Overcoming Obstacles to a Smart Grid Future

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As the United States sped along the Information Superhighway through the 1990s, it left its electricity grid in the dust.

Now, energy efficiency has become an imperative, and momentum is building to merge information and power into a smart grid that can promote energy efficiency and savings.

Miami became the one of the largest U.S. cities to embrace that shift last month when it announced it would invest $200 million in smart meters for homes. Boulder, Colo., Austin, Texas, Southern California Edison and Duke Energy Indiana are also planning smart grids or smart metering programs.

The federal government is getting on board, too. President Obama and Energy Secretary Steven Chu regularly talk about a smart grid future – built by U.S. innovators. Congress this year has already invested $4 billion in smart grid technology in the stimulus package alone, and federal agencies are getting to work designing an overhaul of the power system.

Smart grid technology will eventually revolutionize how we generate, distribute and consume energy on both macro and micro levels.

To get there, however, the nation will have to get over some significant technological and institutional hurdles.

A Glimpse of the Power Grid’s Future

Under the current power grid system, utilities don’t learn about power outages until their customers call. Smart grids will be able to diagnose themselves, as well as monitor electricity demands in real time.

Smart grid technology will also allow customers to sell electricity they generate from rooftop solar panels and other renewable sources back into the system, which will be able to locally store energy and incorporate intermittent sources like wind and solar.

Using smart meters, customers will be able to monitor their electricity use online – and get suggestions for minimizing it, either by turning certain appliances off or using them at different times. At the micro level, appliances themselves may use the smart grid’s intelligence. For instances, refrigerators may one day have chips that keep the ice maker from running during the heat of the day when air conditioners are also sapping power from the grid.

Increasing the efficiency of the electricity grid and adding smart metering could have a huge impact on energy use and consumer costs. In 2007, 9.4 percent of electricity generated was lost in transmission and distribution.

First, Writing the Rules of the Road

But wide implementation of smart grid technology is a while off. There are several large institutional challenges, including systemwide standards and interoperability. As Garry Brown, chairman of New York State Public Service Commission explains:

“If I let Utility A go one route and Utility B go the other route and Utility C a third, did I just set up a system in which three systems can’t talk to each other and the grid operator is not going to understand what is going on?”

The stimulus package gave $10 million to the National Institute for Standards and Technology to begin writing standards for the new power grid. NIST expects by year’s end to have Smart Grid standards that will ensure the interoperability of systems and appliances.

NIST is already working on a draft roadmap for smart grid development, and it plans a stakeholders summit May 19-20 in Washington. At a workshop last week, discussions focused on creating a system that encourages collaborative energy and efficiency, is transparent, secure, avoids congestion, and is loosely coupled, flexible and will last.

Safety and Synchronicity

Technologically, smart grid has two major challenges: how to integrate renewable energy sources and how to maintain cybersecurity.

The smart grid needs to be able to store renewable energy that is generated when demand is low and provide it to customers when demand is high. Right now, energy used at peak times tends to be inefficient and environmentally dirty. At the same time, the grid should be able to accommodate plug-in electric vehicles, which many anticipate will become more widely used.

The need for cybersecurity will also have to be balanced with the push for open standards, which would allow upgrades or changes to be made to the system with software changes, rather hardware substitutions.

“What we’re doing here is opening up two-way communications," Brown says. "We’re giving someone the ability to remotely turn a building on or off. If the wrong people get a hold of that power, we’ve got a real problem. We’d better get cybersecurity in the system as we build it."

Guido Bartels, general manager of IBM’s Global Energy and Utilities, also notes a fundamental problem in the utility business model – utilities lose money if the grid becomes more energy-efficient and consumers use less.

“If we do demand-side management and energy-efficiency and if utilities are going to sell less electricity, that needs to be supported by a certain business model and the whole regulatory environment,” he said. (In 1982, California successfully decoupled utility income from consumer use, resulting in the state’s per capita energy use remaining flat since then, whereas the per capita use in the rest of the country increased by 50% in the same time period.)

Consumers in the Driver’s Seat

The problem is not just for government and utilities alone to solve.

"It’s a consumer opportunity," says Audrey Zibelman, president and CEO of Viridity Energy. "At the consumer side, you can have micro turbines, you can have electric cars, you can have the ability to automatically turn down your thermostat based on price and temperature.

"It turns one of the biggest variables on the system – load, which is not predictable – into something very predicable just like generation. So I think the smart grid will move past demand-response, which is, ‘Let’s turn off the lights when it’s really hot,’ to optimize our energy all the time and tell the person operating the grid how much electricity we plan to use tomorrow, because that will make a very efficient system.”

Because of how much control consumers will eventually have, businesses sense opportunity. A number of companies are introducing smart meter applications. Google announced in February that was developing an online Power Meter that allows users to track their home electricity use. Its engineers who are testing the equipment says they were able to quickly cut their electricity use as soon as they could pinpoint the power hogs.

Other business ideas may utilize smart grid in as-yet unimaginable ways.

“The best thing that will come out of smart grid is something we haven’t predicted yet,” Brown says. “And the best example I can give is the Blackberry after cell phones. When cell phones first were introduced, surveys showed cell phones would just be used as an emergency phone. Obviously the regulators were completely wrong.”