Smart Grid Market Landscape Change?

In March 2009, Sramana Mitra wrote an article in Forbes Magazine titled “The Smart-Grid Dilemma: Market forces are against smart-energy innovations.”
The article made a simple yet important point: “What do utilities make money on? Energy consumption. So, what incentive do they have to install smart meters in your house and make this a transparent process with variable pricing if that means it would eventually reduce your energy bill, hence their revenue?” In 2009, the market landscape and lack of customer demand made this an accurate statement.

On March 17th, 2011, the Federal Energy Regulatory Commission (FERC) released its final ruling on Demand Response Payment Structures. Some analysts have claimed that this ruling actually changes the market dynamics in favor of smart grid. It is very possible as adjustments of payment structures could induce consumer demand for smart grid attributes; i.e. the ability to earn money from load curtailment, better payment rates, purchasing energy efficient appliances and adjusting behavior to gain maximum value, i.e. minimum costs to the consumer. In a sense, the FERC ruling might actually create a customer based “pull” market dynamic where consumers demand these features and utilities oblige.

The more successful recent smart grid projects often included multiple partners in government, academia, and private industry coupled with a sense of customer buy-in and desire for the benefits that smart grid promises:
Austin Energy’s Pecan Street Project

Of course time will reveal what becomes of the push for Smart Grid and the efforts to radically change the North American power grid, which has been called the world’s largest interconnected machine, but it is safe to say that if customers see a benefit, they will as a collective group, begin to demand these improvements.
In 2009,Sramana Mitra saw no real customer centric force that could drive this change, in 2011 FERC might have actually created it.

Evidence-based Green Design

Being a designer, of course I am fascinated by the power of design, and up to now, I don't think we have seen the full power of design in tackling some of our energy problems. Buildings use 40% of the electrical power in this country, and present a large target for improving efficiency. Strategies for making buildings energy efficient have been well known for years, but until recently they have been too labor intensive in the design stage to justify implementing unless a particularly demanding building owner insists on it. Building Information Modeling is the new development in design software for architects and engineers that is making possible advances in green design, some of which are discussed in this McGraw-Hill report. First of all, it automates a lot of calculations that had to be done manually up to now. This has two major effects, it makes it more likely that designers will undertake certain kinds of analyses, and it makes iterative design and evaluation of many options feasible. Second, it offers quantifiable data to be used in evaluating different options for massing, materials cost analysis, and energy cost modeling. Many of the performance aspects of architectural design have been full of rules of thumb and gut feelings, but these new tools are revolutionizing building design - welcome with me the new era of evidence-based building design.

Behind-the-Scenes Look at GE’s Smart Grid Strategy Aug 4, 2009

By all rights, General Electric should have been a Smart Grid pioneer. It had the technology. It had the breadth. It had the industry experience. And it had a CEO —Jeffrey Immelt —who wanted to be on the forefront of all things green (as witness the company’s ecoImagination campaign).

Yet GE was notably absent during the early years. When our Smart Grid Central analysts originally profiled the company, they pointed to “pockets of technical excellence” marred by the lack of a “merged, coherent story.” (See link to story below.)

I recently spent time with John McDonald, General Manager of T&D Marketing for GE Energy. From what I can see, GE is quickly catching up. Three things in particular make me believe that GE will start marching at the front of the parade:

· A roadmapping initiative for utilities

· An internal roadmap for GE’s own efforts

· Updates and new applications for its GIS tool

Helping Utilities Build Maps to the Future

It was back in 2007 that I first started pounding the table about the lack of roadmaps for utilities. (See link below.) Experts such as McDonald and SGN contributor Erich Gunther were touting roadmaps years before that. A roadmap becomes a touchstone to judge future purchasing decisions; to ensure that the pieces will fit together; and to avoid overlap and redundancy. McDonald says flatly that utilities are unlikely to succeed at the Smart Grid without a roadmap that includes:

· The objectives of the utility

· The available technologies

· The standards

· The business case

Unhappily, few utilities have either the technical depth or the “social engineering” skills to bring together siloed departments and generate a coherent, multi-year game plan.

Enter General Electric, which is building the tools, processes, and personnel to help utilities with the task. Utilities will get a plan based on sound systems engineering, and GE will undoubtedly gain some additional sales. (IBM has certainly benefited from its in-house consulting practice.)

Eating Its Own Dog Food

GE has also put itself through the same roadmapping process. As a result, its previously haphazard Smart Grid efforts have been rationalized around five “pillars:”

1. Transmission Optimization

2. Distribution Optimization

3. Demand Optimization

4. Asset Optimization

5. Design & Workforce Productivity

Smallworld Getting a Refresh Too

I was interested to hear that the GE’s Smallworld Geographical Information System is being upgraded as well. In its profile, Smart Grid Central said Smallworld didn’t seem to be “keeping pace with a world that includes Google Maps.” But McDonald says that Smallworld is finally being ported from its proprietary database to Oracle, making its core platform more in line with industry standards.

Equally important, GE will be rolling out a series of applications and extensions, some built in-house, but many others built by GE partners (including many from outside the U.S.). Those applications will contribute heavily to at least two of the GE pillars, Asset Optimization and Design & Workforce Productivity. And when you think about breaking down the barriers between departments and sharing information, it is obvious that a central GIS function is almost mandatory.

