Energy Exchange

California Smart Grid Plans Expect Significant Benefits

By Tim O'Connor / Published: August 16, 2011

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.

Also posted in California / Read 1 Response

Is Government Getting Out Of The Clean Energy Business?

By Andy Darrell / Published: August 5, 2011

Source: Front Page Magazine

Tuesday’s debt deal makes one thing clear:  whatever it is that you may want government to spend money on, there will likely be less money to go around in the future.  That said, I think it’s time to rethink government’s role in the clean energy marketplace.  Whether or not it has money to spend, governments at all levels can do a lot to build a robust American market for clean energy.  Here are some suggested ways forward:

First, engage the private sector.  Our government is highly skilled and effective when it comes to enabling clean energy research, which in turn leads to high-risk investments in emerging clean technologies, but it cannot pay for everything.  This is not the era of the New Deal, and we’re not China.  We are, however, a nation of innovators with the ability to mobilize private capital second to none.  So let’s get innovators, entrepreneurs and regulators in a room together and begin to work on projects that establish what economists have been telling us for years:  clean energy and efficiency will make and save money.  In some places, government can be a convener – for example, cities across the country (and the world) could work with their real estate and banking communities to aggregate efficiency upgrades at a scale large enough to attract major investment from institutional investors and other sources of capital.  Government could basically be a source of data and the initial step in drawing parties together to help broker deals

Second, lead by example and cut waste.  From energy needed to fuel our troops on the front lines to the air conditioning used for government officials in Washington and state and local capitols – there’s a huge amount of money to be saved and strategic advantage to be won by running our government’s own energy use more effectively.  In fact, EDF’s Climate Corps Public Sector is currently engaging in this type of exercise in its efforts to reduce the New York City Housing Authority’s (NYCHA) energy use by more than 45 percent.  These types of energy efficiency efforts should appeal to all sides of the political aisle:  government will do more with less; we’ll send less money overseas for imported oil; we’ll pioneer new technologies through smart energy applications; and Americans will be put to work upgrading government buildings with less wasteful technology.  If there’s a role for money here, it’s to finance upfront costs that get replenished out of energy savings – possibly a mix of private and public capital. 

Finally, open the energy marketplace to truly fair competition.  America’s utilities are governed by an arcane mix of rules that get in the way of innovation and tend to favor traditional fossil fuels.  Our grid is a long way from a smart grid.  Don’t even get me started on subsidies for oil and coal companies.  Rules that shape the energy market and grid are set at the federal, regional and state levels.  It’s time for a national effort to make it easier for households and businesses to use renewable sources of energy like solar and wind, as well as enable drivers to plug in their electric cars.  Homes and businesses should be able to sell extra solar electricity into the grid easily and without limit.  There should be a simple way to aggregate the benefits of efficiency; for example, consumers should be able to sell saved energy to compete with new power plants and this cleaner energy should be valued by regulators on par with new supply.  Consumers should be able to charge electric cars at off-peak times, which could end up costing as little as about three cents a mile to operate.  We can have all this – if we get the rules right at Public Utility Commissions (PUCs) across the country.

The role of government would change.  It would become a source of data, culled from public sources like demographics and building department filings.  It would help ensure that information is disclosed, like the SEC requires disclosure of information to investors on the stock market.  It would change the rules to remove barriers to clean-energy investment inherent in our current electric grids and markets.  It would use its bully pulpit not to harangue, but to create the negotiating table around which unlikely partners come together.  It would enforce rules clearly and consistently to protect health and environment. It would use its own buildings, agencies, vehicles and supply chain to test and develop technologies – to be out front and demonstrate what works.  And where possible, it could be a source of grants or loans, but that role would be overshadowed by the value of the vibrant private energy market that it would support by doing all of these other described duties. 

If the government commits to moving ahead in this way, America will leap ahead in the clean energy sector – and we’ll be moving so fast that its citizens will barely have time to lament the relatively smaller amount of government spending.

Also posted in Energy Efficiency, Renewable Energy, Washington, DC / Read 1 Response

Smart Grid Evaluation Framework Will Score California Utility Plans

By Tim O'Connor / Published: June 6, 2011

The piece was originally posted on EDF’s California Dream 2.0 blog.

