From Tokyo to Toronto, from the remotest outpost to the crowded urban core, the promise of a smarter electric grid is seizing the imagination of users and managers of transmission and distribution systems. Not since the grid was first built has there been so much interest and attention paid to what it might do and how it should operate.
A fundamentally new concept is emerging in which the electric power system is not just a means of moving power from generators to consumers, but an intelligent interactive network that allows consumers, producers and managers to constantly adapt their operations and use of the grid, making the most of the physical assets and of a wide range of commercial opportunities. Given the spectrum of technologies that might be connected through it, countless entrepreneurs are coming up with new ways to use the grid that were never even a consideration until now.
In some respects the smart grid is already here. Other aspects of the smart grid are in the process of being developed and deployed. And still other opportunities, perhaps the most promising, are potentially transformative new concepts yet to be converted into engineering reality. In principle, the smart grid offers the possibility of linking every piece of equipment that can send or receive signals with every other kind of technology on the system that can do the same. Visions emerge in which the operation of each piece is coordinated with every other, creating unprecedented opportunities for efficiencies and value enhancement. Major long term cost savings could be available as design requirements for new installations can be adjusted to take advantage of the potential for individual units to reduce their capital costs and footprint by relying on the availability of shared capacity elsewhere on the system.
The IESO has been facilitating a multi-stakeholder initiative on smart grids over the last year, releasing its final report on February 4. (See “Smart grid forum releases final report,’ page 27.) Not surprisingly, the IESO sees great potential in the technology to improve reliability and efficiency of the system and is encouraging participants to look closely at how they might use the technology. Rhonda Wright-Hilbig of the IESO, speaking at the Innovation Café as part of the APPrO 2008 conference in November, noted that the technology will allow end-use consumers and generators to be partners in the reliability of the system, giving everyone a better idea of what’s going on at any given moment on the system, and enabling more accurate projections of what will happen in the future. “People who we had to serve at the end of a feeder can now be partners in reliability with us,” she said. Not only will distribution level information and customer level information become available for system-wide management, but the flow of information can now be two-way, she said.
However appealing the vision of a smart grid is, it is a very complicated idea to implement, requiring investment by private individuals, public utilities and coordinating bodies on systems that are yet to be fully designed. Although individuals can start buying and installing smart equipment at any time, utilities and coordinating agencies have to think carefully about how much closure on the overall design is necessary before making major investment in new infrastructure in a field that is clearly subject to rapid and possibly fundamental change.
Ontario has its own unique reasons for pursuing smart grid technology, both because it can help address some of the difficulties inherent to Ontario’s physical infrastructure, and because the province has some natural advantages that could make Ontario a world-wide supplier of technology as smart grids become accepted elsewhere. But the driving force for the smart grid could be something completely different: New technology can significantly reduce the cost of meeting key public policy objectives for the province, particularly those related to energy efficiency and distributed generation.
The province certainly took an early lead when it instituted a policy of putting smart meters in every home. Although the smart meter project is not yet complete, there is now an advanced metering infrastructure and enough smart meters around the province that it can serve as a foundation for a number of smart grid initiatives. Combining this with the relatively sophisticated wholesale market that operates in Ontario, the province is positioned to take an early lead in implementation of the technology.
US officials see great potential for smart grid technology in clearing the path for aggressive efficiency initiatives. Recently-appointed US FERC Commissioner Jon Wellinghoff, who leads the Commission’s efforts in the Collaborative Dialogue on Demand Response with the National Association of Regulatory Utility Commissioners, noted the link between demand response and smart grid technologies. “Demand response is clearly the ‘killer application’ for the smart grid,” he said. “By our FERC report gauging progress and identifying continuing barriers to demand response, we can effectively assess our progress in deploying essential smart grid technologies.”
Of course, the term “smart grid” means different things to different people and the range of technologies included in the concept is so wide that almost any work in the field has to start with a little clarification about which area the current work is focused on. For example, there are the following broad groupings of smart grid technologies by general function:
1. Physical asset maintenance (automated systems that tell grid managers and operators if there is some kind of outage on the system and in some cases take remedial action);
2. Refined system operation (where grid managers can use more granular information and controls to better match load and supply, improving efficiency and the options for demand response and distributed generation); and
3. Consumer choice enhancement (where consumers can make more informed choices about when to use power and when to provide various kinds of services to the system).
Ravi Seethapathy, Hydro One’s leading authority on smart grid development, explains that after careful consideration the utility has narrowed down the range of options for smart grid development from its own operational perspective. The utility has identified the following four primary objectives for its work on smart grid development in the immediate future:
• Enabling green and distributed energy supplies;
• Providing more customized profiles and solutions for customer, thereby enabling wider sets of customer choices;
• Enabling more aggressive conservation; and
• Enhanced system reliability.
