Smart Grid 2.0: Moving Beyond Meter-Centric Systems

Smart Grid 2.0 – What’s Next?
Almost 10 years later, we’ve now moved beyond two-way communications and remote meter reading towards the Smart Grid 2.0. The Smart Grid 2.0 puts intelligence and communications in devices throughout the grid from distribution equipment (meters, transformers, capacitor banks, etc.) to commercial electrical devices (chillers, boilers, air handlers, lighting, etc.) and home appliances like electric water heaters, air conditioners, and rooftop solar arrays.

These “smart” devices can now become a part of the grid, able to interact in real-time to changing conditions on the grid. The Smart Grid 2.0 uses the grid network and the devices connected to it as a communicating, intelligent system for the delivery of additional services and increased operation efficiency, such as demand response programs.

Another significant benefit of the Smart Grid 2.0 is asset management. Because of this network infrastructure approach to the Smart Grid, utilities can see all equipment and how the power lines interconnect that equipment to monitor the health of the systems in real time.

Conservation as an Alternative Energy Source
Electrical generating capacity from fossil fuel sources may become capped – either economically, legislatively, or due to environmental concerns – making energy conservation and renewable resources essential elements of today’s energy market.

U.S. utilities experience peak demand just 2% of the year, but to serve customers on such days, utilities incur 15% of the total costs for the year. If the peak electricity loads on these days could be better anticipated and lowered, utilities would experience fewer black-outs and brown-outs and could significantly reduce costs. Electric utilities, being regulated, are allowed to charge for their operating expenses plus a return on their investment. The ratepayers thus fund the utility’s expenses and profits. Lowering the operating expenses by curtailing peak demand will result in lower costs to the ratepayers.

First it is necessary to look at the highest energy users: Commercial buildings account for 72% of overall electricity consumption in the U.S., and offices, retail, hospital, and grocery stores use 75% of the total lighting energy. Cities also have large electricity demands, specifically for streetlights, which use 40% of the average city’s electricity budget.

Aggregators and utilities can shave peak demand with automated demand response programs. The Smart Grid 2.0 enables demand response programs which significantly reduce the strain on the grid at times of peak use. These energy savings could provide enough power to fuel electric or hybrid vehicles and reduce the need for additional coal-powered energy plants. Currently only 14% of the commercial U.S. electricity market is enrolled in demand response programs, leaving an 86% potential market, a huge commercial opportunity for demand response providers.

Business Drivers
Economic forces are aligning toward the development and deployment of the Smart Grid. Recent energy legislation, governmental policy and regulation, the U.S. stimulus package, increased investment in green tech and alternative energy, and increased public awareness regarding efficient energy use are all contributing to the growing Smart Grid market.

A recent poll of North American utilities shows that 70% regard Smart Grid projects as a strong or highest priority to their overall business. Combined stimulus package funding and incentives to improve the grid are leading to rapid growth in the energy market.

Achieving Smart Grid 2.0 Benefits
The benefits of the Smart Grid 2.0 include higher economic productivity, decreased pollution and lower CO₂ emissions from conservation, electric vehicles, and renewable electricity sources. In order to procure and deploy systems that meet a true Smart Grid 2.0 definition, several requirements must be met.

First, power line communications are necessary from the meter to the distribution transformer in order to know the network topology and identify failures. Knowing the topology allows intelligent management of EV chargers, distributed generation, distributed storage and protects distribution equipment life. Secondly, sensing and control at the distribution transformer are needed to take timely action on any failures even before they occur. And lastly, utilities need to avoid systems that are meter-centric and fail to encompass the notion of the grid as a network. These meter-centric systems, useful only for enforcing new pricing models on the consumer, will be outdated in 10 years or less, leaving many utilities with “stranded assets,” an asset that becomes obsolete prior to being fully depreciated.

You might also be interested in …

Bob Dolin’s Smart Grid 2.0 presentation (pdf)

Smart Grid Futures: Why Failing to Create a Shared Long-Term Vision Is Already Costing Us

The Six Most Important Smart Grid Trends

Smart Grid Demand Response: Why Today’s Leaders are at Risk as DR 2.0 Emerges

Smart Meters by Mandate: 96.3 Million European Households Should Have Them by 2014

Smart Grid Communications: Rebirth of PLC?

Related SGN resources …

Smart Grid Strategy

Smart Grid Demand Response

Smart Grid Communications

Global Smart Grid

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