Navigant Research Blog

Energy Storage Maximizes Transmission Infrastructure

— October 6, 2011

Transmission and distribution (T&D) deferral is a key application for energy storage. A common example is deferring the upgrade of a substation by co-locating a battery at the site.  This has been demonstrated at several sites, including by AEP in Ohio, Texas, and West Virginia, and by TEPCO in Japan.  In these cases, NGK Insulator’s sodium sulfur (NAS) batteries were used to defer the upgrade of the substations.  The value of such “virtual upgrades” for energy storage is direct and obvious enough to justify to public utility commissions or other stakeholders.

Other examples for energy storage include wind and solar integration.  As new regulations encourage wind and solar project developers to firm up capacity of intermittent resources or developers seek to maximize their installed capacity, new opportunities for energy storage technologies will arise.

Suitable applications include wind ramping, solar firming, peak smoothing and others. The value of these applications for storage are less straightforward to pin down.  Certainly smoothing instability from intermittent resources is a good thing for the grid; but is there an incentive (regulatory or monetary) to do so?  In many cases there’s not, or it’s not obvious.  Likewise, are intermittent resource developers obligated to maximize the capacity factor of installations in order to turn a profit?  Again, the answer is rarely.

One application highlighted by speaker Jim Robb of Northeast Utilities at the Energy Storage Summit in Houston last week brought the two together: T&D deferral to connect remote, intermittent resources to load centers.  From the perspective of T&D utilities, new transmission lines to remote resources such as wind farms are often hard to justify.  In Robb’s example, the cost of a transmission line to bring wind-generated power from mountainous New Hampshire to load centers in Connecticut and the Boston area added $.06 per kilowatt hour to the cost of electricity from the wind installation.

In addition, because the new transmission line would not increase reliability or improve congestion, it would be classed as an “economic” project, which is more difficult to get funding for in the first place.  Robb ran several scenarios, assuming nearby small pumped storage installations, and the results were fairly intuitive: by including storage a wind farm can be “oversized” relative to the available transmission line, the wind asset can take fuller advantage of the transmission line, and the overall transmission cost decreases.  This is largely thanks to the increased capacity factor for the wind farm when wind is coupled with storage.

This type of T&D deferral is important for several reasons: It maximizes intermittent resources, opens up T&D deferral applications to materials-based energy storage (as opposed to electrochemical storage), addresses the infrastructure issues of intermittent renewables, and gives storage a clear business case for renewables integration.


Allez Linky!: France Greenlights Smart Meter Program

— October 5, 2011

The French government has formally approved the deployment of 35 million electricity meters, starting in 2013 with completion by 2018.  Deploying the Linky meter to customers across France will cost an estimated €4.3 million ($6.2 million).  The government also confirmed that the cost of the rollout is expected to be borne by Électricité Réseau Distribution France and recouped through new network efficiencies.

The project follows the completion of a successful trial of 300,000 meters around Lyon and the Indre-et-Loire department, involving Atos Origin, Itron, Landis+Gyr, and Iskraemeco.  There had been concerns that the government might delay plans for deployment given the financial crisis in the Eurozone and a presidential election beckoning next year.  The announcement that the project will create around 10,000 new jobs will help sweeten the pill politically.

The major challenge in France will be to ensure consumer acceptance.  There is a perception amongst consumer groups that the meters are primarily for the benefit of the electricity industry (dominated in France by nationwide utility EDF and its subsidiaries) and that in the end consumers will be bear the price of the meters.  Only minimal support for consumer energy efficiency is required in the basic rollout and energy retailers can charge more for additional information services.  A lot more work will need to be done if the meter is to play a role in reducing household costs and improving energy efficiency. 

These challenges reinforce more general issues that are becoming evident in the European push to deploy smart meters.  The arguments in favor of smart meters are well rehearsed, but as European deployments accelerate, it’s clear that aligning the interests of all the potential stakeholders is no easy task.  In Europe, the European Commission has promoted smart meters as part of its overall energy policy – with the new technology seen as helping address energy efficiency and also market liberalization.  The basic concept is that if consumers are more aware of the price they are paying for electricity then they will both reduce energy consumption and also be able to find better rates from other suppliers in a deregulated market.  That’s the theory anyway.

