[BETA] Fortnightly

Utilities are using automation and back-office systems to improve their performance on outage management and service restoration. The next generation of smart-grid technologies promises a revolution in self-healing systems. But first the industry must gain confidence in the technology—and the business case for investment.

In light of all the excitement created by smart-grid regulatory initiatives and stimulus funding, three clever tech startups have come forward with proposals for novel grid projects. In California, Western Grid Development proposes to install energy storage devices ranging in size from 10 to 50 MW at various discrete and strategic locations in PG&E’s service territory where the California ISO has identified reliability problems. Second, a company called Primary Power proposes to deploy a total of four advanced, 500-MVAR static VAR compensators (SVC) at three separate locations within the PJM footprint. Third, in Clovis, N.M., Tres Amigas plans to allow power producers to move market-relevant quantities of electric power and energy between and among the nation’s three asynchronous transmission grids: ERCOT and the Eastern and Western Interconnections.

Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.

Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.

Back when the U.S. economy and power consumption still were bubbling, PJM reported in August 2006 that customer curtailments during a week-long August heat wave had generated more than $650 million in market-wide energy savings—all at a mere $5 million cost, as measured in direct payments made to the demand response (DR) providers, set according to wholesale power prices prevailing at the time. Where else but the lottery can you get an instant payoff of 130-1?

Dramatic changes are coming to the electric industry, sparked by a surge of renewable energy and related transmission. Growth in demand-side resources, conservation and smart technologies will add integration dilemmas to an already complex power system.

The market for demand-side products and services appears poised to explode. What began as separate energy efficiency, demand response and distributed energy program offerings are now coming together in integrated demand offerings. A recent poll of 400 industry professionals suggests such packaged offerings might open new opportunities for service providers while also enhancing the customer experience.

The concept of a wireless smart grid is gaining popularity. Some utilities are participating in pilots providing two-way secure radio frequency network coverage. They say the grid is well suited to wireless and the benefits only now are becoming known.

Advanced metering and other smart technologies will allow more granular monitoring of conservation efforts, making them highly predictable for resource planning and system dispatch. Eventually, the smart grid will erase distinctions between wholesale and retail markets.

Six months back, when ISO New England was mulling over various reforms that FERC had mandated last fall in Order 719 for the nation’s six regional transmission organizations and independent system operators (RTOs and ISOs are interchangeable terms in this column), the ISO refused point blank to include in its mission statement a proposal by stakeholders that it should operate the bulk power system at the “lowest reasonable cost.”