In 2009, when President Barack Obama declared the smart grid the future of electricity — along with a $3.4 billion package of investments for smart grid projects — the term trickled into the lexicon, and capital budgets, of utilities nationwide. For most, it has meant switching over to smart meters, which automatically relay usage information every hour or less. Smart meters have now become the rule rather than the exception for U.S. electric utilities, with more than 50 percent of U.S. households using smart meters as of year-end 2015. But a host of other technologies like virtual power plants, utility-scale storage, electric vehicles, and drones are offering new avenues to build on the advanced metering infrastructure to supercharge the smart grid — and make it the smartest it's ever been.
Virtual Power Plants
What exactly a virtual power plant is depends on who you ask.
"It's a smart way to manage distributed energy resources — like solar arrays, wind, thermal plants, customer-side generation, storage — that are all spread out," said Josh Castonguay, chief innovation officer at Green Mountain Power, a Vermont utility that was recently ranked as one of the top 10 most innovative energy companies by Fast Company. As more renewable resources — which operate intermittently and at different hours — come onto the grid, a virtual power plant can coordinate with other resources to simulate the steady output of an actual power plant.
Others, like Brian Farhi at smart thermostat pioneer Nest, say virtual power plants imply demand response.
"For customers enrolled in our Rush Hour Rewards program, the smart thermostat learns usage patterns to create tailored responses," said Farhi, head of new channel development. Responses like pre-cooling homes with non-peak energy in advance of hot afternoons.
With enough homes signed on, this can become a reliable aggregated asset for utilities to reduce load and shift capacity during peak periods, instead of using expensive peaker plants to manage capacity, he said. This idea will face its biggest test yet this summer, as Nest partners with Southern California Edison to deliver about 50 MW to 50,000 homes, in reliable load reduction across a stretch of the Southern California grid.
A different model of virtual power plants moves energy storage, and even generation, toward the customer and uses intelligent software to manage usage and demand response. Sunverge Energy is piloting this model across 30 utilities.
"You take several homes on the grid, fit them with rooftop solar and battery storage, and virtually aggregate them and have them perform a function on the grid as though they were all a centralized source of generation or capacity," said Martin Milani, chief operating officer at Sunverge.
One of Sunverge's pilot programs includes 300 homes across Consolidated Edison's grid in Brooklyn and Queens, where Sunverge provides aggregated control of individual residential resources, converting them into a 1.8-MW virtual power plant with an aggregated energy output of 4 MWh.
In another trial project in Kentucky, the Glasgow Electric Plant Board, which buys its power from the Tennessee Valley Authority, has installed Sunverge Energy's smart storage devices in 169 homes.
"They'll draw from the grid during non-peak times to charge those batteries and dispatch power to homeowners from the batteries during the peak period, reducing customers' bills without affecting their comfort," Milani said. For the Glasgow Electric Plant Board, it means overall energy savings, reduced peak load, and a more reliable grid overall.
Green Mountain Power's Castonguay describes the benefits of such a model as "three pillars — cost, carbon and reliability." In 2015, GMP was the first utility in the U.S. to roll out its behind-the-meter virtual power plant using Tesla's Powerwall batteries. In December 2016, it announced an off-the-grid package that combined efficiency upgrades, solar, and batteries with home energy management. "When you bring energy generation close to where it's consumed, you're reducing line losses and the need for expensive distribution upgrades, and that reduces cost," Castonguay said. Customer-sited storage also means that GMP's customers can take full advantage of intermittent renewable generation and reduce their carbon footprint, while getting a backup in case of outages, he added.
The idea of an efficient, dynamic, intelligent electricity grid — à la smart grids circa 2009 — has been around for a while. But in the last five years, advances in the energy storage field (more on that later) and computer processing have been game changers. Stem Inc., an energy storage provider that is working on virtual power plants in Hawaii and California, installs power monitoring software along with storage at commercial and industrial customer locations, to reduce demand by 10 to 25 percent.
"The power monitor does the metering, communicates voltage and usage data every second to the cloud server, and uses real-time machine learning algorithms to forecast usage peaks and optimize the use of the batteries," said Matt Owens, director of business development at Stem. Computation capabilities have increased dramatically while the cost has come down, enabling intelligent control systems, he added.
