Challenges remain
Clearly, implementation of a smart grid will force U.S. utilities to deal with several complicated issues.
“First, consumer acceptance will be critical,” said Pratt. “It is important that they maintain control and can participate in demand response but do so to their own comfort level. Nobody wants to feel like the power company has the ability to control when you turn the air conditioner on. We found that even when consumers maintain control you can engage them enough that they will play along and reduce peak demand as much as 50% for short periods of time.”
Another looming issue is related to smart grids’ financial viability. State regulators need to allow utilities to earn a fair rate of return on smart grid investments, just as they do with the traditional grid infrastructure that smart grid investments displace, according to Pratt.
The PNNL project manager also focused on challenges related to the increased use of renewable energy sources, which could negatively affect the smart grid. He pointed out that in the face of the need to manage carbon emissions, there is tremendous pressure to rapidly bring large amounts of renewable generation onto the grid. Essentially, that means wind power in the near term, with extensive solar photovoltaics (PVs) following, as costs come down.
“[Renewable sources] add a great deal of complexity to grid operations. One challenge with wind power is that it is an intermittent resource. We can forecast wind to a degree, but many fluctuations are very rapid, and other generation must ramp up or down to compensate,” Pratt said. “Those fluctuations make a grid that is already hard to operate that much harder.”
He gave the example that during this past winter a fluctuation in wind output in West Texas was so large and rapid that power plants could not compensate. An unexpected cessation of wind power caused the regional transmission authority (ERCOT) to implement its voluntary load-curtailment program (which pays industrial users for ramping down power usage or going off-line temporarily to reduce load and avoid a blackout). That event was a tangible example of the complexity of using intermittent renewable energy resources.
“One thing we can do with a digital power grid is to use demand capability to soak up fluctuations in wind—creating a partnership. That will help solar, too. Unlike wind power, solar PVs are usually connected to the grid at a home or building,” Pratt said. “When there are enough of them to actually push power back up the lines toward the substation, new dynamic schemes for voltage regulation and short-circuit protection will be required.”
Higher grid IQ benefits
Overall, the transition to a smart grid should be a positive one for consumers, utilities, shareholders, and regulators. Consumers will be able to manage their energy consumption and peak demand by modifying their electricity usage habits and lifestyle. The PNNL demonstration project found that participants were able to accommodate these changes without bother. Utilities will benefit by having more-reliable systems, which will translate into a reduced need for building additional capacity. In return, consumers should get more control over their energy bills.
Customer participation in demand-response programs will close the loop between generation and consumption that power market economists have yearned for for years. As a result, utilities will be better able to manage energy demand with available resources and, thereby, create higher financial returns for investors. Automation and better feedback about individual consumers’ demand and consumption patterns should lead to more-efficient use of resources and lower operating costs.
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