ONE of SIX SMART GRID STAKEHOLDER BOOKS             consumer advocates                                                    ...
Your stake as a technology professional.DISCLAIMERThis report was prepared as an account of work    responsibility for the...
PREFACEThe U.S. Department of Energy (DOE) is charged            released in 2008 and available onlineunder the Energy Ind...
SECTION 01                    Nationwide,               demand for electricity             is expected to grow 30%        ...
SMARTER GRID / SMART GRID                                                     Because it is deploying now, yet will only b...
SECTION 01 : continuedinformation technology tools and techniques         You’ll learn about the barriers and opportunitie...
SECTION 02                 With real-time             data made possible by       Smart Grid technologies, utilities      ...
SECTION 02 : continued                                             POINT OF CLARIFICATION: wHAT THE SMART GRID ISN ’ T    ...
mitigation of both cyber and physical threats.     improved economics                                             Its abil...
SECTION 02 : continued                                             BENEFITS FOR COMMERCIAL AND INDUSTRIAL CUSTOMERS       ...
Yet it’s important to remember that the        included in utility business cases. Yet credit   Smart appliances costing $...
SECTION 03                     Realizing               the Smart Grid will            require the best solutions          ...
Improved interfaces and decision support will enable grid operators and managers to make                                  ...
SECTION 03 : continuedeither by special indicators or displayed through      automated responses to grid failures to isola...
supplying power during peak load periods, the     First, the development by the end of 2010 of anproject seeks to achieve ...
SECTION 04                  NIST is               matching its          expertise with DOE’s       domain expertise to for...
THE GRIDwISE ALLIANCE: AN EARLY SMART GRID CHAMPION                                                           As part of a...
SECTION 04: continuedthe value of a systems approach                      Ultimately, interoperability standards areto gri...
SECTION 05                    Simply put,                the purpose of the            Collaborative is to get a fix      ...
SECTION 06                      The               Maturity Model           creates a roadmap of        activities, investm...
SMART GRID MATURITY MODEL                                                                                                 ...
SECTION 07                 A smarter                grid delivers          end-use conservation and       efficiency thank...
CAP & TRADE & SMART GRID                                                          Congress is working on proposed legislat...
SECTION 07 : continuedFurthermore, by enabling the sale of more                            smokestacks, the Smart Grid cou...
Doe   Smart Grid
Doe   Smart Grid
Doe   Smart Grid
Doe   Smart Grid
Doe   Smart Grid
Doe   Smart Grid
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Doe Smart Grid

  1. 1. ONE of SIX SMART GRID STAKEHOLDER BOOKS consumer advocates environmental groups utilities regulators policymakerstechnology providers WHAT THE SMART GRID MEANS TO AMERICA’S FUTURE. A smarter grid requires the participation of those who can deliver technology solutions to assist utilities and engage consumers. prepared for the U.S. Department of Energy by Litos Strategic Communication under contract No. DE-AC26-04NT41817, Subtask 500.01.02
  2. 2. Your stake as a technology professional.DISCLAIMERThis report was prepared as an account of work responsibility for the accuracy, completeness, or necessarily constitute or imply its endorsement,sponsored by an agency of the United States usefulness of any information apparatus, product, recommendation or favoring by the United StatesGovernment. Neither the United States or process disclosed, or represents that its use Government or any agency thereof, or LitosGovernment nor any agency thereof, nor Litos would not infringe privately owned rights. Strategic Communication. The views andStrategic Communication, nor any of their Reference herein to any specific commercial opinions of authors expressed herein do notemployees, make any warranty, express or product, process, or service by trade name, necessarily state or reflect those of the Unitedimplied, or assumes any legal liability or trademark, manufacturer or otherwise does not States Government or any agency thereof.2PRINTED IN THE UNITED STATES OF AMERICA.
  3. 3. PREFACEThe U.S. Department of Energy (DOE) is charged released in 2008 and available onlineunder the Energy Independence and Security at, this publication isAct of 2007 (EISA 2007) with modernizing the one in a series of books designed to betternations electricity grid to improve its reliability ’ acquaint discrete stakeholder groups with theand efficiency. As part of this effort, DOE is also promise and possibilities of the Smart Grid.responsible for increasing awareness of our Stakeholder groups include Utilities, Regulators,nations Smart Grid. Building upon The Smart ’ Policymakers, Technology Providers, ConsumerGrid: An Introduction, a DOE-sponsored publication Advocates and Environmental Groups. TABLE OF CONTENTS SECTION 01 // PAGE 2 Our Electric Grid: An infrastructure in search of solutions. SECTION 02 // PAGE 5 The Smart Grid: Operational benefits. SECTION 03 // PAGE 10 Innovation Calling: Key Smart Grid technologies. SECTION 04 // PAGE 14 Security & Standards: Getting to certainty. SECTION 05 // PAGE 17 FERC, NARUC & the Smart Grid Clearinghouse: Drawing clarity from complexity. SECTION 06 // PAGE 18 The Smart Grid Maturity Model: Because one size doesn’t fit all. SECTION 07 // PAGE 20 Smart Grid & the Environment: Enabling a cleaner energy future. SECTION 08 // PAGE 24 Next Steps: Getting to solutions. GLOSSARY // PAGE 26 Smart Grid terms worth knowing. RESOURCES // PAGE 27 Places to go to learn more. 1
  4. 4. SECTION 01 Nationwide, demand for electricity is expected to grow 30% by 2030. Electricity prices are forecast to increase 50% over the next 7 years. OUR ELECTRIC GRID: AN INFRASTRUCTURE IN SEARCH OF SOLUTIONS.TITLE XIII – SEC. 1301. Remember the telecommunications industry circa 1980?STATEMENT OF POLICYON MODERNIZATION OF The phone booth was a ubiquitous feature of the American landscape, a stationaryTHE ELECTRICITY GRID symbol of an industry legendary for its reliability. Back then, about the only way to It is the policy of the United States to make a phone “portable” was to pull it out of the wall. Innovation – to the extentsupport the modernization of the Nation’s it could be called innovation – went by the name of something called a “Princesselectricity transmission and distribution phone.” And customer choice was a matter of what weekend you chose to makesystem to maintain a reliable and secure that slightly cheaper long-distance call to the relatives.electricity infrastructure that can meetfuture demand growth and achieve Once telecommunications was transformed, to move megawatts of electricity morethe goals that