And then there's all the data. Sunverge's energy management system, which forms the backbone of its virtual power plant pilots, "generates 800 data points every 15 seconds — rooftop PV data, battery and inverter health, information from generation and from energy storage systems," Milani said. Multiply that by the thousand systems Sunverge manages across 5 countries. That's a huge amount of data that is a valuable asset for utilities — "analytics that enable Sunverge to predict with confidence, say, how much solar power [it] can generate from a home in Sacramento when there's a peak period."
Much of virtual power plant growth in the U.S. is concentrated in a handful of states, and it's a nascent market when it comes to regulation or understanding. "For utilities trying to make their grids smarter today, don't just think smart meter,"urged GMP's Castonguay. "Think about how you can leverage software, new storage chemistries, and distributed resources, to make a truly customer-serving grid." Utilities with a higher percentage of renewables on their grid or those thinking of going in for upgrades to increase their capacity should especially look at virtual power plants. "Start by zeroing in on feeders where there's congestion, analyzing customers' energy profiles, and assessing system capabilities," he said.
Changing the Nature of Electricity With Storage
It used to be that electricity was instantaneous, and running an electric grid was harder than rocket science, simply because supply and demand, which vary throughout the day, had to be closely matched.
"Not anymore," said Castonguay from GMP, which installed 4 MW of utility-scale lithium-ion battery storage to help shave peak loads and saved customers as much as $200,000 in one hour. "Storage has become the most important aspect of the grid today," he said.
Earlier this year, investor-owned utility Southern California Edison, along with Tesla, brought online a 20-MW lithium-ion energy storage system to address potential energy shortages from the Aliso Canyon gas leak last year. The utility said it has nearly 400 MW of battery storage under contract, double the amount that was installed in the U.S. in 2015. Public power utilities and other investor-owned utilities are also helping California to become an energy storage deployment leader.
Also in early 2017, Los Angeles Department of Water and Power's general manager, David Wright, outlined steps that the department is taking to achieve its goal of reaching 178 MW of energy storage by 2021.
Glendale Water & Power is installing a new 2-MW battery energy storage system next to the public power utility's Grandview Substation. The Imperial Irrigation District brought a new battery energy storage system online in 2016.
Thanks to recent improvements in the economics and energy density of battery storage, as well as mandates from regulators and public utility commissioners, storage batteries are set for unprecedented growth over the next few years. Owens, at Stem Inc., likens the energy storage market right now to where the solar market was seven to 10 years ago. "Just as you've seen dramatic cost declines in the solar market over the last five to 10 years, the same thing has happened with lithium-ion batteries — a 70 percent reduction in the last 24 months," Owens said. "There's still a ways to go down the cost curve, another 50 percent or so, with the lithium-ion technology."
The adoption of energy storage is largely driven by the proliferation of renewables, as storage can solve the intermittency challenges associated with renewable energy and smoothen the load. Take Hawaiian Electric, for instance, which has encountered very rapid growth in solar PV and wind on its grid.
"Because solar is so intermittent, when clouds come over Hawaii for just 45 minutes, they see a big drop in the output of the system — that stresses their grid," said Owens. Stem's 1 MW of battery installations for Hawaiian Electric store low-cost energy when there's an oversupply of solar power in the grid and use it to minimize fluctuations, he added. Battery storage can also allow utilities to move away from expensive peaker plants. "It's flexible, it's fast responding, it can ramp up and ramp down very quickly," says Owens.
Parallel to the rise in utility-scale storage is the emergence of distributed storage, like Stem's system, that ties into virtual power plants and offers the same benefits as utility-scale, and more. Of the 13 value streams that battery storage can offer — such as demand charge reduction and backup power — four can be realized only with customer-sited, behind-the-meter energy storage, even if it's not always the least-cost option, according to a study by the Rocky Mountain Institute.
"It's an opportunity for utilities to engage with their customers and provide a value-added service," said Owens. Plus utilities can be more surgical and incremental about capacity utilization and locate storage to target certain distribution feeds or circuits. Greentech Media estimates that about half of all energy storage deployed in the market by 2020 will be customer-sited distributed storage.
Whether utility-scale or distributed, energy storage is set to be a key component in the energy transformation in the U.S. "All utilities can benefit from piloting energy storage, but public power utilities, because they're community-owned, should err on the side of distributed storage as it can provide more customer benefit," Owens said.
Electric Vehicles: Driving the Grid
The United States now has 400,000 electric vehicles on the road. And that number is set to increase. Electric vehicles are coming, whether utilities are involved or not, said Bill Bottiggi from Braintree Electric Light Department, which has recently rolled out a Braintree Drives Electric campaign.
