Will anyone pay for the 'smart' power grid?

AUSTIN, Texas--To get an idea of what the future electricity grid will look like, think of the Internet.

Like the Internet today, the electricity network needs to be able to connect billions of devices and still operate reliably. Because of growing environmental concerns, the grid needs to become far more flexible than it is today, accommodating distributed power generation from renewable sources and use several energy-efficiency techniques.

But while many people can agree on the vision of tomorrow's utility grid, few are willing to pay for it, according to experts who spoke at the Clean Energy Venture Summit on Tuesday.

A number of technologies need to be put in place to make the power grid smarter, notably more automation within the network and tools to give end users better information. But utilities are "grossly risk-averse and grossly hesitant to adopt new technology," said energy industry consultant Alison Silverstein.

"The utilities all want someone else to make the mistakes and take the risk (of adopting new technologies) for 5 or 10 years," Silverstein said. "And regulators are not willing to get out of their way and let them take those risks. It will require a transformation."

There are a handful of progressive utilities making long-term investments, but they are the exceptions, Silverstein said.

Representatives from two of them--Austin Energy in Texas and Pacific Gas & Electric in California--were on Tuesday's panel and said their companies are willing to spend money on energy conservation programs and incentives for renewable energy sources.

The overall change that the utility grid needs to make is to go from a centralized generation and distribution model to one that is more distributed and diverse, said Roger Duncan, deputy general manager at Austin Energy.

That means that peaks in demand on the utility grid will be offset by distributed renewable sources, such as solar panels feeding power into the grid. Demand management systems, another smart-grid feature, can automatically dial down the consumers' power consumption to prevent outages.

"We're sitting on an aged, old infrastructure while emerging countries like India and China are moving to the next generation of networks and generation sources."

--Brad Gammons, vice president, IBM global energy and utilities industry group

Austin Energy is one of many proponents of another potential smart-grid feature, plug-in hybrid vehicles that can be recharged at night, when demand is lower, and can act as a backup power supply for a home. The utility company also has one of the oldest green-building programs in the country.

But Austin Energy's dream to be more environmentally friendly is also the utility's nightmare, said Duncan.

Utilities are not necessarily adequately prepared to incorporate the many smart-grid technologies needed, he said. And the utility itself, like others in the industry, needs to wean itself from making nearly all its money from retail power generation and distribution.

"We haven't figured out the business models...(that) work well for the utility and the city government and the citizens," Duncan said. "Austin Energy has to figure out how to diversify its revenue sources."

How to build a smart grid
The primary problem with today's electricity distribution system is that wall sockets are the power equivalent of dumb terminals connected to a mainframe computer.

What's needed are access points that can be identified, much like how every computer device on the Internet has an Internet address, said Robert Howard, vice president of gas transmission and distribution at PG&E, who spoke on the utility panel.

With a smarter two-way communications mechanism between a power consumer and provider, both parties get far more control over consumption, he said.

PG&E could draw energy from the 15,000 solar installations in its regions rather than firing up an auxiliary power plant in the middle of a hot day, for example. Plug-in hybrids, which are hybrid cars with larger battery packs, can store about 10 kilowatts of power. Because the average home consumes about 2 kilowatts in an hour, that means a car battery could fuel a home for about five hours.

"Every device can be identified, not anonymous, and be addressable. Then the utility is fundamentally transformed," said Howard. "We can merge transportation with the utility network and fundamentally change the way we live and work."

At the Clean Energy Venture Summit, a few start-up companies pitched their smart-grid technologies to investors.

One company, Boulder, Colo.-based GridAgents, has developed a software system that allows utilities to better manage different kinds of distributed power generation, from solar panels to combined heat and power systems, said CEO David Cohen.

Another company, Silver Spring Networks, provides a way for utilities to monitor their networks, which would allow them to get notifications before a power outage. The key to smart grids is using the Internet protocol on home devices like power meters to shuttle information back and forth between the utility and the customer, said Eric Dresselhuys, Silver Spring's vice president of marketing and business development.

Greenhouse-gas regulations
The advantages of a smart-grid system for consumers is that they have better information about their power consumption and can make choices about purchasing contracts, Dresselhuys said. One consumer might be happy locking into a fixed rate, while others may try to reduce overall consumption by letting the utility tap into its storage, for example.

Silver Spring Networks is testing its system with Florida Power and Light, but Dresselhuys said that even with some activity in smart grids, resistance to the technology is high among both utilities and regulators.

