; Wiring the Smart Grid for Energy_savings
Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out
Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

Wiring the Smart Grid for Energy_savings

VIEWS: 2 PAGES: 21

  • pg 1
									Wiring the Smart Grid for Energy Savings:
         Integrating Buildings to Maximize Investment
                                                                                                            July 2009




                                                                                                             Author
                                                                                                Hannah Friedman, PE
                                                                                                               Editor
                                                                                                         Libby Tucker

                                                                                                 Layout & illustration
                                                                                          Krista Dorsey & Sara Morse
                                                                                                  Research support
                                                                                                     James Anthony




PECI 1400 SW 5th Avenue Suite 700 Portland, Oregon 97201 |   DIR   503-248-4636 |   FAX   503-295-0820 | www.peci.org
Table of Contents

Executive Summary ____________________________________ 1
1   Purpose ___________________________________________ 2
2   Smart Grid Basics __________________________________ 3
    The Problem _______________________________________ 3
    Building the Smart Grid Infrastructure _________________ 3
    Applications that Use the Smart Grid Infrastructure _____ 3
3   The Role of Energy Efficiency ________________________ 4
    The Big Picture_____________________________________ 4
    Past Work on Energy Savings and the Smart Grid_______ 5
    Buildings are Key to Smart Grid Savings ______________ 5
4   Are Buildings Ready for the Smart Grid? __________________6
    Problems in Buildings _______________________________ 6
    Buildings Must Work with the Grid ____________________ 7
    Commissioning the Smart Grid ______________________ 8
5   Energy Savings Using the Smart Grid _________________ 8
    Automated Diagnostics _____________________________ 8
    Energy Savings Powered by Price Signal _____________ 10
    Energy Savings Powered by Information ______________ 11
    Utility Program Planning and Verification Enhancements 12
6   A Few Key Challenges _____________________________ 13
    What Will Motivate Customers? _____________________ 13
    How Do We Get Buildings Ready? ___________________ 14
7   Recommendations for Energy Policy _________________ 15
8   Recommendations for Related Research ________________ 16
9   Conclusion _______________________________________ 17
10 Bibliography ______________________________________ 18




                                                     PECI | Wiring the Smart Grid for Energy Savings
Executive Summary

Smart grid technologies have already undergone many years of research and development, but there
is still a gap in the awareness of how energy savings fits in. We believe smart grid technology and
communications could prove to be a cost-effective infrastructure investment for utilities if the system
is designed to maximize energy savings. Energy efficiency and conservation are well-known as the
first steps towards an integrated approach for cheap, reliable, low-carbon power, since saving energy
generally costs less than building new generation. The additional energy savings potential available by
utilizing the new smart grid infrastructure should be a central objective when designing and building a
smart grid.
Electric loads in buildings represent a significant potential to maximize energy savings with the smart
grid. PECI’s long history in the commissioning industry has shown an average potential of 5-10
percent (and sometimes upwards of 25 percent) electric savings is achievable through existing building
commissioning. It’s time for smart grid investments to leverage existing programs intended to boost
energy savings in buildings.
Building operational problems are the first significant hurdle for energy savings from smart grid
implementation. To accomplish energy savings, buildings must function well and be controllable. Poorly
operating control systems prevent participation in utility demand response programs largely because the
building is not able to respond or demand response events result in uneven results. It’s imperative that
existing buildings are well-functioning prior to being asked to reduce demand.
The next big challenge is interoperability for the smart grid, and for building control systems in general.
To integrate the end-use loads into the smart grid, not only will we need to integrate systems within the
building itself (HVAC, lighting and related metering), but we’ll need to integrate these energy-consuming
building systems externally with the grid.
With attention to overcoming these challenges, commissioned buildings that work properly will be able
to take advantage of smart grid infrastructure. Building engineers, analysts, and technicians will lead the
way in actually designing and implementing smart grid integration with building systems. Potential exists
for using smart grid infrastructure to save energy through widespread deployment in four main areas:
•	   Using automated diagnostic tools,
•	   Implementing time-of-use pricing,
•	   Providing energy use information to customers, and
•	   Enhancing utility program delivery.
It’s time to get buildings ready to interface with smart grid infrastructure. To do so will take a workforce
that is skilled in fixing building controls, and progress towards automated diagnostic tools that help
detect and pinpoint problems to lessen the burden on the skilled workforce. In particular, low-cost
automated commissioning techniques that are easier to set up and use need further development to
bring them into mainstream use.
Demonstration projects that test system interaction are currently underway across the country. Research
should include energy savings estimates or measurements from smart grid demonstration projects,
understanding of how much improved information/awareness leads to persistent savings over time, and
testing of automated diagnostic tools that can hit the mainstream in the near term.
In addition, policies that encourage energy savings with the smart grid will also be of great benefit in
meeting these challenges. We recommend simultaneous investing in smart grid and energy savings,
placing conditions on federal and state funding that require decoupling or other incentives, and linking
smart grid deployment to carbon reduction goals.




