Multi-billion dollar investment spurs US transition to smart energy grid

Paul Boughton
A US$3.4b (EUR2.32b) investment in the US smart energy grid is expected to generate tens of thousands of jobs, save energy and empower all electricity users to cut their bills. Sean Ottewell reports.

Speaking at Florida Power and Light's (FPL) DeSoto Next Generation Solar Energy Centre on 27 October, president Barack Obama announced the largest single energy grid modernisation investment in US history. It will be used to fund a broad range of technologies that will spur the nation's transition to a smarter, stronger, more efficient and reliable electric system. The end result will promote energy-saving choices for consumers, increase efficiency, and foster the growth of renewable energy sources such as wind and solar. The US$3.4b(EUR2.32b) in grant awards are part of the American Reinvestment and Recovery Act, and will be matched by industry funding for a total public-private investment worth over US$8b(EUR5.5b). Applicants state that the projects will create tens of thousands of jobs, and consumers in 49 states will benefit from these investments in a stronger, more reliable grid.

An analysis by the Electric Power Research Institute estimates that the implementation of smart grid technologies could reduce electricity use by more than four percent by 2030. That would mean a savings of US$20.4b (EUR14b) for businesses and consumers around the country, and US$1.6b (EUR1.1b) for Florida alone - or US$56 (EUR32) in utility savings for every man, woman and child in the state.

One hundred private companies, utilities, manufacturers, cities and other partners received their smart grid investment grants on 27 October, including FPL which will use its US$200m (EUR136.5M) in funding to install over 2.5 million smart meters and other technologies that will cut energy costs for its customers. These awards represent the largest group of Recovery Act awards ever made in a single day and the largest batch of Recovery Act clean energy grant awards to date in the US.

Also among the announcements are:

- US$1b (EUR0.68B) towards empowering consumers to save energy and cut utility bills. According to the US Department of Energy (DOE), these investments will create the infrastructure and expand access to smart meters and customer systems so that consumers will be able to access dynamic pricing information and have the ability to save money by programming smart appliances and equipment to run when rates are lowest. This will help reduce energy bills for everyone by helping drive down peak demand and limiting the need for stand-by power plants - the most expensive power generation there is.

- US$400m (EUR273m) to improve efficiency of electricity distribution and transmission. The administration is funding several grid modernisation projects across the country that will significantly reduce the amount of power that is wasted from the time it is produced at a power plant to the time it gets to houses. By deploying digital monitoring devices and increasing grid automation, these awards will increase the efficiency, reliability and security of the system, and will help link up renewable energy resources with the electric grid. The DOE says that this will make it easier for a wind farm in Montana to instantaneously pick up the slack when the wind stops blowing in Missouri or a cloud rolls over a solar array in Arizona.

- US$2b (EUR1.4b) to help with integrating and cross-cutting across the different smart components of a smart grid. Much like electronic banking, the smart grid is not the sum total of its components but how those components work together. The Administration is funding a range of projects that will incorporate these various components into one system or cut across various project areas - including smart meters, smart thermostats and appliances, syncrophasors, automated substations, plug in hybrid electric vehicles and renewable energy sources.

- US$25m (EUR17m) towards building a smart grid manufacturing industry. These investments will help expand the manufacturing base of companies that can produce the smart meters, smart appliances, synchrophasors, smart transformers, and other components for smart grid systems in the US and around the world - representing a significant and growing export opportunity for the country and new jobs for American workers.

When these projects are fully implemented, the DOE expects the combined effects to create tens of thousands of jobs across the country, including high-paying career opportunities for smart meter manufacturing workers and technicians, IT system designers and cyber security specialists, data entry clerks and more.

The investment will also make the grid more reliable, reducing the power outages estimated to cost US consumers US$150 (EUR102.3) b/y.

In terms of equipment, more than 850 sensors - phasor measurement units - will be needed to cover the whole country's grid and make it possible for operators to better control conditions and prevent minor disturbances in the electrical system from cascading into local or regional power outages or blackouts. In addition, more than 200000 smart transformers will be installed. These will make it possible for power companies to replace units before they fail thus saving money and reducing power outages. Also 700 automated substations, representing about five percent of the nation's total, will be needed and these will make it possible for power companies to respond faster and more effectively to restore service when bad weather knocks down power lines or causes electricity disruptions. Finally, the installation of more than one million in-home displays, 170000 smart thermostats and 175000 other load control devices to enable consumers to reduce their energy use. Funding will also help expand the market for smart washers, dryers, and dishwashers, so that American consumers can further control their energy use and lower their electricity bills.

The DOE expects that the net result of this will be a reduction in peak electricity demand by more than 1400MW, which is the equivalent of several larger power plants and can save ratepayers more than US$1.5b (EUR1b) in capital costs and help lower utility bills. Since peak electricity is the most expensive energy - and requires the use of standby power generation plants - the economic and environmental savings for even a small reduction are significant. In fact, points out the DOE, some of the power plants for meeting peak demand operate for only a few hundred hours a year, which means the power they generate can be 5-10 times more expensive than the average price per kilowatt hour paid by most.

Luke Clemente, general manager of GE Energy Services' smart grid business, said: "The holistic smart grid solutions receiving funding deliver synergistic reliability, efficiency and clean-energy technologies across the electrical network.

As a result, consumers will have the power to manage and control their energy use, and we can add more clean energy sources to the generation mix-all while creating thousands of high value, non-transferable, green-collar jobs. This approach tracks closely with GE's smart grid vision that has been honed by decades of research and a century of real-world experience focused on continually improving how power is generated, delivered and consumed."

Just three days after the announcement by Obama, GE said that AEP Ohio is to purchase 110000 of its smart meters as part of the company's gridSMART demonstration project in northeast central Ohio. These meters will give consumers the information to make informed choices about when and how they use electricity - enabling them to lower their electric bills without sacrificing lifestyle.