Starting the Journey to Successful Smart Grid Development
By: Larry Cochrane, Microsoft Corporation and Scott Neumann, Utility Integration Solutions
Desire for energy independence and cleaner energy sources along with the growing interest in climate change are driving a fundamental shift toward the use of smart technologies such as meters. At the same time, smart technology brings on numerous first-time issues for utilities. How do utilities interact with customers as they become active participants within this ecosystem? How will utilities and customers take advantage of capabilities service providers offer? How do they use and secure the exploding volumes of data? These issues will continue to grow.
Utilities face three main challenges:
1) successfully completing smart grid initiatives;
2) taking advantage of new opportunities a smart energy ecosystem enables; and 3) doing it all while still keeping the lights on.
Achieving all three is not an easy task. For most utilities, it means simultaneously deploying smart meters and launching programs such as demand response, tiered pricing and price sensitive load response without wavering on reliability. They also have to determine each program’s effectiveness and profitability. While utilities may have programs in place and are progressing faster on the commercial and industrial side, achieving the depths required for the consumer side is more complex. No single utility or industry solution provider can achieve all three without help.
Integration is the key to smart grid success. By integration, we mean connecting business processes, data, software and human interaction. This connectivity must take place across the entire smart energy ecosystem – from generation to transmission, across to distribution and all the way to consumption.
Demand response extends to wholesale markets
Integration of the retail segment with wholesale markets will be significant. If time-varying retail electricity prices are not directly linked to real-time wholesale prices, then retail consumers will not react to the right signals. According to Stu Bresler, vice president of market operations and demand resources for PJM Interconnection, one of PJM’s roles as a regional transmission organization is ensuring that wholesale prices are transparent, stable and rational. “Price transparency is key so that time-varying retail rates use real-time wholesale prices to stimulate retail customers’ responses in a way that’s consistent with grid conditions,” Bresler said.
To do this, PJM works continuously with its members, other stakeholders, federal regulators and state utility commissions to ensure wholesale market rules efficiently facilitate competition and wholesale prices accurately reflect supply and demand balance. “Connectivity and automation allows us to integrate more types of generation and storage while maintaining reliability and price stability,” he said.
PJM Interconnection also recently completed one of the largest and most sophisticated demand response software system deployments in the world for its wholesale electricity markets. The new system expands its demand-side resources and improves demand-side operational efficiency by linking and automating wholesale powermarket transactions that involve PJM, utilities and demand response curtailment service providers
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