together define a Smart Grid. significant changes occurred. Communications efficiently, reliably and affordably. In the became digitized, markets were made, process, our nation’s electric system will innovation encouraged and a new era of move from a centralized, producer-controlled customer choice inaugurated. network to a less centralized, more consumer- interactive model. The potential exists for similar transformation and opportunity in the provision of electricity Far more than “smart meters,” a fully embodied in a concept known as the Smart functioning Smart Grid will feature sensors Grid. The Smart Grid is defined as the system throughout the transmission and distribution that delivers electricity from suppliers to grid to collect data, real-time two-way consumers using digital technology to save communications to move that data and energy, reduce cost, and increase reliability and electricity between utilities and consumers, transparency. Like the telecommunications and the computing power necessary to make and Internet revolutions that preceded it, that intelligence actionable and transactive. technology holds the key to the Smart Grid Indeed, only by bringing the tools, techniques and its realization. This essential set of and technologies that enabled the Internet to investments will help bring our electric grid the utility and the electric grid is such a into the 21st century using megabytes of data transformation possible. 2
  5. 5. SMARTER GRID / SMART GRID Because it is deploying now, yet will only be fully realized over time, it is necessary to split one Smart Grid into two for the purpose of discussion: A smarter grid refers to the current state of the transformation, one in which technologies are being deployed today or in the near future. The Smart Grid is the ultimate vision – the full realization of everything it can be. THE ELEMENTS OF TITLE XIIItime is of the essence At the same time, a sea change is occurring (1) Increased use of digital information on the customer side of the meter. Research and controls technology.We literally cannot afford the grid as it stands. is incomplete as to how much control overThe costs of new generation and delivery (2) Optimization of grid operations and their energy choices customers ultimatelyinfrastructure are climbing sharply. According resources, with full cyber-security. will seek to exercise. Yet their awarenessto The Brattle Group – a consulting group (3) Deployment and integration of has been heightened by projects large andthat specializes in economics, finance, distributed resources and generation, small, from the proliferation of Advancedand regulation – investments totaling including renewable resources. Metering Infrastructure (AMI) projects toapproximately $1.5 trillion will be required high-profile developments in states such as (4) Incorporation of demand response,over the next 20 years to pay for the Texas, California, Colorado and Hawaii. And if demand-side resources, and energy-infrastructure alone. their recent telecommunications history is efficiency resources.Nationwide, demand for electricity is expected any guide, customers will be demanding (5) Deployment of `smart’ technologiesto grow 30% by 2030, according to the more control rather than less. Just tell them for metering, communications concerningEnergy Information Administration’s Energy what they’re paying for and how they might grid operations and status, and distributionOutlook 2009. be able to pay less and watch what happens. automation. In addition, recent polls indicate that 75% ofElectricity prices are forecast to increase 50% (6) Integration of `smart’ appliances Americans support federal controls on theover the next 7 years.1 and consumer devices. release of greenhouse gases in an effort to reduce global warming, 54% “strongly.” Even (7) Deployment and integration ofSpiraling electricity rates and the cost of among those who are “very” concerned advanced electricity storage and peak-carbon (to be fully ascertained through the about the cost impact, two-thirds support shaving technologies, including plug-inoutcome of proposed cap-and-trade legislation) the regulation.3 electric and hybrid electric vehicles, andare combining to reveal the true – i.e., higher – thermal-storage air conditioning.cost of energy. the size of the opportunity (8) Provision to consumers of timelyIn 2007, the last year statistics were information and control options. Compared with other industries, our electricalavailable, power plants in the United States grid has been largely bypassed by (9) Development of standards foremitted 2,500 million metric tons of carbon technological innovation until relatively communication and interoperability ofdioxide; total CO2 emissions nationwide were recently, owing to the fact that historically it appliances and equipment connected to6,022 million metric tons, 75.9 million more has been heavily regulated and modeled to the electric grid.than in 2006.2 keep the lights on and costs low. Partly for (10) The lowering of unreasonable this reason, its modernization by means of or unnecessary barriers to adoption. 3
  6. 6. SECTION 01 : continuedinformation technology tools and techniques You’ll learn about the barriers and opportunitieshas been somewhat of a back-burner priority. relative to Smart Grid adoption; you’ll discover how some utilities have already takenUntil now. significant steps or put projects in place; you’llThe Smart Grid represents the creation of a see how consensus is being achieved as variousnear-term marketplace in the tens of billions stakeholders align behind the need for a Smartof dollars. According to the Electric Power Grid, if not exactly agreeing on the steps neededResearch Institute (EPRI) and the Pacific to get there.Northwest National Laboratory (PNNL), the DON’T I KNOw YOU FROM Where are we on the Smart Grid adoption curve?total market size is approximately $200 billion SOMEwHERE? Consider the fact that Intel is already getting itsspread over 10-15 years. “smart chips” into appliances all over the world. To give you an idea of the current stateTechnological assistance is needed anywhere of grid modernization, consider this: If Translation: Your company has little timeperformance can be enhanced, efficiencies Alexander Graham Bell were confronted with to lose.gained or innovation enabled. Notable among today’s telephony – cell phones, texting, etc.potential technology applications is the – he would most likely be amazed. Thomascharging of electric vehicles, which share Edison, meanwhile, would feel quite at homemany of the same characteristics as cell in the largely non-digital, electromechanicalphones. Distributed energy storage at scale landscape that is today’s grid.– sometimes called community energystorage – will require the networking ofthousands of energy storage devices, i.e.batteries, similar to networking computers.moving opportunity forwardConsider this a prospectus on the potential ofour present and future grid. In the followingpages, you’ll see how DOE is working withutilities to develop a Smart Grid Maturity Model,state and federal regulators to further a deeperunderstanding of Smart Grid issues andimplementation strategies, and standardsgroups to develop interoperability standardsand protocols. 4
