Session 1 of a 5 Part
GE Energy Series on the Smart Grid
The Smart Grid … Lunch and Learn
Session 1: The Smart Grid and its
Benefits
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Smart Grid Learning Series
Session 1: The Smart Grid and its Benefits
Session 2: The Smart Grid… The Consumer View
Session 3: The Smart Grid… The Distribution View
Session 4: The Smart Grid… The Transmission View
Session 5: The Smart Grid… The View from Rural America
2
Session 1: The Smart Grid and its Benefits
Topics:
The Grid … An Overview
The Benefits of a Smart Grid
Good Things Enabled by the Smart Grid
• Renewable Intermittent Generation. i.e. Wind
• Renewable Dispatchable Generation i.e. Landfill Gas, Geothermal
• PV Solar
• Plug In Vehicles
• Demand Side Management
Calculating the Benefits of A Smart Grid
• Utility Benefits
• Consumer Benefits
• Societal Benefits
Impact of Policy Discussion
3
Introduction
Electricity changed the world
A whole new
world
of opportunity
came into view
5
Add more capacity whenever needed
… power more opportunity. No
worries.
6
What worked in the past won’t work anymore
Old grid structures need to be updated
New grid structures are being built at
record paces
The strain on resources, fuel, siting,
building and maintenance are
overwhelming
7
Soaring energy demand
World energy consumption
forecasted to triple in
about 40 years
Source: U.S. Army Corps of Engineers ERDC/CERL TR-05-21
8
Electricity prices on the rise
U.S. sees 6.5%
spike in ’09
6.5%
electric bills
Source: EIA (Energy information Administration)
9
Outages affect everyday life … every day
Power outages force
evacuation of Woodstock
hospital 7/30/08
Woman in iron lung dies Chicago, IL
during a power outage
Storm knocks out Euro 2008
Los Angeles, CA 5/29/08
TV feed worldwide
Vienna, Austria 6/25/08
Lights out in Vancouver after
underground fire
Thousands in left without power Power outages widespread
Vancouver, Canada 6/14/08 in Texas after Dolly
Harlingen, Texas 7/25/08
Trip on Mexico's transmission
line causes national power South Africa’s power outages
outage create national emergency
5/26/08
Mexico City, Mexico Johannesburg, South Africa 2/13/08
Power outage disrupts Hynix
DRAM production Hours-long power outages anger, frustrate
South Korea, Korea 5/22/08 Pakistanis; government pushes daylight
savings 6/1/08
Islamabad, Pakistan
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Green energy takes center stage
Time National Geographic
Magazine
Changing climate
How to win the
War on global
warming
Vanity Fair April 2008
Green Issue The Economist Hispanic
April 28, 2008 Business
The future
of energy Going Green
May 2008
June 21, 2008 May 2008
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Electricity … Poised to change the world
again
“We can’t solve
problems by using the
same kind of thinking we
used when we created
them.”
- Albert Einstein
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Time is now … to shape the market
“…updating the way we get our electricity by starting to build
a new smart grid that will save us money, protect our power
sources from blackout or attack, and deliver clean, alternative
forms of energy to every corner of our nation.”
-from transcript of America’s Recovery and Investment Plan
The American Recovery and Reinvestment
Act of 2009
Pay down the cost of smart grid
investments
Matching grant program
Funding pool for pilot projects
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Today’s Grid
Today’s grid … an engineering marvel
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Grid inefficiency
Source: AEP PUC Hearing
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Aging assets
Transformer failure rate
100%
80%
60%
40%
20%
0%
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
Age in Years
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The Smart Grid
What is a Smart Grid?
The integration of two infrastructures… securely
Electrical infrastructure
Electrical
Infrastructure
Information
Infrastructure
Sources:: (1) UtilityPoint, by Ethan Cohen 7/18/0 (2) EPRI® Intelligrid
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Why?
