The Smart Grid

The Smart Grid: Enabling Energy Efficiency and

Demand Response

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The Smart Grid: Enabling Energy Efficiency and

Demand ResponseClark W. Gellings, P.E.

Library of Congress Cataloging-in-Publication Data

Gellings, Clark W. Thesmartgrid:enablingenergyefficiencyanddemandresponse/ClarkW.Gellings. p.cm. Includesbibliographicalreferencesandindex. ISBN-10:0-88173-623-6(alk.paper) ISBN-10:0-88173-624-4(electronic) ISBN-13:978-1-4398-1574-8(Taylor&Francisdistribution:alk.paper) 1.Electricpowerdistribution--Energyconservation.2.Electricpower--Conservation.3.Electricutilities--Energyconservation.I.Title.

TK3091.G448 2009 621.319--dc22

2009013089 The smart grid : enabling energy efficiency and demand response / Clark W. Gellings. ©2009byTheFairmontPress.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,electronicormechanical,includingphotocopy,recording,oranyinformationstorageandretrievalsystem,withoutpermissioninwritingfromthepublisher.

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Whileeveryeffortismadetoprovidedependableinformation,thepublisher,authors,andeditorscannotbeheldresponsibleforanyerrorsoromissions.

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Contents

1 WHAT IS THE SMART GRID? ............................................................ 1 What is a Smart Grid? .............................................................................. 1 TheSmartGridEnablestheElectriNetSM ............................................. 2 LocalEnergyNetworks ........................................................................... 4 ElectricTransportation ............................................................................. 5 Low-CarbonCentralGeneration ............................................................ 6 WhatShouldBetheAttributesoftheSmartGrid? ............................. 6 WhyDoWeNeedaSmartGrid? ........................................................... 7 Is the Smart Grid a “Green Grid”? ....................................................... 12 AlternativeViewsofaSmartGrid. ...................................................... 14 Capgemini’sVision(www.capgemini.com/energy) ................ 14 IBM’sVision(www.ibm.com/iibv) .............................................. 16 IntelliGridSM(www.epri-intelligrid.com) .................................... 17 TheModernGridStrategy(www.netw.doe.gov) ....................... 19 GridWise™(www.electricdistribution.ctc.com) ......................... 19 GeneralElectricVision(www.gepower.com) ............................. 19 DistributionVision2010(DV2010) ............................................... 21 UKSuperGenInitiative(www.supergen-networks.org.uk) ..... 21 HydroQuebecAutomationInitiative .......................................... 22 TheGalvinInitiative(www.galvinpower.org) ............................ 22 ElectricitedeFrance(EDF)Power-Strada ................................... 23 EuropeanUnionSmartGrid(www.smartgrids.eu) ................... 23

2 ELECTRIC ENERGY EFFICIENCY IN POWER PRODUCTION & DELIVERY ............................................ 27 Introduction ............................................................................................. 27 PowerPlantElectricityUse ................................................................... 28 Lighting .................................................................................................... 29 MaintenanceIssues ......................................................................... 31 SpaceConditioningandDomesticWaterHeating ............................ 32 BuildingInfiltration ........................................................................ 35 Motors ...................................................................................................... 37 EPRIDemonstrations ............................................................................. 40 EfficiencyinPowerDelivery ................................................................ 43 ConservationVoltageReduction .......................................................... 43

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DistributionTransformerEfficiency .................................................... 46

3 ELECTRIC END-USE ENERGY EFFICIENCY ................................ 53 DefiningElectricEnd-useEnergyEfficiency ...................................... 53 EnergyEfficiency .................................................................................... 53 IsEnergyEfficiencyCost-Effective? .................................................... 54 FinancialImpactsofEnergyEfficiency ............................................... 55 HowDesirableIsEnergyEfficiency?................................................... 55 ARenewedMandate .............................................................................. 56 DriversofEnergyEfficiency ................................................................. 58 RenewedInterest .................................................................................... 60 ReducingGreenhouseGasEmissions .......................................... 61 WhatCanBeAccomplished? ................................................................ 65 IEAEstimates .......................................................................................... 65 UnitedNationsFoundationEstimates ................................................ 67 EnergyEfficiencyPotentialintheU.S. ................................................ 71

4 USING A SMART GRID TO EVOLVE THE PERFECT POWER SYSTEM ...................................................... 77 TheGalvinVision—APerfectPowerSystem ..................................... 78 DefiningthePerfectElectricEnergyServiceSystem ................. 79 Design Criteria ................................................................................. 80 PathtothePerfectPowerSystem ................................................. 80 OverviewofthePerfectPowerSystemConfigurations ................... 81 Device–LevelPowerSystem ................................................................. 81 AdvantagesofthePerfectDevice-Level PowerSystemandRelevantNodesofInnovation ............. 82 BuildingIntegratedPowerSystems .................................................... 84 AdvantagesoftheBuildingIntegrated PowerSystem&RelevantNodesofInnovation ................. 84 DistributedPowerSystems ................................................................... 87 AdvantagesoftheDistributedPowerSystem& RelevantNodesofInnovation ............................................... 87 FullyIntegratedPowerSystem:TheSmartGrid ............................... 88 NodesofInnovation .............................................................................. 88

5 DC DISTRIBUTION & THE SMART GRID ................................... 93 ACvs.DCPower:AnHistoricalPerspective ..................................... 93 Transformerstransformthepowerdeliverysystem .................. 95

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CentralizationdictatesACinsteadofDC .................................... 96 BenefitsandDriversofDCPowerDeliverySystems ....................... 98 PoweringEquipmentandApplianceswithDC .............................. 101 EquipmentCompatibility ............................................................ 101 DataCentersandInformationTechnology(IT)Loads ................... 105 YourFutureNeighborhood ................................................................. 109 PotentialFutureWorkandResearch ................................................. 109

6 THE INTELLIGRIDSM ARCHITECTURE FOR THE SMART GRID ................................................................... 113 Introduction ........................................................................................... 113 LaunchingtheIntelliGridSM .............................................................. 114 The IntelliGridSMToday ...................................................................... 116 VisualizingthePowerSysteminRealTime .............................. 116 IncreasingSystemCapacity ......................................................... 116 RelievingBottlenecks .................................................................... 116 Enabling a Self-Healing Grid ....................................................... 117 Enabling(Enhanced)ConnectivitytoConsumers ................... 117 ASmartGridVisionBasedontheIntelliGridSMArchitecture ...... 118 BarrierstoAchievingThisVision....................................................... 119 CommunicationArchitecture: TheFoundationoftheIntelliGridSM ................................... 119 FastSimulationandModeling .................................................... 122 OpenCommunicationArchitectureforDistributed EnergyResourcesinAdvancedAutomation ..................... 124 EnablingTechnologies ......................................................................... 125 Automation:TheHeartoftheIntelliGridSM ............................. 126 DistributedEnergyResourcesandStorage Development&Integration. ........................................................ 126 PowerElectronics-BasedControllers ......................................... 127 PowerMarketTools ...................................................................... 127 TechnologyInnovationinElectricityUse .................................. 128 TheConsumerPortal .................................................................... 128

7 THE SMART GRID –ENABLING DEMAND RESPONSE— THE DYNAMIC ENERGY SYSTEMS CONCEPT ....................... 131 SmartEnergyEfficientEnd-UseDevices .......................................... 132 SmartDistributedEnergyResources ................................................. 132 AdvancedWhole-BuildingControlSystems ................................... 133

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IntegratedCommunicationsArchitecture ........................................ 133 EnergyManagementToday ................................................................ 134 Demand-side Management .......................................................... 138 DemandResponse ......................................................................... 141 RoleofTechnologyinDemandResponse ........................................ 142 CurrentLimitationsandScopefor DynamicEnergyManagement .................................................... 143 DistributedEnergyResources ............................................................ 144 HowisDynamicEnergyManagementDifferent?........................... 146 OverviewofaDynamicEnergyManagement SystemOperationFromanIntegratedPerspective ................. 148 KeyCharacteristicsofSmartEnergy-Efficient End-useDevicesandDistributedEnergyResources (TogetherReferredtoas“SmartDevices”)......................... 150 KeyCharacteristicsofAdvanced Whole-buildingControlSystems ................................................ 151 KeyFeaturesofaDynamicEnergyManagementSystem.............. 151

8 THE ENERGYPORTSM AS PART OF THE SMART GRID ........ 155 WhatistheEnergyPortSM? ................................................................. 162 WhatAretheGenericFeaturesoftheEnergyPortSM? ................... 162 SimplifyBuildingSystems ........................................................... 163 Safety ............................................................................................... 163 Reliability ........................................................................................ 164 DecentralizedOperation .............................................................. 164 ConsumerInterface ....................................................................... 165 AppliancesThatTalktoEachOther ........................................... 166 Safety ............................................................................................... 166 Communication ............................................................................. 167 Entertainment ................................................................................ 169 NetworkCommunicationsManagement .................................. 169 RemoteConsumer-SiteVicinityMonitoring ............................. 169 Markets ........................................................................................... 169

9 POLICIES & PROGRAMS TO ENCOURAGE END-USE ENERGY EFFICIENCY ................................................... 171 PoliciesandProgramsinAction ........................................................ 174 Multi-NationalLevel .................................................................... 174 NationalLevel ................................................................................ 175

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StateLevel ...................................................................................... 182 CityLevel........................................................................................ 183 CorporateLevel ............................................................................. 184 EnergyEfficiencyChallengesintheMiddleEastand NorthAfrica ................................................................................... 185

10 MARKET IMPLEMENTATION ....................................................... 189 TheMarketPlanningFramework ...................................................... 194 FactorsInfluencingCustomerAcceptanceandResponse .............. 195 CustomerSatisfaction ................................................................... 198 DirectCustomerContact .............................................................. 199 TradeAllyCooperation ................................................................ 201 AdvertisingandPromotion ......................................................... 202 AlternativePricing ........................................................................ 205 DirectIncentives ............................................................................ 206 ProgramPlanning ................................................................................. 210 ProgramManagement .................................................................. 210 ProgramLogistics .......................................................................... 211 TheImplementationProcess ....................................................... 212 MonitoringandEvaluation ................................................................. 213 MonitoringProgramValidity ...................................................... 215 DataandInformationRequirements .......................................... 216 ManagementConcerns ................................................................. 217

11 EFFICIENT ELECTRIC END-USE TECHNOLOGY ALTERNATIVES ................................................... 221 ExistingTechnologies ........................................................................... 221 Lighting ........................................................................................... 222 SpaceConditioning ....................................................................... 224 IndoorAirQuality ......................................................................... 224 DomesticWaterHeating .............................................................. 226 Hyper-efficientAppliances .......................................................... 226 DuctlessResidentialHeatPumpsandAirConditioners ........ 227 VariableRefrigerantFlowAirConditionings ........................... 227 HeatPumpWaterHeating ........................................................... 228 Hyper-EfficientResidentialAppliances ..................................... 229 DataCenterEnergyEfficiency .................................................... 229 Light-EmittingDiode(LED)StreetandAreaLighting ............ 230 Industrial................................................................................................ 230

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MotorsandDrives......................................................................... 230 Motors ...................................................................................... 231 DriveTrain .............................................................................. 231 ElectricalSupply ..................................................................... 233 EquipmentRetrofitandReplacement ........................................ 233 ProcessHeating ............................................................................. 234 Cogeneration .................................................................................. 235 ThermalEnergyStorage ............................................................... 236 IndustrialEnergyManagementPrograms ................................ 237 ManufacturingProcesses ............................................................. 237 Electrotechnologies .............................................................................. 238 ResidentialSector .......................................................................... 238 CommercialSector ........................................................................ 239 IndustrialSector ............................................................................ 239 InductionProcessHeating .................................................... 240 DielectricProcessHeat .......................................................... 240 InfraredProcessHeat ............................................................ 240 ElectricArcFurnaces ............................................................. 240 EfficiencyAdvantagesofElectricProcessHeatSystems ... 241 MeritsofElectrotechnologiesBeyondEnergyEfficiency ............... 242

12 DEMAND-SIDE PLANNING .......................................................... 245 Introduction ........................................................................................... 245 WhatisDemand-sidePlanning? ................................................. 247 WhyConsidertheDemandSide? ............................................... 248 SelectingAlternatives ................................................................... 249 IssuesCriticaltotheDemand-side .................................................... 250 HowCanDemand-sideActivitiesHelpAchieve ItsObjective? ........................................................................... 250 TheUtilityPlanningProcess ................................................ 250 DemandResponse&EnergyEfficiency ............................. 254 WhatTypeofDemand-sideActivities ShouldProvidersPursue?..................................................... 254 HowDoISelectThoseAlternativesThatAreMostBeneficial? .... 258

13 DEMAND-SIDE EVALUATION ...................................................... 259 LevelsofAnalysis ................................................................................. 259 GeneralInformationRequirements ................................................... 261 SystemContext ..................................................................................... 262

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Transferability ....................................................................................... 262 DataRequirements ............................................................................... 263 Cost/BenefitAnalysis .......................................................................... 263 Non-monetaryBenefits&Costs ......................................................... 264 WhatChangesintheLoadShapeCanBeExpected ByImplementingDemand-sideAlternatives? .................. 265 ProgramInteraction ............................................................................. 267 DynamicSystems ................................................................................. 267 HowCanAdoptionofDemand-side AlternativesBeForecastedandPromoted? ....................... 268 EstimatingFutureMarketDemand&Customer ParticipationRates ........................................................................ 270 Consumer&MarketResearch ............................................................ 272 CustomerAdoptionTechniques ......................................................... 273 WhatistheBestWaytoImplement SelectedDemand-sidePrograms? ....................................... 275 ProgramImplementationIssues ........................................................ 275 ProgramPlanning ......................................................................... 275 ProgramManagement .................................................................. 276 ProgramLogistics .......................................................................... 276 TheImplementationProcess ............................................................... 279 HowShouldMonitoringandEvaluationofthe PerformanceofDemand-sideProgramsand ActivitiesBeBestAchieved? ................................................ 280 MonitoringandEvaluationApproaches .......................................... 281 IssuesinProgramMonitoringandEvaluation ................................ 282 MonitoringProgramValidity ...................................................... 282 DataandInformationRequirements .......................................... 283 ManagementConcerns ................................................................. 284 MonitoringandEvaluationPrograms............................................... 284 HowDoIGetStartedinAddressingDemand-side PlanningIssuesasTheyRelatetoMyUtility? .......................... 286

Appendix—ADDITIONAL RESOURCES ............................................... 289

Index ................................................................................................................ 297

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Definitions

ADA AdvancedDistributionAutomation ANSI AmericanNationalStandardsInstitute ASDs AdjustableSpeedDrives CCS CarbonCaptureandStorage CEIDS TheConsortiumforElectricInfrastructuretoSupporta

DigitalSociety CFL CompactFluorescentLamps CH4 Methane CHP CombinedHeatandPower CO2 CarbonDioxide CPP CriticalPeakPeriod CVR ConservationVoltageReduction DA DistributionAutomation DC DirectCurrent DER DistributedEnergyResources DG DistributedGeneration DOE U.S.DepartmentofEnergy DR DemandResponse DSE DistributionSystemEfficiency DSM Demand-side Management E2I ElectricityInnovationInstitute EDF ElectricitedeFrance EMCS EnergyManagementControlSystem EMS Energy Management System EPRI ElectricPowerResearchInstitute FAC TACTransmissionSystems FD ForcedDraft FERC FederalEnergyRegulatoryCommission FSM FastSimulationandModeling GE GeneralElectric GT GasTurbine GTO-PWM GateTurn-OffThyristerPulse-widthModulated HLA High-LevelArchitecture HP Horsepower HPS High-PressureSodium

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HPWHs HeatPumpWaterHeaters HRSG HeatRecoverySteamGenerator HVAC Heating,VentilationandAirConditioning ID InducedDraft IEA InternationalEnergyAgency IECSA IntegratedEnergyandCommunicationsArchitecture IEEE InstituteofElectricalandElectronicsEngineers INAs IntelligentNetworkAgents IP InternetProtocol ISOs IndependentSystemOperators IT InformationTechnology IUT IntelligentUniversalTransformer KHz Kilohertz kWh Kilowatthour LCI LoadCommutatedInverter LED Light-EmittingDiode LEDSAL Light-EmittingDiodeStreetandAreaLighting MGS ModernGridStrategy MH Metal Halide MHz Megahertz MW Megawatt MWh MegawattHour NAAQS NationalAmbientAirQualityStandards NEMA NationalElectricalManufacturersAssociation NERC NorthAmericanElectricReliabilityCouncil NETL NationalEnergyTechnologyLaboratory NSR NewSourceReview PDAs PersonalDigitalAssistants PHEVs Plug-InHybridElectricVehicles PMUs PhaserMeasurementUnits PV Photovoltaics RF RadioFrequency ROI ReturnonInvestment RTOs RegionalTransmissionOrganizations SHG Self-Healing Grid SMPS SwitchedModePowerSupply SQRA SecurityQualityReliabilityandAvailability TES ThermalEnergyStorage TCP/IP TransmissionControlProtocol/InternetProtocol

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TOU TimeofUse TWh TerawattHour UML UnifiedModelingLanguage UPS UninterruptiblePowerSupply V Voltage VFD VariableFrequencyDrive BRF VariableRefrigerantFlow WAMs WideAreaMonitoringSystem WEO WorldEnergyOutlook

1

Chapter 1

What is the Smart Grid?

WHAT ISASMARTGRID?

The electric power system delivery has often been cited as thegreatest and most complex machine ever built. It consists of wires,cables, towers, transformersandcircuitbreakers—allboltedtogether insome fashion. Sometime in the 1960s, the industry initiated the use ofcomputerstomonitorandoffersomecontrolofthepowersystem.This,coupledwith amodest use of sensors, has increased over time. It stillremains less than ideal—for example, power system area operators can,at best, see the condition of the power systemwith a 20-seconddelay.Industry suppliers refer to this as “real time.”However, 20 seconds isstill not real time when one considers that the electromagnetic pulsemovesatnearly the speedof light. Actually, the electric power delivery system is almost entirely amechanicalsystem,withonlymodestuseofsensors,minimalelectroniccommunication and almost no electronic control. In the last 25 years,almost all other industries in the western world have modernizedthemselveswiththeuseofsensors,communicationsandcomputationalability. For these other industries, there has been enormous improve-ments in productivity, efficiency, quality of products and services, andenvironmentalperformance. In brief, a smart grid is the use of sensors, communications,computational ability and control in some form to enhance the overallfunctionality of the electric power delivery system.A dumb systembecomes smart by sensing, communicating, applying intelligence, exer-cisingcontrolandthroughfeedback,continuallyadjusting.Forapowersystem, this permits several functions which allow optimization—incombination—of the use of bulk generation and storage, transmission,distribution,distributedresourcesandconsumerendusestowardgoalswhich ensure reliability and optimize or minimize the use of energy,mitigate environmental impact,manageassets, andcontain cost.

2 The Smart Grid: Enabling Energy Efficiency and Demand Response

THESMARTGRIDENABLESTHEELECTRINETSM

TheElectriNetSMistheguidingconceptformarryingthesmartgridwith low-carbon central generation, local energy networks and electrictransportation(seeFigure1).TheElectriNetSM recognizes theevolutionofthepowersystemintoahighlyinterconnected,complex,andinterac-tive network of power systems, telecommunications, the Internet, andelectronic commerce applications.At the same time, themove towardsmorecompetitiveelectricitymarketsrequiresamuchmoresophisticatedinfrastructureforsupportingmyriadinformational,financial,andphysi-cal transactions between the several members of the electricity valuechain that supplement or replaces the vertically integrated utility. Thisnext-generation electrical infrastructure, the ElectriNetSM, will provideforseamless integration/interoperabilityof themanydisparatesystemsand components, as well as enable the ability to manage competitivetransactionsresulting fromcompetitiveserviceofferings thatemerge inthe restructured utility environment. Examples of competitive transac-tionsincludesettlementsfordemandresponseparticipation,informationreporting and notification, energy trading, and bidding capacity intoancillary servicemarkets. Realizing the ElectriNetSM depends on developing the Intel-liGridSM (see Chapter 6) communications architecture to enable con-nectivity between each element of the ElectriNetSM with requirementsfor developing agent-based software systems, which can facilitate theinformational, financial, and physical transactions necessary to assure

Figure 1-1. Action Framework—Four Evolving Infrastructures

What is the Smart Grid? 3

adequate reliability, efficiency, security, and stability of power systemsoperatingincompetitiveelectricitymarkets.Inaddition,thearchitecturalrequirementswill be designed to supportmultiple operational criteria,including analysis and response to electrical grid contingencies, pric-ing, andothermarket/system conditions.Thegoals of the architectureare to allow for interoperability and flexibility to facilitate and enablecompetitivetransactionstooccur.Interoperabilitycanbeenabledbytheuseofopencommunicationprotocols.Flexibilitycanbeprovidedbythespecification of user-defined business rules which capture the uniqueneedsofvarious serviceofferings. The ElectriNetSM provides a new perspective on how tomanagetransactions given the nature of the existing and emergingdistributed,heterogeneous communications and control network. This perspec-tive is based on combining distributed computing technologies suchas web services, the semantic web, and intelligent agents. Developingan architecture allows future developers to access this framework as aresourceordesignpattern fordevelopingdistributed softwareapplica-tions, takingintoaccountthecoreconceptsof interoperabilityandsup-port for multiple operational criteria (business rules). The purpose ofthis architecture is to provide a resource that can serve as a roadmapto understanding, applying and building next-generation agent-basedsoftwaresystemsappliedtoelectricityvaluechaintransactionalsystems. A new energy value chain is emerging as a result of new tech-nologies,newplayers,andnewregulatoryenvironmentsthatencouragecompetitivemarkets. In thecaseofelectricity, thevaluechainproceedsas follows: It starts at the fuel/energy source; proceeds to the powergenerator; continues when the energy is delivered through the high-voltagetransmissionnetworks;continueswhentheelectricityissteppeddown to a lower voltage onto medium-voltage distribution networks;and finally is delivered to end-use customers for consumption. Thereare a large number of operational services along this value chain fordeliveringelectricity tocustomers.Muchof theexisting focushasbeenon the supply side to enable competitivewholesale transactions result-ingintradingfloorsforenergyandcapacitysales,aswellaspromotingopen and non-discriminatory access to the transmission grid. In thisnewenergyvaluechain, theconsumptionordemandsideofelectricitydeserves special attention. Changes in technology and the resulting economics have nowdisrupted that traditional value chain and stimulated the adoption of


distributedenergyresources(DER).Thesedistributionresourcescantakemanyforms,butsomekeyexamplesaredistributedgenerationandstor-age and plug-inhybridelectricvehicles(PHEVs).Inaddition,becauseofcompetition andderegulation, awhole new area of energy services andtransactions has sprungup around thedemand side of the value chain.Oneofthesenewenergyservicesisdemandresponse(DR)whichenablesload and other DER resources to provide capacity into the bulk powersystem inresponse togridcontingenciesandmarketpricingsignals.DRisanexampleofanenergyservicewhichrequirestheinteractionandin-tegrationofmultiple-partybusinesssystemsandphysicalassetsresultinginbothphysicalandfinancialtransactions.Awholeclassofserviceoffer-ingswhich have similar requirements include those related to customerbilling,management of customer equipment, energy information, and arange of value-added services are emerging (e.g., on-linemeter reading,bill management, energy audits, energy information, real-time pricing,procurement, etc).Many of these service offerings share similar require-ments for integrating disparate systems, automating business processes,andenablingphysicalandfinancialtransactions.Deliveringtheseserviceswill require a communications architecture that is open, highly scalable,and sufficiently flexible and adaptable to meet the changing businessneedsof suppliersandcustomers. The proposed architecture is designed to enable communicationanddecisionmakingbetweendistributedsystemnodesandparties.Thearchitectureisintendedtobeusedtodevelopsoftwarethatcansupple-ment the existing power distribution/market network communicationinfrastructure.Itcouldconsistofacollectionofreusablesoftwareagentsandassociatedhardwarespecifications thatwill interoperatewithin themanyinterfacesanddevicesonthepowersystem/marketinfrastructure.The use of software agents allows the ability for communication andcooperationamongsystemnodes,whiletakingintoaccountthespecificbusiness and technical requirements ofmany industry players such asenergy users, distribution companies, transmission companies, energyservice companies, andenergymarketoperators.

LOCALENERGYNETWORKS

The local energy network facilitates the functionality of the Elec-triNetSM.Overall, the combinationallows for theoperationof apower


system that is self-sensing, secure, self-correcting and self-healing andisabletosustainfailureof individualcomponentswithout interruptingservice.Assuch, it isable tomeetconsumerneedsata reasonablecostwith minimal resource utilization andminimal environmental impactand, therefore, enhance the quality of life and improve economic pro-ductivity Local energy networks increase the independence, flexibility andintelligence for optimization of energy use and energymanagement atthe local level; and then integrate local energy networks to the smartgrid. Local energy networks, energy sources and a power distributioninfrastructureareintegratedatthelocallevel.Thiscouldbeanindustrialfacility, a commercial building, a campus of buildings, or a residentialneighborhood. Local area networks are interconnected with differentlocalized systems to take advantage of power generation and storagethrough the smart grid enabling complete integration of the powersystemacrosswideareas.Localizedenergynetworkscanaccommodateincreasing consumer demands for independence, convenience, appear-ance, environmentally friendly serviceandcost control.

ELECTRICTRANSPORTATION

Thenext building block of theElectriNetSM is electric transporta-tion—particularlyelectricvehiclesand,inthenear-term,plug-inhybridelectricvehicles(PHEVs).AsPHEVsbegintoproliferate,theavailabilityofbothacontrollableloadandcontrollableon-siteelectricalstoragecanhaveaprofound impacton theelectrical systems. Plug-in hybrid electric vehicles represent themost promising ap-proach to introducing the significantuseofelectricityas transportationfuel. PHEVdevelopmentcanbuildonmorethanadecadeofexperiencewith conventional hybrids such as the Toyota Prius and Ford Escape,whichuseabatteryandelectricmotor toaugment thepowerofan in-ternalcombustionengine.Tothisblendoftechnologies,PHEVsaddtheabilitytochargethebatteryusinglow-cost,off-peakelectricityfromthegrid—allowing a vehicle to run on the equivalent of 75¢ per gallon orbetterattoday’selectricityprice.AndPHEVsdrawonlyabout1.4-2kWofpowerwhile charging—aboutwhatadishwasherdraws. The primary challenges to widespread use of PHEVs, challenges


thatwillrequiredirectutilityinvolvementtoovercome,includespecifi-cation of the local energy network anddevelopment of amassmarketto lowerbattery costs.

LOW-CARBONCENTRALGENERATION

AnessentialelementoftheElectriNetSM is low-carboncentralgen-eration.Thecompleteintegrationofthepowersystemacrosswideareasmustincludetheavailabilityofcentralgenerationandlarge-scalecentralstorage.TheElectriNetSMfacilitatestheinclusionofmultiplecentralizedgeneration sources linked through high-voltage networks. The designimpliesfullflexibilitytotransportpoweroverlongdistancestooptimizegenerationresourcesandtheabilitytodeliverthepowertoloadcentersinthemostefficientmannerpossiblecoupledwiththestrongbackbone. Successful implementationof theElectriNetSM assumes successfulachievement of performance and deployment targets associated withseveral advanced technologies as a basis for estimatingCO2 emissionsreduction potential. Those related to central generation must includeanexpandeduseof renewableenergy,particularlywind,solar-thermal,solar-photovoltaics (PV) and biomass, continued use of the existingnuclearfleet throughlifeextension,aswellasdeploymentofadvancedlight water nuclear reactors, advanced coal power plants operating atsubstantiallyhigher temperatures andpressures, andwide-scaleuseofCO2 captureand storageafter 2020.

WHATSHOULDBETHEATTRIBUTESOFTHESMARTGRID?

InorderforthesmartgridtoenabletheElectriNetSM,thefollowingattributeswouldneed tobeaddressed:

• Absolute reliabilityof supply.

• Optimaluseofbulkpowergenerationandstorageincombinationwithdistributedresourcesandcontrollable/dispatchableconsumerloads toassure lowest cost.

• Minimalenvironmentalimpactofelectricityproductionanddeliv-ery.


• Reductioninelectricityusedinthegenerationofelectricityandanincrease in theefficiencyof thepowerdelivery systemand in theefficiencyandeffectivenessof enduses.

• Resiliencyofsupplyanddeliveryfromphysicalandcyberattacksandmajor natural phenomena (e.g., hurricanes, earthquakes, tsu-namis, etc.).

• Assuringoptimalpowerquality forall consumerswho require it.

• Monitoringofallcriticalcomponentsofthepowersystemtoenableautomatedmaintenanceandoutageprevention.

WHYDOWENEEDASMARTGRID?

Thenation’spowerdeliverysystemisbeingstressedinnewwaysforwhichitwasnotdesigned.Forexample,whiletheremayhavebeenspecific operational, maintenance and performance issues that contrib-uted to theAugust 14, 2003 outage, a number of improvements to thesystem couldminimize the potential threat and severity of any futureoutages. Theoriginaldesignofthepowerdeliverysystemrenderssomear-easoftheUnitedStatesparticularlyvulnerable.Forexample,theNorthAmericanpowerdelivery systemwas laidout in cohesive local electri-cal zones. Power plants were located so as to serve the utility’s localresidential, commercial, and industrial consumers. Under deregulationofwholesalepower transactions, electricity generators, both traditionalutilities and independent power producers, were encouraged to trans-ferelectricityoutsideof theoriginal serviceareas to respond tomarketneeds and opportunities. This can stress the transmission system farbeyondthelimitsforwhichitwasdesignedandbuilt.Theseconstraintscanbe resolvedbut they require investment and innovation in theuseofpowerdelivery technologies. TheU.S.deliverysystem(transmissionanddistribution)is largelybasedupon technologydeveloped in the1940sand1950sand installedoverthenext30to50years. Intheperiodfrom1988to1998,electricitydemand in the U.S. grew by 30%, yet only 15% of new transmissioncapacitywasadded.AccordingtoaNorthAmericanElectricReliabilityCouncil (NERC) reliability assessment, demand is expected to grow


20%during the 10 years from 2002 to 2011while less than 5% in newtransmission capacity isplanned.Meanwhile, thenumberofwholesaletransactions eachdayhasgrownby roughly400%since1998.Thishasresulted in significantly increased transmission congestion—effectively,bottlenecks in the flow ofwholesale power—which increases the levelof stresson the system. A lot has been done tomitigate the potential for blackouts—par-ticularly in the effort to provide new technologies that can helpmakeelectricity more reliable, in order to sustain an increasingly high-techeconomywhich is based, in part, on the use of power-sensitive equip-ment.Manyof these technologiesare ready forwidedeploymentnow,whileothersareonlynowenteringdemonstrations. Inaddition,thenationisincreasinglyembracingtheuseofrenew-able power generation. However, large wind and solar resources arelocatedfar frompopulationcenters.Substantialnewtransmissionmustbebuilt toadd these resources to thenation’sgenerationportfolio. Expanding transmission and applying new technologies will re-quire a great deal of cooperation between government and industry.Specifically, six steps should be taken to accelerate the formation of asmartgridandtoenable theexpansionofrenewablegenerationandtoreducetheriskofhavingregionalblackouts—whichwillsurelycomeifthese stepsaren’t taken.

1. Build new generation and transmission facilities in coordinationwith each other, on a regional basis.Without such coordination,generatorswillbe temptedtobuildnewplantswhere localpricesare high—and then oppose construction of new power lines thatcouldbringincheaperpower.Regionaltransmissionorganizations(RTOs)and independent systemoperators (ISOs) shouldbegiventhe responsibility andnecessary authority to carry out aprogramof coordinatedexpansionplanning.

2. Implement technologies necessary for wide-area grid operations.ForanRTOor ISO tooperatea large regionalpower system,keyelement of the grid must be “observable”—either through directmonitoring or computerized estimation. Wide-area monitoringsystems (WAMS) employing phaser measurement units (PMUs)are now being applied to provide direct measurements. In addi-tion, the use of advanced software for state estimation (modeling


theprobablestatusofgridelementsthataren’tmonitoreddirectly)shouldbecomemandatory.Soshouldtheexpandeduseofsecurityassessment software,which canhelp operatorsmitigate problemswhen theyarise.

3. Thecommonpracticeofoperatingpowersystemsunderconditions(so-called “N-l contingencies”) that security assessment softwareindicatesmightleadtoblackoutsshouldbereconsidered,asshouldthetypeofoperationsplanningthatsetsupsuchconditions.Someareashavealreadyemployedmoreconstrainedoperation,suchasNewYorkState.

4. Grid operations must be coordinated more closely with powermarketoperations, inordernotonly tominimize theriskofmoreblackouts but also prevent the type of price spikes experiencedalready in areas likeCalifornia. Specifically, pricesmust bedeter-minedaccording tomarket rulesestablished toensure thatpowerflows are handledmore cost-efficiently and transmission conges-tionisavoided.Consumersalsoneedtobeprovidedwithwaystocurbdemandautomatically, asneeded, in return forpricebreaks.

5. Improveemergencyoperations.Clearlinesofauthorityareneededto handle emergencies effectively. System operators also need tobe trainedmore thoroughly in grid restoration and “black starts”(bootstrapping recovery after a blackout). The whole question ofhow to set protective relays in order to prevent the “cascade” ofanoutageacrossawhole regionalsoneeds tobe reexamined.

6. Informationsystemsandproceduresneedtobeupdated.Complexdata communications underlies power system operations, espe-ciallyduring an emergency.Manyof these systemsneedupgrad-ing,usingadvancedtechnologies,andtheproceduresfortheiruseshouldalsobe fundamentally revised.

Theelectricpowerindustryhaslongpresentedtotheworldagoldstandardof reliability inpower systemoperations.Problemsover timeprovideawarning that this standardwillbe tarnishedunless stepsaretakentoensureevenhigherlevelsofreliabilityforthefuture.Otherwise,thecostsassociatedwithpoorsystemreliabilitycouldsignificantlydam-


age theworldeconomyasawhole. In a digital age when consumers demand higher quality, morereliable power and long-distance power trades place unprecedenteddemands on the system, adequate investment in the nation’s electricinfrastructure is critical. The development and deployment of a morerobust, functional and resilient power delivery system is needed. Theoverall system is being called a smart grid. Under this definition, thesmart grid is an advanced system that will increase the productivityresulting from the use of electricity, and at the same time, create thebackboneapplicationofnew technologies far into the future. This conceptual design of the smart grid addresses five function-alities which should be part of the power system of tomorrow. Thesefunctionalities areas follows:

Visualizing the Power System in Real Time This attribute would deploy advanced sensors more broadlythroughout thesystemonall critical components.Thesesensorswouldbe integrated with a real-time communications system through anintegrated electric and communications system architecture. The datawould need to be managed through a fast simulation and modelingcomputationalabilityandpresentedinavisualforminorderforsystemoperators to respondandadminister.

Increasing System Capacity This functionality embodies a generally straight-forward effort tobuildorreinforcecapacityparticularly in thehigh-voltagesystem.Thiswouldincludebuildingmoretransmissioncircuits,bringingsubstationsandlinesuptoNERCN-l(orhigher)criteria,makingimprovementsondata infrastructure,upgrading control centers, andupdatingprotectionschemesand relays.

Relieving Bottlenecks This functionality allows theU.S. to eliminatemany/most of thebottlenecksthatcurrentlylimitatrulyfunctionalwholesalemarketandtoassuresystemstability.Inadditiontoincreasingcapacityasdescribedabove, this functionality includes increasing power flow, enhancedvoltage support, providing and allowing the operation of the electricalsystemonadynamicbasis.This functionalitywouldalso require tech-nologydeployment tomanage fault currents.


Enabling a Self-healing System Once the functionalities discussed above are in place, then it ispossible to consider controlling the system in real time. To enable thisfunctionality will require wide-scale deployment of power electronicdevicessuchaspowerelectroniccircuitbreakersandflexibleACtrans-missiontechnologies (FACTS).These technologieswill thenprovide forintegrationwithanadvancedcontrolarchitecturetoenableaself-healingsystem.

Enabling (Enhanced) Connectivity to Consumers The functionalities described above assume the integration of acommunicationssystemthroughoutmuchofthepowersystemenhanc-ing connectivity to the ultimate consumers. This enhancement createsthreenewareasoffunctionality:onewhichrelatesdirectlytoelectricityservices(e.g.,addedbillinginformationorreal-timepricing);onewhichinvolves services related to electricity (e.g., home security or appliancemonitoring);andthethirdinvolveswhataremoregenerallythoughtofas communications services (e.g.,data services).

These functionalities will facilitate achievement of the followinggoals:

• Physicalandinformationassetsthatareprotectedfromman-madeand natural threats, and a power delivery infrastructure that canbequickly restored in the event of attackor adisruption: a “self-healing grid.”

• Extremely reliable delivery of the high-quality, “digital-grade”powerneededbyagrowingnumberofcriticalelectricityend-uses.

• Availability of a wide range of “always-on, price-smart” electric-ity-related consumer and business services, including low-cost,high-value energy services, that stimulate the economy and offerconsumersgreater controlover energyusageandexpenses.

• Minimized environmental and societal impact by improving useof the existing infrastructure; promotingdevelopment, implemen-tation, and use of energy efficient equipment and systems; andstimulatingthedevelopment,implementation,anduseofcleandis-tributed energy resources and efficient combinedheat andpowertechnologies.


• Improved productivity growth rates, increased economic growthrates, anddecreasedelectricity intensity (ratioof electricityuse togrossdomesticproduct,GDP).

Asmartgridhasthepotentialtobenefittheenvironment,consum-ers, utilities and the nation as awhole in numerousways, as summa-rized in Figure 1-2. The benefits include themechanisms for enhancedreliability and power quality as well as energy savings and carbonemission reductionsdiscussed in thisbook,plusotherdividends.

ISTHESMARTGRIDA“GREENGRID?”

Today,utilities are struggling to address anew societal and exist-ing or possible future regulatory obligation—mitigating emissions ofgreenhousegases,principallycarbondioxide(CO2), inanefforttocurbglobal climate change and its potentially deleterious implications formankind. AspartofEPRI’sEnergyEfficiency Initiative,afirst-orderquan-tificationofenergysavingsandcarbon-dioxide(CO2)emissionsreduc-tion impactsof a smartgrid infrastructurewasdeveloped.First-orderestimatesofenergysavingsandCO2emissionreductionimpactswerequantified for five applications enabled by a smart grid: (1) continu-ous commissioning for commercial buildings; (2) distribution voltagecontrol; (3) enhanced demand response and load control; (4) directfeedbackonenergyusage;and(5)enhancedenergyefficiencyprogrammeasurement and verification capabilities. In addition, first-order es-timates ofCO2 emissions reductions impactswere quantified for twomechanisms not tied to energy savings: (1) facilitation of expandedintegration of intermittent renewable resources and (2) facilitation ofplug-in hybrid electric vehicle (PHEV)market penetration. The emis-sions reduction impact of a smart grid, based on these sevenmecha-nisms, is estimated as 60 to 211millionmetric tons of CO2 per yearin 2030. There are other smart grid improvements which were notpart of this analysis, such as a reduction in losses in electricity usedin electricitygenerationand reduced lossesby improvedareavoltagecontrol andotherT&D system improvements. Table 1-1 summarizes the energy savings potentials and corre-spondingvaluesofavoidedCO2emissionsforeachofthesevenselected


mechanisms in the target year of 2030. Low-end and high-end valuesare included to show the rangesof savings. Allofthemechanismscombinedhavethepotentialtoyieldenergysavingsof56-203 billion kWh andtoreduceannualcarbonemissionsby60-211 million metric tons (Tg) CO2.On this basis, the environmentalvalue of aU.S. smart grid is equivalent to converting14 to 50 million cars intozero-emissionvehicles eachyear.*

Figure 1-2. Summary of Potential Smart Grid Benefits (Source: EPRI Report 1016905, “The Green Grid,” June 2008).

*Basedonanaveragemid-sizesizedcardriven12,000milesperyear.Averageemissionsfrom Climate Change: Measuring the Carbon Intensity of Sales and Profits.” Figure 5:AverageCO2 Emissions Rates byVehicle Type, 2002). ~ 8,513 lbsCO2 per car, or ~ 4.25tonsCO2per car.


Figure 1-3 details the summary of energy-savings and carbon-re-ductionmechanismsenabledbya smartgrid.

ALTERNATIVEVIEWSOFASMARTGRID

It is no surprise that there is no one definition of the smart grid.Such a complex machine with so many technology options at handto improve its functionality is bound to facilitate a variety of broaddefinitions.Asaresult, thereareavarietyofarchitectures, technologiesand configurations already proposed or under formation forwhat canbe described as smart grids. More than 7,000 pilots of some kind areunderway todaywithnearly1,000of themover10yearsold.Unfortu-nately,manyofthesearenotverysmartandarelimitedinscope.Someexamplesof smartgridvisionsareas follows:

Capgemini’s Vision (www.capgemini.com/energy) Capgemini believes that in order to make meaningful progresstoward addressing the current grid challenges and delivering on thefuturegridcharacteristics,utilitiesshouldfocusonfourmainactivities:

Table 1-1. Smart Grid Energy Savings and Avoided CO2 Emissions Summary (2030) ((Source: EPRI Report 1016905, “The Green Grid,” June 2008).

What is the Sm

art Grid?

15

Figure 1-3. Summary of Energy-Savings and Carbon-Reduction Mechanisms En-abled by a Smart Grid (EPRI 1016905, 2008)


1. Gather data: Data should be collected frommany sources on thegrid.

2. Analysis/forecasting: The data that is gathered should be ana-lyzed—foroperational andbusinesspurposes.

3. Monitor/manage/act: In the operational world, data that comesfromthegridhardwarewill triggerapredefinedprocess thatwillinform, logor takeaction.

4. Rebuilding the grid to support bi-directional power flow andtransfer of power from substation to substation: This is to enablethe information that is collectedandanalyzed tobeactedon.

Capgeminibelievesthattheseactivitiesfallintobothreal-timeandnon-real-timecategoriesas follows:

“Real-timefunctions includeoperationalandmonitoringactivitieslikeloadbalancing,detectionofenergizeddownedlines,andhighimpedancefaultsandfaults inundergroundcables.Non-real-timefunctions include the integration of existing and new utility da-tabases so operational data can be fusedwith financial and otherdata tosupportassetutilizationmaximizationand lifecycleman-agement,strategicplanning,maximizationofcustomersatisfaction,and regulatory reporting.”

IBM’s Vision (www.ibm.com/iibv) IBM’svisionistakenfromtheconsumer’sperspectiveandisbasedona surveyof 1,900 energy consumers andnearly 100 industry execu-tives across the globe. IBM believes that it reveals major changes thatare underway including a more heterogeneous consumer base, evolv-ing industry models, and a stark departure from a decades-old valuechain. IBM believes that the smart grid will be manifested by a steadyprogression towarda“ParticipatoryNetwork,”a technologyecosystemcomprising a wide variety of intelligent network-connected devices,distributedgeneration, and consumer energymanagement tools. IBM’svisionbelieves this includes:

• Preparingforanenvironment inwhichcustomersaremoreactiveparticipants.


• Capitalizingonnewsourcesofreal-timecustomerandoperationalinformation, and decidingwhich role(s) to play in the industry’sevolvingvalue chain.

• Better understanding and serving an increasingly heterogeneouscustomerbase.

Tomake these improvements, IBM believes that utilities will de-ployadvancedenergytechnologiessuchassmartmetering,sensorsanddistributedgeneration.Theybelieve that these technologies respond tothe following interests:

• The combination of energy price increases and consumers’ in-creasedsenseofresponsibilityfortheimpactoftheirenergyusageon theenvironment.

• Thefrequencyandextentofblackoutsaredrivingconsumers,poli-ticiansandregulatorsaliketodemandassessmentandupgradeofthe industry’s agingnetwork infrastructure.

• Climate change concerns have invigorated research and capacityinvestments in small, cleangenerating technologies.

• Technology costs have generally decreased as lower-cost commu-nications,morecost-effectivecomputingandopenstandardshavebecomemoreprevalent.

IBM sees smart meters, network automation and analytics, anddistributedgenerationdriving themost industry changes, froma tech-nologicalperspective, in thenear term.

IntelliGridSM (www.epri-intelligrid.com) A consortium was created by EPRI to help the energy industrypavethewaytoIntelliGridSM—thearchitectureofthesmartgridofthefuture. (See Chapter 6 for a more complete description.) Partners areutilities, manufactures and representatives of the public sector. Theyfundandmanageresearchanddevelopment(R&D)dedicatedtoimple-menting the conceptsof the IntelliGridSM. The objective: The convergence of greater consumer choice andrapid advances in the communications, computing and electronicsindustries is influencing a similar change in the power industry. The

18 The Sm

art Grid: Enabling Energy Efficiency and D

emand Response

Figure 1-4. Smart Grid Concept, EPRI Illustration (Source: EPRI IntelliGridSM Program).


growing knowledge-based economy requires a digital power deliverysystem that links information technologywithenergydelivery.

The Modern Grid Strategy (www.netl.doe.gov) TheU.S.DepartmentofEnergy(DOE)NationalEnergyTechnologyLaboratory(NETL)isthemanageroftheModernGridStrategy(MGS).TheMGS is fostering the development of a common, national visionamonggridstakeholders.MGSisworkingonaframeworkthatenablesutilities,vendors,consumers,researchersandotherstakeholderstoformpartnershipsandovercomebarriers.MGSalsosupportsdemonstrationsof systems of key technologies that can serve as the foundation for anintegrated,modernpowergrid.

GridWise™ (www.electricdistribution.ctc.com) The Electric Distribution Program of DOE supports distributiongrid modernization, through development and use of advanced sen-sor, communication, control and information technologies to enableGridWiseTM operations of all distribution systems and components forinteroperabilityand seamless integration. The term GridWiseTM denotes the operating principle of a mod-ernizedelectricinfrastructureframeworkwhereopenbutsecuresystemarchitecture, communication techniques, and associated standards areused throughout the electric grid toprovidevalue and choices to elec-tricity consumers. DOE’s Electric Distribution Program addresses the critical tech-nology area—distributed sensors, intelligence, smart controls, and dis-tributed energy resources—identified in the National Electric DeliveryTechnologies Roadmap,which defines technology pathways to achiev-ing theGrid2030Vision. DOE’s Electric Distribution Program operates the Electric Distri-bution Transformation (EDT) Program and the GridWiseFM Initiative,bothwithintheU.S.DepartmentofEnergyOfficeofElectricityDelivery& Energy Reliability (OE), which is leading a national effort to helpmodernize and expandAmerica’s electric delivery system to ensureeconomicandnational security.

General Electric Vision (www.gepower.com) GeneralElectric (GE) sees the smart grid “as a family ofnetworkcontrol systems and asset-management tools, empowered by sensors,


communicationpathwaysandinformationtools.”Theyenvision“Agridthat’s smarter for all of us”which could experience improvements forutilities, regulators, andbusinesses.

• For utility executives—GE believes the potential for dramatic en-ergy productivity gains could improve service, control costs andstrengthen reliability.

• For operations managers—GE anticipates a reduction in the fre-quencyandimpactofoutageswithimprovedreal-timeknowledgeofgrid status.

• For chief information technologyofficers—GEsees the smartgridasbasedonopen-standardsoftwareandcommunicationprotocols,easing systems integrationand support.

• Formaintenanceandengineeringprofessionals-GEbelievesmorecanbedonewithless,andfocusesresourcesonimprovingservice,insteadofsimplymaintainingit.Accurate,real-timeandactionableknowledgeofgridstatusenablesashift fromtime-based toneed-basedmaintenance. It also allows for a more timely response tooutages, speedingpower restoration.

• Forcustomerservice(callcenter)functions—Callscanbeanticipat-edwhenanoutagehasoccurred,makingsystemsmoreresponsiveto customers.Armed with answers, calls can be resolved faster,allowingdeliveryof accurate informationanda reductionof call-backs,queue timesand staffing levels.

GEbelievesthatthesmartgriddoesn’tlookallthatdifferentfromtoday’sgrid—onthesurface.It’swhatthesmartgridenablesthatmakesthedifference. Somemajor elementsGEbelieveswillbe includedare:

• Distributedgenerationworking seamlesslywith current assets.

• Smarthomesthatmakesavingspracticalandeasefacetsofevery-day life.

• Demand response that really knows demand and optimizes re-sponse.


• Plug-invehicles thatgiveback to thegrid.• Upgradednetworkoperations• Enhancedpowerqualityand security• Efficiencygains, soyouneed lessand lose less.

Distribution Vision 2010 (DV2010) DV2010 focuses on distribution reliability improvement. It is acollaboration of six utilities started byWeEnergies to conduct researchanddevelopmenttoadvancetechnologyforthedistributionindustrytoachievemajor reliability improvements. TheDV2010projectsincludeadvancedfeederautomation,primarynetworkreconfiguration,acceleratedprotectionanddemonstrationofahigh-reliability network. Several new technologies are being deployedinDV2010 including theuse of smart devices to enable enhancedpro-tection, the use of a local automation controller, and a distribution au-tomation system controller incorporating dynamic voltage control, lossreductionandassetoptimization.

UK SuperGen Initiative (www.supergen-networks.org.uk) The consortium faces two broad challenges over two timescales.First, there are engineering problems created by embedding renewableenergysources intoadistributionnetwork,andsecond, there isaneedto develop amarket and regulatory environment that creates the rightcommercialdriverstoencouragesustainableenergygenerationanduse.Theseproblemsneedtobesolvedforthemedium-termUKgovernmenttargets for renewable energy and for the long-term trans-national aspi-rations for sustainable energy use and climate change. In this context,medium term is 2010 to2020and long term is circa2020 to2050.Sevenworkpackages(WP)havebeendesignedtotacklespecificissues.Each work package contains a mixture of engineering, economic andsocial acceptabilityaspects.

