Duke Energy, American Transmission Co. Form Joint Venture

Duke Energy Corp. and American Transmission Co. announced the creation of Duke-American Transmission Co. (DATC), a joint venture that will build, own and operate new electric transmission infrastructure in North America.

DATC is well-positioned to help address increasing demand for affordable, reliable transmission capacity in the U.S. and Canada, according to the companies. DATC has begun identifying opportunities to build, own and operate new transmission projects that meet potential customers’ capacity and voltage requirements.

DATC will own all transmission assets it builds and operates. Equity ownership of DATC will be split equally between Duke Energy and ATC.

The joint venture will operate as a transmission utility. As a result, it will be subject to the rules and regulations of the Federal Energy Regulatory Commission, MISO, PJM and other independent system operators, as well as states in which DATC develops projects. The structure of their new joint venture allows Duke Energy and ATC to continue developing transmission projects independently.

Navigating the Road to Smart Grid—Modernizing the Critical Communication Infrastructure

By Rilck Noel, Verizon

Every day, utility industry employees deal with a frustrating, double reality. They work in an industry that powers the digital age, yet many utility operations and systems depend on old-fashioned, largely analog technologies. But change is coming in the form of smart grid using digital technology to help create positive outcomes for all utility industry stakeholders.

It’s important to remember the technical layers that make up smart grid when developing a transformation strategy. At the highest level, smart grid’s technologies can be sliced into three layers:

  • Power layer: power generation, transmission, substations, distribution grid and energy consumption.
  • Communication layer: local area network (LAN), wide area network (WAN), field area network (FAN)/advanced metering infrastructure (AMI) and home area network (HAN), supporting information technology (IT) infrastructure.
  • Application layer: demand response control, billing, outage control, load monitoring, real-time energy markets and a new range of customer services.

Although communications is not the primary focus of utilities, smart grid requires a strong communication network that can support the traditional utility functions in the power layer. It also must have the flexibility to adapt to the new requirements in the application layer. It must support demand response, advanced metering devices and distributed energy sources. The communication network must provide seamless integration and real-time communication and manage the flood of data being produced by the components of smart grid, all while maintaining security.

Bridging Communication Technologies With MPLS

The utilities communication network handles traffic for data acquisition, metering information and corporate voice and data. The requirements for these traffic types vary, making it more complex to manage and secure. Much of that traffic runs over private and proprietary Layer 2 protocols, while a fully integrated and optimized grid network will run over Internet Protocol (IP) Layer 3 protocols. Most utilities aren’t ready to replace legacy communication systems fully with IP-based communication, so a hybrid approach is needed. Bridging that gap is a technology called Multiprotocol Label Switching (MPLS) that consolidates multiple communication protocols by creating virtual circuits, allowing it to manage Layer 2 and Layer 3 traffic. The virtual circuits allow Layer 2 traffic to flow through devices with IP addresses but on a separate segment with no IP connectivity. This integration is critical to preserve still valuable legacy assets while enabling smart grid’s broader communication needs.

MPLS provides flexibility in how traffic is handled across the network by allowing it to be prioritized, giving priority to mission-critical traffic. For example, supervisory control and data acquisition (SCADA) traffic can be tagged for priority delivery to the master controller. MPLS also provides resilience. By segmenting AMI, SCADA and substation traffic, each component remains protected even if another is compromised. Traffic can be rerouted quickly as needed.

MPLS also can be configured to separate private and public data logically. Where public and private data travel over the same physical circuits and routers, additional security should be provided at the provider edge to protect those elements from attacks.

MPLS consolidates disparate traffic into a single network, reducing capital and operating expenses. In addition, MPLS can help utility companies meet North American Electric Reliability Corp. (NERC) critical infrastructure protection (CIP) standards, managing the Layer 2 assets while providing full Layer 3 routing as the assets evolve. MPLS can integrate legacy communication networks, providing an efficient hybrid network approach, and it also can connect IP networks, providing an easy migration path to incorporate additional IP-enabled components in the future.

Lifting Data Into the Cloud

It will be difficult to predict how much to scale the current infrastructure to meet the data growth from smart grid. With some utilities keeping as much as 36 months of meter reads, storage requirements quickly can reach exabytes of data. As with the energy systems of yesterday, many utilities will build data centers to handle peak demands. This often could leave periods of underutilization resulting from an overbuilt infrastructure and could create an unfavorable return on investment.