But European policy has also promoted the disaggregation of energy suppliers, with distribution networks and energy retails provided by separate players or between regulated and non-regulated entities from single suppliers (as in France).

This separation highlights a disconnection between the goals of the distribution systems operators and the energy retailers.  Where this split is most developed – as in the United Kingdom – it raises issues as to how a holistic view of the requirement for smart grid investment can be achieved.  Smart meters in the United Kingdom are largely being cost-justified by the potential benefits to consumers and retailers.  Distribution system operators (DSOs) have been involved in the specification but it remains a secondary concern for them compared to the work that needs to be done on improving the network to support renewable integration, for example.

However in most of Europe, it is the distribution company that is responsible for smart meter deployment. As someone from a German DSO said last week, they can’t justify smart meters purely in terms of the benefits to network improvements, as they can achieve the same ends in a more cost-efficient manner (for example, by the strategic placement of many fewer network sensors).  That is not to say the smart meters have no benefits.  DSOs will happily use any data that can be provided, but they can’t make a standalone business case.  ERDF is reported as saying that it will take 20 years to achieve payback on the Linky deployments from improvements in network efficiency.

It is clear that if European countries are to meet the target of deploying smart meters to 80% of customers by 2020, then they need to focus equally and consistently on the two challenges of consumer engagement and providing incentives to network operators.  The need for a holistic view of the smart grid is a commonplace, but realising it within specific market structures is the real challenge.

Moving towards a European smart grid is a huge engineering challenge, but given the social, environmental and market issues also at stake it sometime looks more like an exercise in advanced plate spinning.


Utilities’ IQs Rising

— October 5, 2011

U.S. utilities are getting smarter, and smart grids are making the difference.  This theme permeated the recent Autovation 2011 conference in suburban Washington, D.C., which provided an overview of trends and recent developments.

How smart?  No one from the utilities admitted to failing grades, of course, but various company representatives using smart technology report measurable progress:

  • Pepco’s Bill Gausman, senior vice president of strategic initiatives, told the opening session that his utility’s smart grid outage-detection system came up big during Hurricane Irene.  The system had 150,000 meters reporting in, and managers equipped with this data were able to eliminate 600 truck-rolls in Maryland alone (which, using a back-of-the-envelope calculation, works out to some $90,000 in savings).
  • John Stafford, vice president of sales at Sensus, said he initially underestimated the benefits of smart grid technology for consumers.  He told the audience his own projected bias was that only a “lunatic fringe” would be interested in modifying their usage once empowered with consumption data.  However, consumers are interested in using Web-based reporting portals, he said; adoption is in the 20% range.  He cautioned the audience to guard against personal bias, and allow the actual data to speak for itself.
  • Portland General Electric’s project manager technology support, Eric Spack, said his utility’s installation of smart meters will bring an estimated return on investment (ROI) of $35 million (net present value) in operational cost savings.

Two other companies offered interesting updates on their efforts:

Craig Kuennen, business transformation and marketing administrator for Glendale (California) Water & Power, described how GWP has deployed smart meters across its system, and is in trials for the rollout of CEIVA photo frames early next year that will allow consumers to not only share pictures over a ZigBee-enabled home area network, but also engage them with a water and electric management dashboard. Pretty cool.

Echologics’ Marc Bracken, vice president and general manager, presented a fascinating case study of how his company’s non-invasive acoustics technology enabled the Sewerage and Water Board of New Orleans (SWBNO) to detect and conserve thousands of gallons of lost water per day.  The technology can accurately pinpoint leaks without the use of digging, and in one instance uncovered a significant leak underneath a sidewalk that was costing SWBNO an estimated $200,000 per year.

One of the more lively sessions at Autovation took place during a panel discussion among meter vendors. Aclara’s Paul Lekan, vice president of marketing (and one of the most entertaining personalities in the utility business, I might add) made a strong point about how great the new meters are, but that “it’s all about the data” – and how utilities manage the information they collect and leverage analytics to their advantage.  He cited one utility his company has worked with that saw a dramatic change in customer service calls: before the new technology was installed, 90% of calls were inbound, and now that has been reversed by utilizing data to proactively reach out to customers.

