A Greener Grid
• AMR/Real-time Pricing
• Distributed Energy Resources
• Power Quality/Energy Sensing
• Demand Side Management/Direct Load Control
Today many utilities lack a real-time view as to where the electricity they are sending out onto the grid ends up. Without a real-time view of distribution grid operations, utilities often rely on manually reading analog meters on a monthly basis to get a picture of end-users’ electrical usage. Under this model, utilities are able to see the total amount of energy consumed by an end-user, but not when that energy was consumed. Not knowing when an end-user is consuming energy is very detrimental to the utility as it does not allow for a correlation between the cost of energy as it is produced to when it is consumed, removing any price based incentive for conservation.
Increases in electrical demand require electricity to be imported, raising transmission fees, or generated through the use of peaker plants. Peaker plants are generation facilities constructed specifically to be used in times of increased demand. The use of peaker plants on top of cheaper base-load generation facilities increase the utility’s operational cost, thus raising the real cost to produce electricity. Price increases of this nature are not reflected to the end-users in real-time, as electrical rates are static and fixed by each state’s public utility commission. Fixed rates during periods of upwardly fluctuating generation cost, removes the market incentive for end-users to conserve energy. The result is a utility industry that is constantly struggling to meet summer peak demands and is thus forced to look at construction of additional generation facilities.
The driving force for today’s smart grid adoption is Advanced Meter Reading (AMR), which offers a utility the ability to see individual or collective electrical usage in real-time and to create a more reliable energy market that follows supply demand principles, incentivizing end-users to conserve energy during periods of peak demand.
The Energy Policy Act of 2005 requires state public utility commissions (PUCs) to consider the implementation of advanced metering and communications technology to enable electric consumers to manage energy use and cost through time-based rate schedules.
The Energy Independence and Security Act of 2007 requires each state to consider requiring electric utilities to demonstrate that prior to investing in non-advanced grid technologies, smart grid technologies including AMR and real-time pricing are determined not to be appropriate.
Digital electrical meter information utilized by a smart grid allows the end-user, in a real-time interactive manner, to lower electrical usage during periods of increased generation cost which can have a dramatic affect on the distribution grid. Research at Carnegie Mellon University reported, aside from the reduction in grid congestion, American consumers would save nearly $23BB a year if they shifted only 7% of electrical usage off peak demand hours.
Multiple trials have been undertaken with real-time pricing. The Los Angeles Department of Water and Power (LADWP) saw electric consumption reduced by more than 5 percent across its grid since installing the test-case smart meters. A 14,000GWh reduction if implemented across all of California. Gulf Power, located in Florida, introduced a system of real-time pricing to 2300 residential customers in 2001. Gulf Power achieved a 22% reduction in average demand during high price periods, and recorded 96% customer satisfaction with the program.