June 25 (Bloomberg) -- On a recent muggy morning, Jeff Myerson, a manager for Houston-based CenterPoint Energy Inc., is pointing to mundane-looking gray metal boxes up on a wooden utility pole. They mask high-tech capabilities: State-of-the-art wireless relays that collect information on customers’ power use in 15-minute intervals.
He’s showing a visitor around Braeswood, a tree-lined neighborhood of several hundred 1950s-era ranch homes about seven miles (11 kilometers) southwest of downtown. It’s being refitted for CenterPoint’s “intelligent grid.” This first phase is scheduled to be completed by year-end at a cost of $138 million, with the help of a $50 million U.S. grant.
When fully deployed, the intelligent grid will encompass a network of sensors, switches, smart meters and data-analysis software that will ultimately give the utility unprecedented control and insight into its almost 50,000 miles of power lines and systems. Monitoring centers will collect and parse real-time data, including location of service trucks and crews.
In the old days, outages could take hours, even days to find, particularly in the wake of damaging storms. Already, CenterPoint can more quickly respond to outages by pinpointing the fault down to a city block. In the future, it will deploy algorithms that can predict failures before they occur.
The system also lets customers in energy-conservation programs get interactive price data so that they can time power usage to low-cost periods while turning down thermostats during peak times -- a feature that helps the utility manage load.
“We’re bringing a mechanical system into the digital age,” said Myerson, Centerpoint’s utility director of business transformation.
And none too soon, too. The U.S. utility system sits astride one of the world’s great marvels, the grid. And as with so much of U.S. infrastructure, it’s crumbling because of too little investment and lack of imagination. A $876 billion asset, the grid is an amalgam of almost 7,000 power plants that discharge electricity over 450,000 miles of high-voltage transmission lines and more than 2.5 million miles of feeder lines. All this is managed by 3,300 utilities serving 150 million customers. It’s been called the biggest machine in the world.
It’s also something of a relic. Much of it was built after World War II and little updated since the 1970s. A position paper by the Chicago-based Galvin Electricity Initiative describes the grid as “aging, unreliable, inefficient, insecure and incompatible with the needs of a digital economy” and “in dire need of modernization.”
In heeding that call, CenterPoint finds itself at the forefront of huge and ambitious infrastructure makeover -- a project that could cost close to a half a trillion dollars before it’s completed, according to the Electric Power Research Institute. The basic idea is to refashion the grid to manage electricity distribution in the same way that the Internet manages data. While talk of a smart grid has been around for decades, the concept is gaining momentum -- even urgency -- as evidence piles up showing the aging grid’s shortcomings.
Power outages are up 285 percent since 1984 and the U.S. ranks last among the top nine western industrialized nations in the average time that it takes to get the light back on after power failures. Outages cost businesses as much as $150 billion a year in lost continuity, according to the U.S. Energy Information Administration.
Many grid experts also find it incongruous, in the days of the Internet, ubiquitous Wi-Fi and the ability of digital gadgetry to measure and control all manner of things, that so much of the grid is still so dumb. Hundreds of thousands of miles of power lines stand unmonitored, which explains in part why repairers spend 60 percent of their time just trying to find the fault. “Many utilities are blind beyond the substation,” said Ed Kennedy, chief executive officer of Tollgrade Communications Inc., which makes grid sensors and consults with utilities on smart-grid projects.
And while Thomas Edison might be baffled by the smartphone, he would still recognize the grid, little changed in design from the system he helped to invent more than 130 years ago. For example: Half of U.S. homes still have mechanical meters that require workers to show up and read them. Utilities deploying such meters have little knowledge of their customers’ energy use or interests beyond a monthly bill; they are simply load.
CenterPoint is looking to move the grid into the digital age and has plenty of company. American Electric Power Co., Sempra Energy’s San Diego Gas and Electric and New York Independent System Operator (NYISO), operator of New York State’s grid, are all smartening their grids. Giant PG&E Corp. has established a smart-grid skunk works.
In Detroit, DTE Energy Co. is working with Cranberry Township, Pennsylvania-based Tollgrade on installing sensors and software that will let DTE predict power failures, eliminating 500,000 outage minutes for the utility’s 2.1 million customers over the next three years. The project is part of DTE’s five-year, $250 million grid upgrade.
In Austin, Texas, a real world smart-grid laboratory encompassing about 300 homes called Pecan Street Inc. is showing how a digitally integrated utility system meticulously tracking power flow on both sides of the meter can profoundly change how and when utilities generate electricity and how and when consumers use it.