  7. 7. SECTION 02 With real-time data made possible by Smart Grid technologies, utilities will be able to more effectively utilize assets under normal and adverse conditions. THE SMART GRID: OPERATIONAL BENEFITS. Realizing the Smart Grid will require, to greater or lesser degrees, smart sensors and controls, a broadly accepted communications platform, advanced tools for planning and operation and dynamic pricing. It will also require clear standards for interconnection, performance and metrics. Constantly communicating, proactive and virtually self-aware, the Smart Grid has been described as a complex ecosystem.THE HIGHLIGHTS… It is a fitting characterization. some of the assets. Overall and over time, integrated communications technologies will The Smart Grid will increase the overall When viewed relative to “the grid we have lessen the need for new and costly hard assets.use and value of existing production and now,” transformation to this smarter grid willtransmission capacity; incorporate greater give rise to enhancements that promise to enhancing reliabilitylevels of renewable energy; reduce carbon positively affect every aspect of electricity The Smart Grid will dramatically reduce theemissions by increasing the efficiency of generation, delivery and consumption, as most cost of power disturbances. Communicationsthe system and of loads; gain functionality recently detailed by the Modern Grid Strategy and control technologies applied to the grid and the Electricity Advisory Committee.out of increasing energy intensity; improve will be able to isolate faults and rapidlypower quality to correspond to new digital restore service. Decision-support systems will optimizing asset utilizationdemands; and do it all with the highest “know” when there is the need to quickly and efficient operationlevels of security. reduce load or redirect power and respond In 2005, excluding fuel and purchased power, autonomously to adverse conditions. investor-owned utilities spent $40 billion to operate and maintain the power system.4 With The Smart Grid will also be able to “call real-time data made possible by Smart Grid for help,” enlisting support from distributed technologies, utilities will be able to more energy resources to help balance effectively use assets under normal and system needs. adverse conditions. Among the benefits: A reduction in failure-related maintenance and outage costs and a longer service life among 5
  8. 8. SECTION 02 : continued POINT OF CLARIFICATION: wHAT THE SMART GRID ISN ’ T It ’s only natural to confuse the terms Smart Grid and smart meters. The general news media do it all the time. But smart metering and the physical meter itself are just examples of a single enabling technology that makes two-way communication possible.In combination, such functionality willstrengthen the transmission and distribution reducing widespread outages 10/28system, increase operational flexibility and A $10-billion event 10 BILLION According to the “Final Report on the August 14, Dollarsgreatly reduce the risk of a failure that might 28 MILLIONaffect the entire grid. 2003 Blackout in the United States and People Canada,” that was the estimated price tag forimproving power quality our nation’s last massive blackout, which left more than 28 million people in Michigan, NewPower quality events – dips in voltage lasting York and Ohio living without power for up to 4less than 100 milliseconds – can have the same days. Already, “lessons learned” from this eventeffect on an industrial process as a more general have resulted in a smarter grid and theoutage that lasts minutes. A single such event institution of enforceable reliability standards.can cost commercial facilities such as banks anddata centers millions of dollars. That said, the Smart Grid will be able to employ multiple technologies to ensure that such aAccording to the EPRI, by 2011, fully 16% of our scenario is not repeated. Improved interfaces andnation’s electric load will require digital-quality decision-support tools will enable systempower. (And digital equipment is far more operators to monitor the status of the grid at asensitive than analog ever was, requiring tighter glance – detecting threats against it – andtolerances for voltage and frequency identify, relieve and/or replace failing equipmentfluctuation.) The Smart Grid will help limit the even before a breakdown can occur. In someimpact of power-quality events. Transmission- cases, power-stabilization software will be able toside Smart Grid components will work to reduce address an event and “heal” faster than humansvoltage sags and swells. On the distribution can even react to the event. Even grid-friendlylevel, disturbed sources could be removed and appliances will play a role, responding toreplaced with clean backup power supplies. demand-response signals to adjust load.Broad-based power-quality improvements willreduce losses to American businesses across the reducing vulnerability to man-made events andboard, from scrapped materials in industrial natural disastersprocesses to the number of lost customers ina retail environment. Overlaying the entire electrical network, the Smart Grid’s integrated communications infrastructure will provide detection and 6
  9. 9. mitigation of both cyber and physical threats. improved economics Its ability to support a wide variety of Efficiencies ushered in by the Smart Grid should generation options also reduces the effects of mitigate some of the rising costs of electricity. an attack at any one point on the system. Real-time price signals will allow consumers to Indeed, its strength is in its diversity. For participate based on current supply and example, whether natural or man-made, a demand pricing scenarios. Communication diversity of distributed energy resources offers among these buyers and sellers should reduce grid operators a variety of options in response grid congestion and unplanned outages, as wellTECH HIGHLIGHT: to an emergency. Similarly, resource diversity as determine the real price for electricity atSUPERCONDUCTING within a geographic region offers additionalCABLE TECHNOLOGY various times throughout the day. The reach of means to restore the grid, and a diversity of market efficiencies is also improved. Consider According to the U.S. Department fuels increases the likelihood that adequate that analyst group LECG recently determined power will be available.of Energy, more than 7% of the electricity that the organized wholesale electricitytransported across the wires is lost in markets of PJM and the New York Independent improving publictransmission and distribution because of System Operator (ISO) have already reduced and worker safetyresistance in current copper technologies. average wholesale electric rates between $430 According to the American Public Power million and $1.3 billion a year.Superconducting cable technologies, Association, utility work is among the mostroughly half the size of conventional dangerous occupations, resulting in 1000 more robust marketscopper technologies, will be capable of fatalities and 7000 flash burns annually. Rapidcarrying 3-5 times more power, making The Smart Grid will encourage new market identification of problems and hazards madethem particularly useful and economically participants, enabling a variety of new load possible by improved monitoring and decision-viable where space and rights-of-way are management, distributed generation, energy support systems will be able to predictat a premium. storage and demand-response options and equipment failure before it occurs to save lives opportunities. These contributions are and reduce injuries. Clearly, it is easier to reinforcing the Smart Grid’s economic service equipment routinely than during an advantages by allowing demand to act as a outage event. Reducing failures also leads to supply resource, allowing utilities to defer some reducing outages, which means traffic lights, large capital investments in power plants, elevators, etc., continue to function for the substations and transmission and distribution benefit of the public’s safety. lines. As a result, tens of billions of dollars will 7