• WP1:System-WideReliabilityandSecurity• WP2:DecentralizedOperationandcontrol• WP3:Demand-sideParticipation• WP4:Micro-Grids• WP5:Foresight


• WP6:SystemEvolution• WP7:Outreach

Hydro Quebec Automation Initiative HydroQuebec’sAutomation Initiative is based onwhat they referto as “advanced distribution system designs ” and is intended to beimplementedinastructuredway(activities,functionalities,technologies)to reduce cost, increase reliability (SAIDI, SAIFI), and increase customersatisfaction.Itassumesthatsomeofthegainsoftheadvanceddistributionsystemdesignscanbemeasured.Integrationoftechnologiesandfunction-alitiesisthekeytosuccessbyreducingcosts.HydroQuebecbelievesthatutilitiesandcustomersmusthaveacommonvisionofadvanceddistribu-tionsystemdesigns throughstandards to reachcost reduction.

The Galvin Initiative (www.galvinpower.org) With the inspiration and sponsorship of Robert Galvin (formerCEOofMotorola)andhis family, this initiative,whichbegan inMarch2005, seeks to define and achieve the perfect power system. That is, aconsumer-focused electric energy system that never fails. The absolutequality of this systemmeans that itmeets, under all conditions, everyconsumer’sexpectationsforserviceconfidence,convenienceandchoicewill be met. Robert Galvin believes that this will indeed result in thelowest cost system. In the context of this Initiative, the electric energysystemincludesallelements in thechainof technologiesandprocessesforelectricityproduction,deliveryanduseacross thebroadestpossiblespectrumof industrial, commercial and residential applications. This initiative identified themost importantasset in resolving thegrowing electricity cost/quality dilemma and its negative reliability,productivityandvalueimplicationsastechnology-basedinnovationthatdisrupts the status-quo. These innovation opportunities beginwith theconsumer.Theyincludetheseamlessconvergenceofelectricityandtele-communications service; power electronics that fundamentally increasereliability, controllability and functionality; andhigh-powerqualitymi-crogrids that utilize distributed generation, combined heat and power(CHP)andrenewableenergyasessentialassets.Thissmartmoderniza-tionofelectricenergysupplyandservicewoulddirectlyempowercon-sumersand, insodoing,revitalize theelectricityenterprise for the21stcentury.Thisfocusontheconsumerinterfacealsoreflectstherelativelyintractablenatureofthehighlyregulatedbulkpowerinfrastructurethat


nowdominatesU.S. electric energy supplyand service. This initiativedefineda set of fourgeneric electric energy systemconfigurations that have the potential to achieve perfection, togetherwith the corresponding innovation opportunities that are essential totheir success. Each candidate configuration reflects a distinct level ofelectricenergysystemindependence/interconnectionfromtheconsum-er perspective. In so doing, these configurations address, in a phasedmanner, the fundamental limitations to quality perfection in today’scentralizedandhighly integratedU.S.electricpowersystem.Theyalsoprovide a variety of new avenues for engagement by entrepreneurialbusiness innovators. The four generic system configurations identified by this initiativeare(1)device-level(portable)systems,whichserveahighlymobiledigitalsociety;(2)buildingintegratedsystems,whichfocusonmodularfacilitiesserving individual consumer premises and end-use devices; (3) distrib-uted systems, which extend the focus to local independentmicrogrids,including interconnection with local power distribution systems; and(4) integrated centralized systems,which fully engage the nation’s bulkpower supply network. These configurations should be considered as acomplementaryseries rather thanascompetingsystems. Refer toChapter 4 for amore completedescription of theGalvinElectricity Initiative.

Electricite de France (EDF) Power-Strada EDFproposesto“inventthesmartgrid.”Itdefinesitasintegratingdistributed energy resourceswith dispersed intelligence and advancedautomation. To accomplish this objective, it has identified a series oftechnologychallenges intended to:• Build a vision for the long-term research program for the EDF

group.• Help the decision-making process in providing strategic high-

lights.• Offerabettervisibilityandunderstandingof their activities.• Maintain the right balance between short- and long-term activi-

ties.

European Union Smart Grid (www.smartgrids.eu) TheEuropeanUnionhas initiated a smart grid effort. Their vi-sion is:


• Toovercomethe limitson thedevelopmentofdistributedgenera-tionand storage.

• Toensure interoperabilityand securityof supply.• Toprovideaccessibility forall theusers toa liberalizedmarket.• To face the increasedcomplexityofpower systemoperation.• Toreduce the impactofenvironmentalconsequencesofelectricity

productionanddelivery.• Toenabledemand-sideparticipation.• Toengage consumers interest.

TheEuropeanUnionisundertakingvariousactivitiestoovercomebarriers to thedevelopmentofEuropeansmartgrids.Theybelievethataclearandstableregulatoryframeworkstimulatingthedevelopmentofsmart grids is needed. Thismust be coupledwith the development ofa commonmarketmodel and conditions to be applied to the electric-ity sector throughout the EU by national governments and regulators.Europeanstandardizationbodiesmustdefinecommontechnicalrequire-ments supporting smartgrids. The EU should provide directives, members states and nationalregulators need to define the right incentives scheme applied both tonetwork operators and consumers to promote the implementation ofsmartgridsutilizingavailable technologyand late-stageR&Dproductsandapplications. TheEuropeanUnionhasinitiatedaclusterofsevenresearchproj-ectscenteredprimarilyonenablingtheintegrationofdistributedgenera-tion(especiallyrenewables)intotheEuropeanpowersystem.Severalofthemaredescribed in the following sections.

Dispower Project (www.dispower.org) TheDispowerProject is an elaboration of strategies and conceptsforgridstabilityandsystemcontrolindistributedgeneration(DG)net-works.ItincludespreparationofsafetyandqualitystandardsinDGnet-worksandinvestigationsonqualityimprovementsandrequirementsbydecentralizedinvertersandgenerationsystems.Assessmentsofimpactstoconsumersbys,energytradingandloadmanagementareconductedincludingdevelopment of planning anddesign tools to ensure reliableand cost-effective integration of DG components in regional and localgrids and creation of Internet-based information systems for improvedcommunication, energy management and trading. Investigations on


contract and tariff issues regarding energy trading and wheeling, andancillary services are part of the analysis. Objectives include improve-ment and adaptation of test facilities and performance of experimentsforfurtherdevelopmentofDGcomponents,controlsystems,aswellasdesignandplanningtools,andsuccessfuldisseminationandimplemen-tation of concepts and components for an improved integration ofDGtechnologies indifferentEuropeanelectricalnetworkenvironments.

MicroGrids Project (www.microgrids.power.ece.ntua.gr) TheMicroGrids Project is a study of the design and operation ofmicrogridssothatincreasedpenetrationofrenewableenergiesandothermicro sources including fuel cells, micro-turbines and CHP emissionswill be achieved andCO2 emissions reduced. It includes developmentand demonstration of control strategies that will ensure the operationandmanagement of microgrids is able to meet the customer require-mentsandtechnicalconstraints(regardingvoltageandfrequency)andisdeliveringpower in themostefficient, reliableandeconomicway.Thisinvolves determination of the economic and environmental benefits ofthemicrogrid operation andproposal of systematicmethods and toolsto quantify these benefits and to propose appropriate regulatorymea-sures. The definition of appropriate protection and grounding policiesthat will assure safety of operation and capability of fault detection,isolation and islanded operation are part of the work scope, as wellas identification of the needs and development of telecommunicationinfrastructures and communication protocols required to operate suchsystems (this investigation will include consideration of the possibil-ity of exploiting the powerwires as physical links for communicationpurposes). The project managers intend to simulate and demonstratemicrogrid operation on laboratory models. Finally, they will deploymicrogrids on actualdistribution feeders operating inGreece, PortugalandFrancequantifyingviasimulationtheenvironmental,reliabilityandeconomicbenefits from theiroperation.

CONCLUSION

While no one definition of the smart grid prevails, it can beconcluded that the smart grid maymore appropriately be named the


“smartergrid.”Avarietyofapproachesarepresentedinthischapter—allofwhichhave a common themeof improving theoverall functionalityof the power delivery system. Some of these improvements advocateincremental change, some only focus on one element of automation.Butallcollectivelyenvisionasystemwhich improves theenvironment,enhances thevalueof electricity, and improves thequalityof life.

ReferencesThe Green Grid,EPRIReport 1016905, June2008.Plugging in the Consumer: Innovating Utility Business Models for the Future, Publication

G510-7872-00,© IBM 2007.

27

Chapter 2

Electric Energy Efficiency inPower Production & Delivery

INTRODUCTION

Asinterestinelectricenergyefficiencyincreases,practitionersandothersinterestedinenergyefficiencyarequestioningwhetherthescopeof end-use energy efficiency should be broadened to electric uses inpower delivery systems and in power plants. Interestingly, these twoaspects of efficiency are only briefly mentioned in any of the smartgrid initiatives currently in play. Efficiency advocates are questioningwhether investmentsmadewithin power delivery systems and powerplants to reduce electricity demandmay be as advantageous as thosemade in end-use efforts with consumers. Power plant improvementsin electricity consumption could include methods to improve overallefficiency, therefore, increasing the heat rate (decreasing Btu input perkWhoutput)of thepowerplant.Powerdeliverysystemimprovementscould includeuseofefficient transformersandbettervoltageandreac-tive power control, among others. Each of these are directly related toan informedviewof the smartgrid. Oneelementof the smartgrid that relates to theefficientproduc-tionof electricityhas todowith conditionmonitoringandassessment.In conditionmonitoring and assessment, sensors and communicationsareusedtomonitorplantperformanceandtocorrelatethatperformancetohistoricdata, theoreticalmodels and comparableplantperformance.The objectives are to optimize performance andmanagemaintenance.Most plants have some form of condition monitoring. A number ofpowerplantoperators subscribe tocommercialdataserviceswhichen-able comparisons of individual plant performers to a central database.A few plant operators have centralized data collection and monitor-ing. The concept of the expanded use of sensor, communications and


computationalability ispartof thesmartgridconcept.Assuch,atrulysmartgridwill include extending this concept all theway frompowerproduction, throughdelivery to enduse. This chapter focuses on the unique aspects of power productionand delivery related to efficiency.Again, these are largely enabled bythe smart grid.

POWERPLANTELECTRICITYUSE

Electricity is used in power plants in severalways. The principaluse is in powering motors which drive pumps, fans and conveyors.Otherusesincludeinformationtechnology(computers,communicationsandoffice equipment), building lighting, heating,domesticwaterheat-ing,ventilation,airconditioning, foodservice,environmental treatmentof waste streams, and select use of electric immersion heating to aug-mentpowerproduction. Eachof theseprovideopportunities toapplycost-effectiveelectricenergy-efficient technologies to reduce overall electricity use in powerproduction.However, thedominanceof electricityuse is inmotors. Dataaresketchyandlimited,butafewstudieshaveindicatedthattypically5to7%ofelectricenergyproducedinsteampowerplants(coal,biomass,gasandnuclear)isusedon-sitetoenableelectricitygeneration.Lessisusedincombustionturbinepowerplants,andevenlessinhydropowerandwind.Muchofthatelectricityuseisinelectricmotor-drivenfans and pumps, but there are a number of other uses ranging fromlighting to space conditioninganddigitaldevices. Pumping and fan applications consume a large portion of on-siteenergyandare,therefore,akeyopportunity.Bothpumpsandfansmustberegulatedwiththrottlingvalvesanddamperstorespondtogeneratorloading and climatic conditions. Both pumps and fans are well suitedforadjustablespeeddrives(ASDs)toregulateairandfluidflowandtooperateatoptimumefficiency.Runningpumpsandfanswithadjustablespeeddrives yields substantial energy savings over regulating fluid orair flowwith valves and dampers.Again, the smart grid concepts arethe catalyzing element. Controllingmotor drives andmonitoring theircondition requires sensors, communications, andcontrol. Whenlessenergyisconsumedwithintheplant,generatingcapac-ity is released to sell to consumerswithout changing the rating of the

Electric Energy Efficiency in Power Production & Delivery 29

generator, turbineorboiler.Thisreduces totalenergyrequirementsandcorrespondingCO2 andotheremissions. Inaddition, thecostofpowergenerated is reduced. Major stationary sources of air pollution andmajormodificationstomajor stationarysourcesare requiredby theCleanAirAct toobtainan air pollution permit before commencing construction. The processis called new source review (NSR) and is required whether themajorsourceormodification isplanned foranareawhere thenationalambi-ent air quality standards (NAAQS) are exceeded (nonattainment areas)oranareawhereairqualityisacceptable(attainmentandunclassifiableareas). Asaresult,implementingvariousactionstoreduceon-siteelectric-ity consumption in power plants is “included” inNSR applications innewplantconstructionorwhereplantupgradesareplanned.Inexistingplantswhere these actionsmay be considered, the point of contentionis around whether these efficiency modifications are considered to be“major”modifications.Atpresent,thisisnotwelldefined.Onoccasion,regulatory agencies have considered even “minor” changes in plantconfigurations tobemajormodifications.Assuch,plantownersare re-luctanttoopentheentireplantoperationstoscrutinyforthesakeoftheon-siteelectricitysavings.Theresultisthatimprovementswhichwouldhave resulted in efficiency improvements and emissions improvementsarenot aggressivelypursued.

POWERPLANTLIGHTING

Lighting has a high potential for technology improvement to en-hanceitsfunctionalityinpowerplants.Offices,laboratoriesandcontrolroomsinpowerplantslargelytendtoincorporatehigher-efficiencyfluo-rescent lighting,while the boiler house and turbinehalls often employhigh-pressure sodium,metal halide and other high-intensity dischargelighting.However,many older plants still usemercury or oldermetalhalide lighting systems.Newmetal halide systems could substantiallyimprovelightingandreduceenergyrequirements.Light-emittingdiodes(LEDs)areemerginginmanyplacessuchas inexitsignsandindicatorpanels. Potential areas for lighting improvement include energy effi-ciency, light quality, aesthetics, automation, longevity, convenience andform factor.


Lighting system efficiency is a function of several factors. Theoverall efficiency of the system depends on the efficacy* of the lightsource (measured in lumens of light output perwatt of input power),the effectiveness of the fixture in delivering the generated light to thearea it is desired, and the ability of the controls (if any) to adjust thelight level asparameters such as occupancy, day lighting, security andpersonalpreferencedictate.Efficiencyismaximizedastheperformanceof each of these factors is optimized.Again, the integrationof controlsis anextensionof the smartgrid. Much of the artificial lighting in place today is considerably lessefficient than theoretically, or even practically, possible. Conventionalincandescent lamps are a good example of this—roughly 95% of theelectricityenteringan incandescent lamp is rejectedasheat.Typical in-candescentbulbsproduceonly10 to23 lumensperwatt.Conventionalfluorescent lighting systems offer a substantial efficiency improvementover incandescent lamps, converting 20 to 30% of electricity into light;however,70 to80%of the inputenergy isstill rejectedasheat.Histori-cally, considerable effort has been focused on improving lighting effi-ciency, and research continues. Oneexampleofa significant increase inefficiency inpowerplantoffices is illustrated in the transition fromT12 (1.5-inchdiameter)fluo-rescentlampswithmagneticballaststoT8(1-inchdiameter)fluorescentlampswithelectronicballasts.This transitionbegantooccur inthe late1970sandearly1980s.NowT8orevennewerT5electronicballastsys-temsare thestandard fornewconstructionandretrofits.Theefficiencyimprovement, depending on the fixture is roughly 20 to 40% or evenmore. For example, a two-lamp F34T12 fixture (i.e., a fixturewith two1.5-inchdiameter,34Wlamps)withstandardmagneticballast requires82W, while a two-lamp F32T8 fixture (i.e., a fixture with two 1-inchdiameter,32Wlamps)withelectronicballastrequiresonly59W,whichisanelectricitysavingsof28%.Thesavings isattributable to the lowerwattage lamps aswell as the considerablymore efficient ballast. Nextgeneration T5 (5/8-inch diameter) fluorescent lamps continue to im-prove lighting efficiencyand can replace conventional lamps in certainapplications, suchas indirect lighting.

*Lightingefficacyistheratiooflightoutputofthelampinlumenstotheinputpowerinwatts. Inthe lightingindustry,efficacyisamoremeaningfulmeasureof the lampoutputthanefficiency (which is the ratioof theuseful energydelivered to theenergy input).


Increasedpenetrationofhigh-efficiencylightingsystemsthatcom-bine efficacious light sources with fixtures that effectively direct lightwhereitisdesired,coupledwithautomatedcontrolstodimorturnthelighting on and off as needed, will collectively act to improve overalllightingefficiency.

Maintenance Issues Developers are continually striving to improve the longevity oflamps.Forexample,atypicalfluorescent lamp’s lifetimeis8,000hours,while LEDs recently launched have a useful life* of 50,000 hours ormore—asix-foldincreaseincomparisontothefluorescentlamp.Futurelighting technologiesmaybe able to achieveuseful life expectanciesoffourmillionhours.Furthermore,withgreaterlifeexpectanciesinlamps,therewill likely be an increase in the number of applications employ-ing lighting. Previously, the inconvenience of frequent lamp changesprecluded lighting in certain applications.However, the benefit of illu-mination innewerapplications (e.g.,monitoringand indicator lighting,improved outside plant area lighting, etc.), coupledwith lover energyrequirements, may start to outweigh the maintenance and cost issuesthatwere formerlyabarrier. Lamps also suffer from creeping old age—the longer the lampburns, the fewer lumens per watt it produces. Lamp lumen deprecia-tion is a partial factor in determining themaintenance (light loss) fac-tor,which is an important step in lighting calculation anddesign. Thechange in lumen output is often referred to as lumen maintenance.Newer technologies improve the lumenmaintenance factor. Lightingtechnologiesofparticularinteresttoapplicationsinpowerplantsmust exhibit improvements in one ormore of the attributes re-quired to meet evolving plant operator needs and expectations (e.g.,efficiency, light quality, aesthetics, automation, longevity, form factor,convenience, etc.). Table 2-1 lists the lighting technologies which maybe considered for application in power plants so as to reduce energyconsumption.

*Usefullifereferstothelifethelampoperatesatanacceptablelightlevel.Theilluminationoutput from LEDs slowly diminishes over time. The end of an LED’s useful life occurswhen it no longer provides adequate illumination for the task; however, the LEDwillcontinue tooperate, albeit at a reduced light level, for an indefiniteamountof time.


Table 2-1. List of Lighting Technologies Applicable for Power Plant Energy Efficiency Improvement———————————————————————————————— Multi-photon Emitting Induction Lamps Phosphor Fluorescent Lighting———————————————————————————————— Metal Halide High-intensity T-5 Fluorescent Lamps Discharge Lamps———————————————————————————————— High-Pressure Sodium High- intensity Discharge Lamps————————————————————————————————

POWERPLANTSPACECONDITIONINGANDDOMESTICWATERHEATING

Space conditioning and domestic water heating are other twotechnologyapplicationareaswhichuseconsiderableelectricityinpowerplants.Workersinofficesandlaboratoriesrequirespaceconditioningtocreate comfortable environments inwhich towork.Whenproperlyde-signed,space-conditioningsystemsaffordtheworkerahealthyenviron-mentthatenablesproductivityandasenseofwell-being.Spacesthatareeithertoohotortoocoldmakeitmoredifficultforindividualstocarryout tasks. Such environments can also lead to adversehealth effects inoccupants.Domesticwaterheating isalsoessential for thecomfortandwell-beingofworkers.Hotwaterisusedforavarietyofdailyfunctions,includingbathing, laundry, foodpreparationand in laboratories. Electricity is used in a variety ofways in space conditioning anddomestic water heating (Smith, et al. 2008). In space conditioning, theprimaryfunctionistoheat,cool,dehumidify,humidifyandprovideairmixing and ventilating. To this end, electricity drives devices such asfans, air conditioners, chillers, cooling towers, pumps, humidifiers, de-humidifiers,resistanceheaters,heatpumpsandelectricboilers.Electric-ityalsopowers thevariouscontrolsusedtooperatespace-conditioningequipment. In water heating, electricity runs electric resistance waterheaters, heat pumpwater heaters, pumps and emerging devices suchasmicrowavewaterheaters. Power plant space-conditioning systemsmay implement packagedroof-top or ground-mounted units, or a central plant. The majority ofspace-conditioning electricity use in power plants is attributed to cool-


ing equipment rather thanheating equipment. Themost common spaceconditioning systems for power plants are of the unitary type, eithersingle-package systems or split systems. These are used for cooling ap-proximatelytwo-thirdsoftheair-conditionedspacesinU.S.powerplants.Forverylargeofficebuildingsassociatedwithpowerplants,direct-expan-sionsystems,absorptionchillersorcentral chillerplantsareused. Conventional electric water heating systems generally have oneor two immersionheaters, each rated at 2 to 6kWdepending on tanksize.These systems storehotwater in a tankuntil it isneeded.Newersystemsgeneratehotwaterondemand. Greatstrideshavebeenmadeinthelastfewdecadestoimprovetheefficiencyof space conditioningandwaterheatingequipment.Themostnotable advancements have been in space cooling equipment—largelyin vapor compression cooling. Improvements in the efficiency of spacecooling systems have a large impact on electricity use in power plantswith significant office and laboratory space, since they account for themajorityofelectricityuse in thesespaces.Muchof theprogress inspacecooling efficiency is due to federal standards that dictate theminimumefficiency of newair-conditioning systems. Though the volumeof spacethatismechanicallycooledisontherise,correspondingincreasesinelec-tricity consumption have been tempered by efficiency improvements inair-conditioningsystemsand improvement inbuilding thermal integrity. Larger commercial-scale air-conditioning systems are often ratedwithenergy-efficiencyratio(EER)andintegratedpart-loadvalue(IPLV)parameters. Table 2-2 lists the minimum federal standards for larger-scaleunits(>65,000Btuperhour)asofOctober29,2001.Manufacturerssellsystemswithabroadrangeofefficiencies.Forexample,inthe65,000to 135,000Btuperhour capacity range, it ispossible tobuyunitswithanEERashighas12.5,eventhoughthecurrentfederalstandardis10.3(Smith,etal.,2008).UnitswithhighEERsaretypicallymoreexpensive,as the greater efficiency is achievedwith larger heat exchange surface,moreefficientmotors, and soon. One of the most efficient space-conditioning devices is the heatpump.Heatpumpscanalsobeusedforwaterheatingandinintegratedsystems that combinewater heating and space conditioning. The heat-ing performance of a heat pump is measured by the heating seasonalperformance factor (HSPF),which is equal to the number Btus of heataddedperwatt-hourofelectricity input.HSPFvalues forcommerciallyavailable heat pumps are 6.8 to 9.0 and higher for the most efficient


systems.Thecoolingperformanceofheatpumps ismeasuredwith theSEERvalue (as is used for air conditioners).Values of 10.0 to 14.5 andhigheraretypicalforthemostefficientsystems.Newfederalstandardstookeffectin2006whichraisedtheHSPFforheatpumpsfromthe1992minimumvalueof6.8 toanewminimumvalueof7.8. Inaddition, theminimumSEERvalueshavebeen increased from10.0 to 13.0 (sameasfor air conditioners). Many existing older units have SEERs of 6 to 7,or roughly half the newminimum requirement. Therefore, substantialefficiency improvementsarepossibleby replacingolder equipment. Chillersareusedincentralspace-conditioningsystemstogeneratecooling and then typically distribute the coolingwith chilledwater toair-handling or fan-coil units. Chillers are essentially packaged vaporcompression systems. The vapor compression refrigeration cycle ex-pands,boils,compresses,andre-condensestherefrigerant.Therefrigera-tion system is closed, and the refrigerantflowsbetweenhigh-pressure,high-temperaturevaporandlow-pressure,low-temperatureliquid.First,the liquid refrigerantflows from the condenser to theexpansionvalve,whichreducestheliquidpressurebeforeitenterstheevaporator.Second,the evaporator coils absorbheat from thebuilding’s chilledwater loopthatrunsthroughtheevaporator.Thisheatcausestheliquidtoexpandand become a vapor. The refrigerant vapor then leaves the evaporatorandflows to the compressor.The compressormaintainsapressuredif-ference between the evaporator and condenser. In the compressor, thepressureandthetemperatureofthevaporincreasebeforethevaporcanbecondensedbyrelativelywarmwaterorair.Finally,inthecondenser,the vapor releases the heat it absorbed in the evaporator and the heataddedbythecompressor,anditbecomesaliquidagain.Thisisaccom-plishedeitherviaawater-cooledoranair-cooled condenser.

Table 2-2. Standards for Commercial-scale Air-conditioning Systems, 2001———————————————————————————————— Equipment Size (Btu/hour) EER IPLV———————————————————————————————— 65,000 to <135,000 10.3———————————————————————————————— 135,000 to <240,000 9.7———————————————————————————————— 240,000 to <760,000 9.5 9.7———————————————————————————————— 760,000 and larger 9.2 9.4————————————————————————————————


Chillers are often the largest single user of electricity in a largeofficespace-conditioningsystem.Therefore, improvements inchilleref-ficiency can have a large impact of electricity use. Chiller efficiency isspecifiedinunitsofkWpertonofcooling.It isnormallyquotedbasedon the loading application—either full-load or part-load. In full-loadapplications,theloadonthechillerishighandrelativelyconstant(e.g.,baselinechillers),andthefull-loadefficiencyisusedtomeasureperfor-mance. For part-load applications, which are more common, the loadon the chiller is variable, and use of the part-load efficiency is amoremeaningful measure of performance. The choice of both the compres-sor and the condenser affects the overall efficiencyof the chiller. Somechillers use air-cooled condensers, but most large units operate withevaporativecoolingtowers.Coolingtowershavetheadvantageofreject-ingheattoalowertemperatureheatsinkbecausethewaterapproachesthe ambientwet-bulb temperaturewhile air-cooledunits are limited tothedry-bulb temperature.As a result, air-cooled chillers have ahighercondensing temperature, which lowers the efficiency of the chiller. Infull-load applications, air-cooled chillers require about 1 to 1.3kW ormoreper tonofcooling,whilewater-cooledchillersusuallyrequirebe-tween0.4to0.9kWperton.Air-cooledcondensersaresometimesusedbecause they require much less maintenance than cooling towers andhave lower installationcosts.Theycanalsobedesirable inareasof thecountrywherewater is scarce and/orwater andwater treatment costsarehigh since theydonotdependonwater for cooling. Theefficiencyofwaterheaters ismeasuredwithaquantitycalledtheenergy factor (EF).HigherEFvaluesequate tomoreefficientwaterheaters.TypicalEFvalues range fromabout0.7 to9.5 forelectric resis-tance heaters, 0.5 to 0.8 for natural gas units, 0.7 to 0.85 for oil units,and 1.5 to 2.0 for heat pumpwater heaters (Smith, et al., 2008). Sincethere are no flame or stack losses in electric units, themajor factor af-fectingtheefficiencyofelectricwaterheatersisthestandbylossincurredthrough the tankwalls and from piping. The heat loss is proportionalto the temperature difference between the tank and its surroundings.Newer systemsproducehotwater ondemand, eliminating the storagetankand its associated losses.

Building Infiltration Amajor cause of energy loss in space conditioning is due to airenteringor leavingaconditionedspace (GlobalEnergyPartners,2005).


Unintentionalair transfer toward the inside is referred toas infiltration, andunintentional air transfer toward theoutside is referred to as exfil-tration.However, infiltration isoftenusedtoimplyair leakagebothintoandout of a conditioned space, and this is the terminologyusedhere.Inapoorly“sealed”building,infiltrationofcoldorhotairwillincreaseheating or cooling energy use. Air can infiltrate through numerouscracks and spaces created during building construction, such as thoseassociatedwithelectricaloutlets,pipes,ducts,windows,doorsandgapsbetween ceilings,walls, floors and so on. Infiltration results from tem-perature and pressure differences between the inside and outside of aconditionedspacecausedbywind,natural,convectionandotherforces.Major sources of air leakage are plenum bypasses (paths withinwallsthat connect conditioned spaces with unconditioned spaces above, oradjacent to theconditionedspace), leakyductwork,windowanddoorframes, and holes drilled in framingmembers for plumbing, electricalandHVACequipment. To combat infiltration and reduce energy losses fromheating andcoolingsystems,wraps,caulking,foaminsulation,tapesandothersealscanbeused. Sealingducts in thebuilding is also important topreventtheescapeofheatedorcooledair.Cautionmustbeexercisedtoprovideadequate ventilation, however. Tight spaces often require mechanicalventilationtoensuregoodairquality.Standardsvary,dependingonthetypeofoccupancy. Complaintsaboutthetemperaturefromoccupantsofofficespacesin plants are all too common. Studies show employees find that one-thirdtoone-halfofofficebuildingsaretoocoldortoowarm(Kempton,et al., 1992).Occupants find themselvesdressing forwinter during thesummer to prevent being too cold from an over-active cooling system,or taking off layers of clothing during the winter because the heatingsystemseemstoberunning“fullblast.”Thetemperaturesarealsovari-able throughout a given building. There are often hot spots and coldspots. In addition, humidity is typically not controlled effectively, noris the levelof indoorair contaminants. Environmentalpressuresarechangingtheformofspacecondition-ing and water heating devices. For example, traditional space-coolingtechnologiesrelyonvaporcompressioncyclesthatuseozone-depletingrefrigerants, such as chlorofluorocarbons (CFCs) and hydrochlorofluo-rocarbons (HCFCs).These refrigerantsarebeingphasedout. (1995wasthe last year than CFC refrigerants could be legally manufactured in


most of the industrializedworld. HCFC refrigerants will be produceduntil 2030.)TheKyotoProtocol isdriving theadoptionofenvironmen-tallyfriendlyspace-coolingtechnologiesinseveralcountriesaroundtheworld,mostnotablyinJapanandScandinavia.Inthefuture,space-cool-ingsystemswillincreasinglyrelyonenvironmentallyfriendly“natural”refrigerants (one possible alternative is CO2) or theymay use entirelynewspace-coolingtechnologies(e.g.,magneticrefrigerationandthermo-tunneling). Space-heatingandwater-heatingsystemsthatrelyonthecombus-tionof fossil fuels arealsobeing replacedby cleaneralternatives.Elec-tricity is an efficient source of energy that is very clean at thepoint ofuse. It canbeused todriveheatpumps for spaceconditioningand fordomesticwaterheating. It canalsobeapplied tonovelheatingdevicessuchasmicrowavewaterheaters. Table 2-3 lists the technologies that should be considered whenassessingelectricenergyimprovementsforconditionedspacesinpowerplants.

MOTORS

Processes driven by electricmotors typically consume 80%of theelectricity used in electricity production. Implementing electric adjust-ablespeeddrives (ASDs)onmotors inpowerplants improves theheatrateby increasingtheefficiencyof theseprocesses.ASDsincreaseplantavailabilityandflexibilitythroughimprovedprocesscontrolandreduceemissions andmaintenance costs.ASDs can be used in power plantsfor boiler feedwater, cooling water, circulation water pumps as wellas forceddraft (FD) and induceddraft (ID) fans. In gas turbinepowerplants, they can also be used for gas turbine (GT) starters, drives forgasboostercompressors,boilerheatrecoverysteamgenerators (HRSG)feedwaterpumpsandcoolingwaterpumps. As the demand for electrical energy varies, the required flow ofa fan or a pump varies due to changes in ambient conditions or fuelproperties. Due to these varying conditions, a continuous control ofthe processes and equipment such as centrifugal fans and pumps, isrequired. Processesdrivenbypumpsorfansareusuallycontrolledmechani-cally with inlet guide vanes, throttling valves or hydraulic couplings.

38 The Sm


emand Response

Table 2-3. List of Space Conditioning and Domestic Water Heating Technologies


Themotorsaredrivenatafixedspeedmakingitpracticallyimpossibleto achieve the optimal process efficiency over a control range. Withelectric adjustable speeddrives, changing themechanicaloutputof thesystem is achieved by changing the motor speed. This saves energy,decreases CO2 and other emissions from electricity production andminimizesoperating costs. Since pumps and fans typically run at partial mechanical load,substantial energy savings canbe achievedby controllingmotor speedwith adjustable speed drives.A small reduction in speed correlates toa largereduction in theenergyconsumption.Apumpora fanrunningathalf speedconsumesone-eighthof theenergycompared toonerun-ningat full speed.Forexample, according toABB (www.ABB.com),byemployingadjustablespeeddrives(invertertechnologies)oncentrifugalpumps and fans instead of throttling or using inlet guide vanes, theenergybill canbe reducedbyasmuchas60%. AlthoughanumberofASDtechnologieshavebeenfoundtoexistcommercially for large motors, three U.S. designed technologies havesurvived the rigorsof competition.Theyareas follows:

• Current-source inverter• Modified loadcommutated inverter (modifiedLCI)• Current-source gate turn-off thyristor-pulse-width modulated

(GTO-PWM)

Of these three, the latter two are still being successfully sold forlargemotors (2000HPand larger).Thecurrent-source systemhasbeenshown to have a number of excellent features. It has good harmoniccontrol when used in a 12-pulse input, 12-pulse output configuration,it hasno outputfilter capacitor requirement, and canbeused in a fullregenerativebrakingmode. Themodified LCI inverter, another form of current-source tech-nology, has provided an economic ASD system that has shown thepower production industry that it can reduce fuel costs inmanymo-tor applicationswith electronic speed control. Themodified LCI sys-tem has the simplicity afforded by a rectifier and inverter using thesame components. The DC link diverter circuit provides for invertercommutation when the output filter capacitor can no longer provideexcitationtotheinductionmotortoallowLCIoperations.Thissystemhasbeenpackagedwithwatercoolingofthepowerelectronicstosim-


plify the overall cooling system.Water cooling is important formanypower plant applications where the air is contaminated with coal orashdust.

EPRIDEMONSTRATIONS

EPRIhasconductedresearchprogramstostudytheapplicationofhigh-poweradjustable speeddrives (ASDs) toauxiliarymotorsofelec-tricgeneratingstations(EPRICU-9614,1990).FourutilitiesparticipatedinfieldtestsoftheselargeASDsonboilerfeedpumpsandforceddraftfans. In theperiodof thefield tests, rapid advanceshadbeenmade inthe technologyofASDs for large inductionmotors.Theprincipalgainsarose from new schemes for commutating the inverter. Vector controlhasalsobeen introduced toallowseparationofmotorfluxcontrolandmotor current control to allow the control of torque separately fromvoltage. These field test projects use the existing power plant squirrelcage inductionmotors. The power electronics equipment additions al-lowed control of feedwater flow or air flow directly by motor speed,thus eliminating the control valve or inlet vanes and the power lossesassociatedwith thesedevices. The testprogramobserved theperformanceof theequipmentop-eratingwithandwithoutASDcontrol.Powermeasurementsweremadeto verify power savings and economics. Harmonics weremeasured atthe input and output of the ASD. Motor vibrations were measuredover the speed range.Current andvoltagewave shapeswere recordedandmeanswere established to determineASD efficiency. SeveralASDcoolingsystemsandenclosureswereevaluatedinthecourseofthetestprogram. These tests occurred over a five-year period. During this time,modifiedload-commutatedinvertersandthecurrent-sourceGTO-PWMinverters were installed in over 200 installations nationwide, rangingfrom600HPto9000HP.GTOstandsforgate turn-off thyristors;PWMstands for pulse-width modulated—a technique for creating low har-monic contentACwaveforms. Thesefieldtestsyieldedawealthontheapplicationofthistechnol-ogy to largepowerplant inductionmotors.Among the lessons learnedin thisworkwere the following:


• Thepotentialforoperatingcostsavingsbycontrollingprocessflowwithmotor speed is real.

• Reliabilityof largeASDs isnotan issue.Several improvements inASDsthathavedevelopeddirectlyfromoperatingexperiencehavecontributed to improvedoverall systemreliability:— AninputtransformerisnowusedonalllargeASDinstallations

tocontrolcommon-modevoltage.— Shaft torsional resonance caused by interaction of the ASD

outputcapacitorfilterandthemotorwindingisnowunderstoodand can be controlled either by eliminating harmful outputharmonicswiththeGTO-PWMASDora12-pulseinverterorbyseparatingtheelectricalandmechanicalresonancefrequencieswithanoutputreactor.

— Powerelectronicdevices,likethyristorsandGTOs,haveproventoberobustandreliablewhencorrectlyapplied.

— Available control systemshaveproven toprovide trouble-freeservice.

Utilizing the informationgainedfromthese tests,apreferredcon-figuration for a power plant-specificASDhas evolved. This configura-tionhas the following features:

• Input transformer to control input harmonics and line-to-groundvoltageat themotor.

• Uninterruptible power supply (UPS) system for clean power totheASD control system to eliminate adverse effects from voltagespikes,dips, and interruptionsonASDperformance.

• Water-cooledthyristorstosimplifycoolingoftheASDintheoftenhot,dustyenvironmentofpowerplants.

• GTOthyristor inverter tocontrolharmonics to themotor inorderto eliminate shaft torsional resonance.

• Groundbetweeninverterandmotortocontrolline-to-groundvolt-ageat themotorused in combinationwith input transformer.

Thepreferredconfigurationforalargepowerplantinductionmo-torASD is shown inFigure2-1.


Therehavebeenremarkableadvancesinpowerelectronicscontrolof large inductionmotors in power plant applications. Different hous-ings, different cooling systems, different rectifier arrangements, anddifferent inverter technologies have been analyzed, andpreferredASDapplicationprocedureshavebeen identified. However,theapplicationofadjustablespeeddrivetolargeinduc-tionmotors is still a relativelynew technology.

Utility-specific ASD ThelessonslearnedinEPRIfieldtestinstallationsandfromseveralother recentutility installationsof inductionmotorASDshave contrib-uted to a concept for a second-generationASD specifically for powerplants.Featuresof thepowerplant-specificASDareas follows:

• Useof input transformer for12-pulseor18-pulse converter.

• GroundingofASD system to stabilizeDC linkvoltage andelimi-natemotorover-voltage.

Figure 2-1. Preferred Configuration for Large Power Plant ASD


• Built-indesign tolerance forbusvoltage swings, spikesand inter-ruptions.

• Water-cooled thyristors for simplifiedandmoreeffective cooling.

• Control of or elimination of resonance between output filter andmotor.

EFFICIENCY INPOWERDELIVERY

Theimprovement inthepowerdeliverysystem(electric transmis-sion and distribution) through the use of smart grid technologies canprovide significant opportunities to improve energy efficiency in theelectricpowervaluechain.The transmissionanddistributionsystemisresponsiblefor7%ofelectricitylosses.Onthedistributionsystem,datafrommany utilities clearly prove that tighter voltage control reducesenergyconsumption.Asaresult,anumberofutilitieshaveappliedtheconceptofconservationvoltagereduction (CVR) tocontroldistributionvoltageandreduceend-useenergyconsumptionwithoutadverseeffects.Atthesametime,theU.S.DepartmentofEnergy(DOE)recentlyissueda final rule (October 2007) thatmandates efficiency standards for vari-oustypesofdistributiontransformersbeginningin2010.DOEestimatesthat these standardswill reduce transformer lossesandoperatingcostsby 9 to 26%. On the customer side of themeter, the opportunities forimproving energy efficiency aremany and varied, across all sectors oftheeconomy.

CONSERVATIONVOLTAGEREDUCTION

Onthedistributionsystem,evidencesuggeststhatutilitiesmaybeable toachievedramaticenergyanddemandsavingsbyoperatingdis-tribution feeders at the lower endof acceptable service ranges throughsmart grid applications. This concept is called conservation voltagereduction (CVR). Despite considerable utility research on this subjectinthe1970sand1980s, fewrecentstudieshaveexaminedthispotentialandthemeanstoattainit.Bysomeestimates,only7.5%ofU.S.feedersincorporate thenecessary technologies to tightly controlvoltage in thisfashion.


For a typical U.S.-based, 120-V nominal service voltage (as mea-suredatthecustomermeter),thegoverningU.S.standardistheAmeri-canNationalStandardsInstitute(ANSI)standardC84.1,whichspecifiesapreferredrangeof+/–5%,or114-126V.Utilitiestendtomaintaintheaverage voltage above 120V to provide a larger safetymargin duringperiods of unusually high loads, aswell as tomaximize revenue fromelectricitysales.Utilitiesgenerallyregard114Vasthelowestacceptableservice voltage to customers under normal conditions, since a 4-voltdecrease is typically assumed from the customer meter to the plug,andmost appliances are designed to operate at no less than 110 V ofdeliveredvoltage. In general, lowering voltage decreases load, and thereby savesenergy. “CVR Factor,”which is defined as the percentage reduction inpowerresultingfroma1%reductioninvoltage,isthemetricmostoftenusedtogaugetheeffectivenessofvoltagereductionasaloadreductionor energy savings tool. The CVR factor differs from utility to utilityandcircuit tocircuitbasedoneachcircuit’sunique loadcharacteristics.EmpiricaldatafromutilitiesacrosstheUnitedStatessuggeststhatCVRfactors range from 0.4 to 1.0, and in some cases, may even slightlyexceed1.0.EPRIrecentlycompletedacalculationofthemeanCVRfac-tor (0.8), based on equalweighting of 13 utility CVR factors. One keycharacteristic thatdetermines theeffectivenessofvoltageregulation forloadreductionistheamountofresistiveversusreactiveloadinagivencircuit. Distribution system efficiency (DSE) refers to a range of electricutility measures designed to modify the voltage delivered to end-usecustomers to a range lower than or tighter than theANSI standardC84.1. Resistive loads, such as electric resistance space and water heat-ers and incandescent lamps, act as resistors and predominantly drawreal power.As a result, resistive loads respond directly with voltagechanges—lowervoltages result in reducedpowerconsumption. In fact,poweruse in an individual resistive load is proportional to the squareof thevoltage,meaning that theCVR factorwill begreater than1.0 aslong as the load is on. However, automatic controls on resistive loadssuchasspaceandwaterheatersusuallyreducethisimpact,inaggregate,overalargenumberofloadsbykeepingheaterelements“on”forlongerperiodstomaintaintemperatures.Despitethisphenomenon,powerusestillvariesdirectlywith thevoltage for resistive loads.


Reactive loads, typically containing significant inductance (alsoknown as inductive loads), include motors, pumps, and compressors,whichdrawboth real and inductive-reactivepower.Reducingvoltagestothese loadsdoesnotalways linearlyreducepowerconsumptionandcanevenhavetheoppositeeffect,especiallyifcustomerequipmentvolt-ages fall below industryguidelines.This effect ismostpronounced forindustrial customerswith large inductionmotor loads, particularly forthose that includeadjustable speeddrivemechanisms. Apart from some regional pockets of activity, utilities have notembracedvoltagereductionasameansofenergyconservation.Amorecommonpractice isuseofvoltage reductionas anoperational strategyrelatedtothe“operatingreservemargin.”Thisallowsutilitiestoreducevoltageby5%duringcriticalpeakperiods(CPP)whileremainingwithinpreferredvoltagestandards.Themostfundamentalbarriertotheconsid-erationandadoptionofvoltagereductionforenergyconservationobjec-tivesistechnicalskepticismoverthelinkbetweenvoltagereductionandload reduction. Some utility engineers believe that certain loads drawmore current at lower voltage levels and that, therefore, lower voltagedoesnotnecessarilyresultinreducedloads.However,whilethisinverserelationshipmay hold true for certain types of loads, data frommanyutilities clearlyprove thatmost loadsdo consume less power at lower

Figure 2-2. Distribution System Efficiency (DSE) in the Context of the ANSI C84.1 Preferred Service Voltage Standard for 120-V Systems. (Global Energy Partners, 2005)


voltageswithinacceptableoperating ranges. Utilitiesciteseveralotherreasonsforskepticismaboutthepotentialeffectivenessofvoltagereduction.A“take-backeffect”hypothesizesthatvoltagereductionswillbeonlytemporarybecausecustomerswilladjusttheir usage based on perceived changes to the effect on end-use. Forexample, if lowervoltages result inperceptiblydimmer lights, custom-ersmightsimplyswitchtohigherwattagebulbs,negatingtheexpectedenergy savings. Anothercausefortheutilities’concernistheincreasedriskofcus-tomercomplaintsstemmingfromlowervoltage.Electronicdevicessuchas computers and certain medical equipment are very sensitive eventominor voltage drops,which could cause life support and radiologyequipment to fail, for example. Longfeederlinespresentanotherproblemforutilitiesservingruralareas, where occasional voltage drops below 114 V result in increasedcustomercomplaints.Evenshortfeederlineswherecustomershavelongsecondary feeders result in large perceived voltage drops. In order toreducethesecomplaints,utilitiesneedtoinvestinadditionalequipmentsuchascapacitorsorreworksecondarysystemstoshortenthesecondaryconductors. Utilitiesalsoregardtheirserviceterritoriesandloadcharacteristicsasuniqueand tendnot to share informationaboutdistributionvoltagepractices. Becausemost of the United States is not presently capacity-constrained,manyutilitiesplan to reducevoltages onlyduring systememergenciesor for just a fewpeakdaysduring theyear. Utilitiesalsonotethatvoltageregulationreducespowerconsump-tion,whichposesaneconomicbarrierforthecompanies.Ifautilitydoesnotfacepeakcapacityconstraintsor isunabletore-sellcapacityonthewholesale market, it is hard-pressed to justify the economics of morestringentvoltage regulation. Providedthat itcanovercomeitsseveralobstacles,CVRpromisestodeliver energymoreefficiently to endusers.

DISTRIBUTIONTRANSFORMEREFFICIENCY

Developments in transformer technology and construction canalsoimprovetheefficiencyofpowerdistribution.Threeclassesofsin-gle-phaseandthree-phasetransformersareincommonuseontoday’s


distribution systems: low-voltage, dry-type transformers for inputslessthanorequalto600volts;medium-voltage,dry-typetransformersfor inputs of 601-34,500 volts; and liquid-immersed transformers forinputsofupto2,500kVA.Transformerefficiencyisratedasapercent-agewhen tested at a specified load. Following the standardU.S. testprocedureTP-1 adopted by theNational ElectricalManufacturersAs-sociation(NEMA)in1996,low-voltage,dry-typetransformersareratedat 35% of full load, and the other two transformer types are rated at50%of full load. Notall transformerclassesexhibit thesame levelsof losses.Liq-uid-filledtransformersarethemostefficient,withlossesofonlyabout0.25%,whilemedium-size dry-type transformer losses total about 5%andsmalldry-typeunit lossesequalabout2%.Aggregatetransformerlosses inU.S. powerdistribution can exceed 3%, or 140 billion kWh/year. The U.S. Environmental ProtectionAgency’s Energy Star unitestimates that about 61billionkWh/year of thatpower loss couldbesavedbyusinghigherefficiencytransformers(GlobalEnergyPartners,2005). While transformers are generally very efficient, even a smallamount of loss multiplied by themore than 25million installed dis-tribution transformers accounts for the largest single point of energyloss onpowerdistribution systems.

Transformer Core and Winding Losses Transformerlossesconsistoftwotypes:core(or“no-load”)lossesand winding losses (also called “coil” or “load” losses). Core lossesresult from the magnetizing and de-magnetizing of the transformercore during normal operation; they do not varywith load, but occurwhenever thecore isenergized (Fetters,2002).Amorphouscore trans-formerscanreducethesecorelossesbyasmuchas80%comparedwithconventionalmaterials (seeFigure2-3).Amorphous core transformershavenot beenwidely adopted in theU.S. orEurope,due to a higherfirstcostthanconventionaltransformers.However,demandisincreas-ingrapidlyincountriessuchasJapan,India,andChina.Furthermore,thepricedifferential isdeclining as silicon steelprices increase. Winding losses occur when supplying power to a connectedload.Winding loss is a function of the resistance of thewindingma-terial—copper or aluminum—and varieswith the load. Conventionaltransformers use aluminum winding and are designed to operate at


temperaturesupto150°C/270°Faboveambient.Newerhigh-efficiencytransformersusecopperwinding,reducingthesizeofthecore,theas-sociated core losses, and theoperating temperatures to 80°Cor 115°C(145°Fto207°F)aboveambient.Hence,overalltransformerefficiencyislowestunderlightload,andhighestatratedload,regardlessofwhichcorematerial isused.

New Transformer Efficiency Standards OnOctober12,2007,theU.S.DepartmentofEnergy(DOE)issuedafinalrulegoverningdistributiontransformerefficiency.Theeffectivedateof thenewrule isNovember13,2007,and thestandards itman-dateswill be applicable beginning on January 1, 2010. The standardsapply to liquid-immersed andmedium-voltage, dry-type distributiontransformers. These new mandatory efficiency levels range higherthan existing NEMA TP-1 standards (represented in the rulemakingprocess as TSL-1). Inmost cases, the standards range between TSL-4(minimumlifecyclecost)andTSL-5(maximumenergysavingswithnochange in lifecycle cost) (see Figure 2-4) (Federal Register, 2007). Thefinal rulenotes that these levels are achievableusing existingdesignsofdistribution transformers. DOEalsoconcludes that theeconomic impactsonutilitiesof thenewefficiencystandardsarepositive.Itpointsoutinthefinalrulethat

Figure 2-3. Transformer Efficiency with Amorphous Metal Core Compared with Conventional Steel Core. Source: Metglas.


initialcostsofliquid-immersedtransformerswillriseby6to12%,butthatoperating costs (andelectrical losses)willdecreaseby15 to 23%.Similarly, the initial costs for medium-voltage, dry-type transformerswillriseby3to13%,butthecorrespondinglossesandoperatingcostswill decrease by 9 to 26%.On a national level,DOEprojects that thestandardswillsaveabout2.74quadsofenergyfrom2010-2038,whichisequivalenttotheenergythat27millionhomesconsumeinoneyear.ThisenergysavingswilldecreaseCO2emissionsbyabout238milliontons,which is equivalent to 80%of the emissions of all light vehiclesin theU.S. foroneyear.Hence,DOEconcludes that thestandardsare“technologically feasible and economically justified, andwill result insignificant energy savings (FederalRegister, 2007).”

