Every year during times of peak need Portland General Electric (PGE) of Oregon must fire up Beaver 8, affectionately known as “Little Beaver.” The problem is Beaver 8 is not cheap compared to the other power plants at PGE’s disposal. On average, power generated from Little Beaver costs $164 per megawatt as opposed to the typical $57 per megawatt hour. Of course, the added expense is passed on to the customers. Beaver 8 is not the model of efficiency, either. Built to increase energy capacity following a 2001 energy crisis, the plant was only fired up for two days in 2006 and 2007. Among industry types, the Little Beaver is what’s known as a “peaking unit.” These are the last-resort sources of power only used when demand for power spikes, such as during a summer heat wave when so many are cranking up the air conditioner. Utilities are required to maintain backup sources of power that can meet even the most extreme demand surges according to federal guidelines in order to prevent massive blackouts. As demand for power has grown over the years, so has the need for peaking units which now account for around 14 percent of America’s 2600 total power plants. Considering peak demand is spiraling even more drastically than aggregate energy demand, this number of peaking units will continue to grow. As Bonneville Power Administration spokesman Scott Simms phrases it; building peaking units is like “building an extra freeway lane to accommodate one day of Super Bowl traffic.”
GridWise Alliance president Steve Hauser believes there to be a better way. GridWise Alliance is a consortium of like-minded businesses seeking to update the electrical grid. By lobbying for a smart grid that can accommodate for energy spikes by balancing the load, instead of firing up a peaking unit, with subtle adjustments to how much power consumers can use and at what time. “The system we have now is pretty black-and-white,” said Hauser. “Either a power plant is on, or it’s off.” Within a smart grid, smart thermostats, smart appliances, and micro-power generation sources can relay info about the network to a centralized processing station where the data is used to determine the level of usage and base prices on current demand. Rate information is then transmitted back to consumers through smart meters installed in the home. These devices allow consumers to adjust their consumption accordingly. That way, power is better managed and there wouldn’t be a need for all these peaking units “just in case.”
Hauser believes the smart grid represents flexibility where building peaking units is merely preparing for a worst-case scenario. “I heard someone say recently, ‘You wouldn’t pay to build a huge store3 and keep it stocked year-round just to meet Christmas demand.’ But that’s what the electricity industry is doing,” he said.
A smart grid doesn’t merely minimize waste in the electrical grid; it is designed to minimize waste in consumers. The transmission of power is inherently inefficient – six percent is lost in the act of transmission – and there’s nothing to be done about that. However, efficiencies that can be improved are at the consumption end: with consumers. A smart grid offers a user-friendly means for curbing consumer energy usage. “The reality is that no one turns the thermostat down to 60,” said Hauser. What’s most compelling about the smart grid is that it could alter consumption habits without any requirements of the consumer.
Power providers and smart appliances would do the thinking for the consumer, automatically cycling on and off, almost imperceptibly, during times of lower and higher energy rates. Under the current situation – the “dumb grid” – the only interaction is from the consumer to the utility; there is no information exchange. Variable billing rates and current energy usage would flow from utility to customer, and vice versa, within a smart grid.
Are adamantly self-governing Americans ready to turn over thermostat access to utility companies? Considering that so many automatically pay their bills without even looking at them it doesn’t seem like it’s much of a stretch. With the proper incentives and consumer protections many consumers would jump at the chance to save on their electric bill.
Another proposed smart grid methodology is to give consumers the ability to make their own power adjustments based on information gleaned from their smart meters. Hauser, and advocate of this approach, believes that informed consumers would voluntarily reduce their power consumption. “You’ve just got to make it easy for them,” he said.
So why haven’t smart grids been built yet? The answer to that question is simultaneously simple and complex. There are no “anti-smart grid” groups but there aren’t any big-name supporters either. Congress isn’t ready to put forth any expensive nationwide proposals, especially during this election year. The costs involved are substantial; after all it is a complete overhaul of the system that supplies power to every home and business in America – and the appliances demanding power also.
Because there are no standards for a smart grid in place, any utilities attempting to implement the technology on their own do so knowing the risk of future obsoleteness. Steve Hickok, deputy administer of Bonneville Power Administration said, “No one wants to get stuck with a Betamax.” This is, of course, in reference to the famously outmoded VCR technology of the 1980s.
Provisions were included in last year’s energy bill calling for $400 million in R&D investment through 2012 including the creation of five test sites for smart grids. Hauser and GridWise pushed for the initiative and are optimistic the next administration will provide the funding since the money has not yet been appropriated.
In the meantime spiraling demand for power will continue to be met no matter what. The next move depends on whether utility companies can be convinced to alter their business model where they don’t build a Little Beaver to meet the worst-case scenario. The public must be convinced of the benefits also.
Portland General Electric
121 SW Salmon Street
Portland, Oregon 97204
Bonneville Power Administration
905 NE 11th Ave.
Portland, Oregon 9723