Intro to the Grid

1. Intro to the Grid

3. The Federal Energy Regulatory Commission regulates the interstate transmission, distribution, and wholesale selling of electricity • State utility commissions regulate the retail sale and pricing of electricity • Utilities are allowed to pass on price increases to consumers • Without regulation, there would be little incentive for utilities to operate efficiently • Increases in costs such as facility expansion must be approved by the regulating authority • The addition of something like a “peaker plant” is passed along to consumers

4. Energy consumption varies

5. Sources of Power at Varying Load

6. Seasonal Variation in Pricing

7. Things delivered to your home What is the difference in production and delivery of these three things? Electricity cannot be stored in quantity

8. Why does storage matter? • Power plants represent a lumpy technology • Huge investment and “fixed” output • Turbines can come on and off line but take considerable time to do so • What if you have a spike in demand in a business that cannot store inventory?

9. One part of the solution for demand variation is to build peak demand power plants • What are the problems with this stand alone system? • Asset utilization is not maximized. Fixed prices are spread over smaller number of units • Small peaker plants are expensive to run • Variation in demand still exists + Peak demand generation

10. Why Grid? • An electric grid allows better demand fulfillment and integration with renewable sources • Some generation facilities may have excess capacity while others have excess demand • Solution? • Electricity trading helps smooth out mismatches in supply and demand + + + + Peak generation Peak generation Peak generation Peak generation

11. Existing Power Grid • http://www.npr.org/templates/story/story.php?storyId=110997398

12. Power Grid • The system of multiple sources of supply and multiple points of demand allow balancing the variability in demand relatively sticky supply • Transmission system operators try to coordinate supply and demand • T&D costs are about 30% of consumer electric bill • A wholesale electricity market exists when suppliers offer excess generation capacity to electric retailers

13. A simple grid • The system, in theory, should be able to reach market equilibrium assuming we can calculate the price at each node • If the image at the right represents a power grid, several paths connect the two red points to the right • Between each set of nodes, transmission equipment experiences loss as resistance converts some of the electricity to heat – 6% of energy is lost in T&D • This loss is equivalent to 63 million more cars on the road • Lines are also designed with a maximum capacity • not any path is a viable option depending on supply and demand • Visibility of supply and demand is essential

14. Why Smart Grid? • Since 1982 growth in peak demand has risen 25%/yr more than transmission and distribution • Reliability: Outages cost about $500/person/yr • 41% more outages affecting 50,000+ people (1995-2000) • Age: Expected lifespan T&D 40 years, average age 42 • CO2 Emissions: 40% from electric generation, 20% from cars • Data Center Energy: Power quality critical, Demands doubling every 5 years, Generation emissions close to airline industry • Integration with renewable sources • Security: Our current grid is centralized and thus at risk • Natural disaster, terrorism

15. What is it? • Demand response • Customer controlled • Behavior modification • Home Area Network • Utility feedback and variable pricing • Smart Meters – allow detailed usage information, outage identification • Usage information allows utilities to charge based on time of use • Addition of Distributed Renewable Generation • Storage – PHEV’s? typically 95% of vehicles are parked • Intelligent distribution devices and control systems

16. So Why is Cisco Interested? NETWORK DEVICES "Our expectation is that this network will be 100 or 1,000 times larger than the internet," said Marie Hattar, vice-president of marketing at U.S.-based Cisco Network Systems Solutions. "If you think about it, some homes have internet access, but some don’t. Everyone has electricity access — all of those homes could potentially be connected."

17. Distribution and Transmission Data • Our Grid • Denmark is a leader in distributed grid generation • Significant communication and control infrastructure is needed

18. Home metering • Many utilities want better visibility on usage to support variable pricing, allocation, etc • Austin Energy installed 500,000 meters and sampled every 15 minutes. Annual data storage went up 10x (200TB) • In a 2009 study by the Federal Energy Research Committee estimates a roughly 75% rollout would mean organizing and managing 100 PB of information within 10 years

19. Home Area Networks • Multiple visions exist regarding integration with the grid • Conservation and balance of energy through smart appliances • Appliances which can be controlled remotely either by you or utility • Appliances which you can allow to turn themselves on or off depending on utility price

20. Examples of HAN applicationsAll are consumer Opt-In • AC metering. Utilities cycling AC off for short periods or adjusting the temperature a couple of degrees • Washers, Dryers, heat pumps, etc which turn on when energy price levels hit a certain point • Almost all • Refrigerators that cycle differently based on usage

21. PHEVs and GRID • EVs and PHEVs represent an opportunity for smoothing on the grid • 85% of cars are usually parked • PHEVs represent a storage opportunity for utilities • Charge when demand is low • Draw if when demand is high • Your thoughts?

22. Other Big Opportunities • Data Center Expansion • Data Organization and Retention • Data Privacy • Data Mining

23. Consumer Driven? • Meta analysis of 9 studies across 3 countries report an average of 3.8%* savings • In aggregate this is significant, but for the individual consumer … ? • One in three utilities lacks confidence that regulators are going to make it easy to recover cost of implementing grid projects • Regulators in many states have told utilities to redraw smart grid plans to push consumer benefits higher in to do lists * My June bill was $230…I would have saved $8.75. Do I buy new GRID enabled appliances?