                                                             PECI | Wiring the Smart Grid for Energy Savings   1 of 18
                              1.      Purpose
                              Energy savings is often cited as a significant potential benefit to
                              developing the smart grid. Yet little attention has been paid to how
                              this will happen. The strategy currently receiving the most attention
                              is installation of smart meters in homes and businesses. A handful of
                              utilities across the country have moved quickly to install Advanced
                              Metering Infrastructure, selling consumers on the idea that these
                              energy monitoring devices that communicate with the utility will save
For the smart grid            them energy and money.
to maximize energy
                              But smart meters are only tools for collecting information on how
savings, we need              our buildings use energy. Installing them does nothing to cut energy
buildings to work.            consumption or reduce greenhouse gas emissions. It’s what we do
And further, the cost         with that information (on both sides of the meter) that matters. The
                              smart grid can be designed to maximize energy savings and we must
effectiveness of
                              adopt policies and technologies that achieve this goal.
the smart grid as a
                              On the demand side, buildings hold great potential for cost-effective
whole will rely on the        energy savings made possible by smart grid infrastructure and
materialization of building   applications. But buildings must have functional control systems to
energy savings.               be able to hook into the smart grid. In other words, for the smart grid
                              to maximize energy savings, we need buildings to work. And further,
                              the cost-effectiveness of the smart grid as a whole will rely on the
                              materialization of building energy savings.
                              Unfortunately, this nation’s building stock isn’t ready for the smart grid.
                              Just as buildings need to be commissioned for building systems to
                              work together properly, commissioned buildings that work properly
                              will be able to take advantage of smart grid infrastructure. The energy
                              efficiency and commissioning industries will lead the way in actually
                              designing and implementing smart grid integration with building
                              systems. Smart grid capabilities, in turn, could change the energy
                              efficiency market. Widespread adoption of smart grid infrastructure will
                              affect how energy efficiency programs are structured and implemented
                              and will potentially magnify the energy savings achieved with such
                              programs.
                              This paper examines how utilities and the energy efficiency industry
                              can design and implement a smart grid that achieves greater energy
                              savings. While many years of research and development have focused
                              on smart grid technologies, there is a gap in the awareness of how
                              energy savings fits in. Our goal is to raise the level of discussion about
                              these issues by highlighting whether buildings are ready to integrate
                              with smart grid investments that are charging ahead. We begin with
                              an overview of the smart grid and its relation to energy savings. Then
                              we discuss the hurdles for buildings to be able to interact with a
                              smart grid. Next we emphasize four ways in which energy savings can
                              be achieved using smart grid infrastructure, and we conclude with
                              challenges and policy recommendations.




                                                       PECI | Wiring the Smart Grid for Energy Savings   2 of 18
2. Smart Grid Basics
The smart grid is more than simply installing smart meters – by
bringing an information technology to the electric grid, we will
develop numerous applications that use the devices, networking
and communications technology, and control and data management
systems.


The Problem                                                                          The overlaying of a unified
Our nation’s electrical grid is outdated and overburdened.                           communications and
Infrastructure investments over the past decades have not kept                       control system on the
pace with the growing demand for electricity. In addition, the old                   existing power delivery
grid has numerous problems including reliability and power quality,
transmission and distribution bottlenecks, as well as environmental                  infrastructure to provide
concerns that require the integration of renewable energy and                        the right information to
distributed generation. As a result, the GridWise Alliance estimates                 the right entity (e.g. end-
that utilities and their customers face a $70 billion investment to                  use devices, T&D system
update the grid to modern standards over the next 20 years.
                                                                                     controls, customers, etc.)
                                                                                     at the right time to take the
Building the Smart Grid Infrastructure
                                                                                     right action.
Smart grid investments could help alleviate these problems and
eliminate the need for costly new generation and distribution
                                                                                      - Electric Power Research
infrastructure. Other definitions of the smart grid include elements
of a national grid system needed for load balancing and renewable                     Institute, The Green Grid
integration, such as high-voltage DC power lines. For the purposes
of this paper, we limit our definition to advanced communication and
control devices that enable precise, real-time interaction with the
existing power system. Such smart grid infrastructure falls into three
categories (Global Smart Energy, 2008):
•	   Intelligent devices, such as smart meters, sensors and grid
     aware equipment.
•	   Networking technology for two-way communications, including
     pathways like cable, Wi-fi or power line carrier.
•	   Advanced control and data management systems that provide
     automated decision-making on the supply and demand sides,
     as well as meter data management systems.


Applications that Use the Smart Grid Infrastructure
Once deployed, smart grid infrastructure can be used in a variety
of applications. Just as broadband cable lines have given way to a
variety of computer and Internet applications, a two-way grid will
accommodate an explosion of applications to manage generation,
transmission and distribution, and electric loads.




                                                           PECI | Wiring the Smart Grid for Energy Savings   3 of 18
                                 Applications That Will Use Smart Grid Infrastructure

                                                        Central plant renewables, distributed
                                                        generation, cogeneration, technology
                                 Generation
                                                        for improved power quality in a digital
                                                        economy
                                                        Distribution automation/load balancing,
                                 Transmission
                                                        self-healing grid operation, remote
                                 & Distribution
                                                        disconnect and meter-reading

                                                        Demand response, energy conservation,
                                 Electric Loads
                                                        and energy storage options




                             3. The Role of Energy Efficiency
                             The smart grid can be designed to achieve greater energy savings
                             than what would be possible without it, and these energy savings
                             will make the smart grid infrastructure more cost-effective.


                             The Big Picture
                             Overlaying	the	existing	grid	with	new	digital	devices	will	be	an	
                             expensive	undertaking.	Smart	meters	alone	will	cost	about	$35	billion	
Energy efficiency and        to	install	in	140	million	U.S.	homes	and	small	businesses,	according	
conservation are well-       to	the	Center	for	American	Progress.	The	Brattle	Group	estimates	
known as the first steps     the	initial	investment	in	a	comprehensive,	nation-wide	smart	grid	will	
                             amount	to	$900	billion	over	the	next	20	years.	RePower	America	
toward an integrated         places	the	cost	at	$400	billion.	
approach for cheap,
                             Still,	smart	grid	technology	could	prove	to	be	a	cost-effective	
reliable, low-carbon power   investment	if	the	system	is	designed	to	maximize	energy	savings.
because avoiding energy      (Figure 1)	Energy	efficiency	and	conservation	are	well-known	as	the	
use generally costs much     first	steps	toward	an	integrated	approach	for	cheap,	reliable,	low-
                             carbon	power	because	avoiding	energy	use	generally	costs	much	
less than building new
                             less	than	building	new	generation.	The	additional	energy	savings	
generation.                  potential	available	by	utilizing	the	smart	grid	capabilities	should	be	a	
                             central	objective	when	designing	and	building	a	smart	grid.	


