BY LINDA JACKMAN, ORACLE UTILITIES
In recent years, much attention has been paid to the supply side of the electric grid and to smart grid technology and processes applied to the production, transmission and distribution of electricity to consumers.
There are many consumer-or demand-side-benefits to this technology, including increased reliability of electricity, shorter outage durations and the increased ability to use new customer usage data provided by smart meters to better provide those customers with the best options in demand-side management (DSM) programs.
“Enterprise smart grid” refers specifically to the application of smart grid concepts to the demand side of the electricity-usage equation. The conceptual difference between enterprise smart grid and utility smart grid is this: Enterprise smart grid focuses on energy reduction from a commercial, industrial or institutional standpoint using a set of technologies that typically start at the utility main meter and center on specific loads and energy types.
More specifically, enterprise smart grid uses submeters, demand response and energy management software and building management systems to drive reductions in energy use beyond the meter. These solutions typically are owned and managed by commercial, industrial or institutional consumers rather than electric utilities.
As defined by Groom Energy, the organization that coined the phrase, it is “an intelligent network for understanding and managing dynamic energy consumption within a large organization with linkages to business decision-making and the company’s P&L. The networked application includes digital metering and control technologies which enable energy managers and operators to monitor where, when and how energy is being consumed, while optimizing consumption based on business rules, embedded intelligence and behavior change.”
The Changing Face of Demand-side Management
Electric utilities have two choices for managing customers’ demand for energy.
The first, supplying more energy, is the way utilities have been managing for years, adding megawatts to the mix by building more power plants, buying additional energy or investing in more renewable projects.
In recent years, however, a focus on the “negawatt,” or the energy not consumed, has become increasingly important to avoid the massive costs of adding new megawatts to the grid. Managing that demand side of the equation has grown to include energy efficiency (in appliances and lighting), demand response (such as smart thermostats or other load-shifting programs), grid-side resources (such as distributed generation and energy storage) and other energy management resources, both residential and commercial.
It’s a balanced mix that is opening doors to many energy savings options. Energy efficiency programs promote future reduction of consumption through efficiency measures and education and are considered more longer-focused objectives. Demand response programs, conversely, promote immediate change of consumption by shifting or reducing load through incentives or pricing mechanisms. And finally, grid-side resource programs add resources (such as solar, wind, storage and virtual) to offset energy demand.
The objective in DSM is to have the ability to reduce the amount or timing of energy consumption. This helps increase energy reliability and customer satisfaction-of primary importance-while behaving in a more environmentally responsible manner as a utility.
Why it’s Useful
The success of DSM programs mainly depends on how big a portion of the total energy load is controllable, according to the IEEE’s “The Role of Demand Side Management.” It says the emergence of new equipment, such as plug-in electric vehicles, is expected to make a large demand on the grid in coming years but through special pricing programs and incentives, they offer an exceptional opportunity to increase the percentage of controllable load, as well.
Take demand response, for example. As more U.S. utilities introduce demand response programs-incentive-based and time-based-the potential resource contribution from demand response continues to rise. According to the Federal Energy Regulatory Commission’s (FERC’s) “Assessment of Demand Response and Advanced Metering Staff Report” from 2012, that number is estimated to be nearly 72,000 MW, or about 9.2 percent of U.S. peak demand. This is an increase of about 13,000 MW from the 2010 FERC survey.
The FERC survey also notes that reported potential peak reductions by commercial and industrial customers increased 31 percent, the largest increase of the three customer classes. This increased potential has been attributed to the existence of new and expanded demand response programs, along with improved reporting of existing programs. It also indicates there is a place for customer-managed intelligent energy networks.
An enterprise smart grid also offers large energy customers the opportunity to better manage their energy costs. A comprehensive approach-including more visibility and control over demand response programs and a better ability to measure and verify demand reductions for rebate purposes-allows companies to better track and manage what is usually one of their biggest expenses: energy use.
Visibility, Control and Accurate Analysis
As mentioned, enterprise smart grid applies smart grid concepts to the demand side of the energy equation with a focus on three fundamental capabilities for the company: visibility, control and management integration, according to Groom Energy’s “Enterprise Smart Grid-An Overview.” The enterprise smart grid market continues to grow and evolve as market participants already involved with utility smart grid hone the focus of their hardware, software and metering technologies to assist large consumers deal with their energy usage better. Individual commercial, industrial or institutional consumers gain through the integration of these technologies greater visibility and control over energy consumption and the ability to analyze the resultant energy usage data to set and monitor key performance indicators, carbon accounting and more.
As important as the role that it plays in the overall utility smart grid equation, data analytics plays a critical role in the success of an enterprise smart grid deployment. Reporting-whether to utilities or government agencies within the boundaries of energy rebate programs or to a board of directors or investors about the company’s profit and loss statement-becomes easier, and that’s just the beginning.
Just as utilities are experimenting with mash-ups of the disparate types of new data they are collecting with smart grid technology, so too can commercial, industrial and institutional customers begin to experiment with these types of data mash-ups. An enterprise smart grid offers the ability to determine a company’s basic energy load profile and what affects it and to experiment with changes in usage and determine how each affects the bottom line. Energy usage is integral to any company’s expenses, and being able to delve deeply into the possibilities for change to that bottom line can make a positive difference to a company’s potential profits.
The Utility Perspective
So what does enterprise smart grid mean for individual electric utilities? First, it offers the potential for increased demand response program involvement by commercial, industrial and institutional customers-those who consume the most of the energy load. This increased negawatt usage balances the utility’s need to build or purchase new generation to feed the demand.
Second, an aware and intelligent consumer-especially a large one-becomes a utility’s best partner. This more intelligent end-use balance of commercial/industrial/institutional demand means the utility can focus on reliability and optimum load shaping to increase its operational efficiency and the healthy longevity of its assets, thereby keeping its electricity prices as low as possible for its entire consumer base.
Finally, it could create new and deeper partnerships between a utility and its largest consumers. The opportunities provided by enterprise smart grid open doors to utilities to better discuss with large consumers how specific smart grid technology has assisted the utility and how a similar approach might assist the customer company.
Linda Jackman is group vice president of industry strategy at Oracle Utilities.
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