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Category — Smart Grid

Smart Grid Problems Revealed: The NERC Study

The North American Electric Reliability Corporation (NERC), an international regulatory authority whose purpose is to ensure reliability of the bulk power systems in North America, has just released a study on the Reliability Impacts of Climate Change Initiatives. It provides a comprehensive review of future reliability risks including smart grid initiatives. NERC appropriately looks at a number of future time frames, or horizons, which provide perspective in its analysis – 1-10 years, 10-20 years, and 20-plus years (up to 2050).

A review of the NERC study by Environment & Energy Publishing (E&E), reproduced as an appendix to this post, noted:

“A task force on climate change formed by North American Reliability Corp. urges that policy makers not count on large amounts of renewable energy, demand reduction from smart grid systems or new storage technologies before they prove they can be worked into the grid without endangering the system’s reliability.”

[Read more →]

August 4, 2010   3 Comments

The Smartest Grid In The Room: California Scheming Goes Awry

Any reader lucky enough to have a new iPhone4 knows that sometimes technology just doesn’t work out the way sellers claim. Other times they do, but not in the way that consumers want or expect.

Such is the case with a major component of the so-called “smart grid”– the smart meter. There is growing agreement among federal and state policymakers, business leaders, and other key stakeholders, that a Smart Grid is not only needed but well within reach.

But it is not. Think of the Smart Grid as the 4G network for electricity. Smart meters, are a prime example of an unnecessary and expensive change that will provide little in the way of consumer benefit. They do, of course, provide utilities and energy marketers and government with a host of new tools, which is why they’re being sold in the policy arena. That plus the fact that makers just want the consumer to pay for something that isn’t (yet) cost effective explains the extracurricular (political) push. Add to all this the government’s insistence–encouraged by intermittent renewable developers lobbying efforts and billions in “stimulus” funding–and the momentum is hard to overcome.

The energy utilities want the meters to send price signals that change as generation costs change. By charging you more during high-usage “peak” times (e.g. hot days) they hope to persuade you to shift your usage to “off-peak” evenings and weekends, as many consumers now do with long-distance phone calls, when generation costs are lower. Of course, after a few days the inconvenience of getting off the couch every hour to read the new signal and turn on or off appliances, may lead people to the conclusion that the savings are not worth the effort. It might be smarter, and more effective to install additional generation capacity that can actually perform on those hot days.  [Read more →]

July 15, 2010   19 Comments

Smart Grid Passion–It’s On Your Dime (Part II)

In Part I earlier this week, I asked critics for corrections to the surprisingly weak figures on avoided investment that smart grid advocates use to push their program. Having gotten none, let’s see where the figures take us.

First stop is the home page of the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability (OE). Its most prominent link is to their own The Smart Grid: An Introduction. Intended by its own admission for impressionable readers, it is plagued with misstatements, deceptive graphics, and unsourced assertions. Its official author is Eric Lightner, Director of the Federal Smart Grid Task Force. Lightner has not bothered responding to my requests for the sources of his footnote-free document, which was actually put together by a PR firm. Perhaps this is to be expected from a federal department that has a policy to push and must point us underlings toward official documents favoring the policy. But do we taxpayers have to really put up with this?

Then on the homepage is a link to the Galvin Electricity Initiative, the project of a retired Motorola executive who wants “Perfect Power,” nowadays pushed by the former head of the utility industry’s Electric Power Research Institute.

Then there is a blurb on Gridweek, the annual convention for smart griddies. Its 2009 “Platinum Sponsors” include the usual mix of meter makers, utilities, and … Didja guess the Department of Energy? Right. $50,000. Yours. DOE was equally partisan before the election — It was a “Key Partner” in Gridweek 2008, whose financial and in-kind contributions I can’t reconstruct. [Read more →]

January 15, 2010   2 Comments

‘Smart’ Grid: New Critics of a Bad Idea (Part I of II)

Possibly the most fascinating aspect of the Smart Grid is the absense of an economic rationale. But industry incentives being what they are (concentrated benefits, diffused costs), many have bet on much of it being built. Boondoggles must pass political tests, not economic ones.