                             A	comprehensive	smart	grid	deployment	would	result	in	energy	
                             saving	improvements	from	generation	source	to	end-use	of	
                             the	electrical	grid.	This	is	due	to	reduced	power	line	losses	in	
                             transmission	and	distribution	networks,	more	efficient	voltage	control,	
                             and	lower	energy	consumption	in	individual	buildings.	This	paper	
                             focuses	on	energy	saving	opportunities	in	buildings	linked	to	the	
                             smart	grid.	
                             	




                                                    PECI | Wiring the Smart Grid for Energy Savings   4 of 18
                                                              Sm
                                                                ar
                                                                  tG




                                                                             rid
                                                                              Inv
                                 $ Savings




                                                                                 estm
                                                ENERGY SAVINGS




                                                                                     ent
                                             IMPROVES SMART GRID
                                             COST-EFFECTIVENESSS




                                                                         s
                                                                    ng
                                                  Energy S     a vi
                                                                                   Figure 1




Past Work on Energy Savings and the Smart Grid
The	Electric	Power	Research	Institute	(EPRI)	has	produced	an	
appraisal	of	the	energy	savings	potential	with	smart	grid	deployment.	
EPRI	calculates	that	the	smart	grid	could	reduce	annual	energy	                        “…the development
consumption	by	56	to	203	billion	kilowatt-hours	by	2030,	amounting	
to	a	1.2	percent	to	4	percent	reduction	in	projected	retail	electricity	               of a Smart Grid
sales	(Siddiqui,	2008).	In	their	analysis,	changes	in	consumer	                        communications
behavior	achieved	by	the	display	of	incremental	energy	data	and	                       infrastructure has the
pricing	information	with	smart	meters	across	all	building	sectors	                     potential to compound
produced	the	largest	potential	savings.
                                                                                       energy savings beyond
EPRI’s	analysis	provides	a	good	starting	point	for	estimating	the	
                                                                                       what is achievable
potential	energy	savings	with	smart	grid	deployment.	But	few	
assessments	of	energy	savings	have	been	conducted	that	would	                          through conventional
provide	us	with	more	concrete	estimates.	Smart	grid	demonstration	                     piecemeal deployments
projects	such	as	the	Pacific	Northwest	National	Laboratory’s	                          of energy efficiency
GridWise	study	on	the	Olympic	Peninsula	have	so	far	focused	on	
                                                                                       and demand response
tracking	cost	savings	and	peak	demand	reductions	due	to	real-time	
pricing	feedback,	with	less	focus	on	optimizing	energy	savings.	                       measures."
	
Buildings are Key to Smart Grid Savings                                                -EPRI, Green Grid

We	believe	that	a	significant	potential	to	maximize	energy	savings	
with	the	smart	grid	lies	in	building	electric	loads.	Buildings	are	
responsible	for	over	70	percent	of	electricity	consumption	in	the	
US		–	approximately	half	commercial	and	half	residential	(Energy	
Information	Administration,	2009).	Untapped	potential	for	energy	
savings	is	recognized	through	utility,	government,	and	private	sector	
energy	efficiency	programs	that	are	expanding	at	a	rapid	pace.	




                                                            PECI | Wiring the Smart Grid for Energy Savings   5 of 18
                                                        It’s	time	for	smart	grid	investments	to	leverage	existing	programs	
                                                        intended	to	boost	energy	savings	in	buildings.	But	buildings	must	
                                                        first	be	well-functioning	and	controllable	in	order	to	achieve	these	
                                                        potential	energy	savings.	


                                                        4. Are Buildings Ready for the Smart Grid?
                                                        Building operational problems are a significant hurdle for smart grid
                                                        implementation. The commissioning industry will play a crucial role
                                                        in creating buildings that work with the smart grid.


                                                        Problems in Buildings
                                                        Studies	have	shown	that	both	commercial	and	residential	buildings	have	
                                                        equipment	and	operational	deficiencies	that	lead	to	poor	comfort,	less-
    If we commissioned all                              than-ideal	indoor	air	quality,	reduced	equipment	life,	and	energy	waste.	
                                                        Through	examination	of	common	problems	in	commercial	buildings,	a	
    of the existing buildings                           study	for	the	Department	of	Energy	concluded	that	between	4	and	20	
    in the US that are good                             percent	of	energy	used	for	HVAC,	lighting,	and	refrigeration	is	wasted	
    candidates, we would                                due	to	problems	with	system	operation	(TIAX,	2005).		
    save approximately                                  The	commissioning1	industry	developed	to	address	these	problems,	
    15,000-30,000 GWh/year                              both	for	new	construction	and	existing	buildings.	The	existing	building	
                                                        commissioning	industry	has	shown	over	the	years	that	immense	energy	
    (9-18 million metric tons
                                                        savings	are	possible	simply	by	improving	the	operations	of	existing	
    CO2 /year)2,3.                                      equipment	and	systems.	PECI’s	long	history	in	the	commissioning	
                                                        industry	has	shown	an	average	potential	of	5-10	percent	(and	
                                                        sometimes	upwards	of	25	percent)	electric	savings	is	achievable	
                                                        through	existing	building	commissioning.	If	we	commissioned	all	of	the	
                                                        existing	buildings	in	the	US	that	are	good	candidates,	we	would	save	
                                                        approximately	15,000-30,000	GWh/year	(9-18	million	metric	tons	CO2/
                                                        year)2,3.	There	are	similar	gains	to	be	had	in	residential	and	smaller	
                                                        commercial	buildings,	but	to	be	cost-effective	the	industry	will	need	to	
                                                        customize	and	streamline	its	current	approaches.
                                                        Building	operational	problems	are	a	significant	hurdle	for	smart	grid	
                                                        implementation.	Poorly	operating	control	systems	prevent	participation	
                                                        in	demand	response	programs	for	two	main	reasons:
                                                        •	    The	building	is	not	able	to	respond	to	achieve	demand	
                                                              reduction.	Without	a	well-functioning	control	system	that	
                                                              can	implement	strategies	to	reduce	demand	(such	as	raising	
                                                              temperature	setpoints,	limiting	fan	speed,	or	reducing	lighting),	the	
                                                              utility	will	not	see	demand	reduced	in	a	predictable	way	when	it’s	
                                                              needed	during	a	peak	demand	event.		
                                                        •	    Demand	response	events	result	in	uneven	discomfort.		
                                                              Imagine	if	a	building	was	called	upon	to	reduce	load,	and	while	
                                                              all	the	controls	were	in	place	to	raise	the	temperature	setpoint	