Beyond improving reliability, the basic idea is this: When all energy-use data is digitized and flows freely between power generators and customers, the smart grid will know exactly how much power is needed, when and where, eliminating much of the waste, overbuilding and guesswork inherent in the current analog system and enabling enormous strides in energy conservation.
Many also see the smart grid as fundamental to the utility system being able to absorb and manage disruptive changes that are remaking the U.S. power paradigm. A surge in rooftop solar has turned tens of thousands of consumers into generators. Power is now flowing two ways in America and regulators and green groups are pushing utilities to integrate more and more of this power -- yet keep the grid stable.
“There is a lot of technology coming and if you don’t integrate it successfully you’re going to have one hell of a mess on your hands,” said Roger Duncan, chairman and one of the founders of the Pecan Street project. “The current grid is just not designed to handle this massive deployment.”
A growing number of these very consumers also want both more choice and control over their energy use -- as seen not just by the explosive growth of rooftop solar but by the rise of smart-home companies like Google Inc.’s Nest Labs, which already has hundreds of thousands of customers for its smart in-home energy management thermostats.
“The forces of change have arrived -- competition from rooftop solar, consumer demand for more knowledge, control and choice in their power usage,” said Virginia Lacy, a utility specialist with the Boulder, Colorado-based Rocky Mountain Institute, an energy and technology think tank. “The market is speaking and the smart utilities are starting to listen.”
For a peek into what reinvention looks like, and why it matters, wander into NYISO’s cavernous control center in East Greenbush, New York. There you can see the benefits -- on a 2,300 square foot computer display -- of a $74 million smart upgrade completed last year whose genesis was the 2003 blackout that left 50 million people without power, including most of those in New York City.
The failure began when a high-voltage power line brushed into an overgrown tree in Ohio. An aging computer system blinded operators to the fault for more than an hour as other lines overheated and drooped into more trees, causing a staggering cascade of failures throughout the northeastern U.S. and southeastern Canada.
Back then NYISO had no way to see the fault and the coming calamity, said chief information officer Richard Dewey. Now it does.
Its giant display, overseen from an elevated command post in the dimmed control room, lets operators view all manner of streaming data critical to running its system -- weather statewide and beyond, independent yet interconnected grids in the U.S. and Canada from which it may need to buy power and real-time data on fuel supplies at power plants.
Controllers used this system to avert blackouts during this winter’s Polar Vortex –- actually during five major cold snaps spanning December and January -- even as a pipeline breakdown curbed natural gas supply and some plants shut with little warning.
These weather patterns could easily have led to outages. Instead, NYISO saw that it could order more electricity from plants still able to run, track fuel supplies for each of those plants and bolster reserves by harnessing 1,000 megawatts of wind power driven by wintery gales after Canadian imports were curtailed. At one point, it also managed to deliver power shipments from New England to Pennsylvania.
Far beyond the heavily guarded control center, newly installed sensors called phasor-measurement units transmit alarms to the huge screen whenever voltage or frequency swings exceed their finicky settings -- a potential early warning of grid collapse.
Checking for Trouble
Sensors on the old, dumb grid checked for trouble every six seconds. The phasor units look 60 times a second. With energy flowing at almost the speed of light, this is a significant improvement. “Imagine driving and only opening your eyes every six seconds,” Dewey said. “Then imagine driving and blinking your eyes sixty times a second. You see more.”
While the old sensors recorded information, the new ones send real-time signals that appear among the 3,000 points of data on the ISO’s vast display. “With this, when the power line hit the tree in 2003, we’d have seen the disturbance,” said Dewey. “That could have given us a chance to raise generation here to buffer New York.”
ISO says its system needs to get smarter. It has little presence behind the meter, meaning it doesn’t have a good handle on how much rooftop solar is flowing into its system or how many microgrids are popping up in its service area. New York state regulators are working on a plan that would give utilities incentives to better integrate these new flows.
Some consumers are raving about the benefits of the smart grid, too. For Austin, Texas, resident Luke Downs, a participant in the Pecan Street project, access to the smart grid has changed his energy life. “Suddenly, I could see what I was doing,” he said.
Downs, 44, lives in a 3-bedroom row house in what’s known as the Mueller neighborhood, a planned urban redevelopment on the grounds of Austin’s former municipal airport. It was designed under the principles of “new urbanism” where homes and businesses are clustered together like a pre-war U.S. small town. Its residents can walk or ride along bike paths to shops, schools and parks.
