IT, PNNL and the Electric System

October / November 05 By: Rob Pratt Volume 3 Number 5

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The information revolution that has changed so much about our society—€”from business to manufacturing to entertainment—€”has barely scratched the surface of the U.S. power system. However, with the help of technological advancement and entrepreneurial innovation, a similar awakening is stirring the giant electric energy industry.

Since its creation, the nation's energy system has been based on a linear, one-way flow of information. Electricity is sent from the generation source over transmission and distribution lines to the end users. In return, end users send money to energy providers for the energy they used. Meanwhile, leading-edge industries have been using real-time information, e-business systems and market efficiencies for more than a decade to minimize the need for inventory and infrastructure while maximizing productivity and efficiency.

As a nation, we can't afford to continue operating the energy system in this "business-as-usual" fashion. To meet the load growth projected by the Energy Information Agency, hundreds of billions of dollars of new electric infrastructure must be added by 2020. Simply adding expensive and underutilized iron and steel is not the answer. Instead, it is time for the electric energy system to catch the wave of the information age. The result will be new market efficiencies that optimize the system, minimize the need for new infrastructure, lower costs and increase reliability and security.

A virtual energy infrastructure
In the last few years, industry, government and research organizations have started taking steps toward dramatically changing the antiquated approach to operating and managing the electric system. Called GridWise—„ by the U.S. Department of Energy and others leading the charge, this vision for the future energy system is founded upon the assertion that information technology can revolutionize the electric system.

Information technology can be the genesis of a "virtual" energy infrastructure where smarter use of the current physical infrastructure could help offset the need for new capital investments. After all, bits are cheaper than iron. Establishing this virtual infrastructure would rely upon an information-rich network that combines new energy markets, communications and controls to maximize the use of existing assets and gain efficiencies. For example, on average throughout the year, the nation only utilizes an average of 75 percent of its generation assets and 50 percent of its distribution system assets. By finding a way to better manage the system for the 400 hours a year when demand is at its highest, the distribution and generation assets needed to meet today's demand easily could be reduced by 25 percent and 10 percent respectively. Freeing up those resources could lower prices in competitive electric markets and enable utilities to meet future growth with fewer new power plants, substations and transmission lines.

With the help of information technologies, the creation of a distributed, yet integrated, system will empower consumers to participate in energy markets—€”the key to stabilizing prices. However, no single entity can buy the technology or force this transformation take place, Instead, the government, industry and research organizations have formed an alliance to stimulate an explosion of technological innovation. This wave of innovation will generate opportunities for market participants including utilities, new third parties and consumers to create value by developing and deploying solutions that cross enterprise and regulatory boundaries.

The Grid of the Future
While the specifics of how every piece of the GridWise future might fit together still are being developed, the concept of how it will work is becoming increasingly clear. For example, from a customer perspective, a smart energy management system will communicate with suppliers about how much power a home or business needs now and in the minutes, hours, days and months ahead. In turn, suppliers will communicate the availability and price of their resources and offer long-term contracts as well as incentives to curtail use or run distributed generation during peak demand. The system also will communicate with appliances and equipment about their power needs and ability to curtail usage if prices reach a certain point.

The system will interact with energy service companies and utility programs offering third-party investments to retrofit existing equipment and processes with new technology that allows more flexible or efficient grid operations. With the widespread adoption of this kind of transparent and automatic e-commerce, the potential for aggregated demand savings could be revealed and cost-effectively take the place of upgrading a neighborhood substation or other infrastructure additions.

The abundance of information available in the virtual energy infrastructure could allow demand response technologies to transform an appliance into a full partner in grid operations. On average, throughout the day and throughout the year, about 20 percent of the nation's electric load comes from consumer appliances that cycle on and off—€”heating and air-conditioning systems, water heaters, refrigerators, dishwashers and clothes washers and dryers. At the same time, generators maintain steady operating reserves of about 13 percent of the total load. By reducing the demand of appliances during times of system instability, the need to maintain expensive reserves can be reduced and the system can be stabilized more quickly.