  10. 10. SECTION 02 : continued BENEFITS FOR COMMERCIAL AND INDUSTRIAL CUSTOMERS Electric motors consume approximately 65% of industrial electricity, understandable because they power virtually every process necessary for moving things from compressed air to conveyor belts. Variable-speed drives can reduce a motor’s energy consumption by up to 60% compared with fixed drives and can be enabled to respond to a utility’s price signals. Imagine the impact that such communication can have on manufacturing specifically and society in saved over a 20-year period, according to the In being able to access a wider diversity of fuels,Pacific Northwest National Laboratory. By the Smart Grid will be able to generate moreincreasing the grid’s robustness and efficiency, energy from carbon-free sources such asoptions such as these will work to reduce peak centralized hydro, wind, solar and nuclear power.prices and demand, leading to cost savings and In addition, it will be able to better take intodownward pressure on rates for all stakeholders. account the intermittency of renewables.Demand response is already illuminating the Through the use of low-emission DER sources,promise of the Smart Grid through its greater the Smart Grid will enable states to more rapidlyenablement in certain regions of the country. approach their Renewable Portfolio StandardsDemand response is a means by which demand (RPS) goals.will be dynamically and continuously balancedwith supply-side resources to produce the least reduction in electrical lossescostly electricity system. Distributed energy Electrical generation is required to “cover”resources (DER) may accelerate consumer usage system losses; that is, for the system to work,of small generation and storage devices through power is required to provide the energyconnections with the grid and two-way flows of consumed by line loss and inefficientelectricity and communications. equipment. Smart Grid components and other efficiency improvements engineer this wastemore environmentally friendly out of the system. With more generationIn enabling the deployment of all forms of alternatives at its disposal, the Smart Grid willgeneration and storage, the Smart Grid will be able to utilize many more near load centersencourage greater use of distributed energy and minimize transmission losses.resources, including maximizing the use ofexisting combined heat and power (CHP) units. on making the smart gridResiding primarily at large commercial and business caseindustrial sites, existing CHP units – the CO2 The Smart Grid increases opportunities foremissions profile of which are substantially consumer choice while reducing the cost oflower than fossil-fueled power plants – delivered electricity. It makes firm the promiserepresented 83.5 gigawatts (GW) of installed of clean, renewable energies suchcapacity in place as of 2005. DOE estimates as wind and solar available at meaningful scale.suggest that additional opportunities could be It allows for the connection of anas high as 130 GW.5 entire portfolio of resources. And it enables communication among all parties. 8
  11. 11. Yet it’s important to remember that the included in utility business cases. Yet credit Smart appliances costing $600 million canSmart Grid is a journey rather than a for those very societal benefits in terms of provide as much reserve capacity to the griddestination. Through modernization efforts, incentives and methods for reducing as power plants worth $6 billion.8a smarter grid will evolve into the fully investment risks might stimulate theintegrated Smart Grid over time. And, much deployment of modern grid processes and Over 20 years, $46 billion to $117 billionlike every major modernization effort in technologies. could be saved in the avoided cost ofhistory, it will face hurdles. construction of power plants, transmission As study after study indicates, the societal lines and substations.9Consider the business case for investing in case for Smart Grid adoption is fundamental,the Smart Grid. Utilities such as Austin lasting and real:Energy have proven the cost-effectivenessof multi-dimensional Smart Grid investment. Increasing energy efficiency, renewableCurrently, however, business cases for energy and distributed generation wouldinvesting in the Smart Grid processes and save an estimated $36 billion annuallytechnologies are often incomplete when by 2025.6viewed strictly with regard to near-termcost-effectiveness. Distributed generation can significantly reduce transmission-congestionInvariably, it is easier to demonstrate the costs, currently estimated at $4.8value of the end point than it is to make a billion annually.7sound business case for the intermediatesteps to get there. Societal benefits, oftennecessary to make investments in moderngrid principles compelling, are normally not 9
  12. 12. SECTION 03 Realizing the Smart Grid will require the best solutions that technology providers and integrators have to offer. INNOVATION CALLING: KEY SMART GRID TECHNOLOGIES. Where precisely do Smart Grid opportunities reside in terms of technology design, engineering and development? The following have been categorized as Smart Grid Key Technology Areas by DOE. integrated two-way Examples include: communication • Next-generation FACTS/PQ (power Two-way communication makes the Smart quality) devicesABOUT FACTS Grid a dynamic, interactive, real-time infrastructure. An open architecture creates a • Advanced distributed generation and In fact, FACTS (Flexible AC Transmission plug-and-play environment that securely energy storageSystems) is somewhat of an umbrella term networks grid components and operators, • Plug-in hybrid electric vehicles (PHEVs)that encompasses several technologies enabling them to talk, listen and interact.designed to enhance the security, capacity • Fault current limitersand flexibility of power transmission advanced components • Superconducting transmission cablessystems. FACTS manage to increase the Advanced components play an active role inexisting transmission network capacity determining the electrical behavior of the • Microgridswhile maintaining or improving the grid, applying the latest research in materials,operating margins necessary for grid • Advanced switches and conductors superconductivity, energy storage, powerstability. More power reaches consumers electronics and microelectronics to produce • Solid-state transformersat a lower investment cost and with less higher power densities, greater reliabilityof an impact on the environment. and power quality. 10
