California Smart Grid Plans Expect Significant Benefits

But Missing Metrics and Milestones to Achieve Them

Over the course of the next 10 years, California’s electric grid is getting a 21st century facelift. Last month, the three biggest utilities, PG&E, SDG&E and SCE (with more than 11 million customer accounts) released smart grid deployment plans outlining roughly between $2.4 and $3.6 billion of new investments to make the smart grid a reality.

These plans were required by a 2009 law passed by the State legislature (SB 17), and the investments they outline are critical to helping California meet new infrastructure, efficiency and environmental policies. The state policies of note include reducing greenhouse gas emissions to 1990 levels by 2020, increasing renewable electricity use from 20 percent to 33 percent by 2020 and installing 1,940 megawatts (MW) of solar energy by 2017.   

Last January, EDF began developing a framework for evaluation. The framework determines how close a plan is to achieving the full range of smart grid benefits. In particular, it looks at whether plans have clear visions, effective deployment strategies, meaningful metrics, accurate baselines, and demonstrable roadmaps for success.

After nearly 1,000 pages of smart grid plans were released by the utilities in June and July, EDF energy experts used the framework to evaluate them and filed comments to the California Public Utilities Commission (“CPUC”).

What we found was dramatic. Most importantly, according to the plans, if California deploys the smart grid in an effective way, utilities are going to significantly reduce air pollution, eliminate massive inefficiencies in the system, dramatically increase California’s reliance on renewable energy (including “distributed” energy generated in communities’ own backyard), accommodate hundreds of thousands of zero-emission electric vehicles, and empower consumers to manage their energy use, footprint and bills.

These benefits, if realized, will be significant. PG&E, for example, estimated that it will cut costs by up to $2 billion and reduce up to 2.1 million metric tons (MMT) of carbon dioxide (CO2) emissions. SCE estimated it will be able to charge 1 million electric vehicles by 2020 and avoid up to 1,900 (MW) of peak demand by 2014 (peak demand is typically the most costly to deliver and often the most polluting). SDG&E estimated that it will cut 6.8 MMT of different types of global warming pollution and cut fuel costs by $615 million.

Smart Grid Plan Evaluations and Scores

EDF evaluated plans on the individual pieces—their vision, strategy, metrics, baseline, and roadmaps—and also as a whole.  What we found was that while utilities are visionary and openly strategic about how the smart grid will be deployed, they are missing some key ingredients to overall success – such as quantifiable goals and numerous metrics which progress can be tracked. No utility plan scored above a B- because data was lacking.

EDF gave SDG&E and SCE the highest cumulative grades of a ‘B-‘; though SDG&E edged ahead of SCE with a higher overall points score (32.3 out of 40 for SDG&E compared to 31.8 out of 40 for SCE).  PG&E’s plan earned a ‘C’ (with 28.9 points out of 40). SDG&E earned the most overall points by working with numerous stakeholders and digging into ways to provide the full range of expected benefits.

From the beginning of this process, we advised utilities that these plans should be viewed as roadmaps that will guide a multi-year journey toward a modernized grid. The public, however, and the state’s elected and appointed officials need more information to gauge whether the state’s on the right track. 

EDF views the scores as mid-term grades, with room for improvement. Luckily, the smart grid planning process is still underway at the California Public Utilities Commission so utilities can improve their plans and raise their overall scores before they become final.

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