Enables …
Energy
efficiency
More
renewables
Consumer
empowerment
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Growing Complexity In Modern Grids…
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Capabilities required to manage the future grid
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Flexibility for emerging capabilities
Wide-Area
Protection & Renewables
Automation Forecasting
Wide-Area
Monitoring Renewables
& Control Smoothing
Delivery
Optimization Demand
Optimization
Asset
Reliability Optimization
Optimization
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Standards for open architecture
NERC
Scalable Integrity
Secure Ease of use
Shareability Cost
effectiveness
Ubiquity
Openness
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Smart Grid
Benefits
Increasing grid efficiency
Commissioner Wellinghof, U.S. Federal Energy
Regulatory Commission testifying to U.S. Congress,
May 2007
Smart Grid delivers:
Utility savings: $46MM/yr (2% total load reduction)
Environmental benefits: 290K tons of CO2 reduction
Source: Energy Information Administration & GE Estimates
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Quantifying the benefits … demand response
Customers enrolled in direct load control programs, by
region
1,400,000
1,200,000
1,000,000
“Demand response is clearly the ‘killer
Customers
800,000 5 MM
600,000
customers application’ for the smart grid.”
400,000 - Jon Wellinghoff, FERC Commissioner, Dec. 29,
200,000 2008
0
RFC FRCC MRO SERC WECC NPCC TRE SPP ASCC/HI
Current potential peak load reduction, by DR program Current DR programs can reduce peak load
12000
demand by up to 41 GW (~6% of peak demand
Potential Peak Load Reduction (MW)
10000 for 2008).
8000
41 Utilities reported 13.6 GW of actual peak load
reduction in 2007.
GW Smart grid-enabled DR programs may achieve
6000
peak load reductions of 7%-22%1
4000
1Electric
Advisory Committee, “Keeping the
Lights On in a New World,” January 2009
2000
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Source: FERC Assessment of Demand Response & Advanced Metering,
ge
er
December 2008
Em
Demand Optimization – Value to Consumer
Consumer
Interface
Smart
Thermostat
Demand
Smart
lighting
Pacific Northwest National Laboratory announces the
results of two studies demonstrating consumers and
information technology can play an active role in
Smart Meter Efficient managing the grid
appliances
“On average, consumers who participated in the
project saved approximately 10 percent on their
electricity bills”
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GE roadmap for a Smarter Grid
What it is Why Utility Value/MM Customers*
$16MM/yr, 51K tons of CO2
Demand Manage peak via control Defer upgrades, optimize reduction+
optimization of power consumption generation & renewables Res. consumer savings up to 10%
Based on 1.6% peak load reduction using critical peak
pricing resulting in reduction in fuel costs and deferral
of generation capacity
Delivery Reduce delivery losses in Less energy waste and $7MM/yr,, 45K tons of CO2
reduction+
optimization distribution systems higher profit margins Based on 0.2% loss reduction and 0.5% CVR peak
load reduction resulting in reduction in fuel costs and
deferral of generation capacity
$11MM/yr, ~4.5 yr ROI
Asset Prognostics for proactive Reduced outages and Based on system-wide deployment of advanced
optimization equipment maintenance focused maintainers transformer M&D resulting in transformer life
extension and reduction in inspection,
maintenance & repair costs
Reliability Wide Area Protection & Increased network $7MM/yr
optimization Control performance & reliability Based on the deferral of the capacity upgrade of
two 220kV transmission lines for 3 yrs (each line
30 miles long with a cost of upgrade of $1.5MM
per mile)
Renewables Use of Forecasting & Compensation for Key step for meeting RPS targets,
optimization Smoothing production variability especially in areas with weak
grids
*Utility savings are approximate annual
savings per one million customers
+ $85/kW-yr peak generation capacity value
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Policy Discussion
North American trends and drivers
State Programs and Policies…Dealing with generation in a carbon constrained world
State & Market Policy…… Wholesale markets still evolving
RPS…… Evolves to become one of the solutions for GHG emissions
Energy Efficiency & Demand Response…... Increasing use of programs, impact varies
Environmental Policy….. States tackling “sticky” issues
CO2/GHG Policy….. States feel the need to take action
CAIR/CAMR….. Cleaner air
Regulations to address water scarcity.….. Usage restriction may impact gen. type & output
Transmission Expansion….. Federal & state help on the way, conflicts & timing
Fuels, Supply, & Price….. Supply & Government policy driving the fuel of choice
Natural Gas….Takes on a bigger role in generation; Can supply match?