There’s still plenty of work for GE to put its plan into action and to make sense of its different brands, many of which were gained by acquisition but never fully integrated. Even so, I see strong evidence that GE is quickly shouldering its way forward and may soon join IBM at the front of the Smart Grid parade

A Smarter Grid for India

A Smarter Grid for India
By Alex Yu Zheng
Oct 11, 2007

India has recently experienced an impressive rate of growth as its government implements reforms to encourage foreign investment and improve conditions for its 1.1B citizens. However, with its electrical grid, India loses money for every unit of electricity sold. Because India is home to one of the weakest electric grids in the world, the opportunities for building the Smart Grid are great.

Brief facts about India

The Republic of India is the seventh-largest country by geographical area and the second by population. Like the United States, it has national, regional and local governments, including 28 states and 7 union territories.) It borders Pakistan to the west; China, Nepal, and Bhutan to the northeast; and Bangladesh and Myanmar to the east.

Why India needs a Smarter Grid

With such enormous deficiencies in basic infrastructure, why would India want to consider investing in smart grid technologies? Ultimately for India to continue along its path of aggressive economic growth, it needs to build a modern, intelligent grid. It is only with a reliable, financially secure Smart Grid that India can provide a stable environment for investments in electric infrastructure, a prerequisite to fixing the fundamental problems with the grid. Without this, India will not be able to keep pace with the growing electricity needs of its cornerstone industries, and will fail to create an environment for growth of its high tech and telecommunications sectors.

Recent grid developments

The Indian National Government, in cooperation with the State Energy Board, put forward a road to improvement when it announced the new Electricity Act of 2003, aimed at reforming electricity laws and bringing back foreign investment. The act had several important measures:

· Unbundling the State Electricity Board’s assets into separate entities for generation, transmission, and distribution, with the intention of eventual privatization

· Adding capacity in support of a projected energy use growth rate of 12%, coinciding with a GDP growth rate of roughly 8%

· Improving metering efficiency

· Auditing to create transparency and accountability at the state level

· Improved billing and collection

· Mandating minimum amounts of electricity from renewables

· Requiring preferential tariff rates for renewables

· End use efficiency to reduce the cost of electricity

There has been a recent push in India to begin labeling appliances with energy use to help consumers determine operating costs. There has also been significant effort to improve energy efficiency, for example to increase the average energy efficiency of power plants up from 30% to 40%, and pushing major industries to reduce energy consumption.

India’s grid is similar in design to the U.S.

As is the case in most of the world, the Indian national grid was not designed for high-capacity, long-distance power transfer. As is the case in the United States, India needs to interconnect regional grids. Although coal and hydro-electric potential has peaked in many parts of India (sound familiar?), there are still several regions with excess capacity. Large wind potential and increasing wind capacity in the south and west also create a need for transmission infrastructure. Unfortunately, like the United States, regions are generally sectionalized, with some asynchronous or HVDC links allowing for minimal power transfer. The biggest difference is that India’s transmission grid only reaches 80% of its population, while the transmission grid in the United States reaches over 99% of its population.

India’s grid is not financially secure
According to its Ministry of Power, India’s transmission and distribution losses are among the highest in the world, averaging 26% of total electricity production, with some states as high as 62%. When non-technical losses such as energy theft are included in the total, average losses are as high as 50%. The financial loss has been estimated at 1.5% of the national GDP, and is growing steadily.

India’s power sector is still largely dominated by state utilities. Despite several attempted partnerships with foreign investors, few projects have actually been implemented. This lack of foreign investment limits utilities’ ability to raise needed capital for basic infrastructure.

This financial frailty, coupled with public ownership of utilities and the related bureaucratic slowness, has made it very difficult for investors to take interest in India’s grid. Despite these problems, prescient U.S. companies such as GE have done business in India for decades and are positioned to help India build the Smart Grid. The first Smart Metering Conference is being held next week in India (Spintelligent’s Metering India) and the first major industrial security conference is being held in India the week of October 22 (IFSEC India.) There is tremendous interest in the business opportunities for India.

India has problems not unlike other developing countries
India’s grid is in need of major improvements. This neglect has accumulated in a variety of system failures:

· Poorly planned distribution networks

· Overloading of system components

· Lack of reactive power support and regulation services

· Low metering efficiency and bill collection

· Power theft

While the national government’s ambitious “Power for All” plan calls for the addition of over 1 TW of additional capacity by 2012, it faces the challenge of overcoming a history of poor power quality, capacity shortfalls and frequent blackouts.

What issues should India address first?
Without addressing the problems of investment and financial stability, India is not able to solve its inadequate grid infrastructure. Financial stability and concurrent investment only arises from lowering the enormous problems with power theft in India.

One example: In a demonstration project in nearby Malaysia, TNB Distribution, Malaysia’s largest power company, had to deal with similar problems. Facing enormous power theft, payment delinquency and poor power quality, they chose to implement a new program to reduce losses. They found many significant reasons for their losses, a lack of consistent billing practices, inconsistent meter readers, significant numbers of tampered meters, uncollected debt, and a general lack of information availability at all levels. TNB Distribution successfully dealt with their problems by increasing transparency, and using regular auditing. These are the same issues addressed by the deployment of an advanced metering infrastructure, which helps to increase information transparency and tracking.

A recent presentation at the India Electricity 2006 conference also suggested using demand side management to selectively curtail electricity use for delinquent customers or neighborhoods, while improving power quality for consistently paying customers. While this may not sound like a desirable program to most American utilities, it may make sense in India’s constrained power grid, where high levels of delinquency have increased system load without revenue returns.

Another driver behind the need for a smarter grid in India is its trends towards energy efficiency and increased use of renewables. While blanket energy efficiency is important, India would greatly benefit from intelligent energy efficiency in the form of demand response and grid-responsive appliances.