Smart talk Directly from the DOE

By Kathleen Davis, senior editor

For this New Year’s issue of UAE, we’re talking a lot about the smart grid–how to define it, how to develop it, what the future holds. One of the biggest proponents of the smart grid concept is Kevin Kolevar, Department of Energy assistant secretary for electricity delivery and energy reliability. He recently answered a few of our questions about the smart grid.

KD: We bat around the it phrase of smart grid a lot in this industry. From your point of view, what constitutes the smart grid exactly?

Kevin Kolevar
DOE Assistant Secretary for Electricity Delivery and Energy Reliability
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KK: In short, the smart grid is the convergence of information technology (advanced sensing, communications, and control) with power grid operations and planning (both transmission and distribution) to make the grid more cost effective, reliable, robust, secure and clean. The smart grid can also be described as enabling seven key functional characteristics as follows:

  • Optimizing assets and operating efficiently;
  • Accommodating all generation and storage options;
  • Enabling new products, services and markets;
  • Enabling active participation by consumers;
  • Anticipating and responding to system disturbances in a self-healing manner;
  • Operating resiliently against physical and cyber attack and natural disasters; and,
  • Providing the power quality for the range of needs in a digital economy.

For example, at the head of the system–in control centers and reliability coordinators–the key is the integration of advanced sensors, high-performance computing, and wide-area measurement and control systems. At the roots of the grid, the system is focused on engaging customer-level resources:

  • Revealing to customers–in the form of cost-savings environmental benefits or other incentives–the localized value derived from reducing demand or operating distributed generation or storage (including renewable energy sources).
  • Communicating that value to customers and measuring or confirming their responses in real time.
  • Streamlining resources to allow customers and utilities to take full advantage of the value offered by managing the grid to fit their individual needs.

KD: During the GRIDWEEK conference in D.C. in September you stated that “the era of cheap energy is over.” How expensive do you expect electricity to be for the average consumer in the future?

KK: Prices are difficult to predict, but several things are known:

  • The cost of generating renewable energy is currently higher than traditional sources of generation.
  • Various long-term forecasts of the impact of monetizing carbon point to potentially $50/ton CO2, which translates to about 5 cents per kWh. That price point is well into the future but it indicates a general increase in future power costs.
  • The costs to modernize our energy infrastructure will affect energy prices.

In addition to the upward cost pressures in fuel and carbon management, related commodities such as the cost of the steel, concrete and other materials that go into the generation and transmission and distribution infrastructure will increase as global energy demand continues to grow–as witnessed from the Asian economies over the past five years. However, aggressive use of demand-side technologies in overall power systems and greater efficiencies realized through smart grid applications can provide some downward pressure on price and help mitigate future infrastructure expansion costs.

KD: Smart grid technology, from communicative SCADA to smart reclosers to intelligent meters, is, indeed, pricey. As an industry, we seem to dance around the discussion about who pays for this technology and how? Will consumers see much higher rate bases to cover the costs or perhaps a state or federally sponsored tax use, or perhaps both? How will the costs of the smart grid be absorbed?

KK: Investment in smart grid technologies and systems, like other infrastructure investments, will need to be justified based on the benefits they deliver for a specified cost. That is, it needs to prove itself as a cost-effective way to mitigate some of the need for new infrastructure that will drive up costs–infrastructure that is needed to keep our grid reliable and supply the electricity needed by our economy. The smart grid could also play a critical role in managing renewable generation as we strive to reduce the carbon footprint of our electric system.

The variable nature of renewables greatly increases the complexity of managing the grid and keeping it stable. The smart grid will play a major role in helping us effectively integrate significant amounts of renewable generation while limiting the costs of doing this.

One way to finance the up-front investment to build the smart grid is to allow utilities to make that investment and get a rate-of-return on it just like they do with traditional infrastructure investments. Because financing costs directly impact electricity rates, it will be essential that industry show that the smart grid is a prudent, cost-effective approach that keeps prices lower than they would be otherwise.

KD: Do you see the current financial crisis impacting the acceptance and widespread implementation of smart grid technology across the U.S.?

KK: It’s hard to say. It may reduce the likelihood that tax benefits targeted toward promoting the smart grid can be accommodated in the federal budget. So, we may have to look at other mechanisms. Take for instance, the interstate highway system, which was ultimately financed by the gasoline tax–but look what it has done for our national economy. Most people would look at that as a prudent investment in infrastructure.

KD: Looking at 2009, what is the one most important thing that needs to happen this year to advance the smart grid significantly?

KK: The single most important development needed now is to unequivocally make the business case–showing utilities and regulators that the smart grid is a prudent investment, and building into it the appropriate incentives for those making the required investment (whomever that turns out to be).

KD: What does your office, the Office of Electricity Delivery and Energy Reliability, see as the top five goals you have to advance the smart grid within the next decade?

KK: These are goals the administration shares with industry, and our role specifically within the Department of Energy is to serve as a catalyst, leveraging private-sector investments, and where necessary, making federal investments:

  • Prove the business case and develop means of verifying it as we go forward.
  • Develop technology and approaches to customer engagement that enable demand response to be deployed on a large scale.
  • Develop the technical means and to realize more value from demand response, distributed generation and storage by enabling them to offer reliability and ancillary services.
  • Develop and demonstrate advanced sensing, computing, visualization and control strategies for operating the transmission grid more reliably and efficiently–especially as we seek to increase the use of clean, renewable resources integrated into the grid.
  • Helping promote interoperability–the realization of a plug-and-play approach will make connecting customer-level resources simple, automatic and secure.
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KD: If you had ultimate power–a god of the grid, if you will–how would you arrange the pieces of this smart grid puzzle?

KK: Today we have roughly 4,500 utilities that vary from fully integrated, investor-owned utilities to wires-only utilities to municipals and co-ops. We have more than 130 control areas in North America, a dozen or so independent system operators and regional transmission operators, increasing supervisory responsibility to regional and national reliability coordinators, and lots of merchant generators and power marketers. Investment decision making is spread across all these entities, each with their own balance sheet, and subject to state or federal regulation (sometimes both). This is a very tough environment for making the kind of rational, integrated decisions needed to realize a truly modernized smart grid that meets our nation’s needs.

I would first promote interconnectionwide decisions on investment priorities. My priority would be to deploy systemwide advanced-phasor technologies to provide an MRI (magnetic resonance imaging) of the health of the transmission and distribution system. Simultaneously, I would like every consumer to have the ability to understand, measure and control their electricity consumption through a residential or commercial energy management system. Countries with the ability to make integrated nationwide decisions on power grid issues may leapfrog the United States if we do not find a way to promote at least regionally investment in our electric infrastructure.

KD: Your office has divided the smart grid into technology we can place into the current grid to help the process and the future interactive smart grid that is self-healing and communicative. In your opinion, when will the latter come to fruition?

KK: To meet our nation’s growing energy needs, we must continue to integrate emerging technologies and implement bold policies that ensure clean, affordable and reliable supplies of electricity to the American people. The Department realizes the tremendous value of developing the next-generation technologies, tools, and techniques for electricity-delivery systems, including smart devices to enhance the efficiency and reliability of our nation’s aging infrastructure.

This deployment will be an evolutionary process that will likely take a decade, maybe two, to fully realize. There’s a lot of existing infrastructure that we’re not going to abandon, but it will eventually be displaced by new, smarter infrastructure. So, while a fully modernized smart grid will not happen overnight, the department sees this as an extremely high priority, critical to our nation’s future energy security, and we are continuing to make investments in key research and development initiatives to ensure this vision turns into reality.

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