Is Smart Grid Good News for Consumers?

Big announcement yesterday from the Department of Energy:

President Obama Announces $3.4 Billion Investment to Spur Transition to Smart Energy Grid

Applicants say investments will create tens of thousands of jobs, save energy and empower consumers to cut their electric bills

ARCADIA, FLORIDA – Speaking at Florida Power and Light’s (FPL) DeSoto Next Generation Solar Energy Center, President Barack Obama today announced the largest single energy grid modernization investment in U.S. history, funding a broad range of technologies that will spur the nation’s transition to a smarter, stronger, more efficient and reliable electric system. The end result will promote energy-saving choices for consumers, increase efficiency, and foster the growth of renewable energy sources like wind and solar.

The $3.4 billion in grant awards are part of the American Reinvestment and Recovery Act, and will be matched by industry funding for a total public-private investment worth over $8 billion. Applicants state that the projects will create tens of thousands of jobs, and consumers in 49 states will benefit from these investments in a stronger, more reliable grid. Full listings of the grant awards by category and state are available HERE and HERE. A map of the awards is available HERE.

My first reaction: while the improvements in monitoring capability, transmission efficiency, carrying capacity, and reliability are all welcome, one other aspect of the plan leaves me divided.

Currently, the vast majority of consumers and businesses in the U.S. are monitored with technology that is approaching its centennial. Most people would recognize an electric meter if they saw one. They record total energy usage consumed by one residential or commercial customer – but not the time of day it was used. The meters cannot transmit data and must be read manually. They do not provide price information to the customer, nor do they need to – rates are fixed.

Smart meters, on the other hand, will allow limited two-way communication between the utility and the consumer. In theory, this capability will permit utilities to discourage consumption by charging higher rates during periods of increased demand. The smart meter will notify the consumer in real time of current demand conditions and the rate being charged by the utility. Conceivably, that feedback could be configured into a power profile, allowing consumers to program air conditioners and other appliances to automatically go into power saving mode when rates go up, and activate again when overall usage drops and rates are acceptably low. This would have the effect of shifting some usage to later in the day and distributing consumption more evenly.

Of course, making this cost differential work will require some dramatic changes to the way electricity is currently priced. Most rate commissions have traditionally viewed their mission as consumer advocates, keeping rates as low as possible. That role will have to change, as Energy Secretary Steven Chu noted at a Smart Grid conference in September.

Electricity costs should move to reflect demand: Chu | Reuters

Tue Sep 22, 2009 3:35pm EDT

By Ayesha Rascoe

WASHINGTON (Reuters) – As the United States’ power grid becomes more sophisticated, electricity rates will need to rise to reflect periods of intense energy use and to encourage consumers to change their electricity habits, U.S. Energy Secretary Steven Chu said on Monday.

Chu said currently most local electricity rate commissions view themselves as consumer advocates and try to keep electricity prices as low as possible.

“Hopefully that will evolve somewhat, so that they begin to fold in some of the real costs of electricity generation and electricity use,” Chu said at conference focused on creating a “smart grid.”

For instance, on hot summer days when air conditioning use is high, utilities would charge customers more for electricity. Chu said those who set rates should be more lenient with electricity generated from cleaner sources such as wind or nuclear power.

Chu also pointed out that during periods of low energy consumption, electricity prices would be cheaper for consumers.

I must admit to some ambivalence on this development.

• I wrote earlier about the need for a more robust transmission system, and my opinion hasn’t changed.
• Naturally, I’m excited about the favored position renewables should have in the new regime. (In theory; if nuclear-generated power and power from renewables are put on the same footing, the utilities will likely favor nuclear – despite not having a long-term storage facility for waste, and the fact that there has never been a nuclear generator built on time and on budget in this country. But I digress.)
• I’m all for encouraging consumers to make informed choices about their energy consumption.
• Reducing the use of “peaking plants” –  among the costliest to run, and are only brought online to meet the periods of highest demand – is a good thing for consumers and producers.

However, I worry about the implementation, and the level of sophistication needed ot take advantage of the new system.

• I am particularly concerned about the elderly. Will some choose to disable their air conditioning, in the interest of avoiding the highest tariffs during peak consumption periods, and put their health at risk?
• I also wonder what the mechanism will be for deciding how much to charge, and when rates will be allowed to fluctuate.

Perhaps some protection is needed, similar to the Homestead Exemption, which would offset rates for qualifying individuals. Another option would be to give seniors credits that would be applied against their electricity bill, much as the HEAP program does for heating during the winter months.

So is the Smart Grid a good thing? Is it needed? Will it benefit consumers?

Wind Power, Growing Pains, and the Economy

I came across a few interesting factoids recently.

1. In 2007, wind energy not only led renewables in terms of installed capacity in the US, but actually led all forms of generation added that year – including coal.
2. 2008 was a record-setting year for wind generation, with 8,500 MW coming online – adding almost 50% to the domestic wind generation capacity.

If that’s all you knew about wind power in the US, you might think that the future for wind power looks pretty good. But here’s the catch: the federal Production Tax Credit (PTC) for wind and other renewables expired last year. In every previous instance that the PTC has lapsed, new wind installations plummeted the following year.

