Smart Grid – Driving Forces and Benefits

Electricity provides over 40 percent of the overall energy consumed in the U.S. and it has a well-established relationship to GDP growth. Consequently, the strength and resilience of the electric grid is a matter of critical importance to the overall economy. The current U.S. electric transmission and distribution grid is generally considered to be aging, congested, and incapable of meeting the demands of an information technology intensive economy.

These shortcomings have significantly raised the attention of all stakeholders to modernize the nation’s electric infrastructure. Commonly referred to as Smart Grid, financial and regulatory strategies are in various stages of development and implementation across the electric industry to ensure that this vital capability is able to meet the requirements of a growing, IT-oriented society.

Drivers for Grid Modernization

There are a number of factors that pose challenges to the ability of today’s electric grid to meet customer and society expectations with respect to reliability. These challenges include:

• Demand: Peak demand is likely to increase by over 15 percent over the next 10 years with no indication that the relative importance of electricity to economic growth or as a significant proportion of energy use is going to wane.
• Capacity Constraints: With projections that generation capacity will hit critical reserve limits within the next 10 years, the majority of capacity expansion related projects are not expected to be completed before these limits are exceeded.
• Renewable Generation Sources: Increased control and coordination will be required as the industry shifts some of its dependence to the more variable and remote renewable and distributed generation sources (e.g. wind and solar).
• Congestion: Failure to keep pace with the requirements for expanded transmission infrastructure and mounting challenges in obtaining right-of-way will likely cause frequent congestion, increased transmission losses, and increased risk of failures.
• Distribution: Customer reliance on technology, computers and electronics have resulted in lower tolerances for electric service interruptions and emerging trends of distributed generation and electric vehicles will add stress to the current power systems.
• Demand Management: Viewed as a way to mitigate potential increases in operating costs, improve reliability, and defer investment in new generating and transmission assets, 2-way communication down to the meter will be required.
• Regulatory Policy: Energy efficiency mandates are being issued by both Federal and State legislatures.
• Environmental Considerations: As electric power generation comprises over 24 percent of the world’s carbon dioxide emissions, there is increased pressure to pursue alternative energy supplies and limit transmission line losses.

Some Benefits of Smart Grid

In light of the above mentioned drivers and the unquestioned importance of the role of electricity in the lives and welfare of its customers, the industry recognizes and accepts the challenge to modernize the grid in anticipation of providing the following benefits:

• Electric utilities will be better able to monitor and manage energy delivery down to the customer premises on a real time basis.
• Multiple rate structures will be offered to encourage efficiency and better manage demand peaks.
• Unplanned outages will be reduced in frequency and duration.
• Construction of new plants and transmission lines will be deferred.
• Real-time information will be available to customers and field workers resulting in improved efficiencies and more reliable service.
• The incorporation of clean energy alternatives will be maximized.

These benefits will be realized via the integration of advanced metering infrastructure (AMI), outage management, demand management, distribution automation, substation security and mobile workforce connectivity.