Today, EDF released a tool that will be used next month to critically evaluate the smart grid deployment plans of Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E) and Southern California Edison (SCE).

As a bit of background, we’ve been actively engaged with the California Public Utility Commission (CPUC) since the start of the state’s smart grid planning process. Our comments and suggestions were included as mandatory requirements in the roadmap approved by the CPUC last June, which these utilities must follow in developing their plans. Plans are due to the CPUC by July 1st.

We’ve also been working with SDG&E on its plan, which was submitted to the CPUC earlier today. We advised the utility on steps it can take to empower customers to save energy and money, integrate large- and small-scale renewable energy projects and allow electric vehicles to charge when electricity is cheaper and cleaner.

The Evaluation Framework for Smart Grid Deployment Plans was generated by EDF energy staff and independent consultants. It was reviewed and critiqued by a diverse array of industry and consumer groups including the Electric Power Research Institute (EPRI), Lawrence Berkeley National Laboratory (LBNL), The Brattle Group and The Utility Reform Network (TURN).

The framework will help systematically peel back the layers of complex utility plans and help CPUC staff, policy makers and the public see whether they will deliver the envisioned benefits of a fully deployed smart grid.

Since these plans are the first of their kind by major electric utilities in the West, and are the building blocks that will help forge a new path for updating California’s grid, EDF expects there will be a certain amount of learning while doing.  

With utilities spending millions of dollars on everything from smart meters to automating new systems, it’s important to provide guidelines to help them get it right from the beginning. The framework will shine a light on the best ideas (with an eye toward establishing best practices) and identify where plans fall short.

Our goal is to guide all utilities on how they can deliver environmental and public health benefits to consumers and deliver returns on ratepayer investments in the form of cleaner air, improved public health, reduced energy costs and a stronger economy. Among other attributes, top plans should show how the smart grid will lead to consumers having more control over their energy use and better access to data – making it easier to implement new technology for clean energy and energy efficiency. 

EDF will put its framework to work over the coming weeks and months to evaluate these plans thoroughly and with equal rigor so that the best elements are adopted across the state and any weaknesses or gaps remedied.

Also posted in California / Comments are closed

Malfunctioning Smart Meters Demonstrate Their Intelligence

By Jamie Fine / Published: May 16, 2011

The digital “smart meter” replacement of antiquated analog meters in California has caused quite a stir.  These devices have been making headlines since installations began en masse in 2006 because of concerns about health risks related to the wireless technology they use to transmit data and coincidental bill increases.  While an independent contractor hired by the California Public Utilities Commission found that the initial bill increases were due to summertime rate hikes and unusually high summer temperatures, PG&E’s smart meters are in the news again for billing errors. 

This time there are faulty meters generating billing errors when hot weather makes them run faster than normal.  While some skeptics may feel that the meter malfunctions validate their concerns, in fact, it demonstrates a key smart meter benefit: for the first time ever, meters have the ability to alert utilities that they aren’t working properly. 

When Bad News is Good News

In this particular instance, PG&E remotely compared the meters’ clocks with real time. It identified roughly 1,600 out of 2 million meters made by Landis & Gyr that were malfunctioning.  Its other 2 million meters made by General Electric don’t appear to have the problem. 

This is transformative: PG&E can now monitor millions of meters in real time to comprehensively identify and ameliorate problems. 

This isn’t possible with old analog meters, which is one of the many reasons why they’re being replaced. Before smart meters, electricity users who suspected erroneous billing had little evidence to make their claims.  Now the utility can proactively identify and address problems. 

To Put Things in Perspective

While it is inconvenient when any technical device, including a smart meter, is malfunctioning, the rate of problems with analog meters is much higher.  Consider this comparison:

  • Roughly 1,600 out of 2 million meters were found to have internal clocks that run a bit fast in rare hot conditions.  That’s a meter failure rate of 0.08%, or less than one 10th of a percent.  This failure rate is believed to be within industry norms.
  • According to PG&E, analog meters have a failure rate in the range of 3%, which means they fail at rates about 40 times greater than suggested by these faulty smart meters.

PG&E estimates that the overcharge for failed smart meters is less than $40/year, about $3.33 per month.  Again, it is the intelligent meters that enabled PG&E to quantify and correct the problem.  All of the customers with faulty meters will be repaid in full and receive replacement meters.  They will also get $25 for being inconvenienced and receive a free home energy audit.   