The takeaway from Autovation: Deployments of smart technology may be longer-term bets, but for utilities that have deployed them already some of the payoffs are evident now.


Blackout in Seoul

— October 4, 2011

A couple of weeks ago, I came back to my office from a seminar in Seoul. When I stood in front of the elevator door, the light in the hall went out, along with the elevator sign lamp. The elevator indicators quickly recovered in few seconds. I thought that the lobby lights would also shortly be turned on, but the outage continued for over 30 minutes in my building.

I thought that there must have been big trouble, an accident, or even an act of terror, because I’ve never experienced such an outage lasting over several minutes in my 30 years of working in the South Korean capital.  Unlike in some major North American cities, electricity outages are not common events for Seoulites.

That day, Seoul and other major cities in Korea experienced unprecedented and massive blackouts.  The blackouts started around 3 p.m. and lasted for 30 minutes each as they rolled across areas of Seoul, Busan, and several other big cities.  The news media reported widespread turmoil.  Firefighters were swamped with hundreds of emergency calls from people trapped in elevators.  Non-working traffic signals caused huge traffic jams.  Hundreds of factories without backup uninterruptible power supply (UPS) systems were hit by power failures.  The media also pointed out that some military bases also experienced outages, meaning that national defense was compromised during the incident.

The government attributed the blackouts to unseasonably high temperatures, about 5 degrees higher than the average 26ºC (79ºF) for September, which increased electricity demand for air conditioners.  At the same time, some major power plants were in maintenance shutdowns at the time.

The aftermath continues. President Lee Myung Bak blamed the Korea Power Exchange (KPX) for failing to estimate exactly what the daily peak-hour demand would be.  Citizens and commercial and industrial consumers are reportedly preparing lawsuits to recoup their losses.

The breakdowns were surprising because KEPCO,the sole utility in Korea, has boasted of its stable and advanced capabilities in power supply.  In fact, Korea claims one of the shortest average blackout periods per-household-per-year in the world (16 minutes), along with Japan (11 min) — meaning that Korea is one of the most advanced countries in regard to grid stability. KEPCO often highlights the comparison on this measure with the United Kingdom (78 minutes), and the United States (138 minutes).

Several factors likely contributed to the blackouts. In part it was a man-made failure, brought on by faulty estimations of daily power consumption during a time of unexpectedly high temperatures.  Some industry officials insist that current power-demand forecasting mechanisms should be re-calibrated. Others assert that new power-plant construction must be planned to meet growing electricity demand. In fact, according to the Ministry of Knowledge and Economy, Koreans tend to consume more electricity per capita than inhabitants of many developed nations (South Korea: 8.833 kWh; Japan: 7,818; Germany: 7,148; Great Britain: 5,607 kWh).  One contributor to heavy consumption patterns in Korea is the low price of electricity ($0.072/kWh) as compared to the United States ($0.099), Japan ($0.173), France: ($0.122), etc.  These demand and supply factors were undoubtedly interwoven in the recent outage.

One result is that people are now paying more attention to the newest solution: the smart grid.  The stock prices of Korean domestic smart grid-related companies surged following the outage.

The smart grid presents opportunities for utilities and their customers to benefit from the efficient management of energy and advanced equipment and devices.  Moreover, it offers significant opportunities to wisely manage a nation’s energy sources by potentially reducing the need for additional generation sources, better integrating renewable and non-renewable generation sources into the grid’s operations, reducing outages and cascading problems, and enabling consumers and businesses to better manage their energy consumption.

As shown in the table below, Korean players are following a systematic roadmap for the realization of advanced substation and distribution automation as a part of a full-scale smart grid deployment.  Given the estimated level of technology self-assessment, South Korea is one of the front-runners in smart grid deployments.

Much of the direct impact of this outage will be to educate general consumers about the capability of the smart grid.  I believe that this outage could be a meaningful tipping point for the Korean electricity industry.  


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