NewEnergyNews: TODAY’S STUDY: THE VALUE OF THE SMART GRID

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YESTERDAY

  • THE STUDY: A SUPPRESSED STUDY OF OHIO NEW ENERGY JOBS
  • QUICK NEWS, November 26: WHY PEOPLE DENY CLIMATE CHANGE; THE FORCE OF SOLAR; POWER ELECTRONICS MARKETS TO BOOM
  • THE DAY BEFORE

  • THE STUDY: THE DOE LOAN PROGRAM PAYS OFF
  • QUICK NEWS, November 25: THE PRESIDENT’S CLIMATE CHANGER; SOLAR AND WIND BEAT COAL, GAS ON PRICE; LED LIGHTING TO DISRUPT, TRANSFORM THE INDUSTRY
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    THE DAY BEFORE THE DAY BEFORE

  • THE STUDY: RUNNING OUT OF GAS
  • QUICK NEWS, November 24: NEW ENERGY DOMINATES THE U.S. NEW BUILDS AGAIN; SIERRA CLUB, UNITED STEELWORKERS WANT WIND JOBS; THE ABUNDANCE OF SOLAR
  • THE DAY BEFORE THAT

  • Weekend Video: Much More Inhofe Now
  • Weekend Video: Jon Stewart Talks Keystone, Politics, And Jobs
  • Weekend Video: Jon Stewart On How Keystone Opponents May Be Caught In Their Own Trap
  • AND THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-A NEW WAY TO SEE CLIMATE CHANGE
  • FRIDAY WORLD HEADLINE-EU OCEAN WIND TO CUT COSTS, KEEP GROWING
  • FRIDAY WORLD HEADLINE-COST-COMPETIVE NEW ENERGY, GERMANY’S ‘GIFT TO THE WORLD’
  • FRIDAY WORLD HEADLINE-NEW ENERGY MATCHES COAL ON COST, CAPACITY IN TURKEY
  • THE LAST DAY UP HERE

    THINGS-TO-THINK-ABOUT THURSDAY, November 20:

  • TTTA Thursday-TOP REPUBLICAN DROPS CLIMATE DENIAL
  • TTTA Thursday-FORD ELECTRIC CARS FOR ‘THE MASSES’
  • TTTA Thursday-MIDWEST SOLAR MAKES SENSE AND CENTS
  • TTTA Thursday-NEW ENERGY JOBS BY THE BAY
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

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  • TODAY AT NewEnergyNews, November 26: THANKSGIVING THURSDAY, November 27:

  • Fast Fun Facts About Thanksgiving
  • A Lesser Known Bit Of Thanksgiving History
  • A Funky History Of Thanksgiving

  • Thursday, March 15, 2012

    TODAY’S STUDY: THE VALUE OF THE SMART GRID

    Realizing the Value of an Optimized Electric Grid
    February 2012 (GridWise Alliance)

    EXECUTIVE SUMMARY

    Today’s electric grid is vital to our society and economy. It’s fundamental to our education, manufacturing, retail, transportation, and financial systems. However, today’s power grid is aging, inadequate for the new and increasing demands being placed on it, and outdated in many respects. The grid is being challenged to integrate new energy resources, such as wind and solar; and new demands, such as plug‐in electric vehicles. In order to meet these challenges, the “business‐as‐usual” approach is no longer an option. Investment is needed to improve its material condition, to ensure adequate capacity, and to enable it to address the expectations of the modern customer. As we confront these challenges, it is necessary to recognize that the main beneficiaries of grid modernization are the energy customers and society as a whole. As such, we will need to build an intelligent, flexible, and sustainable grid that is both customer‐centric and capable of balancing societal values, customer needs, and system operation constraints. In order to realize this vision and value of a modernized electric grid, all stakeholders must seek common agreement.

    click to enlarge

    The GridWise® Alliance and Quanta Technology conducted research to report on the state of grid modernization and to quantify the benefits of a modernized electric grid. Detailed data was gathered through in the first‐person interviews with selected industry representatives to discuss their experiences and results. Public information research of existing documents was also conducted by the research team. Based on the results from the interviews and research, the following six key technical domains that categorize smart grid implementation activities were identified:

    Technical Domains:
    􀂃 Renewable Generation and Distributed Energy Resources Integration
    􀂃 Grid Control and Optimization
    􀂃 Transportation Electrification
    􀂃 Customer‐Side Applications
    􀂃 Workforce Effectiveness
    􀂃 Communication Architecture and Integration

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    In addition, the following five major categories of key benefits and values of grid modernization were identified:

    Key Benefits and Values:

    􀂃 Grid Reliability and Security
    􀂃 Customer Energy Management Opportunity
    􀂃 Asset and Resource Optimization
    􀂃 Health, Safety, and Environment
    􀂃 Productivity and Economic Growth

    Grid modernization is still in its beginning stages. As such, much of the literature and discussions are based on expected benefits, but quantitative data is becoming increasingly available. Moreover, concrete examples of demonstrated benefits of grid modernization have been captured. They include examples of improvements to electric reliability, energy savings, and customer engagement among others.

