our energy future. Such
consumer engagement in more intelligent energy
management is key to our energy future. It will
enable wise and long lasting investments in the smart
grid so that customers can take advantage of the
active energy management opportunities it enables.
Experience shows that energy consumers who engage in measuring and monitoring their
energy consumption typically can reduce
energy consumption by 30 percent.
Phil Davis, Schneider Electric
Energy efficiency starts with awareness;
giving consumers greater visibility and
control of their energy use enables them to
seek ways to reduce energy consumption.
This results in significant cost savings as well
as a more reliable electric grid and significant
environmental benefits. Despite these
benefits, there is not yet a unified definition
of “smart grid”, technology standards to
enable it, or a benevolent agency monitoring
that we reach our goals.
Retail prices do not change dramatically
in the face of surplus or shortage. Costs
are predictable and service is reliable. Why
change what works, and why do we need
this “smart grid”?
PHYSICS MEETS ECONOMICS
Behind the scenes is a volatile world
where physics meets economics. Grid operators
constantly balance power and demand.
They maintain (usually) a required reliability
margin; and ideally, they use the most economical
dispatch stack so that overall costs
are as low as possible; except when they
Fundamentally, the grid is smart, but
uneducated. Sophisticated tools help monitor
and control production, just as they do for
many manufacturing companies. A key difference
is that most manufacturers have an
eye to customer demand, inventory levels,
shipping schedules, and supply chain health.
The grid only knows what it can produce.
The amount of product shipped is determined
instantly literally with the flip of a
switch. Either the system works, or it fails.
There are no backorders.
The net result is compromised efficiency.
The industry produces to a regulatory
goal shaped in a political process by stakeholders
representing various points of view;
but the reality is they just don’t know what’s
happening in those 50 story buildings today,
or how they will change next year. Certainly,
the political process cannot support grid
changes that are as rapid or flexible as the
customer demands connected to it.
This is why we need Smart Grid.
Forget Demand Response, in-home displays,
remote energy management and all the rest.
Important, yes, but these are not the justification.
Grid management has used one dimensional
models since the dawn of time. They
work well given long planning horizons and
slow rates of change. Those are coming to
an end. Today, 30 states have Renewable
Portfolio Standards; nuclear power is again
questionable, and a host of new technologies and security threats are making the grid a
high profile asset, and these things are coming
at a pace much more rapid than before.
There are multidimensional modeling
techniques and planning tools that can be
useful, but they require information.
DRIVER OF SMART GRID
In essence, that is the driver of Smart
Grid: distributed intelligence aided by vast
new sources of data. The goal is to integrate
demand side and supply side data into a unified
view of electrons as they travel from
plant to ground to achieve new levels of efficiency.
In fact, Smart Grid would let us
understand exactly what we mean by efficiency.
The engineer’s view is that a device
that accomplishes the same goal while using
less energy is more efficient. The economists
view is that it is more efficient only if the
total cost of acquisition, installation, use,
maintenance and disposal is less than the old
product. An integrated grid view is that
steady state is more efficient than volatility,
so the ideal is to shape demand and supply
to achieve this state. There are a number of
implications for Smart Grid. Some examples:
A substation supplies a mix of commercial
and residential customers. It has feeders
that bring power from a mix of wind farms,
coal and gas generation. There is an intelligent
dynamic relay on site that senses power
fluctuations and can arbitrate between lines
to balance them. It uses natural variations
between feeders to balance power, but it also
can send instructions for “mini-DR” events to
customers on special tariffs. The relay understands
how to blend this mix to meet planning
objectives, and it can do so more quickly
than a centralized system. To work, it must
have data supplied by a distributed sensor
The “cul de sac” effect describes natural
tendencies of neighbors to copy behavior.
One electric vehicle leads to many. The
uncontrolled impact of this can damage local
distribution circuits. Intelligent communications
between vehicle and grid would prevent
damaging demand spikes, use those batteries
for balancing purposes, and provide
billing data to deal with anticipated road use
taxes and other governmental needs.
A 50 story building demand typically
peaks at 14mW but has an “average” demand
of 10. The peak comes on hot days.
Unbeknownst to the facility manager, this
peak is the result of 4 chillers running at 40%
efficiency. Several similar buildings nearby
also have average demands of 10mW, but
tend to peak at 12. The local utility notices
this and is able to run power analytics that
suggest the issue. Incentive funds are available
to help the high use facility offset the
costs of upgrades. All parties benefit from
deferred capital upgrades to the distribution
network as well as reduced need for expensive
These are not new scenarios and they
are simplified, but they are feasible in the
near term with technology that exists. The
Administration’s “Policy Framework” is a call
for development in new dimensions. Rather
than large scale, and potentially damaging,
experiments with grid frequency, such as the
one the Associated Press recently reported
on, perhaps a smaller scale pilot similar to
Duke’s “Envision Charlotte” program can
bring together like minded customers and
supply a “policy microgrid” that will help us
understand what works; not only technically
Smart policy could spur significant
improvements across the commercial building
sector by encouraging deeper knowledge
and understanding of how smart grid technologies
can drive energy efficiency. This is a
particularly important sector to address as
commercial buildings consume 25 to 30 percent
of our energy. Many of these buildings
could drop energy consumption by one-third
through better understanding and control of
systems and activity. However, smart grid
technologies and infrastructure upgrades
which will make it easier for facility managers
to monitor and manage energy consumption,
can be complex and may not meet
the abbreviated pay back targets of building
owners. The U.S. Green Building Council
has begun to address this with its pilot DR
LEED points program. These programs in
combination with smart policy could encourage
building owners to invest in more intelligent
Currently, many consumers perceive
Smart Grid as an unnecessary cost aimed at
enabling gadgets which will exert external
control of private lives. There is an underlying
assumption that the grid is stable, electricity
always will be affordable, and that
there is no reasonable payback for energy
efficiency improvements. Much of this
results from policies that insulate ratepayers
from energy price volatility. Other policies
penalize grid efficiency because revenue is
more a function of assets deployed than of
electrons delivered. Long term efficiency
gains tend to raise customer’s charges to
cover infrastructure costs.
There are many other examples where
custom and policy are clashing with energy
and environmental goals. “A Policy
Framework for the 21st Century Grid” starts
to address these challenges. It’s time to integrate
technology, energy and policy so that
future generations may enjoy efficient, reliable
and economic energy as we do today.