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Smart Grid Support and Forward-Looking Investments

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Kimberly McKenzie-Klemm's picture
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This item is part of the Special Issue - 2022-03 - Investing in the Grid 2022, click here for more

When considering the Smart Grid system, there are three areas of the Energy Community’s investments in the Grid’s operations worthy of noting. Consider the Smart Grid’s capital support, the Smart Grid’s environmental establishment, and benefits and losses due to Smart Grid investments as all three important topics raised about Smart Grid current performance and Smart Grid future evolutions. While each of these topics deserve a “deep dive” treatment of the information and choices facing the use and connectivity in the Energy Sector’s Smart Grid operations, this article will simply offer a topical look at Smart Grid use status and investment directions.

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Historically, capital support for operating the Smart Grid has been invested in various forms of technologies with the intention of pulling all of the system parts into one Smart Grid user development as oversight. Since 2011, the range of expected capital investments in Smart Grid potential technologies turned the corner and now the Smart Grid is unilaterally equipped to sustain current energy needs and requirements. “The effective integration of the Grid with distributed assets presents a more complex and, potentially, transformative situation that will require the deployment of advanced grid capabilities based largely on the application of Smart Grid technology,” (Smart Grid System Report; US Department of Energy, 2018). The Smart Grid end-user and Energy producing market has been consistently growing and expanding. Outlay of invested capital “is expected to reach $94.7 billion by 2025, growing at a CAGR of 22%,” (Smart Grid & Utilities; February 7, 2021).

Establishing the Smart Grid has also been an environmental investment. The “as is” environmental impact of the Smart Grid “brings great environmental benefits: reduced greenhouse gasses, reduced burning of fossil fuels and enhanced integration of solar and wind power,” (Health and the Smart Grid; Krupp, Fred; July 20, 2011). Efficiency renewables at scale for safer distribution, decarbonization, and system parameters working within environment preservation measures are part of the environmental investments resulting from the Smart Grid reliability and resilience. In order to protect eco-balances in future Smart Grid investments, attention to Grid systems built to respond to natural disasters and self-monitor “trouble spots” for blackouts and brownouts is the easy next steps for continuing to improve Smart Grid performance through investing in large area scale implementations.

As with any technology practical applications, trial and error/benefits and losses are a part of establishing a firm grasp on how to implement newly made investments for the best results. Both the Energy Community Supplier and the end-user benefit from the investments the Energy Community has made to enable the Smart Grid to function at optimal value. Societal value is also part of these investment benefits. Conservation and active interaction in residential and commercial electricity use by the end-users to preserve costs enable Energy Sector customers to take control of Energy Smart Grid environment benefits. “From the utility perspective, ““customer participation”” will enable utilities to enlist consumer demand as another resource, offsetting the need for additional power generation,” (What A Smart Grid Means To Our Nation’s Future; United States Department of Energy; Section 2, Page 5).

While these benefits create win-win energy distribution solutions from the development of the Smart Grid, some losses have also accrued along the path of Smart Grid implementations. Trial and error of implementing new technologies within the Smart Grid Systems to fit existing electricity producing systems has been an on-going struggle. Participation by end-users and smaller utilities has at times been a struggle. (For example: Solar powered home owners’ objections to adding use meters; resistance of a local area electric company to partnering with other Energy Community Smart Grid incorporation of technology upgrades.) 

Outside network electricity generation customers often cite fear of depreciation costs and high maintenance needs perceived for Smart Grid decisions along with performance risks. The Pecan Street Project in Austin Texas has addressed the values of Smart Grid applications with results that allay consumer reluctance to include in Grid performance. “Customers can now set and track utility bill budgets, use software to manage the electricity use of individual appliances, and even sell energy back to the grid when they are using less than they produce,” (Smart Grid Project Saves Money and Energy in Texas; Energy.gov; July 3, 2014). Depreciation and maintenance costs of the Smart Grid across the life cycle cost (LCC) are absorbed in costs of operation added upfront to energy use with a “capped” allowance of rates requiring LCC time to spread the differential. Separate charges are given upfront on equipment ownership for Smart Grid implementation (such as a homeowner purchase and installation of a Grid meter). These measures ensure the energy consumer will not face high fluctuations in billing and point to Smart Grid stability and efficiency as a palatable Energy Community decision to maximize operations and minimize investment costs.

Smart Grid investing has its roots in the Energy Community’s attempt to bring new technology and better service into the energy production fold as long ago as 2011. Capital support funded a wide range of technology adaptations, environmental impact protective eco-balance measures, and supplier and end-user benefit sustainability reduced performance costs. Current Smart Grid incorporation status in the Energy Community has become routine for reliable and efficient energy production. Investments in the Smart Grid’s next evolutions will incorporate further consumer reach and upgraded technologies, like artificial intelligence (AI) and two way digital from the Internet of Things (IoT), for quicker emergency responses and through self-diagnostics. As long as the Smart Grid is not allowed to sit on a plateau of satisfaction and the Energy Community continues to improve and challenge the current Grid, end-user consumers will find further investments do not fall short of expectations. Investing in the Grid is walking from the present into the future and it is a future of success.    

Resources

Smart Grid System Report; US Department of Energy, 2018.

Smart Grid & Utilities; February 7, 2021.

Health and the Smart Grid; Krupp, Fred; July 20, 2011.

What A Smart Grid Means To Our Nation’s Future; United States Department of Energy; Section 2, Page 5.

Smart Grid Project Saves Money and Energy in Texas; Energy.gov; July 3, 2014.

Kimberly McKenzie-Klemm's picture
Thank Kimberly for the Post!
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Paul Korzeniowski's picture
Paul Korzeniowski on Apr 24, 2022

Good points. The reality is any investment needs a business case. Initially, utilities were interested in smart grid technology because if offered them ways to reduce personnel costs, replacing trips by employees to read meters with automated processes. As the market matured, their needs changed. Increasingly smart grid technology is becoming the foundation for the migration from traditional dirty fossil fuels. Progress has been made, but more work is needed. 

Kimberly McKenzie-Klemm's picture
Kimberly McKenzie-Klemm on Apr 28, 2022

Oh so true! Thank you Paul for supporting insights.

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