Smart Grid in America and Europe (Part I)

Deck: 

Similar desires, different approaches.

Fortnightly Magazine - January 2011

In the last few years the media has been abuzz over the smart grid. Definitions abound, as well as numerous interpretations. The definition is the starting point of a cohesive vision that governments can use to make the smart grid a reality. As the literature in both the European Union and United States show, the definitions contain basic concepts. The multifaceted nature of the smart grid is illustrated by the ways the two governments understand it.

The E.U. defined the smart grid as “electricity networks that can intelligently integrate the actions of all users connected to it—generators, consumers and those that do both—in order to efficiently deliver sustainable, economic and secure electricity supplies.”1 Similarly, the U.S. defined the grid of the future as one that will incorporate digital technology to improve reliability, security, and efficiency of the electric system through information exchange, distributed generation, and storage resources,2 which will result in a “fully automated power delivery network.3 Because of the growing consensus that the existing grid is in need of updates to meet our future demands, the basic concepts of the smart grid are apparent in the definitions, and involve upgrades, communication, and integration at all levels, resulting in an optimal electric delivery system.4 The upgrades will change the largely mechanical nature of the current grid into one that is based on digital and communication technology.5 With the newly installed technology, the grid will be better able to monitor and respond to grid weaknesses and contingencies.6 The communication advancements will integrate all users of the grid, allowing for greater flexibility in supply and demand.7

Similarly, the identified functions of the smart grid programs of the U.S. and the E.U. don’t differ substantially. In 2005, the European SmartGrids Technology Platform was created, and it identified the anticipated functions of the smart grid.8 The U.S. Department of Energy (DOE) identified the functions of the smart grid in 2009.9 Both governments agree that the smart grid will facilitate greater customer participation, allow for all types and sizes of generation, provide adequate power quality, efficiency, and reliability, and will create opportunities for new products and market integration.10 Only the E.U. stated explicitly that the smart grid would “significantly reduce the environmental impact of the whole electricity supply system” even though this is understood in the U.S. as an underlying goal.11

Clearly, some benefits overlap with the functions. The smart grid is fascinating because, in addition to the functions, it can be the mechanism for countless new benefits. The new smart grid is more efficient, reliable, and economical.12 Communication between the grid components from generation to consumption will increase efficiency by reducing energy losses and increasing power transfers.13 Reliability will improve because of the grid’s ability to use a variety of energy sources, including local distributed generation, and to increase flexible consumption through automatic response and consumer choice.14 These direct benefits result from upgrades to the grid itself, meaning the poles, wires, substations, and power plants. Other secondary benefits aren’t upgrades to the grid itself, but those made possible by upgraded grid facilities. Examples include the economic benefits from efficient energy management in power transfers, new consumer tools such as responsive consumer appliances, and electric or plug-in electric hybrid vehicles.15

The E.U. and the U.S. similarly anticipate the smart grid to be an optimally performing grid capable of meeting future social needs by utilizing digital and communication technology. At the very least it will function to allow for greater consumer participation and will have the flexibility to incorporate different types and sizes of generation sources. The smart grid will contribute three basic benefits: efficient operations, reliable service, and the best economical value. The definition, functions, and benefits of the smart grid create the complete picture of the smart grid.

E.U. Smart Grid Policy

While the definitions and goals are similar, the approaches of the two governments to making the smart grid a reality vary in organization and topic. An overview of the E.U. and U.S. responses shows that the E.U. focuses more on research and deployment plans based on the SmartGrids European Technology Platform goals and priorities. Until the recent smart grid funding through the American Recovery and Reinvestment Act of 2009, the U.S. engaged in more legislative development efforts than government backed deployment of research and development (R&D).

The E.U.’s smart grid implementation seeks to achieve a long term “20/20/20” goal, which means cutting emissions by 20 percent and increasing renewable energy generation to 20 percent of the energy mix by 2020.16 In 2009, the European Commission adopted the third energy package, which required 80 percent of homes in the 27 member countries to have smart meters by 2020.17 Since then, the commission has been working on a possible legislative framework for the smart grid that may address the need for standards and regulation on data security to be adopted in 2011.18 The commission, however, may choose not to adopt guidelines, a framework, or directives. Instead, it’s considering less formal avenues and recommendations at the national and E.U. level.19

The E.U. uses several plans and programs to facilitate new smart grid technology, including the SmartGrids European Technology Platform for the Electricity Networks of the Future (SmartGrids ETP), the European Electricity Grid Initiative (EEGI) Roadmap and Implementation Plan, the E.U. Framework Program, and the European Strategic Energy Technology Plan (SET Plan). 

