Collaboration Central to Obama Administration’s Grid Modernization Plan

An electricity grid policy framework was released at a White House event on Monday at which government and industry representatives discussed the compelling benefits of a modernized grid while hinting at the often intransigent obstacles to making progress toward that goal. In conjunction with the event and release of the policy statement, the Obama Administration announced several public and private initiatives, including $250 million in loans for smart grid technology deployment as part of the U.S. Department of Agriculture’s Rural Utility Service.

A Policy Framework for the 21st Century Grid was produced by the interagency Cabinet-level National Science and Technology Council and emphasizes “the importance of State and local jurisdictions and offers a collaborative path forward to modernize the grid.”

The necessity of collaboration was one main theme that emerged from comments by government and industry panelists at the event.  The other was that a modernized grid is more than just “smart grid” technology.

Nancy Sutley, chair of the White House Council on Environmental Quality, noted that we need new transmission, not just a smarter grid, and pointed to the formation of a multiagency Renewable Energy Rapid Response Team that will coordinate the siting, permitting, and transmission of renewable energy.

Sutley was followed by two California high school students, Shreya Indukuri and Daniela Lapidous, who reported on how they led Harker School in San Jose to make a 13% reduction in energy usage by using off-the-shelf smart metering technology that resulted in a 250% return on investment. The two subsequently cofounded SmartPowerEd to “help high school students install smart sub-metering systems on campus to cut energy waste for the benefit of the environment and school budgets.”

Tom Vilsack, secretary of the Department of Agriculture (USDA), announced  his department’s goal to invest $250 million in smart grid equipment deployment in rural America over the next 12 months. Funds from the USDA Rural Development’s Rural Utilities Service are helping rural electrical systems deploy smart grid infrastructure, including “metering, substation automation, computer applications to monitor and control systems and processes, two-way communications, geospatial information systems, and additional system improvements,” according to the department’s release.

“It’s about consumers saving money” and improving outage recovery time, Vilsack told the audience. The administration wants the “future to be bright for all Americans, no matter where they live,” he said.

Secretary of Energy Steven Chu noted that the grid is not just smart meters and transmission; it’s also “integration with power generators.” A modernized grid is needed, Chu said, to improve reliability and cybersecurity, improve the efficiency of the transmission system, enable renewables and electric vehicles“synchronize electrical systems,” and support “both distributed and central generation.”

While acknowledging the debate about generating power, and creating jobs, locally versus transmitting what may be cheaper electricity from elsewhere, Chu noted that there would always be “tradeoffs” but that efforts to modernize the grid should be affordable.

As he often does, Chu pointed to international competitors in the grid space: China’s newest ultrahigh-voltage transmission lines lose less energy than the U.S.’s 750 kV lines, for example. He also argued that there are great opportunities for technology development if the energy sector’s players get together and “open up.” Money “is being left on the table,” he said. The “good news,” Chu continued, regarding the federal government, is that “we have no authority,” but “we can facilitate solutions.” His message: “I’m from the federal government, and I’m here to help you make money.”

In response to an audience question about cybersecurity, Chu noted that the issue “justifiably has a lot of concern” and that the administration knows of other countries “mucking with” another country’s grid, because of a dispute over a bill. The issue is “very much on the front burner,” and that was all he could say other than that the DOE is working with other agencies on the issue.

Asked about using peaker plants or demand response (DR) to back up variable generation from renewables, Chu answered that DR is “a no-brainer,” but “it’s not either/or. You want to do all of these things.” He noted that solar power is expected to reach 6 to 7 cents per kilowatt-hour in the next decade, without subsidies, and that will mean solar panels will go on a lot of rooftops. Our current grid, however, cannot handle that, so we need to act now to equip the grid to handle vastly more, and more dispersed, renewable generation.

Key Stakeholders Comment on the Need for Grid Modernization
The second panel at the event consisted of David J. Hayes, deputy secretary of the Department of the Interior (DOI); Robert S. Shapard, CEO of Oncor and chairman of the Gridwise Alliance; Cheryl A. LaFleur, commissioner of the Federal Energy Regulatory Commission (FERC); and Tony Clark, president of the National Association of Regulatory Utility Commissioners and North Dakota Public Service Commissioner.

The DOI’s Hayes noted that grid modernization is important to rural areas because they are playing a larger role in generation than in previous eras. In the last quarter, he said, more than 4,000 MW were permitted on public lands, mostly in the Southwest, and mostly solar.

The country is going to invest half a trillion dollars in the grid, Oncor’s Shapard said, so we don’t want to just replicate what we have.

Who’s Got Authority?
A lot of grid decisions will be made at the state level, said North Dakota’s Clark, pointing out that 70% of the costs are at the distribution level. However, smart grid deployment challenges some regulatory models. The costs are clear, but benefits “are more diffuse” because you cannot predict them all, so they’re harder to account for in the regulatory environment. There might be room, he suggested, for rate-cap regulation or performance-based regulation.

Both the FERC and DOI representatives danced around the issue of who has the authority to set the kind of policy that would provide the type of clarity the industry is seeking. FERC has authority to work with the National Institute of Standards and Technology (NIST) to oversee development of standards, including those concerning security, but it’s a voluntary, consensus-based standards-setting process, LaFleur pointed out.

“There’s an awkwardness here about the relative authority” of all the federal entities, Hayes acknowledged. Everyone wants to make the right investments in the right place at the right time. Echoing that sentiment, LaFleur reminded participants that “these investments last 50, 60 years,” so we need to make sure we’re deploying the best technology.

Clark and LaFleur emphasized the necessity of regional planning, a position seconded by Shapard’s comment: “I don’t think we can solve this at the state level.” He called for federal coordination.

Clark emphasized the need to retain flexibility to develop some solutions geographically but called for sharing of best practices and coordination by the federal government.

Hayes noted that “Institutional structures are not well-designed” to deal with this challenge of grid modernization, which is one reasons the administration and federal agencies are facilitating so many multiparty discussions.

“This doesn’t take government money,” Shapard said. As long as utilities can “get clarity” on policy and regulation, they will spend the money.

Policy Framework Highlights
The four primary “pillars” of A Policy Framework for the 21st Century Grid are:

• Enabling cost-effective smart grid investments: “To ensure we learn from the Recovery Act smart grid investments, the Department of Energy will release consumer behavior studies and lessons learned from demonstration projects. Enabling electric utilities to deploy these technology advancements faster and use them more effectively can lead to refined electric rate structures to give consumers the ability to save money by using energy more intelligently.”
• Unlocking the potential of innovation in the electricity sector: “A modernized grid can be a powerful platform for spurring the creation and deployment of new products and services in the electric sector as a means of delivering comfort, convenience, and savings to energy customers. . . . To enable the development of these new technologies, products, and services, NIST is overseeing the effort to develop open standards that will help create national markets for smart grid technologies and promote plug-and-play operability for devices such as appliances that automatically use energy when it is the cheapest or cleanest.”
• Empowering consumers and enabling informed decision-making: “Numerous studies have shown that providing simple feedback on energy consumption to residential consumers—via bill inserts, websites, or in-home displays— can reduce electricity use by 4 to 15 percent. Consumers deserve access to their own energy usage information in machine-readable formats so they can better understand how they are using electricity and take advantage of new tools and services to manage their energy use. With proper privacy safeguards and consumer protections, a smarter electricity system can benefit all consumers.”
• Securing the grid: To keep the grid safe, the administration will make sure grid operators have access to actionable threat information to the electric grid, support research and development for better cybersecurity measures, and work with private sector stakeholders to establish accountability for meeting cybersecurity standards.  

Sources: POWERnews, White House, USDA