"It's all about money. We tend to take a very short view; but if we would charge each customer less than two dollars per month, we could do everything we're talking about with smart grids," he said. However, regulators--as well as consumer advocacy groups--have shown that they will stand in the way of rate hikes imposed in order to upgrade the grid, he said.

Without a clear commitment to investing in upgrading the aging U.S. electrical grid, panelists suggested that regulations to restrict greenhouse gases could act as an impetus.

"We need that kind of pull to get the attention of the country, which would allow us to push forward," said Paul Thomas, president and CEO of Green Mountain Energy Company. "And it will get people willing to put up investments in technologies that allow us to achieve our vision."

A market-based system to reduce greenhouse-gas emissions could act "like a gun to the head" for regulators reluctant to take any bold measures, said energy-consultant Silverstein.

Brad Gammons, vice president of IBM's global energy and utilities industry group, said investors and energy company executives are counting on coming regulations around greenhouse-gas emissions. But overall the funding level from private and government sources is far lower than that for the rest of the world, he said.

"We're sitting on an aged, old infrastructure while emerging countries like India and China are moving to the next generation of networks and generation sources," he said.

[theBike45]

Smart ain't gonna help much

Americans seem overly enthusiastic about each new gooney idea that comes down the pike. They don't ask questions until after the technology has received gross subsidies (like wind power and ethanol) and has gone down the road far enough for the gullibles to start realizing that those solutions : a) didn't actually solve anything, and b) have some bad side effects.
The idea that I'm going to allow a utility to
execute C/D cycles on my batteries and help wear them out is absurd. I also fail to see how one can put juice into a battery at night and then use it during peak daytime periods when the car isn't plugged in, or, at the very least, may be
needed in the near future. If the utility is going to pay the customer for the wear and tear, why doesn't the utility buy the batteries themselves and have total control? This has all the earmarks of a very unthoughtout idea. As usual, no one will ever ask the hard questions before billions will be spent needlessly.

[jlleventon]

Think : Mount Rushmore

Don't forget the 1950's
when cooperation was at its pinnacle
what would make someone die to create an ingenius eyesore to the native american
(they should turn it into a casino)
reguardless
how would/could I invest my feeble self into photovoltaics?
could I mount them in prime locations (tastefully) and tie them to the grid with their own meters? what kind of credentials,permits,funding
my feeble self

[m.o.t.u.]

O.K - whats your solution?

Continued reliance on finite fossil fuel reserves?

Military intervention to access these reserves is absurd. There's got to be a better way forward.

Innovation in the energy sector is going to be trial & error, but isn't that part of the process?

Americans getting enthusiastic about each new gooney idea is great.

That's an essential part of progress in energy.

[Techl0ver]

If Columbus had your attitude, America would never have been discovered. Let's not do anything because we might make a mistake, let other countries pass us by because they are not afraid of making mistakes.

[rykole]

They considered a hybrid as a backup power source for your house.
It is not some "new gooney idea". They are already testing it. The fact that it might reduce blackouts or see them coming is nice. Although, storms will still continue to knock down power lines.

[Manhattan2]

What is the best way to store excess Solar Power?

Do you just feed the power direct to the grid? What if a plant was large enough it had excess power?
What happens when the sun stops shinning at night?

Is it best to ship the power out to nearby towns during the day accounting for I squared R loss? or is best to store excess and use at night locally?

Wasn't nanotechnology going to deal with improved grid technology? Lower losses?

[disco-legend-zeke]

Net Metering = Use the grid for storage.

One of the coolest things about solar is that the availability and the demand track so well.

If i had a LOT of solar capacity, i might consider selling it into the day forward spot market. Assuming the market survived the ENRON debacle.

[suyts]

There isn't

What people must come to know is that there is huge difference between the power that a utility provides and stored electrity. AC and DC. DC power, one can store.(Think batteries.) AC power, one cannot.(The electricity that power companies provide) We can today convert AC to DC and DC to AC, but you lose so much power in the conversion that it is not worth it. As far as this story goes,(not worth the energy spent on the typing)back feeding the grid wouldn't just be problematic but horribly dangerous. There have been many linemen lose their lives because someone's home generator has kicked on after a power outage while they try to repair the line that supplies the power. We are decades away from a solution such as this.

[dolynn]

Funding Help

I think the gas companies should help. They are raking in unrealistic profits.

Who are you to judge what level of profit is "unrealistic?"

[jamie.p.walsh]

Another Big Money/Lobby Industry

These utility companies have trillions of dollars and would never spend the money to improve the efficiency of their distribution/generation. That would mean losing out on the revenue they earn from the inefficiency itself.

