PA Consulting Group
11 May 2014
In April, the UN released a landmark climate change report that suggested diverting hundreds of billions of dollars from fossil fuels into renewable energy and cutting energy waste would shave just 0.06% off expected annual economic growth rates of 1.3 to 3%. The authoritative report however stopped short of extolling the benefits that a smart transmission and distribution system can have on larger efficiency efforts, and while it is true that climate change influences, but does not drive, grid modernization investment, the benefits to be gleaned from these efforts alone are significant. In fact, the Energy Information Administration (EIA) estimates that smart grid technology has the potential to reduce global CO₂ emissions by over 2 gigatonnes per year by 2050. Indeed, with an increasing trend towards utility performance based rate making and events such as the deepening drought on the West Coast resulting in less cost-efficient hydro generation on the grid and overall higher base prices, ensuring that grid conditions are as efficient as possible will serve utilities and rate payers well.
Given this significant efficiency impact, as utilities across the country are embarking on, or completing the deployment of smart grid technologies it is worth considering that there are two types of emission reductions and efficiency efforts that smart grid technologies enable; 1) Direct reductions, such as energy savings from peak load management, energy efficiency programs, continuous commissioning of service sector loads, reduced line losses, and customer feedback on energy use, and 2) Facilitated reductions, such as enabling EV and PHEV deployment and integration of renewables. Focusing in on direct reductions and in particular those strategies and smart grid technologies that require no direct customer involvement, we see that utilities can already take meaningful steps to promote energy efficiency within their systems. Example strategies may include:
- Overall utility technical losses. Technical losses are calculated as the difference between the total amount of electricity entering the network from a generation source and the total leaving it through a customer meter. Examples of losses include those caused by resistance of transmission lines, and the no-load losses of power transformers, and while some losses are unavoidable, many can be reduced by various techniques and technologies. The efficiency opportunity here is significant, according to EIA data, national annual electricity transmission and distribution losses average about 7% of the electricity that is transmitted in the United States. Grid modernization technologies such as synchronous generators and condensers, shunt capacitors and reactors and static VAR compensators can facilitate more effective reactive power compensation, benefitting the system’s ability to move power. Indeed, EPRI has quantified the savings range that smart grid technologies contribute to reducing losses from between 3.5 to 28.0 billion kWh per year in 2030 which equates to between 2 to 16 million metric tons (Tg) of CO₂ .
- Transmission efficiency. Similarly, congestion represents another significant cost of inefficiency in the T&D system, occurring when flows of electricity are restricted due to a lack of transmission capacity. Indeed, more generation from renewables is increasing congestion in some areas of the grid meaning that system flexibility is more important now than ever. While there are many strategies to relieve congestion such as building more generation close to load centers and building more transmission capacity in appropriate locations, utilizing smart grid technologies will go a long way in helping to decrease congestion and improve efficiency. Smart Grid technologies such as synchrophasors measure the instantaneous voltage, current, and frequency at specific locations in the system and improve efficiency by monitoring the maximum power flow that the transmission line can carry in real-time (dynamic line rating). For example, we are seeing generation and transmission organizations such as the New York Power Authority (NYPA) create a much more efficient, responsive, and reliable electrical system through the deployment of ten new synchrophasors on top of the previously installed nine synchrophasors on their network. For NYPA, this technology is ensuring they are getting better indications of grid stress, allowing operators to be more proactive when corrective actions are necessary, and overall increasing transmission efficiency efforts.
- Distribution efficiency. On the distribution network, smart grid technologies can increase efficiency through conservation voltage regulation (CVR), an energy conservation technique that regulates the incoming voltage to buildings. The American National Standards Institute (ANSI) specifies a preferred delivery tolerance of between 114 – 126 V to the customer meter, however, utilities tend to keep the average voltage above 120V to provide a margin during peak load. Again, the opportunity for utility efficiency here is significant, with the Pacific Northwest National Laboratory (PNNL) estimating total U.S. energy savings from CVR to be as high as 6,500 megawatts, or 56,940,000 megawatt-hours -- the equivalent of the Grand Coulee Dam operating at nameplate capacity for a year. Although CVR has been deployed for some time a variety of techniques and new smart grid technologies can enhance accomplishments in this area, including the installation of tap-changing transformers, line drop compensators, capacitor banks and standalone management software or integrated DMS solutions. We are seeing utilities like Pepco, achieve significant savings in their first year of deployment and others are following suit, including TVA, SMUD, and AEP.
In sum, combining the efficiencies that smart grid technologies enable, including facilitation of plug-in hybrid cars, direct feedback on energy usage and the points outlined above on T&D efficiency may have the potential to yield energy savings of 56-203 billion kWh and to reduce annual carbon emissions by 60-211 million metric tons (Tg) CO₂ according to EPRI. On this basis, the environmental value of smart grid in the US is equivalent to converting 14 to 50 million cars into zero-emission vehicles each year. Further, not mentioned here, are the efficiency benefits from deploying high voltage direct current transmission (HVDC) which will also increase overall efficiency in new capital projects. That said, while the technology to support these Utility T&D efficiency strategies and others is mature, one issue in preventing utilities from maximizing non-customer initiated efficiency savings is born out of the fact that there are no explicit requirements, price mechanisms or mandates in the US for coordinating smart grid-enabled technologies to maximize GHG reductions.
At this stage however, in order to facilitate these benefits and realize the true energy efficiency potential of a modern grid, utilities should ensure that these solutions and others are an integral part of their smart grid programs, both in project design and execution. By applying systems thinking, developing KPIs for efficiency and flexibility and utilizing utility analytics to maximize the value from the millions of sensors deployed across the grid, the sector will go a long way to support the goals set out by the UN.