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June 24, 2009

The Smart Grid Opportunity in Pictures

Save money, protect the environment, achieve greater energy independence, create economic opportunity – these are the promises of a smart electrical grid.

Is this too good to be true? Look at the pictures below from ISO New England, the grid system which Vermont belongs to.

The top graph is called a load curve. It shows that we New Englanders, like people everywhere else, sometimes consume a lot more electricity than we do at other times. 10% of the time we have meters spinning at over an 18 gigawatt rate at the high end; During the low 10% of the time we consume at less than a 12 gigawatt rate. This by itself would be no big deal until you look at the difference in price per megawatt hour between the heavy use and the low use times – above $100 megawatt hour (except this year) during the high and less than $40 megawatt hour in the lull. The highest prices are over $200 and the lowest near zero.

[cheat sheet: if you light a 100 watt bulb for 10 hours you consume 1000 watt hours or one kilowatt hour (kwh). At retail we pay about $.16/per kwh here in Vermont. 1,000 kilowatt hours are a megawatt hour (mwh). Utilities buying electricity wholesale buy it by the megawatt hour. $100 per mwh is $.10 per kwh; not surprisingly, wholesale rates are lower than retail. 1,000 megawatt hours is a gigawatt hour. Now you know.]

Notice now that the price graph is pretty flat except at the ends while the demand curve is much more slanted. At the ends, price varies much more dramatically than demand. What's going on is that both the fuel and the capacity used to produce "extra" electricity during periods of peak demand are expensive. Here in New England we usually use natural gas for peak power in plants which run only a fraction of the time. BTW, the low price of natural gas this year explains why peak costs in 2009 (red) are so much lower than in 2008 (yellow).

At the low end you can't really turn off a nuclear plant for the night or completely shut down a hydro plant. Sometimes it's literally necessary to give away surplus electricity.

So one smart grid opportunity is to incent and enable consumer to move their use from the left end of these charts over to the right. The more we level out our use, the cheaper the total bill. Sometimes a peak price lasts for only a few minutes; a refrigerator, for example, can safely be turned off for a little while (the process has to be automated to be practical). Cheaper power late at night than during the day is predictable; electric storage heat can and is created off peak. Some day that's when we'll charge our plugin hybrid electric vehicles and electric lawn mowers.

Another smart grid opportunity is incenting generators of renewable energy to make more supply at peak times. For wind or solar, this requires some form of storage like batteries, but the extra cost may be worth the extra revenues. With hydro power, if there's sufficient impoundment space available, water can be stored until power is needed.

It's all about flattening the curves.

There's more on the components of the smart grid we hope to build quickly in Vermont with stimulus money at http://blog.tomevslin.com/2009/03/whats-a-smart-grid-and-why-does-it-matter.html.

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