T&D and Smart Grid
The ZigBee Alliance and the Wi-Fi Alliance entered an agreement to collaborate on wireless home area networks (HAN) for smart-grid applications. The...
emphasize the value of diversity in generation resources, so we assume a portfolio of these resources would be employed. Cogeneration represents the lowest cost distributed resource at $600/kW to $800/kW, while fuel cells are the most expensive at $4,000/kW. Sixty gigawatts of distributed generation already exist, and several studies suggest the economic potential is between another 60 and100 GW.
Investing in energy efficiency would avoid investments in transmission, distribution, and generation. The magnitude of the savings is augmented by several factors, including line losses and lower planning risk (since distributed resources are inherently less lumpy than large transmission lines) and reduced exposure to energy market volatility. Despite all the existing obstacles, distributed generation is already growing rapidly- partly because its hidden economic benefits often boost value by about tenfold. 5
Demand response acts as a hedge by dampening price spikes when power is scarce, and by providing cheap insurance against artificial scarcity. Had California installed more load management, equivalent to 1 percent of its peak load, shrewd investors could simply have shorted the power market (bet on lower prices) in 2000-2001 when suppliers were withholding supply to raise prices-then activated their load management, dropped prices, averted shortages, and taken more than 1 billion from the miscreants. 6 McKinsey & Co. estimate that if national load were reduced by 5 percent, the resulting savings from avoided peak power prices would be $15 billion a year. 7
The second-order effect on gas pricing is equally if not more intriguing. Consider that almost all peak power is made by inefficient gas-fired combustion turbines, so shaving just 5 percent of U.S. peak electric load would save 25 percent of the gas used for power, or 1.5-2.1 Tcf (9.5 percent of total U.S. natural gas use)-enough to return gas prices to their previous normal range for years. 8 The value of the gas price reduction has been estimated at between $15 billion to $40 billion a year. 9
There would be many winners from the distributed resource path. Society at large would prosper because electric service could be provided at lower cost with higher reliability. Regulators would achieve their objective of fair and competitive electricity markets at the wholesale and retail level, since distributed generation would add more competition and liquidity. Further, grid reliability and energy system resilience (hence security) would be enhanced. Business customers would benefit from a wider spectrum of options to manage their energy needs, greater grid reliability and the ability to reap commercial profits from advantaged locations. Progressive utilities would benefit by sharing in the savings from the lower revenue requirement-in effect, earning a higher return on assets. Clearly, distributed generation manufacturers and energy service companies would become high-growth industries, attracting capital and creating jobs. The environment will benefit from lower air pollution more than it would with centralized generation.
Traditional and next generation distributed resource providers both would realize increases in revenues far beyond their current valuation.
The major efficiency companies (e.g., Invensys, Integrated Electrical Services, Sempra Energy Solutions, Duke Energy Solutions) and the efficiency equipment suppliers all stand to