The advent of the smart grid is sparking interest in intelligent rate design. But while state and federal goals encourage more efficient rate structures, regulatory and political considerations...
The Carbon-Smart Grid
Network intelligence yields green returns.
Mounting political pressure to reduce greenhouse gas (GHG) emissions is prompting legislative bodies at the state and federal level to act, including 23 states that are moving forward with GHG legislation. These and other forces are driving America’s electricity infrastructure toward greater efficiency and reliability, and the integration of a diverse mix of energy resources, including renewables.
Smart-grid systems that now are being developed and deployed will play a fundamental role in addressing the country’s energy challenges over the coming years. Smart-grid technology can lead to both carbon reduction and a more sophisticated delivery network—presenting utilities with new opportunities to create value for themselves and their customers.
Creating Carbon Value
“Carbon value” can be defined as minimizing future financial liabilities associated with carbon emissions, combined with maximizing opportunities associated with renewable energy generation and other low-carbon products and services.
The fundamental drivers of carbon value are future regulations that assign a cost to carbon emissions, along with other state, regional, and federal policies dealing with renewable energy explicitly ( e.g., renewable portfolio standards or RPS). The timing, scope, stringency, and likely interaction of these policies are uncertain, which makes quantification of carbon values challenging. But a necessary prerequisite is a breakdown of the task into its constituent components.
Three areas have the potential to enhance carbon value through a smarter electric transmission grid: zero- or low-emissions generation; T&D efficiency; and innovative market strategies (see Figure 1) .
Often, electricity produced from renewable energy resources such as wind, solar, and to an extent hydro, is not dispatchable due to the nature of the resource. Moreover, the output from these resources can vary greatly over relatively short periods of time, making it difficult to regulate power flow and voltage on transmission and distribution. The smart grid will help integrate renewable energy resources with the rest of the electric system.
Renewable energy resources with variable output ( e.g., wind and solar) have the potential to be combined with energy storage and demand response, reducing apparent variability. The operation of multiple energy resources in an area might be coordinated using advanced control algorithms and a smart-grid communication network, thus firming the load or generating capacity and making it more predictable and reliable.
In cases where the penetration of renewable energy is high, particularly on distribution feeders, the smart grid ideally will help regulate voltage by coordinating the output of inverters. And sensor networks will provide grid operators with a better view of intermittent renewable energy and insolation conditions, allowing for better anticipation and planning of output from renewable energy resources. The net effect would be to increase the potential for more and more renewable energy to be installed and operated in the transmission and distribution network without the performance problems associated with renewable energy source intermittency.
Clearly, the more renewable energy is integrated into the energy supply chain, the greater the carbon value