The smart grid is opening the floodgates on customer data, just as consumers are getting comfortable with retail self-service and mobile apps. With dynamic rates, distributed generation and...
Smart-Grid Strategy: Quantifying Benefits
Modeling the value of various technologies and applications.
by differentiating the price of electricity by its costs, which vary during the day as demand fluctuates. When the incremental effects of enabling technologies are included, dynamic pricing benefits reach a combined present value of $501 million for Smart Power.
The energy efficiency benefit stream includes impacts from both rapidly deploying in-home displays (IHDs) to residential customers, and implementing continuous building commissioning in C&I facilities. The purpose of an IHD is to share directly with customers the detailed current and historical information on electricity usage that smart meters collect, thus allowing customers to make more informed energy usage decisions. Recent pilots have suggested IHD programs can create a significant conservation effect of roughly 6.5-percent energy savings per device owner. 7
Further, AMI allows continuous building commissioning, which ensures that a building’s complex set of systems are designed, installed, and constantly tested and calibrated for optimal performance, leading to significant increases in energy efficiency at the commercial and industrial levels. 8 A realistic market penetration for continuous building commissioning would be about 20 percent of small to medium C&I buildings and 0.2 percent for large C&I facilities.
The combined energy efficiency benefits from IHDs in the residential sector and continuous commissioning in the C&I sector amounts to a present value of $906 million. This value stream is mostly due to avoided energy and carbon costs, with some additional savings from avoided capacity generation.
Another area of SG benefits involves distributed energy resources (DERs). DER broadly includes all forms of renewable generators located near customers, as well as downstream dispatchable storage (possibly including PHEVs, which will be included in future models). While DERs will deliver carbon savings and other environmental and reliability benefits, the conservative model examines only one DER technology—on-site (fixed) energy storage. The value of this technology is that it can shave peak power use by allowing greater off-peak purchases to be stored for use during peak periods. 9
In modeling the impacts of DERs, batteries are assumed to penetrate customer segments roughly in proportion to the value those customers place on avoided outages, which is highest in the commercial sector. In the model, market penetration rates are expressed as the percent of the class peak that can be displaced by discharging the batteries to their full capacity during low-price hours. Benefits of DERs are derived primarily from the ability of these resources to store off-peak energy and use it to meet demand during peak times. This can lead to a reduction in energy costs, and deferral of the construction of new peaking capacity. Energy storage also has the ability to firm up intermittent resources like wind generation, adding to their value and potentially leading to an increase in market penetration. Another major benefit includes increased reliability as batteries function as back-up generators. All together, the potential benefits of expanding and developing the DER market could reach $178 million by 2050 in present value terms.
The model shows that total preliminary estimated NPV benefits for Smart Power exceed $1.8 billion, excluding PHEV benefits yet to come (see Figure 3) . This is