"The concern is that every afternoon when you come home from work, the first thing you're going to do is plug in your electric vehicle. And that's right in our peak period of electric usage." The EV campaign is incentivizing Braintree's customers to program their cars to charge at night when the usage of electricity falls off dramatically, mitigating an increase in peak loads and keeping capacity costs low.
Experts agree that utilities need to come up with demand response programs for EV charging, to prevent the EV proliferation from destabilizing the grid. Green Mountain Power has installed grid-connected charging stations in customer homes, so that the energy management system can automatically modify charging times to coincide with low peak loads. Sunverge suggests a combination of storage and PV to flatten the peak and take the charging load off the grid, as EV penetration increases.
Many companies are working on a vision where EVs themselves could become distributed energy resources for the grid. Could cars really turn into supply batteries? Automakers are starting to embrace two-way charging, or vehicle-to-grid configurations, as changes in cell chemistry are reducing concerns over battery durability.
At the 2017 Consumer Electronics Show, Nissan hinted that it was planning to launch in the U.S. a new version of its all-electric Leaf that could be equipped to provide home and grid support. Since 2012, 4,000 households in Japan have been using the Nissan Leaf to power their homes during peak periods and serve as a backup power supply for blackouts and emergencies, while in Europe, hundreds of customers are trying vehicle-to-grid applications using Leafs.
Also at the show this year, Honda introduced NeuV, a concept car that comes with artificial intelligence, which not only charges the car when prices are low but also serves as a trader to sell electricity back to the grid during peak time.
Taking Flight With Drones
Unmanned aerial vehicles — popularly called drones — have been used commercially since the 1980s. But in the last year, thanks to regulatory changes and robust investment, they're starting to emerge as a viable technology with many gains for utilities.
Take grid maintenance — utilities have thousands of miles of transmission lines, sometimes going over agricultural farms or untracked mountains, requiring expensive flights or time-consuming expeditions for inspection. Or consider storm damage assessment. After a storm event, it can take utilities several days — extending outage times — for an initial damage assessment because of inclement weather or impassable roads.
"UAVs can be deployed a lot more rapidly," said Matt Dunlevy, CEO of SkySkopes, a drone operator that recently completed a nighttime drone test flight over staged storm damage for Xcel Energy. "They can access hard-to-reach locations, they can get up close to transmission lines, and because you're using something small and battery-powered, it's always a lot more cost-effective."
Solar panels, especially in commercial usage, can be installed and inspected in minutes with drones, rather than the days it currently takes. GMP already uses drones for real-time surveillance, especially to inspect turbines and its distributed grid.
"In the past, the only way we could inspect a turbine was to turn it off and hang someone off one of the blades," said GMP's Castonguay. Now the process is a lot more efficient. And safer. "The biggest upside is the safety of our people," said Castonguay. Drones can reduce the risk for inspectors and lineworkers who go up in bucket trucks to check power lines or climb transmission towers to inspect high-voltage electrical equipment.
Drones today pack some pretty sophisticated machinery. Sharper Shape, a leading drone manufacturer focusing on drone-based asset inspections, makes heavy-lift, long-endurance, multirotor reliable aircrafts that carry a sensor suite combining ultraviolet cameras, optical cameras, and thermal sensors, all transmitting real-time in-flight data. Sharper Shape's software then automatically analyzes this data to flag line issues or even vegetation encroachment.
Federal Aviation Administration regulations currently don't allow drone operators to fly their unmanned aircrafts "beyond the visual line of sight," or BVLOS, with some exceptions. "Once there are new laws that permit BVLOS operations, then utilities will see the full potential of drones to examine electrical transmission corridors and assess storm damage," said SkySkopes' Dunlevy. He estimates it will take a year or two.
In the meantime, drones continue to improve. "There are unmanned aircrafts currently in development that are able to draw from the potential energy of the transmission lines without making contact," said Dunlevy. "That would be a game changer — drones could potentially fly forever." Navigant Research estimates that global annual revenue from drone and robotics technologies for transmission and distribution will grow from $131.7 million in 2015 to $4.1 billion in 2024.
In the short term, though, drones can become the extension of a smart grid. "The smart grid can tell a utility that it's got a problem in an area, but the drone can help it quickly decipher why," said Dunlevy.