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 a reality.

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
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”?

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 don’t.

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.

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 network.

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 peak power.


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 but politically.

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 energy management.

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.