So, this is really the second to last installment of this series. I know I started off Part 4 indicating that it was the last week. But, I got a little excited and long winded about micro-grids, so I thought I’d break it up into two sections. Unfortunately, this week, I got excited and long winded about distributed generation and smart meters. However, I did start to make the link from last week’s discussion of micro-grids in the developing world and how it relates to the electrical grid in the developed world. I cover what’s happening now on the cutting edge of grid development, and look a little ahead. Next week, I look deeper into my crystal ball to give you insight into what I expect the electrical grid to look like in the future.
(At this point in time I need to insert the usual disclaimer. These are forward looking statements, and as such, are highly speculative. Do with these thoughts what you will, but any losses or gains based on placing bets on my ideas are at your own risk. Though, if you want to send me part of your gains, I will gladly accept them. Let’s face it, if there was 100% certainty in the thoughts I’m about to share, I’d be placing my own bets, and probably wouldn’t be sharing these thoughts with you.)
At a high level, let’s set the stage for some of the factors that are going to drive the changes in the electrical grid in the near future. The biggest driving force is the need for more electricity. Not only does the U.S. population continue to grow (more people equals more electricity use), but each of us is using more electricity with each passing year. Think about how many gadgets and gizmos (smart phones, tablets, computers, etc.) you’ve bought over the last 10 years that need to be plugged in. You have more stuff that is powered by electricity now than people have ever had in the past.
Another driving force with nearly the same amount of impact as the increasing demand in electricity is the state of our current generation plants. Many of the generation plants that are on-line today were built 40 or 50 years ago. A typically generation plant is only supposed to last about 40 years. Many generation plants that are currently producing electricity have reached the end of their life and will need to be retired. In fact, many nuclear and coal plants have been retrofitted over the last 10 to 15 years to extend their operating life. These plants should have been retired several years ago, and will be retired in the next 10 years. All told, the U.S. will retire hundreds of GW of generation capacity over the next 10 years. The good news is that it’s all the old, inefficient plants that produce high emissions that will be retired. The bad news is that we’re going to have to replace that generation somehow.
Micro-grids in the developed world
So, how exactly does the establishment of micro-grids in the developing world have any impact on how our electrical grid is going to change in the United States? Well, we face some significant problems to the expansion of our own grid. I’m talking about the need to expand and upgrade the actual grid infrastructure – the transmission and distribution lines. This equipment is very expensive to install – a typical high voltage transmission line can cost anywhere from $1 million to $10 million per mile! We have thousands of miles of these lines criss-crossing the country. Not all of it needs to be upgraded. But, you can very quickly see that between the lines that do need to be upgraded, and the new lines that need to be built, it will very easily cost the U.S. billions just to get the electricity from point A to point B. This doesn’t even factor in the cost of building new electricity generation.
So, is there a way to avoid upgrading the very expensive transmission lines? The secret is to locate the power plant right next to where the electricity is going to be used. Not need to send that electricity over the transmission line, so you don’t need to upgrade it. The problem is finding people who want to have a coal or nuclear plant in their back yard.
But, what if it didn’t have to be a full power plant? What if as a homeowner or business, I could produce just enough power for my use? And, what if I could produce it using a technology that I didn’t mind having in my back yard, or on my roof?
This concept of producing electricity close to the source is known as distributed generation, and it’s already being done. Solar panels are showing up on top of houses and commercial buildings all over New Jersey, California, and several other states. On most buildings, you won’t even know they’re there just by walking by. There are also some micro-turbines popping up there and there to collect the wind. And, with the help of the folks from Bloom Energy, fuel cells are starting to find their way into a number of locations. (Micro-hydro dams, run of river systems, and small tidal power are also starting to make some in-roads, but this technology is going to be of limited application given the local geography needed to make it work.)
One of the other benefits of distributed generation how much of the electricity generated is used by the electrical loads and not lost in transportation. Let’s look at the physics of electricity and the wires for a second to understand how this works. At its core, electrons are electricity. And, the transportation of electricity is pushing these electrons down a wire. Picture a highway. When there are not that many electrons trying to travel down the highway, they can travel quickly without getting into each other’s way. When many electrons are traveling down the same highway, they become congested and start running into each other. As more electrons start running into each other, they turn into heat. As the wire heats up, the amount of space available for the electrons to travel starts to shrink. As the amount of space starts to shrink, more and more electrons start running into each other, which creates more heat, which shrinks the highway yet again. All in all, 30% of the electricity that gets generated at a power plant is lost due to the transportation process. By using distributed generation, we use 100% of the electricity generated locally, and we can also reduce the traffic on the transmission lines, which makes the existing transmission grid and generation plants that much more valuable.
So, okay, it does cost more to build distributed generation system than a large power plant, but when you start factoring in the cost of the transmission upgrades required for these new plants, it begins to make more and more sense. And, if you couple a distributed generation grid, like I’m describing here, with a smart grid, that I describe in a few sections, there are even more benefits to be had.
The other “future” trend that is already happening is known as the “smart grid”. At the present time, “smart grid” is only referring to the deployment of smart meters, and smart meters are just the beginning of the “smart grid”. In this section, we’ll go step by step through every development that is encompassed by the term “smart grid”. It is definitely more than just about smart meters, and you’re see how the development of a “smart grid” is going to allow for the integration of the other innovations we’re discussing in this article.