The SmartGrids European Strategic Energy Technology Platform: The SmartGrids ETP is the main guiding document for smart grid development in the E.U. The European Commission created the European Research Area as a forum to share, coordinate, and fund E.U. research and policies on new technology.20 The SmartGrids ETP21 is one of many platforms that provides a point of organization to target specific topics.22 The SmartGrids EPT began its work in 2005, finalized its definition and vision in 2006, and drafted a strategic deployment document (SDD) that describes the R&D priorities, benefits, and timeline of the electricity grid.23 Only recently, in 2010, did SmartGrids ETP issue the final SDD.24 The first SmartGrids ETP objective is to promote a shared vision for the E.U., which includes its mission of coordinating smart grid developments and SmartGrids ETP priorities.25 The top three deployment priorities in the 2010 SDD are optimizing grid operations and use, optimizing grid infrastructure, and integrating large scale intermittent generation, such as wind and solar.26 The other priorities are incorporating information and communication technology, improving distribution networks, and creating new markets for energy efficiency.

The European Electricity Grid Initiative: The EEGI program focuses on innovation and addresses the challenges of integrating new technologies in real working conditions and validating results in demonstrations.27 The EEGI Roadmap 2010-18 and Detailed Implementation Plan 2010-12 divides research activities into three categories: transmission, distribution, and coordinating activities between the two. Each group has specific implementation activities. For example, the transmission projects involve developing a pan-European grid by creating new network architecture and power technologies via on-shore wind demonstration projects. The nine-year Roadmap program is anticipated to cost 2 billion. The estimated costs only cover participation of the distribution and transmission operators, market players, research centers, and universities. The estimated costs don’t cover deployment costs. An investment of 1 billion will fund the priority projects starting between 2010 and 2012. Priority transmission projects starting in 2011 include tools to analyze the pan European grid architecture and network expansion. Distribution projects to start in 2011 include smart meter infrastructure and system integration of medium sized renewable generators. The money will cover their full duration. Program financing is proposed to be split between the European Commission, member states, tariffs, and market participants.

The E.U. Framework Programme: Additional demonstrations and case studies happen as part of the E.U. Framework Programme. The framework programs run for specified time periods and involve demonstrations on pre-determined topics funded by the European Commission and matching funds from private and public sources.28 The program selects parties to carry out the research from responses to calls for proposals.29 The research pilot and demonstration program has been doing work related to the smart grid since the Fifth Framework Programme, which began in 1998 and ended in 2002.30 The Sixth Framework Programme built upon the previous one, including additional work on distributed generation and microgrids. The current Seventh Framework Programme, which began in 2007 and will end in 2013, considers past progress and addresses current priorities such as hydrogen and fuel cells and smart energy networks.31 A total of 2,300 million are allocated to energy research.32

The European Strategic Energy Technology Plan: In 2007, the commission created the SET Plan in order to develop a portfolio of affordable, clean, efficient, and low-emissions energy technologies through coordinated research.33 The SET Plan creates the larger research landscape which directs the E.U. smart grid projects to implement technology deployment in a coherent manner.34 In 2009, when the commission adopted the 20/20/20 goal, it also published a funding map for the SET Plan.35 Because the SET Plan is broad, the SmartGrids ETP, the EGGI, and the Framework Programs all contribute to SET Plan goals in one way or another.36 The EEGI specifically points out that it enables the SET Plan.37

E.U. smart grid deployment utilizes comprehensive goals and plans to set the course for industry groups and interested parties. The SmartGrids ETP is the main guiding document for smart grid development, and the EEGI Plan and the SET Plan help incorporate the smart grid developments in the E.U.’s overall clean energy development goals. In contrast, U.S. lawmakers have developed more laws and regulations, although they are far from complete or mature. Only recently has the U.S. expended great resources into R&D implementation.