Advanced Transformer Technology The intelligent universal transformer (IUT), currently in the veryearlystagesofdevelopment,isanadvancedpowerelectronicsystemcon-cept that would entirely replace conventional distribution transformers.IUTshaveaflatefficiencycharacteristicwithasomewhatlowerefficiencypeak, but higher efficiency off-peak. They are expected to performwithless total loss (higheroverallefficiency)overadaily loadcycle.

Figure 2-4. Existing NEMA standards are represented by TSL1 on this graph, while new DOE transformer efficiency standards range between TSL2—TSL3 and TSL4—TSL5 for transformers of varying voltages. The potential efficiencies of amorphous core transformers are at the high end of achievable efficiencies.


TheIUTwouldalsoprovidenumeroussystemoperatingbenefitsandaddedfunctionalityrelativetoconventionaltransformers.AnIUTis a solid-state transformer, similar to the power supply in a desktopcomputer. As such, the device would eliminate power quality prob-lems and convert loads to sinusoidal and unity power factor, whichwouldenhance theefficiencyof theentiredistributiongrid. IUTsalsoeliminate secondary power faults, supply DC offset loads, and havevery low no-load losses.At the same time, the IUT contains none ofthe hazardous liquid dielectrics found in conventional transformers,avoidingthehazardsandcostsofspills.ComponentcostsforIUTsaresteadily falling, comparedwith components in standard transformers,which are steadily rising inprice. IUTs can replace conventional distribution transformers, bothin new installations and to replace aging units. Because themodulesof IUT systems can be configured for several rating levels, IUTs canreplace larger inventory requirements of many conventional trans-formersatdifferentrating levels.UtilitiescanuseIUTsasdistributionsystemmonitoringnodes to support systemoperationsandadvancedautomation,anduseoptional functions (prioritizedbysponsors) suchas voltage regulation, configuring to supply three-phase power froma single-phase circuit, output ports for dc power and alternative acfrequencies, and interfacewithdistributedgeneration. While IUTscurrentlyexistonly in the laboratory,withactivede-velopment and testing, models could be available within only a fewyears.

Advanced Distribution Automation (ADA) TheIUTisonecomponent inabroaderstrategycalledadvanceddistributionautomation(ADA).ADAisdistinctfromtraditionaldistri-butionautomation (DA).TraditionalDAenablesautomatedcontrolofbasic distribution circuit switching functions.ADA is concernedwithcomplete automation of all the controllable equipment and functionsin the distribution system to improve strategic systemoperation. Thevarious distribution system components are made interoperable inADA, and communication and control capabilities areput inplace tooperate the system. The result is added functionality and improvedperformance,reliability,andcost,relativetotoday’ssystemoperations.In total, ADA will be a revolutionary change to distribution systeminfrastructure,asopposedtosimpleincrementalimprovementstoDA.


While there are numerous areas where R&D advances are needed torealizeADA, five key areas include (Federal Register, 2007): systemtopologies (i.e., optimized radial andnetworked configurations); elec-tronic/electrical technologydevelopmentsuchas intelligentelectronicdevices(e.g.,theIUT);sensorandmonitoringsystems;openandstan-dardized communication architecture; and control systems. Additional areas where significant development is required toachieve theobjectives and thevisionofADA include:

• Development of an integrated distribution system with storageanddistributedgeneration.

• Developmentofadvancedtoolstoimproveconstruction,trouble-shooting and repair.

• Development and demonstration of a five-wire distribution sys-tem.

• Integration of smart metering concepts that would enable con-sumers and utilities to maximize the benefits of night-time re-chargingofplug-in electric vehicles.

CONCLUSION

The smart grid as a concept must extend from power produc-tionthroughdeliverytoend-use.Conceptsoffunctionalityemployingsensors, communications and computational ability can be effectivelyused to reduce energy consumption, reduce emissions from powerproduction, and improve reliability in the frontend of the electricityvalue chain.

ReferencesRetrofitting Utility Power Plant Motors for Adjustable Speed: Field Test Program,M.J.Samotyj,

ProgramManager,EPRIReportCU-6914,December 1990.Distribution Efficiency Initiative, Market Progress Evaluation Report, No. 1, Global Energy

Partners,LLC, reportnumberE05-139,May18, 2005.Fetters, JohnL.,Transformer Efficiency, ElectricPowerResearch Institute.April 23, 2002.Energy Conservation Program for Commercial Equipment: Distribution Transformers Energy

Conservation Standards; Final Rule. 10CFRPart 431. FederalRegister,Vol. 72,No.197, 58189.October 12, 2007.


Smith,C.B., andK.E.Parmenter, “ElectricalEnergyManagement inBuildings,” inCRC Handbook of Energy Conservation and Renewable Energy, edited by F. Kreith andD.Y.Goswami, 2008.

Indoor Environmental Quality in Energy Efficient Homes: Marketing Tools for Utility Represen-tatives,GlobalEnergyPartners,LLC,Lafayette,CA: 2005. 1285-4-04.

Kempton, W. and L. Lutzenhiser, “Introduction,” Energy and Buildings, vol. 18, no. 3(1992), pp. 171-176.

53

Chapter 3

Electric End-use Energy Efficiency

DEFININGELECTRICEND-USEENERGYEFFICIENCY

A debate has raged for decades in the electric utility industry,centeringontheissueofelectricend-useenergyefficiencyasanalterna-tive to traditional supply sources and to using fossil fuels at the pointofenduse.Thatdebatenowseemstobecomingtoclosure.Theutilityindustryisdeeplyrootedintheneedfortraditional,controllablesourcesof capacity and energy such as long-term contracts or power plants.Increasing costs, regulatory encouragement, and concerns about globalwarminghavecausedutilitymanagers to considerdemand-sideactivi-ties. Demand-sideplanning involves thoseutility activitiesdesigned toinfluence customer use of electricity inways thatwill producedesiredchanges in the utility’s load shape, that is, changes in the pattern andmagnitude of a utility’s load. Energy efficiency as an alternative totraditional supply sources is no longer adebatable issue in the electricutility industry.As thisdebatehasmatured, theuseofefficientelectricend-use applications to displace fossil fuels has again surfaced as anessential part of an overall end-use efficiency strategy. In particular, itis the focuson the smartgrid that enables this revivalof interest.

ENERGYEFFICIENCY

Demand-sideplanningincludesmanyload-shape-changeactivitiesincluding energy storage, interruptible loads, customer load control,dispersed generation, and energy efficiency. Energy efficiency involvesadeliberateeffortonbehalfoftheutilitytopromotechangeintheloadshape (amount or pattern) by the customer through such hardware-related actions as improved building-thermal integrity coupled withincreased appliance efficiencies through such non-hardware-relatedactions as altered consumerutilizationpatterns, aswell as through the


adoptionofelectricend-useswhichdisplacefossilfuelswhilecoinciden-tally reducingoverall energyuseandemissions. Many individuals involved in the electric utility industry are un-comfortablewhentalkingaboutenergyefficiency.Theyareintheenergybusiness and are dedicated to delivering kWh to consumers. Certainlyfewfor-profitcompanieswouldreadilyembraceaggressiveprogramstodecreasesalesoftheirownproducts.Thosesupplyinggoodsandservic-eswouldhavegreatdifficultyembracingarole that involvedspendingtimeandmoney toconvincecustomers thatusing fewerof theirgoodsand serviceswould be in the customer’s best interest. However, thesedays,whenutilitiestalkenergyefficiency,*theyoftenmeanit,andmanyare convinced that they are doing so for good reasons. This reflects adesire to take a more holistic view of their customers’ welfare, alongwith societalneeds. Ithastakentheworldseveraldecadestorealizefullythatenergyisnotaninfiniteresource.Theillusionof infiniteresourceshassupportedand sustained a high standard of living. The electric sector has cometorealizethatavarietyofenergysourcesanddemand-sidealternativesarenecessary tomaintain that standardof living, aswell as to addressglobal warming concerns and provide economic stability and nationalsecurity. The energy industry has also come to realize that among allthemeasures thatcanbeusedasresources inmeetingenergydemand,energy efficiency is the simplest option and themost rewarding in theneartermwithregardtobenefitstotheenergysupplierandtheenergyconsumer. Energy efficiencyhas the capabilityof savingall formsofnon-re-newableenergyresources.Whileenergyefficiencydoesseemsomewhatinconsistentwith the electricity “business”mission of selling energy, itmaybebeneficial for the supplier aswell as for its customers and cer-tainly for theenvironment.

ISENERGYEFFICIENCYCOST-EFFECTIVE?

But is itreallycost-effective?Does itcost theconsumer less inthelong run?

*Based inpart onmaterialpreparedbyClarkW.Gellings andPatriciaHurtado,KellyE.ParmenterandCeciliaArzbacherofGlobalEnergyPartners,LLC.

Electric End-use Energy Efficiency 55

Thequestionofwhetherenergyefficiencyiscost-effectivedependsonboth the typeofenergyefficiencyprogramunderconsiderationandontheutility’scharacteristics.Energyefficiencyprogramsand/oractivi-tiesareutility-specific.Eachmustbeevaluatedonthebasisofeconomicsasappliedtoaparticularutility.Onsomesystems,energyefficiencymaybethecheapestsourceofenergy;however,eachenergyefficiencyactiv-itymustbeevaluatedinlightofcapacityalternatives,environmentalim-pactsandotherenergyefficiencyoptionsthatareavailable.Theoveralleconomics will vary due to variations in weather, load characteristics,fuel costs, generationmix, etc.When a system benefit is not achievedtooffset the costof energyefficiency, the resultmaybehigher costs. Inevaluating thebenefitsandcostsofdemand-sideactivities,oneuseful criteria which can be used is the impact on total costs. Sinceend-use activities can impact a variety of costs, evaluation usually isaccomplished by a modeling technique that separately simulates theprice of electricity to the average customer and to those participatinginprograms.

FINANCIAL IMPACTSOFENERGYEFFICIENCY

Dealingwithenergyefficient technologies involvespromoting theadoption of efficiency end-use technologies, the adoption of electrictechnologieswhichreplacegasoroilenduse,and/or invokingchangeinthecustomer’sbehavior.Costsandsavingsincludeabroadvarietyofitems such asmarketing, advertising and promotion, direct incentives,etc. Inmanycases, these formthegreatestcostsofanenergyefficiencyprogram.AnadditionaleconomicbenefitwhichisevolvingentailsusingenergyefficiencyasaCO2credit.Thiscanhavehugeimpactswhereef-ficient electric technologiesdisplace inefficientgasoroil technologies.

HOWDESIRABLE ISENERGYEFFICIENCY?

The desirability of embracing energy efficiency from an industryparticipantperspectivedependsonmany factors.Among these are thefuel mix, capacity reserves, financial capability, and the potential CO2 reductions fromprograms from themarketparticipants in the region. Wholesale market capacity\, prices, fuel mix and capacity pur-


chasesarethelargestdeterminantsofthemarginalcostimpactsofload-shapemodification. It themarginal fuel is oil or gas for both on- andoff-peakperiods,thenenergyefficiencywilloffergreatpotentialforcostreduction. If the fuelmix is such that off-peakmarginal energy is pro-ducedbycoal,nuclear,windorhydropower,thenothertypesofenergyefficiency suchas those involving load shifting,willbedesirable. Acriticalcapacitysituationprovidesastrongmotiveforinterestinenergyefficiency,especiallyiftheregion’sabilitytobuildnewcapacityislimited.Inthecaseofinvestor-ownedutilities,ifstocksaresellingbelowbookvalueandtheregulatorycommission isnotallowinganadequaterate of return, each new sale of stock hurts the existing shareholders.Energy efficiencymay, therefore, benefit stakeholders by deferring theneed for new capital. For distribution utilities without generation as-setswhoarebilledforcapacitybasedonaninvertedrate, themarginalbenefitsmayexceedcosts for energyefficiencyprograms. On the other hand, where capacity is adequate or the ability tobuildnewcapacityisfeasible,capacity(especiallynewcapacityinvolv-ing advanced coal or nuclear) may be cheaper than energy efficiency.However,neitherof theseoptionscanbe inplaceat thepaceofenergyefficiency.Sincemostregionsareexperiencinggrowth,itwouldbelogi-cal to approximate the cost of potential decreased units of energy byequating them to themarginal cost of supply additional increments ofenergy. Inflationarypressures inmanycasesare forcing themarginal costof electrical energy to exceed the average cost. For small changes insales, it is logical toargue that the serviceprovidercouldafford tousethisdifference (marginal lessaverage) topromoteorfinanceenergyef-ficiency.

ARENEWEDMANDATE

The1970s and1980s showedgreat strides in the rate of improve-mentofend-useelectricenergyefficiency.Theoilembargosofthe1970swereawakeupcall tomuchof theworld that led tosignificantpolicyefforts to curb wasteful energy use and to develop and promote newenergy efficient technologies, processes, and novel methods of energysupply, delivery, and utilization. The result was a notable increase intheefficiencyof theseproduction,delivery,andutilization technologies


and systemsanda companiondecrease in the energy intensityof end-usedevicesandprocesses,whichreduced theglobal rateof increase inenergy consumption. Since the 1990s, the global rate of efficiency improvement hasslowedrelativetothepreviousdecades,withsomeregionsexperiencinglesserratesofimprovementthanothers.Manyfactorshavecontributedto this deceleration; but, in essence, improvement in technology, thedevelopment of efficiency programs by utilities and government or-ganizations, and the implementation of policies as a whole in the lastone-and-a-half decades have not been as effective in furthering energyefficiencyasinthe1970sand1980s—theconsequenceofwhichisgreaterper-capita global demand for energy today than would have beenrequired had efficiency gains kept up with the previous momentum.This discrepancy in efficiency improvement rates since the 1970s is anexampleof theunrealizedpotentialofenergyefficiency.Thisandotheradditional efficiency“resources”haveyet tobe fully tapped. The increasingdemandforelectricity, theuncertainty in theavail-ability of fossil fuels to meet tomorrow’s energy needs, and concernsover theenvironmental impactsresultingfromthecombustionof thosefuels—in particular, greenhouse gas emissions—combine to create arenewedurgencyforenergyefficiencygains.Policymakersandenergycompaniesarewell-positionedtodevelopstrategiesformeetinggrowingandchangingenergyneedsof thepublic throughenergyefficiency. Spurred on by both traditional and renewed drivers, energy ef-ficiency is ready tomake a resurgencewith a new generation of tech-nologies,policiesandprograms.Historyhasdemonstratedhowthetra-ditionaldrivers for energy efficiencyhave impactedworldwide energyconsumption.Theawarenessof limitedfossil fuelresourceshascreatedan impetus to improve the efficient production, delivery, and use ofenergyanddevelopcost-effectivewaystoimplementrenewableenergysources. This awareness has effected changes particularly in highly or-ganized industrialized countries.Degradation to the environment fromenergy related causes has resulted in a significant internationalmove-ment to protect the environment and its inhabitants. The increase inworldwideenergyuse thatgoeshand-in-handwithpopulationgrowthand development has made it necessary to develop new technologiesthat can accomplish a given task with less energy. The threats to na-tional security that result from dependence on non-domestic energyresourceshaveresultedinpolicyeffortstomaximizetheuseofdomestic


resources. Indeed, there has been a growing awareness of the value ofa very important national and international resource—energy efficiency. Thisawarenessisnowheightenedinthefaceofreneweddriversrelatedtoenergysupplyconstraints, increasingfuelcosts,andglobalefforts toreducegreenhousegas emissions.

DRIVERSOFENERGYEFFICIENCY

The primary reasons to increaseworldwide energy efficiency canbegrouped into fourmain factors:

1. Worldwide energy consumption is growing due to populationgrowthandincreasedenergyusepercapitainbothdevelopedanddeveloping countries.

2. Fossil fuel resources are finite, and the cost to extract and utilizetheseresources inanenvironmentally-benignmannerisbecomingincreasinglyexpensive.

3. Adependenceonnon-domestic energy supplies compromisesna-tional security formanynations.

4. Thereisanincreasingperceptionthattheenvironmentissufferingasa resultof resourceextraction, conversion, andutilization.

The relevance of each of these four factors is summarized as fol-lows.

Increasing Worldwide Demand for Energy The overall energy consumption of the world is increasing as aresult of twomain reasons. The primary reason is that the populationisgrowingatanexponentialrate.Since1960, theworldpopulationhasincreased from3.0 billion to 6.6 billion.At this rate, thepopulation in-creasesbyaboutthreepeopleeverysecond—foreveryfivepeopleborn,twopeopledie.TheUnitedNationspredictsthatpopulationgrowthwillslowdownandstabilizeoverthenextcentury,dueinpartto increasedfamily planning throughout the world. Even with a slowdown, it isestimated that the population will reach 9 billion by 2042.What doesthismean forenergyconsumption?Eachnewpersonwillneedashare


of the world’s energy resources. In addition, energy use per capita isincreasing in both developed and developing countries.As countriesbecomemore industrialized, their success will depend on the level towhichtheyimplementefficienttechnologiesandpractices.Forexample,China is currently experiencing the most significant growth in energydemanddue tobotheconomicdevelopmentandpopulationgrowth.

Finite Resources Much of the world depends on a finite supply of fossil fuels tomeet their energy needs. The exact quantity of fossil fuel resources isunderconstantdebate;although, theonepoint thatcannotbedisputedis that the expense to extract fossil fuelswill become increasingly costprohibitive as the supplies becomemore dilute and less available. Thefuels that were once considered to be readily available and cheap arenowbecomingscarceandexpensive.Inaddition,theperceivedenviron-mentalimpactsoffossilfuelcombustionmaybeanotherlimitingfactortotheircontinueduse.Someestimatespredictthatfossilfuelswillonlybeviableasanenergy source foronemore century. Other finite resources include nuclear fuels and unconventionalhydrocarbons.Thequantityofnuclearfuelresourcesforuseinconven-tional lightwaterreactors is thoughttobelessthanfossil fuelreserves.There isapotential forsignificantlymoreusefulenergy tobeextractedfromnuclearreservesifthecontroversysurroundingnuclearpower—inparticular, the use of breeder reactors and the disposal of radioactivewaste—is resolved. This application of nuclear fuels could extend re-source availabilityby severalhundredyears or longer.Unconventionalhydrocarbons (in particular, hydrogen) will likely be another resourceof the future, but at the current time they are relatively uneconomicaltoproduceandutilize. Renewableresourceshavealwaysbeenimportantandwillincreas-ingly be important in the future. However, further technical advance-ments are needed to improve the cost-effectiveness of replacing fossilfuelswith renewable energy forms. Energy efficiency is a relatively quick and effectiveway tomini-mizedepletionofresources.Italsobuystimeforthefuturedevelopmentof alternative resources.

National Security Fossilfuelresourcesarenotevenlydividedthroughouttheworld.


In fact, resources for the two predominant energy sources, petroleumandnaturalgas,areconcentratedintheMiddleEastandinEasternEu-ropeancountries.ManyofthecountriesintheMiddleEastarepoliticallyunstable. Several Eastern European countries are currently undergoingtransition. Countries that rely on fuel imports from other, potentiallylessstablegovernments,runtheriskofcompromisingnationalsecurity.ThisisevidencedbycontinuedtensionswiththeMiddleEast.Effectiveenergy efficiency programs can reduce a country’s reliance on non-do-mesticenergysources,whichcaninturnimprovenationalsecurityandstabilize energyprices.

The Environment The environment appears to be experiencing damage as a directresult of industrialization and fossil fuel consumption. Gaseous andparticulateemissionsfrompowergenerationplantsandmanyindustrialprocesses impact the atmosphere at increasing rates. Effects to the en-vironment include thedestruction of forests inCentral Europe by acidrain and potential climate change due to rising greenhouse gas levels.Moreover,exposuretoairpollutants ishazardoustohumansandotherlivingspecies,andcancauseavarietyofhealtheffects. Inaddition,theextractionand transportationof fossil fuelscanresult inenvironmentaldamage. For example, oil spills from tankers can be disastrous to themarine and coastal environments. The environment will greatly ben-efit fromminimized use of environmentally hazardous energy forms,implementationofnon-pollutingrenewableenergy forms, increasedairpollution control measures, waste management, and improved energyefficiency.

RENEWEDINTEREST

The above considerations—population growth, increased energyusepercapitaindevelopingcountries,limitedresources,increasedcostsassociatedwith extracting and converting less accessible energy forms,national security, and environmental degradation—are all importantconsiderations that point to the need for improved energy efficiency.Historyhasshownthatenergyefficiencyworks,andeffortsthatpromotethedevelopmentofenergyefficienttechnologiesandpracticesareeffec-tivealternatives to efforts that focuson the constructionofnewpower


plantsandonthediscoveryandprocurementofadditionalfiniteenergysupplies. In fact, in the United States, energy efficiency has providedmore“capacity” since theAraboil embargoof1973 thananyefforts toincrease thedevelopmentofnewresources. Thecurrentenergystate is insomewaysverymuchlike thestateduringthe1973oilembargo.Manygeographicregionshavebeenexperi-encingrateshocks,therearestillconcernsoverreducingdependenceonforeignenergy supplies frompoliticallyunstable regions, concerns thattheenvironmentissuffering,andofcourse,theworldwidedemandforenergy is still growing. Two ofmajor differences seen today are 1) theincreasedcognizancethatsupplyingpeak loads incapacityconstrainedareas isveryexpensive,and2) thegreater concern that theremaybealink between climate change and energy-related greenhouse gas emis-sions.Addressing the first issue has led to a proliferation of new de-mandresponsepilotsandprograms.(Section5discussesanewconceptfor marketing programs that integrates energy efficiency and demandresponse.)Addressing the second issue has resulted in a world-widemovementtoreducegreenhousegasemissionsinhopesofarrestingthepaceof climate change. The following subsection illustrates how energy efficiency is animportantcomponentintheportfolioofstrategiestoreducegreenhousegas emissions.

Reducing Greenhouse Gas Emissions The debate continues with some providing evidence they allegeprovestheanthropogenic(i.e.,human-caused)forcingofclimatechangedue to greenhouse gas emissions and others voicing out that there isinsufficient reason to believe that recent climate change is not part ofa natural cycle. It is not the point of this paper to get involved in thedebate ofwhether or not anthropogenic greenhouse gas emissions arelinked to climate change. Rather, the point is to show that reducinggreenhouse gas emissions is, in fact, one of a number of motivationsthat support aglobal imperative to improveenergyefficiency. In terms of alternatives to reduce greenhouse gas emissions, ex-pertsbelievethatenergyefficiencyleadsthelistofaportfolioofstrate-gies,whichalso include:

• Alteration of the power generation mix (e.g., greater use ofrenewables,nuclearpower, andadvancedcoal);


• Fuel substitution (i.e., replacing existing use of greenhouse-gas-intensive fuelswithcleanerenergyforms inelectricitygeneration,industrialprocesses, and transportation);

• Forestation;• Carboncaptureand storage (CCS); and• Improvements in the energy efficiency of end-use devices and

electricitygeneration, transmissionanddistribution.

Greenhousegasmitigationstrategiescanbegroupedintothesevenmain categories responsible for anthropogenic greenhouse gas emis-sions:1. Energy supplyanddelivery2. Transportation3. Buildings4. Industry5. Agriculture6. Forestry7. Waste

Table3-1summarizessomeoftheprimarystrategiesbysector.Thetechnicalmaturity,implementationease,andcostofthemitigationalter-nativesacross the sevencategoriespresented inTable3-1varywidely. For the energy supply and delivery category, themost importantmitigationalternativesconsistofimprovementsintheefficiencyofgen-eration, transmission, and distribution; fuel switching; greater propor-tionsofnuclear energy, renewables, andadvanced coal technologies intheenergysupplymix;andcarboncaptureandstorage.Renewablesareintheformofhydro-power,wind-power,bio-energy,geothermalenergy,solar-thermal, and solar photovoltaic. Carbon capture and storage isgeneral envisioned to be used in conjunction with gas- and coal-firedpowerplants. Thetransportcategoryincludesstrategiesrelatedtoimprovingthefuel efficiency of on-road vehicles, marine vessels, rail transport, andaircraft.Italsoincludesimprovingtheoperationalefficiency(e.g.,factorsrelated to transportscheduling,passenger loading,etc.)of thesemodesof transport.Much focushasbeenplacedon road transportbecauseofits large shareofmobile emissions.Measuresparticularly applicable toroad transport include employing refrigerants with low global warm-


Table 3-1. Potential Strategies to Mitigate Greenhouse Gas Emissions (Metz, et al., 2007)


ing potential, using bio-fuels, or switching to hybrid vehicles, plug-inhybridelectricvehicles,hydrogen-poweredfuelcellvehicles,orelectricvehicles.Encouragingmodal shifting from less tomoreefficientmodesof transport is anotheralternative. Mitigation strategies for residential and commercial buildings fallintothreegeneralareas:energyefficiencyofbuildingsandsystems,fuelswitching, and controlling non-CO2 greenhouse gas emissions. Thereare numerous potential energy efficiencymeasures ranging from thosethat address the building envelope to those that address systems suchas lighting,waterheating, spaceheating, space cooling, ventilation, re-frigeration, andappliances. The industrial category consists of measures to improve the effi-ciency of facilities and processes; fuel switching; energy recovery (e.g.,combined heat and power); use of renewables; recycling and use ofscrap materials; waste minimization; and controlling other (non-CO2)greenhousegasemissions.Carboncaptureandstorageisalsopotentiallyfeasible for large industrial facilities. Mitigationalternatives for theagriculture sectorpertain toenergyefficiency improvementsand land, livestock,andmanuremanagement.Thedevelopmentanduseofbiofuels isacross-cuttingmitigationstrat-egy thatalsorelates toenergysupply. Inaddition, theuseofanaerobicdigesters in manure management practices is also applicable to thegeneral categoryofwastemanagement. Forestry strategies are aimed at either reducing emissions fromsources or increasing removals by sinks. Specific alternatives includemaintaining or increasing forest area, site-level carbon density, and/orlandscapelevelcarbondensity;increasingoff-sitecarbonstocksinwoodproducts;bio-energy; and fuel substitution. Thecategoryofwastemanagementiscomprisedoftechnologiestoreduce greenhouse gas emissions aswell as to avoid emissions. Emis-sion reduction approaches include recovery andutilization ofmethane(CH4); landfill practice improvements; wastewater management; andgenerationanduseofanaerobicdigestergas.Emissionavoidancemeth-ods consist of controlled composting; advanced incineration; expandedsanitation coverage; andwasteminimization, recycling, and reuse. Severalrecentstudieshaveestimatedthepotentialof thesestrate-giesinreducinggreenhousegasemissions,withsomeoftheworktakingintoaccounttheeconomicandmarketpotentialsandsomeoftheworkfocusingjustonthetechnicalpotential.Forexample,EPRIhasanalyzed


severalofthesemitigationopportunitiestoassessthetechnicalpotentialforfuturecarbondioxide(CO2)emissionsreductions,specifically,withinthe scope of the U.S. electricity sector. EPRI refers to thiswork as the“PRISM”analysis (seewww.epri.com).

WHATCANBEACCOMPLISHED?

Energyefficientend-usetechnologiesandpracticesaresomeofthemostcost-effective,near-termoptionsformeetingfutureenergyrequire-ments. Many of them can be deployed faster and at lower cost thansupply-side options such as new clean central power stations. Energyefficiency is alsoenvironmentally-responsible. Several recent studies have attempted to estimate the potentialfor energy efficiency improvements. In addition, the costs associatedwith energy efficiency efforts have been compared with the costs ofother strategies formeeting future energyneeds in a clean, sustainablemanner.Results indicate thatenergyefficiencygainshave thepotentialto contribute significantly to meeting future energy requirements in arelatively cost-effectiveandeasily-deployablemanner. A considerable amount of work has been undertaken in recentyears to assess the energy efficiencypotential. Someof the approachesrelyontechnologiesthatarealreadyavailable;otherscountonexpectedtechnologicaladvances(i.e.,emergingtechnologies);andstillothersde-pend on accelerated technological developments or technology “leaps”tomakealternativesviable.Manyoftheprojectionsassumethatmecha-nisms to remove technical, economic, and market barriers will be inplace.Thefollowingsubsectionssummarizesomerecentestimatesofthefuturepotentialof energyefficiency,witha focusonelectricityuse.

IEAESTIMATES

In their World Energy Outlook 2006 (WEO), the International En-ergyAgency (IEA) discusses two potential scenarios for the world’senergyfuture: thereferencescenarioandthealternativepolicyscenario(International Energy Outlook, 2006). The reference scenario accountsfor all government energy and climate policies andmeasures enactedor adopted as of themiddle of 2006 in the projection of future energy


use patterns through 2030. This scenario does not take into accountanyfuturepolicies,measures,and/ornewtechnologies.Thealternativepolicy scenario on the other hand accounts for all energy and climatepolicies andmeasures currently being considered. Its projections, there-fore, depict what is potentially possible in terms of reaching energygoals ifweact rightaway to implementa setofpoliciesandmeasuresunderconsiderationasof2006.Thetypesofnewmeasures includedinthe alternativepolicy scenario include further improvements in energyefficiency,greater relianceonnon-fossil fuels, andsustenanceof theoiland gas supplieswithin net energy-importing countries. However, theAlternativepolicyscenariosnottakeintoaccounttechnologiesthathaveyettobecommercialized;rather it looksat thepotential forgreater im-provementandincreasedandfasterpenetrationofexistingtechnologiescompared to the reference scenario. Breakthrough technologies are notincluded. Relative to the reference scenario, the policies and measures in-cludedintheAlternativepolicyscenariospaintacleanerenergypicture.Thelatterscenarioisassociatedwithsignificantlylowerenergyuseandagreater shareof less carbon-intensiveenergy sources. Ingeneral,energyefficiency improvements in theAlternativepol-icyscenarioscorrespondtoaglobalrateofdecreaseinenergyintensity(energyconsumedperunitofgrossdomesticproduct)of2.1%peryearover 2004 to 2030 for theAlternative policy scenarios compared with1.7%peryearinthereferencescenario.Muchofthisimprovementoverthe reference scenario is indevelopingand transitioneconomieswherethere ismorepotential for energyefficiency improvements. In terms of electricity use, the global electricity demand (finalconsumptionof electricity) in 2030 is estimated tobe 12% lower in theAlternativepolicyscenarios(24,672TWh)thaninthereferencescenario(28,093TWh)mainlyduetogreaterenergyefficiencyimprovements(seeTable32).Two-thirdsoftheimprovementscomefromenergyefficiencyin residential and commercial buildings (more efficient appliances, airconditioning, lighting, etc.) and one-third comes from improvementsin the efficiency of industrial processes. The savings in residential andcommercialbuildingsaloneequatestoavoiding412GWofnewcapacity,whichisalittlelessthanChina’s2004installedcapacity.Still,comparedwiththeelectricitydemandin2004(14,376TWh),theelectricitydemandis estimated to increase by a factor of 1.7 by 2030 for theAlternativepolicy scenarios and by a factor of 2.0 for the reference scenario.Most


of the increase in electricity demand is expected to be in developingcountries.

Table 3-2. Comparison of Worldwide Electricity Demand in 2030 Projected by the WEO Reference Scenario and the Alternative Policy Scenario————————————————————————————————2004 Electricity 2030 Electricity 2030 Electricity Difference betweenDemand Demand (Reference Demand (Alternative and Alternative Scenario) Policy Scenario) Reference Policy Scenarios in 2030————————————————————————————————14,376 TWh 28,093 TWh 24,672 TWh 3,421 TWh (12%)————————————————————————————————Electricity demand is the final consumption of electricity.Source: World Energy Outlook 2006, International Energy Agency, Paris, France: 2006.

Table 3-3 compares the electricitydemand in 2030of the two sce-nariosforselectedregions.Thelargestpercentagereductionsrelativetothe reference scenario takeplace inBrazil, theEuropeanUnion,China,and LatinAmerica. In terms of the actual quantity of electricity sav-ings, China leads with a savings of 814 TWh relative to the referencescenario.

UNITEDNATIONSFOUNDATIONESTIMATES

In a 2007 report, the United Nations Foundation makes a moreambitiousplan of action to improve energy efficiency. Theplan entails“doubling” theglobalhistoric rateofenergyefficiency improvement to2.5%peryearbyG8countriesbetween2012and2030.(UNFoundation,2007 and [G8 countries includeCanada, France,Germany, Italy, Japan,Russia,theUnitedKingdom,andtheUnitedStates]).(Forreference,therate of energy efficiency improvement averaged 2% per year between1973and1990andthendeclinedtoanaverageof0.9%peryearbetween1990and2004.)(InternationalEnergyAgency,2006)*TheplanalsocallsforG8countriestoreachoutto+5nations(Brazil,China,India,Mexico,andSouthAfrica), specifically, aswell as tootherdevelopingcountries

*Thehistoricenergyefficiencyimprovementratesquotedapplytoagroupof14IEAcoun-tries:Austria,Canada,Denmark,Finland,France,Germany, Italy, Japan, theNetherlands,NewZealand,Norway,Sweden, theUnitedKingdom,and theUnitedStates.

68 The Sm


emand Response

Table 3-3. Comparison of Electricity Demand in 2030 Projected by the WEO Reference Scenario and the Alternative Policy Scenario, Selected Regions (International Energy Agency, 2006)

Electricity demand is the final consumption of electricity.Source: World Energy Outlook 2006, International Energy Agency, Paris, France: 2006.


tohelp themattain efficiencygoals.TheG8 countries represent46%ofglobalenergyconsumptionandareeconomicallybestpositionedtoleadthewayinaddressingefficiencyimprovementsthatcanthenbefollowedbythedevelopingcountries.Together,theG8+5accountforroughly70%ofglobalprimaryenergyuse. Ifaccomplished,thisrateofenergyefficiencyimprovementwouldlowerG8totalenergydemandin2030by22%relativetotheIEA’srefer-ence scenario andwould return energy use to close to 2004 values forthese countries. TherateofenergyefficiencyimprovementproposedintheUnitedNations Foundation report is more aggressive than energy efficiencyimprovementratesreferenced inotherrecentenergyprojectionstudies.Forexample,Figure3-1comparestheUnitedNationsFoundationrateof2.5%with rates assumed in the IEA’sReference andAlternativePolicyScenarios. The economics of theUnitedNations Foundation plan are favor-able.The report estimates that to improve the rate of energy efficiencyto a level of 2.5% per year an investment of $2.3 trillion would berequiredby theG8 countries ($3.2 trillionon aglobal basis) relative totheIEA’sreferencescenario.Thislevelofenergyefficiencywouldavoid$1.9trillioninnewenergysupplybyG8countries($3trillionglobally).Therefore, the net incremental investment requiredwould be $400 bil-

Figure 3-1. Comparison of Annual Energy Efficiency Improvement Rates (UN Foundation, 2007) Energy Efficiency Potential in the U.S.


lion by G8 countries ($200 billion globally).According to United Na-tionsFoundation estimates, otherquantifiablebenefits suchas reducedconsumer energy bills help to pay back this relatively low investmentinroughlythree-to-fiveyears(notincludingthevalueofclimatechangemitigation, energy security, etc.). Inadditiontoglobal-scaleestimates,variousentitieshaveconduct-ed assessments of the potential for energy efficiency at the country orregionallevel.Forexample,EPRIalongwithGlobalEnergyPartnersandTheKeystoneCenterrecentlyestimatedthepotentialforend-useelectricenergy efficiency to yield energy savings andpeakdemand reductions(Gellings,etal.,2006andKeystone,2003).(Note:inthiscontext,energyefficiencypolicies andprograms are assumed to encompass traditionalenergy efficiency measures as well as demand response efforts.) Theresultsof the studyare summarized in the followingparagraphs. Table 3-4displays thepotential energy efficiency impactspertain-ingtoannualenergyreductionintheyear2010.Theanalysiseliminatedeffects of energy efficiency programs currently underway or likely tooccuraccording tohistorical trends.Therefore, itprovidessavingsrela-tive toareferencestateofnoenergyefficiencyprogramactivity. Italsoreflects themaximum achievablepotentialateachcost level; therealistic achievable potentialwould likely be less. The total energy savings po-tential in2010 isestimated tobeclose to230TWh,which isequivalentto 5.5% of the forecasted electricity use for 2010.* Significant impactsare associatedwith energy efficiencyprograms in the residential, com-mercial, and industrial sectors.A fifth of the potential is likely to berealized in the residential sector. Residential sector energy efficiencyprogramstargethighefficiencyairconditionersthatexceedcurrentfed-eralstandards, improvedbuildingshellmeasures,andefficient lightingand appliances.A significantpotential is likely to be achieved throughimprovements inend-usedevicesandenforcementofhigher standardsin new construction. The commercial sector is likely to offer the high-est potential for energy saving opportunities (almost 50% of the totalachievablepotentialislikelytoberealizedfromthecommercialsector).Forthissector,energyefficiencyprogramstargethighefficiencyheating,ventilation and air conditioning (HVAC) programs, improved lighting

*Theforecastedtotalelectricityusefor2010is4155TWhaccordingtoAnnual Energy Out-look 2006, With Projections to 2030.EnergyInformationAdministration,OfficeofIntegratedAnalysis andForecasting,U.S.DepartmentofEnergy,Washington,DC:February2006.


Table 3-4. U.S. End-Use Electric Energy Savings Potential in 2010 (TWh)Note EE is Energy Efficiency (Gellings, et al., 2006)


systems and high efficiency equipment such as refrigeration andmo-tors.Averylargepartofthispotentialislikelytoberealizedfromnewconstruction activities. The remaining 30% of the potential is likely tobeachievedfromtheindustrialsectorwhereenergyefficiencyprogramstargetpremiumefficiencymotorsandefficiencyimprovementsinmanu-facturingprocesses, aswell as lighting improvements. Table3-5displaystheimpactspertainingtopeaksummerdemandreductions for the year 2010, which is equivalent to 7.5% of the fore-casted totalelectricitycapacity for2010.*Similar toenergysavings, theresidential sector is likely to contribute a fifth to the overall demandreduction impact.Residential sectorpeak summerdemand impactsarerepresentedbydirect load controlprogramsandenergyefficiencypro-grams.Thecommercialsectorisforecastedtohavethehighestcontribu-tiontopeakdemandreductions(almost42%oftotaldemandreduction).Commercial sector peak summer demand impacts are represented bydemand curtailment programs that serve to reduce loads during peakdemandperiodsthroughtheuseofautomatedloadcontroldevicesandenergy efficiency programs, which yield the majority of the impactsmainly resulting from HVAC and lighting programs. The industrialsectordemandreductionpotential isclose to thatofcommercialsector;peaksummerdemandimpactsaredrivenprimarilybydemandcurtail-ment programs and energy efficiency programs targeting motors andprocessuses. Figure3-2isanenergyefficiencysupplycurveconstructedforthisanalysis. The supply curve shows the cost per kWh saved versus theamountofenergysavingsachievableateach levelofcost.Thecurve isconstructedbybuildingupthesavingsfrompotentialenergyefficiencymeasuresbeginningwith low-costmeasuresandcontinuingupward tohigh-costmeasures.Analysisresultsshowthatsavingsofnearly40TWhcan be achieved at a cost of less than $0.05/kWh. Similarly, savings ofapproximately150TWhareachievable foracostof$0.10/kWhor less.In addition, savings of nearly 210 TWh can be achieved for less thanabout$0.20/kWh. The low-cost portion of the supply curve offers many potentiallow-cost options for improving efficiency. Typical efficiency improve-

*Theforecastedtotalelectricitycapacityfor2010 is988.4GWaccordingtoAnnual Energy Outlook 2006, With Projections to 2030. Energy InformationAdministration,Officeof Inte-gratedAnalysis and Forecasting,U.S.Department of Energy,Washington,DC: February2006.


Table 3-5. U.S. Peak Summer Demand Reduction Potential in 2010 (GW)Note EE is Energy Efficiency (Gellings, et al., 2006)


ments include removal of outdated appliances, weatherization of thebuildingshell,advancedrefrigerationincommercialbuildings,residen-tial lighting improvements, andHVAC tune-ups andmaintenance.Allthese technologies can be deployed for a cost of less than $0.05/kWh.For a cost of $0.05/kWh to $0.10/kWh, additional energy savings in-clude commercial lighting improvements and efficiency improvementsin industrialmotorsanddrivesaswell as electro-technologies. A similar analysis can be used to estimate the costs for reducingpeak demand (Figure 3-3). Here, the appropriate metric is the cost ofpeak demand in units of $/kW, instead of $/kWh. Examples of peakdemandsavingsopportunities thatareavailable for less than$200/kWinclude audits and weatherization of residential building shells; com-mercial building tune-ups andmaintenance; and time based tariffs forcommercialandindustrialcustomers.Othertechnologiesthatcanbede-ployedatacostof$200/kWto$400/kWincludedirectloadcontrolforresidential air conditioning; advanced commercial (building-integrated)cooling and refrigeration systems; and advanced lighting systems forindustrial, commercial, and residential applications. The assessment shows that there is a substantial amount of cost-

Figure 3-2. Supply Curve for U.S. End-Use Electric Energy Savings, 2010 (Gell-ings, et al., 2006)


effective energy efficiency potential still achievable in theU.S. The op-portunityforsavingsishighestintheresidentialandcommercialsectorsand is somewhat lower in the industrial sector.

CONCLUSION

Improving energy efficiency will require deliberate, concerted,andeffectivepoliciesandprogramsattheinternationalandlocal levelsas well as extensive improvements in technology. All of the studiessummarizedhere require that specific sets ofpolicies andprogramsbeimplemented in order to maximize the potential for energy efficiencyimprovement.Eachoftheseeffortsispartofwhatshouldbeconsideredasanoverall approach todeployinga smartgrid.

ReferencesTestimony of C.W. Gellings, State of New Jersey—Board of Public Utilities—Appendix II,

Group IILoadManagementStudies, January1981.C.W. Gellings, “Demand-side Planning,” Edison Electric Institute Executive Symposium

forCustomerServiceandMarketingPersonnel,November1982.

Figure 3-3. Supply Curve for U.S. Peak Demand Reduction, 2010 (Gellings, et al., 2006)


“ClimateChange2007:Mitigation,”ContributionofWorkingGroupIII to theFourthAs-sessment Report of the Intergovernmental Panel on Climate Change, B.Metz, O.R.Davidson,P.R.Bosch,R.Dave,L.A.Meyer (eds),CambridgeUniversityPress,Cambridge,UnitedKingdomandNewYork,NY,USA:2007.

World Energy Outlook 2006, InternationalEnergyAgency,Paris,France: 2006.Realizing the Potential of Energy Efficiency, Targets, Policies, and Measures for G8 Countries,

UnitedNationsFoundation,Washington,DC:2007.Energy Use in the New Millennium: Trends in IEA Countries, International EnergyAgency,

Paris,France: 200Gellings, C.W.,Wikler, G., andGhosh, D., “Assessment of U.S. Electric End-Use Energy

EfficiencyPotential,”The Electricity Journal,Vol. 19, Issue9,November2006.The Keystone Dialogue on Global Climate Change, Final Report, The Keystone Center, CO:

May 2003.

77

Chapter 4

Using a Smart Grid to EvolveThe Perfect Power System*

Muchhasbeenwrittenaboutoptimizingpowersystems.Improve-mentsarecontinuallysuggestedandevaluated—someeventuallyimple-mented.Butmostly thepower systemengineer’s thinking ismiredbytwo anchors: the existing systemand theview that technical solutionsregardingpowersystemsareboundedbycentralgenerationononeendand themeterat the consumer’s facilityat theother. Theworld’selectricityinfrastructure,consistingofvarioussourcesof generation, a set of transmission networks and a variety of distri-bution systems, has evolved through time.After electric utilities andpower systemswere created out of the need to supply arc lamps andelectric streetcars inurbanareas, thesystemsgrewas truedemand forelectricitygrewandasdevelopmentspread.Throughoutthisexpansion,the electrical system, and to a certain extent itsdesign criteria, remainbasedon technologies thathavebeen largelyunchanged for50years. Albeitthemostcomplexmachineeverbuilt,itislargelycomprisedof simple parts—transformers, circuit breakers, cables and conductors.While some sensors have been added, the power system is bolted to-gether, mechanically controlled and monitored by reactive computersimulation that is often 50 times slower than its operational move-ments. Asaresult,electricservicereliabilitytohomesandbusinessesisfarless thanperfect.For example,over the last tenyears every consumer,onaverage inmostdevelopedcountries,hasconsistentlybeenwithoutpowerfor100to200minutesormoreeachyear.Inaddition,thequalityof that service, evenwhile on, has continued to deteriorate. There arenowmoreperturbations in thequalityofpower thaneverbefore.And

*Theauthorwishes toacknowledge thecontributionsofKurtE.Yeager,PresidentEmeri-tus of the Electric PowerResearch Institute, and of the support of theGalvin ElectricityInitiative to this section.


thisatatimewhenconsumersareincreasinglyusingdigitaldevicesassocietymoves towardaknowledge-basedeconomy. Even lessperfection isevident in theend-usesof the system—theenergyconsumingdevices,appliancesandsystemswhichconvertelec-tricity intoheat, light,motivepower, refrigerationand themanyotherapplications. Indeed to achieve perfection in electric energy service,engineers need to deploy the most efficient, environmentally friendlydevices practicable and integrate them into building and processingsystems that allowperfection to extend to thepointof end-use. So what if you could start with an absolutely clean sheet of pa-per—what if therewasnopower systemandwe coulddesignone—asmart grid—using the best existing and evolving technology? Thischapter takes precisely that perspective, to determine the path to theperfect system.

THEGALVINVISION—APERFECTPOWERSYSTEM

The design of the perfect power systemmust startwith the con-sumer’sneedsandprovideabsoluteconfidence,convenienceandchoiceintheservicesprovidedsoastodelighttheconsumer.Perfection,basedontheconsumer’sperspective,mustbethedesignprinciple.Traditionalpower systemplanners andpractitionerswill find this perfection con-cept hard to embrace. Delivering perfect electric energy service seemsnearly impossible and appears inherently expensive—an impracticalnotion to those constrained by the conventionalwisdomof the powersector. InaprojectsponsoredbytheGalvinElectricity Initiative, Inc., thefoundersofMotorolaCorporationhaveenabledresearcherstodevelopapowerfulvision,onethatisunconventional,andcapableofchallengingthebestmindsintheindustry.BobGalvin,formerCEOofMotorolaandan industry icon, crystallized the framework thatwas tobedevelopedby clarifying that:

“My vision is not power system based on requirements beingdriven by future customer needs for end-use technologies, but aPerfect Power System unleashing self-organizing entrepreneurswhose innovationswill greatly increase the value of electricity inthe21st century.

Using a Smart Grid to Evolve the Perfect Power System 79

Further, he defined a clear andunambiguousmeasure of value—“the system does not fail.” Todefine the path to a perfect electric energy service system, theGalvinInitiativeresearchteam,inconcertwiththevisionandinspirationofBobGalvin,literallytooka“cleansheetofpaper”tothechallengeofabsolutelymeeting the criteriaofperfection. As a result, the research team identified four potential systemConfigurationsassociatedwith thispath to thePerfectPowerSystem:

• PerfectDevice-levelPower• Building IntegratedPower• DistributedPower• Fully IntegratedPower:ASmartGrid

This path started with the notion that increasingly consumersexpect greater performance from end-use devices and appliances. Notonlydoesenhancedperformanceofend-usedevices improve thevalueofelectricity;butalsoonceperfectionatthislevelisdefined,itprovideselements of perfection that enable, in turn, a dispersed perfect system.Dispersedperfectsystemsrespondtoconsumer’sdemandforperfection,butalsoaccommodateincreasingconsumerdemandsforindependence,appearance,pride, environmentally friendly systemsandcost control. Dispersed systems or building integrated power systems can inturnbeinterconnectedtoformdistributedperfectsystems.Oncedistrib-utedperfectsystemsareachieved,theycanbeintegratedwithtechnolo-gies that enablea fully integratedperfectpower system toexist. The research team used this broad array of technology develop-ment opportunities to establish general design criteria for the perfectpower system. This established the groundwork for subsequent tasksandtheeventualdevelopmentofthepossiblesystemconfigurationsandassociatednodesof innovation.

Defining the Perfect Electric Energy Service System Theresearchteamusedpanelsofenergyexpertstodefineaperfectelectric energy service system in terms of what it would accomplish:The Perfect Power System will ensure absolute and universal availability of energy in the quantity and quality necessary to meet every consumer’s needs. Thefocusofthesystemisontheserviceitprovidestotheenergyusers,and any definition of a perfect system has to be considered from the


perspectiveof theenergyusers. Inorder toprovideserviceperfection toall energyusers, theper-fectpower systemmustmeet the followingoverarchinggoals:

• Be smart, self-sensing, secure, self-correcting, and self-healing

• Sustainfailureof individualcomponentswithoutinterruptingser-vice

• Beable to focuson regional, specificareaneeds

• Beabletomeetconsumerneedsatareasonablecostwithminimalresourceutilizationandminimalenvironmental impact(consumerneeds include functionality,portability, andusefulness)

• Enhance thequalityof life and improveeconomicproductivity

Design Criteria The design criteria that would be employed to meet these per-formance specificationsmust address the following key power systemcomponentsorparameters:

1. End-UseEnergyServiceDevices2. SystemConfigurationandAssetManagement3. SystemMonitoringandControl4. ResourceAdequacy5. Operations6. Storage7. Communications

The end-use devices are the starting point in the design of theperfect power system. They are the point of interfacewith the energyuserand themechanismbywhich theenergyuser receives thedesiredservice,suchas illumination,hotwater,comfortablespaceconditioning(heatingor cooling), andentertainment.

