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A Smart Grid will enable a number of operational benefits for utilities, many of which go hand-in-hand with the customer service benefits already discussed. Benefits include advanced distribution management functions, outage management, power theft detection, as well as automated change of service, improved asset management capabilities, greater load profiling ability, grid stabilization, and a variety of advanced metering functions.

The main mechanisms for energy savings and carbon dioxide reductions due to improved operational efficiency enabled by a Smart Grid include: reduced line losses, reduced transportation requirements through automated meter reading, and indirect feedback to consumers on billing capability.

Reduced Line Losses

According to data from the Energy Information Administration, net generation in the U.S. was about 4,055 million megawatt hours (MWh) in 2005 while retail power sales during that year were about 3,816 million MWh (Ref. 1). T&D losses, therefore, amounted to 239 million MWh, or 5.9 percent of net generation.

There are a number of measures utilities can undertake that can reduce T&D losses, including upgrading distribution transformers, reconductoring transmission lines, utilizing distributed generation closer to load centers, and building new substations. However, these measures typically require large capital expenditures and are usually undertaken to meet T&D capacity or replacement requirements rather than for the purpose of reducing losses. The loss reduction impact of such T&D infrastructure projects are usually regarded as ancillary benefits not central to their respective business cases.

A Smart Grid has the potential to reduce energy losses that occur in the transmission and distribution of electricity from generation sources to end-users using the existing power infrastructure. The promulgation of open communications standards through a Smart Grid will enable utilities to monitor and modulate the operating parameters of what today are operationally incompatible components in the T&D structure.

In transmission, for example, a Smart Grid will facilitate more effective reactive power compensation and voltage control to maintain system voltages within acceptable limits and minimize system losses. Reactive power flows in the grid consume transmission capacity, thus limiting a system's ability to move real power. Management and control to minimize reactive power in the grid, via a Smart Grid, will allow a utility to maximize the amount of real power that can be transferred across congested transmission lines and thereby minimize transmission losses.

The primary operating lever that utilities can use to affect the flow of reactive power is voltage control, which is accomplished through the use of various devices that inject, absorb, or force the flow of reactive power in the grid. These devices include: synchronous generators, synchronous condensers, shunt capacitors, shunt reactors, static VAR compensators (SVC), and STATCOM (STATic COMpensators). A Smart Grid will facilitate the application and monitoring of such devices.

Similarly, a Smart Grid will enable opportunities to reduce distribution line losses through adaptive voltage control at substations and line drop compensation on voltage regulators and load tap changers (LTCs) to levelize feeder voltages based on load. The American National Standards Institute (ANSI) standard C84.1 specifies a preferred tolerance of +/- 5 percent for 120V nominal service voltage to the customer meter, or a range of 114V to 126V. Utilities tend to keep the average voltage above 120V to provide a safety margin during peak load periods. (Ref. 2). However, maintaining voltage on the upper end of the ANSI C84.1 band at all times, which most utilities do, wastes energy. A Smart Grid will allow utilities to place sensors at the ends of the feeders to monitor and maintain voltage at 114V, which minimizes energy losses without compromising the quality of delivered electrical service. While the impact of voltage reduction on energy consumption will vary from circuit to circuit based on resistive or reactive nature of the load, utility experience has shown that, on average, a 1-percent reduction in voltage yields a 0.8 percent reduction in power draw (Ref. 3).

A Smart Grid will also facilitate more intelligent controls on capacitors, optimizing their usage to reduce system losses further. A Smart Grid will also enable automatic reconfiguration to minimize losses during the day, which requires distribution state estimations, more sensors, and real time control.

To quantify the impact of a Smart Grid on T&D efficiency we have focused on the potential to regulate voltage more precisely. We have assumed that additional voltage reduction enabled by Smart Grid would be confined to the residential sector, since residential loads tend to be more resistive and therefore more responsive to voltage reduction, as opposed to commercial and industrial loads which tend to be more reactive due to increased motor and refrigeration loads.

