The Smart Grid is finally getting smarter in the middle

In the last few years, much of the focus on the Smart Grid has been on customer premise equipment (CPE) such as Smart Appliances, Smart Meters, Smart Thermostats that provide real time alerts and pricing to consumers. Utilities all over the USA have been offering rebates on this equipment, which is well cataloged at www.DsireUsa.org. Working on this side of the equation is often referred to as demand response management. But many utilities are now shifting their focus to supply side management. But even when there is attention given to supply, often the discussion turns to generation: moving away from coal (or making it so-called “clean coal”), adding capacity via renewables and perhaps natural gas.

What often goes ignored is the transmission and distribution aspects of supply. By making improvements to this middleman between the generator and the socket (which makes up the overwhelming majority of The Grid), many utilities are realizing that they can get a bigger bang for their buck. They not only have more control over this part of the grid than they do over the customer premise, but they can often deliver bigger results to their profitability by optimizing substations and power efficiency as it travels through these middle miles. According to Smart Grid News and a new report from Pike Research, “the global substation automation market will grow from $2.7 billion this year to $4.3 billion by 2020.” This new focus is being called Distribution Automation or Grid Optimization. “There are a wide range of technologies that fall into the grid optimization category – from virtual robots that troll power lines to detect early faults to software that helps utilities extend [power flow] control to increase efficiency,” according to Smart Grid News. They report that many utilities are making “an effort to improve power factor, reduce technical losses and reduce energy consumption through voltage reduction.”

Xcel Energy has created a pilot project called SmartGridCity in Boulder, CO. One solution to reduce voltage is called dynamic voltage optimization (DVO), which involves installation of equipment to centralize control of voltage regulation across the distribution system. From the substation to the end of the feeder line can cover a distance of 10 miles or more, over which there is always a drop in voltage referred to as line loss. The voltage at the end of the feeder line has historically not been monitored. This has resulted in the voltage generally being kept higher than necessary by building in extra “engineering margin” at the substation. Utilities often do this to avoid stiff penalties from local rules and tariff non-compliance. “Without DVO, utilities regulate the substation bus voltage to a level high enough to ensure adequate end of the line voltage,” according to Current, one of Xcel’s partners for SmartGridCity. Results of implementing DVO have been dramatic. Actual substation load reduction achieved in this example was between 4% to 7%. Current believes a realistic nationwide target is 3% to 5% of load. They state, “on national basis, 3% would save over $10 billion annually,” and would “reduce carbon equivalent to taking 15% of all cars in the U.S. off of the road.”

However, not everyone is pleased with the project. According to the Denver Post, “Critics call SmartGridCity poorly planned, poorly managed and a failed experiment.” One of the goals of any pilot project is to identify ideas that don’t work, which certainly happened on this project. “You didn’t have to spend $44 million to learn what Xcel did,” said Tim Schoechle, a Boulder-based smart-grid analyst. The two biggest components of Xcel’s losses on the project are the write off of technologies now deemed not viable on future projects: construction of a communication network and a particular software package. Xcel did learn many ideas that can be used, translated, and repeated on other projects. “The project’s impact will spread beyond Boulder. We invest about $200 million a year in our electric-distribution system,” said David Eves, Public Service’s president and chief executive, according to the Denver Post. “SmartGridCity is providing valuable insight to inform our investment decisions.” The biggest criticism is that Xcel learned many lessons that will be used to save them money in many states, but they are asking Colorado rate payers to foot the bill. “SmartGridCity’s price tag, now $45.8 million including interest costs, was challenged by the consumer counsel’s office — which represents residential customers and small businesses — and industrial customers Climax Molybdenum and Rocky Mountain Steel. Climax Molybdenum and Rocky Mountain Steel in filings argued that SmartGridCity was a research project, that it had not achieved its goals and that shareholders, not ratepayers, should pick up the bill,” according to the Denver Post.

Whether or not consumers are able to see the benefits, middle-of-grid projects at Xcel and many other utilities are expected to produce big savings – in operating costs as well as avoided energy generation (and therefore deferred capital expenditures on additional capacity). As more utilities divert their capital investments to the middle miles, property owners and end users may see some drying up of the free CPE of the recent past. On the other hand, some of the mid-grid benefits are dependent on data from the Smart Meters. So for properties that have not yet been upgraded to Smart Meters, the opportunity may not have disappeared.