Engineers at Pacific Northwest National Laboratory have developed an appliance controller that senses grid conditions by monitoring the frequency of the system and providing automatic demand response when the system is disrupted. A simple computer chip in the controller could automatically turn off household appliances in a fraction of a second, allowing the grid a few minutes to stabilize without inconveniencing consumers. These Grid Friendly—„ appliances will be tested as part of a technology demonstration taking place in actual homes in the Northwest this fall.

With further development and more communications capability, technologies like this could be used for even more sophisticated applications, such as prioritizing which appliances were affected and when, and allowing appliances to help reduce peak loads.

The Bottom Line
According to a PNNL study (www.gridwise.pnl.gov/docs/pnnl14396.pdf), the estimated value offered by the transformed energy system could exceed $80 billion in savings over the next 20 years due to deferred construction, reduced outage costs and increased customer efficiencies. A second, more comprehensive study by the RAND Corporation (http://www.rand.org/publications/TR/TR160/TR160.pdf) considered a range of scenarios and identified benefits ranging from $40 billion to $140 billion.
Being held captive by today's linear flow of information inhibits new technologies that do not fit into the system's rigid linear paradigm, regardless of their potential benefit. Perhaps the main reason that economic efficiencies cannot be maximized is the current system's difficulty with integrating control, planning and operational processes that cross enterprise boundaries between utilities and the consumers. Furthermore, the grid's large and broadly dispersed physical infrastructure is directed by centralized command and control, creating the worst possible combination for vulnerability to man-made and natural disasters.

It is time to create revolutionary change in the energy system and several forces already are at play:

—€ The possibility of deregulation: Restructuring of the electric utility industry provides opportunities to craft markets and incentives that express the real value of electricity based on localized system constraints as well as seasonal and daily fluctuations in demand. The availability of these signals and the nature of free markets would give customers flexibility to collaborate across enterprise boundaries and customize their energy choices to minimize their cost while bringing benefits to the utilities that serve them.
—€ Cost-competitive distributed generation: The advent of better and less expensive distributed generation technologies could become part of a collaborative network, serving as plug-and-play resources that easily could be integrated and controlled to maximize benefits. These technologies could open the door to other distributed resources such as demand response, energy efficiency and renewables that don't fit the conventional linear structure of the system.
—€ The telecommunications explosion: The rapid increase in the number of communication channels and decrease in their cost makes it possible to transform the energy system without making a massive investment in telecommunications networks and information technology that, until recently, would have been cost prohibitive.
—€ Advanced information technology: Similarly, advanced information technology has become increasingly more sophisticated and less expensive, creating opportunities for new concepts such as agent-based controls for operations and transactions and automated diagnostics and controls.

Looking Ahead
What will it take to create the energy system of the future? The following activities, several of which are under way, will further the transformation:
—€ Developing the communications architecture and standards to make it possible for generators, transmission and distribution utilities, energy service companies and consumers to share information and form an integrated network.
—€ Attracting investments in technologies, both by government and industry, to help jump-start the revolution. Regulatory, institutional, business and market frameworks for these technologies will be formed as they evolve.
—€ Developing tools to simulate energy markets and energy systems. This involves combining operations and economics in a single model, which has not been done before. Likewise, tools are needed to analyze and monitor the system as changes are implemented to determine their impact and ensure fairness.
—€ Creating test beds and demonstration projects to prove technologies or reveal their faults.
—€ Encouraging involvement of stakeholders and institutions to gain acceptance and willing participation from utilities, vendors, regulators and customers.

Getting on Board
Industry is beginning to embrace this vision of a modernized grid and is starting to work together to realize its benefits. Several corporations joined together to form the GridWise Alliance (http://www.gridwise.org/), including AEP, Areva T&D, Battelle, Bonneville Power Administration, ConEd, GE, IBM, Nexgen, PJM Interconnection, the Rockport Group, SAIC and UAI. In 2004, the alliance signed a memorandum of understanding with DOE, formalizing an agreement among all parties to work together to make this vision a reality.

Rob Pratt leads Pacific Northwest National Laboratory's GridWise—„ program.