The evolution of the global energy economy is dependent on transitioning to the “smart grid,” a term to describe an upgraded electric power transmission and distribution system that encompasses a broad range of innovations. The smart grid will be mostly invisible, but will impact virtually everything we do, and will facilitate a future where energy will be abundant, clean, and more than ever before, electric. There is possibly no company in the world more in the center of this transformation than GridPoint, located in Arlington, Virginia.
Last week I spoke with Karl Lewis, Chief Strategy Officer for GridPoint, who described in detail his company’s services. Understanding how GridPoint is addressing the market opportunity is a very good way to understand how the smart grid is evolving.
As Lewis put it, GridPoint, which initially emphasized electricity storage solutions, is now an “enterprise software company for utilities.” At the heart of GridPoint’s products are intelligent, “grid aware” systems, embedded in products that span the entire grid, from electricity generators, to storage systems, to grid management systems at the utility, to large appliances in the home – including electric vehicles. The management challenges introduced by the growth in intermittant sources of electricity such as wind and solar, combined with the proliferation of new large electricity consumers such as flat screen televisions and, soon, electric vehicles, along with the imperative to use electricity more efficiently, make the need for next-generation systems to manage the electric power grid more necessary than ever.
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|A grid-aware energy management system such as GridPoint’s “Xcel” product will reduce energy
consumption during peak periods. Xcel will be able to measure, control and verify select loads
from electric water heaters, pool pumps, and home appliances, and adjust thermostats.
(Photo: GridPoint Inc.)
A few years ago, GridPoint’s “Connect Series” electricity storage solution, available in 12 kilowatt-hour modules, grid-aware, and including a management interface to intelligently harvest or release electricity depending on market conditions and demand profiles, was – and probably still is – the best in its class. Storage solutions were – and still are – a huge missing piece as solar and wind generators contribute an ever increasing percentage of grid electricity. But GridPoint executives realized that despite the current lack of availablity, storage solutions would quickly become commoditized, whereas grid management systems was an area of huge opportunity still in its infancy.
At the same time, it was clear that intelligent storage systems, able to arbitrage electricity rates by collecting electricity during moments of low spot prices, and releasing electricity during moments of high spot prices, were really only going to make economic sense for utilities, not for commercial or residential customers. This is because commercial and residential customers have guaranteed prices, which while tiered to reflect daily and seasonal variations in demand and supply, fluctuate within relatively narrow bands. Since a battery’s charge/discharge efficiency is about 85%, and since the resale of electricity back into the grid will incur transaction costs, price variations would have to be substantial in order for a storage unit to deliver an adequate return on investment at the commercial or residential scale.
On the other hand, wholesale electricity price fluctuations for utilities, where the spot price of electricity can literally swing from a low of $.02 per kilowatt-hour to a high of $2.00 per kilowatt-hour, are so severe that a smart, utility scale storage unit can quickly deliver a financial payback and ongoing return on investment. This reality, combined with the acute need utilities everywhere face as they attempt to integrate an increasingly complex network of distributed assets, inspired GridPoint to leverage the head start they’d acquired developing the Connect Series to become an enterprise software company, targeting utilities.
There are four interrelated areas utilities must address in order to manage the challenges presented by the new smart grid: (1) Measure and control electricity load at the point of consumption, (2) integrate distributed generation, (3) store energy, and (4) integrate plug-in vehicles. Each of these four challenges present unique requirements.
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|GridPoint provides a standard enterprise software solution for utilities that enables them to develop
custom interfaces both for the utility and the consumer, which in-turn allows load management,
distributed storage management, renewables management, and plug-in vehicle integration.
(Photo: GridPoint Inc.)
In order to measure and control electricity load at the point of consumption, the utility needs to be able to remotely monitor activity at every electricity customer’s meter. This “inside the meter” activity is accomplished by installing IP addressable appliances – or upgrading them to be IP addressable – as well as upgrading each customer’s meter to collect this data and transmit it to the utility. A variety of services can be performed once these upgrades are in place. The utility, working with each customer, can prepare a customized program whereby when there are electricity shortages, the thermostat can be adjusted automatically to reduce the collective energy required by air conditioners, for example. The utility can provide each customer with a detailed analysis of their electricity consumption, allowing them to see what individual appliances and thermostat settings are costing them, and allowing them to set a profile to manage how much electricity they use. Demand management, collectively at the utility level, and individually on the part of electricity consumers, is an essential part of the new smart grid. As Lewis pointed out, using network based intelligence to measure and control load can sharply reduce the necessity for the utility to invest in plants designed to only operate during peak demand. Managing load at the point of consumption is a huge factor in flattening demand as well as reducing overall demand, and represents a “generation-equivalent resource.”
Integrating distributed generation requires a variety of innovations both in terms of technologies deployed as well as the business models that govern utilities. As regulators move towards requiring two-way metering in order to facilitate distributed generation, utilities and suppliers must take steps to ensure that power is safely conveyed back into the grid – on both sides of the meter. Repairing severed power lines, for example, is not the same challenge as before, if power is flowing not only from the utility to the customer, but from the customer to the utility.