Many companies are embracing cloud-based services for managing data. Cloud-based services help reduce capital expenditure on hardware, software and services by paying a cloud provider only for what is used. This leaves critical capital expenditure dollars available for other smart grid initiatives. Usually there are little or no up-front costs, and contracts can be terminated any time, avoiding potential return-on-investment risk. The services are backed by service-level agreements (SLAs) with financial penalties for noncompliance. Other benefits include:

  • Shared infrastructure costs,
  • Real-time scalability on a pay-for-use model,
  • Offsite and managed disaster recovery,
  • High levels of availability, and
  • Reduced maintenance and energy costs.

Probably the biggest advantage is that cloud computing is often more secure than today’s enterprise. Cloud providers have specially trained security teams, top-notch equipment and security protocols that stay current with the latest threats—something most IT organizations, not just utilities, struggle to keep up with.

A more incremental approach is to consider managed services. Outsourcing data management to an expert vendor allows IT resources to focus on essential new business and technical initiatives. Vendors with expertise in data management can improve data center efficiencies through server virtualization. Virtualization helps consolidate multiple applications onto a single server in what is called “virtual instances,” which then reduces the total number of servers needed.

In addition, data management experts can help implement a multitiered storage strategy that offloads less-active or archived data to less expensive storage media, yet keeps the important and active data close to the system that needs it. These same experts often deeply understand data and system security, including identity management protection methods.

To meet smart grid’s new requirements quickly and cost-effectively, the communication layer requires an infrastructure that supports legacy systems and architecture and will be flexible and scalable enough to accommodate changes. And it must do so in a secure manner, meeting CIP-compliance requirements.

Rilck Noel is vice president of the global energy and utility practice at Verizon.

Demand Response: It’s All About the Customer

By Chris King, eMeter Corp.

The smart grid promises tremendous benefits to utilities, consumers and society—as much as $131 billion a year, according to a recent McKinsey study. Among these are utility operating efficiencies, better use of existing grid assets and greater reliability. Most of the benefits—three-quarters of the total in McKinsey’s analysis—are on the consumer side of the meter: reducing peak demand to avoid constructing new power plants, improving energy efficiency (including conservation voltage reduction) and integrating distributed renewable energy resources.

Demand response is a broad concept. It includes any energy-user actions that respond to data from a utility directly or indirectly. On the activity side, demand response includes any consumer act to reduce peak demand, to shift usage to off-peak hours or to lower total energy consumption. It may mean actively managing electric vehicle charging and other usage. Or, it can be a set-and-forget system to run appliances during low-price, off-peak hours or adjust thermostats to cut consumption automatically during high-priced peak or critical-peak periods.

Demand response is also about using energy more efficiently; doing more with less. Using information from smart meters, consumers can identify inefficient appliances and replace them with new ones. The information also reveals when energy is being used but is providing little or no consumer value. This might include lights or appliances left on in vacant rooms, heating or cooling unoccupied space or unintentionally venting conditioned air to the outside via duct leaks. Another good example is vampire loads: phone chargers, televisions and other devices in standby mode and other appliances with continuous, low-wattage loads performing unnecessary functions.

Demand response commonly is divided into two categories: reliability and economic. Demand response is used for reliability when there are insufficient power plants or other resources available to meet the current power demand. The extreme form of reliability demand response is rolling blackouts, when utilities must turn off entire circuits to balance supply and demand. Recent examples occurred in Texas in early 2011, when natural gas pipeline equipment froze so that power plants could not operate, and following the 2011 Japan earthquake and Fukushima nuclear plant failure.

Reliability demand response programs often have been called interruptible programs. Utilities started these programs several decades ago with a handful of their largest industrial customers. These customers—cement plants, air products companies, paper mills, aluminum smelters and other high-energy, low-labor operations—agreed to provide major load reductions in emergencies in return for rate discounts. The emergencies typically occur no more than a few days a year and a few hours on event days. The same concept was extended to residential consumers in the 1980s, with control switches placed on air conditioners. In return for annual incentive payments of up to $100 per summer, such consumers agree to allow utilities to turn off or cycle (e.g., turn off for 50 percent of each hour) their air conditioners. Tens of millions of consumers in the U.S. have participated or are participating in such programs.