U.S. Smart Grid Policy

The U.S. long-term goal for smart grid technology is to reduce energy demand by 20 percent, improve system efficiency by 40 percent, and incorporate 20 percent of renewables for electricity capacity by 2030.38 It also hopes to be able to serve all critical loads at all times by 2030. The U.S. has addressed smart grid issues through meetings with industry, the Energy Independence and Security Act of 2007 (EISA), the Federal Energy Regulatory Commission (FERC) Smart Grid Policy, and the American Recovery and Reinvestment Act of 2009 (ARRA).

Initially, in 2003, the DOE met with electric industry leaders and stakeholders to discuss the future energy challenges of the U.S. and how the smart grid could address them. As a result, the meeting produced the Grid 2030 report, which defined the smart grid, its benefits, and the policy to facilitate its implementation.39

Energy Independence and Security Act of 2007: The EISA laid out the formal U.S. policy for modernizing the electric grid.40 The EISA included new energy efficiency standards for appliances and required the adoption of interoperability and functionality standards for the smart grid. The EISA directs the National Institute of Standards and Technology (NIST) to develop interoperability and functionality standards. Once FERC is satisfied with NIST’s interoperability standards, then FERC must institute rulemaking proceedings to adopt standards and protocols necessary to “insure smart-grid functionality and interoperability in interstate transmission of electric power, and regional and wholesale electricity markets.41 The standards must address physical security, cyber security, and a common information framework.

FERC Smart Grid Policy: In 2009, FERC issued its Smart Grid Policy.42 The policy discussed system security and interoperability standards and it listed four priority standard setting areas: wide-area situational awareness, demand response, electric storage, and electric transportation. One main feature of the policy is the interim rate policy, with the goal of encouraging investment in smart grid systems until the standards are adopted by FERC. The policy also discussed FERC’s new responsibility for smart grid functionality and interoperability under EISA, which extends to distribution, previously under the purview of states only.43 EISA however doesn’t make smart grid standards mandatory, and for now FERC is satisfied with creating the standards and allowing the states to implement them. 

American Recovery and Reinvestment Act of 2009: The ARRA provides the most substantial funding for smart grid deployment of R&D projects. The ARRA set aside $3.4 billion for smart grid development, $1 billion to help consumers save energy and cut utility bills, and $2 billion to integrate smart components, such as smart meters, into the grid.44 As part of determining how the funding will be allocated, the DOE Smart Grid Research and Development Program, within the research and development office of the DOE’s Office of Electricity Delivery and Energy Reliability, issued a multi-year program plan (MYPP) for 2010 to 2014. The MYPP identified five R&D topics for federal funding priority: 1) standards and best practices; 2) technology development; 3) modeling; 4) analysis; and 5) evaluation and demonstrations.45

Although not comprehensive, U.S. laws and regulations like EISA and the FERC Smart Grid Policy create the beginnings of a smart grid legal framework. In contrast, the E.U.’s smart grid legal framework is more country dependent; The 80 percent smart meter penetration by 2020 requirement is one of only a few European-wide legislations so far. By using the stimulus money, the U.S. too has devoted substantial resources to deploy numerous smart grid R&D projects, but unlike the E.U., the U.S. hasn’t followed one set of long-term strategies or plans.

The E.U. has approached smart grid development by creating a cohesive vision, where subsequent planning has followed priorities and goals set by the SmartGrids ETP program in 2005. The U.S. informal meeting of stakeholders and government in 2003 created the Grid 2030 report, but subsequent activities like the EISA, the FERC Smart Grid Policy, and stimulus funding don’t appear to be guided by the 2003 report. Both governments create R&D plans, but with a different organization and focus. For example, the EEGI divides activities into those that affect distribution, transmission, or both.46 In contrast, the U.S. MYPP identified R&D topics organized by five categories that can be applied to distribution, transmission, or technologies that apply to both: 1) standards and best practices; 2) technology development; 3) modeling; 4) analysis; and 5) evaluation and demonstrations.47 While the E.U. identifies the areas of the grid that the plan is supposed to affect, the U.S. identifies the tools used to evaluate any grid technology or development. 

