Dec 16 2009
Why I am calling for the development of a Smart Grid: A Forward Thinking Vision to Deliver Low-Cost, Clean Electricity
Seattle City Light is uniquely positioned to provide low-cost, clean electricity to our customers—who own the public utility. Approximately 88.83% of Seattle City Light’s electricity generation is from hydro, a renewable energy. In comparison, about 50% of the United States electrical production comes from coal. The carbon footprint of coal is approximately 1000 grams of CO2 per kWh of electricity generated when compared to 10-30 grams of CO2 per kWh of electricity generated from hydro. Seattle City Light offers an average rate of 6.42 cents per kWh, compared to the national average of 9.7 cents per kWh. With the commitment Seattle and Washington state has demonstrated with the passage of I-937 in 2006 (3%-renewable energy of its load by 2012, 9%-renewable energy of its load by 2016, and 15%-renewable energy of its load by 2020) and Seattle City Light’s commitment with a 5-Year Conservation Plan to avoid 1 million tons of carbon dioxide emissions, what is the next step to continue providing the lowest rates and the cleanest electricity in Seattle?
That next step is Smart Grid. IBM’s slogan is “building a smarter planet.” Smart grid is the answer for building a smarter Seattle. Smart grid is a revolutionary change in how a utility generates and distributes electricity. The revolution has begun, with a federal stimulus package of $3.4 billion for smart grid technology. From these funds, $9.6 million was granted to Seattle City Light and the University of Washington for the development of a “smart micro grid” on the Seattle campus. Consumer education and engaging the public on what exactly is a smart grid and how it helps residents is absolutely vital as we discuss the development of a smart grid. This UW micro smart grid will help in the education process. The chart on the right provides a breakdown on the age groups and its willingness to pay for smart grid services (poll from IBM).
The Customer benefits are: 1) real-time pricing, allowing customers to adjust energy use and take advantage of potential cost savings, 2) The smart meters can adapt to the intermittence of renewable energy sources like solar and wind, improving their integration with the grid, 3) hybrid and electrical vehicle charging systems with low/high-peak pricing integration, and 4) sensors on streetlights will allow the utility to fix the broken streetlight, rather than rely on customers to report the problem. Eric Lightner, director of the Department of Energy’s smart grid task force, states it best, “How is this going to reduce our costs, help us green the planet and plug in our hybrid vehicles if those come to market?”
Below is a chart of the cost benefit analysis that Seattle City Light has conducted. Bottom line: the cost of initial capital expenses to build a smart grid will pay for itself over fifteen years in terms of utility savings, customer savings, and environmental benefits. A smart grid system was completed in Italy in 2005, costing $3 billion, but producing $750 million in savings per year and delivering better services at lower costs. Current smart grid developments and initiatives are occurring in Austin (Texas), Boulder (Colorado), Ontario (Canada), Worcester (Massachusetts), Chicago (Illinois), and Miami (Florida). The $3.4 billion in smart grid stimulus funds went to approximately 100 utility projects. The significant grant winners were Baltimore Gas and Electric set to receive $200 million for the installation of 2 million residential smart meters; San Diego Gas and Electric received $28.1 million for its wireless smart grid program; Oklahoma Gas and Electric received $120 million; and Texas CenterPoint Energy received $200 million for 2.2 million smart meters. Baltimore’s smart grid project totals $451 million, but is expected to save $2.6 billion over 15 years. The smart grid stimulus package will deploy 40 million smart meters, 170,000 smart thermostats, 200,000 smart transformers, 1 million in-home energy monitors, and 700 automated substations across the country.
Smart Grid Cost/Benefits:
|Total Project Costs for 15 years||$321 Million +/- 10%|
|Capital Costs||$212 Million +/- 10%|
|O&M Costs||$109 Million +/- 10 %|
|Over 15 years||$471 Million|
|Net Present Value over 15 years||$206.8 Million|
|Net savings begin in the first year and continue to build over the analysis period|
|Improved Grid reliability, shorter outage duration and rapid service restoration|
|Customers can manage their energy consumption more effectively and realize benefits of flexible billing|
Smart grid Benefits:
- 1) Enable energy efficiency and reduce system losses (6% is usually lost after it leaves the generator)
- 2) Provide improved outage information, enabling more targeted restoration strategy
- 3) Provide for automated meter reading and automate other operations
- 4) Improved visibility to system and equipment conditions.
- 5) Reduced outage calls
- 6) Reduction in Meter Reading
- 7) Eliminate Reconnect/Disconnect Service Calls
- 8) Reduced Move-in, Move-out work
- 9) Improved crew productivity-fault location
- 10) Increased Customer energy savings
- 11) Reduced planned capital outlays
- 12) Improved maintenance
- 13) Value of reduced outage time to customers
- 14) Reduced Greenhouse Gases.
The funds from the $3.4 billion smart grid investment grant were announced in October and despite a strong application and advocacy by Seattle City Light, Seattle will not receive substantial funds from the federal government. In addition to Seattle City Light’s partnership with the University of Washington, Seattle City Light will team up with the Pacific Northwest Team (energy providers, utilities, vendors, and research organizations) to conduct a regional smart grid demonstration project. This is the largest smart grid demonstration project announced by the Department of Energy, totaling $178 million. The project will involve 60,000 metered customers from five states and test the devices, software, hardware, and tools that will enhance the grid’s reliability and performance. The $3.4 billion set aside by the federal government for smart grid deployment was scheduled for 3 rounds, but because of the extensive business cases made all across the country on the great benefits of a smart grid, the entire funding package was exhausted in the 1st round and rounds two and three were canceled.
Despite my disappointment that Seattle did not receive any smart grid matching funds, I am eager and energized to develop a smart grid in Seattle. The enthusiasm generated around smart grid during the grant programs under the American Recovery and Reinvestment Act across the country demonstrated the time is absolutely now to upgrade our grid infrastructure for the 21st century. There are still many significant issues to discuss like privacy concerns with the utility’s access to real-time information about energy-use; the security of a smart grid system; and the public skepticism on long term cost benefits, but delaying a smart grid development for another 5 to 15 years will cost us more in the long run. Building a smart grid will be the biggest change in how electricity gets delivered to your home or business in the last 50 years. It is absolutely vital that we educate the public about smart grid and my commitment is to be inclusive and accountable about the smart grid business case as we discuss a smart grid development in Seattle.