Advantages of Smart Meters

Once smart meters have been fully deployed, utilities will be able to remotely and in real-time monitor all meters in their service territory, isolating malfunctions with precision and speed.  What does that mean for consumers?  More reliable service and quick resolution when problems arise. 

You might wonder why EDF, an environmental advocacy group, is commenting on this.  Smart meters are key to delivering the environmental and public health benefits of the smart grid. 

EDF will soon be releasing a smart grid evaluation framework targeted at the plans that PG&E, San Diego Gas & Electric, and Southern California Edison owe the state by July 1, 2011.

We will then be publicly evaluating those plans for their ability to deliver benefits including: increased effectiveness and reduced costs of energy efficiency and other electricity conservation programs; integration of electric vehicles and intermittent renewable electricity generation resources, such as rooftop solar panels.

Stay tuned.

Posted in Grid Modernization / Read 3 Responses

Clean Energy: Getting Past Cute

By Andy Darrell / Published: May 13, 2011

Source: Wired Business Conference

Did Bill Gates just call the solar panels on my house cute?  “If you’re interested in cuteness, the stuff in the home is the place to go” was the line most often quoted from his talk at the Wired Business Conference in New York City.  Headlines declared that Bill Gates thinks clean energy is ‘cute’ and Gates seemed to suggest that people who were serious about energy should be looking to innovation in nuclear and other technologies. 

That set off a firestorm of responses among clean energy advocates who point out, correctly, that the cost of renewables is coming down, the clean energy market is growing, and many countries are leaping ahead of the US in terms of public investment and incentives. 

According to a UN report released May 9, renewable resources are plentiful and could provide as much as 77% of the worlds’ energy by 2050.  According to the report, renewable energy investments globally could be in the trillions of dollars by 2030.  The brake, according to the UN, is not technology.  It’s governance and policy that stand in the way.  To get beyond cute, we need advances in policy that create an energy market friendly not just to fossil fuels but to renewables too.

But what does it mean for policy to support clean energy?  A couple of weeks ago, Deutsche Bank released a report that says: “there has been a very substantial growth in [clean energy] investment in China, and something of a shift away from Europe and the US as the centers of clean energy investing.”  The implication is that America is being left behind.

But here’s the kicker.  Deutsche Bank then says: “clean energy private investment is still dominated by the US.”  To me, that’s America’s ticket to leadership in the trillion-dollar market of the future.  Create the rules of the game that allow clean energy to compete and innovation has a shot at taking clean energy well past cute, all the way to super-model status. 

Today’s rules of the game make it hard to plug renewables into the grid on parity with fossil fuel sources.  Buildings can waste nearly half of their energy – yet utilities aren’t rewarded for “buying” efficiency.  We can produce electric cars that cost less than three cents a mile to drive (compared to more than 13 cents for a gasoline-powered car), but where do we plug them in?  How many households and businesses can easily figure out their energy run rate – and the most cost-effective steps to cut bills?  Shouldn’t there be an iPhone app for that?

It’s time to take private investment in clean energy to scale.  For that to happen, government has to rewrite the rules of the game so that:

  • Clean energy can plug into the grid, both for distributed sources (which work really well in some places, like cities) and for utility-scale renewables (which could work well in other places, like deserts).  No need to disparage one or the other – let them compete fairly and openly for market share in different places.
     
  • Information is transparent and accurate.  Make it easy for buyers to see the energy footprint of homes and CFOs to track energy usage floor by floor.  Yes, there ought to be an iPhone app for that too – not just an opaque monthly bill.  Map the pollution created by power plants.  Disclose hydraulic fracturing fluid.  Hidden information kills free markets.
     
  • Efficiency has a market.  Let utilities “buy” efficiency just like they “buy” new power plants and innovators will find ways to aggregate efficiency across cities and real estate portfolios to meet that demand.
     
  • Cars can be electric – and be “batteries.”  Electric vehicles can be batteries for intermittent renewables like solar and wind.  They can also be the least expensive cars on the road today.  If we could easily plug them in, who wouldn’t want that?
     