Path to the Perfect Power System Nowthatthebasicspecificationsandcriteriafortheperfectpowersystemhavebeen articulated,we cannow focuson thevariouspoten-tially perfect power system configurations envisioned by the GalvinInitiative. It isalso important to recognize thatnodesof innovationarerequiredtoenableandachieveperfection. In turn,keytechnologiesare


the basic building blocks needed to achieve the necessary innovativefunctionalityadvancements.

OVERVIEWOFTHEPERFECTPOWERSYSTEMCONFIGURATIONS

The basic philosophy in developing the perfect power system isfirst to increase the independence, flexibility, and intelligence for opti-mizationof energyuse and energymanagement at the local level; andthen to integrate local systems as necessary or justified for deliveringperfectpower supplyand services. Thispathstartedwiththenotionthatincreasinglyconsumersexpectperfectionintheend-usedevicesandappliancestheyhave.Notonlydoesportabilityenableahighlymobiledigitalsociety;butalsoonceperfectioninportabilityisdefined,itprovideselementsofperfectionthatenable,inturn,alocalizedperfectsystem.Localizedperfectsystemscanalsoaccom-modate increasing consumer demands for independence, convenience,appearance,environmentally friendlyserviceandcost control. Local systems can in turn be integrated into distributed perfectsystems.Distributedperfectsystemscan, in turnbe interconnectedandintegrated with technologies that ultimately enable a fully integratedperfectpowersystem.Figure4-1summarizeseachofthesesystemcon-figuration stages. Each of these configurations can essentially be considered a pos-sible structure for the perfect power system in its own right, but eachstage logically evolves to the next stage based on the efficiencies, andquality or service value improvements to be attained. In effect, thesepotential systemconfigurationstagesbuildoneachother starting froma portable power system connected to other portable power systemswhich then can evolve into a building integratedpower system, a dis-tributedpowersystemandeventuallytoafullyintegratedpowersystemas reflected inFigure4-2.

DEVICE–LEVELPOWERSYSTEM

Thefirstlevelofdevelopmentfortheperfectpowersystemiswhatwewill call the“device-level”powersystem.Thisscenario takesadvan-


tage of advancements in advanced technologies including nanotechnol-ogy,biosciences, sensorsandadvancedmaterials.This scenariohasonlymodestneedsforcommunicationbetweendifferentpartsofthesystemasit essentially represents the capabilityof end-use technologies tooperatein an isolated state and on their ownwith extremely convenientmeansof charging their storagesystems fromappropriate localenergysources.

Advantages of the Perfect Device-levelPower System and Relevant Nodes of Innovation Theperfectdevice-levelpower systemhasmanyadvantages:

• The reliability andderivative quality of equipment andprocessesis determined locally and is, therefore, not dependent on a mas-sive power delivery and generation infrastructure that hasmanypossible failure scenarios.

Figure 4-1. Path to the Perfect Power System (www.galvinpower.org)


• It is the most flexible system configuration. The system is notdependent on any existing infrastructure (and, therefore, is idealfor developing systems and remote power requirements) but isalsoapplicable to systems thatarealreadydeveloped (to takead-vantage of the existing infrastructure as an energy source for thedevice-level systems).

• Innovations in end-use technologies, storage, etc., can be utilizedimmediately without significant issues of control and integrationwith thepowerdelivery system.

• There are tremendous opportunities for energy savings throughlocal optimization of powering requirements andminiaturizationof technologies.

• Renewables (solar, wind, other sources) can easily be integratedlocallyasanenergy source for thedevice-levelpower systems.

Figure 4-2. The Perfect Electric Energy System—System Configurations and Nodes of Innovation (www.galvinpower.org)


Eventuallydevice-levelpower systemsmayneed tobe connectedto building integrated or distributed power systems for bulk energysupply. Anexampleofadevice-levelpower system isprovided inFigure4-3. This illustrates variousportable devices and inductive charging aselementsofportablepower.

BUILDING INTEGRATEDPOWERSYSTEMS

The “buildingintegrated”powersystemisthenextlevelofintegra-tionafterthedevice-levelpowersystems.Inthisscenario,energysourcesandapowerdistributioninfrastructureare integratedat the local level.Thiscouldbean industrial facility,acommercialbuilding,acampusofbuildings,or a residentialneighborhood.

Advantages of the Building Integrated Power System &Relevant Nodes of Innovation Integrationatthelocallevelprovidesanumberofadvantagesoverdevice-levelpowersystems (at thecostofadditional infrastructureandcommunication requirementsneeded for this integration):

• Energy availability can be optimized across a larger variety ofenergysources,resultinginimprovedeconomicsofpowergenera-tion.

• Createsaninfrastructureformoreoptimummanagementofoverallenergyrequirements(heating,cooling,power)thanispossiblewiththeportable system.

• Still allows for local control andmanagement of reliability at thelocal level.

One conceptual graphic for a building integrated power systemis shown in Figure 4-4. TheDCpoweredhouse combinesmanyof thenodes of innovation required in the device-level power system andcombines them into a single isolatedpower system suchas ahouseoroffice complex.

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Figure 4-3. Device-level Power (www.galvinpower.org)

86 The Sm


emand Response

Figure 4-4. Building Integrated (Localized) Power (www.galvinpower.org)


DISTRIBUTEDPOWERSYSTEMS

The distributed power system involves interconnection of dif-ferent localized systems to take advantage of power generation andstorage that can supportmultiple local systems. This system still haslimitedneedsforextensivepowerdeliverygridinfrastructures,butin-terconnectionoflocalsystemsallowssharingofgenerationandstoragecapabilities over wider areas for more efficient energy management.The structure also can result in improved reliability by allowing forenergy supply alternatives.

Advantages of the Distributed Power System &Relevant Nodes of Innovation The main advantage of the distributed configuration is that itprovides for additional flexibility in power generation and storagesolutions. The main communications and control is still expected tobe localized, and the energy management can be optimized at thelocal level, but also considering the availability of power from othersourcesbesides the localsystems.Thesemorecentralizedsystemscanincorporate bothgeneration and storage systems. This additional flexibility is enhanced by a use of communica-tions, control hierarchy and computational ability. This naturally re-sults in an increase in infrastructure complexity. The concept of thedistributedsystemistooptimizeperformancelocallywithoutcompletedependence on the bulk power system infrastructure (thismaximizesreliability), but being able to take advantage of the overall infrastruc-ture to optimize energy efficiency and energyuse. In this configuration, energy performance can be optimizedthrough a market structure where appropriate values are placed onall-importantquantities(reliability,societycostsofdifferentsourcesofgeneration,importanceoftheenergytodifferentdevicesandsystems,storagesystemsavailability,etc.).Areal-timesystemcanoptimizebothenergyandreliabilitythroughtheinterconnectionofthelocalsystems,availabilityofcentralgenerationandstorage,andreliabilityandpowerqualitymanagement technologies. Additionally, reliability and power quality will be assuredthrough technologies in individual devices and local systems, aswellas centralized technologies. Like distributed generation, these powerquality and reliability technologies will receive priority at the local


level in this scenariowith theaddedability toexport servicesor takeadvantageofsomecentralizedservicesasappropriatetooptimizeover-allperformance.TheDCdistributiondescribedinthelocalizedsystemstill provides a foundation for implementation of local technologiesfor improvedquality, reliabilityandperformance. Figure4-5providesa visual representation of a distributed configuration that integratesrenewable and fuel cell technologies.

FULLY INTEGRATEDPOWERSYSTEM:THESMARTGRID

The final level of development involves a configuration that en-ables the complete integrationof thepower systemacrosswide areasinto a smart grid. The primary difference between this configurationand the distributed power configuration is the inclusion of a central-ized generation sources and the possiblymoremodest use of distrib-uted energy resources (DER), although the opportunity for DER tobe included in the optimization is inherent in the design. The designimplies full flexibility to transport power over longdistances to opti-mizegenerationresourcesandtheabilitytodeliverthepowerto loadcenters in themost efficientmannerpossible coupledwith the strongbackbone. Figure4-6 providesasimplediagramofafullyintegratedperfectpower system which integrates power electronics, building systems,sensors, communications and computational ability that provides foranoptimalpower system that is self healing andwill not fail.

NODESOF INNOVATION

Inaddition tooutlining theconceptualdevelopmentofplausibleperfectpowersystemconfigurationsitisequallyimportanttoidentify“nodesofinnovation”thatareessentialandcontributetothedevelop-mentof theperfectsystemconfiguration.Thesenodescanincludetheevolutionofentirelynewend-usedevices,theproliferationofexistingdevices now available—but having limitedmarket penetration today,plus anynumber of possible electric power systems technologies andconfigurations. The Galvin Research Team selected the following nodes of in-

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Figure 4-5. Distributed Power (www.galvinpower.org)

90 The Sm


emand Response

Figure 4-6. Fully Integrated Power (www.galvinpower.org)


novationthatwillbecritical fordevelopingtheperfectelectricenergysystemsdescribed in theprevioussection.Noneof theperfect systemconfigurationsarecapableofbeingdeployedtodaywithouttheevolu-tionofoneormorenodesof innovationbeingenhanced.Thesenodescanbemostenhancedbycertainelementsofrelatedtechnologies thatmaybepart of thosenodes. The eight critical nodesof innovation identified include:

• Communications• ComputationalAbility• DistributedGeneration• PowerElectronics andControls• EnergyStorage• BuildingSystemsEfficientAppliances andDevices• Sensors

Thereadershouldnotethatthereareasubstantialnumberofkeytechnologies thatappear tohavethegreatestprobabilityofadvancingoneormoreof the candidatePerfect Systems. Futurework is neededtostudythosetechnologiesthatmaybeessentialtoportable,dispersedordistributedconfigurations.Itwasthisbeliefthatoncethosesystemshadevolved, theperfect fully integratedconfigurationwould literallyself-organize. Formore informationon theperfectpower systemvisit theGal-vinElectricity InitiativeWebsite atwww.galvinelectricity.org.

CONCLUSION

This chapter lays out possible configurations that may lead re-searchers and practitioners to stimulate thinking about evolving im-provedpower systems resulting in a smart grid. Power system engineers continue to debate the best approachto optimizing existing electric infrastructures in the developedworld and planning and deploying new infrastructures in develop-ing countries. Typically this debate ismired in amental frameworkthat evolves from the traditional electric industry. Starting from thebeginning, engineers are taught todesign, analyze andoperate bulk


powersystems.Naturally,thisapproachisreinforcedasgraduateen-gineersenter industry.This chapteroffersanentirelynewapproach.By takinga clean sheet ofpaper andapproaching thedesign fromaconsumer perspective it is possible to unleash innovation and offersubstantive improvement in quality and reliability. The result maywellbetheevolutionofnewsystems—oritmaybetheaugmentationof existing systems. Timewill tell.

ReferencesPhase I Report: The Path to the Perfect Power System, 2005, www.

galvinpower.org.Phase I Report: Technology Mapping, Scanning and Foresight, 2005,

(www.galvinpower.org).

93

Chapter 5

DC Distribution & the Smart Grid

Thomas Edison’s nineteenth-century electric distribution systemreliedondirectcurrent (DC)powergeneration,delivery,anduse.Thispioneering system, however, turned out to be impractical and uneco-nomical,largelybecauseinthe19thcentury,DCpowergenerationwaslimited to a relatively low voltage potential andDC power could notbe transmitted beyond a mile. Edison’s power plants had to be localaffairs, sited near the load, or the load had to be brought close to thegenerator. Directcurrent(DC)isacontinuousflowofelectricityinonedirec-tionthroughawireorconductor.Directcurrentiscreatedbygeneratorssuchasfuelcellsorphotovoltaiccells,andbystaticelectricity,lightning,andbatteries. Itflows fromahigh toa lowpotential; forexample, inabattery,fromapositivetoanegativepole.Anydevicethatreliesonbat-teries—aflashlight, aportableCDplayer, a laptop computer—operatesondirectcurrent.Whenrepresentedgraphically,DCvoltageappearsasa straight line,usuallyflat. Alternating current (AC) is electricity that changes direction atregular intervals. It builds to amaximumvoltage in onedirection, de-creases tozero,buildsup toamaximumin theoppositedirection,andthenreturnstozerooncemore.Thiscompletesequence,or cycle,repeats,andtherateatwhich it repeats iscalled the frequencyof thecurrent. IntheU.S., theAC power provided to a home outlet has a frequency of60cyclespersecond.Thisisexpressedas60hertz(Hz),thehertzbeingaunit equal toone cycleper second.

ACVS.DCPOWER:ANHISTORICALPERSPECTIVE

EarlypowersystemsdevelopedbyThomasEdisongeneratedanddelivered direct current (DC).However, DC power systems hadmanylimitations,most notably that power typically could not be practicallytransmittedbeyondadistanceof aboutonemile.


Moreover, because changing the voltage of DC current was ex-tremely inefficient, delivery of power with direct current in Edison’stime meant that separate electric lines had to be installed to supplypower to appliances and equipment of different voltages, an economi-cally and physically impractical approach.Another limitationwas thatDCcurrent incurredconsiderablepower losses. Edison’s concept for electrification of the U.S.—which includedroyalties from his patents on direct current systems—was to deployrelatively small scale, individualDC plants to serve small areas—suchas the Pearl Street Station, which powered a part of New York City’sfinancialdistrict. But GeorgeWestinghouse’s polyphase alternating current (AC)power system—invented by Nikola Tesla and used with transformersdevelopedbyWilliamStanley,Jr.,whoalsoworkedforWestinghouse—proved to be far superior technically and economically. The voltage ofAC could be stepped up or decreased to enable long distance powertransmissionanddistribution to end-useequipment. Edison fought vociferously against the use of alternating current-based systems, which he claimed would be dangerous because of thehigh voltage at which powerwould need to be transmitted over longdistances.

“My personal desire would be to prohibit entirely the use of al-ternating currents.Theyareunnecessaryas theyaredangerous.”

—Thomas Edison, 1889, Scientific American

HeevenwentsofarastodemonstratethedangerofACbyusingit to electrocute aConey Island elephant namedTopsywhohadkilledthreemen.Healsoelectrocutednumerouscatsanddogsprocuredfromneighborhood boys. But despite proving that alternating current couldbeaneffectivemeansof electrocuting thesehapless creatures, its supe-riority toDC for transmissionanddistributionwas compelling. Alternating current can beproducedby large generators, and thevoltageofalternatingcurrentcanbesteppedupordownfor transmis-sionanddelivery.Thedistance limitationofdirect current and thedif-ficulties of changingvoltagesproved critical factors in abandoningDCsystems in favor of those based onAC.With DC systems, power hadto be generated close towhere it was used. This resulted in problem-aticreliabilityandeconomics. If thelocalplantfailed, theentiresystem

DC Distribution & The Smart Grid 95

wasdown.Andbecauseinitialpowersystemsweredevotedtolightingloads and systems only generated power at times of high usage, thecost of energywas high—oftenmore than $1 per kWhwhen adjustedfor inflation topresentdollars (2005)—compared toanaveragecost forresidential electricity todayof 8.58¢perkWh. Engineers wanted to Interconnect systems to improve reliabilityandovercome theeconomic limitationsofDCelectrical systems. Ifonearea’s powerwere out because of a problem at the generator, then theadjacent townwould be available to pick up the load. In addition, byinterconnecting isolated systems, a greater diversity of load was ob-tained,whichwould improve load factor and enablemore economicaloperationof thegenerationplants. Anothermajordriverwas thedesire tomakeuseofhydroelectricpower sources located far from urban load centers, which made longdistance transmission essential, and thereforemade alternating currentessential.

Transformers Transform the Power Delivery System Byusingtransformers,thevoltagecanbesteppeduptohighlevelssothatelectricitycanbedistributedoverlongdistancesatlowcurrents,andhencewith low losses. Transformersthatcouldefficientlyadjustvoltagelevelsindifferentpartsofthesystemandhelpminimizetheinherentpowerlossesassoci-atedwith long-distancedistributionwereacriticalenabling technologythatledtotoday’sAC-dominatedpowerdistributionsystem.Transform-ersdonotworkwithDCpower. Effective transformerswerefirstdemonstrated in1886byWilliamStanley of theWestinghouse Company.According to the Institute ofElectrical andElectronicsEngineers (IEEE)HistoryCenter, Stanleyfirstdemonstrated the potential of transformers to enableAC transmissionatMainStreet inGreatBarrington,Massachusetts. He demonstrated their ability to both raise and lower voltage bystepping up the 500-volt output of a Siemens generator to 3000-volts,lightingastringof thirtyseries-connected100-volt incandescent lamps,and then stepping thevoltagebackdown to 500-volts.Wireswere runfrom his “central” generating station alongMain Street in Great Bar-rington,fastenedtotheelmtreesthatlinedthatthoroughfare.Atotalofsixstep-downtransformerswerelocatedinthebasementsofsomeMainStreetbuildingsto lowerthedistributionto100-volts.Atotalof twenty


business establishmentswere then lightedusing incandescent lamps. Stanley’s demonstration of raising the generator voltage to 3000-volts and then back down again was exactly the same concept asemployed in present day power systemswhere a “generator step-up”transformer isused to raise the systemvoltage toaveryhigh level forlongdistancetransmission,andthen“largesubstation”transformersareused to lower thevoltage to some intermediate level for localdistribu-tion. Similar alternating current systems that use transformers eventu-allyreplacedThomasEdison’sdirectcurrentsystems.Stanley’sinstalla-tion inGreatBarringtonwas thefirst such system to include all of thebasic features of large electric power systems as they still exist morethanonehundredyears later.

Centralization Dictates AC Instead of DC Other factors led to thepreference forACpower transmission in-steadofDCpowerdelivery—mostnotablyadesire for large-areagridsrelyingoncentralizedpowerplant,suchashydroelectricdams.Havinga transmission and distribution system that could provide hydro-elec-tricity to cities or to remotely located industries such as gold or silvermines in theRockyMountainswasalsoaneconomic imperative. Such development relied not only on transformers, but on devel-opmentofpolyphasealternating currentgeneratorsper the InstituteofElectrical andElectronicsEngineers (IEEE). NiagaraFallsrepresentedashowplaceofaverydifferentsort.Hereelectricalengineerswereconfrontedwithoneofthegreattechnicalchal-lengesof theage—howtoharness theenormouspower latent inNiag-ara’sthunderingwatersandmakeitavailableforusefulwork.Yearsofstudyandheateddebateprecededthestart-upofthefirstNiagaraFallsPowerStationinthesummerof1895,asengineersandfinanciersarguedaboutwhetherelectricitycouldbereliedontotransmitlargeamountsofpower the20miles toBuffaloand, if so,whether it shouldbedirectoralternating current. The success of the giant polyphase alternating cur-rentgeneratorsmadeclearthedirectionsthatelectricpowertechnologywould take in thenewcentury. In the 25 years following the construction of the Niagara FallsPower Station, various technological innovations and other factors ledawayfromtheearlysmall-scaleDCsystems,andtowardsystemsbasedupon increasingly larger-scale central-station plants interconnected via


transmissionlinesthatcarriedalternatingcurrent.Nowcitiesandtownscould be interconnected, and power could be shared between areas.Duringthisperiod,transmissionvoltagesashighas150kVwerebeingintroduced,andsorelativelylargeamountsofpowercouldbetransmit-tedefficientlyover longdistances. In addition to technical and market forces, the government alsoplayed a role in development of centralized power systems and thusreliance onAC transmission. Public policy and legislation encouragedthe movement to larger centralized systems, and by the 1970s, morethan95%ofallelectricpowerbeingsoldintheU.S.wasthroughlargecentralizedpower systems. Asa result, alternating current (AC)distributionwas far superiorfortheneedsofarobustelectrical infrastructure.UnlikeDCpower, thevoltage ofAC could be stepped upwith relatively simple transformerdevices for distance transmission and subsequently stepped down fordeliverytoappliancesandequipmentinthehomeorfactory.AndNikolaTesla’s inventionof a relatively simpleAC inductionmotormeant endusers neededAC,which could be generated at large central plants forhigh-voltagebulkdeliveryoverlongdistances.(SeethesectionAC versus DC: An Historical Perspective formore on the attributes ofAC andDCpower, andwhyACoriginallyprevailed.) Despite a vigorous campaign against the adoption of alternatingcurrent,EdisoncouldnotovercometheshortcomingsofhisDCsystem.ACwonout,andtodayutilitiesgenerate,transmit,anddeliverelectric-ity in the formof alternating current. Although high-voltage direct current (HVDC) is now a viablemeansof long-distancepower transmissionand isused innearlya100applicationsworldwide,nooneisadvocatingawholesalechangeoftheinfrastructure fromAC toDC,as thiswouldbewildly impractical. ButanewdebateisarisingoverACversusDC:shouldDCpowerdelivery systems displace or augment theAC distribution system inbuildings or other small, distributed applications?Edison’s original vi-sion fora system thathasDCgeneration,powerdelivery, andend-useloads may come to fruition—at least for some types of installations.Facilitiessuchasdatacenters,campus-likegroupsofbuildings,orbuild-ing sub-systemsmayfind a compelling value proposition in usingDCpower. SeveralconvergingfactorshavespurredtherecentinterestinDCpowerdelivery.Oneofthemostimportantisthatanincreasingnumber


of microprocessor-based electronic devices use DC power internally,converted inside thedevice from standardAC supply.Another factoristhatnewdistributedresourcessuchassolarphotovoltaic(PV)arraysandfuelcellsproduceDCpower;andbatteriesandothertechnologiesstoreit.SowhynotaDCpowerdistributionsystemaswell?Whynoteliminate the equipment that converts DC power toAC for distribu-tion, thenback again toDCat the appliance? Advocates point to greater efficiency and reliability from a DCpowerdeliverysystem.Eliminating theneed formultipleconversionscould potentially prevent energy losses of up to 35%. Less wasteheat and a less complicated conversion system could also potentiallytranslate into lower maintenance requirements, longer-lived systemcomponents, and loweroperating costs. In a larger context, deployment of DC power delivery systemsas part ofAC/DC “hybrid” buildings—or as aDC powermicro-grid“island”thatcanoperateindependentlyofthebulkpowergrid—couldenhance the reliability and security of the electricpower system.

BENEFITSANDDRIVERSOFDCPOWERDELIVERYSYSTEMS

Due,inpart,totheinterestinthesmartgrid,thespecterofseveralpotentialbenefitsaredrivingnewfoundinterestinDCpowerdeliverysystems: Increasingly, equipment operates on DC, requiring conver-sion from AC sources. Allmicroprocessors requiredirect currentandmanydevicesoperateinternallyonDCpowersinceitcanbepreciselyregulatedforsensitivecomponents.BuildingelectricalsystemsarefedwithACthatisconvertedtoDCateveryfluorescentballast,computersystem power supply, and other electronic device. As one specialtyelectronicsmanufacturerput it, “DC is thebloodof electronics.”

AC-DCconversionswithinthesedeviceswastepower.Thepowersuppliesthatconverthigh-voltageACpowerintothelow-voltageDCpowerneededby the electronic equipmentused in commer-cialbuildingsanddatacenterstypicallyoperateatroughly65%to75%efficiency,meaningthat25to35%ofalltheenergyconsumediswasted.Abouthalf the lossesare fromAC toDCconversions,therestfromsteppingdownDCvoltageinDCtoDCconversions.


SimplygettingridofthelossesfromACtoDCconversioncouldreduceenergylossesbyabout10to20%.Likewise,anincreasingnumberofportablegadgetssuchascellphonesandpersonaldigi-talassistants(PDAs)requireanAC-DCadapter,whichalsoresultsinpower lossesduring conversion.Considered in aggregate, themillions ofAC toDC conversions necessitated for the operationof electronics extract ahuge energy losspenalty.

Distributed generation systems produce DC power. Many dis-tributedgeneration sources suchasphotovoltaic cells and fuel cells—and advanced energy storage systems (batteries, flywheels, and ultracapacitors) produce energy in the form of DC power. Other devicescan also be suited to DC output, such as microturbines and windturbines. Even hybrid vehicles such as the Toyota Prius could serveasDCgenerators in emergencieswith the right equipment to connectthem to the electrical system. The energy losses entailed in converting DC to AC power fordistribution could be eliminated with DC power delivery, enhancingefficiency and reliability and system cost-effectiveness. For instance,EPRISolutions estimated that the total lifecycle costofPVenergy forcertainDCapplicationscouldbereducedbymorethan25%comparedtousingaconventionalDCtoACapproach—assumingthatthespecificend-use applications are carefully selected.2 The costs of newdistrib-uted generation such as PV arrays are still high, so optimization ofdesignswithDCpowerdeliverymayhelpspuradoptionandefficientoperation.

Storage devices such as batteries, flywheels and capacitors store and deliver DC power. This again helps avoid unnecessary conver-sionsbetweenACandDC. DC power could help power hybrid automobiles, transit buses, and commercial fleets.Plug-inhybridvehiclescangogreaterdistanceson electricity than today’s hybrids since they have larger batteries.ThesebatteriesstoreDCpower,sochargingthemwithelectricityfromsolar photovoltaic arrays and other distributed sources could reducerelianceongasoline,enhancingsecurityandemergencypreparedness. DC power delivery could potentially enhance energy efficiency in data centers, a pressing need. One of the most promising poten-tial applications ofDCpower delivery is in data centers,which have


densely packed racks of servers that use DC power. In such centers,AC is converted toDC at the uninterruptible power supply, to facili-tate storage, then is converted again to push out to the servers, andis converted one more time to DC at each individual server. Theseconversionswastepowerandgenerateconsiderableheat,whichmustbe removed by air conditioning systems, resulting in high electricitycosts. Ina10–15megawatt(MW)datacenter,asmuchas2–3MWmaybelostbecauseofpowerconversions.Asthesecentersinstallevermoredenseconfigurationsofserverracks,DCpowerdeliverysystemsmaybe ameans to reduce skyrocketingpowerneeds.

Improved inverters and power electronics allow DC power to be converted easily and efficiently to AC power and to different voltage levels.Componentimprovementsenablegreaterefficiencythaninthepast,andimprovetheeconomicsofhybridAC/DCsystems.Althoughimproved electronics also enhance AC-only systems, such enablingtechnologymakes theDCpowerdeliveryoption feasible aswell. The evolution of central power architecture in computers and other equipment simplifies DC power delivery systems.At present,deliveringDCtoacomputerrequiresinputatmultiplevoltagestosat-isfythepowerneedsofvariousinternalcomponents(RAM,processor,etc.)Developmentofacentralpowerarchitecture,nowunderway,willenable inputofonestandardizedDCvoltageat theport, streamliningdelivery systemdesign. DC power delivery may enhance micro-grid system integration, operation, and performance.Anumberof attributesmakeDCpowerdeliveryappealingforuseinmicro-grids.WithDCdistribution,solid-stateswitchingcanquicklyinterruptfaults,makingforbetterreliabilityandpowerquality.IftiedintotheACtransmissionsystem,aDCpowermicro-gridmakesiteasytoavoidback-feedingsurplusgenerationandfaultcontributionsintothebulkutilitysystem(bytheuseofarectifierthat only allows one-way power flow). In addition, in a low-voltageDCsystem,suchaswouldbesuitable forahomeorgroupofhomes,a line of a given voltage rating can transmit much more DC powerthanACpower. Ofcourse,whileDCcircuitsarewidelyusedinenergy-consumingdevices and appliances, DC power delivery systems are not com-monplace, and therefore face the obstacles anynew systemdesign or


technologymust overcome. For any of the benefits outlined above toberealized,testing,development,anddemonstrationareneededtode-terminethetruepotentialandmarketreadinessofDCpowerdelivery.

POWERINGEQUIPMENTANDAPPLIANCESWITHDC

Many energy-consuming devices and appliances operate inter-nallyonDCpower, inpartbecauseDCcanbepreciselyregulated forsensitive components.An increasingnumber ofdevices consumeDC,including computers, lighting ballasts, televisions, and set top boxes.Moreover, if motors for heating, ventilating, and air conditioning(HVAC)areoperatedbyvariable frequencydrives (VFD),whichhaveinternal DC buses, thenHVAC systems that use VFDs could operateonDCpower.Numerousportabledevices like cell phones andPDAsalsorequireanAC-DCadapter.Asdiscussedabove,bysomeestimatestheAC-DCconversions for thesedeviceswasteup to20%of the totalpower consumed.

Equipment Compatibility EPRI Solutions examined the compatibility of some common de-viceswithDCpowerdelivery in2002:

• Switchedmodepowersupplies,includingthoseforcomputers(labtest)

• Fluorescent lightingwithelectronicballasts• Compactfluorescent lamps (lab test)• Electricbaseboardandwaterheatingunits• Uninterruptiblepower supplies (UPS)• Adjustable speedmotordrives

Thesedevicesrepresentalargepercentageoftheelectricload,andEPRISolutions’preliminaryassessmentsshowthateachcouldbepoten-tially powered by a DC supply.Although additional testing is neededtodeterminetheeffectofDCpoweronthelong-termoperationofsuchequipment,resultsdoindicatethefeasibilityofdeliveringDCpowertothesedevices. Switched-mode Power Supply (SMPS)—Switched-mode powersupply (SMPS) technology isused toconvertAC120V/60Hz into the


DCpowerusedinternallybymanyelectronicdevices.Atthemostbasiclevel, anSMPS is ahigh frequencyDC-DCconverter. Many opportunities exist to use DC power with SMPS-equippedequipment since SMPS technology is found inmany electronic devicesincluding desktop computers, laptop computers with power adapters,fluorescent lightingballasts, televisionsets, faxmachines,photocopiers,andvideoequipment.AlthoughAC inputvoltage is specified formostoftheelectronicdevicesthathaveSMPS,insomecases,thisequipmentcanoperatewithDCpowerwithoutanymodificationwhatsoever.Also,inmany instances, the locationon theSMPSwhereACisnormally fedcouldbe replacedwithDC. Power Supplies for Desktop and Laptop Units—According toresearch on power supply efficiency sponsored by the U.S. Environ-mentalProtectionAgencyandtheCaliforniaEnergyCommission,asof2004, therewerenearly 2.5billion electricalproducts containingpowersupplies in use in the U.S., with about 400 to 500million new powersupplies soldeachyear. The total amount of electricity that flowed through these powersupplies in 2004 was more than 207 billion kWh, or about 6% of thenationalelectricbill.Researchersdeterminedthatmoreefficientdesignscouldsaveanexpected15to20%ofthatenergy.Thatamountrepresents32 billion kWh/year, or a savings of $2.5 billion. If powered by DC,conversion losses couldbe reducedand significant savingsachieved. EPRI Solutions conducted tests to assess the ability of two stan-dardSMPS-typecomputerpowersuppliestooperateonDC;a250wattATXtype typicallyusedfordesktopcomputers,andaportableplug-inpowermodule for laptop computers. In both cases, tests revealed thatthe power supplies would operate properly when supplied with DCpower of the right magnitude, although no tests were done to deter-minepower supplyoperationandperformancewhen connected to thecomputer loads. Forthedesktopcomputerpowersupply,sufficientoutputwaspro-videdwhensuppliedwith150VofDCorgreater.ForthelaptopSMPSunit, 30 V DCwas required to “turn on” the output, which begins at19.79VandcontinuesatthatoutputunlessDCsupplydropsto20voltsDCorbelow. Fluorescent Lighting with Electronic Ballasts—The key to DCoperation of fluorescent lights lies in theuse of electronic ballasts. Theballast is used to initiate discharge and regulate current flow in the


lamp.Modernelectronicballasts function inmuch thesamemannerasa switched-mode power supply thusmaking it potentially possible tooperate them fromaDCsupply. Virtually all new office lighting systems use electronic ballasts,which are more efficient and capable of powering various lights atlower costs.Onlyolder installations are likely tohave the less-efficientmagneticballasts inplace. For electronically ballasted applications, several manufacturersmake ballasts rated forDC. Lighting systems could be retrofittedwithDC-ratedballastunitsforDCoperation.AlllightswitchesandupstreamprotectioninlinewithDCcurrentflowwouldalsoneedtoberatedforDC. Compact Fluorescent Lamps—Compact fluorescent lamps (CFL)are energy-efficient alternatives to the common incandescent bulb.Anew 20-watt compact fluorescent lamp gives the same light output asa standard 75-watt incandescent light bulb, and also offers an averageoperating life 6 to10 times longer. Acompactfluorescentlamphastwoparts:asmall,foldedgas-filledtubeandabuilt-inelectronicballast.Aswiththefluorescenttubesusedin commercial lighting, the electronic ballast enables DC operation ofCFLs.EPRISolutions’testingofa20-wattCFLunitwithDCpowersup-plyrevealedthatwhiletheCFLcouldoperateonDCpower,itrequireda much higher DC input voltage.WithAC supply, the CFL providedconstant light at 63V,butwithDCsupply, 164.4VDCwas required. AfterspeakingwithCFLmanufacturers,EPRISolutionsresearchersdetermined that the CFL used a voltage doubling circuit on the inputto the electronic ballast. However, the voltage doubling circuit doesnot operate on DC voltage. Hence, the DC voltage must be twice themagnitude of theAC voltage to compensate for the non-functioningdoubling circuit. This resulting over-voltage on the capacitors couldresult inshortened lamp life,dependingon the ratingsofcertain inputelements in the circuit. The reduction in lamp life is unknown. Additional research isneeded to determine whether the energy savings over the life of thelampwould compensate for the increased cost due topremature lampfailure. Electric Baseboard and Water Heating—DC voltage can be usedto run almost any device utilizing an electric heating element, includ-ingresistivebaseboardandelectricwaterheaters. Intheseapplications,


electrical current flowing in a heating element produces heat due toresistance. The chief concern of using DC in such applications is not in theheatingelementitself,butinthecontactors,switches,andcircuitbreak-ers used for such circuits. Since DC is more difficult to interrupt, theinterruptingdevicesmustbecapableofclearinganyfaultsthatdevelop.TherearenoDCequivalentstogroundfaultcircuitinterrupters(GFCIs),whicharecommonplaceelectricaldevicesusedinACsystemstopreventelectric shock. Uninterruptible Power Systems—Uninterruptible power systems(UPS) are excellent candidates for DC power support.A UPS is com-posed of an inverter, a high-speed static switch, various controls, andbatteryenergystorage.ThefunctionalobjectiveoftheUPSistoprovidehighreliabilityandpowerqualityforconnectedloadsthatmaybesus-ceptibletovoltagesagsorshortdurationpowerinterruptions.MostUPSsystemshaveanywhere froma fewminutesup toabout30minutesofbattery storage. For largerUPS units (>30 kVA), it is typical to have abackupgenerator that startsandpicksup loada fewminutesafter theutility power is interrupted, which, today, is lower cost than havingseveralhoursofbatteryenergy storageonsite. SinceaUPShasaninverterandaninternalDCbus,italreadyhasmanyof theelementsneeded tooperatewithDCenergy. Variable speed motors—Motors are very important electrical de-vices, and represent a significant portion of power use in the U.S. Inindustry, for instance, approximately two-thirdsof the electricityuse isattributable tomotors. MostACmotor loads still use the same basic technology as theTesla induction motor. These omnipresent motors convertAC powerforapplicationssuchasairhandling,aircompression,refrigeration,air-conditioning,ventilation fans,pumping,machine tools, andmore. A workhorse of modern society, these motors can only operatewithACpower. In fact, if subjected toDCpower, anACmotor couldburnupquickly. In addition,without alternating current, themagneticvectors produced in the inductionmotor poweredwithDCwouldnotbe conducive to rotation and the motor would stall—so an inductionmotor simplywillnotoperatedirectlyonDCpower. But DC can be used if a variable frequency drive is part of thesystem.Avariablefrequencydriveallowsforadjustingthemotorspeed,rather than operating it either on or off. By varying the frequency of


power over awide range,motor speed can be adjusted to bestmatchthemechanical process, such as circulating air with a fan. This abilityto adjust speed can translate into significant energy savings, as aCEOforamajormanufacturer explains: Sinceavariablefrequencydriveconverts60HzpowertoDCandthenconvertstheDCtovariablefrequencyACthat isfedtothemotor,a DC supply can be readily accommodated, further increasing energyefficiency. Greater adoption of energy-efficient variable speed motors, nowunderway for heating, ventilating and air conditioning systems andother applications, represents a greater opportunity for deploying DCpower. In addition, several manufacturers now offer DC variable fre-quencydrives for solar-poweredwaterand irrigationpumps.

DATACENTERSANDINFORMATIONTECHNOLOGY (IT)LOADS

One of the nearest-term applications for DC power delivery sys-tems is datacenters,or“serverfarms.”Thesefacilitiesarestrongcandi-datesforDCpowerdeliverydueto:(1)theavailabilityofproductsthatcouldenablenear-termimplementation;and(2)aneconomicimperativeto increaseenergyefficiencyandpower reliability. Adatacentermayconsistof thousandsof rackshousingmultipleservers and computing devices. The density of these servers keeps in-creasing,wasting power and generating heatwithmultipleAC to DCconversions. The need to providemore andmore power to new blade servertechnologyandotherhigh-densitycomputingdeviceshasmadereduc-ingelectricitycostsapressinggoalwithinthedatacenterindustry.Mul-tiple approaches are under consideration to increase energy efficiency,including amulti-core approach,with cores running at reduced speed,and software that enables managers to runmultiple operating systemimages on a singlemachine.However, one of themore intriguing op-tionsisDCpowerdelivery.Infact,adata-centerindustrygroupformedin late 2005 with support from the California Energy Commissionthrough the Lawrence Berkeley National Laboratory is exploring thechallenge of determining howDC power delivery systems can reduceenergyneedsandenhance theperformanceofdata centers.


HeadedbytheLawrenceBerkeleyNationalLaboratoryandimple-mentedbyEPRISolutionsandEcosConsulting,thegrouphasobtainedfundingfromthePublicInterestEnergyResearch(PIER), theCaliforniaEnergy Commission (CEC) and the California Institute for Energy Ef-ficiency (CIEE) for aDC demonstration project at a SunMicrosystemsfacility inNewark, California. The objectives of the demonstration areto show:

1. HowDC-poweredserversandserverrackscanbebuiltandoper-ated fromexisting components.

2. The level of functionality and computing performance whencompared to similarly configured and operated servers and rackscontainingACpower supplies.

3. Efficiencygains from theeliminationofmultiple conversionstepsin thedeliveryofDCpower to serverhardware.

Numerous SiliconValley giants including Intel, Cisco, and othersare participating and contributing to the project, includingAlindeskaElectrical Contractors, Baldwin Technologies, CCG Facility Integration,CingularWireless,Dranetz-BMI,Dupont Fabros, EDG2, Inc., EYPMis-sionCritical,Hewlett-Packard,LiebertCorporation,MorrisonHershfieldCorporation, NTT Facilities, Nextek Power, Pentadyne, RTKL, SBCGlobal, SatCon Power Systems, Square D/Schneider Electric, SunMi-crosystems,TDIPower,UniversalElectricCorp., andVerizonWireless. The existingAC-based powering architecture in a data center,which requires multipleAC-DC-AC conversions, can have an overallsystemefficiencylowerthan50%.Howmuchenergyandmoneycouldbe savedbyeliminating thesemultiple conversions?Fieldperformancedata are yet to be documented. However, preliminary estimates ofenergy savings indicate that about 20% savings could be realized bychanging fromAC-basedpowering architecture toDC-basedpoweringarchitecture for a rack of servers. Table 5-1 shows one estimate fromEPRI,whichindicatesthatatypicaldatacenterof1,000rackscouldsave$3.5millionannuallybyusingaDCpowerdelivery system. Tocalculateenergysavingsestimates fordifferentdesignconfigu-rations or using different assumptions, visit an Excel-based calculator,availableattheLawrenceBerkeleyNationalLaboratorywebsite(http://


Table 5-1a. Energy savings estimate for one rack of servers with high-efficiency power conversion

*TheefficienciesfortheACsystemarebasedontypical,ratherthanbest-in-classsystems.If a best-in-classAC system is compared to aDC best-in-class system, the savings fromuseofDCpowerwouldbe reduced.For instance,yearly energy savingsmightbeabout$873 rather than $3428.However, gains in reliability fromDCpower (not shown in thistable)wouldnotbeachieved.Onlyenergy-relatedsavingsareconsidered;othersavingssuchassizeandheatsinkcostnotconsidered.Calculationsarebasedontypicalpowerbudget foradual2.4GHzXeonprocessorbased1Userver rack1U=TKEnergycost=12¢/kWh;projectlife=4years;discountrate=6%;Overallcoolingsystemefficiency=1,200Watts/ton;numberof 1Userversper rack=40

Table 5-1b. Assumptions


hightech.lbl.gov/DC-server-arch-tool.html). Intel has estimated that power consumption can be reduced byabout10%,andothershaveprojectedevenhigherreductions.Lessheatwould thereforebegenerated, lowering the cooling loadof the facility.OtherbenefitsofaDCpowerdeliverysystemarealsopossible.Forex-ample,BaldwinTechnologies,whichdoessystemdesign,haspromotedbenefitsofaDCpowerdeliverysystemfordatacenters. These estimated benefitsarebasedonvendorclaims,ratedperformanceofcomponents,as well as improvements that Baldwin anticipates will derive from itsown DC power delivery system design. The benefits and estimatedperformance improvements include the following:

• Alowernumberofcomponentsareneeded,leadingtolowermain-tenance costs andgreater reliability.

• DCpowerdistributiondeliveryismodularandflexible,sosystemscangrowwith load requirements.

• Busways with double end-feed features allow for redundant DCsourcesat critical loads.

• Nodown-streamstaticortransferswitchesarerequired,andvolt-age-matchedDCsystemscan inherentlybe coupled together.

• DCdistributioneliminatesharmonics.

• Grounding is simplified.

• Management softwareandcontrols areavailable.

• DCdistributioneliminatespower factor concern.

• Server reliabilitymaybe increasedbyasmuchas27%.

Baldwin’s DC power system is being demonstrated at the Penta-dyne Power facility in Chatsworth, California, which employs off-the-shelf equipmentavailable fromseveralmanufacturers, including:

• Rectifiers that convertutility- orgenerator-suppliedACpower toDC (500VDC)


• Energy storage, in this case not batteries, but rather a flywheel-based system that can provide power to a 500 VDC bus if ACsourcesare lost

• Equipment racks with DC distribution entailing connectors thatenable feedingpower from two separate 500VDC sources for re-dundancy

• DC to DC converters for conversion of 500 VDC power to low-voltageDC(e.g.,48V,24V,5V,etc.)asrequiredbyserverequipment

YOURFUTURENEIGHBORHOOD

Adding DC power delivery systems to our homes, office build-ings, or commercial facilities offers the potential for improvements inenergy-delivery efficiency, reliability, power quality, and cost of opera-tion as compared to traditional power systems.DCpowerdistributionsystemsmayalsohelpovercomeconstraintsinthedevelopmentofnewtransmissioncapacity that arebeginning to impact thepower industry. WhatmightafuturewithDCpowerdeliverylooklike?Anumberofoptionsareavailable.One includesstand-alonesystems thatcanop-erate full timeasoff-the-grid“islands,” independentof thebulkpowersupplysystem.Hybridbuildingsarealsopossible,withutility-suppliedpower aswell as building-based generators such as a solar array, fuelcell, energy storagedevice,or evenahybridautomobile. DCsystemscanoperateselectedloadsorcriticalsubsystems,suchas computers and lights. Or a DC charging “rail” such as the kitchencountertop shown in Figure 5-1, can charge a host of portable appli-ances. In fact, equipment throughout theentirehouse couldbepoweredbyDC,as shown inFigure5-2.

POTENTIALFUTUREWORKANDRESEARCH

Technologyadvances suggest that there are significantopportuni-ties for certainDC-based applications, andpromisingbenefits in termsof energy savings and increased reliability. But many obstacles must


beovercome.Additional research,development anddemonstration areneededtomakeDCsystemsviable.Below,wediscusssomeofthebar-riers and researchneedspresentedbyDCpowerdelivery systems. The Business Case for DC Power Delivery is Not Yet Clear—Willpotentialoperatingcostsavingsbesufficienttowarrantinitialcapitalin-vestmentforearlyadopters?Forwhatapplications?TowhatextentwillDCplay intonewpowerdelivery infrastructure investments?How, forexample, canDCpower systemsenableuseofplug-inhybridvehicles,whichmay become tomorrow’smobile “mini” power plants? Systemsthat will accommodate efficient, safe, and reliable power delivery be-tween such vehicles and either energy sources or loads are needed.WhetherDCpower systemsareapracticaloptionmustbeassessed. Most Equipment is Not Yet Plug Ready; Demonstrations with Manufacturers are Called For—Even though electronic devices ulti-mately operate onDC, they have been designedwith internal conver-sion systems to changeAC toDC, anddonot typically haveports forDC power delivery.Although some specific products are available to

Tomorrow’s homesmay be blissfully cord free, enabling people to charge portable elec-tronicsusingan inductive chargingpad fedby rooftop solar cells

Figure 5-1. A DC-powered inductive charging system (www.galvinpower.org)


accept DC power—such as DC fluorescent lighting ballasts, or serverrack distribution systems—formost loads,AC 60-Hz power still mustbe supplied.Since theelectronicsmarket ishighlycompetitiveandhasrelatively low profit margins, a compelling business case is necessarybefore product designers and manufacturers will alter their productsand addDC power ports—ormake other changes to their equipment.Todocumentpotential andexpandmarkets, additionaldemonstrationsareneededwithequipment thatholdspromise forusewithDCpowerdelivery, suchasvariable frequencydrives. For Data Center Applications, More Field Testing and Perfor-mance Measurements are Required—Several manufacturers havedeveloped components that enableDCpowerdelivery indata centers,includingrectifiers,storagesystems,DCtoDCconverters,andrackdis-tributionsystems.However, thebenefitsofDCpowerdelivery,suchasenergyefficiency,haveonlybeenestimated,basedonvendorclaimsandratedperformance of various components.Measureddata onpotentialenergysavings,aswellasotherperformancemetricssuchaspowerreli-

FromthekitcheninductivechargertothePCtotheairconditioner,appliancesthroughoutthehouse couldbeDCpowered.

Figure 5-2. A possible DC power system for tomorrow’s home (www.galvinpower.org)


abilityandpowerquality,thelifetimeofconverters,maintenanceneeds,andother factorsare required. Safety and Protection Standards and Equipment Need to be De-veloped—SinceDCpowerdoesnotcycle toacurrent“zero”120 timesper second like 60HzACcurrentdoes, it ismoredifficult to interruptthe flow of DC power. Therefore, DC power switches and interrupt-ers employing semiconductors or other technology are needed for DCdelivery systems.Also tobeaddressedarewhenandwhere solid-stateswitchesneed tobe applied, andwhenanair gap is required.Further,techniques for controlling transients, such as spikes from lightningstrikes, require additional investigation and testing—as does researchforgroundingandbalancingDC. Standard Practices for Design, Installation, and Maintenance Need to be Established in the Marketplace—Adoption of any newtechnology or design procedures can represent a significant hurdle.Designers, technicians, installers, retailers, buyers, and users want tomitigate risk and cost, which requires investment in product develop-ment, system integration,professional training—and time.

CONCLUSION

As the smart grid evolves, it may be appropriate to rethink thewideruseofDCpowerdistribution inbuildings.

ReferencesDCPowerProduction,DeliveryandUtilization:AnEPRIWhitePaper,

TheElectricPowerResearch Institute, June2006.GalvinElectricityInitiative:TransformingElectricServiceReliabilityand

Value for the21stCentury, 2005,www.galvinpower.org.

113

Chapter 6

The IntelliGridSM ArchitectureFor the Smart Grid

The challengebefore the energy industry remains formidable, for,as stated in the July 2001 issue ofWiredmagazine, “the current powerinfrastructure is as incompatible with the future as horse trails wereto automobiles.” But with an aggressive, public/private, coordinatedeffort the present power delivery system andmarket structure can beenhancedandaugmented tomeet the challenge it faces—evolving intoan IntelliGridSM. The 2003 blackout in the Northeast reminds us that electricity isindeed essential to our well-being.And it highlights one of the mostfundamental of electric functions: getting electricity from the point ofgenerationtothepointofuse.Powerdeliveryhasbeenpartoftheutil-ity industry for so long that it is hard to imagine that this process hasnot already been optimized. However, the power delivery function ischangingandgrowingmorecomplexwith theexcitingrequirementsofthedigitaleconomy,theonsetofcompetitivepowermarkets,theimple-mentationofmodernandself-generation,andthesaturationofexistingtransmission and distribution capacity.Without accelerated investmentandcarefulpolicyanalysis,thevulnerabilitiesalreadypresentintoday’spower systemwill continue todegrade. Simply stated, today’s electricity infrastructure is inadequate tomeet rising consumerneedsandexpectations.

INTRODUCTION

Thenation’spowerdeliverysystemisbeingstressedinnewwaysforwhichitwasnotdesigned.Forexample,whiletheremayhavebeenspecific operational, maintenance and performance issues that contrib-uted to theAugust 14, 2003 outage, a number of improvements to the


system couldminimize the potential threat and severity of any futureoutages. EPRI’s study of the outage was performed during a three-weekperiod immediately following and identified several areas that needfurther, rigorous investigation, including theeffectsof:

• Reactive power reserves in the region. Reactivepower is thead-ditional power required for maintaining voltage stability whenservingcertainkindsofenergyconsumingdevicesandappliances,suchasmotors, air conditioning, andfluorescent lights.

