Background

Current System

            In order to understand any proposal for reform, we must first examine the current construction of our grid. Our electricity system is centralized around large coal and nuclear plants that are often placed far away from urban areas. High voltage transmission lines transfer the power across the countryside to substations, which then send the electricity to our buildings. This system finds benefits in the economies of scale achieved within 300-500MW coal plants and (sometimes) large nuclear facilities. The simple position as the status quo with nearly one hundred years of precedent gives our grid a degree of inertia. The grid is nothing fresh – Thomas Edison could essentially recognize the basics of his invention today.^[1]

Yet the failures of our current grid system are increasingly important in our dynamic world. About 8% of energy produced is lost during the transmission process,^[2] and the transmission lines themselves can cost more than $1 million per mile.^[3] Citizen involvement in the process is discouraged; people are either passive in their energy use or directly opposed (often in a not-in-my-back-yard manner) to the expansion of coal plants, nuclear facilities, and transmission lines.^[4] Furthermore, the system is inherently unreliable, susceptible to large blackouts that one study estimated cost utilities upwards of $80 billion per year.^[5] After vertical deregulation in the 1990’s, the physical infrastructure itself began to deteriorate, leading to even larger blackouts, culminating in the Northeast Blackout of 2003, affecting eight states and Canada, caused merely by a branch hitting a power line and cascading demand.^[6] As former Secretary of Energy Bill Richardson said, “We are a major superpower with a third-world electrical grid.”^[7]

The Smart Grid back

“[The Smart Grid is] an intelligent, auto-balancing, self-monitoring power grid that accepts any source of fuel (coal, sun, wind) and transforms it into a consumer’s end use (heat, light, warm water) with minimal human intervention. It is a system that will allow society to optimize the use of renewable energy sources and minimize our collective environmental footprint. It is a grid that has the ability to sense when a part of its system is overloaded and reroute power to reduce that overload and prevent a potential outage situation; a grid that enables real-time communication between the consumer and utility allowing us to op­timize a consumer’s energy usage based on environmental and/or price preferences.” -Xcel Energy

 The smart grid is not a new concept by any means; the idea has been thrown around since the late 1980’s, increasing prominence after large blackouts and failures in the 90’s, the advent of global warming, and rising energy prices. It’s difficult to describe what a smart grid looks like because many of its components are unobtrusive or difficult to fully comprehend. It’s easier to acknowledge what a Smart Grid doesn’t look like – it is not as susceptible to black- or brownouts or difficult to interconnect or wasteful. A smart grid is an aggregation of a number of components that, together, create an interactive network for electricity. Some of the updates are infrastructural, some are reliant on utility and government management. All encompass a different approach to electricity management.^[8]

Like Gore’s Electranet alludes to, the smart grid relies on interconnection of many different systems and the sharing of information. Substations are updated to include realtime analysis of energy supply and demand, allowing quick adjustment in energy production, the reduction of excess generation, and problem-solving capabilities.^[9] “Smart substations” and two-way communication meters on powerlines allow the grid to essentially “sense” problems and fix them. For example, if a powerline begins to develop ice, the substation can respond with a surge of energy that will break off any icicles.^[10]

The smart grid also allows for a more legitimate integration of time-based pricing of electricity. Electricity production costs different amounts at different times of the day (as well as times of the year). Energy in the afternoon costs more to produce than energy at three AM, simply because demand changes throughout the day. These costs are often averaged into one set price (per kilowatt hour) that varies very little. By switching to a smart grid, the utility gains the ability to more easily charge different prices at different times of the day. Peak energy could be rather expensive, while it will cost very little to buy energy at night. This will help the utility increase efficiency and minimize the total energy production and potentially the demand for new sources of energy.

Rather than the one-way street from generation to distribution, electricity in a smart-grid system can be more easily generated near its use by small-scale renewables such as solar or geothermal, combined heat and power, or larger-scale wind. This arrangement of decentralized sources of energy generation is known as “distributed generation.” Anyone who owns an energy generation source (ie solar panels) can tap into the grid with net metering, which the sale of excess energy back to the grid.^[11] For example, in a Vehicle-to-Grid (V2G) capable system, your car could charge at night (feeding off of more abundant wind and cheap prices) and then sell electricity back to the grid during periods of high demand, thus stabilizing peak hours.

Another important addition is the comprehensive “smart meter.” A smart meter is a visible yet unobtrusive display that allows users to see how much electricity their household is using at any moment and in some cases how much it is costing them. While cheap electricity meters already exist and can work within our current grid, smart meters are integral if Xcel plans to charge varied costs for electricity at different times of the day. These kinds of displays could encourage efficiency improvements and habitual conservation, decreasing demand significantly. True smart meters also have a degree of autonomy – one could theoretically program the meter to stop heating or cooling your house if electricity becomes expensive. Further innovations could then be made in “smart appliances” that interact with the meter and shut off or warn you when electricity is most expensive.

Proponents of smart grids claim that decreasing the distance between generation and consumption will decrease waste and thus increase efficiency. The smart grid’s ability to manage demand has the ability to level off expensive peak hours, lowering overall energy prices. However, some of the technologies that could be combined with a smart grid, such as V2G and complex battery storage for wind power, are still in the theoretical stage. Others, especially solar, are currently not cost-competitive with coal or nuclear, although proponents argue the cost will decrease if or when these products are mass produced. Although many of these technologies fall under the definition of a smart grid, a smart grid can only defined only by its creator, and Xcel’s grid emphasizes some of these components, but not others.

It’s also important to recognize the potential democratic nature of a smart grid, often highlighted by activists and the internet demographic. Theoretically, the smart grid would be easily accessible to its users. The combination of in-house smart metering and potential growth of small-scale renewable resources could create more choice within the system while economically benefiting the average person rather than the owners of large coal or nuclear plants. These arguments are hopeful but quite optimistic, as the adoption of any technology depends in part on the process of implementation.