Smart grid is expensive but necessary to integrate renewables and adapt to climate change

Source: Umair Irfan, E&E reporter • Posted: Friday, June 20, 2014

On July 28, 2011, brooding thunderstorms rolled over Chicago in the middle of the night. Lightning struck the Windy City more than 5,700 times, knocking out power for thousands.

However, the electric utility, Commonwealth Edison, noticed before many customers did, dispatching repair crews to damaged areas while people slept. Smart meters installed in the region informed the utility of the exact location of 70,000 outages while automated systems rerouted power to isolate the problems.

The incident is an example of how the smart grid can overcome disruptions and improve resiliency, according to Anil Dhawan, senior electrical engineer at ComEd.

Speaking yesterday at a briefing hosted by the Environmental and Energy Study Institute on Capitol Hill, Dhawan said America’s electrical infrastructure would benefit from upgrades, but without policy support, utilities won’t take the plunge on their own to build new transmission and install smart meters.

Much of the nation’s electrical infrastructure is decades old and decaying. More distributed energy sources like rooftop solar power are coming online in some parts of the country, while homes are becoming more efficient and reducing demand growth. Meanwhile, climate disruptions are exposing weaknesses in the grid.

This is driving utilities to come up with new business models to build a smarter, more resilient grid. But it’s also forcing regulators to revise how they manage electrical infrastructure, cajoling a notoriously slow-moving industry to respond to a rapidly shifting energy landscape.

Getting ‘flex’ from an inflexible system is pricey

Under past rate case models in Illinois, ComEd saw grid investment return rates fluctuate from as high as 82 percent to as low as 17 percent. “I don’t think any company would invest if the rate of return was only 17 percent,” Dhawan said, arguing for a new regulatory formula that would offer utilities a “predictable and repeatable” rate of return.

The Department of Energy is considering some of these reforms as part of its comprehensive assessment of America’s energy sector, the Quadrennial Energy Review. The first report, due out next January, will focus on energy transmission, storage and distribution.

“The reality is these are fairly inflexible systems that require vast investments, on the order of trillions of dollars,” said Karen Wayland, deputy director for state and local cooperation at DOE’s Office of Energy Policy and Systems Analysis. “And then there is a certain level of uncertainty given the major changes in the energy landscape over the last five years in this country.”

Addressing climate change is also a major motivator behind grid investments. The energy review emerged from President Obama’s Climate Action Plan released a year ago, and the administration’s recently proposed greenhouse gas emissions cuts from power plants add additional urgency to the matter.

“We need to reduce pollution. We need to reduce greenhouse gas emissions,” said Rep. Jerry McNerney (D-Calif.). “Smart grid technology is going to be a part of that.”

However, the prospect of a legislative solution in the near term is dim. “Energy policy is very controversial, very partisan right now,” McNerney said. “The important thing is we need to have standards that states and utility companies can agree to.”