24. Top Ten Things Consumers Wantfrom the Grid • Data • Guidance • Reliability • Control • Comfort • Convenience – and ease of communication with utilities • Cost Savings – return on investment • Environmental Preservation • National Preparedness • Thoughtful Roll Out

25. Findings from Focus Groups on Grid • Smart Grid Awareness is low • Consumers have a favorable impression of Smart Grid

26. Smart Grid Awareness is Low • Those who had at least heard the term associated smart grid with the development of new technologies to improve reliability, efficiency, billing accuracy, and energy management. • Those who had not heard the term were asked to speculate on what a “smart” grid might mean. Their assumptions focused on improved efficiency, providing more information to consumers, environmental enhancements, billing accuracy, and reliability. • No one brought up concerns about privacy, health issues, higher bills, etc.

27. Consumers have a Favorable Impression of Smart Grid • With a little prompting on smart grid, participants in focus groups generally described their overall feelings as favorable or very favorable. • Some said they needed more information before expressing an opinion. • A few raised concerns about the costs of the improvements. • Based on the information provided, key value propositions varied from person to person and segment to segment. • No one brought up concerns about privacy, health issues, higher bills, etc.

28. Willingness to Pay for Benefits Varies • Most consumers feel the benefits are significant but are not willing to pay more • Some consumers were willing to pay $3-4/month* for benefits of: • Improved reliability and restoration • Increased access to renewable energy • Availability of better usage information and new pricing options • Reduced greenhouse gas emissions and reduced need for new power plants * The methodology asked if the benefit was not important, important at no cost, willing to pay $3-4 per month

29. Negative comments less impactful than positive: Most compelling arguments are: • Smart grid will help prevent blackouts and restore power faster if they do occur • Existing components in T&D are decades old and wearing out • Power demands are continuing to grow. Adding grid components will allow demand to be met • Adding distributed grid will allow renewable sources to be integrated • Smart meters will allow consumers to see energy consumption and make better choices • A smarter grid is necessary to maintain competitive advantage

30. Negative comments less impactful than positive: Less compelling arguments are: • Grid improvements are necessary to meet demands from electric vehicles • Smart grid projects will create tens of thousands of jobs and bring $12 billion to economy in next two years • Improvements can provide information instantly for dramatic increases in efficiency

31. Smart Meter-Enabled Programs Appeal to Most Consumers • Time of Use Pricing (TOU)and Peak Time Rebates (PTR) appealed to over half of participants • Interest in TOU and PTR is driven both by savings and altruistic motives such as helping the environment or preventing outages • Visibility into pricing is important for TOU and PTR so consumers can make better choices • Those preferring PTR like the idea of responding occasionally for a higher level of reward

32. Smart Meter-Enabled Programs Appeal to Most Consumers • Those who didn’t want to participate in TOU or PTR cited lifestyle or lack or interest in managing consumption • None expressed concern about those who may be negatively impacted by TOU or PTR • Most say they are participating in normal energy saving behaviors • Many have programmable thermostats but few use them

33. What Drives Consumer Adoption • Technology Adoption is governed by: • Perceived advantage • Risk factors • Ease of use • Timing of benefits • Observability • Trialability • Price • Fit with practices

34. Challenges with Consumer Adoption Perceived Advantage • In the focus groups most were not willing to pay more, some would pay $3-4/month • There is an expectation that there would be feedback on usage allow them to save money • This raises the questions on to pay the system including HAN components • It is difficult to gain support for investment in systems which work rather well now. Utilities have done very well in managing the systems so any problems are somewhat transparent

35. Challenges for Consumer Adoption Ease of Use • Most consumers in the focus groups have programmable thermostats, yet many do not use them • This represents an inconsistency with consumers saying the want to save money, but they will not invest time to program the thermostat

36. Challenges for Consumer Adoption Timing of Benefits • Many of the benefits to investment of the grid accrue in the future • It’s difficult to get consumers to invest in problems they are not currently experiencing • When gas prices rise, fuel efficiency becomes a problem. We know we need to reduce our consumption of fossil fuels, yet investment to move this direction has been slow

37. Challenges for Consumer Adoption Observability • Benefits to the smart grid are largely transparent • If my power went out every week, I would happily pay to fix it

38. Challenges for Consumer Adoption Trialability • The ability to alter consumers behavior to reduce energy consumption is something we can’t try before we invest in Grid • This represents a smaller issue and can probably be overcome through communication and demonstrations

39. Challenges for Consumer Adoption Price • Regulators are pushing utilities to show consumer benefit for investments passed through to consumer • Meta analysis of pilot studies show that average savings is 3.8%. • Simple awareness of consumption may alter some lifestyle choices – we might use the delay setting on the washer • The HAN will probably emerge over a decade or more • Only if the premium for Grid enabled is small • Marginal benefit (payback) of enabling appliance is low • Appliances last 7-14 years

40. Challenges for Consumer Adoption Fit with Current Practices • On a daily basis we do not think about our power consumption so we are not used to managing the process • It may take a while before people do their laundry overnight • The capability to do this already exists