1
   Building commissioning is the process of ensuring that systems are designed, installed, functionally tested and capable of being operated and maintained
according to the building owner's operational needs.
2
   Estimated 5-10% annual electric savings from existing building commissioning, based on PECI's commissioning industry experience. Includes all commercial building
floor area for buildings above 100,000 square feet, and discounted by 30% to account for buildings of this size that may not be good candidates for existing building
commissioning. Source for building floor area: EIA Commercial Building Energy Consumption Survey, 2003.
3
   Emissions from electricity generation calculated using the national average conversion factor 1.297 lbs CO2 per kWh. Source: The Green-e Climate Protocol for
Renewable Energy




                                                                                          PECI | Wiring the Smart Grid for Energy Savings                 6 of 18
        throughout	the	building	to	76°F,	this	action	results	in	four	offices	
        overheating	to	83°F	due	to	the	need	for	air	distribution	system	
        maintenance	and	sensor	calibration.	Without	remedy,	this	level	
        of	discomfort	would	likely	lead	to	a	reduced	level	of	participation	
        in	the	demand	response	program.				
Therefore,	it’s	imperative	that	existing	buildings	are	well-functioning	
prior	to	being	asked	to	reduce	demand.	Lawrence	Berkeley	National	
Laboratory’s	Demand	Response	Research	Center	advocates	for	
existing	building	commissioning	prior	to	participation	in	demand	
response	programs:		
“…there	is	a	need	to	retro-commission	first	to	ensure	HVAC	and	
other	building	systems	are	operating	as	efficiently	as	possible	prior	to	
DR	strategy	implementation.	Proper	pre-DR	commissioning	should	
improve	the	performance	of	DR	strategies	because	of	better	HVAC	
balancing,	optimized	comfort,	and	ideal	equipment	scheduling”	
(Kiliccote	et	al,	2008).
Similar	issues	relate	to	a	building’s	ability	to	integrate	distributed	
generation	(usually	in	the	form	of	cogeneration	plants)	or	energy	
storage	systems	like	ice	storage	with	the	grid.	These	are	generally	
complex	systems	that	need	ongoing	attention	to	be	prepared	to	
alleviate	peak	load	utilizing	smart	grid	capabilities.
	
Buildings Must Work with the Grid
One	of	the	biggest	challenges	for	the	smart	grid,	and	for	building	control	
systems	in	general,	is	interoperability.	Building	controls	systems	typically	
utilize	proprietary	programming	languages	and	are	only	beginning	to	
approach	true	interoperability	of	communications	through	effective	
implementation	of	standard	protocols	such	as	BACNet	and	LonWorks.	
Until	recently,	creating	an	interoperable	system	was	a	job	that	often	
required	expensive	gateways.	However,	integration	platforms	are	
becoming	more	widely	available.
To	integrate	the	end-use	loads	into	the	smart	grid,	not	only	will	we	need	
to	integrate	systems	within	the	building	itself	(HVAC,	lighting	and	related	
metering),	but	we’ll	need	to	integrate	these	energy-consuming	building	
systems	externally	with	the	electric	grid.	(Figure 2)
Integration	with	the	smart	grid	will	require	interoperability	protocols	for	
the	entire	smart	grid.	The	National	Institute	of	Standards	and	Technology	
(NIST)	is	working	to	develop	these	protocols	that	will	set	the	playing	field	
for	widespread	smart	grid	deployment	and	innovative	applications.4		
To	be	clear	about	what	interoperability	really	means	for	the	smart	grid,	
let’s	think	about	a	few	examples:
•	      In	residential	applications,	grid-aware	appliances	will	become	
        widespread	only	if	they	are	easy	to	install.	For	example,	a	washing	
        machine	that	receives	a	price	signal	from	the	electric	grid	and	
        correspondingly	makes	decisions	about	whether	to	operate	should	
        be	able	to	be	installed	by	a	homeowner	or	by	a	contractor	without	
        expensive	set-up	costs.	This	kind	of	plug-and-play	operation	
        requires	that	the	appliance	automatically	operates	with	the	utility’s	
        communications	network	as	well	as	any	home	energy	monitoring	
        system.			


4
    NIST is tracking progress online at www.nist.gov/smartgrid/.



                                                                    PECI | Wiring the Smart Grid for Energy Savings   7 of 18
                         •	    When	buildings	act	as	storage	and	generating	plants,	
                               their	control	systems	will	need	to	be	interoperable	with	the	
                               utility	communications	network.	To	provide	dispatchable	
                               energy	into	the	smart	grid,	these	applications	will	need	to	
                               communicate	seamlessly	with	smart	grid	communications	
                               infrastructure.	
                               		
    BUILDING SYSTEM INTEGRATION
          with the Smart Grid




                                                                           key success factors
                                       2-way
                                    communication
    integrated building controls                                           FIXING BUILDINGS
           HVAC AND LIGHTING

                                                                           COMMUNICATION
                                                                           PROTOCOLS


                                                                           INCENTIVES TO
                                                                           SAVE ENERGY AND
                                                                           REDUCE DEMAND
                                                                           BUILDING ENGINEER
                                                                           TRAINING
                                               smart grid

Figure 2



                         Commissioning the Smart Grid
                         Even	with	plug-and-play	devices,	the	smart	grid	won’t	
                         automatically	work.	We	need	to	make	sure	that	buildings	
                         respond	correctly	to	grid	needs	in	efficient	ways.	For	this	vision	
                         to	become	a	reality	we	need	to	commission	all	buildings	that	
                         interact	with	the	smart	grid.				



