Realizing the Smart Grid: What It Will Take

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Realizing the Smart Grid What It Will Take

• RMEL 105th Annual Fall Convention
• September 8, 2008
• Vail, Colorado

ROBERT W. GEE PRESIDENT GEE STRATEGIES GROUP LLC
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Overview

• What is the Smart Grid? What are its
  characteristics, and what technologies does it
  cover?
• What are the federal and state responsibilities
  in deploying the Smart Grid?
• How will Advanced Metering Infrastructure (AMI)
  change the utility paradigm?
• What are the challenges to Smart Grid/AMI
  deployment?

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Origins Of The Smart Grid

• Early 2000s Increasing awareness of aging
  power delivery infrastructure to meet surge in
  electricity demands and digital technologies
• June 2001 EPRI Report stated that power outage
  and power quality disturbances cost US economy
  120 billion annually for all business sectors
• Security and vulnerability of power delivery
  system heightened after 9/11
• January 2002 EPRI launched Consortium for
  Electric Infrastructure to Support a Digital
  Society (CEIDS) to promote public/private
  partnerships to digitize power delivery system
  (now called Intelligrid)
• President George W. Bush, Feb 23, 2002, Radio
  Address
• America cant meet tomorrows energy needs with
  yesterdays infrastructure.
• Energy Secretary Spencer Abraham, May 8, 2002,
  releasing the DOE National Transmission Grid
  Study
• Americas electricity infrastructure is ill
  equipped to sustain our countrys needs today,
  and wholly insufficient to handle the growth in
  demand that is projected over the next few
  decades.
• 2002 National Research Council Report
  commissioned by the National Academies Making
  the Nation Safer The Role of Science and
  Technology in Countering Terrorism recommended
  technology be developed for an intelligent,
  adaptive power grid

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What Does The System Look Like Today?
. . Local distribution systems that connect
the power supply to each consumer are effectively
a last bastion of analog, electromechanically
controlled industry. This is a particularly
notable paradox given the fact that the nations
electricity supply system powers the digital
revolution on which much of the current and
future value depends. -- The U.S. Electricity
Enterprise Past, Present, and Future Prospects,
Galvin Electricity Initiative (August 2005).
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What is the smart grid?

• Definitions and characteristics vary among
  stakeholders
• In H.R. 6, The Energy Independence and Security
  Act of 2007 (EISA), Congress defines the Smart
  Grid as embracing
• . . . increased use of additional information
  controls to improve operation of the electric
  grid optimizing grid operations and resources to
  reflect the changing dynamics of the physical
  infrastructure and economic markets, while
  ensuring cybersecurity using and integrating
  distributed resources, including renewable
  resources developing and integrating demand
  response, demand-side resources, and
  energy-efficiency resources deploying smart
  technologies for metering, communications of grid
  operations and status, and distribution
  automation integrating smart appliances and
  other consumer devices deploying and integrating
  advanced electricity storage and peak-shaving
  technologies transferring information to
  consumers in a timely manner to allow control
  decisions developing standards for the
  communication and the interoperability of
  appliances and equipment connected to the
  electric grid identifying and lowering of
  unreasonable or unnecessary barriers to adoption
  of smart grid technologies, practices, and
  services.
• This is too wordy
• Fundamentally, it involves the integration of
  advanced communications and information
  technology into the electric grid (from
  generation to consumer) for enhanced grid
  operations, customer services, and environmental
  benefits.

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Vision of the Smart Grid 7 Characteristics

• Enabling informed participation by customers
• Accommodating All Generation and Storage Options
  (Plug Play Capable)
• Enabling New Products, Services and Markets
• Providing the Power Quality For the 21st Century
• Optimizing Asset Utilization and Operating
  Efficiency
• Addressing Disturbances Automated
  Prevention, Containment, and Restoration
• Operating Resiliently Against Attacks and Natural
  Disasters (Self-healing)

Source DOE Smart Grid Implementation Workshop
June 2008
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Schematic of the Smart Grid
Source EPRI (circa 2002)
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Smart Grid Technology Areas

• Advanced Metering Infrastructure (AMI)
• Smart Meters
• Two-way Communications
• Consumer Portal
• Home Area Network
• Meter Data Management
• Demand Response
• Advanced Distribution Operations (ADO)
• Distribution Management System with
• advanced sensors
• Advanced Outage Management (real-time)
• DER Operations
• Distribution Automation

• Advanced Transmission Operations (ATO)
• Substation Automation
• Geographical Information System for Transmission
• Wide Area Measurement System (WAMS)
• Hi-speed information processing
• Advanced protection and control
• Modeling, simulation and visualization tools
• Advanced Asset Management (AAM)
• Advanced sensors
• Integration of real time information with other
  processes

