In parallel with this trend, a competitive bulk power market has been growing. The report says that the number of transactions is increasing substantially, noting that “transactions on the Tennessee Valley Authority’s transmission system numbered less than 20,000 in 1996. They exceed 250,000 [in 2003], a volume the system was not originally designed to handle.”
Meanwhile, “annual investment in new transmission facilities has declined over the last 25 years. The result is grid congestion.” To deal with those bottlenecks, transmission operators may curtail transactions for economic reasons, throttling the supply of cheaper electricity to users, sometimes for economic reasons, or to maintain reliability. Such actions “grew from about 300 in 1998 to over 1000 in 2000.”
High demand implies potential profits, so why not build more plants? GRID 2030 notes that the impediments include “opposition and litigation against the construction of new facilities, uncertainty about cost recovery for investors, confusion over whose responsibility it is to build, and jurisdiction and government agency overlap for siting and permitting. Competing land uses, especially in urban areas, leads to opposition and litigation against new construction facilities.”
A HELPING HAND FOR ADAM SMITH
In his “Theory of Moral Sentiments,” Adam Smith referred to the “invisible hand” to describe the apparent benefits to society of people behaving in their own interests. The impediments described above suggest the situation isn’t so simple.
What should designers do, then? One has to read to page 7 of the body of the report to find the way the Smart Grid is intended to guide the invisible hand.
It’s based on the observation that, in the aggregate, more power is available than we need for the present. We just can’t have it all when we want it. Managing the daily demand profile would be a pretty good ameliorative step. And, surprise, the government and the power industry would both prefer to guide the invisible hand, rather than operate by fiat.
“The ability to monitor and influence each customer’s usage, in real time, could enable distribution operators to better match supply with demand, thus boosting asset utilization, improving service quality, and lowering costs. More complete integration of distributed energy and demand-side management resources into the distribution system could enable customers to implement their own tailored solutions,” GRID 2030 explains.
“The national average load factor (the degree to which physical facilities are being utilized) is about 55%. This means that electric system assets, on average, are used about half the time. As a result, steps taken by customers to reduce their consumption of electricity during peak periods can measurably improve overall electric system efficiency and economics,” it continues.
There is more to the Smart Grid than allowing users to deal with a dynamically changing rate structure, controlled by a more privatized generation and distribution network, but that’s a big part of it. Other aspects involve improved, lower-loss materials for electrical transmission, the ability to rapidly isolate single-point failures, rather than allowing them to propagate, the facilitation of more micro sites, and hardening the system against physical and cyber terrorist and criminal attacks.
However, the strongest driver is simply the need to get some breathing room by stretching present capacity through voluntary load-leveling, driven by an economic carrot-and-stick approach to business and private users of electricity.
The report originally referred to local mini- and micro-grids, some powered by photovoltaics, wind, or tides (see “Commercial Solar Power And The Smart Grid”). Yet it can be construed as a vision for the whole smart grid. For example, “Power from distributed energy facilities flows to and from customers and into the regional network, depending on supply and demand conditions,” GRID 2030 says.
“Real-time monitoring and information exchange enables markets to process transactions instantaneously and on a national basis,” it continues. And, “Customers have the ability to tailor electricity supplies to suit their individual needs for power, including costs, environmental impacts, and levels of reliability and power quality. Sensors and control systems link appliances and equipment from inside buildings and factories to the electricity distribution system.”