Miles Keogh, NARUCAugust 24, 2011

Smart Grid: Federal Inputs and State Perspectives in the U.S.

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Disclaimer: None of this is NARUC official policy.These are probably my opinions, but only mine. Perspectives of the Commissions are as varied as the number of Commissioners & their staffs.

NARUC & its Grants & Research • NARUC members are the PUCs of the 50 States, DC, USVI,

Puerto Rico, and Guam• Grants & Research Dept. engages in research for

Commissioner interest; ~ $3M per year (with ARRA)• Provides link to other Private and Public sector

stakeholders– Electricity Delivery Working Group, – National Council on Electricity Policy, – National Action Plan on Energy Efficiency, – Intelligrid Advisory – Other issues and sectors

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On the menu

• Defining Smart Gird• State / Fed History• Fed Funding, State Action• What’s Next?• What Can / Should We Be Asking?

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What the heck IS the Smart Grid?

• NARUC produced a Smart Grid primer in 2009

• Focus is on Definitions, Key Regulatory and Policy Issues.

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It’s not just the grid + internet

For our primer we needed a definition

The smart grid takes the existing electricity delivery system and makes it “smart” by linking and applying seamless communications systems that can:– gather and store data and convert the data to

intelligence;– communicate intelligence omnidirectionally among

components in the “smart” electricity system; and– allow automated control that is responsive to that

intelligence.

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Lots of components• Appliances, cars, storage, and everything

facing inward from the meter, to the…• Distribution side of the meter to the…• Transmission substation to the…• Integration of generation and resources

(which may be inside the meter!)

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Federal Involvement, State Actions• In 2007, the Energy Security & Independence Act added

a new “must consider” PURPA standard for Smart Grid• Consideration must be complete in 2010 – 2011• So this is something the Feds have wanted the States to

consider for some time• State actions:

– California– New York– Vermont– Texas– Boulder, Colorado

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If It Wasn’t Adequately Considered Before…

• “President Obama has announced the largest single grid modernization investment in U.S. history, funding a broad range of technologies to spur the nation’s transition to a smarter, stronger, more efficient and reliable electric system… The $3.4 billion in investments are part of the American Reinvestment and Recovery Act, and will be matched by industry funding for a total public-private investment worth over $8 billion.”

• “Secretary Chu announced that the Department of Energy is awarding $620 million for projects around the country to demonstrate advanced Smart Grid technologies and integrated systems… These 32 demonstration projects, which include large-scale energy storage, smart meters, distribution and transmission system monitoring devices, and a range of other smart technologies, will act as models for deploying integrated Smart Grid systems on a broader scale. This funding from the American Recovery and Reinvestment Act will be leveraged with $1 billion in funds from the private sector to support more than $1.6 billion in total Smart Grid projects nationally.”

• Of ARRA’s $787 billion, $45 billion went to the Department of Energy, with 11.5 intended for the grid and around $4 billion for smart grid.

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Categories of Stimulus Funding• As an ARRA pot this area awarded 3.375

billion to matching grants that are to be co-funded by ratepayer funding.

• Also another billion to demonstration projects, storage projects, Phasor Measurement Unit / Synchrophasor deployment

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Smart Grid Investment Grants:

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Investment Grant Project Types• Advanced Metering• Customer Programs & Services• Equipment Manufacture• Distribution Systems• Transmission Systems

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The Breakdown Is Significant

$818,245,749 , 24%

$32,402,210 , 1%

$254,260,753 , 7%

$147,990,985 , 4%

$25,786,501 , 1%

$2,150,505,323 , 63%

AMI

Customer Systems

Distributiuon Systems

Transmission Systems

Equiment Manufacture

Integrated

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Regional Technology Demonstrations

• Demonstrate smart technologies including advanced digital technologies, microprocessor-based measurement & control technologies, communications, computing and information that provide regional solutions and best practices to improve system reliability, security & efficiency.