This comparison of the overall efforts of the two governments indicates differences in their smart grid deployment approach, which is further explored in “Smart Grid in America and Europe (Part II).”

 

Endnotes:

 1. SmartGrids European Tech. Platform, Strategic Deployment Document for Europe’s Electricity Networks of the Future 6 (2010) [hereinafter E.U. SmartGrids SDD].

 2. Office of Elec. Transmission & Distribution, U.S. Dep’t of Energy, Grid 2030: A National Vision for Electricity’s Second 100 Years 17–21 (2003) [hereinafter U.S. Grid 2030]; U.S. Dep’t of Energy, “Executive Summary,” in U.S. Smart Grid Report iv–v (2009).

 3. U.S. Grid 2030, supra note 23, at 17.

 4. European Comm’n, European SmartGrids Technology Platform: Vision and Strategy for Europe’s Electricity Networks of the Future 4–5, 12, 24 (2006) [hereinafter E.U. SmartGrids Vision & Strategy] (stating that European grid will need upgrades valued at 500 billion; therefore, the money should be invested in future technology instead of “like-for-like replacement”); U.S. Grid 2030, supra note 23, at 4–9.

 5. Clark W. Gellings, “The Smart Grid: Enabling Energy Efficiency and Demand Response” (2009); U.S. Grid 2030, supra note 23, at 17.

 6. E.U. SmartGrids Vision & Strategy, supra note 45, at 15–18, 27–18; U.S. Grid 2030, supra note 23, at 17.

 7. U.S. Grid 2030, supra note 23, at 17.

 8. E.U. SmartGrids Vision & Strategy, supra note 45, at 4. The tasks are:
Better facilitate the connection and operation of generators of all sizes and technologies; allow consumers to play a part in optimizing the operation of the system; provide consumers with greater information and options for choice of supply; significantly reduce the environmental impact of the whole electricity supply system; deliver enhanced levels of reliability and security of supply.
E.U.
SmartGrids SDD, supra note 12, at 4, 6–7. One recurring goal is to foster market integration towards a pan-European integrated market. Id. at 8.

 9. U.S. Dep’t of Energy, U.S. Smart Grid Report 10 (2009), (“To convey the present situation of smart-grid deployment, the report uses a set of six characteristics derived from the seven characteristics of the National Energy Technology Laboratory (NETL) Modern Grid Strategy project and documented in ‘Characteristics of the Modern Grid’ (NETL 2008).”). It enables informed participation by customers, accommodates all generation and storage options, enables new products, services, and markets, provides power quality for a range of needs, optimizes asset utilization and operating efficiently, and operates resiliently to disturbances, attacks, and natural disasters. Id.

10. E.U. SmartGrids Vision & Strategy, supra note 45, at 4–5.

11. U.S. Grid 2030, supra note 23, at 17, 21.

12. E.U. SmartGrids Vision & Strategy, supra note 45, at 4, 20–21; U.S. Grid 2030, supra note 23, at 20–21

13. E.U. SmartGrids Vision & Strategy, supra note 45, at 4, 21, 24–25; U.S. Grid 2030, supra note 23, at 21.

14. E.U. SmartGrids Vision & Strategy, supra note 45, at 20, 24. Broadband communications and automation will create a “smart grid,” along with superconducting cables and will “enable[ ] real time market transactions and seamless interfaces among people, buildings, industrial plants, generation facilities, and the electric network.” U.S. Grid 2030, supra note 23, at 17.

15. E.U. SmartGrids SDD, supra note 12, at 14; E.U. SmartGrids Vision & Strategy, supra note 45, at 4–5; U.S. Smart Grid Report, supra note 910, at 26; U.S. Grid 2030, supra note 23, at 20.

16. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, 20 20 by 2020: Europe’s Climate Change Opportunity, at 20, COM (2008) 30 final (Jan. 23, 2008); see also E.U. SmartGrids SDD, supra note 12, at 8 n.1; McKinsey & Co., McKinsey on Smart Grid (2010) [hereinafter McKinsey Report]; “Power Firms Want Funding Model for Smart Grids,” EurActiv, Nov. 30, 2009.