  13. 13. Improved interfaces and decision support will enable grid operators and managers to make more accurate and timely decisions at all levels of the grid, including the consumer level, while also enabling more advanced operator training.advanced control methods sensing and measurement improved interfaces technologies and decision supportAdvanced control methods monitor powersystem components, enabling rapid diagnosis Sensing and measurement technologies Improved interfaces and decision support willand timely, appropriate responses to any enhance power system measurements and enable grid operators and managers to makeevent. They also support market pricing, facilitate the transformation of data into more accurate and timely decisions at allenhance asset management and efficient information to evaluate the health of levels of the grid, including the consumeroperations, and involve a broad application equipment, support advanced protective level, while enabling more advanced operatorof computer-based algorithms. relaying, enable consumer choice and help training. Improved interfaces will better relay relieve congestion. and display real-time data to facilitate:Examples include: • Data reduction Examples include: • Data collection and monitoring of all essential grid components • Visualization • Smart meters • Data analysis to diagnose and provide • Speed of comprehension • Ubiquitous system operating parameters solutions from both deterministic and • Decision support predictive perspectives • Asset condition monitors • System operator training • “Diagnosis” and subsequent appropriate • Wide-area monitoring systems (WAMS) action processed autonomously or through • Advanced system protection applications of smart grid operators (depending on timing and technology complexity) • Dynamic rating of transmission lines Consumer energy management within the • Provision of information and solutions to Smart Grid will necessarily include some form human operators of AMI, including but not limited to “smart meters.” On the customer side of the meter, • Integration with enterprise-wide processes this will enable electricity service providers to and technologies signal homeowners and businesses when power is expensive and/or in tight supply, 11
  14. 14. SECTION 03 : continuedeither by special indicators or displayed through automated responses to grid failures to isolate HOw ENERGY STORAGE FITS INWeb browsers. Another level of implementation disturbed zones and prevent or limit cascading The facility with which personalwould allow the utility to automatically reduce blackouts; the plug-and-play ability to connect electronics such as cell phones and “smartthe customer’s electricity consumption when new generating plants to the grid, reducing the phones” can store energy is a welcome factpower is expensive or scarce. This will be need for time-consuming interconnection of everyday life. When similar technologiesmanaged through communication between studies and physical upgrades; and enhanced and approaches are applied to the grid, thethe smart meter and the customer’s equipment ability to manage large amounts of wind and collective electric infrastructure will comeor appliances. solar power. Some analysts believe that to represent a far more reliable, secure and deployment of the Smart Grid is essential toThe Smart Grid will make it easier to realize efficient network. the large-scale use of wind and solar energy.benefits from distributed generation, such as According to the Electric Advisory (Again, see Section 7.)rooftop solar panels, and to implement “net Committee, there are many benefits tometering,” a ratemaking approach that allows deploying energy storage technologies technologies in action:operators of distributed generators to sell city of fort collins, colorado into the nation’s grid. Energy storage cansurplus power to utilities. The Smart Grid will provide: The city and its city-owned Fort Collins Utilityalso manage the connection of millions of support a wide variety of clean energy 1. A means to improve grid optimizationplug-in electric vehicles into the power grid initiatives, including the establishment of a for bulk power production(see Section 7, “Smart Grid & the Environment: Zero Energy District within the city (known 2. A way to facilitate power systemEnabling a cleaner energy future”). as FortZED). balancing in systems that have variable orOn the transmission side, monitoring and diurnal renewable energy sources This DOE demonstration project will integrate areliability of the Smart Grid will include real-time 3. Facilitation of integration of plug- wide range of renewables and demand responsemonitoring of grid conditions; improved in hybrid electric vehicle (PHEV) power within utility operations. It seeks to transformautomated diagnosis of grid disturbances; demands with the grid the electrical distribution system by developing an integrated system of mixed distributed 4. A way to defer investments in resources to increase the penetration of transmission and distribution infrastructure renewables – such as wind and solar – while to meet peak loads (especially during delivering improved efficiency and reliability. To outage conditions) for a time realize the potential of a “zero energy district,” 5. A resource providing ancillary the project involves a mix of nearly 30 services directly to grid/market operators distributed generation, renewable energy and Types of energy storage include: demand-response resources across five • Thermal customer locations for an aggregated capacity of more than 3.5 MW. By increasing the use of • Flow batteries renewables and distributed energy resources for • Pumped hydro • Lithium-ion batteries • Flywheel • Compressed air 12
  15. 15. supplying power during peak load periods, the First, the development by the end of 2010 of anproject seeks to achieve a 20%-30% peak-load open, global standard for transmitting signals toreduction on multiple distribution feeders. and receiving signals from a home appliance; and second, appropriate policies that rewardTechnologies being integrated include: consumers, manufacturers and utilities for • Photovoltaics (PV) adding and using these new peak demand ONE LESS $10 MILLION reduction capabilities. SUBSTATION • Wind turbines GE’s smart appliances – or demand-response DOE is funding several demonstration • Microturbines appliances – include a refrigerator, range, projects across the country. Among these • Dual-fuel combined heat and power microwave, dishwasher and washer and dryer. is the Perfect Power project at the Illinois (CHP) systems Currently running as a pilot program, these Institute of Technology (IIT), leveraging appliances receive a signal from the utility advanced technologies to create a replicable • Backup generators company’s smart meter, which alerts the and more reliable microgrid. The project’s • Plug-in hybrid electric vehicles (PHEVs) appliances – and the participants – when peak goals: To promote distribution automation, in an ancillary-services role electrical usage and rates are in effect. In the encourage more local and renewable energy • Fuel cells pilot program, the signal word “eco” comes up generation and electricity usage. Prior to on the display screen. The appliances are embarking on this demonstration project,the state of smart appliances programmed to avoid energy usage during local utility Exelon had planned on building that time or operate on a lower wattage;Major home-appliance manufacturers are a third $10 million substation to serve however, participants could choose to overridesufficiently convinced of the commercial IIT’s growing needs. That will no longer the program.viability of the Smart Grid. be necessary. Not only will this project eliminate the substation’s cost, but also theWhirlpool, the world’s largest manufacturer and carbon dioxide it would have generated.marketer of major home appliances, hasannounced that it plans to make all of itselectronically controlled appliances Smart Gridcompatible by 2015. The company will make allthe electronically controlled appliances itproduces – everywhere in the world – capableof receiving and responding to signals from theSmart Grid. The company mentioned that itsability to successfully deliver on thiscommitment in this time frame was dependenton two important public-private partnerships: 13
  16. 16. SECTION 04 NIST is matching its expertise with DOE’s domain expertise to formulate a Smart Grid Roadmap, set to be released by the end of 2009. SECURITY & STANDARDS: GETTING TO CERTAINTY. Present and future architects of the Smart Grid look for regulatory certainty before they can confidently enter the marketplace with their respective tools, technologies and deployment plans. Meanwhile, many regulators are seeking evidence of mature interoperability and security standards before they can convey such certainty. Historically, in industries from tele­ Accountability Office (GAO), cyber attacks are communications to computers, standards increasing at an alarming rate. As far back as follow markets rather than lead them. That 2002, the GAO reports, 70% of energy and said, standards in both areas are evolving power companies experienced some kind of with all deliberate speed. severe cyber attack to computing or energy management systems. A status report: Ironically, recent technological approaches to smart grid security: the grid, including reliance on unprotected safety built in telecommunications networks, may be adding The grid as we know it was engineered, to the security problem. In addition, the ease designed and built during a time when of accessibility to open information sources “security” referred to the continuing operation available via the Internet may also be putting of the grid itself rather than determined the infrastructure at risk. efforts by terrorists and others to harm it. The Smart Grid makes security an imperative Times have certainly changed. Today, the from the outset. A systems approach to integrity of the grid is itself an issue of national electric power security will identify key security. At issue are not only attacks on the vulnerabilities, assess the likelihood of threats power system, i.e., physical attacks – but also and determine consequences of an attack. attacks through the power system, or cyber Resilience will be built into each element of attacks. According to the Government the system and the overall system designed14
  17. 17. THE GRIDwISE ALLIANCE: AN EARLY SMART GRID CHAMPION As part of a public/private partnership with DOE, the GridWise Alliance and its affiliate GridWise Architecture Council have earned a reputation as an influential voice in support of Smart Grid technologies and implementation. The Alliance and its members advocate change locally, regionally, and nationally to promote new policies and technology deter, detect, respond and recover from keys to resisting attackman-made disruptions as well as those fromnatural disasters such as hurricanes and The Smart Grid must be designed – at theearthquakes. Planning for man-made threats component level – to reduce the:will consider multiple points of potential failure. • Threat of attack by concealing, dispersing,According to DOE, this approach would apply eliminating or reducing single-point failuresrisk management methods to prioritize the • Vulnerability of the grid to attack byallocation of resources for security. Particular SECURITY AT THE METER protecting key assets from physical and cybergoals of security programs would include: attack A collaborative utility task force – • Identifying critical sites and systems the Advanced Metering Infrastructure • Consequences of a successful attack by Security Task Force (AMI-SEC) – is currently focusing resources on recovery • Protecting selected sites using surveillance partnering with DOE to develop a common and barriers against physical attack To succeed at this task, the Smart Grid’s set of cybersecurity requirements for “system requirements” rely upon greater and advanced metering infrastructure (AMI). • Protecting systems against cyber attack more sophisticated levels of automation to using information denial (masking) provide wide-area monitoring, remote system • Dispersing sites that are high-value targets control, and predictive tools to deal with impending disruptions before they happen. In • Tolerating disruptions addition, the system must be capable of enabling the autonomous operation of selected • Integrating distributed energy sources and grid elements and ensuring that added using automated distribution to speed equipment and control systems do not create recovery from attack additional opportunities for attack. 15
  18. 18. SECTION 04: continuedthe value of a systems approach Ultimately, interoperability standards areto grid security needed to ensure that power electronics, communication data, and informationA systems approach involving government and technology will work together seamlessly, whileindustry encourages balanced investment, which cyber security standards protect the multi­ensures that costs for security requirements will system network against natural or human-be allocated across the Smart Grid. Federal, state caused disruptions.and local policies and regulations should bedeveloped to allow utilities and others in the NIST is matching its expertise with DOE’selectricity industry to recoup reasonable costs ABOUT NIST domain expertise to formulate a Smart Gridfor security upgrades that are part of the overall Roadmap, set to be released by the end of 2009. Founded in 1901, NIST is a non-system design. At the same time, the GridWise Architecture regulatory federal agency whose mission Council has begun to develop an interoperability is to promote U.S. innovation andinteroperability standards: maturity model to determine the appropriatenist and the roadmap industrial competitiveness by advancing process for developing software. measurement science, standards, andMany within the grid community argue that These efforts provide a starting point to bring technology in ways that enhance economicwaiting for standards is the only way to ensure the stakeholders together to work toward security and improve our quality of life.cost-effective implementation. Others hold thatthe only standard required is the size of the plug common goals and visions of what the Smart NIST has created standards for everythingfor Smart Grid appliances. Still others maintain Grid needs to become. from automated teller machines andthat waiting for standards might have retarded atomic clocks to mammograms andthe growth of personal computing to the extent semiconductors. The agency has beenthat we’d still be playing Pong. designated within EISA 2007 (Title XIII) to develop the standards framework forClearly, there are technologies that can and arebeing implemented within utilities in Smart Grid technologies.anticipation of the Smart Grid, among them awide array of smart sensors. And as long asopen, technology-neutral standards areobserved, private industry is free to developstandards on its own. However, the NationalInstitute of Standards and Technology (NIST)will draw the Interoperability Roadmap. 16
