Largest 'smart grid' test hopes to shock consumers about energy use

This is the first part of a series on the electric grid.

BOULDER, Colo. -- On Sunday nights, Philip DiStefano fills up his car. In most towns, this would not be a noteworthy event, but in this campus town, it is. DiStefano is chancellor of the University of Colorado's sprawling campus here, and his car, a hulking Ford Escape, gets 54 miles per gallon.

That's because it is a plug-in hybrid and he fills it by plugging into the wall in his garage.

As he and most other residents here readily admit, Boulder is not a normal American city. That is one reason why Boulder and DiStefano's embassy-like home have been selected for the first big demonstration of the value of what is called the "smart grid" concept.


While other towns may claim to be working toward a smart grid, Xcel Energy, the local utility, has rechristened Boulder "SmartGridCity," calling it in a recent press release the "first fully functioning smart city in the world."

The smart grid idea can mean different things to different people. On a national scale, though, it may be the most ambitious move the United States could make toward cutting its emissions from burning fossil fuels. Fifty percent of the nation's electricity comes from coal-fired power plants. Americans are accustomed to using far more electricity than any other large nation on the planet. The smart grid effort is about finding ways to change the electricity grid so that utilities can help reduce peoples' juice-guzzling habits.

Take DiStefano's house, for example. A four-bedroom showplace designed for holding university functions, it has a big solar array on its roof and an automated wiring system that turns off unneeded lights and tweaks down the heating, the water heater and other appliances when DiStefano and his wife, Yvonne, are away. Just before they return, it turns things back on again so he can sit cozily in his office and view his electricity use through a special portal installed on his laptop.

Since this summer, the DiStefanos have cut their electric bill by 14 percent. During times of peak energy use next year, they will save more money by selling Xcel some of the electricity from the solar array on their house, or from the big storage battery in the car. "If we're gone and there is a power outage," DiStefano added, proudly, "the electricity we have will go to power the refrigeration, the security system, the sprinkler system and our home office."

Assuming it gets regulatory approval, Xcel will offer cheaper electricity prices at night, when demand is low. Its new system will send signals to appliances in the DeStefano house, telling them it is a better time to charge the car, or to run the clothes dryer. DeStefano and his wife will heed these signals, but the larger question hanging over Boulder is what will everyone else do?

Moving the electricity grid beyond Edison

Next year, Xcel will begin to extend these features to many of the other 44,500 homes in Boulder (population 100,000). "If we give our customers [price] signals, do they actually act on them?" wondered Tom Henley, a press spokesman for Xcel. His company will soon find out, because it has turned the city's electric grid into a two-way street. It delivers power over the regular lines, but then it retrieves power-use information through 200 miles of newly installed fiber optic cables.

The cables connect nearly 16,000 "smart" meters -- also newly installed -- that can tell homeowners and the utility just how much electricity they're using at any given time. The new system is also designed to handle larger amounts of renewable energy, which requires more agile switching to balance power supplies as wind and solar activity fluctuates.

Xcel Energy, an electricity and natural gas company that operates in eight Western and Midwestern states, calls this the first step in a "long-term test" to see whether it can slow down electricity demand growth. Instead of building more power plants at $1.25 billion apiece for new coal-fired models, the goal is to incentivize customers to shave their electricity demands to free up the extra current that the grid sometimes needs. "We think the cheapest megawatt is the one you didn't produce," explained Henley.

Whether that will be true here or anywhere else is still an open question, depending on how consumers respond. Still, facing soaring prices for new power plants, other utilities are planning to try similar programs. The Office of the Gas and Electricity Markets, which regulates the United Kingdom's power grid, is planning up to four "smart grid" cities, each modeled after Boulder's system. A recent report by the European Commission calls for as many as 30 "smart cities." In the United States, the Department of Energy is planning to devote $1.5 billion from the recent economic stimulus law to setting up several larger, regional smart grid tests.