This year is no exception. According to a story in Forbes magazine this week Wind Sector Looks To Congress For Lift – Forbes.com:

Following a half-decade-long boom, the wind energy sector went bust in the second quarter of 2009. Some 1,200 megawatts of new wind projects were completed during the quarter, the American Wind Energy Association said Wednesday, half the average for the previous four quarters, when wind developers installed nearly 10 GW of generating capacity, making the U.S. the world’s largest wind market.

This is particularly critical for wind installations because the major cost associated with wind is the upfront cost of development. (Ironically, this is also its major advantage over supposedly “cheaper” coal-fired plants, which require additional outlays for fuel) The PTC has been used as an investment vehicle and sold to the larger investment houses and commercial banks. Unless you’ve been living under a rock for the last six months, you probably know that the financial sector has taken a beating and just recently shown signs of recovery. As a result, they have clamped down on lending in general, much less for multibillion-dollar projects whose viability depends on a patchwork of state incentives and regulation and a Federal tax credit that is only intermittently available. Although the American Recovery and Reinvestment Act renewed the PTC for three years, and added a more streamlined investment vehicle (Investment Tax Credits, or ITC), the hiatus slowed what had been record growth in the industry.

To be sure, there are other problems facing the renewable energy sector. From the Associated Press: Pickens calls off massive wind farm in Texas

HOUSTON (AP) — Plans for the world’s largest wind farm in the Texas Panhandle have been scrapped, energy baron T. Boone Pickens said Tuesday, and he’s looking for a home for 687 giant wind turbines.

The article indicates that the lack of a robust transmission system to feed the Pickens wind farm energy to where it could be used is part of the reason Mr. Pickens has altered his original plan. While the current (relatively) low price of natural gas makes the original Pickens Plan less economical, surely the expiration of the PTC, and inaction by Congress for a national renewable energy standard also factor into the decision.

Echoing Pickens’ concerns, the American Wind Energy Association has been pushing for additional funding for improved transmission lines. From the Associated Press coverage of the AWEA annual conference:

The U.S. has become the world’s biggest wind-power generator and of the electricity production added in the country last year, 42 percent came from wind turbines. But as more megawatts come on line, the problem of getting power from wind-swept plains to places where people actually live becomes more urgent.

“In some ways we’re reaching the glass ceiling,” said Rob Gramlich, vice president of policy at the American Wind Energy Association. It was the organization’s biggest annual conference to date, drawing 1,200 exhibitors and more than 20,000 people.

The country’s grid is aging, often overloaded and, in the case of wide-open states like Wyoming and North Dakota — some of the best places to erect wind turbines — not nearly extensive enough to move electricity to major markets where customers wait.

The wind industry group says it needs 19,000 miles of new high-voltage lines — at a cost of about $100 billion — for wind-farm developers to keep building.

There is really nothing standing in the way of the continued growth of renewable energy in this country – except a lack of political will. And that’s a real shame, because these kinds of projects are what our country and our economy could use right now. According to AWEA, the 8,500 MW added last year pumped approximately $17 billion into the economy, and created 35,000 new, good paying jobs at a time when the overall economy was shedding jobs at the worst rate since the Great Depression.

Sounds like the change we need, all right.

NPR: Power Hungry: Visualizing The U.S. Electric Grid

File under tres cool: Interactive map of the current US electrial grid.

Is anyone else surprised by the relative lack of high-voltage lines in the Northeast and Great Lakes states? Is that because there is enough local generation capacity to meet local needs? Or is it an artifact of the way the power “system” was built?

I am not an electrical engineer, but it seems to me that a few more high-voltage lines to somewhere outside the region would be prudent. Profitable, even – selling surplus power becomes more economical when delivered over higher-voltage (less lossy) transmission lines. And building in some redundancy would also be a good thing, in case of an attack on the transmission grid. I am not a mad bomber, either, yet it seems to me that those transmission towers are pretty vulnerable structures.

Planning for additional renewable energy generation “not done”

This is one of the problems of not having an effective national energy strategy. From the LA Times comes this story: ‘Green’ energy plan in Obama stimulus may be losing steam:

The stimulus package increasingly appears unlikely to include major investments in “green infrastructure” — the wires and rails that could deliver renewable energy to Americans’ homes and help end the nation’s addiction to oil — according to alternative-energy advocates who are discussing the plans with the Obama transition team.

It’s a timing issue. The blueprints and, in many cases, the authority don’t exist to lay miles of high-speed rail lines or to build a sprawling web of power lines to create a truly national electric grid.

Remember August 2003 blackout? Some of the most heavily populated areas in the Northeast US were affected – including New York City – as well as the most people in Canada. It was caused by a power transmission system that was inadequate for the admittedly high load placed on it that day.

It took several days to restore the network.

The cascade failure actually started near my house. It was set in motion by one of the high-voltage transmission lines sagging into a nearby tree and grounding out.

This should have been a wake-up call for a more robust power distribution system. Instead, the power company reacted by: cutting down trees within 100′ of their lines. Which was understandable: nobody was stepping up to provide any incentive to do so, other than customer outrage, and that’s transient. Still, it’s hard to believe that five years later, there has been no serious planning done to lay the groundwork for an improved power distribution grid.: