Understanding the Smart Grid: What's Great and What's Wrong with Electricity 2.0 (Video)

power lines storm photo

Photo by nicholas_t via Flickr CC

What exactly is the smart grid, why don't we have it, and when will we? For most Americans, the smart grid is a mystery. That's part of the reason why there is some bubbling hostility toward smart meter installation projects in many places, and smart grid pilot projects happening in (relatively) so few.

Tom Raftery of GreenMonk is an expert on the smart grid. He took the time to talk with us about the ups and downs of the (slowly) developing smart grid.

What is the Smart Grid?

As a refresher, the smart grid is the next generation of our energy grid, and hopefully too, our water grid. It is the implementation of smart devices and systems that allow for two-way communication between energy sources, utilities and end users. This allows for real-time feedback to optimize energy efficiency and minimize both the resulting monthly energy bill as well as the need for additional power plants.

Problems With the Smart Grid Still to Be Answered
However there are still a lot of questions that consumers have about a smart grid, such as how it impacts information privacy, will bills be accurate, will it allow us to use renewable energy more, and so on. We're aware that the smart grid has the potential to significantly cut the carbon footprint of the US, but will that come at the cost of information privacy or the security of our energy grid? These are important questions that are asked just as often as "Smart grid? What's that?"

Expert Tom Raftery Explains The Ups and Downs of the Smart Grid

In early 2009, Raftery gave a talk at the eTech conference, and it is an excellent lecture to watch to gain a strong understanding of why we need a smart grid to make our electricity grid more efficient and what is standing in our way.

But he also took the time to talk with us last week and answer some of the more pressing questions concerning mainstream America when it comes to the next generation of electricity.

TH: What's the biggest barrier with smart grids right now? Is it utilities not latching on? Is the technology too new? Is it that not enough people understand what it is?

There are multiple barriers to complete smart grid roll-outs at the moment. The biggest one, as far as I can see is money!

The smart meter roll-out alone costs in the order of $150 per household just for the device. Then there is the installation engineer on top of that. And the software to back it up. In terms of the software, remember that presently utilities take maybe one meter reading a month. When they start taking readings from smart meters they will be taking up to 2880 per 30-day month when they are taking 15 minute readings (or 720 for hourly readings). If they have 1 million customers they go from 1m meter readings a month to 720m per month (or 2,880m). That's a massive jump in the amount of incoming data which needs to be stored, queried for billing, and held for however long.

A lot of the software to handle this is still being developed and utilities, being very conservative, don't want to be guinea pigs. And newer technologies tend to have a price premium.

Circling back to the price for the utilities. If they have 1 million customers, they are looking at spending hundreds of millions on the smart grid roll-out (smart meters, communications infrastructure for smart meters, back-end database for data, back-office apps for using the data - customer care, billing, etc.).

One of the big deals about smart grids is that it will help us reduce our consumption - from the utilities perspective, they should invest these large sums of money so we can reduce the amount we purchase from them? You can start to see the difficulties.

Demand Response and the Smart Grid

electric meter image

Photo by taberandrew via Flickr CC
TH: What's the most apparent way a smart grid will change the average person's daily life? What about the most important way?

You know, the best way a smart grid could change the average person's life is 'not a jot' - apart from reduced utility bills.

Utilities are talking up demand response programs and how they will be able to come into your house or apartment and turn down your air conditioner (for example) at times when supply is short and demand is high. This is a top-down approach destined to piss off customers and will in no way get buy-in from a skeptical public.

Far preferable would be some kind of automated demand response, completely controlled by the consumer, so far example as a homeowner I'd set my dishwasher at 8 PM to come on at 5c per kWh or 5 AM, whichever comes first. As long as the dishes are done by 7 AM, I'm happy. Similarly with other devices. Plenty of loads in the home are movable. You don't care when your hot water is heated, as long as it is hot when you need it hot. A well lagged (insulated) boiler would mean you could heat it when electricity is cheap, and then use it whenever.

By the way, totally counter-intuitive but cheaper electricity has a higher renewable percentage so actively selecting for cheaper electricity means you are actively selecting for electricity with a higher percentage of renewables in the mix. How does this work?

Well, electricity prices on the wholesale market are very volatile. Consumers are protected from this but electricity prices can fluctuate by orders of magnitude within a 24-hour period. Price is set by good old supply and demand. Demand fluctuates according to day of week, time of day and by season. As the price drops on the wholesale market, it becomes less attractive for more expensive generators (the ones with start-up costs for their generation - the fossil fuel burners, for example) to stay selling in so they drop out. The renewables, on the other hand, are price takers. They don't have significant start-up costs for generation so they stay in the market no matter what price they get. So, as the price drops, more and more fossil fuel generators drop out and the percentage of renewables in the mix increases!

Bringing Renewable Energy Into the Smart Grid

wind turbine photo

Image via steve caddy via Flickr CC
TH: Other than this change in demand and timing, how will the smart grid help us incorporate renewables into the grid?

Utilities are used to dealing with a situation where their generation (gas coal, oil) is steady and predictable in its output and their customers' demand is unsteady but generally predictable (demand tomorrow = demand this day last year +1-2%, say).

For various reasons utilities are having to move to a situation where they need to incorporate more renewables into their mix. Renewables generation is not steady and is only slightly predictable (via weather forecasts, for example). Because electricity has to be used as it is generated (can't be stored, generally), the more unstable the generation, the more unstable the grid.

How can you fix this? Well, one way would be to align the demand with the supply.

How do you do that? Well, as supply and demand shift, they affect price on the wholesale market. So, if you expose people to the real price, they will modify their behaviour to select for when price is lowest (when electricity is in lower demand (or when their is a higher percentage of renewables as I mentioned earlier)). This is demand response.

Now, however you do it, if you roll out a demand response program, you are aligning demand with supply. The more you do that, the more stable you make the grid. The more stable the grid, the more renewables that can be added to it.

Information Security and the Smart Grid

TH: Many people in the US are concerned with information privacy - they want to own their energy usage data and don't want utilities handing it over to governments and third parties. What are some of the steps both businesses and people can take to appease people's concerns?

Let me tell you, people in the EU are far more sensitive to data privacy issues that in the US! Honestly, on this question, I'm not sure there is a good answer though.

Consider your mobile phone. It is a tracking device. As long as it is on, it knows where you are 24x7 (and tells your mobile provider). Mobile phone records have been used to both exonerate and help convict people in recent years.

iphone gps trail photo

Photo via miss_hg via Flickr CC

Now consider people working in the call center of your mobile phone company. How much are they paid per annum? If I offer to slip one of them $2k do you think I could have access to your movements for the last 6 months? Similarly for your energy consumption data soon.

The best way to protect against this is legislation. Legislate to keep data private and have very heavy fines for the utilities (and mobile phone co.s) for breaches. This will incent them to put processes in place to track inappropriate accesses to people's data (and disable export functions, etc.).

TH: What's your favorite saying about the smart grid, or a quote or insight that you always remember?

I spoke to Dr Monika Sturm a couple of years back. Monika is director of Siemens Center of Competency for smart meters - their research and development facility. She told me that the output from smart meters is extremely granular. So much so, that it is possible to look at the output of smart meters and identify all the devices which make up the reading. So by looking at the output from my smart meter, it would be possible to see that I have a Philips 37" LCD TV (the 2008 model), and a 2006 Indesit BHZ model fridge and a .... You get the idea.

This plays back to the privacy question you asked earlier but it also offers an alternative revenue option for utilities who are looking at people reducing their consumption. It goes something like this:

I get an email from my utility saying

"Dear Tom, we notice that you have an Indesit BHZ fridge. This is currently costing you €25 per month to run. We have a newer, more energy efficient model on special this month for €10 per month. It will cost you roughly €10 per month to operate so overall you will save €5 per month if you avail of this offer. If you sign up, by simply replying to this email, we will have our partner install the fridge by the end of the week and we can take away your old fridge for you for no extra charge."

Or similar.

Utilities Need to Step Up Communication with Customers

utility meter reader vintage photo

Photo via Seattle Municipal Archives via Flickr CC
TH: Anything you want TH readers to be sure to know about?

The problems associated with smart meters in places like Bakersfield were entirely predictable. [Editor's note: Bakersfield residents felt the new smart meters from Pacific Gas & Electric led to inflated energy bills. It resulted in a lawsuit.] Utilities are not used to communicating with their customers. They do so only when it is time to send the monthly bill. With the advent of smart grids, utilities will need to be in far closer communication with their customers. If people's consumption is approaching a threshold which could push them into a higher band, send them a text/email/IM/Tweet/all of the above (or whatever the customers preferred method of communication is) to let them know. If the customer's consumption is lowest in their block/zipcode/subdivision/whatever, let them know, etc.

Communications is not something utilities have not traditionally needed to invest any time in. However as Bakersfield has shown, it will be a vital skill for utilities in the future, especially as the markets open up and people have a choice of who to buy their electricity from.

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More on the Smart Grid
Another Benefit of Smart Grids: Fewer Utility Trucks Spewing CO2
Chinese Gov't to Spend More on Smart Grid Projects than U.S. in 2010
Cisco's Smart Grid Bests Google's PowerMeter When it Comes to Climate Change Solutions

Understanding the Smart Grid: What's Great and What's Wrong with Electricity 2.0 (Video)
What exactly is the smart grid, why don't we have it, and when will we? For most Americans, the smart grid is a mystery. That's part of the reason why there is some bubbling hostility toward smart meter installation

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