NewEnergyNews: TODAY’S STUDY: TODAY’S STUDY: THE COSTS AND BENEFITS OF A SMART GRID

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Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge now: To make every day Earth Day.

YESTERDAY

THINGS-TO-THINK-ABOUT THURSDAY, December 8:

  • TTTA Thursday- The Record Of The New EPA Head
  • TTTA Thursday-The Undeveloped New Energy
  • TTTA Thursday-Walking On New Energy
  • TTTA Thursday-Electric Tractor For Emissions-Free.Farming
  • THE DAY BEFORE

  • ORIGINAL REPORTING: Turning Distributed Energy From Threat To Opportunity
  • ORIGINAL REPORTING: Solar Policy Action Heats Up
  • ORIGINAL REPORTING: Maine’s Almost Solar Policy Breakthrough
  • THE DAY BEFORE THE DAY BEFORE

  • TODAY’S STUDY: How To Balance Competing Solar Interests
  • QUICK NEWS, December 6: Sliver Of Hope? Al Gore In Climate Change Meet With Donald Trump; The Opportunity In New Energy; Google Seizing New Energy Opportunity
  • THE DAY BEFORE THAT

  • TODAY’S STUDY: A Way For New Energy To Meet Peak Demand
  • QUICK NEWS, December 5: Trial Of The Century Coming On Climate; The Wind-Solar Synergy; The Still Rising Sales Of Cars With Plugs
  • AND THE DAY BEFORE THAT

  • Weekend Video: Trump Truth And Climate Change
  • Weekend Video: The Daily Show Talks Pipeline Politics
  • Weekend Video: Beyond Polar Bears – The Real Science Of Climate Change
  • THE LAST DAY UP HERE

  • FRIDAY WORLD HEADLINE-Aussie Farmers Worrying About Climate Change
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 1
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 2
  • FRIDAY WORLD HEADLINE-New Energy And Historic Buildings In Europe
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    Anne B. Butterfield of Daily Camera and Huffington Post, f is an occasional contributor to NewEnergyNews

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    Some of Anne's contributions:

  • 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

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • WEEKEND VIDEOS, December 10-11:

  • A Climate Change Denier’s Lies Exposed
  • The Good News Numbers On The EV Boom
  • “This Is Just The Beginning”

    Monday, November 04, 2013

    TODAY’S STUDY: TODAY’S STUDY: THE COSTS AND BENEFITS OF A SMART GRID

    Smart Grid Economic and Environmental Benefits; A Review and Synthesis of Research on Smart Grid Benefits and Costs

    October 8, 2013 (Smart Grid Consumer Collaborative)

    Executive Summary

    The SGCC completed this review to help stakeholders better understand the benefits – economic, environmental, reliability, and customer choice – associated with Smart Grid investments. We present controlled studies from actual Smart Grid deployments whenever possible, synthesizing research results into a “per customer per year” context using assumptions based on actual Smart Grid deployments.

    In order to reflect variability across different utility operating environments, we present a set of conservative assumptions that we refer to as the “Reference Case,” along with more aggressive assumptions reflecting “the state of the possible” that we refer to as the “Ideal Case.” We also describe the benefit drivers for each Smart Grid capability.

    Findings

    We believe readers of this report are likely to reach the conclusion that Smart Grid investments offer economic benefits in excess of costs, and likewise offer significant reductions in environmental impact.

    Smart Grid Investment Offers Economic Benefits in Excess of Costs

    The Smart Grid appears to offer both direct benefits (those which could affect consumers’ bills) and indirect economic benefits to customers. Direct benefits are delivered through four primary mechanisms:

    • Increasing electric distribution efficiency, primarily through Integrated Volt/VAr Control (IVVC).

    • Facilitating changes in customer behavior, either by shifting usage away from high-demand periods or by reducing usage. These capabilities include offering customers more choices including time-varying rates, prepayment programs, and customer energy management systems.

    • Reducing operating costs from capabilities such as remote meter reading and remote service disconnect/reconnect.

    • Improving revenue capture through improved Smart Meter accuracy and theft detection capabilities.

    The Smart Grid also appears to offer significant indirect benefits to communities through economic productivity increases associated with improved grid reliability. Capabilities such as fault location help repair crews find faults faster, while fault isolation limits the number of customers impacted by any particular service outage.

    Smart Grid Investment Offers Significant Reductions in Environmental Impact

    The Smart Grid offers significant reductions in environmental impact through two sources: conservation and greater renewable generation integration. Greenhouse gas emission reductions can be traced directly to Smart Grid capabilities – such as time-varying rates and customer energy management systems – offering a conservation effect. We find that the Smart Grid increases the level of customer- sited generation that the distribution grid can reliably and efficiently accommodate.