  19. 19. SECTION 05 Simply put, the purpose of the Collaborative is to get a fix on the state of Smart Grid issues, technologies and best practices. FERC, NARUC & THE SMART GRID CLEARINGHOUSE: DRAWING CLARITY FROM COMPLEXITY. DOE-sponsored Smart Grid projects of various sizes and scope are increasingly coming before regulatory commissions in jurisdictions across the country. Reconciling the value of the Smart Grid with Grid Clearinghouse, a comprehensive website the day-to-day business facing the nation’s built to house “all things Smart Grid,” detailSMART GRID “FOR THEREST OF US” regulators is complex at best. Regulators are and analyze best practices and enable hard at work balancing competing priorities; regulators to make more informed ratemaking Analogous to the Clearinghouse, the keeping utility service reliable and affordable; decisions.Department of Energy will also launch “greening” the electricity supply; modernizing The Collaborative sees the Smart Created for a far transmission; and combating climate change. Clearinghouse as an additional tool for Smartbroader audience – a “typical” American Where precisely does the Smart Grid “fit” in Grid stakeholders to use in advancing Smartconsumer of electricity interested in the their busy schedules and what does it mean Grid concept and implementation as well as acountry’s energy plan but possibly puzzled to the ratepayers they serve? venue for many federal and state agenciesby its complexity – this site will keep the and public and private sector organizations topublic informed about DOE’s activities in ferc/naruc smart grid collaborative assess Smart Grid development and of the Smart Grid in an easy-to­understand manner. The site will also To further their understanding with regard to To ensure transparency and maximizefunction as a single point of entry the range of issues associated with the Smart “lessons learned,” recipients of DOE Smart Grid, federal and state regulatory officials Grid Investment Grants will be requiredfor the general and trade news media, have joined together under DOE sponsorship to report setbacks as well as successesproviding a value-added reference point to form the FERC/NARUC Smart Grid on the site. Accentuating such lessons willfor this key outreach constituency. Collaborative, using collaboration to draw speed knowledge transfer, facilitate best clarity from complexity. practices and hasten the progress of all Smart Grid initiatives. Most recently, at the request of the two organizations, DOE has established the Smart 17
  20. 20. SECTION 06 The Maturity Model creates a roadmap of activities, investments, and best practices with the Smart Grid as its focus. THE SMART GRID MATURITY MODEL: BECAUSE ONE SIZE DOESN’T FIT ALL. No two electricity service providers are alike. Nor are their business plans or investment strategies. As utilities across the country consider investing in a Smart Grid, they’re also searching for a reasonable degree of solid footing. Utility executives and technology providers alike want to know that making the grid smarter is good business with clear benefits. In effect, how does a Smart Grid-curious have an admirable track record of moving utility “do” the Smart Grid? And how best can entire industries forward. Consider, for technology providers help them succeed? example, how they have transformed the software development industry. Moving forward toward the Smart Grid can’t be done without adopting a systems view. During 2007-2009, IBM and seven utilities Utilities in search of a starting place need look from four continents developed the Maturity no further than the Smart Grid Maturity Model and recently donated it to the Carnegie Model (SGMM). The Maturity Model creates a Mellon Software Engineering Institute (SEI). roadmap of activities, investments and best The SEI has developed worldwide de facto practices with the Smart Grid as its vision. standards, such as the Capability Maturity Those using the model will be able to Model Integration (CMMI) for process establish an appropriate development path, improvement, and led international efforts to communicate strategy and vision, and assess improve network security through its globally current opportunities. The Maturity Model can recognized Computer Emergency Response also serve as a strategic framework for Team (CERT) program. vendors, regulators and consumers who have The U.S. Department of Energy is working or desire a role in Smart Grid transformation. with the SEI, enabling the Institute to serve Maturity models – which enable executives to as the independent steward of the global review the progress a business is making in SGMM with primary responsibility for its transforming or altering the way it operates – ongoing governance, growth and evolution18
  21. 21. SMART GRID MATURITY MODEL Levels, Descriptions, Results ONE: TWO: THREE: FOUR: FIVE:LEVEL Exploring and Functional Integrating Optimizing Innovating Initiating Investing Cross Functional Enterprise Wide Next Wave of Improvements Contemplating Making decisions, Smart Grid spreads. Smart Grid New business, Smart Grid at least at a Operational linkages functionality and operational,DESCRIPTION transformation. functional level. established benefits realized. environmental May have vision Business cases in between two or Management and and societal but no strategy place, investment more functional operational systems opportunities yet. Exploring being made. One or areas. Management rely on and take full present themselves, options. Evaluating more functional ensures decisions advantage of and the capability business cases, deployments under span functional observability and exists to take technologies. Might way with value interests, resulting integrated control advantage of them. have elements being realized. in cross-functional across and between already deployed. Strategy in place. benefits. enterprise functions.RESULT Vision Strategy Systemization Transformation Perpetual Innovation PARTICIPATION TO DATEbased upon stakeholder needs, user feedbackand market requirements.To support widespread adoption and use, theSEI will ensure availability of the model andsupporting materials and services for theuser community, including a suite of offeringson how to use the tool and “train thetrainer” sessions.It is important to note that the Smart GridMaturity Model is not a means of comparing oneutility with another; rather, the intent is strictlyone of self-assessment. The first step for utilitiesis taking the Smart Grid Maturity Model survey 1. PORTLAND GEN. 6. SEMPRA 12. EAST MISS. EPA 18. AEPby contacting 2. BC HYDRO 7. SALT RIVER 13. COMED 19. HYDRO OTTAwA PROJECT 3. EPCOR 14. DOMINION VIR. 20. SCANA CORP.The survey offers insights into a utility’s current 8. COSERVE 4. MANITOBA 15. ALLEGHENY 21. EXELONposition relative to adoption and development HYDRO 9. AUSTIN ENERGY POwER 22. VELCO 5. BONNEVILLE 10. CENTERPOINT 16. PEPCOof the business plan necessary to set milestones POwER 23. FIRST ENERGY 11. ENTERGY 17. DUKEtoward achieving the benefits of the Smart Grid– for both residential and business customers. 19
