Smart Grids: A Technologically Powered Paradigm Shift

1.       What’s wrong with our paradigm?

During his year in office president Obama has adhered to a trend of exploring various alternative energy strategies while continuing to burn fossil fuels at an unprecedented rate and refusing to address the underlying issues of an economy designed around increasing consumption each year. Energy use is projected to nearly double globally (it is currently around 17.3 trillion KWH per year) in the next 20 years, increasing 2% each year in developed countries and 4% in the rest of the world. Generally when powerful interest propose that technological fixes will help save us from climate change it is wise to remain healthily skeptical, however one technological advancement lends itself particularly well to this paradigm shift away from growth that many countries have already picked up on.

 The necessity of this shift is made apparent by the graphs on this page; although GDP may increase, standard of living and general well- being do not. Median household income has also stagnated and inequality has increased as we have shifted from a production to speculation based economy. The dissatisfaction with neo-liberalist economic policies and the looming environmental crisis has led to a proliferation of alternative methods of measuring a nation’s progress, including GNH, GPI, genie coefficient and the index of sustainable economic welfare, among others. The subject of happiness related to money/consumption has been well studied by scientists across many disciplines, and it has been demonstrated that above a certain level, somewhere around the poverty level, more doesn’t serve to make people happier.

The culmination of these critiques of the traditional capitalist agenda can be seen in the leftward shift taking place in many Latin American countries in recent years (as well as movements like “Occupy” and more recently “Moral Mondays” in the US, riots in the EU, the Arab spring, etc.), with new constitutions being drafted around the ideal of well-being over that of increased annual consumption and productivity.

A smart grid would allow for an important shift in the operating rule of power supply, moving from a) utilities adjust output to meet demand, to b) homes and businesses adjust electrical use manually or automatically depending on the availability of power. Using electrical sensors/meters, basic information technology, and a wireless communications system, power lines can be made responsive to external factors. The implications of this transformation are quite profound, including various mechanisms for saving energy, avoiding waste, incorporating new green technologies, and perhaps most significantly, the decoupling of utilities profits from the amount of energy people consume.

This overhaul has already happened in California as well as many other developed nations, power companies in California no longer make more money based on how much energy their customers consume, but by how efficiently energy distribution is managed. This takes the abstract ideal of well-being and sustainability over increased GDP, wealth and consumption, and applys it to a concrete project that has been shown to be achievable and has had impressive results; while electricity consumption has increased dramatically throughout the rest of the US, it has remained steady in California. Today two Californians use less electricity than one Texan, meanwhile California still ranks among the top ten happiest states.

2.       What’s wrong with our power lines?

In 2000 the National academy of engineering declared our “vast network of electrification” the greatest engineering achievement of the 20^th century, noting that it is only on the back of this system that most other things have been engineered. Yet power grids haven’t changed much in the last 100 years, working in a one way system with power stations delivering energy to a grid where it is distributed to factories, offices and homes.

Utilities still rely on consumers to tell them when the power has gone out, and then they must investigate why. Furthermore the customer has no idea how much energy he is using until he sees his bill.  Energy leaks and energy pilfering are also rampant, accounting to 10 percent of all energy in the US, up to 50 percent in some cities, and costing 150 billion a year. On top of that, these energy losses and outages generally require the use of diesel powered back-up generators.  Deregulation in the 90s encouraged companies to send energy over long distances, meaning some parts of the grid get congested, causing more wasted heat energy and blackout, costing an estimated 80 million annually.

Once a smart grid is in place, sensors on the transmission lines and smart meters on the customers premise to inform the utilities when something goes wrong. At worst the utilities can know what the problem is without sending someone to investigate, and at best smart switches can automatically route the power around the problem, sort of like how internet can redirect data packets. A data acquisition systems today provides information on the state of transmission lines every 4 seconds, which would be increased in a smart grid to 30 times per second, helping halt power surges before they develop into blackout. This will reduce the need for peaker power plants (which are generally dirtier than normal plants) and idling power plants, helping save money and the environment.