Almost 300 homes in the Mueller community participate in the Pecan Street project and the neighborhood boasts more electric vehicles per capita than any other residential neighborhood in the U.S. Solar panels cover many of the rooftops. The place is essentially a testing ground for the utility of the future.
The idea is to help participating utilities like Austin Energy, Downs’s utility, San Diego Gas & Electric and appliance makers like LG Electronics understand how customers will use the next wave of products for the smart grid.
Participants like Downs sign up to have their homes wired down to the circuit to track power use and in return get rebates for buying and using home energy management systems, electric vehicles and solar panels.
Downs was able to install a $21,461 rooftop solar system with $3,857 in support from the non-profit research group associated with the University of Texas, collecting a $14,774 rebate from Austin Energy and $857 in federal tax incentives. He then bought a red Chevy Volt, for $42,000 -- $27,000 after local and federal rebates.
Employing an energy-management system that came with his solar package and tools supplied by Pecan Street, he found he could track his electricity use in real time on his laptop and smartphone. What he saw both surprised and mortified him.
Downs got rid of his power-sucking desktop for a more energy-efficient one. He swapped out his incandescent lights for power-sipping LEDs. He programmed his thermostat to cool his house.
A mechanical engineer by training, Downs, who runs a small business that makes mobile apps and games, said he’s cut his monthly energy bills to nearly zero -- and the smart grid has made it almost automatic and effortless.
“I’m actually not using any resources to drive around town or power my house, and that is really a thrill for me,” Downs said, laughing in near disbelief.
For its part, Austin Energy, America’s eighth-largest municipal-owned utility, sees Downs as the prototypical customer of the future -- savvy, energy conscious, an enthusiastic embracer of all this new, smart technology. It makes sense on both sides of the meter, said Larry Weis, Austin Energy’s general manager.
Last year, the utility opened a new $80 million command-and-control center featuring what was at the time the biggest video screen in North America. From there operators will have much of same kinds of controls that are being deployed by CenterPoint – finding and fixing power outages more quickly and even preventing them before they happen.
They also have other tricks to roll out. For example, Austin Energy predicts it will save as much as $340,000 a year by automating the operations of its 70,000 streetlights, which can now send a wireless signal to tell the utility when they’re broken.
Such successes give the smart grid momentum, though hurdles remain. A smart grid linked to smart homes and smart businesses raises cybersecurity and privacy issues. There are remaining technological challenges. An American Enterprise Institute report, while nodding to the virtues of an Internet-like grid, said controlling megawatt hours across a smart grid is far more complex than controlling megabytes on the Internet, analogous to “going from controlling a toy drone to a Boeing 777.”
On the hardware end, new classes of power transistors and semiconductors just now being developed will have to be rolled out to handle the “weapons-grade flows of electrons” moving across a completely digitally-managed grid, according to the report.
There is also utility resistance, in part based on regulatory issues. In many states, regulators maintain rules that make it difficult for power companies to pay for much of anything beyond power plants, transmission lines and poles, which helps to explain a lack of innovation in grid infrastructure upgrades.
The challenge is to convince both consumers and public utility commissions that spending on smart grid technology delivers services that make them worth any rate hikes. “We spend a lot of time making sure that anything we do is price-justified for our customers,” said Leo Denault, CEO of New Orleans-based Entergy Corp. “Utilities can only move rates so much and then there’s going to be backlash.”
There is also risk of a backlash -- against utilities -- if they don’t embrace the digital revolution. Corporations such as Google, Apple Inc. and Wal-Mart Stores Inc. are turning more and more to solar to power data centers or supply electricity for stores. Microgrids -- digitally enabled small clones of the big grid -- are springing up and stealing utility revenues by showing how smart grids can integrate solar and other forms of renewables while increasing resilience and reliability. Consumers are embracing interactive home-energy management systems that show a thirst for control and knowledge of their power use that most utilities simply can’t or won’t provide.
For Jeff Ray, CEO of ABB Group’s Ventyx unit, which is working with CenterPoint on its smart grid upgrade, utilities will either embrace these new technologies or suffer the consequences. “I don’t think they have a choice if they want to keep their customers,” he said.
Sunil Cherian, CEO of Spirae, a Fort Collins, Colorado, provider of smart-grid services, agreed. Utilities that don’t adapt and smarten their grids “won’t be around in 10 to 15 years.”
To contact the editors responsible for this story: Timothy Coulter at firstname.lastname@example.org Will Wade, Robin Saponar