Part 1: A Grand Vision for Smart Grid
By Wanda K. Reder
The U.S. economy is healthier today than it has been in recent years, and it is now time to position the country for prosperity. One of the most promising opportunities we have to further bolster the country’s economic vitality is to push ahead with electric grid modernization investments that bring smart grid to reality.
The smart grid vision is a transformative one: Smart grid will improve the overall performance of the grid, reduce carbon emissions, facilitate widespread use of electric vehicles, and help create a more vibrant economy and improved way of life. This article discusses the economic and lifestyle impacts that smart grid will deliver and some of the key challenges that must be overcome to fully implement this vision.
Customers Need a Better and More Reliable Electric Power Supply
Consumer loads and customer expectations have changed substantially in recent years. We’re now in a digital society and the consumer electronics category already represents one of the largest single sources of domestic electricity consumption in developed regions. Furthermore, it is well understood that electricity consumption by digital devices in the residential sector will increase significantly in the coming years.
With more and more electronic products driving electricity demand, more consumers will expect uninterrupted power availability and near-perfect power quality. And more and more commercial businesses, including home-based businesses, will need electric service assurances in order to fully operate and compete. Excluding rare events such as extreme storms like Hurricane Sandy, electric service outages for a typical customer, depending on where they live in the country, range from 90 to 214 minutes or more per year. The industry must accommodate the need for increased electrical reliability to support consumers’ digital lifestyles and to ensure the economic viability of the country’s businesses that are heavily dependent on computers and information technologies.
The shape of the load has also changed substantially, due in large part to the increasing penetration of air conditioners that create occasional but severe peak loads. Utilities have deployed additional, centralized generation along with the necessary transmission and distribution facilities to accommodate these conditions but the strategy is costly because peaks typically occur less than one percent of the time per year. The industry must find ways to accommodate load growth and deal with peak conditions without building capital-intensive infrastructure that is used so infrequently. Centralized generation is also inefficient because approximately 15 percent of power transmitted today is lost as it travels across the grid from generation to the end-use. These losses are in addition to the losses that occur during the generation process. Combined, the losses associated with electricity generation and delivery are staggering: For example, when a home consumes 1 kWh of electricity, 3.4 kWh are used to generate and distribute it, according to the U.S. Department of Energy. Losses of this magnitude exacerbate the costs to supply power centrally to meet peaking condition.
The inefficiency of centralized asset utilization in the United States has been characterized recently in a study by Paul Centolella, published by ElectricityPolicy.com, which found that the average electric generation capacity factor has been below 50 percent since 2002. According to Centolella, many transmission and distribution facilities have average utilization rates that are even lower. These rates are well below the average rates of other capital-intensive industries, which generally exceed 75 percent. Centolella warns, “As the power industry heads into another major investment cycle, its failure to use its capital assets efficiently is a major challenge it must tackle”.