0 The Smart Grid: Deconstructed and Demystified Christine Hertzog Managing Director Smart Grid Library September 2009 © Smart

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The Smart Grid:Deconstructed and Demystified

Christine HertzogManaging DirectorSmart Grid Library

www.SmartGridLibrary.com

September 2009

© Smart Grid Library

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Guilty or Not Guilty?

• Do you turn on your kitchen sink faucet, then leave for the day?

• Do you leave your car idling all night in your garage?

• Do you leave lights and computers on, and all charging devices plugged in all the time?

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Why is electricity held in low esteem?

• Because it is always there

• Because it is cheap

• Because we treat it like a commodity

• Because we ignore it unless

THE LIGHTS GO OUT!!

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Northeast Blackout of 2003

Causes•Lax tree-trimming•Software bug •Human error

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Agenda

• Today’s Grid

• Smart Grid Overview

– Players

– Funding the Smart Grid

• Evolutions and Revolutions

• Smart Grid Top Ten Trends

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Today’s Electrical Grid

• Energy flow in one direction, from generation to consumer (residential or C&I)

• Information flow in one direction from meter to utility – manually read by a meter reader or transmitted information

back to the utility

Generation Transmission Distribution Home/Office

Energy Information

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It’s not a National Grid

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High Reliance on Fossil Fuels

• 259 GW (2,590 MW) of new generating capacity - equivalent to almost 2 million homes - will be needed between 2007 and 2030

– EIA Annual Energy Outlook• Local utilities rolling out smart

meters and demand response programs

– Peak power demand may outstrip current supply in 5 years• First new transmission line in 25

years – MidAtlantic Power Pathway

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Highly Fragmented Market

• ISO/RTOs (Independent System Operators/Regional Transmission Organizations– Federally-regulated entities

coordinate regional transmission and markets• May be intrastate or

interstate• Create level playing field for

alternative energy sources• Ex: PJM

– Forecasts energy needs– Monitors wholesale markets– Operates reliability markets to

accommodate unexpected changes in electricity supply

• Wholesale power markets trade short and long-term power contracts– Power marketers include all

energy sources – coal, gas, nuclear, solar, etc.• Register tariffs with FERC

to sell wholesale power • Electricity derivative markets

– Futures and options• 3200 IOUs, municipals, and

co-ops that buy and distribute electricity

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Agenda

• Today’s Grid


– Players




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Smart Grid 101

It includes software and hardware applications for dynamic, integrated, and interoperable optimization of electric system operations, maintenance, and planning; distributed generation interconnection and integration; and feedback and controls at the consumer level (from the Smart Grid Dictionary).

The Smart Grid is a bi-directional electric and communication network that improves the reliability, security, and efficiency of the electric system for small to large-scale generation, transmission, distribution, and storage.

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Tomorrow’s Smart Grid

• Energy flows in many directions, from generation to grid or building, from car to/from building, from utility to

customers, from customers to utility

• Information networks established to create secure communications between devices and

people

Generation Transmission Distribution Home/Building

DistributedGeneration& Storage

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Smart Grid Benefits

The Smart Grid will:

• Reduce CO2 emissions by up to 480 MMT by 2020

• Save up to $35B in energy and fuel costs(Smart2020.org report on information and communications technologies)

• Lower rates? No

• Lower bills? Yes

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Regulatory Agencies Influence Smart Grid Definition and Deployment

• Federal Energy Regulatory Commission– Oversight of interstate and wholesale electricity rates– Works with ISOs

FERC

• Department of Energy– The Smart Grid money machine– Involved in standards via NIST

• North American Electric Reliability Corporation– Not a governmental entity, but with mission to ensure

reliability of the bulk power system in North America– Proposes standards for reliability that are reviewed/

approved by FERC

DOE

NERC

• Federal Communications Commission– WAN to HAN focus– Licensed, unlicensed, and wireless spectrum

FCC

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States Also Impact Smart Grid Plans

PUC

EnergyCommissions

• Public Utility Commissions – Manage investor-owned utilities like Pepco– Approve rates for electricity/gas, etc.– Referee in fight about who owns energy use data

• Energy Commissions– Roles vary in states– Ex: California Energy Commission responsibilities

• Energy policy and planning agency• Sets appliance and building energy efficiency

standards• Provides incentives for renewable energy

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Legislation Impacts on the Smart Grid

• Waxman Markey (ACES)

– Emissions activity already spurring utility plans and investments

• Wyden (STORAGE)

– Provides an investment tax credit for energy storage assets

• American Clean Energy Leadership Act (ACELA)

– Distributed generation, transmission siting and deployment

• EPACT2005

– Lighting and appliance efficiency standards

• EIEA2008

– Renewable energy tax credits

– EV tax credits

The biggest complaint in Silicon Valley? The fits and starts of investment tax credits, production credits, and incentives make it impossible for investors to truly understand and calculate risks and potential ROIs. All start-ups are told to not use assumptions about government incentives in their business cases.