                         5. Energy Savings Using the Smart Grid
                         Buildings will play a key role in creating an energy efficient smart
                         grid. Further, the cost-effectiveness of the smart grid increases
                         by enabling deeper, more persistent energy savings. But how?


                         Automated Diagnostics
                         One potential way that the smart grid capabilities may be used
                         to achieve energy savings is through the widespread deployment
                         of continuous diagnostic tools for commercial buildings. In this
                         section, we will give a brief overview of diagnostic tools and the




                                                 PECI | Wiring the Smart Grid for Energy Savings   8 of 18
opportunities and challenges that exist in using smart grid infrastructure
to enable these services in the commercial sector.
Detecting problems using automated software tools continuously
over time is often referred to as “automated diagnostic tools”. These
diagnostic tools generally detect problems by using a series of expert
rules or a model to compare with actual energy data. The automated
analysis routines are employed on an ongoing basis to continuously
track building performance and flag issues for building operators to
review and act upon.
Diagnostic tools for large HVAC systems have been available
commercially for over a decade, and were initially characterized in a
study by Lawrence Berkeley National Laboratory in 2001 (Friedman
and Piette, 2001). Currently, only a small fraction of large commercial
buildings employ diagnostic tools that utilize meter-level data (whole
building electric use) and building automation system data (such as
temperatures, pressures, airflow, etc.) to diagnose problems in HVAC
and lighting systems. The main barriers for use are complexity of
software installation, cost, and difficulties tuning the sensitivity of the
diagnostic procedure to avoid false alarms or missed problems.
While the implementation of the two-way communications of a smart
grid is not a requirement for the implementation of diagnostic tools
(these tools can be implemented at the building site with local data), it
is useful to think about what benefits the smart grid might bring to this
emerging field. The benefits are related to three main areas:
•	   Ubiquitous data on a common platform: Currently, 15 minute interval
     meter data is generally available only for larger buildings or by more
     progressive utilities that have made investments in interval meters
     and data management systems. With the implementation of the
     smart grid, this data will be available on a wider scale, for smaller
     and smaller customers. It is foreseeable that the standards-making
     process for the smart grid will result in a level of interoperability that
     will allow for the development of many applications for end-users
     on top of the network and data management systems provided by
     the utility. Rather than inventing (or reinventing) data gateways or
     implementing separate data collection systems specifically for the
     purposes of collecting data for diagnostic tools, this development
     could be handled by the utility in a consistent platform. There are
     significant issues with data management that need attention for a
     common platform to be effective:
     o   There is no standard data model for exchange of 15-minute
         interval data. As a result, automating the data feed from the
         utility into different software applications is difficult and
         requires significant customized efforts at each utility.
      o Data retention can be a significant issue. While many
          utilities are putting in the metering infrastructure to collect
           interval data that allows time of day and other demand
          responsive rate structures, many do not retain the base
          data on a long term basis. Summarized results needed for
     billing are retained while the raw data is purged unless a
     customer has subscribed to a program that warehouses
     their past data. The interval data is extremely useful for
     diagnostics, but cannot be used if it is not available.




                                                                 PECI | Wiring the Smart Grid for Energy Savings   9 of 18
                                 This type of common data platform may enable greater
                                 market penetration of diagnostic tools, as software application
                                 companies provide more cost-effective solutions to the market as
                                 a whole.
                            •	   Development of diagnostic algorithms that utilize electric
                                 meter data. One challenge for utilizing electric meter data for
                                 system diagnostics is the need for integration with other data
                                 sources outside the purview of the utility. For example, diagnostic
                                 algorithms may require data such as air and water temperatures,
                                 valve and damper positions, and pump or fan speed to detect
Investments in the
                                 problems and recommend solutions. This issue begs the
smart grid may enable            question: How far into customer end-uses will the utility be able
automated diagnostics            to “see”? (The parallel question for demand response is: How far
on a wider scale than            into customer end-uses will the utility be able to control?) It is
                                 unlikely that commercial building managers will allow the utility
previously imagined,
                                 access to the data within the building automation system itself.
and lead an industry that        In fact, the interoperability challenges alone may prevent utilities
has been “emerging” for          from seeing to the system level in commercial buildings without
over a decade into the           costly gateways. Without the detailed system-level data, we are
                                 left to analyze the whole building interval meter data. While this
mainstream.
                                 data may not allow us to detect all problems, we may be able to
                                 identify some large energy-wasting issues. These issues include
                                 scheduling and unoccupied energy usage, demand peaks, and
                                 correlations of outside temperature and energy usage. This type
                                 of automated diagnostics represents a significant opportunity
                                 to detect and correct some common, low-hanging fruit
                                 opportunities in commercial buildings on a mass scale.
                            •	   The opportunity for new utility services. While the current
                                 diagnostic tool business is dominated by energy services
                                 companies or engineering consulting firms, the model may
                                 change with the implementation of the smart grid. Utilities could
                                 compete with these firms to be a provider of ongoing diagnostic
                                 services. The benefit of the utilities getting into this business
                                 is potential economies of scale and cost savings in offering a
                                 consistent platform of automated services to all customers.
                                 Rather than attempt to diagnose problems on a building-by-
                                 building basis, utilities could diagnose large groups of buildings
                                 at once, or even target certain market sectors within their service
                                 territory. Further, using this market sector approach, load profiles
                                 could be automatically compared across the market sector
                                 for further benchmarking and diagnostic outputs for specific
                                 buildings. This type of utility program delivery would require that
                                 questions around data ownership be addressed.
                            Investments in the smart grid may enable automated diagnostics on
                            a wider scale than previously imagined, and lead an industry that has
                            been “emerging” for over a decade into the mainstream.


                            Energy Savings Powered by Price Signal
                            Utility demand response programs give consumers a role in
                            managing their energy use based on the cost of power at any given
                            time. The programs are similar to congestion pricing on the highway:
                            the more traffic that enters the system, the more costly it is to use.




