Spring 2009 Climate Alert
Achieving Economic Prosperity and Climate Protection [ PDF ]
In this Newsletter:
The Smart Grid
By William A. Nitze, Chairman, Climate Institute Board of Directors, November 2002-February 2009
Improving the U.S. electricity transmission and distribution network through deployment of new-information-based technologies can make an important contribution to reducing U.S. greenhouse gas emissions and thereby reducing the risks of disruptive climate change. Our current electricity grid is inefficient; subject to black-outs and other disruptions; incapable of transmitting large quantities of wind and other renewable energy from where it can be produced to where it is needed; and unable to utilize distributed energy sources to reduce peak demand for electricity from conventional power sources. The so-called “smart grid” would address all of these deficiencies.
On a macro scale, the smart grid would replace outdated transmission infrastructure with more modern power lines and equipment, thereby reducing line losses and the need to build new power plants. It would also create new power lines to connect remote areas with strong wind regimes or other renewable energy resources to areas with higher population density and electricity demand. These lines would ideally be high voltage, direct current lines buried underground, which would reduce power losses, protect against weather-induced interruptions, and minimize resistance from people living near the lines. The federal government would also promulgate new interconnection protocols that would maximize power sharing between regions in the event of a power shortage. The net effect would be a more efficient, resilient transmission system and a higher proportion of electricity from renewable sources.
On a micro scale, the smart grid would empower the end user and the electric utilities supplying the end user to integrate local renewable energy sources into the end user’s total power supply, store sufficient power at the end-user’s premises to cover critical loads during outage, and moderate electricity use by different systems within the end-user’s premises to reduce the power required for a given level of energy services. It would also enable utilities to keep track of electricity use by specific systems within the end-user’s premises and to draw down power stored at those premises to help meet peak demand without curtailing customers or building peak power plants. In the future, the smart grid will also be able to access power stored in the batteries of plug-in hybrids parked at the premises.
There are a number of products ranging from smart meters to large battery storage units that perform these functions already in the marketplace. GridPoint, Inc., a company that I co-founded, manufactures energy management units that can simultaneously keep track of where a customer’s electricity is coming from and going to, convert direct current from solar panels or another renewable energy source on the customer’s premises to high quality alternating current, store sufficient electricity to cover critical loads for 10 hours or more during an outage, and access power stored in plug-in hybrids. The company is deploying these units in several smart grid pilot projects around the country, including the $100 million SmartGridCity project in Boulder, CO managed by Xcel Energy. The preliminary results from the Boulder pilot have been promising, demonstrating potential end-use energy savings of 20% or more.
The Obama Administration has made the smart grid a central component of its energy and climate change policies. The Administration’s stimulus package specifically directs $11 billion towards smart grid, including $4.5 billion in matching grants for smart grid projects to be chosen by the Department of Energy (DOE) in a process that is still being worked out. Smart grid companies may also be able to access funds from other pots of stimulus money such as the $7.2 billion set aside for expanding broadband services to underserved areas or the $3.2 billion to be distributed by states through energy efficiency and conservation block grants. DOE is already working on regulatory and right of way issues that need to be addressed to make the smart grid a reality.
There are several large challenges that need to be overcome. The first is how to pay for smart grid investments once the stimulus money has been committed. The obvious answer – higher transmission charges – is a hard sell politically. The second is how to create an integrated national grid. The obvious answer – transferring authority from state regulatory commissions to the Federal Energy Regulatory Commission – also faces strong political opposition. I am confident, however, that the Obama administration has the political will to address these challenges and that a smarter grid will make a significant contribution to achieving our climate change and other energy and environmental policy goals.
Other Articles in this Newsletter:
Good Economics: A Strategy That Might Save the Climate
Does a Big Economy Need Big Power Plants?
Output-Based Allowances for Efficient Greenhouse Gas Reductions
Green Provisions in the U.S. Stimulus Bill: Reducing Emissions While Saving the Economy?
A Practical Roadmap for Efficient Vehicles