RNRF Round Table: Smart Grid Development & Renewables Integration

RNRF Washington Round Table on smart grids.

The Brattle Group hosted RNRF’s Washington Round Table on Public Policy at its Washington, D.C. office on April 20, 2016. Heidi Bishop, a senior policy and marketing analyst with the group, discussed the status of smart grid development, renewable energy trends, and the integration of renewables into smart grids.

According to the Department of Energy (DOE), “smart grid” generally refers to a class of technology using computer-based remote control and automation, including two-way communication technology and computer processing that has been used in other industries for decades. In essence, a smart grid “computerizes” the electric utility grid.

Status of Smart Grid Development

Bishop highlighted DOE’s description of the functional characteristics of a smart grid. These include:

• Self-healing from power disturbance events, i.e., a smart grid can identify when and where power is down, and respond either by self-healing or sending an alert.
• Enabling active participation by consumers in demand response.
• Operating resiliently against physical and cyber attack.
• Providing power quality for 21^st century needs.
• Accommodating all generation and storage options.
• Enabling new products, services, and markets.
• Optimizing assets and operating efficiently.

A smart grid involves deployment of these technologies across the entire system, from transmission, to distribution, to consumption. On the consumer end, almost 60 million households have smart meters today.[1] For example, Pacific Gas and Electric Company (PG&E), a California electric utility, implements a “SmartMeter” program that is part of a statewide effort driven by the California Public Utilities Commission to upgrade the state’s energy infrastructure. The new meters provide two-way communication between PG&E and the consumer. These meters help PG&E provide more reliable service by using the information from two-way communication to quickly identify outages and resolve other service problems. Consumers can make more informed energy decisions with detailed information about their usage, including alerts that notify consumers when their energy use is on pace to exceed a personalized bill alert amount. Additionally, consumers can opt into a rate structure based on the time of day electricity is used. PG&E also offers the options to opt into a network that connects smart devices in the home that automatically respond to energy usage from the grid.

Status of Renewable Development

According to the U.S. Energy Information Administration (EIA), the mix of fuels used to generate electricity in the United States has changed significantly since 1990. For example, coal-fired power plants accounted for 42% of U.S. electricity generation capacity in 1990 (and produced more than half of the total electricity supply), but decreased to 28% of generation capacity in 2014 (and produced 39% of electricity supply). Electricity generation from wind has experienced significant gains in its share of electric generation capacity, growing from 0.2% in 1990 to about 6% in 2014. Electricity generated from solar energy rose from almost 0% in 1990 to 1% in 2014. EIA projects that by 2040, renewables will be responsible for 18% of all electricity generation (Figure 1).[2] According to Bishop, electricity generation from renewable sources is expected to grow by 9% this year alone, consisting primarily of wind, with some solar.

Figure 1. Electricity generation by fuel, 2000-2040.[2]

Bishop noted that renewable energy development has been driven by Renewable Portfolio Standards (RPS), the Clean Power Plan, declining solar prices, concerns about energy resilience, and consumer preference. Photovoltaic (PV) energy in particular has received increased attention. Technological advances have driven module costs down, and third-party financing has expanded the residential market for rooftop solar. The penetration of distributed energy resources (DER), which includes solar, has been increasing in key states, including California, New Jersey, and Arizona.

Integration of the smart grid and renewables

Bishop stressed that renewable integration is a key component of smart grid development and distribution plans. The “grid of the future” requires the meshing of several different systems. Smart grid functions support renewable integration through better forecasting, smart inverters,[3] demand response,[4] integrated storage batteries tied to solar, and real-time system awareness and management. According to the DOE, the goal of renewable energy integration is to:

• Reduce carbon emissions and emissions of other air pollutants through increased use of renewable energy and other clean distributed generation.
• Increase asset use through integration of distributed systems and customer loads to reduce peak load and thus lower the costs of electricity.
• Support achievement of renewable portfolio standards for renewable energy and energy efficiency.
• Enhance reliability, security, and resiliency from microgrid applications in critical infrastructure protection and highly constrained areas of the electric grid.
• Support reductions in oil use by enabling plug-in electric vehicle (PHEV) operations with the grid.

Grid modernization poses technological and regulatory challenges for both utilities and their regulators. Utilities must weight the value of DER to the rest of the system, cost and benefits of different strategies for deploying DER, and many other considerations. State Public Utilities Commissions are becoming active in guiding smart grid development through dockets on grid modernization and “utility of the future” dockets. The current U.S. electric grid is being stretched to its capacity as energy use increases and shifts. To move forward, the grid must be modernized and built to manage the increasing complexity and needs of energy consumers in the 21^st century.

Footnotes

[1] A smart meter measures usage at increments of an hour or less and communicates that information back to a utility. With old meters, a flat rate is charged for the electricity used by a consumer; a smart grid would allow for distinction among when energy used, leading to the potential for better management of energy use.

[2] https://www.eia.gov/energy_in_brief/article/fuel_mix_for_elect_generation.cfm

[3] Smart inverters will enable PV and other distributed generation and storage to enhance rather than degrade grid stability.

[4] Demand response provides an opportunity for consumers to reduce or shift their electricity usage during peak periods of use in response to time-based rates or other forms of financial incentives. For more information, see http://energy.gov/oe/technology-development/smart-grid/demand-response.]]>