• $435,900,287 awarded

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Storage Demonstrations• Utility- Scale Energy Major,

utility-scale, energy storage installations that establish utility technology cost/benefit, validate system reliability, durability & adaptability via advanced battery systems, ultracapacitors, flywheels & compressed air systems . Demonstration areas include: wind & PV integration, upgrade deferral of transmission assets, congestion relief and system regulation.

• $184,826,277 awarded

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PMUs• Leverage capabilities of

synchrophasors via installation and network of multiple high-resolution, time-synchronized grid monitoring devices, collect and analyze data, and use of data to create wide-area information that results improved operations and planning, particularly in local or regional operational issues that pose reliability concerns.

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Thinking about value• Much discussion on cost and on benefit

components:– Outage management– System optimization– Customer empowerment and demand response– Enabling electromobility

• Each has a cost and a possible benefit• “High-value” and “low value” don’t capture time

and uncertainty, however, so instead we hope Commissioners will consider:– Direct value applications– Option value applications

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Smart Grid can enable the reduction of ~5-9% of 2005 GHG emissions

© 2009 Silver Spring Networks | Company Confidential

Enabling renewable integration and transport electrification are key Smart Grid applications for combating climate change

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Smart Grid GHG abatement potentialGton CO2e 7.2

5% 9%

Elec-tricity

Do N

ot Reproduce

Do Not Reproduce

Confidential

Per Peter Yeung, SSN

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Dramatic reduction in tailpipe emissions

Reduction in petroleum imports of >50%

Reduction in peak loads – lowering prices for consumers

Improved grid reliability

Increased grid security

Positive environmental impact

Enable new products, services and competitive retail markets

Anticipate and respond to system disturbances (self-heal)

Perform continuous self-assessment, respond faster by supplementing human operators.

Operate resiliently against attack and be less vulnerable to natural disaster

Equivalent of $1.00 per gallon for gasoline

Provide prices and opportunity to buy when KWh prices are low and sell when high

Home back-up power and mobile resource

Protecting against power losses and avoiding costly interruptions and spoilage

Reducing the cost of electricity during peak power periods,

Customer choice from products to services

Enhanced system reliability

Enable active participation by consumers

power quality at different prices

Consumers access to information, control and options that allow them to better manage energy and environmental costs

Minimizing energy transmission losses

Improving the efficiency of the electricity grid.

Increased efficiency of power delivery

Extended asset life

Seamlessly integrate generation and storage options

Operate efficiently to improve load factors, lower system losses, and improve maintenance.

Grid operators have new resource options to provide energy, capacity and ancillary services

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Are we considering Direct and Option Value?

• Roughly 12% of investment grants have gone to T & D applications of Smart Grid

• Vast majority has gone to some version of meter deployment

• The funds must be matched• Approvals to date:

– Maryland– Colorado– California– New York– Texas– Vermont– Oklahoma

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Smart Rates • Digital price signals that can be

communicated or broadcast electronically • Signals that can be acted upon by

automated customer controls, smart appliances and energy management systems

• Signals that integrate prices and incentives

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Difficult cases

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California: Bakersfield and Consumer Revolt

Colorado: Smart Grid City

Maryland: BG&E

Hawaii: PSC rejection

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Basic Questions• What problem(s) are you trying to solve: manage future

costs, improve reliability, or integrate renewables ?• Which customer(s) are you trying to serve: society, end-

user (rate payer) or the utility ?• How is the “Smart Grid” different from what you’ve

already been doing ?• What are the smart grid costs and benefits?• Where do you start and what information do you need to

proceed: [1] Pilot programs or [2] Transition Plan ?

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What else should we be asking? • What will customers want? What will they put up with?• What is the best way to manage the integration of both

smart grid and of other new technology (such as PHEVs, distributed energy resources, etc.)?

• Does Smart Grid make us more secure or less?• Willa “Modern Grid” require new or amended rules?

(addressing incentives, rate recovery of premium, etc.) • Will those rules affect the market and regulatory tools

available to us without upsetting their current functions?• Given other upward pressure on electricity prices, how can

we make smart grid a factor in relieving that pressure, or at least find synergy with other needed investments?

Miles KeoghDirector, Grants & Research

NARUC202-898-2217

mkeogh@naruc.org