Winners in the Obama administration's $3.4 billion smart grid sweepstakes were exultant. Some losers sounded bitter. But there seemed to be no quarrel that yesterday's Energy Department grants will accelerate revolutionary changes in the ways electricity is generated and managed by utilities and their consumers.
"The grid has to evolve to support where policy is driving us," said Chris Baker, senior vice president and chief information officer of San Diego Gas & Electric Co., which won a $28.1 million federal smart grid grant yesterday. It will help to fund a $60 million futuristic information management system that ties key elements of its smart grid together.
Many hurdles lie ahead, ranging from consumer acceptance to cyber security to huge data management issues. But optimism seemed the rule yesterday. "It's going to happen," Baker said. "I truly believe stimulus funding is going to help push this along."
President Obama traveled to Florida to highlight DOE awards to 100 utilities, equipment manufacturers, cities, systems developers and other recipients. The winners have committed $4.7 billion of their own resources to match the smart grid grants.
The president sketched his vision of a clean-energy future marrying solar panels, advanced storage batteries, plug-in electric hybrid cars, home energy management systems and smart appliances together in a grid studded with new sensors and control devices.
Smart grid technologies will reduce electricity use by more than 4 percent by 2030, saving $20 billion in customer costs that year and cutting greenhouse gas emissions accordingly, the White House said, citing analysis by the Electric Power Research Institute (EPRI). Demands for "peak" power on the hottest summer days could drop by 20 percent. Tens of thousands of new jobs will be created, the administration projects. "We're on the cusp of this new energy future," Obama said at a solar energy center in Arcadia, Fla. "In fact, a lot of it is already taking place."
Before the DOE announcement, utilities across the United States had announced plans over the next decade to replace more than 50 million old-model "dumb" electric meters with advanced digital versions. The smart meters will read and report electricity usage and prices at intervals as short as 15 minutes, giving consumers the means of conserving power when it becomes scarcest and most expensive.
Even without grants, companies vow to press on
The grants will accelerate smart meter installations, said Mark McGranaghan, EPRI's director of distribution research in Knoxville, Tenn. "These awards are designed for deployment, to put things into the field and create jobs." Most of the successful smart meter projects had been in the works, and the grants are saying, "instead of five years, let's make it happen over two."
But so great was the interest in the DOE program that for every one winner, there were three losers. "I wonder what will happen to the other 300?" he asked.
"There are big names not on the list, and small ones that are on. Southern California Edison isn't on the list, and they are deploying [advanced meters] like crazy. CenterPoint [in Houston] happens to be on there. Oncor [in Dallas] isn't. But any of the Texas utilities could have been in that list," McGranaghan said. "I'm sure it was a tough decision."
The defeat stung Oncor. It has begun installing smart meters and will have 700,000 in place by the end of the year, aiming to complete a 3-million-unit installation by 2012, said spokeswoman Carol Peters.
"Oncor is disappointed that our 7 million customers were excluded from the benefits of this award," she said. But she added, "No matter what, Oncor isn't slowing down, because advanced meters and other smart grid technologies can save consumers money and energy. It's happening. It's real."
"We think this will really stimulate other projects to go forward, maybe not as quickly or to the extent they would have [if they had won]," but forward still, said Katherine Hamilton, president of the GridWise Alliance in Washington, D.C.
Consumers' images of smart thermostats and appliances, responding to customers' directions or programmed instructions, barely hint at the scope and complexity of the technology challenges addressed by the smart grid grants yesterday, industry experts said.
Multi-company teams eyed favorably by DOE
PPL Electric Utilities Corp. in Allentown, Pa., got $19 million to install a new smart grid management system to support conservation and distributed energy generation at homes or businesses. NSTAR Electric Co. in Norfolk, Mass., received $10 million to help fund "self-healing" devices on transmission lines and substations to reduce the impact of outages.
The Western Electricity Coordinating Council, the New York Independent System Operator, the Midwest Independent Transmission System Operator, and the PJM Interconnection -- four of the nation's largest grid operators -- were awarded $1.2 billion in all to install more than 500 power-flow monitoring units called phasors. The units, able to detect and report frequency spikes and other conditions at millisecond intervals, replace monitors that read parameters every two to four seconds, far too slowly to protect the grid of the future.
Future grid systems will have to read, assemble, sort out, process and interpret data from millions of customer meters, transformers and other nodes on the system in real time, said Tim Noonan, Boeing Co.'s vice president of advanced global services and support, in St. Louis, Mo.
All that information must be served up as needed "to let machines make decisions machines should make, and people make decisions people should make. You have to make sure old things and new things can talk to each other," while putting a military-grade cyber-security system on the entire network, he added.
DOE's grant decisions revealed a preference for multi-company teams, each tackling discrete parts of the challenge, from meters to software to communications systems, Hamilton said.
The collaborations resemble the industry teams that battle for defense contracts and combine for space program grants. General Electric Co., for example, is partnering with Silver Spring Networks, Florida Power & Light and Cisco to deploy smart grid technologies in Miami. FPL won a $200 million award that helps fund its $578 million project to install 2.6 million smart meters and thousands of monitoring and control devices throughout its service area.
"There is a great opportunity for integration and collaboration of technology," said John Joyce, CEO of Ambient Corp., a 50-employee company in Newton, Mass., that builds smart grid communications devices. It is partnering with Duke Energy, which received a $200 million grant toward its $852 million project to roll out 1.4 million smart meters in Ohio, Indiana and Kentucky.
Shaking up the states
The alliances will be fluid, not fixed, Joyce predicted, with new teams responding to different needs in different states and regions.
EPRI's McGranaghan agreed that the winners announced yesterday gain an important forward push but can't count on prevailing in such a complex emerging technology arena. The grants "cut across various technologies, and there are still a lot of technology decisions to be made."
There were pronounced winners and losers among the states, as well. Hamilton said some grants seemed targeted to states like Texas, California and Pennsylvania that are moving ahead with time-based electricity pricing -- considered a key companion for smart meter deployments.
Some states, like Florida, where a few utility companies have been early smart grid adopters, got major grants over $100 million. But other states with similar early movers got a few million each. Louisiana, Indiana, Illinois, Colorado and Massachusetts -- all states that have lagged in smart meter installations as of a survey last year -- got more than $10 million each in smart grid grants.
Some in the industry predicted that the gap in state policies on smart grid support and time-based pricing will shrink as the programs proceed. "States can't sit on the sideline," Baker said.
"Once these projects are real and are deployed, consumers are going to ask for this, and once that happens, state commissions are going to listen," Hamilton said.