Smart grid: worth it?

Costs and benefits weighed by leading utilities

Oct. 7, 2011 - Phil Carson - intelligentutility.com

Some questions don't have direct answers and such was the case in last week's EnergyBiz webcast titled, "Rethinking Smart Grid: Do the Benefits Outweigh the Challenges?"

But such questions do lead to enlightening discussions and threads of thought worthy of consideration. 

As I listened to representatives from San Diego Gas & Electric (SDG&E), Xcel Energy and CenterPoint Energy—located, respectively, in Southern California, the Midwest and Texas—explain their rationale for grid modernization, their technology roadmaps and enumerate challenges and benefits, I too considered the question posed by the webcast's title.

My initial reaction to the question is: Do utilities have a choice? Listening to the participants in the webinar, the answer to that question was specific to each of the utilities in question.

For San Diego Gas & Electric, its own dedication to excellence and customer-driven priorities would answer the question in the affirmative. According to Lee Krevat, director of smart grid, Sempra, the owner of SDG&E, customers of that utility are expected to be among the nation's highest adopters of electric vehicles as well as solar photovoltaics. Serving 1.4 million metered electricity customers (and 850,000 natural gas meters) in a 4,100 square mile area means that those customer priorities must be addressed.

Regulatory mandates, however, run in parallel to SDG&E's quest to serve its customers and collaborate with stakeholders. California's Senate Bill 17 mandates that a "smart grid deployment plan" be filed by July 1. (SDG&E filed its plan June 6.)  

The plan required by that legislation had to include a vision statement on where the utility is heading, a baseline on where it stands today, a strategy for how to get from A to B, how it is addressing security, a roadmap for technology deployment, an assessment of costs over ten years and benefits that meet policy mandates, environmental goals and sound economics, as well as the metrics by which all this would be measured.

Not only is SDG&E accommodating its customers' adoption of solar PV, but it had years ago committed itself to 33 percent renewable energy penetration by 2020, which now is California's current state renewable portfolio standard. Thus aspirations and mandates have dovetailed.

In the case of CenterPoint Energy, it appears that the demands of location and reliability also make the question of whether benefits exceed challenges somewhat moot. 

CenterPoint Energy operates transmission and distribution facilities for 2.2 million metered electricity customers in the Houston area, as well as three million natural gas customers in six states. Houston's famously hot locale sits on the Gulf Coast smack in the middle of "Hurricane Alley." Maintaining service—just ensuring fundamental reliability and restoring outages—in such a location has driven CenterPoint to incorporate "smarts" into its grid.

Jeff Myerson, CenterPoint's director of smart grid integration, told the EnergyBiz panel that CenterPoint has  pursued a  three-year program of interval meter deployment and a "Smart Meter Texas Portal" established with other Texas utilities. Myerson said those interval meters and the energy feedback information they enable would engage the utility's customers. Engagement, of course, not only increases customer satisfaction but also boosts participation in peak load reduction, which has a strong payback in capital deferral and operations and maintenance terms. 

CenterPoint also is implementing an "Intelligent Grid Distribution Management System," which includes a communication network, 164 circuit switches and substation monitors. Utility benefits include efficiencies from remote, automated meter reading and electronic service orders including remote connects/disconnects. Other benefits from these programs include more precise identification of outage locations and quicker circuit switching to isolate faults, leading to improved reliability and faster restoration.

I'll close with the webcast's third panelist, Michael Lamb, managing director, business systems and assistant CIO, Xcel Energy, a vertically integrated utility that delivers power to 3.4 million customers in eight Midwestern states (and serves 1.9 million natural gas customers).

Lamb said that "business cases must be the center for all modernization investments." Strategies and objectives need to be clearly defined before undertaking a project. That said, the business case for technology deployments continue to improve, he said.

Meanwhile, Lamb said—echoing my case above—"the expectations of customers and regulators are changing and even driving technological investments."

Xcel relies on the traditional utility model to grasp the business case for grid modernization, which must take place "in the value streams that our customers and regulators are used to"—i.e., safe, reliable, quality, secure power, according to Lamb.

"At a high level, we think of 'smart grid' as a continued modernization of our value stream," Lamb concluded. "The pace of change has picked up. There's a significant convergence occurring between the physical and virtual worlds, sometimes referred to as operating technologies and information technologies. As long as utilities stay focused on core business case procedures and methods, we'll make the right decisions, as we have for many years."

(We'll ignore the counter-example of Xcel's SmartGridCity pilot here for now and assume that Xcel will apply Lamb's logic to actual grid modernization deployments.)

So the answer to our basic question is "yes," at least in these three cases. Readers, weigh in! 

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757