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Business staying Productive with Smart Grid Investments

It's about a lot more than meters

Ken Silverstein | Dec 01, 2010

When it comes to rolling out the smart grid, at least one local electricity distributor says that it is about a lot more than just the meters. Chattanooga-based Electric Power Board says that it is about optimizing technology for the benefit of the entire community.

Smart grid systems center on controlling energy use, which in turn will limit emissions, preserve the environment and increase grid reliability. It's a holistic approach. That means scheduling the most economical fuels and building a digital network that extends to meters, which can then signal consumers to cut their energy usage. High hopes now exist as the cause is supported by national public policy that is enabling pilot projects to become commercialized.

"We wake up thinking about what we can do for our community, not the shareholders," says David Wade, chief operating officer, for EPB, in a meeting with reporters. "The smart grid is about being intelligent, interactive and self-healing."

If the smart grid is to grow in value, he says that it must be able to communicate with hundreds of thousands of devices throughout the system. The goal is to reduce outage times, which in turn, keeps economic activity humming. In the case of EPB, it says that its trials with the smart grid have cut brownouts by 40 percent. In other words, its installation of the appropriate "switches" and meters has boosted the local economy there by 40 percent - a number that it says is "conservative."

If, for example, it cost $100 million to implement but it resulted in 40 percent more productivity, then the payback is quick. As for EPB, it says that it got a $111 million smart grid grant from the federal stimulus plan. It matched that grant with its own $111 million. By August 2012, the local distributor that is tied to the Tennessee Valley Authority says that it will be mostly done with its rollout that includes 170,000 meters.

The process started in 2009 and entails the utility reaching inside customers' homes to adjust energy usage during peak periods. During this time, EPB said that it did not receive any complaints and that the estimated savings ranged from very little to noticeable amounts. By using "demand management," it says that it could avoid or delay buying additional generation, which is often at high prices.

Beyond the switches and the meters, EPB has also been building out its fiber and communication systems for the last two years. In short order, it will be able to offer high-speed internet services to 100,000 homes and business.

"Electric rates will be going up," says Harold DePriest, chief executive of EPB. "The smart grid can reduce that increase. But we should be careful to not promise that it will reduce rates."

Limiting Emissions

All utilities are under pressure to limit their emissions and to produce energy savings. And many power companies are already making investments somewhere along the value chain in the intelligent utility. Now that the federal government is more involved, it should expedite the progress.

Altogether, the stimulus plan sets aside about $4.5 billion to modernize the grid -- an endeavor that involves increasing reliability and curtailing consumption. It's all coupled with the push to limit carbon emissions and to increase the use of renewable energy.

Utilities are therefore under the twin pressures of managing their fuel mix while keeping down costs. Part of the intelligent utility involves equipping power plants with the tools to analyze and monitor efficiency and emissions processes. Such technologies can also evaluate market and environmental conditions as well as fuel costs and then compile that information so that utilities can operate their plants as a fleet.

At the same time, the grid is changing. With or without national renewable portfolio standards that mandate green energy usage, such sustainable fuel forms will grow. It then becomes a technical question as to how to integrate those renewables into the system, particularly as they expand from 2 percent of the portfolio mix today to as much as 20 percent. It involves maximizing the performance of power plants and the transmission grid while also communicating with customers so that they can participate.

To succeed, a comprehensive approach is necessary -- one that increases the productivity and efficiency of everything from power plants to distribution grids to consumer appliances. The tools to achieve higher standards are, in fact, emerging and are partly driven by consumer concerns and partly by global initiatives meant to minimize emissions. It's a powerful one-two punch.

According to Cognyst Advisors, the advanced metering industry that permits utilities and consumers to communicate with each other grew by 40 percent from 2008 to 2009. At that pace, a third of all meters will be "smart" by the end of 2011.

Electric Power Research Institute, meanwhile, says that deployment of a highly automated system could limit electricity consumption by reducing sales by 1.2 to 4.3 percent by 2030. The Galvin Electricity Initiative adds for every dollar spent on the smart grid, $4 or $5 is returned. That's not just from the marginal savings of electricity. It's also from job growth and productivity.

"Anything we can do to help use energy more efficiently will save jobs," says EPB's DePriest. "We are about bringing in jobs."

The smart grid is already delivering results for EPB. Businesses are seeing fewer outages and are therefore staying more productive. Over time, though, they are also hoping to see less price volatility. That's money that will be used to grow their enterprises and help expand the region's fortunes.

EnergyBiz Insider has been named Honorable Mention for Best Online Column by Media Industry News, MIN.

So what do you think? Please share your thoughts by posting a quick comment below, or by sending a longer reply to energybizinsider@energycentral.com.

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Business staying Productive with Smart Grid Investments

It's about a lot more than meters

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