• Power flow patterns over the entire region,coupledwithissuesofcoordination,controlandcommunicationsofpowersystemactivi-tiesona regionalbasis.

• New power flows resulting from changing geographic patterns of consumer demand and the installation of new power plants.

LAUNCHINGTHE INTELLIGRIDSM

Aspreviouslystated,today’selectricityinfrastructureisinadequateto meet rising consumer needs and expectations. A sharp decline incritical infrastructure investment over the last decade has already leftportions of the electric power system vulnerable to poor power qual-ity service interruptions and market dislocations. Substantial systemupgradesareneeded just tobringservicebacktothe levelofreliabilityandqualityalready requiredandexpectedbyconsumers,and toallowmarkets to function efficiently so that consumers can realize theprom-isedbenefitof industry restructuring. To assure that the science and technology would be available toaddress the infrastructure needs, in 2001 the Electric Power ResearchInstitute(EPRI)andtheElectricityInnovationInstitute(E2I)initiatedanambitiousprogram.ItwascalledtheConsortiumforElectricInfrastruc-ture to Support a Digital Society (CEIDS) and hoped to build public/private partnerships to meet the energy needs of tomorrow’s society.Thiseffortessentiallylaunchedthesmartgridconcept—albeitnotusingthat label. Itwas theCEIDSeffort that formed the foundation formostall smartgridefforts to follow.

The IntelligridSM Architecture for the Smart Grid 115

The CEIDS consortium believed that the restructuring and riseof the digital economyhave set electricity price, quality and reliabilityona collision course.Themaindriving forcebehindefforts to increasecompetition in bothwholesale and retail powermarketswas the needto make inexpensive electricity more widely available—in particular,to reduce regional price inequities.Already, the effects of deregulationarebeingseen in thewholesalemarket,withbothpricesandpricedif-ferentialsdecliningrapidly.Theeffectonretailmarketswillcomemoreslowly,butoverthenext20years,theaveragerealpriceofelectricityintheU.S.isexpectedtofallby10%forresidentialcustomersand14%forindustrialcustomers.Atthesametime,however,industryrestructuringhasnotyetprovidedadequatefinancial incentives forutilities tomakethe investments necessary to maintain—much less improve—powerdeliveryqualityand reliability. CEIDS believes that meeting the energy requirements of societywill require applying a combination of advanced technologies—fromgeneratingdevices(e.g.,conventionalpowerplants,fuelcells,microtur-bines)tointerfacedevicestoend-useequipmentandcircuitboards.Sim-ply“goldplating” thepresentdelivery systemwouldnotbe a feasibleway to provide the level of security, quality, reliability and availabilityrequired.Neitherwilltheultimatecustomersthemselvesfindtraditionalutilitysolutionssatisfactoryoroptimalinsupplyingtheever-increasingreliabilityandqualityof electricpower theydemand. Inaddition,newtechnology isneeded ifsociety is to leverage theever-expanding opportunities of communications and electric utilities’natural connectivity to consumers to revolutionize both the role of arapidlychangingindustryandthewayconsumersmaybeconnectedtoelectricitymarketsof the future.CEIDSbelieved it couldenable suchatransformationandusheredthedirectionforbuildingfuture infrastruc-tureneeded. CEIDS initiated the creation of new levels of social expectations,business savvy and technical excellence by attracting players from theelectricutility industry,manufacturersandendusersaswellas federaland state agencies. In order to achieve this, CEIDSwas guided by thefollowingkeyprinciples:

• Vision: Todevelop the science and technology thatwill ensure anadequate supply of high-quality, reliable electricity to meet theenergyneedsof thedigital society.


• Mission: CEIDS provides the science and technology that willpower adigital economyand integrate energyusers andmarketsthroughauniquecollaborationofpublic,privateandgovernmen-tal stakeholders.

CEIDS latermorphed into the IntelliGridSMandtheElectricity In-novationInstitutewasabsorbedintoEPRI.Theconsortiumsurvivesandprospersmore thaneverwithover50 collaborativepartners.

THE INTELLIGRIDSM TODAY

The IntelliGridSMremainsoncoursetoprovidethearchitectureforthesmartgridbyaddressingfivefunctionalitiesinthepowersystemoftoday.ThesefunctionalitiesareconsistentwiththoseoutlinedinChapter1, and include the following:

Visualizing the Power System in Real Time This attribute would deploy advanced sensors more broadlythroughout thesystemonall critical components.Thesesensorswouldbe integratedwithareal-timecommunicationssystemthroughanInte-gratedElectricandSimulationandModelingcomputationalabilityandpresentedinavisualforminorderforsystemoperatorstorespondandadminister.

Increasing System Capacity This functionality embodies a generally straightforward effort tobuildorreinforcecapacityparticularly in thehigh-voltagesystem.Thiswouldincludebuildingmoretransmissioncircuits,bringingsubstationsandlinesuptoNERCN-1criteria,makingimprovementsondatainfra-structure, upgrading control centers, and updating protection schemesand relays.

Relieving Bottlenecks This functionality allows theU.S. to eliminatemany/most of thebottlenecksthatcurrentlylimitatrulyfunctionalwholesalemarketandtoassuresystemstability.Inadditiontoincreasingcapacity,asdescribedabove, this functionality includes increasing power flow, enhancedvoltage support, providing and allowing the operation of the electrical


systemonadynamicbasis.This functionalitywouldalso require tech-nologydeployment tomanage fault currents.

Enabling a Self-healing Grid Oncethefunctionalitiesdiscussedaboveareinplace,thenitispos-sibletoconsidercontrollingthesysteminrealtime.Toenablethisfunc-tionalitywillrequirewide-scaledeploymentofpowerelectronicdevicessuch as power electronic circuit breakers and flexibleAC transmissiontechnologies.These technologieswill thenprovide the integrationwithanadvancedcontrol architecture to enablea self-healing system.

Enabling (Enhanced) Connectivity to Consumers The functionalities described above assume the integration of acommunication system throughout much of the power system. Oncethat system is present, connectivity to the ultimate consumers can beenhanced with communications. This enhancement will allow threenew areas of functionality: onewhich relates directly to electricity ser-vices (e.g., added billing information of real-time pricing); one whichinvolves services related to electricity (e.g., home security or appliancemonitoring);andthethirdinvolveswhataremoregenerallythoughtofas communications services (e.g.,data services). The IntelliGridSM architecture includes a boldnew concept calledthe EnergyPortSM (see Chapter 8). The EnergyPortSM is the consumergateway now constrained by the meter, allowing price signals, deci-sions,communications,andnetworkintelligencetoflowbackandforththrough a seamless two-way portal. The EnergyPortSM is the linchpintechnologythatleadstoafullyfunctioningretailelectricitymarketplacewith consumers responding (through microprocessor agents) to pricesignals.SpecificcapabilitiesoftheEnergyPortSMcanincludethefollow-ing:

• Pricing and billing processes that would support real-time pric-ing

• Value-addedservicessuchasbillinginquiries,servicecalls,outageand emergency services, power qualitymonitoring, and diagnos-tics

• Improvedbuildingandappliance standards


• Consumer energymanagement through sophisticated on-site en-ergy management systems

• Easy“plugandplay” connectionofdistributedenergy resources

• Improvedreal-timesystemoperationsincludingdispatch,demandresponse, and loss identification

• Improved short-term load forecasting

• Improved long-termplanning

ASMARTGRIDVISIONBASEDONTHE INTELLIGRIDSMARCHITECTURE

The IntelliGridSMwill enableachievementof the followinggoals:

• Physicalandinformationassetsthatareprotectedfromman-madeand natural threats, and a power delivery infrastructure that canbequickly restored in theeventofattackoradisruption:A“self-healing grid.”

• Extremely reliable delivery of the high-quality, “digital-grade”power needed by a growing number of critical electricity enduses.

• Availability of a wide range of “always-on, price-smart” electric-ity-related consumer and business services, including low-cost,high-value energy services that stimulate the economy and offerconsumersgreater controlover energyusageandexpenses.

• Minimized environmental and societal impact by improving useof the existing infrastructure; promotingdevelopment, implemen-tation, and use of energy-efficient equipment and systems; andstimulatingthedevelopment,implementation,anduseofcleandis-tributed energy resources and efficient combinedheat andpowertechnologies.

• Improve productivity growth rates, increased economic growth


rates, anddecreasedelectricity intensity (ratioof electricityuse togrossdomesticproduct,GDP).

BARRIERSTOACHIEVINGTHISVISION

Toachievethisvisionofthepowerdeliverysystemandelectricitymarkets, accelerated public/private research, design and development(RD&D),investmentandcarefulpolicyanalysisareneededtoovercomethe followingbarriers andvulnerabilities:

• Theexistingpowerdeliveryinfrastructure isvulnerabletohumanerror,naturaldisasters, and intentionalphysical andcyberattack.

• Investment in expansion and maintenance of this infrastructureis lagging, while electricity demand grows and will continue togrow.

• Thisinfrastructureisnotbeingexpandedorenhancedtomeetthedemandsofwholesale competition in the electricpower industry,and does not facilitate connectivity between consumers andmar-kets.

• Under continued stress, the present infrastructure cannot supportlevelsofpower,security,quality,reliabilityandavailability(SQRA)needed for economicprosperity.

• The infrastructure does not adequately accommodate emergingbeneficial technologies includingdistributedenergyresourcesandenergystorage,nordoesitfacilitateenormousbusinessopportuni-ties in retail electricity/information services.

• Thepresentelectricpowerdeliveryinfrastructurewasnotdesignedto meet, and is unable to meet, the needs of a digital society—asocietythatreliesonmicroprocessor-baseddevicesinhome,offices,commercialbuildings, industrial facilities andvehicles.

Communication Architecture: The Foundation of the IntelliGridSM

Torealize thevisionof theIntelliGridSM, standardizedcommunica-


tionsarchitecturemustfirstbedevelopedandoverlaidontoday’spowerdelivery system. This “Integrated Energy and Communications SystemArchitecture”(IECSA)willbeanopenstandards-basedsystemsarchitec-tureforadatacommunicationsanddistributedcomputinginfrastructure.Severaltechnicalelementswillconstitutethisinfrastructureincluding,butnot limited to, datanetworking, communications over awidevariety ofphysicalmedia, and embedded computing technologies. IECSAwill en-abletheautomatedmonitoringandcontrolofpowerdeliverysystemsinreal time, support deployment of technologies that increase the controlandcapacityofpowerdeliverysystems,enhancetheperformanceofend-usedigitaldevicesthatconsumersemploy,andenableconsumerconnec-tivity, thereby revolutionizing the value of consumer services.Note thatthe IntelliGridSMArchitecture is free to anyone and can bedownloadedfromEPRI’swebsiteathttp://intelligrid.epri.com/. These were the initial steps in developing the IntelliGridSM: todefine clearly the scope of the requirements of the power systemfunctions and to identify all the rolesof the stakeholders.Thesewerethen included in an Integrated Energy and Communications SystemArchitecture. There are many power system applications and a largenumber of potential stakeholders who already participate in powersystemoperations.Inthefuture,morestakeholders,suchascustomersresponding to real-time process,DR owners selling energy and ancil-laryservices into theelectricitymarketplace,andconsumersdemand-ing high qualitywill actively participate in power systemoperations.At the same time, new and expanded applicationswill be needed torespond to the increased pressures for managing power system reli-ability as market forces push the system to its limits. Power systemsecurityhasalsobeenrecognizedascrucial in the increasinglydigitaleconomy. The key is to identify and categorize all of these elementsso that their requirements canbeunderstood, their informationneedscan be identified, and eventually synergies among these informationneeds can be determined. One of the most powerful methodologiesfor identifying and organizing the pieces in this puzzle is to developbusinessmodels that identify a strawman set of entities and addressthekeyinteractionsbetweentheseentities.Thesebusinessmodelswillestablish a set of working relationships between industry entities inthepresent and the future, including intermediate steps fromverticaloperationstorestructuresoperations.Thebusinessmodelswillinclude,butnot be limited to, the following:


• Market operations, including energy transactions, power systemscheduling, congestion management, emergency power systemmanagement,metering, settlementsandauditing.

• Transmission operations,includingoptimaloperationsundernor-mal conditions, prevention of harmful contingencies, short-termoperations planning, emergency control operations, transmissionmaintenanceoperations,andsupportofdistributionsystemopera-tions.

• Distribution operations, including coordinate volt/var control,automateddistributionoperationanalysis,faultlocation/isolation,power restoration, feeder reconfiguration, DRmanagement, andoutage schedulinganddatamaintenance.

• Customer services, including automated meter reading (ARM),time-of-useandreal-timepricing,metermanagement,aggregationfor market participation, power quality monitoring, outageman-agement, and in-building servicesandservicesusingcommunica-tionswithend-use loadswithin customer facilities.

• Generation at the transmission level,includingautomaticgenera-tioncontrol,generationmaintenancescheduling,andcoordinationofwind farms.

• Distributed resources at the distribution level, includingpartici-pationofDRinmarketoperations,DRmonitoringandcontrolbynon-utility stakeholders, microgrid management and DRmainte-nancemanagement. These businessmodelswill be analyzed andused todefine the initialprocessboundaries forsubsequent tasks.Businessprocessdiagramswillbeusedtoillustratethemorecom-plex interactions.

The scope of IECSA architecture encompasses the power systemfrom the generator to the end-use load. In other words, the IECSAarchitecture extends as far as the electric energy extends to do usefulwork.Thismeans the IECSAarchitecture includes thedistributedcom-putingenvironmentsinin-buildingenvironments,aswellasinteractionwiththeforeseenoperationofintelligentend-usesubsystemsandloadswithin the customer’s facility.


The business models include the issues surrounding RTO/ISOoperations and the seams issues between entities serving restruc-tured as well as vertical markets. This includes business operationsthat spanacrossdomains suchas customerparticipation inancillaryservice functions aswell as self-healing grid functionality. Standarddocumentationlanguagessuchasunifiedmodelinglanguage(UML),high-level architecture (HLA), andothersare incorporatedasappro-priate. The intent here is to make the resulting information usefulfor thevarious stakeholdergroups.Business entities includeverticalutilities, as well as business entities anticipated to participate in afully restructured electric and energy service industry. The businessmodelsalsoincludedkeycommunicationsbusinessmodelsthatcouldprovide either common services or private network infrastructuresto support the power industry through the IECSA architecture. Thebusinessmodelsforcommunicationsincludegenericcommunicationsbusinessfunctionsthatmayhaverolesintheultimateimplementationof the IECSA including, but not limited to, common carrier servicesandtheprovisionofaccessnetworktechnologiestocustomers.Thesebusinessmodelswould address the application of new communica-tionstechnologies thatexhibitself-healingcapabilitiessimilar to thatproposed for the power system

Fast Simulation and Modeling OncetheIECSAbeginstobedeployed,thentheindustry’scompu-tationalcapabilitymustbeenhanced.Inordertoenablethefunctionalityof thepowerdeliverysystem,acapabilitywhichallowsfastsimulationandmodeling (FSM)will need to evolve in order to assure themath-ematicalunderpinningandlook-aheadcapabilityforaself-healing grid (SHG)—one capable of automatically anticipating and responding topower system disturbances, while continually optimizing its own per-formance. Creating a SHGwill require the judicious use of numerousintelligent sensors and communication devices that will be integratedwithpowersystemcontrolthroughanewarchitecturethat isbeingde-velopedbyCEIDS.Thisnewarchitecturewillprovidea framework forfundamentally changing system functionality as required in the future.TheFSMprojectwill augment these capabilities in threeways:

• Provide faster-than-real-time, look-ahead simulations and thus beable toavoidpreviouslyunforeseendisturbances.


• Performwhat-ifanalysesforlarge-regionpowersystemsfrombothoperationsandplanningpointsofview.

• Integratemarket,policyandriskanalysesintosystemmodelsandquantify their effectson systemsecurityand reliability.

ThenextstepincreatingaSHGwillinvolveadditionofintelligent networkagents(INAs)thatgatherandcommunicatesystemdata,makedecisions about local control functions (such as switching a protectiverelay),andcoordinatesuchdecisionswithoverallsystemrequirements.Because most control agents on today’s power systems are simplyprogrammed to respond to disturbances in pre-determined ways—forexample,byswitchingoffarelayatacertainvoltage—theactivitymayactuallymakeanincipientproblemworseandcontributetoacascadingoutage.ThenewsimulationtoolsdevelopedintheFSMprojectwillhelpprevent such cascading effects by creating better systemmodels thatuse real-time data coming from INAs over a wide area and, in turn,coordinate the control functionsof the INAs foroverall systembenefit,instead of the benefit of one circuit or one device.As discussed later,havingsuch improvedmodelingcapabilitywillalsoenableplanners tobetterdeterminetheeffectsofvariousmarketdesignsorpolicychangesonpower systemreliability. To reach these goals, the FSMprojectwill focus on the followingthree areas:

• Multi-resolution Modeling. New modeling capabilities will bedeveloped thatprovidemuch fasteranalysisof systemconditionsand offer operators the ability to “zoom” in or out to visualizepartsofasystemwith lowerorhigherdegreesof resolution.Thisoff-linemodelingactivitywillbethefocusofworkduringthefirsttwoyearsof theproject.

• Modeling of Market and Policy Impacts on Reliability.Therecentwesternstatespower“crisis”dramaticallyillustratedhowuntestedpolicies andmarket dynamics can affect power system reliability.Thenewmodelingcapabilitiesbeingdevelopedinthisprojectwillallow planners and policymakers to simulate the effects of theiractivitiesbeforeactuallyputtingthemintopractice.Thiseffortwillbe conducted in parallel with the previous project, beginning in


thefirstyear,andthenintegratedwiththemulti-resolutionsystemmodels.

• Validation of Integrated Models with Real-Time Data.Once thenew, integratedmodelshavebeen thoroughly testedoff-line, theywill be validated and enhanced using real-time data frommajorpowersystems.Thisworkwillbegininthethirdyearandcontinuethrough the end of the project. Full integration with on-line net-workcontrolfunctionsandINAswillbelefttoafollow-onproject.

Unified integration architecture is the key enabler to successfullyandinexpensivelydeployingadvancedfunctions.Thisarchitecturemustbe robust enough to meet the numerous disparate requirements forpower system operations and be flexible enough to handle changingneeds. The focus of this project is to identify and propose potentialsolutions forenterpriseand industry-widearchitectural issues thatwillarise from the high levels of integration andmanagement foreseen bythisproject.Theconceptsand functionsdefined in the IECSAwill sup-port the development and deployment of distributed applications thatreach to and across a great number of applications and stakeholders.The IECSA is required to integrate customer interaction,power systemmonitoring and control, energy trading, and business systems. It willreachacross customers, feeders, substation, control centers, andenergytraders. The IECSAmust also provide a scalable and cohesiveway toaccess resources across thewide spectrum of applicationswhile at thesame timeproviding themeans tofilteroutunwanteddata.

Open Communication Architecture forDistributed Energy Resources in Advanced Automation A subset of the work on an Integrated Energy and Communica-tionsSystemArchitectureisthedevelopmentofanopencommunicationarchitecturefordistributedenergyresources(DER)inadvanceddistribu-tionautomation (ADA)orDER/ADAarchitecture. TheDER/ADAArchitectureProjectwilldeveloptheobjectmodelsfor integration of specificDER types into the open communication ar-chitecturethatisbeingdevelopedthroughthecompanionCEIDSprojectknow as the Integrated Energy andCommunication SystemsArchitec-ture (IECSA)Project.Whereas the IECSAProject is concernedwith thebroad requirements for the architecture, the DER/ADAArchitecture


Project is focused on a very specific, but very important, piece of thewhole—objectmodels forDERdevices. It is important to note that the termDER has various definitionsand is used ambiguously in different situations. The broadest use ofthe term includes distributed generation, storage, load management,combinedheatandpower,andothertechnologiesinvolvedinelectricitysupply,bothinstand-alone(off-grid)applicationsandinapplicationsin-volvinginterconnectionwithpowerdistributionsystems.Anotherterm,distributed resources (DR), is similarlyused inanambiguousmanner. Eventually,objectmodelswillalsobeneededforotherDERtypesbesidesdistributedgenerationandstorage.Hence, fortheremainderofthis chapter, DER is used for brevity to denote distributed generationand storage. Key benefits thatwill be derived from the objectmodel develop-mentinthisprojectandfromthebroaderopenarchitecturedevelopmentin the IECSAProject include:

• Increasing the functionality andvalueofDER indistribution sys-tem operations,which benefits both the utility and the consumerof electricity.

• Growing themarket forDERequipmentvendors.

• Providingalargemarkettocommunicationandcontrolequipmentprovidersforsaleoftheirproductstohelpbuildtheinfrastructure.

ENABLINGTECHNOLOGIES

Inaddition to the IECSA foundation,EPRIhasdeveloped the fol-lowing list of critical enabling technologies that are needed to movetoward realizing IntelliGridSM:

• Automation: theheartof the IntelliGridSM

• Distributedenergyresourcesandstoragedevelopmentandintegra-tion

• Powerelectronics-basedcontrollers

• Powermarket tools


• Technology innovation inelectricityuse

• TheConsumerPortal

These technologies are synergistic (i.e., they support realizationof multiple aspects of the vision).Aspects of some of these enablingtechnologiesareunderdevelopment today.Eachof these technologiescallsforeithercontinuedemphasisorinitiationofeffortssooninordertomeet the energyneedsof society in thenext 20years andbeyond.

Automation: The Heart of the IntelliGridSM

AutomationwillplayakeyroleinprovidinghighlevelsofpowerSQRA throughout the electricity value chain of the near future. To aconsumer, automation may mean receiving hourly electricity pricesignals,whichcanautomaticallyadjusthomethermostatsettingsviaasmart consumerportal.To adistribution systemoperator, automationmay mean automatic “islanding” of a distribution feeder with localdistributed energy resources in an emergency.To apower systemop-erator, automationmeans a self-healing, self-optimizing smart powerdelivery system that automatically anticipates and quickly respondsto disturbances to minimize their impact, minimizing or eliminatingpower disruptions altogether. This smart power delivery systemwillalso enable a revolution in consumer services via sophisticated retailmarkets. Through a two-way consumer portal that replaces today’selectricmeter, consumerswill tie into this smart power delivery sys-tem.Thiswillallowpricesignals,decisions,communications,andnet-workintelligencetoefficientlyflowbackandforthbetweenconsumerandserviceproviderinrealtime.Theresultingfullyfunctioningretailmarketplacewill offer consumers awide range of services, includingpremium power options, real-time power quality monitoring, homeautomation services, andmuchmore.

Distributed Energy Resources andStorage Development & Integration Smallpowergenerationandstoragedevicesdistributedthrough-out—and seamlessly integrated with—the power delivery system(“distributed energy resources”) and bulk storage technologies offerpotentialsolutions toseveralchallenges that theelectricpower indus-trycurrentlyfaces.Thesechallengesincludetheneedstostrengthenthe


power delivery infrastructure, provide high-quality power, facilitateprovisionofarangeofservicestoconsumers,andprovideconsumerslower-cost,higher-SQRApower.However,various impedimentsstandinthewayofwidespreadrealizationofthesebenefits.Akeychallengefordistributedgenerationandstorage technologies, forexample, is todevelopways of seamlessly integrating these devices into the powerdeliverysystem,andthendispatchingthemsothattheycancontributeto overall reliability and power quality. Both distributed storage andbulkstoragetechnologiesaddresstheinefficienciesinherentinthefactthat, unlike other commodities, almost all electricity today must beused at the instant it isproduced.

Power Electronics-based Controllers Power electronics-basedcontrollers,basedon solid-statedevices,offer control of the power delivery system with the speed and ac-curacy of a microprocessor, but at a power level 500million timeshigher. These controllers allow utilities and power system operatorsto direct power along specific corridors—meaning that the physicalflowofpower canbealignedwith commercialpower transactions. Inmanyinstances,powerelectronics-basedcontrollerscanincreasepowertransfercapacitybyupto50%and,byeliminatingpowerbottlenecks,extendthemarketreachofcompetitivepowergeneration.Ondistribu-tion systems, converter-based power electronics technology can alsohelpsolvepowerqualityproblemssuchasvoltagesags,voltageflicker,andharmonics.

Power Market Tools To accommodate changes in retail power markets worldwide,market-basedmechanisms are needed that offer incentives tomarketparticipants in ways that benefit all stakeholders, facilitate efficientplanningforexpansionofthepowerdeliveryinfrastructure,effectivelyallocate risk, andconnect consumers tomarkets.For example, serviceproviders need a new methodology for the design of retail serviceprograms for electricity consumers. At the same time, consumersneedhelpdevisingwaystheycanparticipateprofitably inmarketsbyprovidingdispatchableor curtailable electric loads, especiallybypro-viding reserves.Andmarket participants critically need newways tomanagefinancialrisk.Toenable theefficientoperationofbothwhole-saleand retailmarkets, rapid,openaccess todata is essential.Hence,


development of data and communications standards for emergingmarkets is needed. Further, to test the viability of various wholesaleandretailpowermarketdesignoptionsbefore theyareput intoprac-tice, power market simulation tools are needed to help stakeholdersestablish equitablepowermarkets.

Technology Innovation in Electricity Use Technologyinnovationinelectricityuseisacornerstoneofglobaleconomic progress. In theU.S., for example, the growth inGDPoverthe past 50 years has been accompanied by improvements in energyintensityandlaborproductivity.Improvedenergy-useefficienciesalsoprovide environmental benefits. Development and adoption of tech-nologies in the following areas areneeded:

• Industrial electrotechnologies andmotor systems• Improvement in indoor air quality• Advanced lighting• Automated electronic equipment recyclingprocesses

In addition, widespread use of electric transportation solu-tions—includinghybridand fuel cell vehicles—will reducepetroleumconsumption, reduce theU.S. tradedeficit, enhanceU.S.GDP, reduceemissions, andprovideother benefits.

The Consumer Portal Once communications and electricity infrastructures are inte-grated,realizingtheabilitytoconnectelectricityconsumersmorefullywith electronic communicationswill depend on evolving a consumerportal to functionasa“frontdoor” toconsumersand their intelligentequipment. The portal would sit between consumers “in-building”communications network and wide area “access” networks. Theportal would enable two-way, secure and managed communicationsbetween consumers equipment and energy service and/or com-munications entities. It would perform the work closely related to“routers”and“gateways”withaddedmanagement features toenableenergy industry networked applications including expanded choice;real-timepricing;detailedbilling and consumption information;widearea communications and distributed computing. This could includedata management, and network access based on consumer systems


consisting of in-building networks and networked equipment whichintegrate building energy management, distributed energy resources,anddemand response capabilitywithutilitydistributionoperations.

CONCLUSION

Theparticipation of energy companies, universities, governmentand regulatory agencies, technology companies, associations, publicadvocacy organizations, and other interested parties throughout theworldneedtocontributetorefiningthevisionandevolvingtheneededtechnology.Onlythroughcollaborationcantheresourcesandcommit-mentbemarshaled to enable the IntelliGridSM.

Chapter 7

The Smart Grid—Enabling Demand Response—

The DynamicEnergy Systems Concept

Dynamic energy systems provide the infrastructure to use thesmartgridtoenabledemandresponsethroughdynamicenergymanage-mentsystems.Dynamicenergymanagement isan innovativeapproachtomanaging load at thedemand-side. It incorporates the conventionalenergy use management principles represented in demand-side man-agement, demand response, and distributed energy resource programsand merges them in an integrated framework that simultaneouslyaddresses permanent energy savings, permanent demand reductions,and temporary peak load reductions. This is accomplished through anintegrated system comprised of smart end-use devices and distributedenergy resources with highly advanced controls and communicationscapabilitiesthatenabledynamicmanagementofthesystemasawhole.Thissimultaneousimplementationofmeasuressetsthisapproachapartfromconventionalenergyusemanagementandeliminatesanyinherentinefficiencies that may otherwise arise from a piecemeal deploymentstrategy. Itoffers a “no-regrets”alternative toprogram implementers. Dynamicenergymanagement consistsof fourmain components:

1. Smart energyefficient end-usedevices2. Smartdistributedenergy resources3. Advancedwhole-building control systems4. Integrated communicationsarchitecture

These components act as building blocks of the dynamic energymanagementconcept.Thecomponentsbuilduponeachotherandinter-

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actwithoneanother to contribute toan infrastructure that isdynamic,fullyintegrated,highlyenergy-efficient,automatedandcapableoflearn-ing.Theresultisaninfrastructurecomprisedofindividualelementsthatarecapableofworkinginunisontooptimizeoperationoftheintegratedsystem based on consumer requirements, utility constraints, availableincentivesandothervariablessuchasweatherandbuildingoccupancy.The following bullet points summarize thepredominant characteristicsof eachof these three components. The components andhow theypo-tentially interplay will be covered in greater detail later in this whitepaper.

SMARTENERGYEFFICIENTEND-USEDEVICES

• Appliances, lighting, space conditioning, and industrial processequipment with the highest energy efficiencies technically andeconomically feasible.

• Thermal energy storage systems that allow for load shaping.

• Intelligent end-use devices equippedwith embedded features al-lowing for two-waycommunicationsandautomatedcontrol.

• Devicesthatrepresentanevolutionfromstaticdevicestodynamicdeviceswithadvancementsindistributedintelligence;oneexampleis a high-efficiency, Internet protocol (IP) addressable appliancethatcanbecontrolledbyexternalsignalsfromtheutility,end-userorotherauthorizedentity.

SMARTDISTRIBUTEDENERGYRESOURCES

• On-site generation devices such as photovoltaics, diesel engines,micro-turbines and fuel cells that provide power alone or in con-junctionwith thegrid.

• On-site electric energy storage devices such as batteries and flywheels.


• Devices that are dynamically controlled to supply baseload, peakshaving, temporarydemand reductionsorpowerquality.

• Devices thataredynamically controlledsuch thatexcesspower issoldback to thegrid.

ADVANCEDWHOLE-BUILDINGCONTROLSYSTEMS

• Controlsystemsthatoptimizetheperformanceofend-usedevicesand distributed energy resources based on operational require-ments,userpreferences andexternal signals from theutility, end-userorotherauthorizedentity.

• Controls that ensure end-use devices only operate as needed;examples include automatic dimming of lights when daylightingconditionsalloworreducingoutdoorventilationduringperiodsoflowoccupancy.

• Controlsthatallowfortwo-waycommunications;forexample,theycansenddata(suchascarbondioxideconcentrationinaparticularroom)toanexternalsourceandtheycanacceptcommandsfromanexternalsource(suchasmanagementofspaceconditioningsystemoperationbasedon forecastedoutsideair temperature).

• Local, individual controls that are mutually compatible with awhole-building control system; for example, security, lighting,space conditioning, appliances, distributed energy resources, etc.,canallbe controlledbya centralunit.

• Controls that have the ability to learn from past experience andapply thatknowledge to futureevents.

INTEGRATEDCOMMUNICATIONSARCHITECTURE

• Allow automated control of end-use devices and distributed en-ergy resources in response to various signals such as pricing oremergency demand reduction signals from the utility; day-ahead


weatherforecasts;otherexternalalerts(e.g.,asignalcouldbesenttoshutdowntheoutdoorventilationsystemsinthebuildingintheeventof a chemical attack in thearea); andend-user signals (e.g.,a facilitymanagercouldshutdown thebuildingsystems fromanoff-site locationduringanunscheduledbuilding closure.

• Allow the end-use devices, distributed energy resources and/orcontrol systems to send operational data to external parties (e.g.,advancedmeters that communicatedirectlywithutilities).

• Communicationssystemsthathaveanopenarchitecturetoenableinteroperabilityandcommunicationsamongdevices.

Figure7-1showsanexampleofthedynamicenergymanagementinfrastructureapplied toagenericbuilding. In thisexample, therearetwo-waycommunicationsviatheInternetaswellasviathepowerline.Thebuilding isequippedwithsmartenergy-efficientend-usedevices,an energy management system (EMS), automated controls with datamanagement capabilities, and distributed energy resources such assolar photovoltaics, wind turbines and other on-site generation andstorage systems. Thus, energy-efficient devices, controls and demandresponsestrategiesarecoupledwithon-siteenergysourcestoserveasanadditionalenergy“resource”fortheutility.Notonlydoalloftheseelements contribute to the utility’s supply-side by reducing buildingdemand, the distributed energy resources can also feed excess powerback to thegrid. A dynamic energymanagement system is likely to have a muchlarger impact on a building’s electricity consumption and demand thanjust implementing energy efficiency and/or demand response on theirown.Example7-1 illustrates thispoint foranofficebuilding in theU.S. One of the key enabling characteristics of the Dynamic EnergyManagement frameworkwouldbea smartgrid.The following subsec-tion describes a recent assessment that quantifies the energy savingspotential associatedwitha smartgrid.

ENERGYMANAGEMENTTODAY

Currentpractice in the implementationphaseof energyuseman-agement consists of several elements used alone or in combination to


effect a change in energyuse characteristics at a given site. In general,theelements canbedivided into sevenmain categories:

1. Energyauditsand/orreviewsofhistoricalenergyusecharacteris-tics to identifyproblemareas.

2. Improvements to the operation andmaintenance of existing end-use devices and processes to reduce energy use, demand and/ormaterials.This includeshousekeepingandmaintenancemeasures,heat recovery, energy cascading, material recovery/waste reduc-tion, etc.

3. Replacement or retrofit of existing end-use devices or processeswithenergy-efficientdevicestoreduceenergyuse,demandand/ormaterialsaswellastoimproveproductivity.Thismayalsoincludefuel switching (e.g., from thermal processes to electrotechnolo-gies).

4. Load shaping strategies such as thermal energy storage whichshifts load tooff-peakperiods.

Figure 7-1. The Dynamic Energy Management Infrastructure Applied to a Generic Building


Example 7-1. Dynamic Energy Management Applied to a Hypothetical Office Building. Source:Dynamic Energy Management, EPRI, Palo Alto, CA: 2007.

(Continued)

5. Installation of controls to turn end-use devices “on/off” or “up/down” as required or desired to reduce energy use and/or de-mand. This includes local controls and building energymanage-ment systems.

6. Demand response strategies to reducepeakdemand temporarily.

7. Use of distributed energy resources to replace or reduce depen-denceonelectricity from thegrid.


Example 7-1. (Cont’d)

(Continued)


In some cases, the end-user takes the initiative to employ one ormore of the elements listed above.Oftentimes, however, implementersof various energy use programs solicit participants. The elements aretypically applied separately or in a piecemeal fashion, with the typesofmeasures implementedbeinga strong functionof theprogramsandincentives offered by implementers to program participants. Economicevaluations are also a key component to energy usemanagement pro-gramstoquantifyexpectedcosts,savings,paybackperiodsandreturnson investment. All of these elements fall within the framework of demand-sidemanagement in its broadest sense. However, typical practice compart-mentalizestheelementsintothreemaintypesofprograms.Specifically,thefirstfiveelementsareconventionallyconsideredtobeencompassedin demand-side managementprograms,whilethelasttwoelementsareof-tenconsideredseparatelyandfallwithindemand response and distributed energy resourceprograms,respectively.Thecurrentpracticeswithineachof these three conventional categoriesarediscussednext.

Demand-side Management “Demand-sidemanagement is theplanning, implementationandmonitoringofthoseutilityactivitiesdesignedtoinfluencecustomeruseofelectricity inwaysthatwillproducedesiredchangesintheutility’sload shape, i.e., changes in the timepattern andmagnitude of a util-ity’sload.Utilityprogramsfallingundertheumbrellaofdemand-sidemanagement include loadmanagement, newuses, strategic conserva-tion, electrification, customer generation and adjustments in marketshare.” EPRIcoinedthetermdemand-sidemanagementintheearly1980sandcontinuedtopopularizethetermthroughaseriesofmorethan100articles since that time including thefivevolume setDemand-side Man-

Example 7-1. (Cont’d)


agement which iswidelyrecognizedasadefinitiveandpractical sourceof information on the demand-side management process. During itspeak of activity, annual demand-sidemanagement expenditures in theU.S.weremeasuredinbillionsofdollars,energysavingsweremeasuredinbillionsof kWh, andpeak load reductionswere stated in thousandsofMW.Whileactivitiesnationallyhaveslowedsincethen,demand-sidemanagement continues to influence thedemand for electricity. Demand-side management is even more encompassing than theabove definition implies, because it includes the management of allforms of energy at the demand side, not just electricity. In addition,groupsother than justelectricutilities (includingnaturalgas suppliers,governmentorganizations,non-profitgroupsandprivateparties)imple-mentdemand-sidemanagementprograms. Ingeneral,demand-sidemanagementembracesthefollowingcriti-cal aspectsof energyplanning:

• Demand-sidemanagementwill influence customer use.Anyprogramintended to influence the customer’s use of energy is considereddemand-side management.

• Demand-side managementmust achieve selected objectives. To con-stituteadesired loadshapechange, theprogrammust further theachievementofselectedobjectives(i.e.,itmustresultinreductionsin average rates, improvements in customer satisfaction, achieve-mentof reliability targets, etc.).

• Demand-sidemanagementwill be evaluated against non-demand-side management alternatives. The concept also requires that selecteddemand-sidemanagementprograms further these objectives to atleast as great an extent asnon-demand-sidemanagement alterna-tives, such as generating units, purchased power or supply-sidestoragedevices.Inotherwords,itrequiresthatdemand-sideman-agementalternativesbecomparedtosupply-sidealternatives.It isatthisstageofevaluationthatdemand-sidemanagementbecomespartof the integrated resourceplanningprocess.

• Demand-side management identifies how customers will respond. Demand-side management is pragmatically oriented. Normativeprograms (“weought todo this”) donot bring about thedesired


change; positive efforts (“if we do this, that will happen”) arerequired. Thus, demand-sidemanagement encompasses a processthat identifies how customerswill respond, not how they shouldrespond.

• Demand-side management value is influenced by load shape. Finally, this definition of demand-sidemanagement focuses uponthe load shape. This implies an evaluation process that examinesthe value of programs according to how they influence costs andbenefits throughout theday,week,monthandyear.

Thus,thetermdemand-sidemanagementisextremelybroadinitsoriginalintent,encompassingallactionsthatmeetthecriticalaspectsofenergyplanninglistedabove.Inaddition, itembodiesallofthesevenelements (listed previously) that are associated with current practicein energy use management. It can even be considered to encompassmost of the essence of dynamic energy management. However, thetwo-way communications fundamental to the dynamic feature ofdy-namicenergymanagementwerenotavailableduring the inceptionofthe demand-side management concept, and so they serve to updatethedemand-sidemanagementvision.Moreover,demand-sidemanage-mentdoesnot inherentlyprescribe that the elementsbe implementedsimultaneously as does dynamic energy management. Furthermore,despite its broad definition, demand-sidemanagementmainly resultsin the implementation of four main types of components in conven-tional implementation. These components include (1) energy-efficientend-use devices (which includesmodification to existing devices andprocesses as well as new energy-efficient devices and processes); (2)additional equipment, systems and controls enabling load shaping(suchas thermalenergystoragedevices); (3)standardcontrolsystemstoturnend-usedevices“on/off”or“up/down”asrequiredordesired;and (4) the potential for communications between the end-user andan external party (however, this is generally not employed to a greatextent). Oftentimes, the components are implemented separately ratherthansimultaneously.Forexample,anenergy-efficientlightingprogrammayofferincentivesforconversionfromT-12lampsandmagneticbal-laststoT-8lampsandelectronicballasts,butitmaynotofferincentivesfor lighting controls or other measures. In addition, a water-heating


programmay offer incentives specifically for conversion from gas toelectric water heaters or to heat pumpwater heaters. Still other pro-gramsofferincentivesforwhole-buildingenergysavings,regardlessofhow the savings are achieved.All of thesemeasures positively affectboth the energy companies and the customers to some extent. How-ever, if a building-wide program incorporating a variety ofmeasurescoupledwithadynamic linkbetween theend-usedevices,controllersand energy suppliers were undertaken, the benefits would be opti-mized. This iswhere dynamic demand-sidemanagement, or the termEPRIhasdefined—dynamic energy management—comes toplay.

Demand Response Demand response (DR) refers tomechanisms tomanage the de-mand from customers in response to supply conditions, for example,havingelectricitycustomersreducetheirconsumptionatcriticaltimesor in response to market prices. There has been a recent upsurge ininterest and activity in demand response, primarily due to the tightsupply conditions in certain regions of the country that have createda need for resources that can be quickly deployed.Demand responsecan broadly be of two types—incentive-based demand response andtime-based rates. Incentive-based demand response includes directloadcontrol,interruptible/curtailablerates,demandbidding/buybackprograms, emergency demand response programs, capacity marketprograms, and ancillary services market programs. Time-based ratesinclude time-of-use rates, critical-peak pricing, and real-time pricing.Incentive-based demand response programs offer payments for cus-tomerstoreducetheirelectricityusageduringperiodsofsystemneedorstressandaretriggeredeitherforreliabilityoreconomicreasons.Arangeoftime-basedratesiscurrentlyoffereddirectlytoretailcustom-erswith theobjectiveofpromoting customerdemand responsebasedon price signals. These two broad categories of demand response arehighly interconnected, and thevariousprogramsundereach categorycanbedesigned to achieve complementarygoals. According to a recent Federal Energy Regulatory Commission(FERC) study, nationally, the total potential demand response resourcecontributionfromexistingprogramsisestimatedtobeabout37,500MW.Thevastmajorityofthisresourcepotentialisassociatedwithincentive-baseddemandresponse.Thisrepresentedapproximately5%ofthetotalU.S.projectedelectricitydemand for summer2006.


ROLEOFTECHNOLOGY INDEMANDRESPONSE

Technology plays a key role in enabling demand response. Thefuturegrowthofthedemandresponsemarketcapabilitydependsonthecost,functionalityanddegreeofprocessautomationoftechnologiesthatenable demand response. Enabling technologies for demand responseinclude:

• Interval meters with two-way communications capability whichallow customer utility bills to reflect their actual usage patternandprovidecustomerswithcontinuousaccesstotheirenergyusedata.

• Multiple,user-friendly,communicationpathwaystonotifycustom-ersof real-timepricing conditions,potentialgeneration shortages,aswell as emergency loadcurtailment events.

• Energy information tools that enable real-time or near-real-timeaccesstointerval loaddata,analyzeloadcurtailmentperformancerelativetobaselineusage,andprovidediagnosticstofacilityopera-torsonpotential loads to target for curtailment.

• Demand reduction strategies that are optimized tomeet differinghigh-priceor electric systememergency scenarios.

• Loadcontrollersandbuildingenergymanagementcontrolsystems(EMCS)thatareoptimizedfordemandresponse,andwhichfacili-tateautomationof loadcontrol strategiesat theend-use level.

• On-site generation equipment used either for emergency backupor tomeetprimarypowerneedsof a facility.

Advancementsintechnologiesregardingcontrolsystems,telecom-munication andmetering all increase the opportunity for end-users tomonitor and adjust their electricity consumption in coordination withelectricitymarket conditions.Additionally, distributed generation is animportant source of supply when traditional supply sources becomescarce. Developing these alternatives and incorporating them into themarketplace is increasingly becoming a reality and should provide in-


creased demand-side responsiveness in the future.A service area thatis growing rapidly is associatedwith automatedmeter reading (AMR)and advancedmetering technologies. Customers are also investing insophisticatedenergyinformationsystems(EISs)andEMCSs—especiallyInternet-based controls for their facilities. Several vendors are sellingproprietaryhardwareandsoftwareservicesforbuildingenergymanage-mentcontrolsandsystems.Onewaytodrivethecostsdownfordemandresponse, and to enhance theutilizationof thisprogram, is forutilitiesand customers to have common architecture for demand response-related activities, EIS/EMCS and utility-sponsoredAMR programs.Integrated architectures require the implementation of common pro-tocols used in today’s Internet technology. Demand responsive controlsystems integrate the controls for the distributed (demand-responsive)energysystemwithelectroniccommunicationandmeteringtechnologyto facilitate one-way or two-way communication between utility andcustomerequipment.These technologiesareused toreduceenergyuse(bydimminglights,raisingair-conditioningsetpoints,etc.) inresponsetopeakelectricitydemandemergenciesand/orprices.

CURRENTLIMITATIONSANDSCOPEFORDYNAMICENERGYMANAGEMENT

Currently,thedemandresponseenablingtechnologieshavelimita-tions in terms of system scaling and interoperation with other similarsystems that impair their ability to be scaled up to serve the entireindustry. Also, the individual demand response-enabling technologycomponentsdiscussedhereareoftentimes implemented inapiecemealfashionwithoutintegrationofthedifferenttechnologycomponents.Thisresultsindemandresponseprogramsfallingfarshortoftheanticipatedpotential benefits associated with an integrated strategy to manageload. Demandresponsefunctionsareoftenappliedtostandardend-usedevices,withlocalcontrolsystemsandone-wayorbasictwo-waycom-munications. Utilities or other energy service providers have not yetimplemented for the most part the full functionalities associated withthe enabling technologiesdue to anumberof technological, regulatoryandeconomicbarriers.Customersareoftenoffered individualdemandresponseprogramsinsteadofasingleserviceofferingcomprisedofdif-


ferentoptions tomanage their electricity load,whichultimately resultsin a low level of the potential being realized. Furthermore, very rarelyareenergyserviceproviders talkingabout integratingenergyefficiencyand demand response into a single offering. Virtually all energy ef-ficiency programs, frommarket transformation programs (appliancesandbuildingcodes)toimmediateresourceacquisitionprograms(rebatesandperformancecontracting)help to lowersystempeaks,even ifpeakreduction is not the primary program goal. Customers often do notconnect their participation in energy efficiencyprogramswithdemandresponse, because theydonotunderstand that reducing theirpeakus-age changes the system load profile andmakes the electricity systemmore efficient. Energy efficiency can reduce load significantly, and theloadreductionsoccurovermanyhoursoftheloadshapeandformanydaysof theyear.

Distributed Energy Resources In their most general sense, distributed energy resources includetechnologies fordistributedgeneration(non-renewableandrenewable),combined heat and power, energy storage, power quality, and evendemand-side management and demand response. Since demand-sidemanagementanddemandresponsehavebeentreatedseparatelyherein,the current scope of distributed energy resources will include energygeneration and storage technologies, including the generation of heatandpower, and the storage of electricity. (Thermal energy storagewasencompassed within demand-side management.) Distributed energyresources can be applied at the utility-scale where they feed into thedistribution system, or they can be applied at the building level. Thefocushere is building-leveldistributedenergy resources since they canbe consideredademand-sideenergyalternative. Theprincipalpurposesofdistributedenergy resourcesare:

1. To supply stand-alone power and/or heat (e.g., for remote loca-tions).

2. To augment power from the grid (e.g., to minimize power pur-chases).

3. To reduce transmission and distribution losses by placing powerandenergy sources closer to loads.


4. To provide peak shaving or load leveling (e.g., to reduce peakdemandcostsand/ortoenableparticipationindemandreductionprograms).

5. Toguaranteepowerquality,reliabilityandsecurity(e.g.,forcriticaloperationsandprocesses).

6. To reduce capital costof transmission facility construction.

Somedistributedenergy resource technologies include:• Solarphotovoltaics

• Reciprocatingengines

• Stirlingengines

• Combustion turbines

• Microturbines

• Wind turbines

• Fuel cells (e.g., phosphoric acid, molten carbonate, polymer elec-trolytemembrane)

• Batteries (e.g., lead acid, nickel-cadmium, nickel-metal hydride,lithium ion, vanadium redox, zinc-bromine, sodium-sulfur, solidoxide)

• Superconductingmagnetic energy storage

• Flywheel energy storage

• Ultracapacitors for storage

Someof these technologies are significantlymore established andimplemented than others. Some are still in the research and develop-ment stage. For example, diesel and gas reciprocating engines and gasturbines are well-established distributed generation technologies forlarge commercial and industrial buildings. The vast majority of theseunitsareinstalledtoserveasbackupgeneratorsforsensitiveloads(suchasspecialmanufacturingfacilities,largeinformationprocessingcenters,hospitals,airports,militaryinstallations,largeofficetowers,hotels,etc.)


forwhichlong-durationenergysupplyfailureswouldhavecatastrophicconsequences. Engines and turbines currently account for most of thedistributed generation capacity being installed—approximately 20 GWin the year 2000, or 10% of total capacity ordered.While nearly halfof the capacitywas ordered for standby use, the demand for units forcontinuousorpeakingusehasalsobeen increasing. The term energy strategy reflects the idea of accumulating energyinsomeformandthensupplyingitwhenneeded.Initsbroadestsense,energy storage encompasses fuels such as coal, gas and uranium, aswell as water reservoirs behind hydroelectric dams, or “cool” storage(chilledwater in tanks) or hotwater, all ofwhich allow the controlledaccumulationandreleaseofenergy.But the term energy storage isoftenused to refer specifically to the capability of storing electrical energythathasalreadybeengenerated,andcontrollablyreleasing it foruseatanother time. This concept is sometimes called electric energy storage todistinguish is fromother typesof energy storage. At present, electric energy storage in building-level distributedenergystorageismostcommonlyassociatedwithbatteriesthatareusedin conjunction with non-continuous power generators such as windturbines and photovoltaic systems. These batteries are charged duringperiodsofexcessgenerationandthenaredischargedduringperiodsofinsufficientgeneration.Backuppower systems suchas small-scaleUPSdevices are also widely utilized. Moreover, there is increasing use ofportablepower storagedevices;wefind these inour computer,mobilephone,gaming systems,MP3players, etc.

HOWISDYNAMICENERGYMANAGEMENTDIFFERENT?