So, let’s start with smart meters. The development of smart meters is currently happening in the territories of a number of utilities. But, let’s define exactly what a smart meter is, and see how it’s an improvement on our current meters. The current meters are just that – meters. They record the amount of electricity that you use in your home or business. They’re so basic, that they still require a person to read the meter to determine just how much electricity you used last month. The fancy ones – AMRs and IDRs – are still just meters. AMR meters, or Automated Meter Read meters, push the meter read data automatically to the utility. Imagine how much of step forward this was for utilities – the ability to read your meter without sending a person out to do it! Thankfully for the meter readers union, the majority of electricity customers are still on the old meters, so make sure your meter reader had access to your meter. IDR meters, or interval data records, is an additional step beyond the AMR meter. Not only does it record your electricity usage, but it also records when you’re using electricity. This may not seem like an important element until you understand that electricity has a different cost to produce depending on when during the day you use it. IDR meters allow the utility to charge you based on a Time-of-Use or (TOU) rate.
Why would you want a TOU rate? Simply, it’s usually cheaper. Electricity is most expensive during the day, and least expensive overnight. The non-TOU rate means that you’re overpaying for electricity at night, and under paying for electricity during the day. For those of us who work 9 to 5, that means we’re subsidizing those people who stay home from work during the day. Also, by being on a TOU rate, people become incentivized to shift their load to times when it’s less expensive to produce electricity on the grid. If electricity is the same price all the time, why wouldn’t I run my dryer in the middle of the afternoon? What you’re missing is that it’s more expensive for the utility to deliver that electricity in the middle of the day. The price you pay does not reflect the cost the utility bears. By going to a TOU rate, you’re incentivized to run your dryer at 3am (thank goodness for a time delay start!) when power is much less expensive. (If you have an indexed hourly rate, where your price of electricity is indexed to the wholesale price of electricity, you may actually get paid for running your dryer at 3am. Check out an article I wrote about “How Spot Market Prices Are Determined” to find out how this works.)
So what’s the difference between the current meters and a smart meter? At a very basic level, a smart meter, or AMI meter, allows two-way communication between the meter and the utility in real time. (I use the term “utility” here to represent distribution utilities, the ISO or RTO that serves the region, and potential some other entities that could make use of this data.) An AMI meter, or Advanced Metering Infrastructure meter, has two major benefits over the current meters. First, it lets the utility know that it’s on-line and recording electricity use. Second, it allows the utility to push new information to the meter.
Letting the utility know that the meter is on-line seems like a very basic detail, but it’s something that missing from the current dumb network of meters that is the electrical grid. The “dumbness” of the current meters is why the utility still needs you to call them when you have an outage – they just can’t tell any other way! AMI meters provide the utility a “last gasp”, the last piece of data, to be sent to the utility before the AMI goes off line. This gives the utility the ability to troubleshoot the problem while the trucks are en-route to fix it. Think about how quickly the utility can restore electricity if it already knows what’s wrong before it gets there! Plus, they’re starting to realize that they can fix some of the things before the truck is there! They re-route the electricity through another feeder, and ultimately fix the root cause of the problem while you’re reading the latest blog post on Power2Switch.
Pushing new information to the meter isn’t a capability that’s widely being used. But, think of the possibilities. What if your meter got information about what the electricity prices were going to do tomorrow? Your home automation system takes that information and devises the best use of all you appliances. It runs the dryer at 4am, because that’s when electricity is – 2 c/kWh. It runs your AC at 3pm to pre-cool your house to 65 degrees, because it knows that at 4pm electricity is going to be twice as expensive. And, because of this pre-cooling, the house is comfortable 72-degrees when you walk in the door at 5:30pm. This starts to get a little into the internet of things, but it is fun to dream isn’t it?
The next steps for AMI meters will include providing much more information to the utility about what’s ultimately happening at the end of the distribution network. The smart meters are going to be measuring voltage, frequency, and real power vs reactive power in real time, and sending all that information back to the utility. This information is critical to maintaining a stable electricity grid, and currently the utilities rely on data from their substations for all of this. Think of this as trying to drive from New York to Los Angeles by using GPS to tell you where you are, but without being able to look at the windows. You’ll probably get there eventually, but your car will end up with more than a few scratches along the way. (The GPS only provides you the big picture data, which only allows you to make the big corrections – left turns and right turns. Looking out the window provides you with the real time data necessary to make the minor corrections like slowing down to avoid hitting the turning car ahead.) I’ll discuss…
What has been learned from distributed generation technology in the developing world is starting to be integrated into our electrical grid. The challenge, for next week’s discussion, will be integrating all this technology at a much greater scale. Smart meters are turning our very dumb electrical infrastructure into a not-so-dumb sensor network. Some of the benefits are already being experienced during the electrical grid recover in the aftermath of storms like Sandy. This is just the beginning of what is eventually possible.
Distributed generation and smart meters – it’s already happening people!
Next week, we look at the continued evolution of the smart grid. How can we make all these new sensors provide us with an electrical grid that is incredibly resilient? How can we continue to keep our electricity costs down? And how to we replace the multi-GW of generation that’s going off-line? Stay tuned!