Smart grid empowers DER

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FierceSmartGrid: Public utilities have traditionally operated under the assumption that energy flows only one way - from the generation station to the customer. What factors are causing this to change to two-way energy flow?

Avanesh Jayantilal, IEEE 

Avnaesh Jayantilal: The key drivers are changing environmental attitudes - specifically, the strong interest in creating a sustainable environment for future generations - and, the political imperative to reduce the nation's dependence on foreign sources of energy. A related economic driver is recognizing the real economic cost of green house gas emissions.

These societal changes have resulted in two parallel and reinforcing trends: The growing use of more renewable energy resources within consumer and industrial premises (e.g. solar photovoltaic), also referred to as Distributed Energy Resources (DER), and a utility-wide initiative to promote greater consumer involvement in monitoring - and adjusting - their energy usage (Energy Efficiency). The ability for consumers to generate and resell energy will enable energy flow from lower (distribution) to higher levels (transmission) of the grid where large scale generators (e.g. nuclear, coal, etc.) are located, and could potentially have significant challenges and advantages to grid management.

FierceSmartGrid: Is the two-way paradigm limited to energy, or, is there also a change in the direction of information flow?

AJ: A bidirectional information flow is absolutely essential in managing the challenges of DER. Without a two-way information flow between producers and consumers it would be impossible to accomplish the objectives of the Smart Grid of turning consumers into true prosumers (producers of energy through DER). The information flow will provide the right incentives and feedback signals to help consumers determine the viability of DER investments and decisions of energy usage. An example would be smart grid pilot programs the use of real-time or dynamic pricing to enable consumers to shift their energy usage based on the actual cost of energy.

FierceSmartGrid: Generally speaking, how can utilities cope with the new paradigm? Will it require a large capital investment?

AJ: The paradigm shift has been gaining momentum over the last few years primarily driven by regulators, politicians and the changing preferences of consumers. Initially, utilities did not grasp the opportunity at hand but viewed this as more of a challenge or disturbance to their usual business practices. But more recently a new generation of thought leaders have emerged and evolved this into tremendous new revenue opportunity whilst improving their core business of maintaining the reliability of the grid.

To cite just one example, some service providers have developed an innovative approach to resolving consumer reluctance to install solar because of the complexities and the financial risk. They now offer to install solar panels on a consumer's rooftop at their expense and then pay the consumer a flat monthly fee for renting the rooftop.  The service providers then resell this energy to the local utility and are also able to take advantage of the available federal and local subsidies.

In terms of grid operations, utilities have also started to invest in energy storage (primarily batteries) as a key partner for harvesting renewable energy. Storing energy in batteries reduces wastage at time of low demand or when there is congestion on the grid. 

Utilities must also consider the impact of DER's on current operating strategies and maintenance programs. Traditionally, for example, distribution grid assets have been sized to run hard during the day and cool off at night. When renewables and energy storage becomes a significant part of the energy mix, and when electric vehicles are charging overnight, distribution assets will be running hard for more hours in a day. This will require a more proactive management of these critical grid assets to ensure performance and reliability are not jeopardized.

FierceSmartGrid: What technologies will have to be deployed to manage the Smart Grid?

AJ: The Smart Grid will require the enhancement of existing technologies whilst also the introduction of new innovative technologies over time. To this extent the Department of Energy (DOE) has initiated a number of private-public partnerships to invest into collaborative research and development programs.

New technologies in demand forecasting, weather-related forecasting for DER's, and a new generation of energy management systems, including  the introduction of microgrids, will be required to effectively manage the new mix of DER's..

Electric Vehicle (EV) management is the prototypical example of a new innovative application area. Utilities must account and manage for EV charging in the evening hours when historically demand is low and also at potentially different locations on different days. Utility energy management systems are very capable of managing static loads that are somewhat deterministic in behavior (i.e. small changes from day to day), which are the opposite of EV charging. Utilizing locally available energy storage, demand response (including dynamic pricing) and microgrid technologies will enable utilities to adapt to deal with this new challenge.

