In May, PJM Interconnection announced that it had attracted a record amount of new generation at its recent annual capacity auction, which ensures that electricity supply will meet demand for the period June 1, 2016 through May 31, 2017.  The auction procured 5,463 megawatts (MW) of new generation, thus breaking last year’s record amount of 5,346 MW.  In addition, the auction obtained a record amount of imported power from the Midcontinent ISO (the new name for MISO, reflecting the grid operator’s southward expansion), more than doubling last year’s total. All in all, the auction procured 169,160 MW, resulting in a reserve margin (a cushion for unforeseen events) of 21.1%, or 5.5% above the target.

PJM holds this capacity auction – also referred to as the Reliabity Pricing Model (RPM) – every May in order to obtain sufficient electricity, plus a reserve margin to meet expected demand for power 3 years in the future in PJM’s territory. PJM provides its estimate for peak power use to the bidders who then bid their existing and new power plants as well as energy efficiency and DR resources. Their bid prices are based on the costs to have those resources available for a particular delivery year. The price bid by the final resource that meets PJM’s target establishes the price paid – the clearing price – to all resources in that zone.

Most noteworthy, this time, was PJM’s announcement that the level of demand response (DR) procured in the auction had dropped by about 2,400 MW, after years of continued growth at every auction.  The auction cleared 12,408 MW of DR.  “Limited DR,” which can only be dispatched 10 times a summer for up to 6 hours each time, represented the overwhelming majority (9,800 MW) of the demand-side resource.

Shortfalls Possible

The main reason for the DR procurement decline was considerably lower capacity prices in most of PJM’s territory this year.  For example, the MAAC region, which covers 10 utilities along the Atlantic seaboard, cleared a price of $119.13 per MW-day, a drop from $167.46 per MW-day in 2012.  FirstEnergy, in northern Ohio, and western Pennsylvania’s PennPower cleared a price of just $59.37 per MW-day, compared to $136 per MW-day last year.

According to PJM’s Senior VP of Markets, Andrew Ott, prices dropped simply because supplies were up while demand was flat.  Competition from new natural gas supplies, increased imports from other regions, and less demand for electricity due to a sluggish economy have put pressure on capacity prices.  Another factor affecting the demand for DR has been the higher procurement costs for aggregators, as they look to recruit new potential and often hard-to-reach customers to participate in their capacity programs.

Although the supply of power and reserve margins are good enough to meet the demand for electricity in PJM’s territory and most other regions of the United States this summer, a few areas in the country could be facing severe shortages that will drive the need for DR.  ERCOT in Texas, for example, is dealing with tight reserves with a margin that is 0.85% below its target.  If the state experiences another extreme heat wave like the summer of 2011, ERCOT would most likely face a challenge to meet its peak demand.  Thus, the grid operator is planning to expand its DR programs to increase the current 1,700 MW of DR.  In Texas, DR is seen as the first line of defense to beat the heat.

Currently, two markets have subsidies for distributed solar photovoltaic (PV) systems plus energy storage.  Germany and Japan are both trying to encourage distributed PV users to consume the electricity generated onsite, using energy storage systems (ESS).  Announced in early May, the German government program offers both a subsidy and a low-interest loan to encourage ESS.

In addition, the feed-in tariff for distributed solar has dropped below the retail price of electricity, in order to encourage self-consumption of PV energy.  Germany will spend up to $32.17 million (€25 million) in 2013 to support distributed PV+ESS, in an effort to defer upgrades to the distribution grid, which is overtaxed thanks to the successful campaign to encourage distributed PV adoption.  The subsidy increases the existing subsidy for systems that are only solar PV from €600 ($785) per kilowatt (kW) to €660 ($863) per kW if a battery system is also installed.  The maximum payment for the entire system is €3,000 ($3,926) total.

Financing Storage

Representatives from KfW – the German development bank – have stated that a similar amount of funds (€25 million, or $32.17) will be available for 2014.  All battery systems are eligible, but must have a 7-year warranty.  KfW is administering both the subsidy and low-interest loans.

Specifically, KfW, is offering low-interest loans to finance the capital expenditures associated with adding battery energy storage systems to PV systems in Germany.  KfW will finance up to 100% of the upfront cost for battery ESS and PV systems (not including VAT).  In addition, the battery portion of the system can qualify for a repayment bonus.

These loans are being offered to a cross-section of the market similar to the one served by the subsidy for residential storage plus PV.  The loans are available to ESS retrofits for PV installations that went into operation after December 31, 2012 and are targeted at solar PV systems as large as 30 kW.

If the German program succeeds, it will mean increased flexibility and resilience for the German distribution system with less investment on the part of DSOs. Germany is also a model for the rest of Europe; other markets with high PV penetration such as Italy, Spain, and France may adopt a similar scheme once the benefits to the grid and customers is better understood.

According to Oklahoma Gas & Electric’s System Watch web portal, more than 140,000 of its roughly 800,000 customers lost power during the second of two Oklahoma supercell tornados on May 31.

Everyone wonders what is going on in the cockpit when the plane is stuck on the tarmac.  In the modernized utility distribution control center, the operators have complete and current situational awareness of tens to hundreds of distribution circuits (OG&E has 1,100 circuits in its service territory), and sometimes more than a million meters.  Like a pilot in the cockpit, grid operators will have stackable monitors, color coded visualization on a GIS-enhanced interface, and the capability to quickly zoom in on alarms and provide intel to assessor, restoration crew etc.  Several such smart grid functions will have been used and useful in the overall effort of scouting, repairing, and managing outages in Oklahoma over the last 2 weeks.

