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August 09, 2009

Vermont Utilities Unite to Seek $66 Million in Smart Grid Funding

All 20 Vermont electric distribution utilities (the people you buy electricity from); the transmission utility, VELCO, which brings electricity to them; and the efficiency utility, Efficiency Vermont, whose role is to reduce demand, have united to design a single $133 million plan for implementation of a "smart grid" in Vermont and have submitted a joint application to the US Department of Energy for stimulus funding to cover 50% of the cost. The Vermont Department of Public Service and Office of Economic Stimulus and Recovery helped with coordination; the project had great support from Governor Douglas, Senators Leahy and Sanders, and Congressman Welch; but the heavy lifting was done by the utilities.

This is an extraordinary collaboration for a very good cause; if this project is funded, Vermonters will have the benefits of a smart grid five years sooner than we would otherwise. I'm not aware of this sort of coordinated state-wide application from anywhere else, which is one of the reasons why I'm optimistic that it'll get funded. However, it is in competition with other grant requests nationwide for a pool of $3.4 billion dollars, which almost certainly is NOT going to be enough to give all applicants everything that they ask for; so this is no sure thing.

The project is called eEnergy Vermont because smart grid means using digital technology to make better use of energy resources than was ever possible before. For consumers the smart grid means better information about our energy use and much better control over it including substantial opportunities to save money by using electricity when it is cheap and shunning it when it is expensive as well as better reliability. For utilities the smart grid means an opportunity to cooperate with their customers to reduce expensive buys of peak electricity, avoid the need to build as much generation and transmission capability as would otherwise be necessary to deal with escalating peaks (the grid must be sized for peaks), and lower operational costs which include but go way beyond the obvious cost of sending someone out to read your meter. The distributed small sources of renewable power popping up around the state are better used and therefore more valuable if plugged into a smart grid. For the country a smarter grid means reduced reliance on foreign oil and lower CO2 emissions as well as a stronger economy because of lower energy costs.

The communication backbone for eEnergy Vermont is a 72 strand optical fiber network that VELCO is building to every one of the 270 electrical substations in the state. Engineering for the backbone is already underway, funding has been obtained, and it will be built regardless of whether or not the stimulus grant is obtained (but we think that having this fiber available for eEnergy will help us obtain the grant). This same network is also the backbone for much of the state's broadband plan (stimulus grant applications due 8/14), eEducation, and eHealth (applications due later). In other words, the same communication infrastructure which carriers meter readings from substations to utilities, delivers electrical use and price information to consumers, and supports substation automation also will be the way many of us access Internet services, the path for transmitting electronic health records and connecting monitoring devices from home to hospital, and will provide gobs (technical term) of reasonably-priced bandwidth to schools and libraries.

A smart grid is necessary for Vermont and the nation's future. Suppose that next year plug in electric vehicles are available from a number of manufacturers, some at a reasonable price. If our Prius population is any indication, Vermonters will start to snap them up for environmental reasons even before they are strictly justified by economics. If we do that and plug them all into a dumb grid when we get home at 6PM, the grid would simply go psst! (another technical term) and not be able to handle the load. But, if these are smart cars or plugged into smart outlets and there is a smart grid behind this all, we'll fill up with electrons when they're very cheap in the middle of the night AND when the transmission bandwidth is available to deliver them to us. An added benefit here in Vermont is that we can buy more very clean, very green electricity from Hydro Quebec so long as we do that when transmission capacity is available; so we will have displaced oil with hydro power as a transportation fuel.

55.5% of Vermont homes are heated with oil and another 14% with propane. Electric storage heat, which was once in fashion and then not, is much more practical with a smart grid when you can assure that you don't burn fossil fuel at a power plant to create heat to create electricity which is then converted to heat again in the home with lots of loss along the way. With a smart grid utilities can offer way off-peak interruptible rates, which would, even at today's relatively low fuel costs, save $750/year for the typical family using propane heat (after they buy the electric storage heat setup which is probably less than $4000 installed). The trick for many will be to keep the propane furnace as backup in case there's either a power outage or a few days of high electricity prices in a row (all switching automatic, of course). The $750 savings was calculated assuming that electricity only provides 75% of the heat required and the rest still comes from propane. The economics are not as good for conversion of oil heat today – just above break even on fuel costs; but are likely to get much better as oil prices climb faster than the price of off-peak electricity. If our homes are heated by hydro power, that's a lot of oil we don't buy and a lot of CO2 we don't produce.

It's not an exaggeration to say that smart grid enables the energy future Vermont wants to have. We'll get there sooner rather than later – and be a great example to the rest of the country – if this grant is granted.


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