Source NETL Modern Grid Strategy
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Organizations Working on Smart Grid Today
EPACT05 Hearings
EEI
EISA-2007
FERC
NERC (FM)
DOE Smart Grid Task Force
GWAC
GridWise Alliance
UtilityAMI
DOE-OE Grid 2030
Galvin Initiative
DOE/NETL Modern Grid Strategy
EPRI Intelligrid
CEC PIER
IEEE
NIST
NW GridWise Testbed
CPUC AMI
Open AMI
GridWise Program
PSERC
GridWorks
CERTS
NYSERDA
Nat'l Labs
GridApps
DOE-OE
CEC PIER
Source Eric Lightner, DOE Office of Electric
Delivery and Energy Reliability
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EISA The Federal Role In Deploying The Smart Grid

• Policy Statement
• It is the policy of the United States to support
  the modernization of the electric transmission
  and distribution system to maintain reliability
  and infrastructure protection.
• DOE Tasks
• Submit Smart Grid System Report after first year
  and every two years
• Form Smart Grid Advisory Committee
• Manage Smart Grid Task Force comprised of DOE,
  FERC, and National Institute of Standards and
  Technologies (NIST)
• Lead Smart Grid Technology Research, Development,
  and Demonstration program
• Submit Study of security aspects of Smart Grid
  systems
• Submit study of effect of private wire laws on
  CHP facilities
• NIST Coordinates development of framework for
  protocols and model standards for information
  management for interoperability of smart grid
  devices and systems

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State Responsibilities for Smart Grid Deployment
under EISA Section 1307

• PURPA Directive -- each state must consider
  requiring electric utilities to demonstrate that,
  prior to investing in non-advanced grid
  technologies, Smart Grid technology is determined
  not to be appropriate
• States required to consider allowing recovery of
  costs of qualified Smart Grid investments and
  recovery of remaining book value of assets made
  obsolete by Smart Grid
• Requires consideration within first year of
  enactment, and concluded in 2 years
• But state commission answer to all of these could
  still be NO

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The Landscape for AMI

• Automatic Meter Infrastructure (AMI)
• First generation smart grid technology
• Will pioneer the platform for customer
  interface with emerging technologies
• Currently, 74 Smart Grid initiatives in 33
  states, which include utility-sponsored Automatic
  Meter Infrastructure (AMI) pilot programs at
  different stages
• California taking most aggressive approach in
  authorizing deployment and cost recovery of AMI
  other states (DC, Maryland, Michigan, Texas) have
  pilots underway
• One estimate 50 million existing meters replaced
  by smart meters by 2010 at 18 billion cost
  (Deutsche Bank)

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AMI Deployment a New Utility Paradigm
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Essential Smart Grid Elements
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Challenges to Smart Grid Deployment

• Technological
• Lack of consistent standards and protocols means
  most systems can communicate only with
  technologies developed by same manufacturer
• Limits interoperability of Smart Grid
  technologies and limits future choices for new
  technologies
• Need to future proof technology or risk having
  technology choice rendered obsolete
• Management Culture
• Some utilities embarked on aggressive deployment
  strategies (e.g., those exclusively in wires
  business)
• But most risk averse, not wanting to bear
  entrepreneurial and technology risks not
  customarily early adopters
• Timing of market entry is key not too soon or
  risk making wrong choice on technology

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Challenges (cont.)

• Regulatory Policy/Business Case Alignment
• Groundwork essential to support utility capital
  expenditures
• Regulators will be focused on cost-to-benefit
  ratio of capital expenditures, and not
  necessarily on utilitys revenue growth potential
• Will regulators recognize societal benefits?
• Cost allocation issues between customer classes
  benefiting from technology
• Regulatory support essential for creation of new
  services envisioned from emerging technologies
• February 2007 NARUC Resolution --guidelines for
  state commissions seeking to deploy
  cost-effective AMI includes consideration of
  intangible benefits, timely cost recovery of
  AMI expenditures, and accelerated cost recovery
  of existing metering infrastructure to generate
  cash for AMI deployment

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Challenges (cont.)

• Customer involvement and support
• Early Pilots -- too early to tell whether
  customer involvement can be sustained year to
  year
• Uncertainty whether costs can justify benefits
• Question of whether technology will create a
  digital divide between higher income and lower
  income customers
• Will customers be better off with new
  technologies?

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Final Thoughts

• Experience from AMI pilots needs to be validated
  and tested
• Lessons learned from multiple Smart Grid
  initiatives needs to be shared a collaborative
  information clearinghouse is being planned for
  establishment by DOE/EPRI
• Consensus on the value of advanced Smart Grid
  technologies will be required of all stakeholders
  (utilities, regulators, customers) for merits to
  be realized

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Robert W. Gee President Gee Strategies Group
LLC 7609 Brittany Parc Court Falls Church, VA
22304 U.S.A. 703.593.0116 703.698.2033
(fax) rwgee_at_geestrategies.com www.geestrategies.co
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