                                                  PECI | Wiring the Smart Grid for Energy Savings   10 of 18
The cost of power rises when the grid is strained. This utility pricing
information can be fed directly, incrementally or in real-time, to
smart meters in homes and businesses where it’s interpreted either
automatically by energy-management systems, or actively by the
customers themselves.
Portland General Electric, for example, gives its customers the
option to pay based on Time of Use if they have a smart meter
installed. The utility charges $0.11 per kilowatt-hour when demand
for electricity is the highest, $0.064/kWh when demand is at partial-
peak, and $0.037/kWh during off-peak demand times. Many utilities
employ a much greater difference between on-peak and off-peak
prices to further promote peak demand reduction. Pacific Northwest                   In the future, energy
National Laboratory’s Olympic Peninsula Project, part of its GridWise                savings can be optimized
Demonstration, went a step further by adjusting the Time of Use price                along with demand
every five minutes based on real-time electricity demand.
                                                                                     reduction to achieve both
In addition to demand reduction, energy savings can be achieved                      carbon and peak demand
through demand response programs, but only when electricity
consumption is avoided altogether and not just shifted to another                    targets.
time. For example, if a customer decides not to run the dishwasher
at 5 pm. they’ll likely still need to use it later that night, so no energy
use is avoided. The same isn’t necessarily true of an office where the
lighting is reduced in certain areas as a result of peak pricing. In this
case, the demand response activity results in actual energy savings,
not just shifting consumption to a different time.
Although demand response programs haven’t traditionally been
designed to lower energy consumption, dynamic pricing resulted in a
4 percent average savings in the (largely residential sector) demand
response programs (King and Delurey, 2005). In the future, energy
savings can be optimized along with demand reduction to achieve
both carbon and peak demand targets.


Energy Savings Powered by Information
Energy savings can also be achieved when consumers know how
their activities contribute to their overall energy use and consequently
make changes in their energy-consuming choices. Smart meters,
Web-based energy use displays or other digital meter readers
can provide constant feedback on energy use that may motivate
conscientious consumers to change their behavior in order to waste
less energy and lower their carbon footprint, for example.
However, the effect of consumer feedback on energy savings is still
an open question and requires more research into potential savings.
Initial residential studies have shown that frequent feedback raises
energy awareness and lowers energy consumption by 11 percent
on average (King and Delurey, 2005). But little information exists
on feedback savings associated with commercial and industrial
information-based programs.
We’re not convinced that most consumers, who already suffer from
information overload, will want to be constantly bombarded by more
data. Persistent energy savings may also be difficult to achieve if
consumers treat energy savings like a fad diet rather than a lifestyle
change. For these reasons, we believe the key to lasting energy




                                                               PECI | Wiring the Smart Grid for Energy Savings   11 of 18
savings through information-based devices relates to ease-of-use
and automation. By setting preferences at the outset then letting
automated programming do the rest, energy management devices for
homes and businesses can lead to real savings. We need to strike the
right balance between detailed information and the user’s ability to
respond.


Utility Program Planning and Verification
Enhancements
Up to this point, we’ve discussed the additional energy savings
opportunities that will result from demand response activities,
improved information, and automated diagnostics. But there’s
a fourth aspect of the smart grid roll out that could lead to
energy savings - utility program enhancements that improve the
effectiveness of energy savings delivery. We will discuss two main
program enhancements:
•	   Improved target market energy use intensity (EUI) and load shape
     analysis that will be available with interval meter data from every
     building coupled with better utility data management systems
•	   Ability to do more detailed and less costly monitoring and
     verification of energy savings.
Through cost savings stemming from the smart grid data
infrastructure, utilities will be able to allocate more dollars to
achieving energy savings with reduced planning costs for how to
achieve those savings and verify that the savings occurred.
Currently, utility program implementers use incomplete and often
old data for analysis of target market energy savings potential
through EUI and load shape baseline studies. The smart grid could
significantly decrease this gap in information by providing detailed
data about every building’s energy use, aggregated into useful
information through the data management systems. This information
will help utilities make decisions about where and how to spend
efficiency program dollars. For example, the energy intensity and load
shapes of convenience stores could be reported by climate zone for
more effective targeting of utility program offerings.
Evaluation, measurement, and verification (EM&V) for energy savings
programs is a costly process that often includes site surveys and
collecting energy and other data to verify the accuracy of utility
program claimed savings. With greater use of 15 minute interval
meter data, baseline and post-implementation models of energy use
can be developed to a degree of accuracy previously not achievable
with only monthly utility bills. With the ability to “see” energy savings
on the order of 5 percent using this interval meter data, utility
programs may find whole building energy use EM&V to be a cost-
effective solution for verifying savings. While this approach may not
be feasible in some project applications, it could provide equivalent
or improved accuracy of savings verification at a potentially lower
cost.




                       PECI | Wiring the Smart Grid for Energy Savings   12 of 18
6. A Few Key Challenges
Moving from early technology adoption to a fully automated grid with
significant market penetration will take more than a little ingenuity. We see
several remaining difficulties that must be overcome to achieve the type of
energy savings we envision with smart grid deployment.