Thereissignificantpotentialtoincreasethefunctionalityoftypicaldemand-side management measures, typical demand response strate-gies, and typical implementation of building-level distributed energyresources by combining them in a cohesive, networked package thatfully utilizes smart energy-efficient end-use devices, advanced whole-buildingcontrolsystems,andanintegratedcommunicationsarchitecturetodynamicallymanageenergyat theend-use location.Werefer to thisconcept here as dynamic energy management. Figure 7-2 illustrates theadditional potential for functionality offered by dynamic energyman-agementrelativetoconventionalenergymanagementpractices.Ittrans-


formstheenergy-efficientend-usedevicesandprocessesassociatedwithtypical demand-side management into smart, highly energy-efficientend-use devices and processes. It transforms the standard distributedenergy resources associated with typical practice into smart, environ-mentally friendly on-site energy resources that are leveraged to theirmaximumpotential tobenefit theend-user, theutilityand theenviron-ment. It transformsthelocal,standardcontrolsassociatedwithconven-tional energymanagement into advanced, building-wide controls thataremutually compatible and capable of learning. Finally, it transformsthe basic communications associated with typical demand responseand typical distributed energy resources into an advanced integratedtwo-waycommunicationarchitecturethatnetworktheend-usedevices,distributed energy resources, and control systemswith each other andwith the utility or other external entities to dynamically manage andoptimizeenergyuse. As discussed previously, a dynamic energy management systemis a demand-side energy resource that integrates energy efficiency andloadmanagement from a dynamic, whole-system or networked perspective that simultaneously addresses permanent energy savings, permanentdemand reductions. and temporary peak load reductions. This sectionbrieflyoutlines theoperationofadynamicenergymanagementsystemfrom an integrated systems perspective. Next, it specifies some of thecharacteristicsthatindividualcomponentsofadynamicenergymanage-mentsystemare likely toembody.Thesecomponents include (a)smartefficient end-use devices; (b) smart distributed energy resources; (c)advancedwhole-buildingcontrolsystems;and(d)integratedcommuni-

Figure 7-2. Additional Potential of Dynamic Energy Management Beyond Current Practice in Energy Use Management


cationsarchitecture.At theend, someof thekey featuresof adynamicenergymanagement system that are likely to facilitate implementationanduseradoptionarediscussed.

OVERVIEWOFADYNAMICENERGYMANAGEMENTSYSTEMOPERATIONFROMANINTEGRATEDPERSPECTIVE

A dynamic energy management system is comprised of highlyefficient end-use devices, equipped with advanced controls and com-munications capabilities that enable them todynamically communicatewith external signals and to adjust their performance in response tothesesignals.Thismarksanemergence fromstatic todynamicend-usedevices with advancements in distributed intelligence. In addition toelectric end-usedevices, adynamic energymanagement systemwouldalsoincludedistributedenergyresourcessuchassolarphotovoltaicsys-tems,dieselgeneratorsandfuelcells.Theperformancesofthesedistrib-utedenergyresourcesarealsoprogrammedtooperate inan integratedmannerwithend-usedevicesatthefacilitysoastobeabletooptimizeoverallsystemperformance.Theenergy-efficientend-usedevicesalongwithdistributedenergyresourcesaretogetherreferredtohereas“smartdevices.” These smart devices have a built-in programmable response andcontrol strategy,whereby users are able to program the device perfor-manceandsetoptimalperformancelevelsbasedonavarietyofexternalparameters such as external ambient conditions, time of the year, con-sumerhabitsandpreferences,etc.Thedevicesareabletocommunicatewith a variety of external signals such as electricity prices, emergencyevents,externalweatherforecasts,etc.Forcommunicationwithexternalsignals received from the energy service provider or with other exter-nal signals, advancedmeters with communications infrastructure willbe required. This will enable the energy service provider to connectthe electric meter and end-use devices in the building to the Internet,thereby giving the energy serviceproviderdirect access and control tothesedevices. Depending on the hourly electricity price or other external pa-rameters andbasedon thepre-programmedcontrol strategy, the smartdevicesequippedwiththeresponsivecontrolsautomaticallyrespondtotheexternalsignalsandoptimizeentiresystemperformance,saywithin


theuser“comfortrange” tominimizeelectricitycosts.For thedynamicenergy management system to operate autonomously in response toelectricity price or other external signals, it must be capable of veryabstract decision making, ranging from determining the best cost vs.comfort tradeoff for current conditions, to the very physical, such asturninganairconditioneronoroff.Informationondifferentparameterssuch as temperatures throughout the building, outsideweather condi-tions,occupancy,applianceuseandpowerconsumptionmayallowfortargetedcontrolandbeable todeliverpredictablebehaviorandenergycost to theoccupants. Theresponsestrategyofeachindividualsmartdeviceisnetworkedandinteractswiththeresponsestrategiesofotherdevicesinthesystemso as to be able to optimize entire “system” performance.Networkingamongdevicesallowsinternalcommunicationsandinteractionsamongdevices. The system should be able to execute a fully automated con-trol strategywithoverrideprovisions. Ina fullyautomatedsystem, thecontrol and communications technology listens to an external signal,and then initiates a pre-programmed control strategy without humanintervention. The control devices have real-time control algorithms intheirgatewaydevicesandautomaticallycontrolwithoutmanualopera-tion.Forexample,theyareenabledtorespondtocurtailmentrequestsorhigh-energyprices from theenergy serviceprovider, andautomaticallydeployspecificcontrolstrategiestooptimizesystemoperationandavoidhigh-energycosts. Even though the system is able to control multiple devices, userpreferencemaybe to control somedevicesdirectly (e.g.,HVAC),whilefor others (e.g., copiers and fax machines) direct control is probablynot practical. For devices that are indirectly controlled, the actuationof response could be occupant-assisted through signaling the occupantvia some kind of notification methods (e.g., red-yellow-green signals)that telloccupantswhenthe time ispropitious torun theseappliances.Furthermore, an intelligent dynamic energy management system willcontain learning functionalitieswith learning logic and artificial intelli-genceinordertobeabletolearnfrompriorexperiencesandincorporatetheselessonsintofutureresponsestrategies.Forexample,ifanoccupantattemptstolowerthetemperaturesetpointatatimewhenelectricityisexpensive, a confirmationwill be required for the action to take effect.Thefactthattheoccupantconfirmedthatalowersetpointwasdesiredeventhoughitwouldbecostlytoachievebecomespartof the learning


process. The measure of success for the learning functionality is thatoccupantsoverride the system lessover time.

KEYCHARACTERISTICSOFSMARTENERGY-EFFICIENTEND-USEDEVICESANDDISTRIBUTEDENERGYRESOURCES (TOGETHERREFERREDTOAS“SMARTDEVICES”)

• Smart devices are comprised of very high-efficiency end-use de-vices and a variety of distributed energy resources (discussed inearlier sections).

• Smart devices are equipped with highly advanced controls andcommunications capabilities.

• Smartdevicesembeddedwithmicroprocessorswillallowincorpo-rationofdiagnostic featureswithin thesedevicesbasedoncriticaloperating variables and enable them to undertake corrective ac-tions.

• Distributed energy resources with intelligent controls are able tosynchronize theiroperationwithend-usedevices inorder toopti-mize systemperformance.They are also enabled to automaticallyfeedbackpower to thegridbasedonoverall systemconditions.

• Communicationsfeaturesforthesedevicesneedtobesetupbasedon“openarchitecture” to enable interoperability.

• Smart devices containmicrochips that have IP addresses that en-ableexternal controlof thesedevicesdirectly from the Internetorthroughagateway.ItisdesirabletohaveTCP/IP5communicationprotocolsothatthesystemcanbesetupandmanagedusingcom-monnetworkmanagement tools.

• These devices have “learning logic” built into them (artificialintelligence, neural networks) to improve on future performancebased on past performance experience, and on parameters suchasbuildingcool-downandheat-uprates,occupanthabits,outsidetemperatureand seasonalvariables.


KEYCHARACTERISTICSOFADVANCEDWHOLE-BUILDINGCONTROLSYSTEMS

Advancedwhole-buildingcontrolsystemswillneedtoincorporatethe following functionalities:

• Receivingandprocessing information fromsensors

• Sendingactuation signals for controlofdevices

• Learningphysicalcharacteristicsofthebuildingfromsensorinfor-mation

• Managing time-of-dayprofiles

• Displaying systemstatus tooccupants

• Obtaining commandsignals andoverrides fromoccupants

• Learning thepreferencesandpatternsof theoccupants

• Receiving and displaying external signals, such as price informa-tion from theutility

Advanced energy management and control system (preferablyweb-based) is likely tobeanenabling technology.

KEYFEATURESOFADYNAMICENERGYMANAGEMENTSYSTEM

Thekeyfeaturesofadynamicenergymanagementsystemcanbesummarizedas follows:

Incorporate End-User Flexibility—Customers should have nu-merous options about how they can participate in a dynamic energymanagement system.Customer flexibilitymust be built into any state-of-the-art system.They shouldhave the ability touse custombusinesslogicthatisapplicabletotheirownoperations.Forexample,inresponsetohighelectricitypricesignals, somemaychoose toallowremotereal-time sheds,while othersmaywant some advancedwarning via pageror cellphoneand theability tooptout, ifdesired.


Simplicity of Operation Will Be a Key Features—For easyuseradoptionofadynamicenergymanagement system, theuser interfacefor the systemwill have to be concise and intuitive for non-technicalpeople. The system will need to work right out of the box with noprogrammingrequirement.Itwillneedtobehaveautonomouslybasedon effective initialdefaults andmachine learning.

Leverage on Standard IT Platforms vis-à-vis Building Custom Systems—Oneofthemostimportantwaystokeepcostslowwillbetoleverage existing trends in technology.Theuseof existing IT technol-ogy in such systems wherever possible is an important way to keepcosts low. The public Internet and private corporate LAN/WANs areidealplatformsforcontrolsandcommunicationsduetotheirubiquity,especially in largecommercialbuildings. Inaddition, theperformanceofITequipment(e.g.,routers,firewalls,etc.)continuestoimproveandequipmentpricescontinuetodrop.Dynamicenergymanagementsys-temsbasedonstandardITplatformswillalsotendtobemorescalableandsecurethanspecial-purposesystemsdevelopedspecificallyforthepurpose.

“Open Systems” Architecture and Universal Gateways Essential for Integrating System Operation—An important concept in the dy-namicenergymanagementsystemarchitectureisthatthelayersofpro-tocols across all the systems are common, and that seamless commu-nicationandcontrolactivitycanoccur.An“opensystem”architectureis essential in integrating the systemoperation.Also,monitoring andcontrollingdifferentdevices fromacentral locationor fromanywherein thenetworkcanbedoneonly ifauniversalgatewayisused.Com-municationbetweendevicesandtheInternet isaccomplishedthroughstandardcommunicationspathwaysincludingEthernet,telephonelineorwireless communications.

Integration With Existing Building Energy Management Sys-tems Essential—It will be advantageous for state-of-the-art dynamicenergymanagementsystemstohavetightintegrationwithanyexistingEMCSandEISandenterprisenetworkswithinbuildings.Thisstrategymaximizes theperformance,distributionandavailabilityof thebuild-ingdata,whileminimizing the installation andmaintenance costs. InsystemsinwhichEMCSsandEISsarehighlyintegratedwithenterprise


networksandtheInternet,managingtheflowofinformationisgreatlysimplified.

“Open Standards” and “Interoperability” are Key Character-istics—For flexibility and future proofing, state-of-the-art dynamicenergymanagementsystemsshoulduseopenstandardswhereverpos-sible.Unlikeproprietarysystems,trulyopensystemsareinteroperable.In other words, a device from one company (e.g., Cisco) will easilyandnaturallyresideonanetworkwithproductsfromothercompanies(e.g., Nortel). Communication using the TCP/IP protocol will ensurethat the system can be set up andmanaged using common networkmanagement tools.

Flat Architecture Essential for Robust, Low-Cost Systems—Astate-of-the-artdynamicenergymanagementsystemwouldhaveaflatarchitecture in which there are aminimum number of layers of con-trol network protocols between the front-end HMI (HumanMachineInterface)andfinalcontrolandmonitoringelementssuchasactuatorsandsensors.Themostrobustandleastcostlysystemsshouldhavenomore than one enterprise network protocol and one control networkprotocol.

CONCLUSION

Inadditiontotheotherfeaturesmentionedinthisbook,thesmartgrid must enable connectivity with customers in a dynamic systemsconcept.

ReferencesGellings, Clark W., Demand-side Management: Volumes 1-5,EPRI,PaloAlto,CA,1984-1988.Assessment of Demand Response and Advanced Metering—Staff Report,FERCDocketAD06-

2-000,August 2006.Dimensions of Demand Response: Capturing Customer Based Resources in New England’s

Power Systems and Markets—Report and Recommendations of the New England Demand Response Initiative, July 23, 2003.

Arens, E., et al. 2006. “Demand Response Enabling Technology Development, Phase IReport: June 2003-November 2005,Overview and Reports from the Four ProjectGroups,”Report toCECPublic InterestEnergyResearch (PIER)Program,Centerfor theBuiltEnvironment,University ofCalifornia,Berkeley,April 4.

TransmissionControlProtocol/InternetProtocol(TCP/IP)asdevelopedbytheAdvanceResearchProjectsAgency (ARPA) andmay be used over Ethernet networks and


the Internet.Useof thiscommunications industrystandardallowsDDCnetworkconfigurationsconsistingofoff-the-shelf communicationdevices suchasbridges,routers and hubs. Various DDC systemmanufacturers have incorporated accessvia the Internet throughan IP address specific to theDDC system.

IntelliGridArchitecture Report: Volume I Interim User Guidelines and Recommenda-tions,Report 1012160,ElectricPowerResearch Institute,December 2005.

Fast Simulation andModeling, Report 1016259, Electric Power Research Institute, De-cember 2007.

ElectricityTechnologyRoadmap:MeetingtheChallengesofthe21stCentury:2003Sum-maryandSynthesis,Report1010929,ElectricPowerResearchInstitute,June2004.

155

Chapter 8

The EnergyPortSM as Part of the Smart Grid

Electricity consumers are changing.Their behavior is increasinglydrivenbyreal-timemanagementofelectricity.Inaddition,theyincreas-ingly demand higher levels of reliability, efficiency and environmentalperformance.Electricsystemsincreasinglyarecontrolledbycustomerre-sponseandwillbeaidedby real-timepricingand“dynamic systems.” Electricity is often taken for granted, but it is the building blockwhichfuelsthedigitaleconomy.Thedigitalworldisenablingapotentialshiftwhich could enable the electricity enterprise to shift from a com-modity-based,risk-averseindustryintoaninnovative,real-timecreativeindustry. Consumersdoactuallyhaveunlimitedcontrolovertheirelectricityuse.However, they lack thewill and themeans to enable that control.The only information they receive is amonth ormore after they con-sumetheenergy.Theydonothaveinformationonthetime,patternandamount of their usage.Nor do they have information on time-varyingprices,optionstopurchaseunderalternativetariffs,orotherelectricity-related services. Information and control are the key to enabling customers tomanage their electricity costs. If customers and their appliances havethe ability tomake consumptiondecisions, price-driven incentiveswillencouragecustomerstouseelectricitymorejudiciously—usinglessandmanagingpeakdemand.Whileasegmentoftoday’scustomersmaybewilling toundergo the inconvenienceofmonitoring theelectricitymar-ket in real-time and adjusting the operation of appliances and devicestominimizecosts—thatsegmentisinaminority.Manymorecustomerswouldbeinterestedinanautomatedsystemwhichwouldautomaticallymonitor prices and system conditions and adjust individual building,processandappliance systems to respond. If the systems are in place, then signaling customers appropri-


ately—particularlythatpeakpricesarehigherthanoff-peakprices—willresult inachange inconsumerbehavior.Demonstrationprogramscon-firmthatcustomersdonotwanttospendagreatdealoftimemanagingtheirenergyuse,butsomesegmentswanttoknowmoreaboutelectric-ity consumptionpatterns. There is evidence to suggest that the combination of ubiquitouslow-cost communications,wirelessandwired internetprotocol (IP) ad-dressable,standardization,low-costsensorsmakeprecise,real-timeandon-demandelectricitymanagementalow-costincrementtoinvestmentsalreadybeingmade to serveotherneeds (e.g., security,web connectiv-ity).As a result,many new firms offer new customer-centric productsand services. This may create a “market pull” which could fuel theneed for regulators to adopt new regulatory arrangements which willallowutilitiesto invest inadvancedmeteringinfrastructureandenergyefficiency. These dynamic systemswill allow theentire electricity infrastruc-ture to respond todemand changes, allow formuchmore efficientde-cisionsonwhere electricity is generated, andhow it isdistributed andutilized. This would enable the electricity enterprise to operate moreeconomically,willimprovetheenvironment,reducetheneedsforenergyoverall, andencourage investment. Whilesomeoftheincentivestoengagewithcustomersexistnow,theprincipalincentivesliewithapotentialchangeintheregulatorycompact.Inmost jurisdictions, investor-owned electric utilities are able to delivereffective and economic electricity energy.They arenot, however, able tooffer comparable compensation to stakeholders for investments inmostdemand-responseprogramsand inanyenergyefficiencyprograms. However, inmanycases, load-servingentitiesdohavean incentivetoreducepeakdemandsincetheproductionandpurchaseofelectricityatthosekeytimes,especiallyduringpeakperiods,lowerscosts.Inaddition,utilitieshave limited incentive tominimizedistribution throughput. Most utilities have the opportunity to replace today’smechanicalelectric meters with a smart metering infrastructure that is capable ofproviding the customer with information using advanced meters toreduce costs andenhance services.Advancedmetering canbe adaptedtoprovidecustomerswithmoreinformationandallowthecustomertostartmakingdecisions. Customers routinely make investments in home and commercialelectronicsforreasonsotherthanmanagingelectricity—heating,ventila-

The EnergyportSM as Part of the Smart Grid 157

tionandairconditioning(HVAC)control,homeentertainment,security,and other services.As sensors and information technology networksbecomemore common, the cost of retrofitting existing buildings willdecline and new buildings will be designed to accommodate controland implementationofdynamic systems. Overthenextdecade, theadaptationofadvancedelectricityman-agement will become an integrated part of the entire electricity valuechain. Astheworlddrivestobecomeincreasinglydigital,andcommuni-cationscomputationalabilityandcustomer-enabledenergymanagementcontrol becomes ubiquitous, the electricity industry is an anomaly. Itis a centralized supply-driven industry built around a philosophy ofcost recovery. In the evolution of the electric utility industry, its focusis on the regulatory compact and the utilization of assets in genera-tion, transmissionanddistribution to servecustomers interiorneed forelectricity.Unfortunately, the compact created thendidnot include theentire electricity value chain. Electricity is produced by one or moreformsof energy and thendelivered to customers. The traditional viewof that system ignores theultimate conversionof electricity intousefulenergyservice.Therefore,theutilityindustryremainsahighlyassetin-centivizedindustry.Inrecentyears,anindependentmerchantgenerationbusinessdominated the supplybusiness. The system of regulation has served us well and established thebasis for building the electricity enterprise. It hasperformed extraordi-narilywell. By its nature, it is very command and control. It relies ontop-downplanning,decisionsandoperationalcontrol.Itisnotdesignedtoenable“utilities”toinveston“bothsidesofthemeter”toensuretheentireproduction-delivery-utilizationchainisoptimized.The“customersideof themeter” isperceivedas someoneelse’sproblem. The assumption is made that consumers will make the right de-cision regarding prices, the availability of end-use energy consumingdevices and their control of those devices. In fact, research has shownthat consumers do not choose the most optimal or most efficient ap-pliancesordevices, theydonotnecessarilyparticipate indemand-sidemanagement programs, and their control of appliances and devices isvaried. It is interesting to note that inmany industries there has been atransformation todistributed systems. In electricity, the shift todistrib-uted resources couldbeanevolutionaryevent.


Themodestly successful effort of the 80s and the 90s to create ademand-sidemanagement(DSM)structurehas impactedtheindustry’sshifttoacustomer-centricapproach.Unfortunately,thereductionincon-sumeracceptanceandresponseofdemand-responseprogramsiscitedasevidence.TheDepartmentofEnergyestimatesaone-thirddecline.Withhigher energyprices, there is a greaterwillingness to look at demand-responseandenergyefficiencyefforts.Yetthiswillingnessmaystillnotprovidesufficientsustainable incentives tomake thenecessarychangesin consumerbehavior. Utilities remain cautious about energy efficiency and demandresponse, even with regulatory incentives. They cite uncertain DSMresults; get involved in hardware and services to customers; lack ofcommunications infrastructureandof commonprotocols; anda lackofexperience in jointventuringand teamingwith retailers. Early efforts at energy efficiency received bad press because ofpoor design, imperfect pricing, awkward administration, and unsatis-factorymonitoring, even though those programs have been an overallsuccess. Unfortunately, utilities and other electric service providers havehadbadexperiences investing incustomer-related technologiessuchastelecommunications, internet technologies, home and building securityservices, and other customer-related services. To the extent that someutilitieswere investing in a communications network, theywere oftennotdoing sousingopen IPprotocols. These uncertainties have created a resistance to any new invest-mentinthecustomersideofthevaluechain.Surveyshaverevealedthatthere is near universal agreement thatworkingwith electric utilities isdifficult, both due to their reluctance to engagewith customers and aresistance to investment in any technologies that reduce kilowatt hoursales. Inmoststates intheU.S., theregulatorycompactgiventoelectricutilitiesencouragesthemtobuildadequategeneration,transmissionanddistribution capacity to meet their consumers’ demand for electricity.They receive a return on that investment subject to limits also adjudi-catedbythestatecommissions.Signsexistthatthisso-called“compact”mayberenegotiated.Thiswouldunleashinnovationinelectricityretailspace. Theresultisthattoday,fewconsumersofelectricityareincentedtoorabletomanagetheirelectricitydemand—theyhavenopricesignals,


no choice among usage profiles that reflect their social and economicviews,andnoportalsor interfacesthatallowthemtoseehowtheyareusing electricity. However, this status may evolve.With the evolutionof web-enabled energymanagement and cheap, ubiquitous communi-cations (wiredandwireless), there is thepotential topiggybackon the“computer revolution” to build on infrastructure and cultural affinitiesincrementally.Thequestion iswhether today’s incumbent electricutili-tieswill leverage thisopportunityor leave it to thirdparties. There is some evidence to indicate that a segment of electricityconsumers will want to exercise control of their electricity use—if thetechnologieswerepresentwhich facilitated that control.Manywill notbe engaged in theheavenlypursuitofmanaging theoperationof theirenergy-consuming devices and appliance and the building they areresident in.The segmentof thepopulationwilling toengage inenergymanagementwillgrowasmoreareconvincedastohowthis is intheirenlightened self interest. Engaging in control over one’s electricity destinymay not meansitting infrontofaPCallday. Itmaymeansettinga fewcontrolsona“mastercontroller”soastohaveabrainautomatethepurchasedecisionfor the consumer. The electricity industry is moving toward an intersection wherehigher electricity and fuel prices and changes in electricity rates arealigningwithdramaticadvancesinreal-timeinternetprotocol(IP)-basedwirelesscommunication.TheseincludeITadvances,especiallyIP-basedand inexpensive sensors; heavier reliance on high-quality electricityin home-entertainments backup and standby devices; emerging massmarketinresidentialwirelesssensormanagement;andmarginalpricingwhichsetspriceshighenoughtostimulateinnovationandthepenetra-tionofnew technologies. Itispossibletoimagineafuturewherevirtuallyallelectricity-usingdevicesincorporatesensorsthatmanagethepatternandamountofcon-sumptionof the consumer.Thismay include the capability to interfacewiththeenergymanagementsystemsresidentinindustrialfacilitiesandlarge commercial buildings. Through electricity portals, customerswillbe able to program energymanagement capabilities. In addition, theseadvanced systemswill allow interactive control in response to signalsforutilities andotherproviders. As a result, thepower systemwill be able to respond todemandchanges; itwillallowformoreefficientdecisionsregardingwhereelec-


tricityshouldbegeneratedandhowitisdistributed.Theresultwillbeamoreeconomical,environmentallyfriendlysystemwhichwillencourageinvestments inperfectpower systems. Tomorrow’spowersystemwill incorporateelectricenergystoragecapacityandamicro-gridorientationthatwillallowconsumersdemandtobemanagedatthesubstation-and-below-leveltomaximizethepowersystem.Inthefuture,itispossiblethatasignificantportionofnewgen-erationcouldbebuiltlocallyutilizingvariousdistributedandrenewableresources.Therewillbe significantvariations indeployment. Some researchers believe that within 10 years the penetration ofnew technologywill beunderwayas an increment to the current trendsinhomeandbusinessautomationwhichwillallowrapiddeploymentofelectricity-relatedmanagement technology. It is essential that structuralincentivesareputinplacetosupersedetoday’sutilityoppositionandreti-cencetoconsumerprograms.Thesetechnologieswillcreatethepotentialforradicallychangingtheelectricitysystemfromasupply-sidesystemtoahigh-reliability“perfect”demand-driven incentive industry. Thereisevidencetosuggestthatasegmentofelectricityconsumerswill take advantage of the ability tomanage their electricity once thatability isenabled.This includesenablingconsumers tobeawareof thevariability in electricity demand and price. The demand for electricityvaries daily and seasonally. The daily variation ranges from lower de-mandovernight,ariseindemandinthemorningtoamoderateperiodthrough theday, ahigh-demandperiod in the late afternoonandearlyevening, and a return to a lower, moderate demand in the evening.Consumers cause this pattern of demand due to their use of energy-consumingdevicesandappliances. Inpart, thesepatternsarebasedonhousehold schedules.To some extent, they are also causedbydaylightandweather, i.e., less artificial illumination is required on bright days,moreair conditioningonhotdays, etc. Meanwhile over these periods of usage, electricity costs vary—sometimes appreciably. Yet the consumer has no knowledge of thosevariations.Andfurthermore,noincentivetomodifyeitherthepatternoramountofdemand. In short, theprices individual consumerspaybearlittle or no relation to the actual cost of providingpower in any givenhour. The price of electricity in most markets is based on a combina-tionof long-termandshort-termmarkets.The long-termpurchasesarenegotiatedandsetbycontracts.Theshort-termpurchasesaremadeonthe basis of a variety of market-based exchanges. Typically, wholesale


electricity is sold at a combinationoffixedandmarginal costs, but thecustomerdoesnotfeeltheaffectsofthosepricesuntiltheyreceivetheirbillsomeweeks later.Asaresult, theyseenoconnectionbetweentheirbehavior and the cost of electricity. Consumers have no incentive tochange their consumption as the cost of producing electricity changes.The consequences of this disconnect between cost and consumptionyields inappropriate investments ingenerationand transmission. Thisarrangementcouldberadicallymodifiedbythe implementa-tion of a dynamic system—a system which would communicate thepriceof electricityandenable consumers to respond to thoseprice sig-nals.Dynamicsystemsharness therecentenhancements in informationtechnology.Thesesametechnologicaldevelopmentsalsogiveconsumersatoolformanagingtheirenergyuseinautomatedways.Customerscanmaketheirownpricingdecisions,usedefaultprofiles,orletthesuppliercontroldemand through switching. Theevidenceofthepast20yearssuggeststhatelectricityconsum-erswillrespondtotimevaryingprices.However,thefocusisshiftingtothequestionof thesymbiosisofpricingand technology. Inconjunctionwith time-varying pricing signals enabled by a dynamic system, theabilityof customers to choose and to control their electricity consump-tion using digital technology is at the core of transforming the electricpower system. Dynamic systems and the digital technology that enables themare synergistic. Dynamic systems can enable a diverse and consumer-focused set of value-added services. Dynamic systems empower con-sumers and enable them to control their electricity choices with moregranularity and precision. This can range from energy managementsystemsinbuildingsthatenableconsumerstoseetheamountofpowerusedbyeachfunctionperformedinthebuildingtoappliancesthatcanbe automated to change behavior based on changes in the retail priceof electricity. Dynamicsystemscanyield lowerwholesaleelectricityprices,bet-ter asset utilization and reduced needs for additional generation andtransmission investment. Increased reliability is one particularly valuable benefit of imple-mentingdynamicsystems.Activedemandresponse topricesignals in-herentlyactstomoderatestrainsontheentiresystem.Dynamicsystemsallowthereductionofpeak-periodconsumptionreducingthelikelihoodof transmissioncongestionandgeneration shortages.


One of themost important benefits of dynamic systems are theirability tounleash innovation.Theability forconsumers tobe informedabouttheirelectricitybehaviorcreatesincentivestoseekoutnovelprod-ucts and services that better enable them tomanage their own energychoicesandmakedecisionsthatbettermeettheirneeds.Thisincentive,in turn, induces entrepreneurs to provide products and services theconsumers demand. Competition for the business of customerswoulddrive innovation inend-use technologies. TheEnergyPortwould facilitate consumer engagementwith suchdynamic systems.

WHAT ISTHEENERGYPORTSM?

TheEnergyPortSMispart“portal,”part“gateway,”andpart“smartelectricmeter.” To date, the term portal has been narrowly defined asrelating to communicationsdata hubs, gatewayoften refers to specific,narrow access points, andmeter is the traditional electric utility inter-facewith its customers limited tomeasuring consumption. In fact, theterm“portal”isexperiencinggrowinguseinreferencetointernet-basedweb servers that provide a web-based view into enterprise-wide ac-tivities.TheEnergyPortSMprovidesaview intoconsumer facilitiesandcarries the definition further to include communications with energymanagement systems and even end-use subsystems and equipment.The EnergyPortSM is a device or set of devices that enable intelligentequipment within consumer facilities to communicate seamlessly withremote systems over wide-area networks. The EnergyPortSM can per-form the functions of a communications gateway that physically andlogically inter-connects a wide-area access networkwith a consumer’slocal network. It is envisioned that the EnergyPortSMwill have locallyavailablecomputingresourcestosupportlocalmonitoring,dataprocess-ing,management, and storage.

WHATARETHEGENERICFEATURESOFTHEENERGYPORTSM?

The EnergyPortSM may benefit consumers in seven ways: safety,security, convenience, comfort, communications, energy management,and entertainment.


Simplify Building Systems Today’s buildings use separate systems for ethernet, power, tele-phone, intercom, thermostat, cable TV, audio and video distribution,securitywiring,doorbells,andthelike…somewirelessandothersoftenin separatewiring systems. IntheEnergyPortSM,thosesystems,andothers,willbesimplified.Threeapproacheswillbeavailable:(1)Theycanbeintegratedandcon-solidatedintoonehybridcable.Thatcablewillruntoeveryconvenienceoutlet in thebuilding andprovide all thepower, communications, andcontrol capabilities the building owner will need at any convenienceoutlet inthebuilding;or(2)power linecarriersignalswillbesuperim-posed over the buildings power lines; or (3) radio networkswill sendsignalsdisplacingallbut thebasic electricalwiring. No longerwill consumers have to search for special jacks for au-dio,video,or telephone.Nolongerwill theyhavetorunseparate linesfor security systems or intercoms. The EnergyPortSM System can plugprinters, faxmachines, DVDs, VCRs, toasters, telephones, radios, TVs,stereos or speakers into a universal outlet that will link them to eachotherand to the services they require. Theuseofsuchauniversaloutletwillnotprecludetheuseofanyconventionalappliance.Anyoftheold,conventionalappliancesconsum-ersmaywish to use in the EnergyPortSM Systemwill be immediatelyusablewiththesystem.TheEnergyPortSM System is an enabling system that handles the distribution and control of electric energyandother en-ergy sourcesaswell as allkindsof communications.

Safety The EnergyPortSM System can enable the distribution of electricenergyfarmoresafelythroughtheuseofa“closed-loop”system.Beforeenergy canbe fed toany typeofoutlet, anappliancemustbepluggedin and itmust actually request power through a small communicationchipitwillcontain.AmicroprocessorwillidentifyeachappliancetotheEnergyPortSM.Unlessthathappens,noenergyisavailableattheoutlet.Becausetheoutletiseffectively“dead,”theprobabilityofelectricalshockorfirehazardsare substantially reduced. In such a “closed-loop” systemwhen an appliance is plugged in,itscommunicationschipsuppliesanappliance identificationtothesys-tem(much like thebarcodedoesat thegrocerystore). Italsoprovidesanestimateof theappliance’senergyconsumption,and lets thesystem


knowtheappliance’sstatus—isitonoroff,isitinproperworkingorder.Onlythenisenergyallowedtoflowthroughtheoutlettotheappliance.And then itsuse is continuallymonitoredby the system. Nowifthatmonitoringsignalisinterruptedorterminated,energyflow is immediately shutdown.Reasons for interruptionmight includeunplugging the appliance or shutting it off; it could be an overload,short, or ground-fault condition; or it might be a poorly made plugconnectionorashort.Regardless,theconsumerremainssafeandsecurebecause theenergyflowhasbeenshutdown…andwillnotbeable tostart againuntil theproper conditionsexist.

Reliability The EnergyPortSM could offer even more to consumers in theeventofanoutage.Therecouldbeseveralpartsof thesystemthatusepoweredcontroldevices. Inorder tokeep thesedevicesalivewhenthemainpowerfails,anuninterruptiblepowersupplycanbeenabledbasedonastoragedevice.Thisstoragesystemcouldallowthesystemtokeepintactanyinstructionsprogrammedin;itcouldcontinueanytimingop-erationsnecessary;anditcouldprovidethenecessaryminimumpowerfor securityandalarmsystems. AnotheradvantageoftheEnergyPortSMsystemthatcancomeintoplaywhenthere’sapoweroutageistheintegrationwithalternatepowersources,suchasphotovoltaics,astandbygenerator,orgascogenerationsystems,theEnergyPortSMwillimmediatelyswitchovertotheappropri-ate source. Depending on the sizing of the alternate power source, the En-ergyPortSM System could provide the power necessary for selection ofoperations, suchas the freezer, or refrigerator, cookingor lighting.Notonlyisthiscapabilityconvenient,butinsomehomesituations, itcouldbe critical.

Decentralized Operation TheEnergyPortSM System isnot a computer-controlledbuilding inthesensethatthere’sasinglepersonalcomputerrunningthings.TheEner-gyPortSMusesdistributedintelligence,ordistributedcontrol,tocarryoutitsoperations.Thereasonsforthisareefficiencyandreliability.Muchlikegoodmanagement in a business organization, decisions and actions arecarriedoutmostefficientlyatthelowestlevelspossible.Thus,consumersdon’thave thepresidentmakingeverydecisionordoingevery task.


In the EnergyPortSM System, the reliability of the entire buildingenergy and communication system is integrated. So when there’s afailureof anyone component,mostproblems canbe isolatedandkeptfromaffectingotheroperationsbecauseofdistributedcontrol.

Consumer Interface Consumers will interact with the EnergyPortSM in a variety ofways. Everything in tomorrow’s buildings will be controlled by sig-nals… whatever device can send the appropriate signal can be usedto controlwhatever the consumer chooses.No longer is the switch onthewallphysicallyopeningandclosing thepathofpower toanoutletor fixture.Now it is simply sending a signal to the system. Therefore,that switch can be assigned to control anyone of a range of desirableapplications.Thesame is true foramultitudeofotherdevices, suchasdisplaypanels,videotouchscreens,telephonekeypads,infraredremotecontroldevices,or evenvice recognitiondevices. Forexample,fromswitchorpaneldisplay,consumersmaybeableto select to control the lights, music, temperature, time, or the TV. Tocontrol the TV, perhaps these options now become available: beyondjust simple on/off, access to control the volume, color, contrast, andchannel. Inhomestoday,thereisaproliferationofappliances,eachwithitsownsetof instructions.Forexample, to set the timingofanoperation,youmightuseoneprocedure for thewashingmachine,another for theDVDorVCR,anotherforthemicrowave,andstillanotherforthealarmclock. However, one of the neat things about EnergyPortSM control isthatwhatever the consumer uses to control operations or timing, theyonly have to learn one basic set of instructions. Keeping it simple is abasicpremiseof theEnergyPortSM. For example, the living roommight be set up to have the tablelamp controlled by either the telephone or a wall switch. The floorlampmight be assigned to an occupancy detector as well as anotherwall switch. If the furniturewas rearrangedor itwasmore convenientto run operations differently, the housewould not have to be rewired,theassignmentwould simplybe changed. Sensorsare justanotherkindofswitch.Andtheirusecanbeveryhelpful in the EnergyPortSM System. In this case, they can be used todetermineunauthorizedentry,andoccupantscandecidewhatresponseshouldbemade.Itmightbetolightuptheoutsideatnight,turnonall


the interior lights,soundanalarm,andcall thepoliceofanemergencymonitoring service forassistance. Those same sensors can do double duty. During the day, whenconsumers are at home, they might simply determine an individual’spresenceso that theycan light theirwayfromroomtoroom.Consum-ers could carry the laundry, or the baby, from room to roomwithouthaving to fumble and stumble for a light switch. In theEnergyPortSM, sensorscanalsoworkinteractively.Forexample,whyshouldthelightsbe turned on in a room that already has enough light coming in thewindowonabrightday?Orwhyshouldthelightscomeonifnoone’sintheroomatall?TheEnergyPortSMcanenableremotecontrolwhetherbyaswitchortelephonekeypadorthelike.Thiscancomeinveryhandinorder to issueone command from the comfort of one’sbedatnighttolockthedoors,turnoffallthelights,setthesecurityalarms,andturnthe thermostat to its set-back position. Telephone control can come inhandywhenunexpectedeventscauseachange inplans.Here, it couldprevent a char-broiled steak for dinner from becoming charcoal. Voicerecognition devices are becoming increasingly reliable and affordable.Such a unit in the EnergyPortSM System canmake life better for all ofus, but particularly for the elderly or infirmedwhomight not be ableto exerciseother formsof control.

Appliances That Talk to Each Other OneofthemostexcitingformsofcontrolmadepossiblebytheEn-ergyPortSMcomesthroughappliance-to-appliancecommunication.Here,for example, the ringing of the telephone or doorbellwould cause thevacuumcleaner to shutdownsoa consumer couldhearand respond.

Safety Safety has a high priority among consumers. The EnergyPortSM wouldmonitorsafety.Another formof safetycomeswhenwecanpre-ventdangerousthingsfromhappening…asinthecaseofayoungper-sonwhoarriveshomefromschoolbeforehis/herparentshavereturned.To keep the student from playing Betty Crocker in an unsupervisedsituation,simplylockouttheuseoftherangeuntilparentsreturn.Thesamecanbedoneforpowertoolsintheworkshop,anexpensivestereosystem,or a sophisticated sewingmachine. Still another formof safetycomeswhen consumers can be kept frommakingmistakes… such asleaving the rangeburneron.


Fire, of course, is something toalwaysbemindfulof. Shouldonebreakout inabuildingenabledbytheIntelliGridSM, theoccupantscanbe alerted, toldwhere the location of the fire is,what rooms are occu-pied,andflash the lightsshowing thesafestpathwaytoexit thehome.Meanwhile, all this information can be called out immediately to thefire department or emergencymonitoring service so they can respondpromptlyandappropriately to theproblem. The use of sensors in a building need not involve cumbersomeextrawiringorcomplications. Indeed, theconvenienceofbeingable toplug in whatever kind of sensor can meet the consumer’s needs intoanoutletconvenientlylocatedanywheresignificantlyreducescostsandaddsagreatdeal to the safetyand securityof thehomeorbusiness. In addition, the EnergyPortSM provides the convenience of beingable to plug in any appliance anywhere in the home. No longer willconsumershavetorununsightly,andsometimesunsafe,extensionsforpower,cableTV,telephone,orstereowhentheychoosetorearrangethefurniture.Rightnow,forexample,ifaparticularlightswitchiswiredtoaparticularoutletwherethereisatablelamp,anextensioncordhastoberun tocontrol it if theconsumerdecided toplace itelsewhere.Withthe EnergyPortSM System, the system can be reconfigured to control alamp regardlessof location. Another kind of convenience comes when consumers are visitedwithapermanentortemporarydisabilityorsimplyachangeinthewaytheywill beusing theirhomeorbuilding. Should aparticularproductorcontroldevicebeneededforaperiodoftime,theysimplygooutandpurchaseor rent theEnergyPortSM component tomeet theirneeds. ComfortisakeyfactorindeployingtheEnergyPortSM System. The EnergyPortSM will enable consumers to set different temperature andhumidity levels indifferent areasof theirbuildings.For example,keepthe temperature cooler in a roomwhere Thanksgiving dinner is beingprepared,while it remains comfortablywarmer forguests in the livingor dining room.Andwhy heat the bedrooms during that time just tokeepguests’coatswarm?TheEnergyPortSMSystemwillallowseparatezonesor roomsof thehome tobe conditioned to suit specificneeds atany timeof thenightorday.

Communication Essential to the EnergyPortSM are the deployment of advancedcommunications capabilities.Whether it be to coordinate all the items


on the menu for a particular meal so that they all are finished at thesame time fordinner…or simply touse the telephoneasan intercomto keep you from running or shouting to one another throughout thebuilding.Perhaps the capabilityofplacinga smallvideocamera in thenurserywill give a consumermorepeaceofmindwhen thebabysitteris down in the family roommunching popcorn and watching TV…orbeingalerted toaproblem inoneof theappliances inabuilding.Aproblem,thatifundetected,mighthaveacosttheconsumermoremoneyor causedabiggerproblem. Not only can theEnergyPortSM System relaydiagnosticproblemsfrom appliances, it can also let building owners know if the systemitself is sufferinganyproblems.Or,perhaps, justkeepbuildingownersapprisedof itsstatusormaintenancerequirements,soyoucanrespondappropriately. TheEnergyPortSM can help consumersmanage the use of energymoreeffectively.Itwillhelpbuildingownersandoperatorsdecidewhento use heating and cooling systems based onwhether or not anyone’soccupying the space,what roomsareoccupied,orwhat the costof en-ergy is at aparticular time. Heatingwaterisoneofthemorecostlyusesofenergy.Whyspendthemoneytomaintainaconstanttemperaturewhenaparticularlevelofhotwater is only requiredat certain times.Also, there canbedifferentwater temperatures fordifferentneeds.Nolongerdoesheathavetobeusedfortheworst-casesituation.Nowconsumerscanhavetheirshowerwater,dishwater,orclotheswaterat theright temperatureat therighttime. In“closed-loop”control,thecommunicationschipineachappliancewasdescribedasalsoprovidingenergyconsumptioninformationforthatappliance to the system. The feature enables the building owner to callup a printout or display of his estimated energyusewheneverwanted.That estimate can be broken down appliance by appliance, time of day,durationofuse,andcostofuse.This isamuchsought-after featurethatplaces theconsumer incontrolofhowenergyexpensesaremanaged. Of course,manyconsumersarenot inclined touse such informa-tion. They’ll simply want to make some preliminary decisions abouthow they’ll spend that energydollar fordifferentdegreesof efficiency,comfort and convenience.Manywill want to take advantage of “real-time” pricing structures likely to be introduced by more and moreutilitiesaroundthecountry.Bysodoing,theconsumercansavemoney


by time-shifting their use of energy. It may be as simple as cyclingthe air-conditioner to save energy during the cooling season. For theutility companies, the EnergyPortSM System enables demand-side loadmanagement; for theconsumer, itcanmeansignificantsavingswithoutsacrifice. Another help to both the utilities and the consumer comes fromwhat the EnergyPortSM can dowhen powermust be restored after anoutage.Becauseeachbuildingcanbe linkedto theutilitycompany, theutilitycannowselectivelyrestorethepowertoappliancesinthehome.Thismeans the utility doesn’t have towait until it has enough poweravailable to handle the huge start-up current demand that’s called forwhenpowerisrestoredallatonce.Therefore,theutilitycanrestorefullpowersooner toaffectedconsumers…and theconsumerdoesn’thavetobewithoutpower foras longashemighthavebeen.

Entertainment Entertainment is an additional benefit of the EnergyPortSM. The EnergyPortSMcanenableonecentralaudiosourcetoprovideaselectionofmusic to severaldifferent roomsof thehome.Someonecan listen topunkrockintherecroom,whileteenagerscanbesoothedbyBeethovenin thebedroom…orviceversa!

Network Communications Management The EnergyPortSM can support both the applications that are de-pendenton internetworkingaswellas the functionsnecessary toman-age thenetworksandconnecteddevices.

Remote Consumer-Site Vicinity Monitoring The EnergyPortSM can support local data monitoring to supportavarietyof applications including, butnot limited to, electric, gas andwater operations support, quality-of-service monitoring, outage detec-tion, and other functions that can support the provision of reliabledigitalqualitypower for the future.Suchmonitoringcapabilitiescouldbeextendedtootherparameterssuchassecurity,microclimateweather,andhomeenergy.

Markets One of the greatest values of the EnergyPortSM can be to enableconsumerstoeffectivelyrespondtoelectricenergymarketdynamicsand


real-timepricing.Today’smeteringdoesn’tenableconsumerstorespondto prices that vary hourly or even more frequently. Communicatingmarket pricing to consumer-owned energy management systems andintelligentend-useequipmentwillgreatlyhelptoclosethegapbetweenconsumersandmarketpricing for electricity.

CONCLUSION

Thesmartgridwouldbe thegluewhichenables theElectriNetSM tosticktogether. ItwouldconnectLow-CarbonCentralStationGenera-tion to local energynetworks and to electric transportation.Within thelocal energy network, some formof portalwould be needed to enabletheultimate connectivity—that to the consumer.

ReferencesEnergyPortSM Features—Opening aGateway to theWorld,C.W.Gellings,ABoldVision

forT&D,CarnegieMellonUniversity,December2004.

171

Chapter 9

Policies & Programs to Encourage End-use Energy Efficiency*

In order tomaximize energy efficiency improvements, high levelleadership in the development, implementation, and monitoring ofpolicies and programs is required by international government bodiesand organizations, national governments, state governments, regionalcoalitions, energy companies, city governments, corporations, etc.Ap-propriatestrategicplansneedtobedevised,andrealisticbutaggressivetargetsneed tobeestablished.Theeffectivenessof specificpoliciesandprograms will be a function of their design, stringency, and level ofimplementation. Ultimately, gaining the cooperation and dedication ofindividual energy end-userswill be essential to produce themagnitudeof responsenecessary toachieve targets for energy savings. Therearemanyproveninstrumentsforachievingenergyefficiencyresults.Someareregulation-drivenandothersaremarket-driven.Table9-1 lists a variety of policy- and program-instruments that have beenused successfully andhave the potential to yield significant energy ef-ficiencyimprovements.Thetableorganizestheenergyefficiencyinstru-ments intofive categories:

• General• Energy supply&delivery• Industry (includingagricultureandwastemanagement)• Buildings• Transport

Thegeneral category includespolicies andprograms thatbroadlyapplytotheeconomyasawhole.Specificinstrumentsincludesubsidies

*Based inpartonmaterialpreparedbyClarkW.GellingsandPatriciaHurtado,KellyE.ParmenterandCeciliaArzbaeherofGlobalEnergyPartners,LLC.

172 The Sm


emand Response

Sources:1. Realizing the Potential of Energy Efficiency, Targets, Policies, and Measures for G8 Countries,UnitedNationsFoundation,Washington,

DC: 2007.2. Climate Change 2007: Mitigation, Contribution ofWorkingGroup III to the FourthAssessment Report of the Intergovernmental

PanelonClimateChange,B.Metz,O.R.Davidson,P.R.Bosch,R.Dave,L.A.Meyer (eds),CambridgeUniversityPress,Cam-bridge,UnitedKingdomandNewYork,NY,USA:2007.

3. Energy Use in the New Millennium: Trends in IEA Countries, InternationalEnergyAgency,Paris,France: 2007.

Table 9-1. Examples of Policies and Programs for Achieving Energy Efficiency Improvements

Policies & Programs to Encourage End-use Energy Efficiency 173

for research and development; public goods charges to fund energyefficiencyprograms; tax incentives; incentives forprivate sector invest-ment;leadershipinprocurementofenergy-efficientequipment,vehicles,and facilities (e.g., by government or high-profile corporations); publicinformationandeducation to increaseawareness (suchasviamailings,media,direct contact, etc.); and tradeallies. The energy supply & delivery category encompasses actions di-rectedat energy companies. Someof thepotential actions aredevelop-ment of minimum standards of efficiency for fossil-fuel-fired powergeneration;reducedsubsidies for fossil fuel;carboncharges; innovativerate structures including those that decouple profits from sales to en-courageenergyefficiency;implementationofdemand-sidemanagementprograms; targets of meeting a larger portion of future electricity de-mandwithenergyefficiency;greateruseof combinedheatandpower;improvedpowersupplyanddeliveryinfrastructure(includingdevelop-mentofa“smartgrid”);reducednaturalgasflaringtopreventwasteofvaluableresourcesandtoreduceemissions;andintroductionoftradablecertificates for energy savings. The concept of tradable certificates forenergyefficiencyisanalogoustoapproachestakenforgreencertificatesand CO2 trading,butapplies toenergysavingsandmeetingenergyef-ficiency targets. The industry category consists of energy efficiency instrumentssuch as strategic energy management; minimum standards of energyefficiencyforkeytypesofequipmentincludingmotors,boilers,pumps,and compressors; process-specific energy efficient technologies; energymanagement systems; negotiated improvement targets; incentives; re-search initiatives; and benchmarking of energy efficiency. Some of thepoliciesandprogramsextendtotheagricultureandwastemanagementcategories. There are many policy and program opportunities in the build-ingscategory.Someofthemainopportunitiesincludestrongerbuildingcodesandappliancestandards; labelingandcertificationprograms;ad-vanced lighting initiativesaimedatphasingout inefficient lightingandpromotingenergyefficientlightingandadvancedcontrols;leadershipinprocurementof energyefficientbuildings; energyefficiencyobligationsandquotas;energyperformancecontracting,inwhichanenergyservicecompanypaysthecapitalscostsoftheenergyefficiencymeasuresandispaidbackbytheenergysavings;voluntaryandnegotiatedagreements;tax incentives; subsidies, grants, and loans; carbon tax; education and


information; mandatory audits and energymanagement requirements;and detailed billing. Policy and program instruments applicable to the transport cat-egoryrelatetovehicleandfuelefficiencyaswellastoshiftingtranspor-tationmodes, routes,andschedules.Specific instrumentsare improvedfuel economy; mandatory fuel efficiency standards; advanced vehicledesignandnewtechnologies(e.g.,plug-inhybridelectricvehicles);taxeson vehicle purchases, fuel, and parking;mass transit improvements tomake itmoredesirable to thegeneralpublic; infrastructureplanningtooptimize routes, trafficflowsandgeneral efficiency;greater allowancesfortelecommuting;modeswitchingtomoreefficientformsoftransport;and leadership inprocurementof energy-efficientvehicles. In addition to the policies andprograms listed in the table, thereare also potential policies related to aiding transition and developingnations. For example, the United Nations Foundation report suggestsestablishing loanguarantee funds for investments inefficiency;makinginvestments in the human and institutional resources required by thecountriestomaximizeefficiency;supportingamarketexportingenergyefficient technologies; andminimizing the tradeof inefficient or lesser-efficient technologies (UNFoundation, 2007).Themost successfulpoli-cies and programs, particularly for developing countries, are likely tobe those that address energy requirements for economic developmentwhile simultaneously consideringenvironmental impactsandcosts.