Conservative estimates say smart grid implementation will save the US 227 billion, 45 billion of which is estimated to be due to dynamic pricing, or changing the price in relation to demand. Private investment annually in the US towards smart grid technologies is around 200 million, and the most recent government stimuli had a 4 billion dollar chunk for smart grids. Morgan Stanley predicts the industry to grow from 20 billion today to 100 billion in 2030. The total projected cost of install in the US is around 50 billion, though relevantly we would need to throw around 450 billion into the conventional grid over the next ten years to meet expected demand increases.

3.       What else can smart grids do?

Three other promises from smart grid proponents includes mechanisms for decreasing consumption during peak hours, distributed generation, and increased feasibility of electrical cars. I will address each of these in this section.

Companies often cut back on consumption during peak hours, and now people can do the same both manually and automatically, saving an estimated between 20-30 percent during peak hours. A lower peak demand allows for reduced expensive backup capacity. Those advocating smart grids report that cutting just the top ten percent at peak hours could save consumers 100 million annually. Real time info on load and pricing will make this possible, and even allow for dynamic pricing.

Studies have shown people decrease energy use by 7-10 percent if they know their usage is more expensive when demand is high, which can be increased to 15 percent at peak times with added incentives. Reducing peak demand by just 5 percent would save 66 billion dollars in 20 years. Since the best smart grid technology promises to reduce peak demand by closer to 25 percent, it could save us closer to 325 billion in the same amount of time. Italy, a leader in smart grid technology, spent 300 billion to fit its country with 30 million smart meters and now saves around 500 million a year, an investment that will pay off in only 6 years.

Many green technologies have outputs that are a slave to the weather, as in they are distributed and intermittent. This wreaks havoc on a conventional grid built on a balance between supply and demand. With fossil fuels you can always burn something and get energy, and if you burn more stuff you get more energy, which can theoretically be done at any time.  The smart grid makes it easier for a utility to balance supply and demand during peak hours or extreme weather conditions, meaning they don’t need to construct as many new power stations and have the ability to incorporate renewable energies, even back yard solar panels or wind turbines.

It can also manage the charging of tens of thousands of electric cars at night when demand is low. If it’s a windy night cars can charge on the wind, or the plugged in cars can act as an energy storage system, holding energy in their batteries and then return it to the system when the wind drops utilizing a Vehicle to Grid (V2G) system. This again helps to balance the supply and demand of energy, saving energy and increasing efficiency.

4.       What does this technology consist of?

There are three strata technologies within the market which we hinted at in a previous section, but will discuss in more detail bellow.

Advanced Metering Infrastructure (AMI): This is basically a smart phone in your house, complete with chip, display, and connected to a communications network. It can monitor how much energy your using and when, and for what price. They will most likely be connect to one another through a wireless mesh network, where information travels from one meter to the next ultimately communicating with the utility and costumer simultaneously in real time.

The second stack technology is a database. The utility needs a way to manage all this data and set rates according to demand. And finally there exists a Home Area Network (HAN), comprised of thermostats and other systems for measuring energy that are connected to your AMI and other smart appliances. In this way your washing machine can wait to turn on until demand/price has dropped below a certain level, and other such innovations. People can set their devices to automatically turn off when demand is high, or utilities can manage demand at peak hours.

5.       Why don’t we have a smart grid yet?

There are several reasons. For one thing the technology is still improving, and is particularly lacking in terms of an efficient battery for energy storage. There are also worries that it could be vulnerable to cyber criminals. Issues of setting up standards for the network with compatible devices and devising a system to access historical billing information or real time metering data will be difficult, but it has already been done successfully in other countries. Importantly, old-fashioned power grids are a powerful (pardon the pun) special interest group, and there making money as is.

This connects with perhaps the most pertinent reason; smart grids are designed to reduce demand, and in a growth based economy businesses are incentivized away from this possibility. Efficient power distribution and a lower carbon footprint do not yet correlate with a utilities bottom line outside of California. So while power companies across the continent plan their future around added capacity and higher production California utilities are buying their customers cfls , installing smart meters, and replacing inefficient machines.

This all stems from a well-being over a productivist mindset; the idea the profits should flow towards that which is “social productive and ecologically beneficial”. This represents a realignment of interest towards a culture of efficiency rather than waste. I think smart grids are one of many avenues we should pursue in order to address “individual behavior, societal norms, institutional actions, and technological advances” with the goal of reduced consumption through appeal to human behavior and by drawing upon human creativity.

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