The national power grid comprises more than 9,200 electricity-generating units with more than 1 million megawatts of generating capacity connected by more than 300,000 miles of transmission lines, according to the U.S. Department of Energy (DOE). Since 1982, the increase in peak demand for electricity has exceeded transmission growth by almost 25% a year. In fact, of the five major blackouts in the last 40 yr, three occurred within the last decade. As a result, each day, approximately 500,000 Americans spend at least 2 hr without electricity, and power outages are estimated to cost the U.S. economy more than $150 billion a year. In addition, there are claims that the infrastructure is vulnerable to major weather events and terrorist attacks.

To address these concerns, the DOE Modern Grid Strategy (previously the Modern Grid Initiative) was launched at the National Energy Technology Laboratory (NETL) in January 2005. The mission assigned to the team was to “accelerate grid modernization in the United States.” Recently, the program has been renamed the Smart Grid Implementation Strategy (SGIS). Its focus is to “accelerate the transition to a smart grid in the United States through the development of implementation strategies and tools.” As such, the team has turned its attention to providing tools, materials, and expertise to assist with advancing smart grid implementation.

According to the DOE, this implementation involves adding new sources of electrical generation, including renewable energy sources; improving power quality; supporting a wholesale market with a variety of price options; expanding data acquisition and data sharing across business units to improve load factors, lower system losses, prevent energy theft, and dramatically reduce outage durations; improving asset management and reducing maintenance and capital costs; incorporating cyber security standards to make the system resilient to attack and provide for rapid restoration capabilities; and providing consumers with the ability to become informed, involved, and active consumers through access to in-home displays, web portals, demand response (DR), and distributed energy resource options (More Than Meters).

Millions of meters

In 2009, the American Recovery and Reinvestment Act (ARRA) allotted $3.4 billion for 100 projects under the DOE Smart Grid Investment Grant (SGIG) program. The funds will be matched by $4.7 billion in private investments. Ranging from $400,000 to $200 million, the grants will reach every state except Alaska. See the list of project selectees

The majority of the funds will accommodate upgrades to electric utility power systems, including the installation of more than 200,000 smart transformers, which will allow power companies to replace older units before they fail. Electric utilities will also install more than 850 sensors across the electric grid within in the contiguous United States, making it possible for grid operators to better monitor grid conditions and allow them to better integrate intermittent renewable energy power sources, such as wind and solar power. In addition, electric utilities will install nearly 700 automated substations, which will make it possible for power companies to respond faster and more effectively to service outages when inclement weather brings down power lines or causes electricity disruptions.

The grants will also support the installation of smart grid components for consumers, including more than one million in-home energy displays, 170,000 smart thermostats, and 175,000 other load control devices to enable consumers to reduce their energy use. The funding will help expand the market for smart washing machines, clothes dryers, and dishwashers, so that U.S. residents can further monitor and control their energy use and lower their electricity bills (Smart Appliance Standards). Such smart grid technologies can also better accommodate the use of plug-in electric vehicles (EVs) and the production of renewable energy from customer-owned systems, such as solar arrays. Finally, the smart grid grants will pay for installing more than 2.5 million smart meters, which allow electric utility customers to access pricing information and avoid using excess electricity during peak usage times when it is most expensive.

Glendale Water & Power (GWP), Glendale, Calif., was the first utility in the nation to receive funding under ARRA, signing a contract for a $20 million federal SGIG to help implement its $51-million grid initiative. Currently, the city is undergoing a demonstration of smart meters, which included the installation of a meter data management system, 1,000 electric meters, 500 water meters, and 300 in-home displays. The city plans to have all meters replaced by September 2011.

In addition to replacing all electric and water meters with new smart meters, receipt of the $20 million in DOE grant funds will allow GWP to expand the project scope and accelerate implementation to include distribution automation, new enterprise data storage systems, residential and small business smart grid devices, thermal energy storage, DR, and expanded Wi-Fi backhaul. The city expects the plan to take up to 10 yr to fully implement.

The bigger they are. The implementation of a national smart grid will require the efforts of all key stakeholders, including regulators, utilities, investors, and consumers. Unfortunately, such a large, coordinated effort comes with barriers to adoption of new technologies and upgrades. In a recent survey of 20 industry leaders of electric utilities, half the respondents reported rate cost as the strongest barrier to smart grid projects within their organization. Technology immaturity was also named as a key barrier but was rated a “top barrier” for fewer respondents.

In addition, the need for open standards, regulatory matters, and consumer privacy issues have been cited as major challenges to overcome. However, the biggest obstacles may be awareness and perception. In a recent report commissioned by GE Energy, more than three-fourths of consumers in the United States are not familiar with the term “smart grid.” Fewer than 10% of those surveyed reported they have heard of the smart grid and have a good understanding of what it is.

Among those who report an understanding of the smart grid, almost all believe that such a grid would offer real benefits. They understand real-time reporting across the national electrical network would mean fewer power outages and quicker power restoration when outages occur. Many realize that peak-use-based pricing can save them money by allowing them to choose when and at what price to use electricity.

