When President Obama announced $3.4 billion in new federal grants to upgrade the nation’s power grid last month, he did so amid many references to 21st century technology. A “smart” power grid based on new technology will be essential to meeting the nation’s energy needs over the coming decades. But if such a critical implementation is to happen smoothly, decisionmakers would be wise to learn past experience to ensure that the new grid does all that is required of it.
The oil industry presented President Theodore Roosevelt with a frequent and convenient target during his first term. At the time, incandescent light bulbs and phenomenal growth in the auto industry helped displace a shrinking demand for kerosene. President Obama, in his first year in office, has frequently invoked global climate change, the benefits of tapping into renewable energy sources, and the desirability of increased energy independence from oil-rich countries in making his case for shifting the nation’s energy consumption patterns away from fossil fuels.
The Obama Administration unveiled this latest multi-billion-dollar initiative with descriptions of jobs created, lower energy bills, and increased efficiency. It joins an existing framework of federal (and a growing number of state) tax incentives, grant and loan programs for energy efficiency and renewable energy use. But Smart Grid must be more than a job creation program. It must deliver a functionality that will allow the nation’s energy economy to make fundamental changes while providing greater reliability to keep the rest of the economy on track.
Virginia received less than its expected share of Smart Grid funding. The Rappahannock Electric Cooperative landed $15.6 million to upgrade its systems and infrastructure with the goals of improving reliability and leveling off demand during peak hours. The Northern Virginia Electric Cooperative in Manassas received $5 million for similar purposes. Virginia Tech won $1.25 million to develop and run an online Smart Grid Information Clearinghouse.
In a highly competitive grant competition, only one application in four was selected overall. Among those on the losing side was a $200 million application from Dominion Virginia Power. The project, which was accompanied by support letters from Governor Tim Kaine, Senator Mark Warner, and several Members of Congress, sought to install 2.4 million “smart meters” to help consumers monitor and manage their energy use, reducing consumption during peak times.
A pilot study run by Baltimore Gas and Electric in 2008 found that consumers using smart meters and dynamic pricing schedules reduced their energy consumption during peak usage periods by between 18 and 33 percent.
Virginia’s total electricity consumption has grown by 61 percent since 1990, more than twice its rate of population growth. Nationally, electricity consumption is expected to increase by 26 percent by 2030, with summer peak demand expected to grow 39 percent, according to the U.S. Department of Energy. Already, retail energy consumption comprises 2.4 percent of the nation’s Gross Domestic Product.
A smart power grid can provide household and business consumers with real-time feedback about their electricity consumption. Smart meters let families work together to reduce their energy use with unprecedented accuracy.
This growing demand also makes it imperative that a Smart Grid provide increased reliability, protection against service interruptions, and the ability to restore power quickly when failures do occur.
Smart Grid reliability must also offer consistent protection against cybersecurity threats. Household smart meters generally rely on wireless communication, making them and the networks they are connected to especially susceptible to threats that include malicious hackers, identity thieves and even unscrupulous customers looking to alter their records.
Finally, and for many Americans most importantly, Smart Grid must allow renewable energy producers to sell the energy they generate from solar panels, wind turbines, and other renewable sources back to electric utilities at rates that make sense. Renewable energy sources right now make up only 10 percent of U.S. electricity generating capacity.
For renewable energy sources to compete with fossil fuels over the long term, they will have to stand on their own without tax dollar subsidies. The whole concept of renewable energy requires changing the grid to include better distribution and storage options. Today’s electrical grid stores very little power. Because renewables like solar and wind power vary in intensity and are often best produced far from major population centers, Smart Grid must allow renewable producers to add power, then store and distribute it so the energy can be used where and when it is needed most.
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