  • Subsidies give way to rules that create a level playing field.  Governments currently dole out massive subsidies to the oil and gas industry.  They subsidize renewables too, but comparatively less.  Worldwide, some reports suggest that governments pay over $300 billion in subsidies for fossil fuels and a mere $55 billion for renewables.  Frankly, waiting for more and more subsidies alone is a losing strategy, especially in times of fiscal constraint.  What if we focused instead on getting the rules right, so that renewables could plug in and compete on more even footing?  And what if we focused on getting information into the marketplace so that local and regional renewable opportunities were clear to end-users? 

How important is it to get this right?  By 2030, the global population will reach 10 billion people – that’s a billion more than originally expected.  Most will live in explosively growing mega-cities, especially in fast-growing economies in China, South Asia, and Latin America. 

Can we provide so many people an economic future without destroying the planet?  Only if we take down the barriers to private sector innovation and rewrite the rules of the market to let clean energy in. 

Here’s something else Gates said: “If we don’t have innovation in energy, we don’t have much at all.”  If we don’t have innovation in policy, we won’t have enough innovation in energy.

Also posted in Climate, Energy Efficiency, Renewable Energy / Read 1 Response

Smart Grid: Big Market, Big Return

By EDF Blogs / Published: May 11, 2011

Guest Blog Post By: Jackie Roberts, EDF’s Director of Sustainable Technologies, National Climate Campaign

The exciting innovations in the area of an energy internet – also known as the “smart grid” – illustrate just one of the ground-breaking ways that the U.S. can reduce our energy consumption and carbon emissions while also creating new business opportunities that help expand jobs.

Big Market, Big Return

Using data from a Pacific Northwest National Lab study that quantified several categories of smart grid benefits, Duke University estimates that a built-out smart grid could reduce an estimated 18% of emissions from the U.S. electric sector.   Looking across the full spectrum of possible benefits, EDF sees even greater potential.  By mobilizing system-wide efficiencies and large-scale deployment of renewable and distributed resources, a well-designed smart grid could reduce electric sector carbon emissions 30% by 2030.

This new market is predicted to be just as large as the aforementioned emission estimates.  According to one market research firm, the global market value of products to enable the smart grid has grown from an estimated $26 billion in 2005 to more than $69 billion in 2009, a compounded annual growth rate of 22%. Total market value is expected to exceed $186 billion by 2015 (SBI Energy, 2010).

Who Will Benefit?

Duke University’s report, “U.S. Smart Grid: Finding New Ways to Cut Carbon and Create Jobs,” identifies 334 U.S. company locations in 39 states that are already developing or manufacturing products for a smart grid. All regions of the country will benefit.

For example, Chicago-based S&C Electric Company, founded in 1911, acquired new customers in the smart grid market. The company holds thousands of patents in switchgear, interrupters, and other transmission-voltage devices.  In the past four years, its business has expanded approximately 50%, according to the company, with new products such as a truck-sized device that connects wind farms to the grid.   Today, most of S&C’s products are made in the United States and Canada, with only a small portion made elsewhere.  In all, the U.S. workforce totals about 1,700 employees, including more than 1,000 machinist, manufacturing, assembly and support positions, 200 engineers and technicians, a global sales force, and finance and accounting offices.

Global Expansion

Export markets are promising as well.  According to Duke, “Italy’s 30 million installed smart meters all use Echelon (a U.S. company based in California) technology.  Echelon has recently won large contracts in China, Russia, and Denmark.” 

As former Google CEO Eric Schmidt noted, “Many companies can skirt downturns entirely by coming up with innovations that change the game in their industries – or create new ones.”  That’s exactly what companies identified by Duke, from well-known IBM and other partners in our Pecan Street Project to companies such as Cooper Power Systems, are doing as they expand their offerings to meet the demands of the smart grid value chain.  

Just last Friday, Eric Spiegel, President and CEO of Siemens Corporation, announced that their “orders and sales are increasing and [they] have added more than 1,000 new jobs to our U.S. workforce in just the last two quarters to keep up with the demand.”  All three of the company’s sectors – Industry, Energy, and Healthcare – contributed to these results, but job growth was concentrated in the Industrial Automation, Building Efficiency, Smart Grid, and IT areas.  Encouraging news all around.

Posted in Grid Modernization / Comments are closed