    click to enlarge

    This report contains case study examples and in these examples provided in Section 3, both quantitative and qualitative values have been captured. From these examples, a list of more than 20 different ways in which benefits can be and are being assessed were identified. These case studies demonstrate consistent realized or expected benefits across all of the technical domains and value categories. The assessment techniques used in this research are also being successfully used by utilities to demonstrate the benefits and progress of their grid modernization efforts. Some examples include:

    􀂃 Oklahoma Gas and Electric has demonstrated energy savings improvements by implementing volt/VAR optimization on its electric system. Reducing voltage by 2% on an automated circuit has been shown to make a corresponding 1‐2% reduction in demand/energy consumption. As a result of this smart grid investment in distribution automation and volt/VAR control, Oklahoma Gas and Electric has been able to delay the need to construct a new power generation plant to outside of their 10 year planning horizon.

    􀂃 Southern California Edison has shown improvements in system reliability as a result of its advanced distribution system. As a result of distribution automation, Southern California Edison has achieved a 33 minute reduction in average Customer Minutes of Interruption. This represents a 47% improvement. Similarly, total Customer Minutes of Interruption were reduced by 18,949 minutes or approximately 17%.

    􀂃 Pacific Gas & Electric launched its SmartRate program which is a critical peak pricing tariff option that requires internal meter data to implement. During the 2010 summer season, Pacific Gas & Electric Company called thirteen (13) Smart day events during which SmartRate participants reduced energy consumption by 14.1% on average. An analysis of the programs finds that 88% of the respondents experienced lower costs as a result of SmartRate participation.

    It is believed that many customer and social benefits from smart grid can be realized through efficient deployment plans. As with most large scale investments and policy issues, it is necessary to find the right balance in sharing costs, benefits, and risks. In any case, to provide sustained momentum for utilities to continue smart grid deployment, regulatory support is required both from both a policy and a financial perspective. During our interview, two regulators, from the District of Columbia Public Services Commission and the Illinois Commerce Commission, respectively, provided their insights on the urgency and necessity of grid modernization.

    click to enlarge

    From our research, several observations and challenges regarding successful grid modernization were identified, namely:

    Technology readiness;
    Market readiness and risks;
    Realization of potential benefits;
    Impacts of financial support; and
    Customer engagement.

    As evident from the case study examples, many benefits of a modernized grid can be realized and the challenges overcome as technology is deployed and experience is gained. As we progress, it is imperative to transition grid modernization initiatives into “normal course of business.” Our electric grid is a vital strategic asset that requires investment to bring it into 21st century technology.

    Moving forward, the challenges we face and the issues raised in our observations should be addressed jointly by regulatory policymakers, utilities, and customers to ensure the successful implementation of grid modernization projects. The GridWise Alliance stands ready to facilitate this collaboration among stakeholders in order to achieve the important goal of transforming the electric system to achieve a sustainable energy future for the public good. Optimizing our energy resources, energy delivery, and energy consumption is made possible by modernizing the United States’ electric grid.

    click to enlarge

    INTRODUCTION

    The Current State of the Electric Energy Industry

    In the U.S., there are more than 142 million electric customers demanding over 4,200 billion kWh of electricity annually. Despite the recent economic downturn, the nation’s customer base is expected to grow 16% over the next 20 years to more than 165 million customers, and increased demand to approximately 5,200 billion kWh [6, 9, 58]. Today’s power grid needs to be upgraded because it is aging, inadequate for new demands being placed on it, and outdated in many respects. Investment is needed to improve its material condition, ensure adequate capacity, and enable it to meet modern customer expectations, such as service reliability, additional usage information, innovative energy management opportunities, etc. Even more challenging is the need to integrate new energy resources and demands. It is anticipated that approximately 200 GW of renewable energy generation, both centralized and distributed, will be added by 2020, primarily via wind turbine and photovoltaic systems [40]. Introduction of these generation resources creates challenges to grid operations due to the intermittent characteristics of these resources and the complexity of interconnection to the transmission or distribution system. On the demand side, adoption of plug‐in electric vehicles (PEVs) is expected to increase dramatically, with an estimated 20 million PEVs in use by 2030 [40]. With each PEV requiring high demand of power for charging, this variable load, if left unmanaged as to when and where it occurs, could further stress an already‐stressed grid.

    The “business‐as‐usual” approach is not an option. High customer expectations with respect to power reliability and quality should be addressed by advanced automation, monitoring, and power protection technologies. Based on research conducted by the Electric Power Research Institute (EPRI), overall reliability can be improved by 40% through a fully automated distribution system [6]. The intermittency introduced by renewable generation can be mitigated by advanced energy storage or optimal profiling of solar and wind generation. The growth of energy demand requirements, including demands from PEVs, should be managed through effective demand response or other demand‐side management programs, such as dynamic pricing, direct load control, and integration with customer home area networks (HANs). Based on Federal Energy Regulatory Commission (FERC) estimation, effective demand side management programs can cut peak demand by up to 20% within 10 years [15]. More grid modernization efforts should be conducted. As discussed in the recent International Energy Agency (IEA) report, “Smart Grid Technology Roadmap,” the electric energy industry needs dramatic changes and widely deployed new technologies to modernize the grid in order to address the challenges it faces [41].