But guess what?  People are finally starting to wonder if this smart grid is worth the trouble. Intervenors, at last, are turning up at state proceedings. For a good sample of the issues and alternatives, look at Synapse Energy Economics’ July 8 filing at the New Jersey Board of Public Utilities on behalf of the state Department of Public Advocate. Synapse is possibly the best firm in the business to represent efficiency or environmental interests, but they stand with the skeptics on smart grids.

The utilities have yet to find consultants who can make an easy case for the grids. Advanced Metering Infrastructure (AMI) by itself recovers only 50 to 80 percent of its costs if all it gets used for is automated reading, data transmission, and service initiations and terminations. (See Brattle Group’s The Power of Five Percent, at p. 6.) Getting a positive cost-benefit figure requires time-varying rates for small customers and ways they can react to them, or giving their utility power to do that for them.

California is in the midst of distributing smart meters to everyone over the next few years, but it has already made certain that the necessary rate reforms and controls rate and controls won’t be there. First, the state just got a law that prohibits any mandatory form of time-varying pricing, with or without bill protection, prior to 2013. Mandatory real-time pricing without bill protection has to wait until 2020. Utility-controllable thermostats (originally deemed necessary for a positive cost-benefit figure) were removed from the state’s regulatory options a year ago by public protests. [Read more →]

January 12, 2010   8 Comments

Does the "Smart Grid" Have a Smartest-Guys-in-the-Room Problem?

[Editor note: Ken Maize, a long-time energy analyst, joins MasterResource for the first time (see his bio at the end of this post). A MR previous post by Robert Michaels has questioned 'smart metering,' part of the 'smart grid' concept]

However politically incorrect my conclusion, I’m convinced that the “smart grid” is not smart and even dumb. It diverts attention from what is a more important objective–a strong grid. And it politicizes in the very area where we need more consumer-driven, free-market incentives.

Following the Northeast grid collapse of 2003, the Electric Power Research Institute (EPRI) popped out the smart grid concept, largely the brainchild of then EPRI’s CEO Kurt Yeager. The blueprint was for an interconnected intelligent network reaching from the generating station to your toaster, able to talk up-and-down the line, matching supply and demand seamlessly.

Sounds cool, but doesn’t stand up to analysis in my judgment.

Where Did ‘Smart Grid’ Come From?

The idea of a smart grid has been laying around in bits and pieces for many years. I recall visiting Southern California Edison (SEC) in the 1980s where a group of us energy reporters visited the utility’s “smart house.” It kinda reminded me of the Betty Furness advertisements for Westinghouse kitchens when I grew up in Pittsburgh in the 1950s and 1960s. SCE assured us that the smart house, connected to the utility over phone lines (this was pre-World Wide Web) and through radio signals, would dominate home construction in the coming years. (Enron would have a ‘smart house’ a decade later to awe visitors to 1400 Smith Street in Houston, but that’s another story.) [Read more →]

June 19, 2009   6 Comments

Smart Grid: Can 'Smart Metering' Overcome the Hassle Factor? (transaction costs matter too)

When asked for conjectures about the Smart Grid, economists’ imaginations become almost indecently fertile. Writing in her blog, market-friendly Lynne Kiesling sees astounding dividends from real-time pricing and smart grid technology, preferably with competitive retail service.

Say, for example, you are on the train to work, and you get a SMS [ text message] notification that due to unexpected weather, there will be a higher-than-normal electricity price in the 9:00-10:00 hour. You may have already programmed your devices to respond to price signals, but what if the price is high enough that you want to change your settings? You can log in to your HAN [Home Area Network] from your mobile device, or from your computer at work, and change the device settings in the home through the web portal. … [i]f the home has e.g. solar PV panels the customer can program the network to reduce electricity use once the home’s consumption reaches the generation capacity of the solar resource.

But what is wrong with this picture? [Read more →]

May 29, 2009   4 Comments