POLICIESANDPROGRAMS INACTION

The following sub-sections present nine examples of the typesof energy efficiency policies and programs currently underway at themulti-national,national, state,city,andcorporate levels.Example9-1 isa multi-national-level example, Examples 9-2 to 9-6 are national-levelexamples, Example 9-7 is a state-level example, Example 9-8 is a city-level example, andExample9-9 is a corporate-level example.

Multi-National Level In 1999, the International EnergyAgency (IEA) proposed that allcountriesharmonizeenergypoliciestoreducestandbypowerto1Wattorlessperdeviceinallproductsby2010.Further,theIEAproposedthatallcountriesadoptthesamedefinitionandtestprocedure,butthateach


countryusemeasuresandpoliciesappropriatetoitsowncircumstances. While the standby power use formost small devices is relativelysmall,typicallyrangingfrom0.5to10Wattsperdevice,thetotalpoweruseof alldevicesdrawing standbypower is substantial becauseof thecurrent and even higher expected proliferation of devices. Indeed, itis estimated thatworldwide standby power currently accounts for 480TWheachyear. IEAestimates standbypoweruse couldbe reducedbyasmuchas60 to80%. To date, there have been several accomplishments related to the1-Watt Initiative: TheG8has committed topromoting the1-Watt Initiative. An internationally sanctioned test procedure for standby powerwas adopted by the International Electrotechnical Commission (IEC62301) in2005.Today, thisprocedure is specifiedandusedextensively. Manycountriesaroundtheworldusevoluntaryendorsementlabels. Koreaand theU.S.have implementedgovernmentprocurement. Japan and California are currently the only two regions that haveadoptedregulations.However,standbyrequirementsincreasinglyarepartofwiderenergyefficiencyregulations.Forexample,Korea,Australia,NewZealand, theU.S.,Canada,andChinaareconsideringregulations. The voluntaryCode ofConduct in Europe has been expanded tocover standby power in external power supplies, set-top boxes, andbroadbandmodems. The primary lesson learned from the 1-Watt Initiative is that it isdifficultandexpensivetotargetpoliciestowardsindividualdevices.Asa result, the IEA now proposes a uniform approach to standby powerrequirementsinallproducts.Thiswouldapplytoallproductswiththeexceptionofproductsalreadyregulatedbyanefficiencystandardwithatestprocedurethatcapturesstandbypoweruse,orproductswithspecialfeatures suchasmedicaldevices.

Sources:1. Ellis,M.,InternationalEnergyAgency,Standby Power and the IEA,Presentation,Berlin,

May, 2007.2. Standby Power Use and the IEA “1-Watt Plan,” FactSheet,InternationalEnergyAgency,

Paris,France:April 2007.

National Level: Norway In 2002, theNorwegianMinistry ofPetroleumandEnergy (MPE)establishedanenergyefficiencyagency:Enova.Enovaisfundedfroma


levyontheelectricitydistributiontariffs.Its2007budgetis$200million.Enova’smission is to promote energy efficiency and renewable energygeneration in a consistent and comprehensivemanner inNorway. ThegoalofEnovaistoachievereductionsinenergyuseof12TWhby2010,eitherthroughimprovedend-useenergyefficiencyorincreasedproduc-tionofrenewableenergy.(TotalnetenergyuseinNorwaywas222TWhin 2006.Thus,Enova’s savingsgoal of 12TWh represents~5%of totalenergyuse inNorway). Enova primarily relies on improvements in industrial energy ef-ficiencytoachieve itsgoal.Specifically,Enovaprovides investmentaid,or grants, to industry. These grantsmay cover asmuch as 40% of theinvestments costs. (The maximum of 40% is imposed by state guide-lines.) Enova uses a standard net present value approach to assess theprofitability of a project. Themain criterion used by Enova for select-ingenergyefficiencyprojects is theproject’s investmentaidperunitofenergy saved. The lower the investment aid per unit of energy saved,themorelikelytheaidwillbegranted.However,thegrantshavesomeobligations attached. For example, if the energy savings are not met,parts or all of the investment aid may have to be returned. Similarly,if the actual investment costs are lower than the estimated investmentcosts,theaidisreducedproportionally.Ontheotherhand,iftheactualinvestment costs are higher than the estimated investment costs or theenergysavingsexceed theestimatedenergysavings, theamountof thegrant still remains the same.As a result, the inherent incentives for acompany to signal high investment costs and high energy savings aresomewhat reduced. The results from the Norwegian energy efficiency investmentmodelarepromising.Bytheendof2006,Enovahadcontractualagree-ments for an aggregated savings of 8.3 TWh/year. Contractual agree-mentsassociatedwithindustrialenergyefficiencyprojectsaccountedfor2.2 TWh/year, or 26% of total aggregated energy savings. Numerouscompaniesusetheresultsfromtheenergyefficiencyprojectstopromotetheir commitment to corporate social responsibility.

Sources:1. Enge,K.,S.Holmen, and M. Sandbakk, Investment Aid and Contract Bound Energy Sav-

ings: Experiences from Norway, 2007SummerStudyonEnergyEfficiency in Industry,WhitePlains,NewYork: July24-27, 2007.

2. Statistisk Centralbyra, Statistics Norway, Total supply and use of energy, 1997-2006.3. Enova’s results and activities in 2006,Enova: 2007. (InNorwegian).


National Level: Ghana African countries primarily focus on energy-efficient and sustain-ablesupply-sideenergyinitiatives.Forexample,newrenewableenergyproduction is popular. However, it is typicallymore cost-effective andoptimal fromasustainableperspectiveto improvedemand-sideenergyefficiency. This alsomakes energy supply available tomore customers,which is important inmany supply-limited regionsofAfrica. One substantial barrier to increased end-use energy efficiency inAfrica is the great need for education. It is easier to educate peopleon the supply-side than on the demand-side. Educating people on thesupply-side typically involves one paid person for each 1MW, whileeducating industry and business personal in efficient energy end-useinvolveshundredsto thousandsofpeopleperMWcapacity.ThefigureincreasestotensofthousandsofconsumersperMWcapacityifthedo-mestic andgeneralpublic is included.Asa result, educatingend-usersingoodenergypractice is amajor taskofnationalproportions. SomeAfrican countries have endeavored to re-orient its energy-efficiencyinitiativesto includebothsupply-sideenergyproductionanddemand-sideend-use.One case-in-point isGhana. GhanasubmittedaTechnologyNeedsAssessment(TNA)reporttoUnitedNationsFrameworkConventiononClimateChange (UNFCCC)in2003, and receivedmajor funding shortly thereafter from theUnitedNationsDevelopmentProgram(UNDP)andtechnicalsupportfromtheNationalRenewableEnergyLaboratoryintheU.S.ThegoaloftheTNAis to identify various technology development and transfer programsthat canpotentially reducegreenhousegasemissionsandcontribute tothe country’s sustainabledevelopment. Top priority end-use technologies identified include replacing in-candescent lampswith Compact Fluorescent Lamps (CFLs) and boilerefficiency enhancements. Since the assessment, Ghana has experiencedadramatic increase in theuseofCFLsprimarilyasa resultof changesinthecountry’simporttariffs,installationtaskforces,andsalesthroughretail stores. The CFL promotion policies have been sustainable andself-financing. It is estimated the newCFLmarket has addedU.S. $10million to theGhana economy. The CFL deployment has also resultedina reductionof 6% inGhana’s electricitydemand.

Sources:1. Energy for Sustainable Development: Energy Policy Options for Africa, UN-ENERGY/

Africa: 2007.


2. Stern, N.H., The Economics of Climate Change: The Stern Review, CambridgeUniversityPress,Cambridge,UK:2007.

National Level: Germany Increasedenergyefficiencyinbothenergysupplyandend-usearecriticaltothesuccessofGermany’sambitiousplantoreducegreenhousegasemissionsby40%by2020.aThereforeavarietyofenergyefficiencypoliciesaffectingthesupply-sideandthedemand-sidearebeingimple-mented or will be introduced in the near future.A few examples areprovidedbelow. Energy producers are required to increase efficiency by 3% eachyear,primarilythroughtheuseofmodern,highlyefficientgasandcoalpower plants with carbon capture and storage and the increased useof combined heat and power plants. For example, Germany aims toincreasetheshareofcombinedheatandpowerin itselectricitygenera-tion from12.5% to25%by2020. Startingin2008,Germanenergycompanieswillreceive15%feweremissionsallowancestostimulateinnovationsinenergy-efficientpowerplant technology. State subsidies are available to anyone that renovates a house oranapartment inanenergy-efficientmanner.Forexample, subsidiesareavailable for insulation, replacementof inefficientheating systems,andfornewenergy-efficientwindows. Energycertificatesaregoingtoberequiredforallnewandexistingbuildings; thesecertificateswill showthebuilding’scurrentenergyuseandwhat energyefficiencymeasuresareavailable. There will be increased support for a tenant’s rights related toenergy efficiency. If the landlordof apropertydoesnotmodernize theproperty and, as a result, theheating costs arehigh, the tenantwill bealloweda rent reduction. AmotorvehicletaxthatiscalculatedonthebasisofCO2emissionsrather than thesizeof thevehiclewillbe introducedsoon inGermany.TherewillalsobeamotorwaytollchargefortrucksbasedontheirCO2 emissions. GermanycurrentlypresidesoverboththeCounciloftheEuropeanUnionandtheG8.SincecombatingclimatechangeisofgreatimportanceinGermanenergypolicy,Germanyhasmadeclimateandenergycentralthemesof itspresidenciesofboth theEuropeanUnionand theG8.———————aIncomparison, theEuropeanUnionhascommittedtoareductionof30%ingreenhouse


gasemissionsby2020inthecaseofaninternationalagreement,andto20%inanyevent.

Sources:1. Taking Action Against Global Warming: An Overview of German Climate Policy, Federal

Ministry for the Environment, Nature Conservation andNuclear Safety, September2007.

2. “Merkel confronts German energy industry with radical policy overhaul,” Herald Tribune, July4, 2007.

National Level: China China’sFiveYearPlanfor2005-2010establishedanambitiousgoalof reducing energy intensity, defined as energy use per unit of grossdomesticproduct(GDP),by20%between2005and2010.Thistranslatesintoanaveragereductionof4%peryear.ThegoalassumesanaverageannualGDPgrowthrateof7.5%from2005to2010;thusenergyusecanonlyincreaseatanannualgrowthrateof2.8%.However,bothGDPandenergyusehavebeengrowing faster recently (close to10%each).Asaresult, achieving the 20%energy intensity targetby 2010will require areductionofChina’s energyuseof 19EJ (or 18Quads). To realize the 20% energy intensity reduction goal, China hascreated the Top-1000 Energy-Consuming Enterprises programwhich setsenergy-savingtargetsforthe1000largestenergy-consumingenterprisesinChina.These1000enterprisesused19.7EJ in2004,whichrepresentsathirdofChina’stotalenergyuseandclosetohalfofChina’sindustrialenergy use. The aggregated goal for the 1000 enterprises is to achieveenergy savingsof 2.9EJ (or 2.8Quads)by2010. Steelandchemicalindustriesaccountforthemajorityofenterprisesincluded in theprogram, representingabouthalf of the total.The steeland iron industries also account for ~40% of total energy used by the1000 enterprises, followed by the petroleum/petrochemical industry(~15%), and the chemical industry (~15%). Over thesummerof2006,China’sNationalDevelopmentandRe-formCommission (NRDC) determined energy savings targets for eachenterprise. NRDC also held trainingworkshops in the fall of 2006 forall of theenterprises. Sincethen,theparticipantshavebeenrequestedtoconductenergyaudits and develop energy actions plans. However, many have foundthis task difficult because of the lack of qualified energy auditing per-sonnel. To address this barrier, the U.S. Department of Energy (DOE)andNDRCrecentlysignedamemorandumofunderstandingconcerning


industrial energy efficiency cooperation. The first phase of this effortinvolves a teamofDOE-assembled industrial energy efficiency expertsalongwith a similar team assembled byNRDC to conduct energy au-dits jointlyat8-12enterprises fromthe“Top1000”program.Aspartofthe energy audits,DOE energy expertswill identify energy-saving op-portunities and provide information on U.S. equipment suppliers thatcan assist in implementing improvements.Additionally, DOE plans toidentifypotentialdemonstrationsforenergy-efficientboilers,firedheat-ers, andcombinedheat andpowerunits.

Sources:1. Price,L., andW.Xuejun,“ConstrainingEnergyConsumptionofChina’sLargest In-

dustrialEnterprisesThrough theTop-1000Energy-ConsumingEnterpriseProgram,”2007 Summer Study on Energy Efficiency in Industry,WhitePlains,NewYork,July24-27,2007.

2. U.S. and China Sign Agreement to Increase Industrial Energy Efficiency, DOE to Conduct Energy Efficiency Audits on up to 12 Facilities, PressRelease, U.S.DepartmentofEnergy,September14, 2007.

3. Memorandum of Understanding between the Department of Energy of the United States of America and the National Development and Reform Commission of the People’s Republic of China Concerning Industrial Energy Efficiency Cooperation,signedinSanFrancisco,U.S.DepartmentofEnergy, September12, 2007.

National Level: Japan Japan has been aworld leader in implementing energy efficiencymeasures.Asaresult, theyhaveoneof the lowest levelsofgreenhousegas emissions per gross domestic product (GDP) in theworld. Japan’s1979RationalUseofEnergylawanditssubsequentamendmentscovervariousenergyefficiencyprogramsandpoliciesthatspantheindustrial,buildings, and transportation sectors. Representative achievements foreachof these sectorsare summarizedbelow.

Industry Energy efficiency achievements in Japan’s industrial sector havebeen significant. Current energy use is at 1970 levels even though thesectorhasexperiencedlargeeconomicgrowth.Thisisduetoreductionsin the energy intensity of industrial processes, industry restructuring,andenergysavingsinindustrialfacilities.Despiteimprovements,effortsarestillunderwaytoreducetheintensityofenergyuseandgreenhousegasemissionsintheindustrialsectorbecauseitaccountsfornearlyhalfofJapan’senergyuse.Specificenergyefficiencyeffortsincludearequire-ment for medium and large factories to appoint energy conservation


administrators,aswellasarequirementforthemtosubmitenergycon-servation plans and reports detailing energy consumption.Another ef-fortrelatestoaVoluntaryActionPlanintroducedbytheJapanBusinessFederation,NipponKeidanren, in1997.Theplanencouragesvoluntaryenergyefficiencyactionsbyindustry,andhassetagoalofreducingCO2 emissions in the year 2010 to below 1990 levels for targeted industrialbusinesses.

Buildings Though the energy efficiency of appliances has steadily improved,energyuse in Japan’sbuildings sector continues to risedue to increasedproliferationofelectronicdevices,growingpopulation,andthedesireformoreconveniences.Toaddressthisproblem,JapanhasestablishedtheTopRunnerProgramtodevelophighenergyefficiencystandardsforelectricalappliancesanddevices.Thisprogramspecifiesstandardsthatareequaltoor higher than the best available products on themarket. For each typeof appliance, the program sets a mandatory efficiency requirement formanufacturers and importers to achieve by a specified target year. Thestandards are continuously reevaluated.As a result of the Top RunnerProgram, the energy efficiency ofmany end-use appliances and deviceshasincreasedsubstantially.Forexample,theefficiencyofairconditionersimprovedbyabout40% in2004 relative to1997. Inaddition, Japan introducedanEnergy-SavingsLabelingSysteminAugust2000toinformcustomersontheenergyusecharacteristicsofend-usedevices.Tohelpencouragethesalesofenergyefficientdevices,anEnergy-EfficientProductRetailerAssessmentSystemwasintroducedin2003totractandevaluatesalesefforts.Asofthefirstoftheyear,150stores were considered active promoters of energy-efficient products.Incentives are also offered to encourage integrated heat and electricitymanagementatplantsandofficebuildings. To set an example for consumers, Japan established a procure-mentpolicyinApril2001toencouragegovernmententitiestopurchaseenergy-efficient end-use equipment for offices and public buildings.Procurement efforts by thegovernmenthelp to createmarkets fornewtechnologiesand to increasemarketpenetrationof theproducts.

Transportation Toreducegreenhousegasemissionsfromthetransportationsector,Japan has created Top Runner standards for fuel efficiency in passen-


ger vehicles. In addition, the government offers incentives for hybridvehicles in the form of tax breaks, subsidies, and low-interest loans.The government also offers subsidies for vehicles equipped with anautomaticfeaturetoreduceidling.Forshippersandlargetransportationbusinesses,thegovernmentrequiresthatenergy-conservationplansandreportsbe submitted.

Source:Edahiro, J., “AnOverviewofEfforts in Japan toBoostEnergyEfficiency,” JFS Newsletter,

Sep. 2007.

State Level CaliforniaisoneoftheleadingStatesintermsofenergyefficiencyin the U.S. There are a large number of effective energy efficiencyprograms currently inplace inCalifornia.Manyof theseprograms areimplementedby the state’s three large investor-owned electricutilities:Pacific Gas & Electric (PG&E), Southern California Edison (SCE), andSanDiegoGas&Electric(SDG&E),eithertogetherorseparately. Inad-dition,municipalutilitiesare implementingavarietyofprograms.Onerepresentative example of California’s achievements is the CaliforniaStatewideResidentialLightingProgram,whichwasfirstofferedin2002.The StatewideResidential Lighting Programwasdesigned in responsetothe2001energycrisisexperiencedinCalifornia.Manypilotsandfull-scale programswere initiated in subsequent years to address capacitylimitations, including the Statewide Residential Lighting Program andother energyefficiencyanddemand responseefforts. The purpose of the 2002 Statewide Residential Lighting Programwas toencouragegreaterpenetrationofenergyefficient lampsandfix-tures in the residential sector. The products covered included compactfluorescentlamps(CFLs),torchieres,ceilingfans,andcompletefixtures.The program consisted of two types of incentives. One type providedrebates tomanufacturers to lowerwholesale costs. Theother typepro-vided instant rebates to consumersat thepoint-of-sale. The program was implemented by PG&E, SCE, and SDG&E.Each utility had in-house management responsibilities. The programleveraged relationships with manufacturers and retailers establishedin previous lighting programs. Progresswas tracked by using data onthe number of products delivered bymanufacturers and retailer salesinformation. Inall,5,502,518lamps,24,932fixtures,6,736torchieres,and50ceil-


ingfanswithbulbswererebatedduringthe2002programyear.Thetotalprogramcostwas$9.4Million.Theestimatedprogramaccomplishmentswere162,888MWhinenergysavings,and21.4MWindemandsavings.This equates to a reduction in emissions of about 100 thousandmetrictons of CO2 per year. Similar lighting programs have been offered intheyears since2002.

Sources:1. National Energy Efficiency Best Practices Study, Vol. R1—Residential Lighting Best Practices

Report,QuantumConsulting Inc.,Berkeley,CA:Dec. 2004.2. Gellings, C.W., and K.E. Parmenter, “Demand-side Management,” inHandbook of

Energy Efficiency and Renewable Energy, edited by F. Kreith andD.Y. Goswami, CRCPress,NewYork,NY:2007.

City Level The city of Portland,Oregon, has been an international leader oncommunity-basedenergypolicyforalmostthreedecades.In1979,Port-landadoptedthefirst localenergyplanintheU.S.asaresponsetotheOPECOilEmbargo.The1979energypolicy includedtheestablishmentof an EnergyOffice and an EnergyCommission. In 1990, Portland ad-opted a new energypolicy that included extensive research and broadcommunityparticipationofmorethan50publicandprivategroupsandassociations. The 1990 Energy Policy contained about 90 goals for cityoperations,energyefficiency,transportation,telecommunications,energysupply,waste reduction,andrecycling.Theoverallgoal set in the1990EnergyPolicyistoincreaseenergyefficiencyby10%inallsectorsofthecity(includingtheresidential,commercial,industrial,andtransportationsectors)by2010. Portland’s successful implementation of the energy policy is pri-marily a result of the city first focusing on its internal buildings andfacilities. Specifically, the city created the City Energy Challenge Pro-gram to reduce city energy costs by $1million by 2000. This goalwasachieved, and the energy costs have been reduced further. The energysavingscurrentlyequal$2millionperyearormorethan15%ofthecityenergy bill. A fewexamplesofPortland’s energypolicy successes include: Energy efficiency improvements inmore than 40million sq.ft. ofcommercial and institutional space; Weatherization inmore than22,000apartmentunits; Reduction inper capitahouseholdenergyuseby9%; Newresidential andcommercial state energy codes;


Increasedbicycleand transit transportation; Retrofitofallred,green,andflashingambertrafficsignalstolightemittingdiodes (LEDs); and Useofawiderangeofsolar-poweredequipmentandfleet,includ-ing water quality monitoring stations, sewer emergency investigationtrucks, parking meter repair trucks, and multi-space smart parkingmeters. Additionally,onaper-capitabasis,Portland’sgreenhousegasemis-sions have fallen by 12.5% since 1993 when Portland became the firstU.S. city to adopt a strategy to reduce emissions. Portland’s goal is toreducegreenhousegas emissions to10%below1990 levelsby2010.

Source:OfficialwebsiteofCityofPortland,Oregon,http://www.portlandonline.com/.

Corporate Level In late 2006, Wal-Martannounced its campaign to sell100millionCFLsbytheendof2007atitsWal-MartandSam’sClubstores.Itsgoalis to sell oneCFL to eachof its 100million customersduring theyear.According toWal-Mart, if achieved, its goal would save its customersasmuch as $3 billion in electricity costs over the life of theCFLs. Theenergy savings would be equivalent to that used by 450,000 single-familyhomes.About20millionmetric tonsofgreenhousegaseswouldbeeliminated—comparable to taking700,000 carsoff the road. Attaining its goal of selling 100million CFLs by the end of 2007maynotbetoodifficult.Consideringthat90%ofAmericanslivewithinfifteenmilesofaWal-Martstoreandthereare6.6billioncustomervisitstoWal-Mart stores each year, all it will take forWal-Mart to meet itsgoal is for one customer out of every 60 that enter the store to buy aCFL. In late 2005, Wal-Mart officials began talking about ways CFLscouldhelp their customers savemoney.AWal-Mart stafferaskedwhatdifference it wouldmake if the incandescent lamps in all ceiling fanson display in everyWal-Mart storewere converted to CFLs.A typicalWal-Martstorehas10modelsofceilingfansondisplay,eachwithfourlamps.With 3,230 stores and 40 lampsper store, that is nearly 130,000lamp conversions.Atfirst therewas skepticismwhen itwas estimatedthat changingout those lampswould savenearly $6million in electricbills annually. But, once the numberswere verified, the decision to go


aheadwasquicklymade. Wal-Mart’sCFLgoalsare justpartofitsoverallsustainabilitypro-gram.Theprogramgoals include: Being suppliedby100%renewable energy; Creatingzerowaste; and Sellingproductsthatsustaintheearth’sresourcesandenvironment. Towardsthatend,Wal-Martopenedthefirsttwostoresinaseriesofhigh-efficiencystores thatwilluse20%lessenergythantheir typicalSupercenter.OnestoreopenedonJanuary19,2007inKansasCity,MO,and theotheropenedonMarch14, 2007 inRockton, IL.Wal-Mart alsohas two living laboratories (located inAurora,CO,andMcKinney,TX)where theydemonstrateand testnewenergyefficient technologies.

Sources:1. www.walmartfacts.com,accessed2007.2. “Wal-MartContinuestoChangetheRetailWorld—OneCFLataTime,”Power Tools,

Winter2006-2007,Vol. 4,No. 4,GlobalEnergyPartners,LLC,Lafayette,CA:2007.

ENERGYEFFICIENCYCHALLENGES INTHEMIDDLEEASTANDNORTHAFRICA

The region encompassing the Middle East and North Africa(MENA)wasa focusof the IEA’sWorldEnergyOutlook2005(Interna-tionalEnergyAgency,2005).Thisregionhasahighpotentialforenergyefficiency gains on both the demand-side and the supply-side.A largeshareof their end-usedevices aswell as electricitygeneration capacityis less efficient than inOECDcountries. Oneoftheprimarychallengestodemand-sideenergyefficiencyisthestructureoftheenergymarket.Thisregionischaracterizedbysomeofthelowestenergypricesintheworld.Muchoftheelectricitysuppliedis heavily subsidized. Electricity rates are particularly under-priced inIran,Egypt,andcountriesinthePersianGulf.Insomeareas,significantquantities of electricity are lost due to illegal connections despite thelow energy costs; in other cases, customers’ non-payment of bills is aproblem. The low rates present an obstacle tomarket-driven improve-ments in end-use energy efficiency.While, inmany cases, energypriceincreasesoftenresultinagreaterconsumerdemandforenergy-efficienttechnologies, thisprice incentive is lacking in theMENAregion.More-over,theapproachofraisingratestogeneratetheincentivetopurchase


energy-efficient technologies (or some type of price reform) would bechallenging to implement in theMENA region due to the low incomelevelofmanyof the customers. Two of the primary areas of opportunities for end-use energy ef-ficiency improvement are space coolinganddesalination.Demands forair conditioning aregrowing, and the space cooling efficiency inmuchof theregion isbelowthatof theworldaverage.Districtcooling isonealternativecurrentlyreceivingsignificantattention;howeverpenetrationisstill low(duetothelackofincentive).Theregionisalsohometothelargestdesalinationcapacityintheworldandthedemandforfreshwa-terisexpectedtotripleinsomecountriessuchasSaudiArabia,theUAE,andKuwaitby2030. Improving theefficiencyofdesalinationprocessesand combining desalinationwith power generation are othermethodsto address energy efficiency. One of the challenges of combinedwaterand power is the mismatch between the electricity demand, which ishigherinthesummerthaninthewinter,andthewaterdemand,whichis relatively constant. The power generation efficiency in this region is also on-averagesignificantly lower than in OECD countries. For example, gas-firedplantshave average efficiencies of~33%comparedwith 43% inOECDand oil-fired plants have average efficiencies of ~34% compared with42% in OECD. TheMENA region often expands capacity with lower-first-cost,lessefficientsupply-sidetechnologiesbecauseoftheavailabil-ityofinexpensivefuel.Asaresult,opportunitiestoimprovesupply-sideefficiencyare substantial. There is a growing need for supply-side investments to meetincreasing electricity demand, which is projected to increase by 3.4%per year through 2030. Some of this investment could potentially beoffset cost-effectively by energy efficiency improvements on both thesupply-side and thedemand-side. Such improvementswould also freeup resources for export.The challenge isovercoming thebarriers.

CONCLUSION

Thereisarenewedinterestinenergyefficiencyduetoincreasingworldwidedemand for energy, availability constraints, environmentalissues, and economic considerations. Energy efficiency supports sus-tainabledevelopment,energysecurity,environmentalstewardship,and


savesmoneyforbothenergysuppliersandenergyend-users.Energy-efficiencymeasurescanbeginrightawayto freeupadditionalsupplyand to defer the construction of new generation capacity. Energy ef-ficiencyisenvironmentallyfriendlyandcost-effectiverelativetobuild-ingnewcapacity.Muchofthetechnologytoenhanceenergyefficiencyishere,yetitisunderutilized.Fullyimplementingallfeasibleavailabletechnologyhas thepotential tomake significant improvements in en-ergyefficiency.Nevertheless,additionalresearchandtechnologyinno-vationswill be required to accelerate energy-efficiency improvementsin order tomeet the expectedworldwide growth in energy demand.We already have the experience to develop new technologies and toimplement energy-efficiencypolicies andprograms.Theoil embargosofthe1970sprovedthatsignificantchangealongtheselinesispossiblewith concerted efforts. This book describes a variety of proven toolsat our disposal to meet this renewed mandate for energy efficiency,includingpoliciesandprograms,marketimplementationmethods,andenergy-efficient technologies.

ReferencesRealizing the Potential of Energy Efficiency, Targets, Policies, and Measures for G8 Countries,

UnitedNationsFoundation,Washington,DC:2007.World Energy Outlook 2005: Middle East and North Africa Insights, International Energy

Agency,Paris,France: 2005.

189

Chapter 10

Market Implementation

For voluntary energy efficiency and demand response programs,such as those that might be offered by energy service companies, thesuccess of the program inmeeting targets for energy efficiency greatlydependsonthelevelofmarketpenetrationachieved.(Note: inthisdis-cussion paper, energy efficiency programs are assumed to encompasstraditional energy efficiency programs as well as demand responseprograms.) Planners can select from a variety ofmethods for influenc-ing consumer adoption and acceptance of voluntary energy efficiencyprograms.Themethodscanbebroadlyclassifiedinsixcategories.Table101listsexamplesforeachcategoryofmarketimplementationmethod.The categories include:

• Consumer Education: Many energy suppliers and governmentshavereliedonsomeformofconsumereducationtopromotegen-eral awareness of programs. Brochures, bill inserts, informationpackets,clearinghouses,educationalcurricula,anddirectmailingsare widely used. Consumer education is the most basic of themarket implementationmethods available and should be used inconjunctionwithoneormoreothermarketimplementationmethodformaximumeffectiveness.

• Direct Consumer Contact: Direct consumer contact techniquesrefer to face-to-face communication between the consumer andan energy supplier or government representative to encouragegreaterconsumeracceptanceofprograms.Energysuppliershavefor some time employedmarketing and consumer service repre-sentatives to provide advice on appliance choice and operation,sizing of heating/cooling systems, lighting design, and evenhome economics. Direct consumer contact can be accomplishedthrough energy audits, specific program services (e.g., equip-ment servicing), store fronts where information and devices are


displayed, workshops, exhibits, on-site inspection, etc. A majoradvantage of these methods is that they allow the implementerto obtain feedback from the consumer, thus providing an op-portunity to identify and respond to major consumer concerns.Theyalsoenablemorepersonalizedmarketing,andcanbeusefulin communicating interest in and concern for controlling energycosts.

• Trade Ally Cooperation: Tradeallycooperationandsupportcancontribute significantly to the success ofmany energy efficiencyprograms. A trade ally is defined as any organization that caninfluencethetransactionsbetweenthesupplieranditsconsumersor between implementers and consumers.Key trade ally groupsinclude home builders and contractors, local chapters of profes-sional societies, technology/product trade groups, trade associa-tions, and associations representing wholesalers and retailers ofappliancesandenergy-consumingdevices.Dependingonthetypeoftradeallyorganization,awiderangeofservicesareperformed,including development of standards and procedures, technol-ogy transfer, training, certification,marketing/sales, installation,maintenance, and repair. Generally, if trade ally groups believethat energy efficiency programs will help them (or at least nothinder their business), theywill likely support theprogram.

• Advertising and Promotion: Energy suppliers and governmentenergyentitieshaveusedavarietyofadvertisingandpromotionaltechniques. Advertising uses various media to communicate amessage to consumers in order to inform or persuade them.Ad-vertising media applicable to energy efficiency programs includeradio,television,magazines,newspapers,outdooradvertising,andpoint-of-purchase advertising. Promotion usually includes activi-tiestosupportadvertising,suchaspressreleases,personalselling,displays, demonstrations, coupons, and contest/awards. Someprefer the use of newspapers or the Internet; others have foundtelevisionadvertising tobemoreeffective.

• Alternative Pricing: Pricing as amarket-influencing factor gener-ally performs three functions: (1) transfers to producers and con-sumers information regarding the cost or value of products and

Market Implementation 191

services being provided, (2) provides incentives to use the mostefficientproductionandconsumptionmethods,and(3)determineswho can afford how much of a product. These three functionsare closely interrelated. Alternative pricing, through innovativeschemescanbeanimportantimplementationtechniqueforutilitiespromoting demand-side options. For example, rate incentives for

Table 10-1. Examples of Market Implementation Methods for Energy Effi-ciency Programs (Gellings, et al., 2007)


encouraging specificpatterns of utilization of electricity can oftenbecombinedwithotherstrategies(e.g.,directincentives)toachieveelectric utility demand-sidemanagement goals. Pricing structuresinclude time-of-use rates, inverted rates, seasonal rates, variableservice levels, promotional rates, off-peak rates, etc. Demand re-sponseprogramsincorporatealternativepricingstrategies.Amajoradvantage of alternative pricing programs over some other typesof implementation techniques is that the supplier has little or nocashoutlay.Theconsumerreceivesafinancialincentive,butoveraperiodofyears,sothattheimplementercanprovidetheincentivesas it receives thebenefits.

• Direct Incentives: Directincentivesareusedtoincreaseshort-termmarketpenetrationofacostcontrol/consumeroptionbyreducingthenet cashoutlay required forequipmentpurchaseorby reduc-ingthepaybackperiod(i.e., increasingtherateofreturn)tomakethe investment more attractive. Incentives also reduce consumerresistance tooptionswithoutprovenperformancehistoriesorop-tions that involve extensive modifications to the building or theconsumer’slifestyle.Directincentivesincludecashgrants,rebates,buyback programs, billing credits, and low-interest or no-interestloans. One additional type of direct incentive is the offer of free,orveryheavily,subsidized,equipmentinstallationormaintenancein exchange for participation. Such arrangements may cost thesuppliermorethanthedirectbenefits fromtheenergyordemandimpact,butcanexpediteconsumerrecruitment,andallowthecol-lectionofvaluable empiricalperformancedata.

Energy suppliers, utilities, and government entities have success-fullyusedmanyof thesemarketing strategies.Typically,multiplemar-ketingmethodsareused topromoteenergyefficiencyprograms. By selecting theappropriatemixofmarket implementationmeth-ods, planners and policymakers can augment ormitigate the externalinfluences, taking into account the customer characteristics, to increasecustomer acceptance of the demand-side alternative being promoted,thereby obtaining the desired customer response. Figure 10-1 fromEOLSS illustrates the customer characteristics, implementation pro-grams, and other external influences that affect three major customerdecisions:


• Fuel/appliance choice• Appliance/equipment efficiency• Appliance/equipmentutilization

The selection of the appropriate market implementation methodshould be made in the context of an overall market planning frame-work.Elements toconsider inselecting theappropriatemarketingmix,illustrated inFigure10-2, are:

• MarketSegmentation—basedontheloadshapemodificationobjec-tives, informationoncustomerendusesandappliancesaturation,and other customer characteristics (from consumer research), themarket canbebroken into smallerhomogenousunits so that spe-cific customer classesare targeted.

• Technology Evaluation—based on the applicability of availabletechnologies for the relevant end uses and load shape objectives,

Figure 10-1. Factors Influencing Customer Acceptance and Response The Mar-ket Planning Framework


the alternative technologies are evaluated and the profitability ofspecificappliancesassessed.

• Market ShareAnalysis—based on estimates of customer accep-tance, the proportion of the total potential market that can beservedcompetitively is estimated.

• SelectionofMarketImplementationMethods—basedontheaboveanalyses and estimates of potential customer acceptance and re-sponse, the appropriate mix of implementationmethod is evalu-atedand selected.

• MarketImplementationPlan—basedontheselectionofthemarketimplementationmethods,an implementationplan isdevelopedtodefineandexecute thedemand-sideprograms.

Figure 10-2. Market Planning Framework


• Monitoring and Evaluation—the results of implementation aremonitored and evaluated to provide relevant information to im-prove futureprograms.

The methods used for market segmentation and target market-ing can vary, depending on the customer characteristics and the tech-nologies/end uses being addressed by the demand-side alternative. Ifa technologyoffers significantbenefits to thecustomer, there is littleornoperceivedrisk,andthecustomerisawareofthetechnologyandhasa favorable attitude toward it, the technology is likely to be well ac-ceptedwith littleneedto intervene in themarketplace.However, if thecustomeracceptanceisconstrainedbyoneormorebarriers, themarketimplementationmethods should be designed to overcome these barri-ers. Suchbarriersmay include:

• Lowreturnon investment (ROI)• Highfirst cost• Lackofknowledge/awareness• Lackof interest/motivation• Decrease in comfort/convenience• Limitedproductavailability• Perceived risk

FACTORS INFLUENCINGCUSTOMERACCEPTANCEANDRESPONSE

A second important aspect is the stage of “buyer readiness.”Customers generally move through various stages toward a purchasedecision. The stage that a customer is in will have a bearing on theappropriatenessofthemarketimplementationmethodused.Consumerresearchcanidentifywherecustomersareintheirdecisionprocess.Keyquestions to considerare:

• Docustomersperceiveaneedtocontrolthecostofenergyandaretheyawareof alternativedemand-side technologies?

• Wheredocustomersgo to search formore informationandguid-anceonalternatives,andwhatattributesandbenefitsareperceivedforanygivenoption?


• How much interest is there in participating in a demand-sideprogram, and how can customers be influenced to move towardparticipation?

• What specific attributes and benefits must customers perceive inorder toacceptaparticulardemand-side technology?

• How satisfied are customers who participated in a previous de-mand-sideprogram?

Table 10-2 lists the applicability ofMarket ImplementationMeth-odstoovercomebarrierstoacceptance.Table10-3illustratesapplicabil-ity to stagesofbuyer readiness. Answerstothesequestionsareimportantinformulatingamarketimplementation program. To influence customer awareness and inter-est, emphasis can be placed on the use of customer education, directcustomer contact, and advertising/promotion. If results of marketresearch indicate that customers in the awareness and interest phasepreferreliability,comfort,andcost-competitivetechnologyoptions,com-municatingtocustomersinadvertising/promotionprogramsshouldbeconsidered. If the results of consumer research indicate that customersin the purchase/adoption phase use a high implicit discount rate andthatfirstcostsareabarrier,theuseofdirectincentivesisappropriate.Iffirst costs are not an obstacle, bit lowering energybills is amotivatingfactor,thenfinancialincentivesforaparticulardemand-sidetechnologymaybeakey consideration. In addition, if a significant source of information and influenceis found to come from trade ally groups during the stage of customerpurchase of replacement or new equipment, a point of purchase andcooperativeadvertisingprogramwithtradealliesshouldbeconsidered.Incentiveprograms for tradealliesmayalsobea consideration. A final aspect of the buying process is customer satisfaction.Asa program is accepted and increases its market share, word of mouthbecomes an increasingly important source of customer awareness andinterest. Service after the sale is extremely important and represents aformofmarketing.Identifyingsatisfiedorunsatisfiedcustomersisuse-ful in termsof evaluating futuremarket implementationmethods. Itmustbere-emphasizedthatmarketsegmentscanbedefinedus-inganumberofcriteria,someofwhichmaybeinterrelated.Segmentingdemand-side markets by end use, stage of buyer readiness, perceived


barrierstoacceptance,andothersocio-demographicfactorscansuggesttheappropriatenessof alternativemarket implementationmethods. Note that the applicability, advantages, and disadvantages of themethodsdiscussedhere, as compared to different types of demand-side

Table 10-2. Applicability of Market Implementation Methods to Overcome Barriers to Customer Acceptance

Table 10-3. Applicability of Market Implementation Methods to Stage of Buyer Readiness


programs,varysignificantly.Typically,plannersandpolicymakersselectamixof themethodsmost suitable to the relevantdemand-sideoptions.

Customer Satisfaction Many energy suppliers and governments have relied on someformof customereducation topromotegeneral customerawarenessofprograms. Brochures, bill inserts, information packets, clearinghouses,educational curricula, and direct mailings are widely used. Customereducationisthemostbasicofthemarketimplementationmethodsavail-ableandcanbeused to:

• Informcustomersaboutproducts/servicesbeingofferedandtheirbenefits, and influence customerdecisions toparticipate in apro-gram.

• Increase theperceivedvalueof service to the customer.

• Inform customers of the eligibility requirements forprogrampar-ticipation.

• Increase the customer’s knowledge of factors influencing energypurchasedecisions.

• Provide customersother informationofgeneral interest.

• Generally improve customer relations.

Whenever a new program is introduced, or changes aremade inan existing program, an implementation needs to notify its customers.Ifaprogramisnew,increasingthegenerallevelofcustomerawarenessisanimportantfirststepinencouragingmarketresponse.Advertising/promotioncampaignscanalsobeusedtoinfluencecustomerawarenessandacceptanceofdemand-sideprograms(seediscussionofadvertisingandpromotionbelow). An increasing number of energy suppliers and governments pro-vide booklets or information packets describing available demand-sideprograms. Detachable forms are frequently provided for customersseeking to request services or obtain more information about a pro-gram. Somehave also established clearinghouses or toll-free telephonenumberstoprovideinquiryandreferralservicestoconsumersregardingdemand-side technologiesandprograms.


Customer education has the widest applicability to demand-sidemeasures. Some education brochures describe the operation benefitsand costs of demand-side technologies (e.g., heat pumps and thermalstorage). Others focus on methods to reduce energy costs. Typically,implementersalsoprovidedo-it-yourselfguidesonhomeenergyaudits,homeweatherization,andmeterreading,aswellas informationonde-mand-sideprogramsandcustomereligibility. Themajoradvantageofcustomereducationtechniquesisthattheytypically provide a more subtle form of marketing, with the potentialto influence customerattitudes andpurchasedecisions.Customer edu-cation programs seek to increase customer awareness and interest indemand-sideprograms.Before customers candecidewhetherornot toparticipate in a program, theymust have information on the program,itseligibilityrequirements,benefits,andcosts.Customereducationtech-niques should be used in conjunction with one or more other marketimplementationmethods formaximumeffectiveness.

Direct Customer Contact Direct customer contact techniques refer to face-to-face commu-nication between the customer and an energy supplier or governmentrepresentative to encourage greater customer acceptance of programs.Energysuppliershaveforsometimeemployedmarketingandcustomerservicerepresentativestoprovideadviceonappliancechoiceandopera-tion,sizingofheating/coolingsystems,lightingdesign,andevenhomeeconomics.

Energy Audits Are particularly useful for identifying heating/air conditioningsystem improvements, building envelope improvements,waterheatingimprovements, and the applicability of renewable resource measures.They provide an excellent opportunity for suppliers to interact withcustomers and sell demand-side options. Energy auditsmay last from30minutes to 3 hours, and cost from $70 to $200 to complete.Energy auditsalsoprovideausefulserviceinobtainingcustomersfeedbackandresponding to customer concerns.

Program Services Involve activities undertaken to support specific demand-sidemeasures includingheatpumps,weatherization,andrenewableenergy


resources.Examplesofsuchprogramsincludeequipmentservicingandanalyses of customer options. Those can be provided by governmentemployees, energy suppliers, contractorsor tradeallies.

Store Fronts A business areawhere energy information ismade available andappliancesanddevicesaredisplayed to citizensandconsumers.

Workshops/Energy Clinics Specialone-ortwo-daysessionsthatmaycoveravarietyoftopics,including home energy conservation, third-party financing, energy-ef-ficientappliances, andotherdemand-side technologies.

Exhibits/Displays Useful for large public showings, including conferences, fairs, orlarge showrooms. Exhibits can be used to promote greater customerawareness of technologies, appliances, anddevices throughdirect con-tact. Mobile displays or designed “showcase” buildings can also beused.

Inspection Typically includesanon-site reviewof thequalityofmaterialsandworkmanship associatedwith the installation of demand-sidemeasures.These inspections are frequently related to compliance with safety orcode requirements andmanufacturer specifications. Inspectionsoffer theimplementeradditionalopportunities topromotedemand-sideoptions. Direct customer contactmethods are applicable to awide rangeofdemand-side options.Amajor advantage of thesemethods is that theyallowtheimplementertoobtainfeedbackfromtheconsumer,thusprovid-inganopportunity to identify and respond tomajor customer concerns.Theyalsoenablemorepersonalizedmarketingandcanbeusefulincom-municating interest inandconcern forcontrollingenergycosts. Direct customer contact methods are labor-intensive and mayrequire a significant commitment of staff and other resources. Also,specializedtrainingofpersonnelmayberequired.Other issuesrelativetodirect customer contact are:

• Schedulingrequirementsandtheneedforrespondingtocustomerconcerns ina timelyandeffectivemanner.


• Potentialconstraintsarisingfromtheneedforfieldserviceperson-nel to implementdirect customer contactprograms inaddition toeitherotherduties.

• Possible opposition of local contractors/installers to direct instal-lationprograms.

• Liability issues related to inspectionand installationprograms.• “Fair trade” concerns related to contractor certification for audits

or installation.

Trade Ally Cooperation Tradeally cooperationand support can contribute significantly tothe success ofmanydemand-side programs.A trade ally is defined asany organization that can influence the transactions between the sup-plier and its customers or between implementers and consumers. Keytradeallygroups includehomebuildersandcontractors, localchaptersof professional societies (e.g., the U.S. American Society of Heating,Refrigeration andAir Conditioning Engineers, U.S.American InstituteofArchitects,TheIlluminatingEngineeringSociety,andTheInstituteofElectrical and Electronic Engineers), technology/product trade groups(e.g., local chapters of theAirConditioning andRefrigeration Instituteand theAssociation ofHomeApplianceManufacturers), trade associa-tions (e.g., local plumbing and electrical contractor associations), andassociations representing wholesalers and retailers of appliances andenergy consumingdevices. Dependingonthetypeoftradeallyorganization,awiderangeofservicesareperformed, including:

• Developmentof standardsandprocedures• Technology transfer• Training• Certification• Marketing/sales• Installation,maintenance, and repair.

Inperformingthesediverseservices, tradealliesmaysignificantlyinfluencethecustomer’sfuelandappliancechoice,and/ortheapplianceor equipment efficiency. Trade allies can, therefore, assist in develop-ing and implementing demand-side programs. For example, trade ally


groups can provide valuable information onmajor technical consider-ationsandassist in thedevelopmentof standards foroperatingperfor-mance, sizing,andcomparison.Theycanalsoprovidevaluablemarketdata on technology sales and shipments.Wholesalers and retailers areparticularly valuable in providing cooperative advertising, arrangingsales inventory, and supplying informationon consumerpurchasepat-terns. Installation and service contractors often influence the sale of ademand-side technology, and are responsible for its proper installationand service. Trade ally groups canbe extremelyuseful inpromoting a varietyofdemand-sidemeasures.Tradeallygroupscanalsohelpreduceimple-mentationcosts.Inaddition,tradealliescanprovidetechnical,logistical,andconsumerresponseinformationthatisusefulinthedesignofutilityprograms.Generally,iftradeallygroupsbelievethatDSMprogramswillhelpthem(oratleastnothindertheirbusiness),theywilllikelysupporttheprogram. To obtain the greatest benefit from trade ally cooperation, imple-mentersmustbewillingtocompromiseandaccommodateconcernsandquestions of allies related to product availability, certification require-ments, paperwork, reimbursement of expenses, cooperative advertis-ing/promotion, training needs, etc. Builders are generally concernedabout reducing first costs and, therefore, may resist more expensivebuildingdesignandappliances.Plumbingandelectricalcontractorsareconcernedabout the installationandserviceabilityofheatingandcool-ingequipment,andwhetheranenergysupplierpromotionalcampaignwill conflict with their peak service periods.Also, manufacturers andretailersprefer tobe informedat least sixmonths inadvanceofan im-plementer’sintentionstopromoteend-usedevicesorappliances,sothatthey canhave sufficient stocksonhand tomeet consumerdemand. Demand-sidemanagementprogramsarelesslikelytofaceconcernsrelated to fair trade if theprogramsare co-sponsoredwith trade allies.Considerable opposition may result if the program competes directlywith trade ally businesses. Implementerswill avoidmuch controversyand possible legal challenges by recruiting trade allies as partners indemand-sideprograms.

Advertising and Promotion Energysuppliersandgovernmentenergyentitieshaveusedavari-etyofadvertisingandpromotionaltechniques.Advertisingusesvarious


media to communicate a message to customers in order to inform orpersuadethem.Advertisingmediaapplicabletodemand-sideprogramsinclude radio, television, magazines, newspapers, outdoor advertisingandpoint-of-purchaseadvertising.Promotionusuallyincludesactivitiestosupportadvertising,suchaspressreleases,personalselling,displays,demonstrations, coupons, and contest/awards. Some prefer the use ofnewspapersbasedonconsumer research that found thismediumtobethemajorsourceofcustomerawarenessofdemand-sideprograms.Oth-ershave found televisionadvertising tobemoreeffective. Similartocustomereducationmethods,advertisingandpromotionhave widespread applicability.A number of innovative radio and TVspots have been developed to promote demand-side measures. Thesehave includedappealing slogans, jingles, andhumorous conversations.Other promotional techniques used have been awards, energy-efficienthome logos, and residential home energy rating systems, to name afew.

