Changes Are Coming to our Electric Industry

Over the past several years there has been a quiet revolution in the electric industry. This revolution is helping improve electrical reliability, reduce utility costs and reduce our environmental footprint.  What is this revolution?  It is the “smart grid.”  The smart grid is replacing the old outdated electrical grid, bringing it into the twenty first century.  What is making our electrical grid smarter?  In short, it is, according to the SmartGrid.gov website, the digital technology that allows for two-way communication between the utility and its customers is in part what makes the grid smart. Like the Internet, the Smart Grid will consist of controls, computers, automation, and new technologies and equipment working together, but in this case, these technologies will work with the electrical grid to respond digitally to our quickly changing electric use. The revolution has been quiet since its impact until recently has been felt only by the large electric users
and the power industry.  But soon, Maryland homeowners and businesses will start seeing some of the benefits.  While most of the smart grid is not obvious to the average citizen, an important element of the smart grid that the consumer will see is the smart meter.

As an energy professional for a large office facility during the past few years, I have had the opportunity to witness firsthand some of the benefits of the smart grid, and I am really excited about the future as the smart grid expands.   One immediate benefit was having a much better understanding how we used power.  When I first got access to the information from our advanced electric meters, it was a big revelation about how we were using power.   Our electric meters collect our electric usage information every 15 minutes around the clock. The insight we got from our electrical usage graphs helped save us a lot of money on our electrical bills.  An example was seeing how much electricity we were using when our facility was shut down at night and on the weekends.  The facility, with all its lights off, looked like it was using very little electricity.  In fact, we were according to our advanced meters using a lot.  That information led to some significant operational changes that have saved a lot of money over time.  All our electrical information from our advanced meters is conveniently available on the internet.

Concerned about the cost and reliability of our electricity?  I have found that the smart grid has helped reduce costs and improve the reliability of our power grid system.  How is this possible?   A little background information first.  We are part of the huge PJM power grid (the world’s largest competitive wholesale electric market with 51 million customers; 1,325 generation sources in several states; 56,000 miles of transmission lines; and 6,038 transmission substations – from PJM 2009).  This high-voltage electric transmission system connects power plants and the many utilities like PEPCO and BGE. The utilities distribute the electricity to homes and businesses.  The power grid is sized to provide the peak electrical load.  That means for all but a handful of hours each year the power grid is oversized.  There are, for example, old inefficient power plants that are mostly on standby.  This standby capacity is expensive and an inefficient use of our resources.  With the smart grid, instead of constantly expanding the number of expensive power plants and transmission lines to meet peak power usages, we can instead provide incentives to customers to strategically reduce their electrical usage during these few of peak hours or when the wholesale price of electricity is high.  With smart meters, large electric users are compensated based on the amount of electrical usage reduction that occurs during the peak hours or when the wholesale prices are high.  In effect we can become “negative” power
generators or as the industry refer to us, a demand-reduction resource.  If you are a smart energy manager, you can significantly reduce your utility costs by using information technologies.   There is even a service industry out there that helps make this happen, the Curtailment Service Providers (CSP).  They make money only when their customers (electric users) make money.  So they are highly motivated to ensure that you are successful.   By improving the efficiency of our power grid, we are all saving money.  Over time some of these benefits may one day help homeowners and smaller electric users save money. With fewer standby power plants and high-voltage transmission lines, there are also reduced environmental impacts.  Homeowners can also participate in reducing their electrical usage during these peak hours and get substantial credits on their power bills. PEPCO offers the Energy Wise Reward program (https://energywiserewards.pepco.com/md/index.php) which provides up to $80/year in credits for participants. The program works by using controls on your air conditioning unit that will shut down your compressor via radio signal during
these peak electrical usage periods while keeping your circulating fan keeps running. 

As noted above, improved reliability is also a benefit. When there are power problems and the possibility of brownouts or blackouts, the PJM grid operator will declare a grid emergency. When that happens, large electrical users that have load reduction contracts are given a notice that they need to reduce electrical power consumption by an agreed upon amount within an agreed upon time frame. The contract agreement uses the advanced/smartmeters to verify power reductions.  The users’ compensation (and that of the CSP) is based on how well they are able to reduce the electrical usage when the emergency call comes in.  Several times during the past few years we, my facility was called upon to reduce our power usage.  The system worked so well that very few people ever realized there were any problems.   

We are in the middle of the information age and we need to bring our electric industry and customers into the twenty first century.   If you know how to use that information, you can save money while helping the environment.