In an effort to break through some of these barriers, the DOE, under the Smart Grid Regional Demonstration Grant (SGRDG) program, awarded $620 million among 32 awardees in November 2009. (For a list of grant awards, visit http://www.oe.energy.gov/recovery/1255.htm.) These smart grid demonstrations are taking place at a number of U.S. locations and include a variety of electric utility distribution system designs, climate zones, and technologies. Individual demonstrations are expected to be focused on the integration of specific feeder types that serve residential neighborhoods, a mix of residential and commercial customers, or mostly commercial customers. Among other things, this demonstration project is expected to help enable electric utilities to use existing and new utility-owned communication investments; public communication infrastructure investments; available and emerging smart home and building technologies, such as programmable thermostats and energy display devices; and collaborate with other utilities, standards bodies, and industry organizations.

However, there are already several examples of small-scale smart grids at work. American Electric Power (AEP) has worked for several years to connect microgrids to the larger grid as part of DOE’s Consortium for Electric Reliability Technology Solutions (CERTS), which Pike Research, the Boulder, Colo.-based market research and consulting firm that provides in-depth analysis of global clean technology markets, says is one of the first to connect microgrids to the primary national grid.

Microgrids, sometimes called islands, are modern, small-scale versions of the centralized electricity system. They are set up to achieve specific local goals, such as reliability, carbon-emission reduction, diversification of energy sources, and cost reduction, established by the community being served. Like the bulk power grid, smart microgrids generate, distribute, and regulate the flow of electricity to consumers, but do so locally. Microgrids have been used for some time as safeguards against power outages and other disruptions in circumstances where reliable, continuous electricity is critical, such as hospitals and data centers.

The military also has adopted the technology at some locations, and the U.S. industrial sector, which uses about 25% of the country’s total electricity output, is seeing advantages from microgrids. Although some microgrids are connected to the larger electrical grid system, in some cases, they are designed for a community’s independence from its local electric utility. Marin Clean Energy, in Marin County, Calif., is an example of a community choice aggregation (CCA) public power entity that is allowed under California law to buy and sell electricity from wholesale power markets on behalf of residents instead of from the local electric utility — in this case, Pacific Gas & Electric (PG&E). The county also hosts a microgrid demonstration project that links five municipal buildings.

Micro vision

Microgrids now account for 772MW of power-generating capacity, according to Pike Research, which is expecting more than 2,000 microgrid sites to be operational worldwide by 2015 — up from fewer than 100 in 2010. The research firm is forecasting the microgrid market will segment as follows:

  • Institutional/campus microgrids with a single owner.
  • Commercial/industrial microgrids with multiple owners.
  • Community/utility microgrids tied to the larger utility grid infrastructure.
  • Remote off-grid systems that will be increasingly common in developing countries
  • Military microgrids that can support remote base operations without a fuel supply.

Pike Research anticipates the institutional/campus single-owner microgrids will be the largest segment with 53% of deployments by 2015, followed by commercial/industrial with multiple owners at 39% of the deployments.

At a Capitol Hill briefing recently hosted by the House Select Committee on Energy Independence and Global Warming, the smart microgrid design emerged as the vision for transforming the electricity system and improving the value proposition for customers. Presenters from the Galvin Electricity Initiative, Pareto Energy, and the Intel Open Energy Initiative outlined plans for wide-scale implementation of microgrid development and the policy changes needed to make this vision a reality. As the Senate starts debating the Kerry-Lieberman climate change bill, microgrid advocates want to ensure language supporting microgrid adoption is included.

The Galvin Electricity Initiative, founded in 2005 by former Motorola Chief Robert W. Galvin, whose vision of better meeting the needs of the electric consumer in the new century, focuses on consumers, such as homeowners and businesses. It shows them the potential of improvement through three strategies: raising awareness, drive regulatory reform, and rapid prototyping. The initiative has been involved in three prototypes to date.

Since 2006, the initiative has been working with the Illinois Institute of Technology (IIT), Chicago, on a microgrid design — or what the initiative refers to as a Perfect Power System. Instead of just incrementally upgrading the system, however, the team at IIT had a vision: Create a next-generation system formed from a smart system of microgrids. The redundant loop system with smart switches in the loops will both update and add to existing infrastructure to create a reliable, efficient, and environmentally friendly system.

“They own their own distribution system, so they’re responsible for the safety, reliability, and cost-effectiveness of that distribution system,” says John Kelly, deputy director at the initiative. “They’re also responsible for the efficiency of the power delivery and the cleanliness of the power being delivered.”

On projects such as these, the organizations are led by in-house electrical engineers and electricians, and they also subcontract to outside firms. “They have to have a core knowledgeable staff, but they do have to go outside for detailed design and construction,” he says. “The leadership still comes from within.”

Libertyville, Ill.-based Aldridge Electric recently completed work on the third phase of the IIT pilot project. The Aldridge Electric crew worked weekends and off-campus hours to safely complete the installation of all the electrical switchgear, controls, and medium-voltage and fiber-optic cable.

Solar panels and wind turbines will be installed in the final phase of the project, allowing IIT to be able to sell electricity back to local energy markets. “What we’re seeing is these microgrids are buying the type of energy they want,” says Kelly. “They don’t necessarily have to pay more to get clean energy.”

In addition, the system will automatically isolate cable failures and reroute power flow to prevent local building outages, protecting valuable experiments conducted at the university that rely on a stable power source. The IIT team estimates that the project will pay for itself within 5 yr following its completion, generating at least $10 million over 10 yr through grid infrastructure improvements and the ability to purchase electricity based on real-time prices rather than a traditional contracted average.