Distributed generation also has to be regulated in a manner that provides incentives both to the utility and to the consumer. The traditional business model for utilities is that they make money when they invest in generating assets. Decoupling a utility’s return to investors from the volume of electricity they produce is a complex exercise that can produce unintended consequences. Regulations to decouple financial return from electricity volume have already been written in California and other states, but as the smart grid evolves and as we learn what works and what is counterproductive, these regulations will require frequent adjustments. It is likely, for example, that utilities will begin to own distributed generating assets. Particularly at the commercial scale, where a fairly substantial amount of capacity can be deployed per customer, this can provide a commercial electricity consumer with guaranteed lower rates, and the utility can finance and install the entire system. A solar system on a 100,000 square foot warehouse roof is a typical example of how such a program would work. Using GridPoint’s enterprise management software, the utility can manage myriad distributed systems, which in aggregate can obviate the need for new power plants, or even make possible the decommissioning of power stations dependent on imported fuel.
Electricity storage, despite eventually becoming a commodity, is nowhere near enjoying such status at present. With over 20 gigawatts of wind generated output now in the United States, and with plans in many states to bring wind and solar generating resources up to 20% or more of total electricity capacity within a few years, electricity storage must quickly catch up. Other than pumped hydro storage, which has been built out pretty much to the limit of available resources, the installed base of electricity storage capacity in the United States is still negligible.
While commercial and household consumers, in that order, will begin to deploy storage systems on site, the primary investor in large scale storage solutions will be the utility, since investing in storage can offset the need to construct new power plants, and also enable utilities to avoid paying exhorbitant spot rates for electricity during periods of high demand. Also, utilities will need to invest in large scale storage solutions simply to fulfill renewable energy mandates – if utilities are going to bring renewable generating capacity up to 20% of supply, or higher, they will have to invest in parallel in storage systems to take electricity gathered during the solar peak, or during times of high winds, and store it for distribution during the demand peak. Typically the solar supply peak precedes the demand peak, which in turn is followed by the wind supply peak later in the night. Only storage at the utility scale can manage this cycle.
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|A GridPoint energy management system will take plug-in electric vehicle management in stride.
(Photo: GridPoint Inc.)
Finally, electric vehicles appear to be within 3-5 years of mass adoption. Sometime between 2011 and 2013, let’s say, there will be over 1.0 million plug-in electric vehicles being owned and operated by American consumers. Given the fact electric vehicles convert energy into transportation miles very efficiently, combined with the potential for electricity powered vehicles to reduce the demand for imported fuel, it is possible growth in the U.S. electric vehicle fleet will not stop at 1.0 million, but could surge within a generation to comprise 50% or more of all light vehicles. The supply and management of electricity for electric vehicles is a huge element to consider when transitioning to the smart grid.
Electric vehicles will need to be “grid aware,” meaning they will need to be programmed to recognize when off-peak rates apply, so they can begin and end their charge cycle during those times – presumably during the middle of the night. Electric vehicles will also need to be able to access and pay for “roam charging,” where they will plug into charging stations on the road, but communicate their consumption to the utility, so the vehicle owner receives these charges as line items on a single bill, similar to the cell phone billing model. There will need to be provisions for rapid charging, where an electric vehicle owner may be on the road and get a quick charge, but pay a premium for this service.
Also, there is potential for vehicle-to-grid charging, where a vehicle owner sells power back to the grid during times when the car has excess charge and utility rates are high. This possibility, however, is less likely than it might immediately seem, since routinely having cars discharge energy back into the grid will accelerate the degradation of the vehicle’s battery, an asset that is significantly more expensive than batteries designed for stationary use. Also there are significant safety issues surrounding having a two-way charging system on a car that would require expensive upgrades both to the vehicle’s power management system as well as the circuitry in the home. These facts, combined with the relatively narrow tiers of electricity price variation sustained at the household consumer level, make it unlikely that vehicle batteries will ever be a significant part of the smart grid’s energy management system.
Putting all of this together is the area where GridPoint enjoys a decisive lead. As this market is just beginning to coalesce, there are still communication protocols that have to be standardized. At the household level there are already standards that have been widely adopted, using IP with the Zigbee communications protocol with standard application profiles – this will enable the consumer’s smart meter, and their utility partner, to interact with large appliances. There are wifi-light communication protocols as well that appear moving towards standardization, so low energy appliances such as thermostats can communicate with household appliances and with the utilities. But at the wide area network level, it is still wide open. Silver Spring Networks is one company with a strong product that is competing, along with other contenders, to become a standard.
GridPoint’s role in all this is not to choose or deliver the communications protocols, nor the storage solutions. Instead GridPoint offers a standardized enterprise software for the utility to adopt and manage these various assets. GridPoint helps the utility customize their software for their unique requirements, they assist them to write their “smart grid roadmap,” and help them choose the technology set they will use as they upgrade to a smart grid. Right now GridPoint is the only company offering these solutions on an open, standardized platform. They offer one software solution to communicate and manage all of the asset types. GridPoint is at the forefront of the emerging electric age.