Of 2,179 distribution substations in the U.S. referenced, 70 percent (or 1,525) are assumed to serve predominantly residential circuits. Based on an example of 1.14 billion kWh/Residential Distribution Substation ratio of residential electricity sales per residential substation, and a ratio of load reduction to voltage reduction of 0.8 (a one-percent reduction in voltage yields 0.8 percent reduction in load), a range of savings induced by a Smart Grid is presented as a function of:

• Market penetration of voltage regulation between 25 percent and 50 percent of residential distribution substations by 2030 (7.5 percent of distribution circuits already have voltage regulation capability, as per Ref. 4); and

• Average percentage voltage reduction between 1 percent and 4 percent (i.e., between 1.3 and 5.0V from a baseline of 126V).

On this basis, we quantify the savings range for a Smart Grid in reducing losses through voltage regulation as 3.5 billion to 28.0 billion kWh per year in 2030.

Reduced Transportation Requirements through Automated Meter Reading

A Smart Grid's advanced metering functions will greatly simplify a utility's meter reading process. Since meters can be read from a central location through automated meter reading, utilities will not need to dispatch workers to drive to read each meter. This reduction in transportation requirements means less fuel consumption and less carbon emissions from the vehicle tailpipe. Moreover, advanced metering will also virtually eliminate meter reading errors, and will facilitate more frequent, accurate, and informative billing.

Indirect Feedback to Customers on Energy Use through Improved Metering and Billing

Informative billing is a pathway for indirect feedback to consumers on their energy use characteristics beyond conventional billing. Some studies suggest that such indirect feedback mechanisms inspire changes in consumer energy use behavior, yielding significant energy and demand savings and associated reductions in greenhouse gas emissions.

However, based on the range of studies and demonstrations conducted, the conservation effect of enhanced billing and indirect feedback is inconclusive. A prominent meta study of energy bill reductions attributable to information indicated that indirect feedback through enhanced billing detail resulted in a zero percent to 10 percent reduction in energy consumption (Ref. 5). A pilot study of 106 participants in Milton, Ontario (Canada) showed that indirect feedback through enhanced weekly billing in various formats yielded no discernable reduction in energy consumption (Ref. 6).

This divergence in results suggests that a conservation effect is a function of electricity rates levels, rate design structure, regional attitudes towards energy conservation, information delivery mechanism (online and/or mailed delivery), and data presentation (graphical representation, normative and historical benchmark comparisons, choice of highlighted metrics, etc.).

This mechanism for energy savings crosses over to the Smart Grid goal of transforming customer energy use behavior. However, the marginal energy savings and carbon reduction benefits of this mechanism attributable directly to a Smart Grid are assumed to be negligible relative to other potential mechanisms enabled by a Smart Grid.

References:

1. U.S. DOE, Energy Information Administration, Tables 1.1 (Net Generation by Energy Source by Type of Producer, 1994 through 2005) and 7.2 (Retail Sales and Direct Use of Electricity to Ultimate Customers by Sector, by Provider, 1994 through 2005). Net Generation is net of utility power system auxiliary loads, including electricity consumption at power stations and other utility facilities.
2. Northwest Energy Efficiency Alliance. Distribution Efficiency Initiative, Market Progress Report, No. 1, Report #E05-139. Prepared by Global Energy Partners, LLC, Lafayette, CA: May 18, 2005.
3. Ibid.
4. Northwest Energy Efficiency Alliance. Distribution Efficiency Initiative, Market Progress Report, No. 1 Report #E05-139. Prepared by Global Energy Partners, LLC, Lafayette, CA: May 18, 2005.
5. Darby, Sarah. "The Effectiveness of Feedback on Energy Consumption: A Review for DEFRA of the Literature on Metering, Billing, and Direct Displays," Environmental Change Institute, University of Oxford, UK: April 2006.
6. Robinson, Jennifer. "The Effect of Electricity-Use Feedback on Residential Consumption: A Case Study of Customers with Smart Meters in Milton, Ontario." University of Waterloo, 2007.