They will never be forced to do so because they are in the top 5 of influential conglomerates whom control everything.

1. Oil
2. Insurance
3. Automakers
4. Big Tobacco
5. Utilities

[solrosenberg]

Are you nuts?

"These utility companies have trillions of dollars"

What reality are you living in? Yes, inflation is out of control, but there are no trillion dollar utilities. The largest utility in the US in terms of enterprise value is Exelon at $65 billion. But hey, what's a few orders of magnitude among friends?

[suyts]

We are

no where near that "pie in the sky" idea. While it is true the technology exists, there is no practical implementation. I work for a small rural electric coop. We are engaged in a project to automatically read all meters from the office. Today we are at 85%. Most of the residentials and natural gas wells are read in the office. This project has cost about $2million for our 2,000 customers/owners and the cost continues to rise. Do the math. Our debt is great. Rural electrical coops have led the way in such endeavers. But to think that somehow we can supply each home with a solar panal, somehow store the energy and then somehow backfeed it through the grid without subjecting us all to the poverty experienced by our stone aged ancestors is ludicrous. Not even Bill Gates and the U.S. could afford such an endeaver. I believe it was irresponsible and misleading of the person being interviewed and the WRITER to let people believe such an undertaking is achievable today or even in the next 50 yrs. Please do some homework first. Didn't they teach you that in journalism 101?

[cce2]

Investment

No one said anything about providing a solar panel and storage for every home. That is up to the homeowner. If someone wants to purchase solar panels and a plug-in hybrid and then sell their unused power back to the grid, it is their choice. This will only become more common as the years go on and the price comes down. If we are serious about saving money, the utility companies need to be compelled to start now. The cheapest and cleanest power plant is the one that doesn't have to be built. This is an investment in national security, and it should be treated as such.

If the telephone and cable companies can rework their system to provide broadband internet access in 10 years (addressing+two way communication), utility companies can do the same.

[OscarWeb]

What are you talking about?

How difficult is it to understand that an electric vehicle can be charged overnight and used during the day? Obviously it will not be plugged in. Or am I misunderstanding something in your post?
Also, the utility is not executing charge/discharge cycles on your vehicle. You are in control of that. You plug the car in at night, it gets charged. If the power goes out to your home, your home can automatically switch over to using the car's batteries as a power source. Think of your vehicle as a UPS for your entire home.

[suyts]

That was only one

of the many things this article seems to advocate. But lets talk about the vehicle. Just because it can hold the kw, doesn't necessarily mean it can power a home. There are amps and voltage considerations. One can buy an UPS for about $100 to power ONE pc for about 30 min. How much will a battery like one that will power an entire home for hours cost? Add to that all the other things this article seems to advocate "Every device can be identified, not anonymous, and be addressable.", "PG&E could draw energy from the 15,000 solar installations in its regions", and the rest. Yes, we can do all of it. No, it is not feasible to do all of it at this time. The thought of "less than two dollars per month, we could do everything we're talking about with smart grids,", simply isn't true. Unless your talking about spreading it out over fifty years.

[GreenGreg]

i need to comment on a couple items. Many utility companies are regulated, so they are not making huge profits as suggested. If the utilities offer something to a customer that is value added, most will gladly participate. There are pools of money available in states like California that can assist in the costs of renewing and changing the delivery and management systems of power. They have a fee that is charged every month (tax) that goes to the CPUC, then they give it back for energy efficiency programs and capital improvements. You will see in a short time that there are some real solutions to the complaints in this blog. They are VERY low cost solutions that will save consumers money and allow the utilities to manage the grid more effectively. What most people dont understand is the utilities dont want to add more plants, they are a liability. And they want to manage the power because when they run at maximum output, it tears up the high voltage transmission lines and infrastructure. That costs alot of money to keep everything running. There is always negativity with new ideas, and sometimes we all try and fail, but making the assumption that new technology equals a screwing just doesnt make sense. I agree with one poster that implementation of ideas without looking at the down the road impact is all too common, but if you take notice, that is usually driven from Government policy. The private sector makes mistakes, and when they do, it sure costs them. The Government on the other hand just takes more of our money to make up for it. And the idea that big oil, automakers, insurance ect, are the bad guys is nuts. The big government is the bad guy, they make 60 cents on a gallon of gas by the time they get fed, local, and state taxes. We need to take a serious look at Washington. The rest will probably fall in line. Let technology run its course, if it can be profitable for those that are in it, it will drive the market and can be good for all....
In full disclosure, i dont work for a utility, but i do develop technologies that can and will integrate with these smart grids and meters.