LNG.…. The backstop for NG; Are supplies secure?
Coal/IGCC ..… Uncertain future due to policy & technology constraints
Nuclear..…The holy grail with issues
Oil..…Small role but potentially significant
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Importance of Policy Incentives
Source: EER
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Optimizing our electrical infrastructure
Through knowledge and empowerment
System capacity
Time of use rates
Demand
Base rate High Peak
2X-4X 3X–15X
Base Base
0 2 4 6 8 10 12 14 16 18 20 22 24
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Regulation must reward utility efficiency
Per Capita Electricity Sales (kWh/person)
14,000
U.S.
10,000
CA
6,000
2,000
0 1960 1973 2008
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Wind RPS and purchase obligations
Wind Issues/Outlook US Wind Installations and RPS, 2008
High $/kw costs drives continued need for
subsidies
Capital dries up, Stimulus $$ need to start flowing
National RES policy needed to drive growth
Bottlenecks driving transmission needs
Cumulative Wind Power Capacity
Projected Growth, 2000-2020(MW)
Source: EER
Capital supply & transmission constrains growth
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Energy efficiency and demand response
Trends/Observations Energy Efficiency Resource
States trying to favorably impact conservation & efficiency
Standards
Proliferation of Energy Efficiency & Demand Response
programs
Electric consumers do not see utility wholesale cost volatility
Income factor impacting demand
Activists: ban new transmission to encourage efficiency in NE
Impact
EE program impact limited, lg. size housing dampens
results
CA programs have averted construction of 15 large power
plants
NY peak shaved by 1GW during peak period by DR
program
Industry recognizing DR is cost effective and profitable
Source: Pew Center on Global Climate
States adding smart meters, transparent pricing Change
EE & DR Programs Impact Need for Gen. & T&D
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Emissions, CO2 and GHG
Regional Initiatives, Driving Uncertainty
States & Provinces taking lead on legislation
State Regulatory Commissioners target CO2 emissions
Financial burden to consumers not clearly articulated
Shift to out of state generation…impact on system reliability?
Emissions’ leakage…cost of CO2 to be a major contributing
factor; Penalties
Legislation adds burden to the states
Generation mix critical to success
NG to play a major role.
Renewables becoming more important
Proven “clean technology” can revitalize Coal RGGI
CO2 capped at 188 tons through 2014; capped at 169M tons by 2018
Efficiency & Demand response programs become more critical Midwestern Regional Greenhouse Gas Reduction Accord
Meeting deadlines very challenging Reduction of GHG emissions 60-80 % below 1990 levels by 2050
Western Climate Initiative
Reduction of GHG emissions 15% below 2005 levels by 2020,
industry wide.
Gas Generation & Renewables Big Winners
Sources: EPA, Pew Center on Global Climate Change; RGGI/WCI/CERA 37
Transmission expansion needed
Average Congestion and RMR Costs, 2001–06
$7
$6
Stagnant investment over the past 15-20 $5
years creates congestion and limits $$/MW
$4
renewable implementation $3
EPAct 2005 created NIETC, FERC $2
backstop authority to site new transmission $1
lines $0
PJN NEW YORK ISO ISO NE ERCOT
CAISO
2005-09 Federal vs. States’ rights issues
Transmission Projects Across N America
2000 investment level grows from $5B to
10B/yr by 2006, expected to reach to
~$13B/year by 2010 (2008 data)
Total transmission investments of $150
billion through 2022 (2008 data)
Legislation & Investments needed to address
Congestion & Enable Renewables Growth
Sources:, EIA, CERA, CEC 38
Summary
Economic and environmental demands are forcing functions
Investment in technology can accelerate their adoption
The Smart Grid is dynamic and must be viewed as a system
Demand response is the 5th fuel … let’s compensate for it
Policy will drive behavior
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Smart Grid Learning Series … next week
Session 1: The Smart Grid and its Benefits
Session 2: The Smart Grid… The Consumer View
Session 3: The Smart Grid… The Distribution View
Session 4: The Smart Grid… The Transmission View
Session 5: The Smart Grid… The View from Rural America
40