    click to enlarge

    The Momentum of Smart Grid

    The intention of “smart grid” is to modernize grid infrastructure and build in intelligence to power grids and delivery systems, and their interfaces to customer premises as illustrated in Figure 1. The perspectives range from an emphasis on infrastructure to an emphasis on new paradigm‐shifting applications. The recent smart grid initiatives can be considered the single largest grid modernization investment in American history. Multi‐billion dollar investments from both government and industry are fueling major activities over the next several years, providing the greatest momentum in transforming the energy industry in decades. With this investment in grid modernization research, development, and implementation, regulators and policymakers are trying to understand the costs and benefits of these efforts.

    As smart grid development proceeds, it is necessary to understand that the final recipients of grid modernization benefits are the energy customers and society at large. In the long term, we will need to address how to build an intelligent and sustainable grid that is both customer‐centric and capable of balancing multiple factors (e.g., societal values, customer needs, and system operation constraints). Policymakers and regulators are faced with the challenge of reconciling the large and complex investments required to modernize the electrical system and to develop a better way to connect the end customer to the electricity markets in a manner that allocates benefits and risks between customers and providers.

    EPRI provides high level estimates of the costs and benefits of aggregate smart grid investment in the U.S [6]. As summarized in Table 1, the total benefit of all attributes for the smart grid is estimated to be between $1,294 billion and $2,028 billion for the period from 2010 to 2030. Based on EPRI’s report, once all of the attributes and benefits of a smart grid are identified and analyzed, estimates of the total benefit may increase even more. It is estimated that the net investment in smart grid produces value that significantly outweighs cost, resulting in a benefit‐to‐cost ratio range of 2.8 to 6.0, based on the underlying assumptions discussed in the EPRI technical report. The report indicates an investment level of between $17 billion and $24 billion per year will be required over the next 20 years. These costs include the infrastructure to integrate distributed energy resources (DER) and to achieve full customer connectivity, but does not consider the cost of additional generation, the cost of transmission expansion to add renewable energy and to meet load growth, nor a category of customer costs for smart‐grid‐ready appliances and devices. In addition, renewable generation could also help society by reducing annual carbon emissions by between 60 and 211 million metric tons of CO2, or equivalent to converting 14 to 50 million cars into zero‐emission vehicles each year [7]…

    click to enlarge

    CONCLUDING REMARKS

    Our nation depends on a robust and reliable electric grid to power our economy and society. The electric system is fundamental to our quality of life and it is a critical component of many industries such as financial services, transportation, construction, manufacturing, retail, and education. It is imperative to modernize the power grid to its next generation now. The first phase toward achieving this goal was developing a common understanding of what the smart grid would be, and what its applications and benefits are. Not that long ago, a number of people equated smart grid with AMI or smart meters. While smart meters are a component, they are just a small piece in an overall optimized electric network.

    It has become apparent that smart grid requires a holistic approach addressing all technical domains and broad coverage of benefits themes, as described in this paper. Grid modernization has now moved to a second phase, namely deployment, as documented through a large number of implementation projects supported by multi‐billion dollar investments. Consistent benefits, both realized and expected, can be seen in all of these projects, either quantitatively or qualitatively. This deployment phase will continue in the next few years as applications and associated benefits are clearly demonstrated from the results of the projects.

    click to enlarge

    Success of these deployment projects will set the direction for further steps in developing the grid of the future. For example, most Smart Grid Investment Grant projects in the U.S. will be completed by mid‐2013, resulting in major implementation of smart grid technology and benefits that will create a framework for how the grid will be designed and operated going forward. As a result, the next smart grid phase should encompass transitioning more and more grid modernization initiatives into “normal course of business.” In addition, results achieved and smart grid infrastructure deployed will uncover new applications and benefits that may not have been considered before. As is evident from case examples, many more potential benefits can be identified and realized as technology is implemented and experience is gained.

    Building an optimized grid does not happen in a vacuum. Engineers and system operators clearly see the value of grid modernization. However, there are significant policy and financial issues that must be addressed prior to engineers building this technically advanced, flexible and optimized system. As with most policy issues, the key is to find the right balance in sharing costs, benefits and risks. The responsibility for achieving this balance lies with regulators and, in some cases, legislators, but must include input from all stakeholders. To provide momentum for utilities to continue smart grid investment, regulatory support is required, both from a policy perspective and financial perspective. To this end, a thoughtful deployment plan that includes cost benefit analysis or a successful pilot project that confirms expected benefits is an important component of the evaluation. Furthermore, to accelerate to the next grid modernization level, customer outreach and engagement is an essential success factor.

    The business case for smart grid is positive. Benefits and success stories are being captured. A “business as usual” or “slow go” approach is not in the nation’s best interest. Moving forward, the challenges faced by all stakeholders in the electric energy ecosystem and the issues raised in our observations should be addressed jointly by regulatory policymakers, utilities, and customers to ensure the successful implementation of a modernized electric grid for the United States and its prosperity.

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