[javsewpc]

The question who pays? is necessary, but not sufficient to enable the needed transformation identified by Mr. Lamonica. According to Eberhardt Rechtin and Mark Maeir, in their book "The Art of System Architecting," to go forward "[S]ocial economist bring two special insights to sociotechnical systems." They are: 1) "the four who's:" who benefits? who pays? who provides? and, as appropiate, who loses? and 2) In any resource-limited situation, the true value of a given service or product is determined by what one is willing to give up to obtain it.

From the article, it is very clear that with a few exceptions, the Investor Owned Utilities (IOUs) paradigm is unable to respond well to the social economists insights. Utilities want to benefit and to provide, but they don?t want to pay, nor lose. They want someone else to pay and take the risks, while they retain their obsolete price control business model that is set as an average service that don't let customers get the true value of electricity that the smart grid will provide.

The true value of electric service will come from business model innovations of a restructure power industry. As can be seen in www.energyblogs.com, more than 130 articles have been written on the emergent electricity without price control (EWPC) to the end-customer paradigm. To provide a market/regulation balance, the emergent EWPC whole involves a transportation (transmission and distribution) only utility, under a regulatory compact with a responsibility to transport electricity, as the IOUs get divided into regulated transportation and the open market value chain of generation and retail.

I invite readers to comment about the social economists insights about the IOUs and EWPC paradigms.

[daninyardleypa]

The problem with this "system" is not the technology, it is the way in which it could be used. With cap and trade, state and local governments can put a cap on the amount of energy you use. They can access your usage through every device plugged in through their soon-to-be-required IP addresses, and say you can't charge your Ipod now, or your TV has to be shut off from 2pm to 5pm until the government owned news broadcasts come on to tell you everything you need to know.

Big, Big, Big, Big, Big, Big, Big, Big, Big, Big, ....

[iptofar]

Get ready for more blackouts. To many feed back loops and to many controls. Could you imagine everyone's water heater getting into a endless on/off loop. For large consumers, this might be warranted. It is stupid for the average house. It would be better to require timers on loads and programmable thermostats. My best guess is this will eventually be used to clamp down on individual users and either make them pay up or actually cut their power.

The other thing we have to do is give california a really long power cord because they aren't willing to produce electricity in their own state.

[mtrinca]

The prevailing attitude seems to be "if it ain't broke, don't fix it", and that the risks and costs of this Smart Grid endeavor far outweigh the benefits. But I propose that we don't see the full potential value of this yet, and that's what there aren't as many people out there stump-thumping and advocating Smart Grid as there should be. Apart from the aforementioned benefits (i.e. self-healing grid, more efficient grid management, cost savings), there's huge potential to help the environment and undo some of the damage that our reliance on fossil fuels has wrought upon the Earth. We're not talking about just plugging in a few wind turbines and solar panels here. There's potential to build something here that could allow us to provide 100% of our energy from renewable sources, from Nature. One such technology that could plug into this system would be the Solar Roadway (www.solarroadways.com). As solar panels become more efficient (e.g. through space technology), we will eventually reach a point where we can get most of our energy from the sun. MIT is also developing technologies that will allow us to store some of that energy in our very own homes, for those times when the sun isn't shining or the grid might be down (http://web.mit.edu/newsoffice/2008/oxygen-0731.html). Some of you might still think this is a pipe-dream and not worth pursuing. "Why is the government wasting our money on this?" you ask. But you lose sight of what really makes this country great - that we do dream big and set seemingly impossible goals for ourselves. The moon landing in the 1960's is the best example of this. We didn't have the technology then that we have today, and yet I am not alone in thinking that we accomplished this in record time compared to what's taking place today (as we try to get back to the moon). But I digress...
Even if we fail at achieving our goal of a complete, nation-wide Smart Grid, the lessons we learn and the technologies we develop as part of this will spur innovation and lead to new technologies that will shape our future for generations to come. This is a responsibility far too large for industry to tackle alone. As the world's preeminent superpower, it is our country's government who must push this initiative forward. And as citizens our this great country, I think it is our duty to pay our dues in order to help out. We may not see the immediate benefit, but our children and our children's children will surely thank us and admire us for having the guts to make this change.

[refabrica]

Check for latest news on Utilities applying for Stimulus Funds at

http://www.refabrica.com/index.php?option=com_content&view=article&id=59:lates-smart-grid-metering&catid=1:latest-news&Itemid=50