What Will Motivate Customers?
The smart grid has been called the Internet for electricity. Smart grid
players are competing to develop a “killer application,” or the functionality
that will fuel smart technology adoption in the same way that e-mail
launched Internet service into the mainstream market.
Customers need a compelling reason to be active participants in the
grid. The “killer app” could be a social tool that taps into the competitive
impulse by providing customers not only with their own energy use data
but a platform to compare it to their neighbors. We think the likely winners
will be applications that build on time-of-use pricing. Energy prices are
predicted to rise over time, and the potential to save money with pricing
and demand response programs could prove to be a powerful motivator.
People will pay attention to their energy use as prices go up.
However, simply receiving energy price information won’t necessarily
motivate customers enough to propel widespread adoption. The user
interface must be easy to understand as well as provide the right level of
complexity for a variety of end-users. A residential customer, for example,
may prefer a simple user interface that doesn’t show specific pricing
information but instead allows the energy management system to adjust
electricity use based on a pre-determined setting that balances “comfort”
and “cost.” A commercial building manager, however, may prefer a much
more data-rich interface that integrates with the building’s diagnostic
tools, including tools that detect energy waste in HVAC and lighting
systems.
Google’s PowerMeter is an early consumer home energy monitoring
platform built to interface with advanced metering infrastructure. The
Internet search company has partnered with a smart meter manufacturer
and a handful of utilities to deliver meter readings to a customer’s iGoogle
homepage. The customer sees a display that tells them their demand at
the meter at any point in time, and provides metrics to help track energy
use. PowerMeter currently requires users to do some homework to
pinpoint their energy use to specific activities or appliances. For instance,
running the washer and dryer produces corresponding spikes in energy
on the display. Until appliances have embedded chips that communicate
with home energy management systems, a homeowner would need to
manually compare when they used certain appliances to their PowerMeter
dashboard to see the direct effects. Further, the PowerMeter application
currently only provides day-after data rather than allowing customers to
see their energy use in real time. This may limit the energy savings that
could be achieved with a true real-time feedback device. The Web-based
platform also allows customers to compare their data with friends and
neighbors, which may prove to be a real motivator for consumers.




                                                             PECI | Wiring the Smart Grid for Energy Savings   13 of 18
                              How Do We Get Buildings Ready?
                              It’s time to get buildings ready to interface with smart grid. What will
                              it take? There is a need for focus in two key areas:
                              •	   Training engineers and analysts in energy engineering and
                                   building control systems, and
                              •	   Expanding automated diagnostic tools that help detect and
                                   pinpoint problems in buildings to lessen the burden on the
                                   skilled workforce.
                              Currently there is a shortage of experienced building performance
There is an increasing        engineers, commissioning providers and analysts, as the skills for
demand for engineers,         these positions requires a combination of design, O&M, and data
energy consultants, and       analysis expertise. Further, there are few HVAC courses offered at
                              colleges and universities across the country. To meet the need for an
commissioning providers in
                              increased numbers of workers who have the ability to fix buildings
the new energy economy.       and prepare them to integrate with the smart grid, training programs
                              that provide a balance of commissioning process, analytics, and
                              hands-on troubleshooting experience are required. Current training
                              programs focus on the commissioning process, leaving the hands-
                              on and analytical training to occur on the job.
                              A recent whitepaper published by the California Commissioning
                              Collaborative stated “…Green Professionals are needed in large
                              numbers to bring energy efficient buildings online and maintain
                              their performance over time” (CCC, 2009). It’s obvious that there
                              is an increasing demand for engineers, energy consultants, and
                              commissioning providers in the new energy economy. While
                              green-collar jobs, including construction, installing contractors,
                              technicians, and building operators have received significant
                              attention through recent workforce development and training
                              programs, relatively little attention has been paid to the development
                              of green professionals.
                              A second key development must happen for buildings to be ready
The bottom line is that       and stay ready for integration with the smart grid: automated
                              commissioning and diagnostic tools. As we discussed previously
building systems need         in this paper, these tools need further development to bring them
to be well-functioning to     into mainstream use. The major hurdle is complexity of set-up
interact with the smart       and use, which leads to high costs. The future of diagnostic tools
grid, participate in demand   revolves around self-configuring smart devices that automatically
                              communicate with building control systems without a lengthy
response programs, and        integration process. In addition, diagnostics need to be further
achieve energy savings.       developed that use easily accessible data, such as whole building
                              electric demand and consumption. Diagnostics that can infer
                              building problems from this high-level data will be easier to
                              implement en masse.
                              Overall, there is a significant challenge in adding a layer of
                              complexity on top of fundamental building performance issues
                              that haven’t yet been addressed. Does it make sense to use the
                              smart grid infrastructure to communicate with buildings that aren’t
                              controllable? The bottom line is that building systems need to
                              be well-functioning to interact with the smart grid, participate in
                              demand response programs, and achieve energy savings.




                                                    PECI | Wiring the Smart Grid for Energy Savings   14 of 18
7. Recommendations for Energy Policy
The smart grid can be designed to maximize energy savings and we
must direct policy to achieve this goal. But how?
Smart grid investments shouldn’t outpace spending on energy
efficiency and conservation
Energy efficiency and conservation are the lowest-cost energy
resource. Funding priorities should address these needs first and
foremost. But because both commissioning activities access the
same systems and processes, these smart grid investments also
provide an opportunity to grow the supply of controllable buildings.
Ideally, smart grid implementation should occur simultaneously
with commissioning activities to maximize the potential for energy
savings.
Government funding for smart grid should be linked to state
adoption of decoupling and other incentives structures
The majority of electric utilities earn a rate of return based on the
number of kilowatt-hours of electricity that they sell. They therefore
have little incentive to design programs that aim to save energy.
When utility profits are decoupled from energy sales, energy savings
can become a priority. Such a policy has already been adopted in
California and nine other states, resulting in greater focus on energy
savings.
At a minimum, only states that require utility decoupling should
be eligible to receive federal financial assistance for smart
grid implementation. The problem is that decoupling energy
consumption from utility profits only prevents a utility from losing
money from energy efficiency programs, it does not allow them to
profit from these programs. Incentivizing adoption of energy saving
programs and practices alleviates this sticking point and should be
encouraged. Regulators should allow utilities to earn a rate of return
on investments that save energy, treating these investments in
“nega-watts” just like a power plant or other capital investment.
This year, utility regulators in North Carolina and Ohio approved
unprecedented rate cases that allow Duke Energy to earn the same
rate of return for reducing demand as it does for increasing supply.
In return, Duke is obligated to cut energy consumption 22 percent
by 2025 in Ohio. In North Carolina, the utility aims to reduce energy
use 2 percent within four years and more than 8 percent in ten
years, though there is a cap on how much the utility can profit from
the savings.
If a similar policy is adopted by regulators across the U.S., “it will
drive a massive shift in investment, away from traditional generation
and toward demand reduction strategies (and the smart grid
technologies that support it),” (Global Smart Energy, 2008).
Smart grid policy should have specific linkages to carbon
reduction goals
Proponents often tout the smart grid as a means for reducing
carbon dioxide emissions by enabling renewable integration,