    To the extent this generation is renewable, Smart Grid capabilities designed to accommodate it offer even more significant environmental benefits. Direct and Indirect Benefits by Capability per Customer per Year

    Reference Case and Ideal Case Benefits

    Table 1 summarizes the available benefits from various Smart Grid capabilities found in the research. In many cases, we have made assumptions about key benefit drivers such as customer participation rates to convert the research findings into a “per customer per year” metric. Where a range is presented, the low end represents the Reference Case, which embodies assumptions typical of the current average capability deployment. The high end represents the Ideal Case, which is based on assumptions that, though the research indicates are achievable, may not be reached unless the benefit drivers are carefully and thoughtfully optimized by Smart Grid stakeholders.

    Not all Smart Grid capabilities are subject to large variation. For example, capabilities designed to improve reliability are not driven by customer participation rates. In other cases, insufficient research for a particular capability is available on which to base differences between a Reference Case and Ideal Case, rendering any such distinctions arbitrary. A summary of Reference Case and Ideal Case assumptions is presented in the appendices. Sources are footnoted throughout this review.

    Direct and Indirect Benefits

    Direct benefits are those that could affect customers’ bills, whereas the indirect benefit calculations represent our attempt to translate reliability and environmental performance improvements from Smart Grid capabilities into economic terms.

    It is important to note that no single utility necessarily has all of these capabilities and each utility’s results could vary significantly from these estimates. The most significant drivers of benefits and opportunities for improvement are described for each capability in this review

    Benefit Drivers

    Our analysis indicates that four drivers explain most of the variation in the available benefits.

    There appear to be some opportunities available to increase the benefits of Smart Grid capabilities through policy. As one example, traditional ratemaking practices may not encourage utilities to reduce sales volumes between rate cases. Once electric rates are set in a rate case, reductions in sales volume below anticipated levels reduce the likelihood that a utility will be able to cover its costs. Several Smart Grid capabilities discussed in this review, including Integrated Volt/VAr Control and time-varying rates, derive a significant proportion of available economic benefits via reductions in sales volumes. Other regulatory rules and norms may require revisions to enable some customer economic benefits, for instance billing and payment program innovations. The SGCC hopes this review will help stakeholders work together in pursuit of policy solutions that enable customer equity, provide customers with choices, and encourage utility investment, while maximizing available benefits for all customers.

    Costs by Smart Grid Component

    The average Smart Grid cost per customer, based on budget information from U.S. utilities’ applications for the U.S. Department of Energy’s Smart Grid Investment Grant (SGIG) program funds, is presented in Table 3 by component.

    In addition to these costs, we assume utilities will make annual expenditures equal to 4 percent of initial Smart Grid investments to operate and maintain hardware, software, and communications networks.

    Benefit-Cost Summary

    Figure 1 summarizes the Net Present Value (NPV) of benefits and costs for the Reference Case, while Figure 2 does so for the Ideal Case. We assumed a 13-year project life, incorporating 3 years of implementation and 10 years of operation.

    Based on available research and incorporating the Reference Case and Ideal Case assumptions detailed in this report, we find the ratio of benefits to costs range from 1.5–2.6 to 1 in the Reference Case and Ideal Case, respectively.

    Subtracting the NPV of total costs from total benefits (direct and indirect) yields net benefits of approximately $247 per customer in the Reference Case and $713 per customer in the Ideal Case.

    Conclusions and Recommendations

    The research presented in this review indicates that grid modernization creates direct and indirect economic benefits for customers in excess of costs. The research also indicates that the Smart Grid delivers significant environmental benefits through conservation and renewable generation integration. Opportunities to optimize these benefits are available through a holistic approach involving customer engagement, utility operations, and regulatory/governance systems. The SGCC encourages all stakeholders (utilities, regulators, advocates, and customers) to collaborate in pursuit of optimizing these benefits.

    Looking forward, candid conversations among stakeholders about the critical role that the electric distribution grid plays in a community and the kind of grid a community wants to have are essential. Grid upgrades require long lead times; flexibility and reliability must be designed and built well in advance of when they will be needed. The grid we use today was not designed for the demands society seems poised to place on it in the future. Communities need to be asking key questions about the kind of grid they want, the costs required to build it, and priorities and trade-offs they can agree upon.

    As the role electric distribution plays in communities’ economic vitality and sustainability increases, a new dynamic is needed in the nature of relations among distribution utility stakeholders. This review can serve as a reasonable starting point for the evolution of a new dynamic, and the SGCC hopes stakeholders embrace it and its message in the spirit of objectivity and collaboration in which it has been researched and developed.

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