Serving customers’ needs should be a top priority for power companies, irrespective of the regulatory construct and business model. Transformation doesn’t change this basic fact, but how do we...
Proving Smart-Grid Savings
Real-world projects show tangible returns.
Much is riding on successful smart-grid deployments. Last fall, the Department of Energy set aside $11 billion for smart-grid creation. On top of that, many utilities are investing millions of their own money in grid improvements within their service areas. The expensive question remains: Will these investments pay off? Lacking a standard path for smart-grid development, utilities nationwide are venturing into unknown territory, putting their smart-grid business cases to the test.
AEP’s gridSMART Ohio Project: American Electric Power (AEP)
• 5.2 million customers
• $14.4 billion revenue (2008)
• Service areas in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia, and West Virginia
• Approx. 39,000-MW generating capacity
• Coverage: 110,000 customers
• Cost: $150 million. The Department of Energy awarded $75 million and the rest is coming through a combination of monies subject to regulatory approval and in-kind donations from vendors that want to participate.
• The Project: AEP’s vast service territory poses significant challenges to implementing advanced grid technology because it encompasses everything from urban and suburban areas to mountainous and rural sections across eleven states. For that reason, AEP is taking a holistic approach with its smart-grid demonstration project in central Ohio. Working in partnership with the DOE, and with General Electric, AEP is investing in advanced technologies to operate the grid more efficiently. The utility aims to achieve this by installing smart meters, distribution automation equipment, demand-response technology, integrated voltage/var control, all the way through to smart appliances and home energy management systems. Smart appliances will help the utility determine how best to control them during peak periods without having a negative effect on residential customers’ lifestyles. The reason for the high $150 million price tag is that AEP is also planning to test community storage technologies, adding plug-in hybrid electric vehicles, and creating a cyber security center.
“Our demographics match the demographics across the nation within a few percentage points,” says Teri Flora, director of corporate communications for AEP Ohio. She’s realistic about the project and expects to see both successes and failures. “We’re confident that we can produce a demonstration project that will allow smart grid to progress across the country.”
• Returns: The utility expects that the improved efficiencies will reduce consumer costs by about $5.75 million over the course of the project. Consumption will be reduced by 18 megawatts and peak demand will be reduced by 15 megawatts. “By maintaining power at the appropriate level, supporting the vars, they’re eliminating waste on their network,” says Mark Hura, global smart-grid leader for General Electric. “They’re more efficient about how they’re delivering that power.” With the integrated volt/var control application alone, AEP is looking at curbing peak demand by up to 2 percent for the customers on the circuits that have the installation.
• Timeline: Smart-meter deployment began in December 2009. Hura says that GE has installed the smart-meter technology infrastructure and the advanced coordinated voltage/var