  22. 22. SECTION 07 A smarter grid delivers end-use conservation and efficiency thanks to its ability to establish more focused and persistent consumer participation. SMART GRID & THE ENVIRONMENT: ENABLING A CLEANER ENERGY FUTURE. In 2008, emissions of carbon dioxide from fuel burning in the United States were down 2.8%, the biggest annual drop since the 1980s.10 This is widely attributable to the length and depth of the worldwide recession and just as widely expected to be an anomaly. Most agree, as the national and global economies improve, carbon emissions will resume their upward trend. Thanks to its ability to establish more focused solar to be deployed rapidly – and in and persistent use of demand response larger percentages. controls, a smarter grid delivers end-use conservation and efficiency. In so doing, it optimizing wind also positively addresses our nation’s growing Although possessing myriad attributes, carbon footprint. renewables also increase the complexity of operating the grid. A smarter grid enables enabling carbon savings operators to manage against this complexity. The full exploitation of renewable energy The Smart Grid can lower the net cost for sources such as wind and PV solar is critical wind power by regulating fluctuations with to managing our collective carbon footprint. demand response. Combining demand However, when viewed against the limitations response, energy storage and distributed and of the current grid, both technologies face centralized generation assets can manage barriers to full-scale deployment. A smarter these fluctuations (i.e., when the wind doesn’t grid enables grid operators to see further into blow) to lower the cost of integrating wind the system and allows them the flexibility to into the system. Overall, the Smart Grid can better manage the intermittency of optimize the penetration of renewables into renewables. This in turn surmounts a our nation’s electrical system. significant barrier – enabling wind and20
  23. 23. CAP & TRADE & SMART GRID Congress is working on proposed legislation that would limit greenhouse gas emissions and turn them into a commodity that can be bought and sold (i.e., cap and trade). Accurate accounting of actual carbon footprints made possible by a smarter grid offers solid verification, thereby capturing the value and enhancing the tradability of carbon offsets.A smarter grid can optimize wind resources electric-only range of 20 miles could reduce fuelin conjunction with demand response controls, use by about one-third according to a report bydealing with the intermittency of such resources the American Council for an Energy-Efficientby actively managing “holes in the wind.” Economy (ACEEE). EPRI estimates that the same PEV could reduce fuel consumption byoptimizing solar about 60% compared with non-hybrid vehicles.A PV array on every roof would be a welcome Although the vehicles will be producing thesight. However, although existing distribution savings rather than the Smart Grid, onlygrids are capable of safely supporting high Smart Grid technologies will allow us to tappenetrations of PV solar energy, placing excess their fundamental potential. Consider thepower back onto the grid may also pose following ramifications:problems. Smart Grid control systems can helpthe grid rise to this challenge. The idle production capacity of today’s grid – potential that is not now being used – couldsmart grid & electric vehicles: supply 73% of the energy needs of today’s cars,driving toward a cleaner planet SUVs, pickup trucks, and vans with existing At scale, PHEV deployment will cutThe Smart Grid’s single biggest potential for power plants.11 GHG emissions including CO2 .delivering carbon savings is in providing On average, PHEVs will produce just one-thirdcost-effective and increasingly clean energy of the greenhouse gases (GHGs) emitted byfor plug-in electric vehicles (PEVs), including conventional, gasoline-fueled vehicles –plug-in hybrid electric vehicles (PHEVs). tailpipe to tailpipe. According to a joint studyHere’s how they work. PEVs can be plugged by EPRI and the Natural Resources Defenseinto a standard household electrical outlet to Council (NRDC), PEVs have the potential torecharge their batteries. Capable of travelling reduce cumulative U.S. GHG emissions by asup to 40 miles in electric-only mode, the much as 10.3 billion tons from 2010 to 2050.majority of PEVs operating on battery power They could reduce national oil consumption bywould meet the daily needs of most drivers, as much as four million barrels per day in 2050according to Edison Electric Institute (EEI). according to that same EPRI/NRDC study.Compared with a current hybrid, a PEV with an 21
  24. 24. SECTION 07 : continuedFurthermore, by enabling the sale of more smokestacks, the Smart Grid could the United States as well as lesseningelectricity over the same infrastructure, the dramatically reduce the size and complexity our dependence on foreign oil. The firstSmart Grid has the potential to lower electric of the industry’s ongoing “clean-up detail.” models are scheduled to roll off assemblyrates. These benefits accrue, however, only if That is, rather than wondering how to handle lines in 2010.these vehicles are charged strictly off-peak. hundreds of millions of four-wheeledCharging PEVs on-peak would only further emitters, Smart-Grid functionality enablesstress the grid. us to shift focus to challenges ranging from carbon management to the use of moreIn terms of carbon emissions, the nation’s renewable sources of electricity.vehicles produce roughly the same carbonemissions as the nation’s coal-based power At scale, PHEV deployment will cut GHGplants. By moving their emissions from emissions including CO2. In the process, it willmillions of tailpipes to far fewer work toward improving the general health of POTENTIAL IMPACTS of HIGH PENETRATION of PLUG-IN HYBRID ELECTRIC VEHICLES on the US POWER GRID 25 Residential, Commercial Electricity Idle production MILLIONS BARRELS per DAY 20 capacity of the current U.S. grid could supply 73% of Production Industry 8.2 5.0 the energy needs of today’s cars, 15 SUVs, pickups, and vans if vehicles are charged off peak. 10 5 Potential Net Transpor- PHEV Imports tation Gasoline Displacement 12.5 12.5 9.1 6.5 0 22