On April 27, 2011, the resilience of Alabama Power Co. (APC) was tested in the most severe weather incident in the state’s history.  The outbreak of tornados resulted in 239 deaths.  Roughly half of Alabama Power’s 1.4 million customers were without power after more than 3,000 distribution transformers and twice as many poles were downed.  Eight distribution substations were either damaged or destroyed and 400 transmission structures were broken.  Yet, it took only 7 days for the utility to restore power.

The Next Generation

More than 10,000 mutual assistance resources were utilized, meaning restoration crews came from other states to help.  The company took a decentralized and mobile command approach; it used 11 staging areas, each equipped with a distribution management system (DMS) to manage remote switching and other operational control.  During less severe storms, APC operators can turn on an autopilot function (known as fault location, isolation, and service restoration, or FLISR) in the DMS to speed up service restoration, saving thousands of customers from sustained outages every year.  The smart utility’s goal is to minimize customer impacts by reducing restoration time when major events occur.  Utilities are looking to information technology / operational technology (IT/OT) integration and increased mobility to assist with outages.

In the event of outages, utilities rely on operational systems to notify customers of causes and estimated restoration times.  Next-generation DMS will be integrated with outage management to provide additional inputs for visualization and decision support to better address impacted areas.

Advanced workforce management (WFM) solutions that enable utilities to forecast, schedule, dispatch, and monitor progress of outage crew have gained increased interest.  WFM is carried out with the assistance of outage management tools that analyze outage reports to determine the scope of outages and the likely location of problems.  An outage management system (OMS) or a DMS compiles information on the times and locations of customer calls, smart meter outage notifications, and fault data from substations and monitoring devices on feeder lines.

Some utilities are reporting that the integration of advanced metering infrastructure (AMI) has given them the capability to reduce outage time by being able to confirm if meters have power or not.  AMI plays out in two different stages of restoration:

• After performing restoration work in a given area, service at all the meters can be confirmed quickly and remotely before crews move onto the next area.
• Individual complaints are followed up on in the wrap-up phase of a large storm restoration effort.

Traditionally there are always a lot of single customer outages that end up being “OK on arrival”, meaning a technician was dispatched with a ticket to restore power only to find out power has already been restored.  By confirming power has been restored via AMI and backing that up with a phone call to the customers, hundreds of truck rolls are saved in large storm events.

Small but notable steps are advancing the connected home for energy management. Coming from different industry stakeholders taking different approaches, they include:

• Smart Energy Profile 2 (SEP 2): The ZigBee Alliance ratified the SEP 2 standard, which paves the way for IP-based home area networks and devices that can interoperate over ZigBee, Wi-Fi, or HomePlug protocols.
• Wi-Fi-enabled Whirlpool appliances: The manufacturer introduced four appliances (refrigerator, dishwasher, clothes washer, and dryer) that can connect over Wi-Fi and be controlled with a mobile application.
• Collaboration between Ford Motor Company and KB Home: The automaker and leading home builder are jointly promoting the benefits of new technologies aimed at helping consumers lower their home energy bills and reduce their environmental impact.

Most consumers have little idea what SEP 2 is or what it could mean to their home energy management.  Nonetheless, ratifying the standard is a key milestone.  Products built on SEP 2 will be able to communicate over the Internet and share information.  For instance, smart meters, thermostats, and appliances will be able to share data for the purposes of control and energy efficiency.  SEP 2 also enables the control of plug-in hybrid electric vehicle (PHEV) charging.  Interoperability testing of devices with SEP 2 continues, with products expected to be commercially available later this year or in early 2014.

Whirlpool’s new products – part of its 6^th Sense Live smart appliances line – are not the first Wi-Fi-enabled appliances on the market.  Samsung demonstrated a Wi-Fi refrigerator in early 2011.  However, Whirlpool’s offerings signal new momentum for Wi-Fi in home appliances, given the company’s status as an industry leader and the fact it controls other well-known brands such as KitchenAid, Maytag, Amana and Jenn-Air.  It is reasonable to expect those brands will have Wi-Fi-enabled appliances in their product portfolios at some point, assuming the initial Whirlpool products find traction.  But momentum is likely to be gradual.  For now, Whirlpool’s new Wi-Fi appliances are only available in the Chicago area, with no word on when the company might expand sales to other regions.

Similarly, the Ford and KB Home collaboration is in its formative stage.  In April, Ford’s C-MAX Energi plug-in hybrid car joined KB Home’s ZeroHouse 2.0 model home demonstration project in San Marcos, California.  The effort also combines Ford’s MyEnergi Lifestyle initiative with KB Home’s vision of a net-zero energy home.  The idea is to show how electric-powered vehicles, solar power, smart appliances (from Whirlpool), and home design can synchronize around energy efficiency.  It’s a bold vision that brings together other key players, including Eaton, SunPower, Infineon, and Nest Labs.

Together these steps show that, after years of promise but little tangible progress, the energy efficient connected home is starting to emerge.  But, with a few exceptions (e.g., Oklahoma Gas & Electric and NV Energy), utilities have yet to engage on a wide scale.  And consumers will not be rushing to adopt the new products and services.  Appliance replacement cycles are long (e.g., about 15 years for refrigerators), and real-world examples of the payback must be demonstrated.  The connected home market is advancing.  But this is a long march.