Economic demand response programs involve dynamic pricing. Dynamic pricing rates include several options under which consumers pay more for power during times when wholesale prices are higher—usually at peak times—and less at other times. Time-of-use (TOU) rate schedules assign pre-determined rates to pre-defined time periods. For example, during summer, the afternoon rate charged is generally higher than the night rate charged. Critical-peak pricing (CPP) or peak day pricing (PDP) describes rates where a very high rate will apply to a customer’s usage during CPP events (typically up to 15 events per year, four hours per event). In return, the customer gets a small discount during the other hours of the year. The CPP event is triggered based on system conditions, such as high temperature, and customers are notified a day ahead. Real-time pricing (RTP) rates are based on prices in the wholesale energy market, subject to change hourly and usually communicated to customers a day ahead. Peak-time rebate (PTR) is the carrot rather than the stick: a program that provides the customer a rebate on a per kilowatt-hour basis for reductions in the customer’s usage below a threshold level on days when a PTR event is called. The baseline is specific to each customer and is based on the customer’s prior usage for specific days prior to the day of the PTR event.

As utilities continue to roll out smart meters, implementation of demand response pricing programs will have a huge impact on delivering the smart grid’s benefits to consumers.

Chris King is the chief regulatory officer of eMeter.

Accenture Study: Consumers Would Buy Electricity, Products, Services From Nonutility

Most consumers would consider buying electricity and energy efficiency solutions from companies other than traditional energy providers, according to Accenture research.

“Revealing the Values of the New Energy Consumer,” a survey of 10,199 people in 18 countries, found that 73 percent of consumers would consider buying electricity, energy efficiency products and related services from companies other than traditional energy providers. The survey also found that:

  • More than half (59 percent) would consider buying electricity, energy efficiency products and related services from product retailers: 49 percent from cable, phone companies or both, and 45 percent from online sites, brands or both.
  • When considering the purchase of energy-efficient products such as smart thermostats, 54 percent would opt for their electricity suppliers, 50 percent would consider buying from retailers, 32 percent from online sites, and 22 percent from cable, phone companies or both.
  • At least 90 percent of respondents in China, South Africa, South Korea, Singapore and Brazil would buy electricity, energy efficiency products and related services from nontraditional electricity providers, compared with 23 percent in France, 50 percent in Belgium and 59 percent in Germany.

While impact on electricity bills remains the main factor, respondents considered other elements when adopting electricity management programs. Most (57 percent) would adopt an electricity management program even if it did not reduce their electricity bills. Almost a third (29 percent) would adopt a program that required them to pay 5 percent more on their electricity bills.

Smart consumer technologies will be key components of energy management programs as customers look for greater convenience and mobility:

  • 60 percent of respondents would be interested in technology that can automate completely their electricity management.
  • 35 percent would install a smart device that automatically turns on or off pre-selected appliances, a “set and forget” program.
  • More than a third would be interested in monitoring and managing their usage through personal electronics (36 percent).
  • 35 percent would be interested in the ability to customize the design of the in-home display or online portal of their electricity management program.
  • Mobility is important with almost a third (32 percent) of consumers interested in applications they can download on their mobile phones to measure their consumption in real time.

Accenture’s study is based on an online survey conducted in native languages with 10,199 residential end customers in 18 countries during December 2010.

For more on demand response and energy efficiency, see the related features in this issue, starting on page 30.


Eurelectric Studies Efficiency

Eurelectric in April announced strong support to ramp up the market for energy efficiency services. Eurelectric conducted a survey among some 150 electricity companies across Europe assessing the extent of providing energy efficiency services, the barriers still facing the sector and possible opportunities to overcome these barriers.

Preliminary results suggest that more than four out of five companies already promote energy efficiency services in the electricity sector. In addition, there is a strong expectation that this business will expand in the next five to 10 years if the markets are developed properly and barriers are removed.

Among the main barriers to the development of an effective market for energy efficiency services, electricity companies have identified:

  • A lack of awareness and interest among customers, particularly because of high transaction costs and difficult access to capital, together with weak price signals,
  • High risks related to the delivery of energy efficiency services, and
  • Uncertainty surrounding regulatory support, often caused by conflicting policies.