                                                           PECI | Wiring the Smart Grid for Energy Savings   15 of 18
demand response, distributed generation and additional energy
savings. But it’s possible to build a smart grid that isn’t optimized for
carbon reductions, and may even increase emissions. For example,
shifting demand from peak times increases baseload power plant
operation, which is often supplied by coal-fired power plants.
Numerous efforts are underway at the state and federal levels to
address climate change and implement carbon dioxide emissions
controls. As proposed policies are still a moving target, we
won’t attempt to address specific legislation, but we support
broad recommendations for ensuring that adoption of smart grid
technologies considers carbon dioxide reduction a primary goal.



8. Recommendations for Related Research
Needs for smart grid research abounds – many technologies are
available but the ability to integrate those technologies into a system
is relatively untested. Therefore, smart grid demonstration projects
that test system interaction will be of great benefit. In conjunction
with these demonstration projects, we feel there are three key areas
for further research related to energy savings and the smart grid:
•	   Develop energy savings estimates or measurements from
     smart grid demonstration projects. For a smart grid that
     saves energy, we must answer: Are smart grid infrastructure and
     applications resulting in savings? If not, what are the barriers?
•	   Improve our understanding of how information and
     awareness leads to persistent savings over time. Persistent
     savings requires attention and acting upon information. For a
     smart grid that saves energy, we must answer: Who will look at
     and act upon automated reports? What building management
     structures need to evolve to make savings possible and lasting?
•	   Develop automated diagnostic tools that can hit the
     mainstream in the near term. We believe that there is need for
     fairly simple diagnostic tools that take what a typical building
     manager would analyze visually and make this analysis widely
     available. While more complex expert tools are also needed,
     the hurdles for implementation in terms of cost and set-up
     are significant barriers. For a smart grid that saves energy, we
     must answer: How far and fast can things automate? How can
     automated diagnostics be made plug-and-play?
We believe this research will enhance the rollout of the smart grid
and should be undertaken in parallel with smart grid demonstration
projects prior to large-scale investments.




                      PECI | Wiring the Smart Grid for Energy Savings   16 of 18
9. Conclusion
In this paper, we have promoted the smart grid as an enabling
infrastructure, and we have focused on the message that it’s what
we do with smart grid data and communications that really matters.
Using smart grid capabilities wisely will lead to increased energy
savings in buildings. These energy savings will come from four key
areas:
•	   Automated diagnostic tools that detect problems in building
     energy systems
•	   Behavior changes based on peak pricing and demand response
     programs
•	   Behavior changes based on communicating better energy
     information to consumers and businesses
•	   Enhanced utility program planning and verification through
     better access to energy data
Energy savings will help carry the smart grid cost-effectiveness
equation forward – in fact, we believe it will be essential to promote
and account for these savings in order to support the business case
for the smart grid.
How will the promise of energy savings be realized in smart grid
investments? The building stock needs to be able to integrate with
the smart grid – this requires that buildings are well-controlled
(which usually means they are operating fairly efficiently) and
the control systems are interoperable with the grid. To fix the
buildings that need to integrate with the smart grid, we need more
building performance experts in an already strained workforce
of commissioning providers and energy engineers. Therefore,
building training programs in parallel with smart grid investments
is key. Finally, we assert that the smart grid and energy savings
investments should be robustly linked. Smart grid investments
shouldn’t outpace spending on energy efficiency and conservation.
Further, government funding for the smart grid should be linked to
state adoption of decoupling and other incentives structures that
promote energy savings.
As more and more smart grid policy, demonstration projects, and
investments are undertaken over the next decade, it is crucial that
buildings are ready to carry forth the energy saving promise of the
smart grid.




                                                          PECI | Wiring the Smart Grid for Energy Savings   17 of 18
10. Bibliography
California Commissioning Collaborative, “Shades of the Green Workforce: The Need for Green
Professionals in the New Energy Economy”, 2009.
http://resources.cacx.org/library/HoldingDetail.aspx?id=483

Energy Information Administration, “Electric Power Annual 2007: A Summary” http://www.eia.doe.gov/
bookshelf/brochures/epa/epa.html, April 2009.

Friedman, H. and M.A. Piette, “Comparative Guide to Emerging Diagnostic Tools for Large Commercial
HVAC Systems” May 2001. LBNL Report 48629.


Global Smart Energy, “The Electricity Economy: New Opportunities from the Transformation of the
Electric Power Sector”, no publication date. White paper for the Global Environment Fund
http://www.globalenvironmentfund.com/

Kiliccote, S., M.A. Piette, G. Wikler, J. Prijyanonda, and A. Chiu, “Installation and Commissioning
Automated Demand Response Systems”, Proceedings, 16th National Conference on Building
Commissioning, Newport Beach, CA, April 22-24, 2008. LBNL-187E. April 2008

King C., and D. Delurey, “Energy Efficiency and Demand Response: Twins, Siblings, or Cousins?”, Public
Utilities Fortnightly, March 2005. http://www.fortnightly.com

Siddiqui, O, “The Green Grid: Energy Savings and Carbon Emissions Reduction Enabled by a Smart
Grid”, prepared for the Electric Power Research Institute, EPRI reference number 1016905, June 2008.

TIAX, “Energy Impact of Commercial Building Controls and Performance Diagnostics”, report prepared
for the US Dept of Energy, 2005. http://www.tiaxllc.com/aboutus/pdfs/energy_imp_comm_bldg_cntrls_
perf_diag_110105.pdf




                                                          PECI | Wiring the Smart Grid for Energy Savings   18 of 18

								
To top