TW: Final segment on smart grids (obviously I like the idea). This segment focuses on the implications for utilities and overall implementation challenges.
The notion of distributed power storage via things like V2G (see below) is exciting. As you likely know, typical power generation is most efficient when done in predictable steady flows, but demand peaks and troughs (hot days v. really cold days, weekends v. working hours etc.). Alternative energy generation has the opposite problem as wind and sun generate power in sync with the weather conditions. Power storage limitations preclude optimizing the generation and consumption dynamic. Distributed storage could help bridge that chasm
Smart meters cost roughly $500 per to buy and install. That is not chump change and likely requires a 3+ year payback. Obama has stepped in with some limited funding through the stimulus package but more will be needed. There are many competing incentives and stakeholders with varying agendas. But we need smart grids!!
From Economist:
"...The advantage from the utility’s point of view is that it becomes easier to balance supply and demand by reducing consumption at times of peak demand, such as during very hot or cold spells, when people crank up their air-conditioners or heaters. As well as improving the stability of the system, it could also enable utilities to postpone the construction of new power stations, or even do without them altogether, by reducing the peak level of demand that they have to meet.
Moreover a smart grid will make it easier to co-ordinate the intermittent and dispersed sources of power, from rooftop solar panels or backyard wind-turbines, for example. And, of course, a smart grid could also help manage the charging of electric vehicles. The best time to charge vehicles is at night, when lots of cheap electricity is available. “If we don’t do that, then we will add to peak loads and we’ll have to build huge amounts of infrastructure to handle our vehicles,” says Robert Pratt of PNNL.
The flow of energy between the grid and electric cars need not be one-way. With millions of electric cars plugged in at any one time, they could act as an enormous energy-storage system, absorbing excess power from wind turbines on windy nights, for example, but also feeding power back into the grid if necessary (an approach called “vehicle to grid”, or V2G) if the wind suddenly drops.
....Implementing all this will not be cheap. A smart meter costs about $125, and can cost several hundred dollars more to install, once the necessary communications network and data-management software at the utility are taken into account.
....The American government is spending some $4 billion from its economic-stimulus package on smart-grid initiatives, but providing a smart meter for every American home would cost far more: California’s investor-owned utilities alone are spending about $4.5 billion on deploying smart meters over the next few years. That implies that a nationwide implementation could cost around $50 billion.
But PNNL estimates that $450 billion would have to be poured into conventional grid infrastructure to meet America’s expected growth over the next decade anyway...One problem is that power companies are understandably reluctant to invest in technologies that will reduce consumption of the product they sell, even if there are other benefits. One way to realign the public interest with that of the utilities is through a process called “decoupling” which breaks the direct relationship between electricity sales and profits, a measure that has been successfully employed in California. Energy use per person has remained largely flat over the past 30 years in California, but it has increased by roughly 50% for the rest of America.
But in some instances the business case is straightforward. Enel spent around €2.1 billion ($3 billion) installing its 30m smart meters in Italy, but now saves around €500m a year as a result, so its investment paid for itself within five years.
...Reducing peak demand in America by a mere 5% would yield savings of about $66 billion over 20 years, according to Ahmad Faruqui of the Brattle Group, a consultancy that has worked with utilities on designing and evaluating smart-meter pilot programmes. Moreover, studies have shown that the best in-home smart-grid technologies can achieve reductions in peak demand of up to 25%, which would result in savings of more than $325 billion over that period, calculates Dr Faruqui...“
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