Eurelectric called for EU policymakers to address these barriers. Energy efficiency must become a profitable business in itself, leading to a robust internal market for energy services, energy-saving techniques and practices and commercial opportunities, they noted. 


By Patty Durand, Smart Grid Consumer Collaborative

In March 2010, a handful of industry leaders came together around the conviction that the energy industry faces an urgent need to find a new way forward in an era that is rapidly redefining the relationship between energy providers and consumers.

The Smart Grid Consumer Collaborative (SGCC) was their brainchild: a way to pool resources to learn what consumers need and how to engage them productively as energy system participants. Founding members Southern California Edison, American Electric Power Co. Inc., the GridWise Alliance Inc., IBM, General Electric Co., Magnolia Audio Video (Best Buy), Duke Energy Corp., Silver Spring Networks, Progress Energy, Ember Corp., Control4, and Stoel Rives LLP soon were joined by prominent utilities, vendors, research laboratories and consumer advocacy groups.

We’ve attracted members such as Google Inc., Oracle Corp., Landis+Gyr, and the Environmental Defense Fund—quickly exceeding our first-year goal of 50 members—and now have more than 65 members representing a balance of consumer, regulatory, business and research interests.

Our organizational model is different from anything else. We encourage consumer and environmental advocates to join and to participate fully in setting agendas and in all aspects of the group. As a 501c3 nonprofit, we provide forums for all stakeholders to access consumer research and educational resources. We provide resources and venues for technology vendors, utilities and consumer advocates to learn from and influence each other, collaborating toward a modern electric grid that protects consumers and keeps their wants and needs front of mind.

Thanks to the dedication and support of our members, in our first year we were able to make major contributions to closing industry knowledge gaps:

  • “2011 State of the Consumer Report”: An analysis of more than 80 consumer smart grid studies and white papers. The report distilled its findings into 10 major topics with data and bibliographical references to support and encourage further study and application by readers.
  • Focus groups: A three-city project gathering primary insight into consumer needs, wants and attitudes provided additional needed insight.
  • “Partnering for Progress Symposium”: Just before our first anniversary we hosted a half-day symposium in conjunction with DistribuTECH Conference & Exhibition 2011, where nearly 200 media, analysts and industry leaders gathered to discuss issues and delve into the SGCC-produced research released at the event.
  • Meeting: Our inaugural annual members meeting in February included a forum for to brainstorm with the Department of Energy’s Office of Electricity to identify and prioritize smart grid consumer education efforts.
  • Symposium: We co-sponsored another dynamic half-day consumer symposium during Connectivity Week in May, where further debate and discussion focused on best practices for consumer communications and more.

The first year has been marked by growing support from industry stakeholders seeking a leadership role in changing societal perspectives and building a modernized grid as a national priority. Our 2011 research and outreach has uncovered much more that is needed to support successful consumer smart grid programs.

SGCC members are providing input to define and fund additional shared-cost studies and sharing resources to empower all stakeholders to learn from one another. SGCC committees are shaping additional plans for education and outreach, too:

  • Education and outreach are a major part of our 2011 plan. Outreach is ideal for the SGCC’s collaborative, shared-cost approach. Early collaboration with consumer advocates ensures the messages are accurate and appropriate. Sharing best practices helps accelerate learning for smart grid projects across the country.
  • As lessons learned pour in, the SGCC is compiling a best practices cookbook, including pull-out pieces featuring successful consumer engagement program models for utilities to apply to local situations.
  • The SGCC website continues to grow into a solid resource for consumer information. It includes more than a dozen miniprofiles of successful customer engagement programs, along with periodic research insights.
  • We have two short videos on our website with short interview segments from members sharing perspectives on consumer engagement with the smart grid.
  • Members-only forums such as committee meetings and virtual discussions provide a safe place to ask questions, share concerns and learn from others’ mistakes and successes.

We’ve set ambitious goals to continue serving our educational mission. To succeed we need continued growth. We have important research in the pipeline regarding consumer messaging and consumer polling. We’ll be producing consumer-facing informational pieces on smart grid health impacts, data privacy and more. Other pieces will ensure consumer voices can be heard regarding what they like about their smart meters and energy management tools. The SGCC was formed a year ago to foster positive communications to bring forth a new, smarter era for U.S. electricity. If you’re a stakeholder, get involved.

Patty Durand is executive director, of the Smart Grid Consumer Collaborative.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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