17. Council Directive 2009/72, Concerning Common Rules for the Internal Market in Electricity and Repealing Directive 2003/54/EC, 2009 O.J. (L 211) (EC); “Smart Meters: Controlling Your Energy Bill?,” EurActiv, Feb. 16, 2010: (“The gas and electricity directives of the third energy package, adopted in 2009, require member states to prepare a timetable for the introduction of intelligent metering systems. In the case of electricity, at least 80 percent of customers should be equipped with smart meters by 2020, pending a cost-assessment study.”)

18. European Comm’n, Roadmap: Legislative Proposal for a Regulatory Framework on Smart Grids (2010).

19. “Commission Cautious on Smart Grids,” EurActiv, Apr. 16, 2010.

20. Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, towards a European Research Area, COM (2000) 6 final (Jan. 18, 2000); see European Research Area, From Concept to Reality, Eur. Commission, (last updated June 7, 2010) (explaining that among other initiatives, the E.U. Research Framework Programmes and the European Technology Platforms were created as part of the European Research Area).

21. See generally E.U. SmartGrids Vision & Strategy, supra note 45.

22. Individual Platforms, E.U. Eur. Tech. Platforms, (current as of Nov. 16, 2010).

23. See generally E.U. SmartGrids Vision & Strategy, supra note 45, at 4, 6.

24. See generally E.U. SmartGrids SDD, supra note 12.

25. E.U. SmartGrids Vision & Strategy, supra note 45, at 4.

26. E.U. SmartGrids SDD, supra note 12, at 8.

27. European Elec. Grid Initiative, Roadmap 2010-18 and Detailed Implementation Plan 2010-12 (2010) [hereinafter EEGI Roadmap & Implementation Plan]. 

28. See generally European Comm’n, Towards Smart Power Networks: Lessons Learned from European Research FP5 Projects 5 (2005) [hereinafter E.U. FP5 Lessons].

29. European Comm’n, Introduction, Seventh Framework Programme (FP7) website, (last updated Aug. 20, 2007) [hereinafter Seventh Framework Website].

30. See generally E.U. FP5 Lessons, supra note 2840, at 5.

31. European Comm’n, FP7: Tomorrow’s Answers Start Today 10 (2006) [hereinafter FP7: Tomorrow’s Answers].

32. Id.; see also European Comm’n, Work Programme: 2011: Cooperation: Theme 5: Energy (2010) [hereinafter Theme 5: Energy].

33. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Investing in the Development of Low Carbon Technologies (SET-Plan), COM (2009) 519 final (Jan. 7, 2009).

34. EEGI Roadmap & Implementation Plan, supra note 2730.

35. “Commission Cautious on Smart Grids,” EurActiv, Apr. 16, 2010: (“In October 2009, the Commission published its long-awaited funding map for the Strategic Energy Technology (SET) Plan …”).

36. Anna Jenkinson, “A Smart Grid for Europe,” Sci. Bus., July 15, 2010 (stating that the smart grid initiative was one of four initiatives aimed to implement the SET Plan and identifying the other three as wind, solar and carbon capture and storage).

37. EEGI Roadmap & Implementation Plan, supra note 2730, at 2.

38. Office of Elec. Delivery & Energy Reliability, U.S. Dep’t of Energy, Smart Grid Research & Development: Multi-Year Program Plan (MYPP): 2010–2014 at 1–2 (2010) [hereinafter U.S. MYPP].

39. See generally U.S. Grid 2030, supra note 23.

40. Energy Independence and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492 (2007).

41. Id. § 1305(d) (to be codified at 15 U.S.C. § 17385(d)).

42. Smart Grid Policy, 12 FERC ¶ 61,060 at 1 (2009) (codified at 18 C.F.R. ch. I).

43. Id. ¶¶ 12, 22 (citing authority under Federal Power Act § 201).

44. Press Release, White House, “President Obama Announces $3.4 Billion to Spur Transition to Smart Energy Grid” (Oct. 27, 2009).

45. U.S. MYPP, supra note 3850, at 2. 

46. EEGI Roadmap & Implementation Plan, supra note 2730, at 16–19.

47. U.S. MYPP, supra note 3850, at 2.