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In addition to more precise control over load and generation (consumption and production) the smart grid of the future is also likely to integrate the management of storage technology. Although bulk storage of electricity is generally too expensive to be economic in the immediate future, some storage technology available now allows system managers to improve power quality and balance out system irregularities of various kinds. This is especially important as the system incorporates more variable generation like wind and solar and controllable or dispatchable sources are reduced. As such, storage systems can be economic in certain niche areas where the value of its balancing services is high enough. Storage systems can take many forms from including various kinds of chemical batteries, fuel cells and flywheels. Seethapathy notes that energy storage, once installed, could be used to (a) store and release – increasing the firm power value and dispatch abilities of distributed generation, (b) provide time shifting and peak shaving services, (c) provide ancillary MVAR flexibility at or near load points and (d) smooth the outputs of intermittent DG sources. These units could be in the range of 1-10 MW each and distributed. Often associated directly with significant loads and localized generation, the distributed character of such storage facilities could add to their efficiency and overall benefits.
Sarah Thorne of Decision Partners summarizes the social challenge and opportunity of smart grids by saying that “Smart grids will change the fundamental relationships between customers and utilities. They will enable engagement in decision making at multiple levels. Customers will no longer need to be passive recipients of services, but can take a more active role in choosing services – along with sources for those services – and in providing information to others on the system that allow for better informed decisions to be made by everyone from the consumers themselves, up through to the system planners and operators. Smart grids have the power to transform society.”
Julie Girvan, a consultant who often represents consumer groups at the Ontario Energy Board, points out that one of the key questions to resolve is how should the province prioritize what aspects of smart grid technology to move forward with? Despite the numerous areas in which benefits could be delivered, Ontario-based development will probably have to focus on just a few. For example, efforts on smart grid development in Ontario could be targeted to reach:
a) Enhancement of reliability at the distribution level (practical, although not very sexy)
b) Enabling small-scale adjustments to the supply mix (a little more green energy)
c) Major contribution to overall supply adequacy (allowing the system operator more knowledge and control to manage imports, exports and inter-regional transfers)
d) Assisting in the development of an overall green technology and innovative high-technology industry in the power field (by making Ontario into a world leader and exporter of grid management technologies).
Given the whirlwind of ideas that will likely circulate in the early days of smart grid technology, it will undoubtedly be necessary to winnow out some of the less workable propositions. To accomplish this without unnecessarily closing the door on promising new technologies a high degree of involvement by potential users will be important at the early stages. Government may well take a role in encouraging such early assessment and testing. Yet, there are so many players contributing to the development of the model, it’s hard to know which will take the lead in each area and help to resolve the initial standardization questions. It seems like a field that’s ripe for a leader to step into the ring.
In this process it will be important to bear in mind that smart grid development does not eliminate the need for major new infrastructure like large transmission lines or reinforcement of the existing distribution grid. The base electrical grid isn’t changing much, only the web of technologies attached to it is changing. Smart grid technology may reduce the cost of the additional infrastructure, but it could also complicate the process given that it introduces a wider variety of potential beneficiaries who might be expected to contribute to the local specification process and to the capital costs of that infrastructure.
Of course from a public policy perspective the potential of the smart grid to create new jobs will be important. Those jobs created by the sector will likely be outside the traditional T&D sector in new fields that combine automation, security, software, communication and specialized industrial power quality services. They may be hard to track, so observers may be watching for the creation of a new agency that will be able to monitor the progress of the smart grid and measure the benefits it produces.
Despite great promise and the sincere efforts of many players in the field, smart grid development remains a relatively chaotic and unpredictable field, without clear leadership in any country. This makes it possible that a focused and determined industry leader will come forward to take charge, potentially influencing the direction of development. Given the risk that regional needs might be overlooked, Ontario and many other jurisdictions would sorely like to see an international collaborative effort built with strong regional representation, to develop common standards and reflect priorities that are of concern to the greatest number.
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Although government will not be the primary actor in the field, a certain amount of leadership from government is widely seen as critical at this stage. This is because the smart grid requires so much early coordination between diverse sectors and also because choices must be made as to which policy priorities should be built into the design and development work ahead. The actual positions of government need not be established immediately, but stakeholders are eager to understand what the scope of the government’s role will be. There’s another reason that government needs to be fully engaged as well: distributors and other actors need to know what kinds of costs can be covered from the rate base or the public purse. “No one will make major investments without certainty on that,” noted one expert. Some are asking that the OEB be charged with an immediate task of providing clear regulatory encouragement to distributors with viable demonstration projects and pilot programs, while it works out a framework for the full range of cost responsibility issues.
Sarah Thorne left participants with a key question at the closing of the APPrO 2008 session: The public wants to be involved in the decisions that smart grids will make possible. How can we take advantage of people’s interest in being involved, to make sure the most useful technologies are implemented in the most effective way?
“It’s essential that smart grid be the policy of the province,” one observer said. Paul Murphy was even more specific, noting that the Ontario Smart Grid Forum concluded that “coordinated development (of the smart grid) should become the policy of the provincial government and be enabled through legislation.”