"The unit price of electricity is going nowhere but up," explained Frederick Butler, president of the National Association of Regulatory Utility Commissioners. His group wants Boulder to be a "success story" because America's long reliance on cheap energy is ending and the soaring costs of fuel and new power plants will eventually shock people. The current system, Butler noted, works "like a supermarket with no price tags. You are invited to go in and buy anything you want, and we'll tell you how much it was at the end of the month."

America's electric gluttony, he added, extends beyond homeowners, because many businesses are renters and don't see their energy bills. "I see big department stores in shopping malls. Late at night, they're closed, but the escalators are still running and the air conditioning is still set at super cool. The message people have been getting is, 'Use all [the electricity] you want, and we'll make more.' This has to be turned around, and the smart grid is the way to do it."

How will America's consumers respond?

Engineers describe the nation's three interconnected power grids as the largest man-made machine on earth. Estimates of the cost to renovate them range from $200 billion to more than $1 trillion. Despite this steep price tag, Butler is convinced the renovations can be sold to the public. "Climate change is a motivator for people who care, but when you ask how much are you willing to spend, the numbers go way down. But if you stress how much money they might save, that could be a different story."

There is a new galaxy of smart grid software, hardware and appliances being designed by companies, and Xcel's Boulder experiment -- being done with seven partners that make these items -- is intended to test many of them out. According to Xcel, the experiment will cost $100 million, and both utilities and federal energy experts are anxious to see the data on consumer behavior that Boulder is expected to produce.

"We know we can get people to respond; that's not really making news," explained Rob Pratt, a power systems engineer at the Department of Energy's Pacific Northwest National Laboratory. Other studies, he notes, have shown that once people become aware of how much electricity they use, they cut their demand, on average, by about 10 percent.

The larger question is whether consumers "can stay signed up for 10 or 20 years into the future," he added. "This is like creating a new power plant; it's not a temporary deal. Utilities are preparing to make large, long-term investments, and we need to know whether they will pay off."

"Do do people stay in or drop out? Does dealing with smart grid seem intrusive to people, or does it go viral? Those issues are really important. That's why it's important that you have a place like Boulder where people go all-out."

Compared with other U.S. cities, Boulder does tend to go all-out on ideas that are considered "green." In November 2006, Boulder voted to impose a carbon tax on itself to help reduce its carbon footprint. Last year, Xcel selected Boulder from a list of eight cities because Boulderites are "environmentally aware and early adopters of technology," explained Xcel's Henley.

One reason is because many federal and academic experts on smart grid issues live around here. They work at the National Institute of Standards and Technology, the National Center for Atmospheric Research or the University of Colorado -- all in Boulder -- or at the Department of Energy's National Renewable Energy Laboratory in nearby Golden, Colo.

Spotting the blackout before it occurs

Aside from Chancellor DiStefano's house, the laws, the financing, the regulations and the wiring needed to operate Boulder's smart grid won't be completed until sometime next year, but there have already been some interesting experiments. "Formerly, we were running blind," explained Kathleen Hoxworth, a project manager at Xcel's operations center in Denver, which collects data from Boulder.

On the conventional one-way grid, she noted, a utility often doesn't know there is trouble on the grid until a consumer complains of a power outage. Then trucks and work crews have to be dispatched, and sometimes, especially where there are underground cables, multiple tests have to be conducted to figure out what section of the line, or which transformer, has blown.

This happened often, because the city's demand for electricity has grown 39 percent in the last 10 years. Much of the new demand has come from customers installing air conditioning systems for the first time. "They wouldn't necessarily tell the utility," said Henley, so often the first sign of an increased demand would come when a nearby transformer blew. Now, Xcel can pinpoint the problem and beef up the transformer as soon as the new air conditioner is turned on.

One result is that there were 50 complaints about low voltage in 2007. This year, the utility says there were none. "We've improved our customers' experience even though they don't know it," said Henley.

But Boulder, being Boulder, has also produced odd surprises. Engineers installing the new sensor network discovered that some electricity was moving the wrong way: back toward the power plant. Some of the estimated 700 homes in Boulder that have electricity-producing solar arrays were putting excess electricity back on the grid, without telling Xcel. "I guess they were doing it for the greater good of the community," said Hoxworth.

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