What’s a Smart Grid and Why Does It Matter?

We Vermonters have a huge opportunity to use federal stimulus funds to shape our near term energy future. The Vermont of three years from now will have both reduced its use of expensive and relatively dirty peak electricity AND begun to substantially reduce the use of oil in cars and homes. Energy policy is a key part of the SmartVermont plan announced Thursday by Governor Douglas and the Smart Grid is a key part of energy policy.

Whether you believe that the most important goal of an energy policy is reducing CO2 emissions, preventing the outflow of dollars from the State and nation for imported oil, or stopping the flow of petro dollars to unfriendly places, you are probably part of the huge consensus which believes that we need to reduce our use of fossil fuels both locally and nationally. It's even better, of course, if we reduce our use of fossil fuels by making alternatives cheaper rather than just by making fossil fuels more expensive; that's kinder to our pocketbooks and has a better chance of being a model for the rest of the world.

What's a Smart Grid?

 

The Smart Grid lets us do all these good things. But what's the Smart Grid?

Smart Grid infrastructure consists of electronic meters at each residence and business, an information network to carry data from the meters to the utilities in near real-time AND to bring information on the instantaneous price of electricity back to consumers; gadgets which help us automatically adjust our electrical use to prices in whatever way we want to do that; and lots of electronics and other devices in the electrical grid itself, which let the grid use the information on usage to adjust transmission and supply and accommodate the varying output from alternative energy sources.

Smart Grid benefits to consumers are lower overall rates and the chance to use very cheap way off-peak electricity for charging electric vehicles and appliances, generating and storing heat for later use, and adjustable activities like clothes washing and drying. Businesses have even greater opportunity to reduce energy costs. The benefits for the economy are less money spent on fossil fuel and a better return on alternative energy investments. The benefit for the environment is less use of fossil fuel to generate electricity. Lots of winners.

Smart Grid Economics

 

Of course electricity is not really an energy source the way a windmill or coal-fired generating plant or a hydro-electric dam is; electricity is a way of getting energy from where it's generated to where it's used. The cost of electricity depends on both what fuel was used to generate it and how much it cost to transmit it from source to point of use. Similarly the environmental impact of using electricity depends on how the electricity was initially generated. Here in Vermont two-thirds of our electricity is carbon-free from Hydro Quebec and Vermont Yankee; that's why we have the lowest carbon footprint per capita for electrical consumption of any state in the country. Off-peak almost all of our power comes from these sources; on-peak we buy expensive electricity largely generated by spooling up gas-fired facilities, which use expensive fuel and are an expensive resource because they are only needed for a few hours each day.

The following charts are from Vermont's 2005 power plan.  The chart immediately below shows how wholesale prices vary during two normal days:

   

Peak costs for power during the afternoon on both days was 60% higher than the daily lows.  On a bad day, the difference is much greater:

 

Obviously if we can shift some usage from peak to off-peak, the electricity we do use will cost us much less because less expensive fuels and more environmentally friendly generating fuels are used off-peak. Also, the total cost for building electrical facilities is reduced if we don't have to build extra generating plants and transmission lines solely to meet peak demand.

Smart Grid and SmartVermont

Part of the SmartVermont plan is to use federal stimulus money to accelerate activities already underway and get the Smart Grid in place much faster than we would have otherwise. We must compete for and win grants for:

• the speedy completion of our broadband network (a good thing in its own right and essential to carrying the information on which the SmartGrid depends),
• rolling out smart meters statewide
• making the improvements in the grid and in our electrical substations needed to make this all come together, and
• funding experiments to determine what rate structures are most useful to consumers.

To take further advantage of the Smart Grid, we are looking at possibilities of using stimulus money to accelerate the adoption of plug in hybrid or pure electrical vehicles– perhaps first by transit districts and others who may be eligible for stimulus funding for fleet expansion – and to help grow the use of geothermal heat (which uses an electrical compressor) and storage heat.

SmartVermont means using the different flows of federal money – broadband, energy, transit, economic development, diesel fuel avoidance etc. – synergistically to build an even better Vermont for the future. It won't be easy; there's lots of coordination required; we have to succeed in our competitive grant requests; and there will be slipups. But the results'll be worth the effort.