FierceSmartGrid: From the perspective of changing utilities' operating strategies, what are the primary characteristics of Distributed Energy Resources (DER)?

 AJ: The primary difference will be in investment strategies for handling the projected growth in peak demand. In the past, we have sized grid assets to serve peak demand. As demand grew, the grid was upgraded across the board to meet peak demand, but that peak only occurs during perhaps 20-30% of the year on average.

Continuing to invest just for peak demand may not be economically sustainable - especially given the uncertain nature of demand growth. Energy storage and renewables force us to rethink that strategy, and instead of upgrading, utilities should consider the option of using distributed energy resources such as localized energy generation, energy storage and demand response to better manage peak demand needs.

Can this strategy work?  Utilities are investing into pilot programs to see if this makes sense for them. So far, results seem to point that it makes operational sense. But there are also economic and commercial questions yet to be answered. Many of the test beds, for example, are looking at return on investment (ROI) and business cases for large scale deployment.

Another important emerging characteristic is grid islanding - allowing microgrids to go it alone from time to time. The big question with the islanding concept is whether we need to centralize or decentralize management and control. Today, the prevailing logic is that a utility really needs to know what's happening out in the grid. But islanding is the way we're going to go because we have to simplify DER adoption and management.

It's not difficult to think of scenarios that make centralized control seem unnecessarily cumbersome at times. If one microgrid is generating more energy than it needs at a particular time of the day, for example, it might want to share that energy with another microgrid that needs it without the utility trying to decide which microgrid should do what. In other words, adopt a decentralized notion of the intelligence closer to the load. That's where the microgrid concept and benefits really starts to kick in.

There are a number of entities including the Department of Defense (DoD), electric distribution utilities and vendors looking at how to do this through pilot programs. The DoD is a big proponent of renewable energy, and is actively pursuing technologies to enable military facilities to become a self-sustaining microgrids to ensure security of energy supply.

FierceSmartGrid: How important is it for utilities to adopt the same management strategies, processes and technologies?

AJ: "Electrons are Electrons." They have no national or regional boundaries. There may be some existing regional differences in the way utilities manage based on the energy mix and for some socio-political reasons. But overall we should - and will - adopt best practices for utilities with some regionalization. Smart Grid today is on a learning curve that started about five years ago and will continue for another five to ten years.

FierceSmartGrid: What international standards are available or being worked on that will help utilities achieve interoperability in a distributed energy management?

AJ: The Smart Grid is really an end-to-end proposition so standards activity is ongoing for everything from best practices for grid management to smart meters to home automation networks and smart appliances.

For example, the National Institute of Standards and Technology (NIST) through the Smart Grid Interoperability Panel (SGIP) is responsible for coordinating development of an interoperability framework for smart grid devices and systems. Some examples of emerging and deployed standards include:

The Common Information Model (CIM). It's a standard developed by the electric power industry and adopted by the International Electrotechnical Commission (IEC) to allow enterprise application software to exchange information about the configuration and status of an electrical network (transmission and distribution).The IEEE adopted its IEEE 1815 Distributed Network Protocol (DNP3) standard for electric power systems communications. It creates a foundation for achieving greater device interoperability and security. Another standard worth noting is the OpenADR Alliance's Smart Grid standard known as Open Automated Demand Response (OpenADR). It is being developed to assure interoperability in demand response products and services. At the home networking level, the ZigBee Alliance's Smart Energy standard assures interoperability for products that monitor, control, inform and automate the delivery and use of energy. It includes features for consumers to handle information provided by utilities so they can reduce energy consumption.

FierceSmartGrid: Can you suggest a timeline for distributed energy management systems to become widely used by utilities?

AJ: Generally speaking, we see pilots going live in 18 months and the industry leaders adopting DER Management System (DERMS) which will include most of the functionality I've just described including advanced microgrid management in about five years. The continued investments by governments, utilities, professional organizations and vendor community are actively pioneering the next generation of smart grid technologies - power engineering has never been so exciting, and to this end the IEEE plays a key role in building international consensus, and providing resources and vision to accomplish the Smart Grid's potential.