| Imagine it's a hot, humid day and the temperature | | | | pricing signals, but can't really control diversification. |
| is rising. The local electric company is reaching it | | | | Utility Pricing |
| maximum generating capacity, so it sends a signal | | | | So how does the utility send pricing signals? First |
| to your home automation system to reduce the | | | | let's look at how utilities charge for their service. |
| electrical consumption in your house. Your home | | | | Utilities charge for energy and demand. |
| automation system responds by raising the set | | | | Energy Charge - Charge for kilowatt-hours (kWh) |
| point of your thermostat and only energizing the | | | | of energy consumed. All customers are charged |
| water heater when absolutely necessary. For | | | | for kWh consumed to pay the cost to produce |
| your ability to shed some load, you get a discount | | | | the electricity and the cost of daily operations. |
| on your energy bill. Welcome to the "Smart Grid". | | | | Demand Charge - Charge for peak kilowatts of |
| It is projected by the Energy Information | | | | demand. Determining demand loads requires more |
| Administration that U.S. electrical consumption | | | | expensive metering and is typically only applied to |
| could increase by 26 percent from 2007 to 2030, | | | | large commercial and industrial customers. |
| or by an average of 1.0 percent per year.1 Work | | | | The utility tries to influence demand levels through |
| is underway to build the smart grid to meet new | | | | Time-of-Use rates to encourage customers to |
| demand with minimal investment in conventional | | | | use more electricity at non-peak times or by |
| power plants and expanded transmission and | | | | special rates and programs for customers who |
| distribution (T&D) lines. So what is the Smart | | | | can shed loads upon request. Smart grid |
| Grid? A good definition of the Smart Grid is found | | | | technology will allow utilities to apply Real Time |
| in a report published by the Electric Power | | | | Pricing (Day Ahead, Hour Ahead) so as to have |
| Research Institute (EPRI) and found on their | | | | the maximum influence on consumption levels and |
| website. The report is entitled "The Green Grid: | | | | time of use. |
| Energy Savings and Carbon Emissions Reductions | | | | Communication is Key |
| Enabled by a Smart Grid." 2 | | | | In order to make the smart grid work, |
| Smart Grid Definition | | | | communication is key. The utility will have to be |
| "The term Smart Grid may be best understood | | | | able to communicate individually with each |
| as the overlaying of a unified communications and | | | | customer. This will require smart electrical meters |
| control system on the existing power delivery | | | | that can inform the customer directly or indirectly |
| infrastructure to provide the right information to | | | | through a home automation system or end use |
| the right entity (e.g. end-use devices, T&D | | | | appliances. Communication standards will be |
| system controls, customers, etc.) at the right | | | | necessary and customers will have to be |
| time to take the right action. It is a system that | | | | informed and educated on how this can all work |
| optimizes power supply and delivery, minimizes | | | | to theirs and the utility's advantage. Likewise, |
| losses, is self-healing, and enables next-generation | | | | HVAC and appliance manufacturers will have to |
| energy efficiency and demand response | | | | build equipment with features to reduce load |
| applications." | | | | (variable speed, high efficiency mode) to take |
| Utility Loading - Life would be easy if it was all | | | | advantage of this new level of communication |
| base load | | | | with the electrical utility. |
| Electrical utilities see the electrical load as base | | | | The Future - From Passive to Active Participation |
| load, intermediate load and peak load. | | | | You, the consumer of electrical energy, will now |
| Base Load - Load that exists around the clock. | | | | become an active partner with your local utility. |
| Typically served through nuclear and coal fired | | | | Over the next decade, you will see smarter |
| plants. | | | | appliances, smarter meters and home automation |
| Intermediate Load - Load that occurs regularly, | | | | systems that will allow you to communicate |
| but only on certain days and times. Typically | | | | directly with the local utility to a mutual advantage. |
| served by coal-fired, wind or solar plants. | | | | The Smart Grid Consumer Mantra |
| Peak Load - Load that occurs under very high | | | | Ask not what the grid can do for you. Ask what |
| demand conditions, usually driven by weather | | | | you can do for the grid - and prepare to get paid |
| conditions (very hot or very cold days). Typically | | | | for it.3 |
| served by gas turbine peaking plants. | | | | References |
| Utilities rely upon naturally occurring diversification | | | | 1. Annual Energy Outlook 2009 with Projections to |
| in the load to even out the demand so it can | | | | 2030. Energy Information Administration. Report |
| supply the electrical needs of its customers | | | | #:DOE/EIA-0383. March 2009. > |
| without having in place all the infrastructure | | | | 2. The Green Grid: Energy Savings and Carbon |
| needed to meet the sum of the base, | | | | Emissions Reductions Enabled by a Smart Grid. |
| intermediate and peak loads. | | | | EPRI, Palo Alto, CA: 2008. 1016905. 2-1. |
| Utilities try to influence diversification through | | | | |