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Federal Money Trail

• American Recovery and Reinvestment Act fueling $83 billion into clean tech sectors

• Energy efficiency grants and investments for government buildings, HUD dwellings

• Home weatherization

• Renewable energy loan guarantees, wind tax credits extended

• Electricity transmission and smart grid (3,000 miles of transmission lines and 40 million smart meters)

• Clean tech tax expenditures (including renewable energy credits)

• Carbon capture research

• Vehicle battery loan guarantees and grants for R&D

$83B

$12B

$5B

$6B

$11B

$21B

$3.4B

$2B

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VC Money Trail

• Energy policy is spurring venture capital and public investment

• Venture capital clean tech investment

– $4.1 billion in 2008, up 54% from $2.7 billion in 2007

– The recession toll: VC funding fell by 14% in the fourth quarter of 2008

– Tops $1.6 billion in 2009 (thru July) for about 100 deals

• The top seven VC investments in 2008 were in clean tech

• Sectors include Smart Grid software applications, geothermal companies, pollution and recycling technologies, and transportation (EV and batteries)

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Agenda

• Today’s Grid


– Players




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Electricity Supply Chain – Now

Generation Transmission Distribution

Say Good bye to these three silos

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The Supply Chain Evolves

Generation Transmission Distribution Consumption

Consumption is a new and critical Link in the Supply Chain

Traditional Grid Smart Grid Enhancements

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The Smart Grid Relies on Storage


StorageUtility-scale• Compressed air• Flywheels

Utility-scale• Flywheels• EC Capacitors

Substation-scale• Molten salt• Flow cells

Residential-scale• Electric vehicle• Home battery


Energy Storage technologies underpin centralized and distributed generation

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The Smart Grid Changes Generation






Technology• Utility-scale

renewablesRegulatory• Decoupling• Feed in TariffsPlayers• New power

producers


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Transmission Impacts – Big but Mostly Invisible to End Users








producers

Technology• Superconductivity• Synchrophasors• HVDCRegulatory• Interstate trans-

mission agency to build lines?

Players• Transcos


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Distribution Becomes Bi-directional








producers



Players• Transcos

Technology• Smart meters• Distribution

automation• MicrogridsRegulatory• Zoning to allow

storage


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Major Changes in Store for End Users








producers



Players• Transcos

Technology• Smart meters• Distribution

automation• MicrogridsRegulatory• Zoning to allow

storage

Technology• HAN• HEMS• Smart appliancesRegulatory• Net metering• FiTsPlayers• Energy-efficiency

consultants


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A Revolution is Ongoing

• Remember how the telecom industry looked and acted twenty years ago?

• Be prepared for big changes to your relationship with electricity!

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Agenda

• Today’s Grid


– Players




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Top Ten Trends

#1 – The Smart Grid will dramatically increase renewable energy sources for utility-scale and distributed generation

From this To this

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Top Ten Trends

#2 – NIMBY, BANANA, and NOPE will kill or delay many remotely-based renewables generation projects

Existing transmission assets must be upgraded to transport the maximum KV amounts on them

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Top Ten Trends

#3 – Security standards will guide protocols, processes and procedures, but mistakes will occur, creating new cottage industries for consultants, lawyers, and hackers

Issues

• Privacy of consumer information

• Ownership of energy data

• Physical and cyber security

• Liability for breaches and failures

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Top Ten Trends

#4 – Distributed generation facilities will be built using renewable energy sources and storage for onsite consumption and for resale back to the grid

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Top Ten Trends

#5 – Energy will be stored at many points on the grid, including rolling batteries (EVs and PHEVs), home batteries, as well as utility-scale storage

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Top Ten Trends

#6 – Us ordinary folks will engage in energy arbitrage, using intermediaries to manage interactions with utilities

#7 – Cars become income generators for their owners -- carbitrage

EVs and PHEVs will not lose value the minute they are driven off the lot

=

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Top Ten Trends

#8 – Energy efficiency-enabled devices will proliferate in homes – my home will be smarter than I am!

#9 – HEMS applications will control appliances to save on energy bills

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Top Ten Trends

#10 – Multiple options for your home control device and application

What will be the most popular in-home display device?

Smart phone?Internet TV?

Computer?

Wall-mount unit?

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And One Very Real Threat

If we are not very aggressive in objectives and pace, China will leapfrog the USA in Smart Grid technologies and deployments

• No need to protect stranded assets or vested interests

• Build from scratch using the latest/greatest technology

• Largely unified market structure, unlike USA with 3200+ utilities, 50 PUCs, 10 ISOs/RTOs, 4 major Federal entities, and excessively combative inhabitants

It’s telecom all over again……

but with a lot more complexity

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We Can Win This Horse Race

• Good start with Federal initiatives on standards and funding

– Can’t get derailed on political arguments about whether global warming is real

• Focus on innovations in technology and regulations– For a truly level playing field,

stop subsidies to established fossil fuels

• Remember to keep the consumer (end user) in mind

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Thank You!

For help with the terms and acronyms in this presentation, get the Smart Grid Dictionary, First Edition, at the website below or at Amazon.com

For more information, visit: www.smartgridlibrary.com or contact Christine Hertzog at [email protected]

Documents

0 The Smart Grid: Deconstructed and Demystified Christine Hertzog Managing Director Smart Grid Library September 2009 © Smart