Smart grid investments are on the rise. Strategic choices are needed today for effective investment for the future. For smart grid, need to understand opportunities and barriers for full scale deployment and smarter messaging for consumers.

KEMA senior vice president Rob Wilhite gave the first keynote address at the Apogee INNOVATIONS 2009 conference in Atlanta, Georgia on September 30, 2009. Apogee Interactive hosts INNOVATIONS each year for utility professionals to deliver the latest industry news, online energy efficiency applications and Web-based utility customer communications initiatives.

Wilhite set the stage for the conference with his analysis of the industry opportunities and barriers for full scale deployment of the smart grid, and the need for smarter messaging to consumers. Here’s an overview of Wilhite’s keynote address:

What is the “Smart Grid” vision?

The smart grid movement is well underway in the US – spurred on by the Energy Independence and Security Act of 2007 (EISA), the American Recovery and Reinvestment Act of 2009 (ARRA), and by various smart energy stakeholder initiatives such as the US Department of Energy’s (DoE) Modern Grid Initiative, Electricity Advisory Committee and Task Force, GridWise Alliance, GridWise Architecture Council, national lab demonstration projects and numerous utility programs.

The Smart Grid concept has no clear universal definition, particularly as the boundaries vary among individual users within the energy system from generation through to end use. However, a “Smart Grid” vision is emerging. EISA has provided federal guidance on smart grid characteristics. And the DoE recently offered a perspective as part of an overall Smart Grid primer, in which a “smarter grid applies technologies, tools and techniques available now to bring knowledge to power – knowledge capable of making the grid work far more efficiently….”

Why does our grid need to become “smart” or “intelligent”?

It is clear that the US grid needs to become “smarter” or more “intelligent.” Our electric power infrastructure is rapidly aging and in need of replacement and increased maintenance. KEMA research and analysis has shown that, like many power system devices, a 1% failure rate associated with newer transformers increases to 3% and much higher when they reach decades of use. And core utility workers needed to operate and maintain the grid are also aging and getting more difficult to replace.

Recent financial institution studies have found that over the next two decades, smart grid investments are expected to increase more than five times current levels. And according to the DoE, smart grid deployment will open a $100 billion market in smart technologies. Smart grid technologies are potentially disruptive to the traditional utility value chain, particularly for consumers.

What technology choices and innovations will be needed to achieve this vision?

So the question becomes what technology choices and innovations are needed to achieve the smart grid? Current core focus areas that support operating assets reliably today while moving towards a “smarter” future grid includes:

• Feeder and distribution automation — this consists of mostly discrete sensors and control equipment. Low-latency, high bandwidth communications and back-office data management have been one of the barriers to overcome for successful smart grid deployment.
• Advanced Metering Infrastructure – AMI provides increased network connectivity and communications between the customer and the utility in a full two-way (bi-directional) system with near real-time access to data.
• Home Area Networking – The number of vendors seeking the Home Area Networking (HAN) market is significant – many expect to follow the AMI path to commercialization. The key to success of this “next generation” of products will be through industry-wide, open communications protocols and interoperability.
• Plug-in Hybrid Electric Vehicles – On the consumer side, the potential impact of Plug-in Hybrid Electric Vehicles (PHEVs) is significant and highly anticipated. Potential impacts to the U.S. grid are significant. Consumer sentiment and fuel prices will dictate how rapidly PHEVs will be adopted as a viable supply/ demand option for the smart grid.  

What issues need to be resolved for successful achievement?

There are a number of key barriers to implementation that need to be resolved to successfully achieve the smart grid vision. Interoperability and standards will be vital to full systems integration for smart grid components. There is a strong interest in enhanced levels of quality assurance for smart grid devices. With increased connectivity within a smart grid, a number of security concerns are emerging. Regulatory acceptance and validation of the business case value is needed, as is consumer acceptance of the value proposition.

A number of smart grid consortia and alliances have been launched to address policy and deployment issues. KEMA has been actively engaged in a number of these consortia and alliance initiatives underway, including the DoE Electricity Advisory Committee, GridWise Alliance, and the GridWise Architecture Council. On the regulatory and consumer side, a unique form of promoting the smart grid concept is being pursued through Duke Energy’s Utility of the Future demonstration center. KEMA is Duke’s exclusive partner in designing and operating Envision as the premier smart grid demonstration center in the world.

How will society and consumers respond?

So how will society and customers respond to the smart grid? Well-designed and accurate communications and outreach are vital for public education and acceptance. Early smart grid and smart metering efforts are finding some resistance with inadequately structured consumer messages. For insight into customer adoption issue, KEMA is launching a new multi-client study to address the question of residential adoption of home smart energy technology offers. Regulators will require a sound financial analysis and projected return on investment. And the smart grid enabled Utility of the Future will require changes in the way utilities operate across several dimensions.

The Energy Dashboard concept offers a relatively low-tech path to capture commercial and industrial (C&I) customer interests and further business. The Energy Dashboard is a centralized energy tracking and management tool for C&I owners/operators with multiple facilities. Offered by a number of providers, it serves as an enabling platform for increased energy savings opportunities and greater participation in Demand Response and efficiency programs.

Smart Grid: Fact or Fiction?

With various the facets of implementation to address and barriers to overcome, ultimately is the smart grid fact of fiction? The smart grid is poised to help offer part of the solution for some of the nation’s pressing issues. Here are a few facts.

• The smart grid can create jobs. New highly-skilled, high-tech positions – both direct and indirect – will be needed to build, implement, deploy and operate the smart grid. New jobs will emerge and existing jobs will evolve within utilities, utility contractors, direct utility suppliers, and indirect utility supply chain. For more information, read KEMA’s Smart Grid jobs report prepared for the GridWise Alliance.   
• The smart grid can help address climate change and a cleaner environment. According to various sources of research, the environmental value of a US smart grid is equivalent to converting 14 to 50 million cars into zero-emission vehicles each year (60 to 211 metric tons CO2).
• The Smart Grid can make your clothes cleaner. OK that’s fiction. The smart grid won’t make your whites whiter, but it can reduce the cost of doing your laundry. Smart appliances fitted with automated controls can reduce usage during peak times – consumer override is possible.
• The Smart Grid will truly be intelligent. Sensors and controls become truly autonomous, driven by self-correcting, intelligent algorithms, operationally embedded. Utilities and energy providers are making the investment decision a priority, with intelligent controls a design standard for asset management.

In 2008, KEMA released the first comprehensive industry viewpoint on the “Utility of the Future.” “Utility of the Future: Directions for enhancing sustainability, reliability and profitability” is the first volume in a series of publications to help utilities achieve their smart grid goals. Volume 1 is an outgrowth of strategy work performed by KEMA for major utilities and other key energy industry suppliers. The publication outlines a vision of the “Utility of the Future” that is organized and managed much more like high-tech product and service companies, operating in a multi-player ecology of businesses with shifting roles.

For more information on KEMA’s vision of the Utility of the Future, visit www.kema.com/utility_future.