Newspaper Advertising Newspaper advertising offers a number of advantages, includingflexibility in geographical coverage, limited lead time in placing ad-vertisements, intensive coveragewithin a community, targetmarketing(by placing ads in certain sections of newspapers),merchandising andadvertising design services, and specialized campaigns (e.g., inserts,specializedzone/areacoverage formajormetropolitanareas,andcolorpreprints). Disadvantages of newspapers include their relatively short life inthe home, hasty reading of articles and ads, and relatively poor repro-duction, as compared tomagazines. Specialized regional editions of national magazines and localurbanmagazines offer the advantages of market sensitivity, relativelylonger usage in homes, associated prestige of the magazine, and sup-portservicesprovidedtoadvertisers.Amajordisadvantageofmagazineadvertising is the inflexibility compared to spot radio and newspaperadvertising. Readership data frommagazines can help a utility decidewhethermagazineadvertising is appropriate.

Radio The use of radio also offers a number of advantages, includingfrequency of use, lower cost, flexibility in the length and type of com-


munication,audienceselectivity,limitedadvanceplanning,andmobility.Therearealsosomelimitationsassociatedwiththeuseofradio,includ-ing fragmented coverage, the fleeting nature of the message, and thelimited data on listener characteristics andmarket share as comparedto televisionadvertising.

Television Themass appealof television is commonknowledgeand is illus-tratedbythelargeexpendituresontelevisionadvertising,whichreachesa very large audience. Disadvantages of television include the fleetingnatureofmessages,highproductionandbroadcastcosts,limitedlongev-ity, and the lackof selectivity.

Outdoor Advertising There are also various types of outdoor advertising that can beused. Posters are useful in high pedestrian traffic areas or in placeswherealargeaudienceexists.Smallerpostersmaybelocatedonbuses,insubways,andintransportationstations.Billboardsconsistofmultipleposter sheets and are particularly useful in large open vehicular andpedestrian traffic areas. The advantages of outdoor advertising are theabilitytoreachlargenumbersofcustomersatalowcost.Themessagesmust be simple and easy to comprehend. Rather obvious limitationsof outdoor advertising are the brevity of the advertisingmessage, thelimitedeffectiveness, andpossiblenegativeaesthetic impacts.

Point of Purchase Promotion Given the increasing trend toward self-service in retail outlets,point-of-purchase displays are becoming very important. Point-of-pur-chasedisplaysareoftentimesdesigned tobeconsistentwith theadver-tising themesused in othermedia. Point-of-purchasedisplaysused in-cludeappliancestickers;countertop,window,andindoordisplays;andmodelsofapplianceoperation.Point-of-purchaseadvertisingcancoversuch topics as product features, brand/service loyalty financing, util-ity marketing programs, and service/maintenance options. The use ofpoint-of-purchasedisplays in trade ally cooperative advertising shouldbe seriously considered. Themajor advantage of point-of-purchase ad-vertising is the relatively lowcostand theproximityof theadvertisingmessage to thepointofpossiblepurchase. Somemediamay bemore useful than others in terms ofmoving


customers from the “awareness” stage to the “adoption” stage in pur-chasing a product or service. Therefore, a multi-faceted and carefullyscheduled advertising/promotional campaign is worthy of consider-ationaspartof anydemand-sidemanagementprogramplan. An important issue is the extent to which government or stateregulatoryauthoritieslimitvarioustypesofadvertising.Advertisingandpromotionmaybe limited to those thatencouragesafety, conservation,load management, etc. Some demand-side management technologiesmayormaynotfallwithinthedefinitionofallowableadvertising.Care-fulconsiderationmustalsobegiven to theneed forstatements regard-ingproduct liability andwarranties (expressor implied) in advertisingdemand-side technologies.

Alternative Pricing Pricing as a market-influencing factor generally performs threefunctions:

• Transfers to producers and consumers information regarding thecostorvalueofproductsand servicesbeingprovided.

• Provides incentives to use themost efficient production and con-sumptionmethods.

• Determineswhocanaffordhowmuchof aproduct.

These three functions are closely interrelated.Alternative pricing,through innovative schemes canbe an important implementation tech-nique for utilities promoting demand-side options. For example, rateincentives for encouraging specific patterns of utilization of electricitycan often be combinedwith other strategies (e.g., direct incentives) toachieveelectricutilitydemand-sidemanagementgoals. Variouspricingstructuresaremoreor lesswell-suited todifferenttypes of demand-side options. For utilities, time-of-use rates may begenerally offered or tied to specific technologies (e.g., storage heatingandcooling,off-peakingwaterheating).Theycanbeusefulforthermalstorage, energyanddemandcontrol, andsomeefficientequipmentop-tions. For gas utilities, inverted rates used to encourage building enve-lopeandhigh-efficiencyequipmentoptions.Seasonalratessimilarlycanbeusedwithhigh-efficiencyoptions.


Forbothgasandelectricutilities,variableservicelevelscanbeof-feredonavoluntarybasis as an incentive to reducedemandat certaintimesof theday.Promotional ratescanbeused toencourageeconomicdevelopmentinanarea;andoff-peakratescanbeparticularlyapplicableto thermal storageandwaterheatingoptions. A major advantage of alternative pricing programs over someother types of implementation techniques is that the supplier has littleornocashoutlay.Thecustomer receivesafinancial incentive,butoveraperiodofyears,sothattheimplementercanprovidetheincentivesasit receives thebenefits. Onepotentialdisadvantagewithsomealternativepricingschemes,suchastime-of-useratesandratesinvolvingdemandcharges,isthecostof metering, which can sometimes amount to several hundred dollarsper installation. In addition, such rates do not lower the customer’spurchase cost, as do some other implementation techniques, such asrebates. Note also that detailed information regarding cost of serviceand load shapes is needed to design and implement rates to promotedemand-sideoptions.Customer education relative to the rate structureand related terminologymayalsobeneeded. Customer acceptance and response to alternative rate structureswillvary,dependingonthecharacteristicsofthecustomer,thedemand-sideprograms,andthespecificratestructures.Forexample,researchoncustomer response to electric time-of-use rates indicates that:

• On average, considerable similarity exists in customer responsepatternsacross several,geographically-diverseareas.

• Households typically reduce the share of peak usage inweekdaysummer use by 3 to 9 percentage points (from 50 to 47-41%) inresponse toa4:1TOUrate.

• Thedegreeofcustomerresponseisinfluencedbyapplianceowner-shipandclimatic conditions.

Direct Incentives Direct incentives are used to increase short-termmarket penetra-tion of a cost-control/customer optionby reducing thenet cash outlayrequiredforequipmentpurchaseorbyreducingthepaybackperiod(i.e.,increasing the rate of return) to make the investment more attractive.Incentives also reduce customer resistance to options without proven


performancehistoriesoroptionsthatinvolveextensivemodificationstothebuildingor the customer’s lifestyle. The individual categoriesofdirect incentives include:

• Cashgrants• Rebates• Buybackprograms• Billing credits• Low-interestorno-interest loans

Eachcategoryisbrieflydetailedbelow.Whilethislistisnotneces-sarily all-inclusive (variations and combinations of these incentives areoften employed), it indicates themore common forms of direct incen-tives for large-scale customer adoption. One additional type of directincentive is the offer of free, or very heavily subsidized, equipmentinstallationormaintenanceinexchangeforparticipation.Sucharrange-ments may cost the supplier more than the direct benefits from theenergyordemand impact, but can expedite customer recruitment, andallow the collectionofvaluable empiricalperformancedata.

Cash Grants These are payments usually one-time sums made to consumerswho adopt one ormore cost control options.Amountsmay be tied tolevels of energy or demand reduction or energy efficiency, or can beset simply at a level designed to encourage widespread customer re-sponse.

Rebates Similartocashgrants,rebatesarenormallysinglepaymentsmadetoconsumerswhoinstallaspecificoption,eitherasoriginalequipmentor as a replacement for an existing device. Rebate levels are generallyset inproportiontotherelativebenefitsoftheoptiontothesupplierorimplementer. They have beenmost often usedwith building envelopeoptionsandwithefficient equipmentandapplianceoptions.

Buyback Programs These are special incentives that reflect supplier cost savings re-sulting from the implementations of amix of cost-control options. Theimplementergenerallyestimates theexpectedaveragefirst-yearenergy


use change (and any corresponding demand change) for a particularoptionthroughtestingoranalysis,andthendetermines itsvaluebasedondifferencesbetweenaverageandmarginalcostsorothercostcriteria.Thisamountisthennormallypaidtothecustomer’sinstallationcontrac-tor as a purchase price subsidy. The supplier or implementer in effect“buysback”aportionoftheconsumer’sinvestment.Buybacksaremostoftenusedwithbuildingenvelopeoptions.

Billing Credits Theseare credits applied toa customer’s energybill in return forinstallingaparticularoption.Billingcreditshavemostoftenbeenusedwith energy and demand control options, and are generally offered inproportion to the sizeof the connected loadbeing controlled.

Low-interest or No-interest Loans These are loansoffered at below-market interest rates, orwithoutinterest, for thepurchaseand installationof specifichigh-efficiencyop-tions. They are frequently used to promote the use of high-initial-costoptionsinthebuildingenvelope,efficientequipmentandappliance,andthermal storage categories. Reduced interest loans, by allowing homebuyersandconsumers tofinance suchexpensive itemsaswhole-houseinsulation,heatpumps, and ceramic storageheaters, often increase thenumber of consumers willing to invest in these options. Sometimes,low-interest loan programs are co-funded by the energy supplier andgovernmentorpublic agencies.

Direct Incentives and Demand-side Technologies Directincentivesarebeingusedinalargenumberofdemand-sidemanagement programs to encourage customer participation. Varioustypesofdirectincentivesareapplicabletomanyofthecostcontrol/cus-tomeroptionsineachofthemajoroptioncategories.Theycanoftenbeused in combination toproduce increasedcustomeracceptance. Rebate and cash grant programs have been praised by some fortheir administrative simplicity relative to loans. The carrying costs toutilities of low-interest or no-interest loans can be great, as can the re-cordkeepingrequirements.Rebatesandgrantshaveanaddedadvantageto the consumer because they significantly lower first costs for newmajorappliancesorotheroptionpurchases. Low-interest loans, however, can often allow consumers to pur-


chase higher-priced options than they would otherwise with only apartialrebate.Thus, if theoptionproducessufficientbenefit, theaddedcostsof thefinancingprogrammaybe justified. Billingcreditscanallowthesuppliertoprovideasubstantialtotalincentivetothecustomerbutinsmallannualamountsoveraprotractedperiod. Initial cash outlays are minimal, and administrative costs canbe lower than those for loanprograms. The consumermust be able toafford the initial purchase, however, andmust understand the overallcost-effectivenessof implementing theoption. In developingdirect incentive programs, implementers should beaware of potential fair trade or antitrust concerns. If an implementerestablishesrationalcriteriafordealingwithtradeallies,adherestothosecriteria, and uses sound business practices, it is likely that the legalityofincentiveswillnotbechallenged.Iftheprogramisstructuredsothattrade allies support it and also stand to gain from it, then there willprobablybeno concernabout fair trade lawviolations. Both customer acceptance and response to direct incentive pro-grams, and potential benefits and costs of these programs, depend onthenatureandsizeof the incentive, thenatureof the technologybeingpromoted, and the characteristics of the customer. Experiencewith di-rectprogramsindicatesthatparticipantsinsuchprogramsaregenerallymiddle- toupper-classhouseholds.

The Market Implementation Plans Oncecarefulconsiderationhasbeengiventoevaluatingalternativesand the appropriate implementation methods have been selected, animplementationplanshouldbe formulated.Thisplanshouldcontain:

• Program objectives/general purpose—objectives of the marketimplementation planmust be communicated to all program per-sonnel.

• Measurable program goals (e.g., energy/demand sales or savingsand customer contact quotas)—programgoals should bewell de-finedandmeasurable.

• Pre-programlogisticalplanning(i.e.,trainingandequipment/facil-ity procurement)—adequate timemust be reserved for employeetraining, discussions with trade allies, and procurement of thenecessary supportmaterials.


• Programimplementationprocedures—itisagoodideatodevelopaprogramimplementationflowchartandmanualforallkeypro-grampersonnel.

• Managementcontrols—managementandprogramcontrolsmustbecarefullydefinedanda customer communicationprogramshouldbedevelopedand integratedwith thedemand-sideprogram.

• Programbudget/accounting—program cost accounting should beadequatelyaddressed.

• Monitoringandevaluationprocedures—developaprogramevalu-ation plan in advance of program implementation that providessufficiently for program data collection and recordkeeping andoffers suitable feedbackonprogramperformance.

PROGRAMPLANNING

Aswithanysophisticatedprogram,ademand-sideprogramshouldbeginwithanimplementationplan.Theplanincludesasetofcarefullydefined,measurable,andobtainablegoals.Aprogramlogicchartcanbeused to identify theprogramimplementationprocess fromthepointofcustomerresponsetoprogramcompletion.Forexample,inadirectloadcontrol program, decision points, such as meeting customer eligibilityrequirements, completing credit applications, device installation, andpost-inspection canbedefined.Actualprogram implementation canbecheckedagainst theplanandmajorvariances reviewedas theyoccur. Thecarefulplanningthatcharacterizesotherenergysupplyopera-tionsshouldcarryovertotheimplementationofdemand-sideprograms.The programs are expensive and prudent planning will help assureprogramefficiencyandeffectiveness.Thevarietyofactivitiesandfunc-tionalgroups involved in implementingdemand-sideprogramsfurtheraccentuates theneed forproperplanning.

Program Management The implementation process involves many different functionalentities. Careful management is required to ensure efficient imple-mentation. Managing such widespread activities requires a completeunderstanding and consensus of program objectives and clear lines of


functional authorityandaccountability. Ongoing programmanagement is also extremely important. Theneedforcostaccounting,monitoringemployeeproductivityandqualityassurance should be addressed; the use of incentives necessitates closemonitoring of program costs. For whatever reason, if periodic statusreports are required, the exquisite input data and the reporting of keyperformance indicatorsmustbe carefully included.

Program Logistics Programsupportincludesstaffing,equipment,facilities,andtrain-ingrequirements.Aprogramimplementationmanualisausefultooltoprovideprogrampersonnelwithnecessarypolicyandprocedureguide-lines.Thesamplelistoffunctionalresponsibilitiesinanimplementationprogram gives an indication of the activities that may be included insuchamanual. Acustomeradoptionplan thatcoordinates theuseofmassmediaand other advertising and promotional activities (such as bill insertsanddirectmail)shouldbecarefully integrated into the implementationprogram.It isalwaysimportanttoestablishgoodrapportwithcustom-ers. Consumer concerns should be addressed at all levels of programdesignand implementation. Many demand-side management programs include installing aspecific piece of equipment or hardware that will alter energy use tobenefitboth the customerand the supplier. Some of these technology alternatives can be installed, used ormarketed by the energy supplier as part of the demand-sidemanage-ment(DSM)program.ThespecialissuesrelatedtosuchDSMprogramsinvolvingsupplierownedandinstalledequipmentincludeselectingtheproper equipment or hardware, establishing an appropriate customeradoption program, developing quality assurance programs, and devel-opingan installationandmaintenance schedule.

Selecting the Proper Equipment or Hardware Implementers need to evaluate a variety of conflicting factors iftheyare specifying the functional requirements for equipmentorhard-ware.Intheequipmentselectionprocess,changesindemand-sidetech-nology (such as improvements in the efficiencies of space heating andcoolingequipment)andevolvingsupplierneeds(suchasautomationofthegasor electricutility’sdistribution system) shouldbeevaluated.


Establishing an Appropriate Implementation Program Some programs are better suited to promote the installation ofcertain demand-side technology alternatives. In most cases, a mix ofimplementation techniques will be used. The selected implementationmarketingmeasuresshouldbecompatiblewithanytechnologyalterna-tive that ispartof thedemand-sideprogram.

Identifying Quality Assurance Consideration Becauseof thepossible largenumberofdisperseddevices, imple-menters can improve customer and utility system performance byconsideringqualityassuranceintheimplementationprogram.Intheex-ampleofelectricdirectloadcontrolprogram,failuresmaybeattributedeither tomalfunctionsof thedevicesor to the communication links.

Developing an Installation and Maintenance Schedule Many expenses are involved in the installation,maintenance, andrepairofthenumerousdevicesthatareincludedinademand-sidepro-gram.Operatingcostscanbereducedbydevelopingprudentschedulingpolicies for limited crew resources. Efficient scheduling of equipmentordering and installation is helpful in reducing unnecessary programdelays.

The Implementation Process Developing,installingandoperatinganenergysupplysystemthatisallthestepsassociatedwith“implementing”asupply-sideprogramtakesyearsofplanningandscheduling,rigorousanalyticmodeling,calculationsconcerningreliabilityandmaintenance,andstrictconstructionscheduling.An equally rigorous approach is needed to implement the demand-sidealternatives.There aremanyactors involved in the implementationpro-cess,and this requires thecareful coordinationofallparties. The implementation process takes place in several stages. Thestagesmayincludeforminganimplementationprojectteam,completingapilotexperimentanddemonstration,andfinally,expandingtosystem-wide implementation. This “time-phased” process tends to reduce themagnitudeof the implementationproblem,becausepilotprogramscanbeused to resolveprogramproblems before system-wide implementa-tion takesplace. Implementingdemand-sideprogramsinvolvesmanyfunctionalel-ements,andcarefulcoordinationisrequired.Asafirststep,ahigh-level,


demand-side management project team should be created with repre-sentationfromthevariousdepartmentsandorganizations,andwiththeoverall control and responsibility for the implementation process. It isimportant for implementers to establish clear directives for the projectteam,includingawrittenscopeofresponsibility,projectteamgoalsandtime frame. When the limited information is available on prior demand-sideprogramexperiences,apilotexperimentmayprecedetheprogram.Pilotexperiments can be a useful interim step towardmaking a decision toundertakeamajorprogram.Pilotexperimentsmaybelimitedeithertoasub-regionortoasampleofconsumersthroughoutanarea. If thepilotexperiment proves cost-effective, then the implementers may considerinitiating the full-scaleprogram. After thepilot experiment is completed, additional effortmustbegiven to refining the training, staffing,marketing,andprogramadmin-istration requirements.

MONITORINGANDEVALUATION

Just as there is need to monitor the performance of supply-sidealternatives, there is a need to monitor demand-side alternatives. Theultimate goal of themonitoringprogram is to identifydeviations fromexpected performance and to improve both existing and planned de-mand-side programs. Monitoring and evaluation programs can alsoserve as a primary source of information on customer behavior andsystem impacts, foster advanced planning and organization within ademand-side program, and provide management with the means ofexaminingdemand-sideprogramsas theydevelop. Inmonitoring theperformance of demand-sidemanagementpro-grams, twoquestionsneed tobeaddressed:

• Was theprogram implementedasplanned?• Did theprogramachieve itsobjectives?

The first question may be fairly easy to answer once a routinemonitoring systemhas been adopted.Tracking and reviewofprogramcosts, customer acceptance, and scheduled milestones can help deter-minewhether the demand-sidemanagement programhas been imple-


mentedasplanned. The second question can be much more difficult to answer. Asnotedpreviously,demand-sideprogramobjectivescanbebestcharacter-ized in terms of load shape changes. Thus, an assessment of programsuccessmustbeginwithmeasuring the impactof theprogramon loadshapes.However,thismeasurementcanbedifficultbecauseotherfactorsunrelatedtothedemand-sideprogramcanhaveasignificantimpactoncustomer loads. In monitoring and evaluating demand-side programs, two com-monapproaches canbe taken:

• Descriptive—Basicmonitoringthatincludesdocumentationofpro-gramcosts,activitiescompleted,servicesoffered,acceptancerates,andcharacteristicsofprogramparticipants.

• Experimental—Use of comparisons and control groups to deter-mine relative program effects on participants or nonparticipants,orboth.

The twomonitoring approaches tend to address different sets ofconcerns; therefore, it is useful to incorporate both in programdesign.With a descriptive approach, implementers should be aware of basicprogramperformanceindicators, intermsofbothadministrativeproce-dureand targetpopulationcharacteristics. Informationsuchas thecostperunitofservice,thefrequencyofdemand-sideequipmentinstallation,thetypeofparticipants(singlefamilyhouseholdsorotherdemographicgroups), and the number of customer complaints, can be useful in as-sessing the relative success of a demand-side management program.Recordkeeping and reporting systems can be helpful in completingdescriptiveevaluations. Thedescriptiveevaluation,however,isnotadequateforsystemati-callyassessing the loadshape impactsof thedemand-sideprogram.Toassess load shape impacts requires the careful definition of a referencebaselineagainstwhichloadshapeswithademand-sidemanagemental-ternativecanbejudged.Thereferencebaselinereflectsthoseloadshapechangesthatare“naturallyoccurring”—thatis,thosechangesunrelatedto thedemand-sideprogram itself. Insomecases,thereferencebaselinemightbetheexistingforecastwith appropriate adjustment to reflect the short-term conditions in the


service area. In other cases, the referencemight be a control group ofcustomers not participating in the program. The energy consumptionand hourly demand of program participants could also be measuredbefore they joined theprogram toprovidea “before”and“after” com-parison. If a “before” reference isused, it is oftennecessary to adjustdataforsubsequentchangesinthecustomer’sapplianceorequipmentstockand itsusage.Addinganextraappliance (suchasawindowair condi-tioner)canmorethanoffsetanyreductionsinenergyuseresultingfroman electric weatherization program. Similarly, the effect of an electricdirect load control of a central storagewater heater can be altered bychanges in a customer’s living pattern resulting, for example, from re-tirementorfromthesecondspousejoiningthelaborforce.The“before”situationmustbeclearlycharacterizedsothatappropriateimpactoftheprogramcanbemeasured. If the reference point is a group of nonparticipants, that groupmust have characteristics similar to those of the participants. This, ofcourse,requiresagreatdealofinformationonbothgroupstoallowforpropermatching, includingnotonlyappliancestockdatabutalsosuchinformationasfamilysize,workschedules, income,andageofheadofhousehold.

Monitoring Program Validity Monitoring programs strive to achieve two types of validity: in-ternalandexternal.Internalvalidityistheabilitytoaccuratelymeasurethe effect of the demand-sidemanagement programon the participantgroup itself. External validity is the ability to generalize experimentalresults to the entire population. For example, controlledwater heatingmayreducepeakloadforasampleofparticipants,butthereisnoguar-antee that all customerswill react ina similar fashion.Threatstomonitoringprogramvalidityusuallyfall intotwocategories:problems associatedwith randomization and problems associateswithconfounding influences. Randomization refers to the degree to whichthe participating customer sample truly represents the total customerpopulation involved in the demand-side program. It can also refer tothedegreeofbias involved inassigning customers to the experimentalandcontrolgroups.Confounding influencesrefer tonon-program-relatedchanges thatmayincrease or decrease the impact of a demand-side program. In some


cases, the effect of these non-program-related changes can be greaterthantheeffectofthedemand-sideprogram.Thelistofpotentialsourcesof confounding influences is extensive, including weather, inflation,changes inpersonal income,andplantopeningsandclosings.

Data and Information Requirements Data and information requirements involve the entire process ofcollecting,managing, validating, and analyzingdata in themonitoringand evaluation program. The cost of data collection is likely to be themost expensive part of the evaluation study. Data collection costs canbe reducedwithproper advanceplanning andbyhaving sufficient re-cordkeeping and reporting systems. Sourcesof evaluationdata includeprogramrecords,energybills,utilitymetering,andfieldsurveys.Typi-cally,telephonesurveysaretocompletefieldsurveys.Thedatamustbevalid (measurewhat it is supposed tomeasure) and reliable (the sameresultswouldoccur if repeated,withinanacceptablemarginof error). The data collection system should be designed before the imple-mentation of the demand-side program itself. There are a number ofreasons for this:

• Some information is needed on a “before” and “after”“ programinitiationbasis.Ifthe“before”dataareinadequate,additionaldatamustbe collectedbefore the startof theprogram.

• Somedatacollectionstakeconsiderabletime,particularlyifmeter-ingof consumerelectricorgas enduseshas tobeperformed.

• Monitoring the effect of the demand-side alternative throughouttheprogramallows foradjustmentsandmodifications to thepro-gram.

In addition, information on participant characteristics, awarenessof the program, motivations for participating, and satisfaction is veryimportant in evaluating theoverall successof aprogram. The information-gathering mechanisms may already be in placeat many utilities. Load research programs and customer surveys havelong been used to collect data for forecasting an planning. The exper-tise gained in conducting these activities is helpful in considering thedevelopmentof amonitoringprogram.


Management Concerns Monitoring and evaluationprograms require carefulmanagementattention. Some of themost important hurdles thatmust be overcomein themanagementof amonitoringprogram include:

• Assuring sufficient advancedplanning todevelopand implementthe monitoring and evaluation program in conjunction with thedemand-sideactivity.

• Recognizingthatmonitoringandevaluationprogramscanbedate-intensiveandtime-consuming;therefore,evaluationprogramcostsmustbekept inbalancewithbenefits.

• Establishing clear lines of responsibility and accountability forprogram formulationanddirection.

• Organizingandreportingtheresultsof theevaluationprogramtoprovidemanagementwitha clearunderstandingof these results.

• Developing a strong organizational commitment to adequatelyplan, coordinate, and fundmonitoringprograms.

Monitoring and evaluation programs can be organized in fourstages: pre-evaluation planning, evaluation design, evaluation designimplementation, andprogram feedback.

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221

Chapter 11

Efficient Electric End-useTechnology Alternatives*

There are numerous electric energy efficient technologies com-merciallyavailable.Manyofthesetechnologiesarealreadyinuse,butincreasingtheirmarketpenetrationhasthepotentialtoyieldsignificantimprovements in worldwide energy efficiency. In addition, advance-ments in these technologies as well as commercialization of emerg-ing technologies will act to further energy efficiency improvements.Some advancements will occur naturally, but in order to achieve themaximum potential for energy efficiency, accelerated advancementsare needed. Such accelerated advancements require focused researchinitiatives.Maximizationof theenergyefficiencypotentialalsomeansthat someof thebasic sciencewill need to evolve. This section lists representative technologies that are commer-cially available for buildings and industry. It then identifies someemerging technologies aswell as some researchneeds. Thereisasecondcategoryofelectricend-usetechnologiesthatiscovered in this chapter. It involves those technologieswhichhave thepotential todisplaceend-useapplicationsoffossil fuelwhilereducingoverall energyuse andCO2 emissions.This secondgroup is typicallyreferred to as electrotechnologies.

EXISTINGTECHNOLOGIES

Many technologies capable of improving energy efficiency existtoday.Somehavebeenestablishedforseveraldecades(e.g.,fluorescent

*This chapter benefits from several related efforts, includingwork fromPhaseOne,Task2oftheGalvinElectricityInitiative(www.galvinpower.org)andthesecondincludesworkdone by EPRI staff andGlobal Energy Partners, LLC on the Impacts of Electrotechnolo-gies—allmanagedanddirectedby theauthor.


lamps),othersarenewtothemarket-place(e.g.,whiteLEDtasklight-ing),stillothershavebeenavailableforawhile,butcouldstillbenefitfrom increased penetration (e.g., lighting controls). Existing end-usetechnologieswhichmaybedeployedinofficesandsimilarcommercialapplicationsassociatedwithpowerplantsarealsodiscussed inChap-ter 2. Figure11-1listsexamplesoftechnologiesforbuildingsandindus-try. Themajority of the technologies listed consume less energy thanconventionalalternatives.Someofthetechnologies listed(particularlyfor industry) are electrotechnologyalternatives to thermal equipment.Inmanycasestheyaremoreenergyefficientthanconventionalthermalalternatives;however,insomecasestheymayusemoreenergy.Oneoftheprimaryadvantagesofelectrotechnologiesisthattheyavoidon-siteemissions of pollutants and, depending on the generationmix of theutility supplyanddistribution toend-users, they can result inoverallemissions reductions. The buildings technologies are broken down into categories ofbuilding shell, cooling, heating, cooling and heating, lighting, waterheating,appliances,andgeneral.Theindustrytechnologiesaredividedinto theend-useareasofmotors,boilers,processheating,waste treat-ment,airandwatertreatment,electrolysis,membraneseparation,foodand agriculture, and general. The table is meant to serve as a repre-sentative listof technologyalternatives,andshouldnotbeconsidereda complete listing.

Lighting Artificial illuminationisessentialtosociety.Itenablesproductiv-ity, provides safety, enhances beauty, facilitates information transfer,and allows for visual entertainment. The advent of electric lighting drastically transformedmodern society’suseof artificial illumination.Artificial lighting isnowubiquitous tonearlyeveryaspectofour life.In the U.S., lighting systems currently account for about one-tenthof total electricity consumption in residential buildings, nearly one-quarter of total electricity consumption in commercial buildings, and6 TO 7% of total electricity consumption in manufacturing facilities.Worldwide, artificial illumination is estimated to demand 20 to 25%of all electric energy in developed countries. In developing nations,artificial illumination is often the first use that newly electrified com-munitiesembrace.Becauseofitssignificancetosociety—bothinterms

Efficient Electric End-use Technology Alternatives 223

Figure 11-1. Examples of Technology Alternatives for Buildings and In-dustry


offunctionalityandenergyuse—maximizinglighting’scontributiontoa perfect electric energy service system is an obvious goal of futureinnovation.Table11-1showsinnovativelightingtechnologiesthatmaypotentially contribute to reduced electricity consumption.

Table 11-1. Innovative Lighting Technologies

Space Conditioning Space conditioning is an important consumer function. Whenproperly designed, space-conditioning systems afford the consumerhealthylivingandworkingenvironmentsthatenableproductivityanda sense of well-being. Space conditioning is the largest end-user ofelectricityinbothresidentialandcommercialbuildings.Italsoaccountsfor a relatively large share of electricityuse across themanufacturingindustries. The primary purposes of space conditioning are to heat,cool, dehumidify, humidify, and provide air mixing and ventilating.To this end, electricity drives devices such as fans, air conditioners,chillers, cooling towers,pumps,humidifiers,dehumidifiers, resistanceheaters,heatpumps,electricboilers,andvariouscontrolsusedtooper-atespace-conditioningequipment.Becauseofitssignificanceandlargeimpactonelectricityuseacrosstheresidential,commercialandindus-trial sectors, innovations in technologies related to space conditioningmayhave a substantial effect onhowelectricity isused in the future.Table11-2shows innovativespace-conditioningtechnologies thatmaypotentially contribute to reduced electricity consumption.

Indoor Air Quality Indoorairqualityisasubjectofincreasingconcerntoconsumers.In fact, theU.S. Environmental ProtectionAgency (EPA) states that itisoneof thefivemost critical environmental concerns in theU.S.Ac-


cording toEPAstatistics,Americansspendanaverageof90%of theirtime indoors, either at home, school orwork. Thus, it is essential forourhealthandwell-being thatwe takemeasures toensureacceptableindoorairquality.Thehealtheffectsofpoor indoorairqualitycanbeparticularly severe for children, elderly, and immuno-suppressed orimmuno-compromisedoccupants.Poor indoorairquality isestimatedto cause hundreds of thousands of respiratory health problems andthousandsofcancerdeathseachyear(EPA,2001). Indooraircontami-nants such as allergens,microorganisms, and chemicals are also trig-gersforasthma.Inadditiontocausingillness,poor indoorairqualitymay inhibitaperson’sability toperform,and leads tohigher ratesofabsenteeism. Furthermore, turmoilwith theMiddle East has promul-gated the need for heightened homeland security measures, whichfocus on protecting building occupants from chemical and biologicalweapons and creatingmore resistant indoor environments. Table 11-3showsinnovativeindoorairpurificationtechnologiesthatmayreduceelectricity consumption.

Table 11-2. Innovative Space Conditioning Technologies

Table 11-3. Innovative Indoor Air Purification Technologies


Domestic Water Heating Domestic water heating is essential for the comfort and well-beingofconsumers.Hotwaterisusedforavarietyofdailyfunctions,including bathing, laundry and dishwashing.Water heating is also asignificantenduserofelectricity,particularlyfortheresidentialsector.Indeed,waterheatingaccounted for9.1%of residential electricityusein2001.Itmakesupasmallershareinthecommercialsector,consum-ing 1.2% of commercial electricity use in 1999. Electricity is used torunelectricresistancewaterheaters,heatpumpwaterheaters,pumpsand emerging devices such as microwave water heaters. Because ofthe importance of water heating to society—in terms of both func-tionality and electricity use—maximizing the contributions by waterheatingtechnologiestoaperfectelectricenergyservicesystemshouldbea focusof future innovation.Table11-4shows innovativedomesticwaterheatingtechnologieswhichmaypotentialcontributetoreducedelectricity consumption.

Table 11-4. Innovative Domestic Water Heating Technologies

Hyper-efficient Appliances Whiletheadoptionofthebestavailableenergy-efficienttechnolo-gies by all consumers in 100% of applications is far from complete,the utilities, states and other organizations interested in promotingincreased efficiency are beginning to question the availability of the“next generation” of energy-efficient technologies.After several yearsofunsuccessfullytryingtoencouragetheelectricitysectortofillinthegapsofR&Dinadvancedutilizationappliancesanddevices,EPRIhasturned instead to the goal of transferring proven technologies fromoverseas. As a result of several factors, manufacturers of electrical ap-paratus in Japan, Korea and Europe have outpaced U.S. firms in thedevelopment of high-efficiency electric end-use technologies. If fullydeployed, these technologies could reduce the demand for electricenergy by over 10%. In addition, collectively these technologies havethe potential to reduced electric energy consumption in residential


and commercial applicationsbyup to 40% for each application.Theyrepresent the single greatest opportunity to meet consumer demandfor electricity. The technologies are currently being demonstrated with severalutilities in different climate regions to assess their performancewhendeployed indiverseenvironments.Thiswillensurea thoroughevalu-ation. The following technologies are considered among those readyfordemonstration in theU.S.:

• VariableRefrigerantFlowAirConditioning(withandwithouticestorage)

• HeatPumpWaterHeating• DuctlessResidentialHeatPumps andAirConditioners• Hyper-EfficientResidentialAppliances• DataCenterEnergyEfficiency• Light-emittingDiode (LED) Street andAreaLighting

Ductless Residential Heat Pumps and Air Conditioners Approximately 28% of residential electric energy use can be at-tributedtospaceconditioning.Useofvariablefrequencydriveaircon-ditioningsystemscanofferasubstantialimprovementwhencomparedto conventional systems. In addition, in many climate zones, the industry has long rec-ognized that the application of electric-driven heat pump technologywould offer far greater energy effectiveness than fossil fuel applica-tions.However, except inwarmer climates, the cost andperformanceof today’s technology in insufficient to realize that promise. Theseductless systems have the potential to substantially change the costandperformanceprofile ofheatpumps in theU.S.

Variable Refrigerant Flow Air Conditionings Ducted air conditioning systems with fixed-speed motors havebeen themost popular system for climate control inmulti-zone com-mercialbuildingapplicationsinNorthAmerica.Thesesystemsrequiresignificant electricity to operate and offer no opportunity to managepeakdemand. Multi-split heatpumpshave evolved froma technology suitablefor residential and light commercial buildings to variable refrigerant


flow (VRF) systems that can provide efficient space conditioning forlarge commercial buildings. VRF systems are enhanced versions ofductlessmulti-split systems, permittingmore indoor units to be con-nectedtoeachoutdoorunitandprovidingadditional featuressuchassimultaneousheatingandcoolingandheat recovery.VRFsystemsareverypopularinAsiaandEuropeand,withanincreasingsupportavail-able frommajorU.S. andAsianmanufacturers, areworthconsideringformulti-zone commercial building applications in theU.S. VRF technology uses smart integrated controls, variable-speeddrives, refrigerantpipingandheat recovery toprovideproductswithattributes that include high energy efficiency, flexible operation, easeofinstallation,lownoise,zonecontrolandcomfortusingall-electricitytechnology. Ductless space conditioning products, the forerunner of multi-split and VRF systems,were first introduced to Japan and elsewherein the 1950s as split systems with single indoor units and outdoorunits.Theseductlessproductsweredesignedasquieter,moreefficientalternatives towindowunits (Smith, 2007).

Heat Pump Water Heating Heat pump water heaters (HPWHs) based on current Japanesetechnologyarethreetimesmoreefficientthanelectricresistancewaterheatersandhavethepotential todelivernearlyfivetimestheamountofhotwater, even compared to a resistancewaterheater. HPWHsaresignificantlymoreenergyefficientthanelectricresis-tancewaterheaters,andcanresultinlowerannualwaterheatingbillsfor the consumer, aswell as reductions in greenhouse gas emissions.But the highfirst costs of heat pumpwater heaters andpast applica-tion and servicingproblemshave limited theiruse in theU.S. Water heating constitutes a substantial portion of residentialenergyconsumption.In1999,120,682GWhofelectricityand1,456 tril-lion Btu of natural gas were consumed to heat water in residences,amounting to 10% of residential electricity consumption and 30% ofresidential natural gas consumption (EPRI, 2001).While both naturalgas and electricity areused to heatwater, the favorable economics ofnatural gaswater heaters have historicallymade themmore popularthan electricwaterheaters. Heatpumpwaterheaters,whichuseelectricitytopoweravapor-compression cycle to draw heat from the surrounding environment,


can heat water more efficiently for the end user than conventionalwaterheaters(bothnaturalgasandresistantelementelectric).Suchde-vicesofferconsumersamorecost-effectiveandenergy-efficientmethodof electricallyheatingwater. Thepotential savings in termsof carbonemissionsatthepowerplantarealsosignificant.Replacing1.5millionelectricresistanceheaterswithheappumpwaterheaterswouldreducecarbonemissionsbyanamount roughlyequivalent to theannual car-bon emissionsproducedby a 250MWcoalpowerplant. Heatpumpwaterheatershavebeencommerciallyavailablesincethe early 1980s and have made some inroads in some places in theworld,particularly inEurope and Japan.

Hyper-efficient Residential Appliances Driveninpartbyhighelectricitypricesandgovernmentencour-agement, Japanese, Korean, Vietnamese and European markets havewitnessed the introduction and widespread adoption of “hyper-ef-ficient” residential appliances including electric heat pump clotheswashers and dryers, inverter-driven clothes washers, multi-stage in-verter-driven refrigerators, and advanced-induction ranges and cooktops. Dependingon theapplication, theseappliancescanuse50% lesselectricitythanconventionalU.S.appliances.However,thereareissueswith regard to their acceptancewithU.S. consumers and their actualperformance.

Data Center Energy Efficiency Data centers consume 30 terawatt hours of electricity per year.The technologies that are employed in those buildings today only al-low100wattsofevery245wattsofelectricitydeliveredtoactuallybeused to provide computational ability. The steps in between deliveryto thebuilding andactualuse include the following conversions:

• UninterruptablePower Supplies 88—92%Efficient• PowerDistribution 98—99%Efficient• Power Supplies 68—75%Efficient• DC toDCConversion 78—85%Efficient

Inaddition,all the lostenergyhas tobecooled.That is typically


donewithair conditioning requiring1,000watts for each tonof cool-ing, typically at an efficiencyof 76%.

Light-emitting Diode (LED) Street and Area Lighting Street lighting is an important lifestyle enhancement feature incommunities all over the world. There is a move across the U.S. toreplaceexistingstreetandarea lights—normallymercuryvapor,high-pressure sodium (HPS) ormetal halide (MH) lamps—with new tech-nology thatcosts less tooperate,andLEDsareat the forefrontof thistrend.SinceLEDstreetandarea lighting (LEDSAL) technology isstillrelatively new to the market, utilities, municipalities, energy serviceproviders and light designers have expressed a keen interest inwhatthe tradeoffs are between conventional lighting and LEDSAL.Cost isprobablyfirstamongthem,withthedisadvantageofhigherinitialcost,but the advantageof loweroperating costs. Several important tradeoffs to considerwhen adopting LEDSALarepresented in this chapter,organizedaccording to theiradvantagesand disadvantages. The advantages include energy efficiency, loweroperating costs, durability, flexibility and improved illumination thatcanleadtoincreasedsafety.Onthedisadvantagessidearehigherfirstcosts, lower immunity to electrical disturbances, lower LED efficacy,varying fixture designs, three-wire installation, and unsuitability forretrofits into conventionalfixtures. LEDSALs offer a number of advantages related to power andenergyuse, light quality, safety andoperating costs.

INDUSTRIAL

Industrial use of electricity is dominated by the use of electricmotors, lightingandprocessheating.Lightingapplicationshavebeendiscussedearlier.Thissectionfocusesonmotorsanddrivesaswellasprocessheating.Thisisfollowedbythreeadditionalkeyopportunitiesfor energy efficiency in the industrial sector—cogeneration, thermalenergy storage and the application of industrial energy managementprograms.

Motors and Drives Electricmotors anddrivesuse about 55%of all electricity in the


U.S.Inaddition,electricallydrivenequipmentaccountsforabout67%ofindustrialelectricityuseintheU.S.Thereareseveraltypesofmotorsusedinindustrialapplications,includingDCmotors,permanentmag-netDCmotors, synchronousmotors, reluctancemotorsand inductionmotors. Inductionmotors are by far themost commonmotorused inindustry and account for over 90%of all themotors of 5 horsepowerandgreater.Asaresultof theirprevalence, theefficientuseofmotorsand drives presents a considerable opportunity for energy savings intheindustrialsectorandbeyond.Applicationsofelectricdrivesincludecompressors, refrigeration systems, fans, blowers, pumps, conveyors,and assorted equipment for crushing, grinding, stamping, trimming,mixing, cutting andmillingoperations. It isbest to focusontheentiredrivesystemtorealizemaximumenergy savings. A drive system includes the following components:electricalsupply,electricdrive,controlpackages,motor,couplers,belts,chains, gear drives and bearings. There are losses in each componentthatneedtobeaddressedformaximumefficiency.Ingeneral,efficiencyimprovements canbemade in fourmain categories: theprimemover(motor), drive controls, drive train, and electrical supply. Indirect en-ergy savings can also be realized through efficient motor and driveoperation. For example, less waste heat is generated by an efficientsystem, and therefore, a smaller cooling loadwould result for an en-vironment that is air conditioned. This section focuses on efficiencyopportunities in (a) the operation and maintenance of electric drivesystems, (b) equipment retrofit and replacement, and (c) controls andalterations to fans, blowers, andpumps. The efficiency of motors and drives can be improved to someextent by better operation andmaintenance practices. Operation andmaintenance measures are typically inexpensive and easy to imple-ment, and provide an opportunity for almost immediate energy sav-ings.Themainenergyefficiencyopportunitiesformotors,drivetrains,and electrical supply systems aredescribedbelow.

Motors• Better lubrication: It is important tousehigh-quality lubri-

cantsthatareappropriatefortheparticularapplication.Toomuchor too little lubrication can reduce systemefficiency.

• Improved cooling:Adequate cooling ofmotors can reduce


theneedformotorrewindsandimproveefficiency.Cleaningheat transfer surfaces andventswill help improve cooling.

• Spillage prevention:Prevent thespillageofwater intomo-torwindings.This is facilitatedbychoosing leak-proofmo-tors

• Minimized low- or no-load operation of motors: Eliminate motorsthatareoperatinginfrequentlyorat lowloads.Effi-ciencydecreases as thepercentageof loading isdecreased.

• Motor matching:Size themotorcorrectly tofit theapplica-tion.Match its torque characteristics to the load.

• Quality rewinding: Use high-quality winding techniquesand materials (such as copper) when rewinding motors.Consider replacing or rewinding motors with aluminumwindings.

• Operation:Analyze themerits of continuous vs. batch op-eration. Is it more efficient to run smaller motors continu-ously, or largermotors inbatchoperation?

Drive Train• Belt operation: Properly align belt drives.Adjust belt ten-

sion correctly.

• Minimization of friction: Reduce losses due to frictionby checking operation of bearings, gears, belt drives andclutches.

• Lubrication: Lubricate the chain in chain drives correctly. Useappropriate types andquantities of lubricants.

• Synchronous belts:ConvertV-belts to synchronousbelts.

• Chains:Convert roller chains to silent chains.

• Direct driven loads:Usedirect-driven loads in theplaceofgear,


belt or chaindrives formaximumefficiency.

• Quality bearings: Use high-quality bearings forminimized fric-tion.

Electrical Supply• Operation at rated voltage:Motors aremost efficient if they are

operated at their ratedvoltage.

• Phase balance: Balance threephasepower supplies.

• Efficient power systems:Losses canoccur in thepower systemsthat supply electricity to the motors. Check substations, trans-formers, switchinggear,distributionsystems, feedersandpanelsfor efficient operation.De-energize excess transformer capacity.

Equipment Retrofit and Replacement Equipment retrofit and replacement measures require moremoney and time to implement than do operation and maintenancemeasures;however,theycanalsoresultinmoresignificantenergysav-ings.Somecommonretrofitandreplacementopportunities formotorsanddrives aredescribedbelow.

• Heat recovery: Modify equipment to recover heat. The wasteheat can supply heat for another part of the process, reducingthedemandonheating equipment.

• Controls for scheduling: Install controls to schedule equipment.Turn off motors when they are not in use, and schedule largemotors to operateduringoff-peakhours.

• Other controls: Consider power factor controllers in low-duty-factor applications, and feedback control systems.

• Variable speed drives (adjustable speed drives): Installvariablespeeddrivestocontroltheshaftspeedofthemotor.Thisreducesenergy consumption considerably bymatching themotor speedto theprocess requirements.

• Replacement of throttling valve with variable-speed drive:Con-


trolshaftspeedwithavariable-speeddriveinsteadofathrottlingvalve. Throttling valves are associated with significant energylosses.

• Replacement of pneumatic drives:Considerreplacingpneumaticdrives with electric motors, if possible. Pneumatic drives useelectricity togeneratecompressedairwhich then is converted tomechanical energy. Electric motors are muchmore efficient; butin some applications, pneumatic drives are preferred because ofelectricalhazardsorbecauseoftheneedforlightweightandhigh-power drives. The main inefficiency of pneumatic drives arisesfromair leaks,which arehard to eliminate or avoid.

• Replacement of steam jets: Replace steam jets on vacuum sys-temswith electricmotor-drivenvacuumpumps.

• High-efficiency motors: Install high-efficiencymotors in all newdesigns and system retrofits, and when motors need replace-ment. Motor manufacturers have focused on improving motorefficiencysince themid-1970swhenthecostofelectricitystartedtorise.Despitemotorinnovationsandavailability,theutilizationof high-efficiencymotors in industry is small compared towhatispossible; there is still a largepotential for energy savings.

Process Heating Processheataccounts for10%of industrial end-useof electricityintheU.S.Althoughthispercentageissmallcomparedtoelectricdrivesystems, it is significant enough that energy efficiency improvementsinprocessheatapplicationshavethepotentialforasubstantialimpactonoverallelectricalefficiency.Thefourmainwaysforprocessheat tobe generated are with combustible fuel-based systems, electric-basedsystems, thermal recovery systems, or with solar collection systems.When all types of process heat are considered, electrically poweredsystemsonlyaccount fora fewpercentof the total.Theshareofelec-tric process heat systems is likely to increase in the future because ofseveral advantages associated with electric systems, including easeof control, cleanliness at the point of use, safety, small size, and ap-plicability for a large rangeof capacities. In addition, electric systemswill likely become more prevalent as a result of the increasing costs


of combustible fuels. Generally, process heat is used for melting, heating and dryingoperations. Specific applications include distilling, annealing, fusing,cooking, softening andmoisture removal. There are a variety of elec-tricheatingsystemscurrentlyavailable,and therearemanyemergingtechnologies. Themost common electric process heat technologies in-cluderesistanceheaters, inductionheaters, infraredsystems,dielectricsystems (RF and microwave), electric salt bath furnaces, and directarcelectricfurnaces.Thefollowingsectionofthischaptersummarizessome of the energy efficiency opportunities for process heat applica-tions.

Cogeneration In the early 1900s, most industries generated their own powerandusedthewasteheatforsupplementalthermalenergy.Thiswasthebeginningofcogeneration.As thepublicutility industrygrewinsize,and the costs of electricity generation decreased, cogeneration use attheindustrylevelstartedtodecline.Between1954and1976,industrialelectricalpowerproductiondecreasedfromabout25to9%andcontin-ued to decline.However, as a result of the oil embargo in the 1970s,cogenerationbegantoreceivemorenoticeandhasexperiencedaslowgrowthsincethemid-1980swhenindustrialcogenerationcapacitywasabout4%. In theearly1990s, it increased toabout5.1%.Cogenerationshould continue to grow in the face of increased fuel prices and thedevelopment ofnew cost-effective technologies. Cogeneration systems produce mechanical energy and thermalenergy, either simultaneously or sequentially. Electricity is then pro-duced when the mechanical energy is applied to a generator. Thereare threemain classes of cogeneration systems: (1) topping cycles, (2)bottomingcycles, and (3) combinedcycles. In toppingcycles, electric-ity is produced first, and the thermal energy that results from thecombustionprocess is used for process heat, space heat or additionalelectricity production. In bottoming cycles, high-temperature thermalenergy (typically steam) is produced for process applications, andthen the lower temperature steam is recovered and used to generateelectricity. Topping cycles are more commonly used than bottomingcycles. Combined cycles are based on topping cycles, but the steamthatisgeneratedfromtheexhaustgasisdirectedintoasteamturbinetoproduce additional electricity.


Cogeneration systems are currently in use in a variety of in-dustries, and the number of candidate industries is increasing. Anyindustry that has a demand for thermal energy and electrical energyis a candidate for cogeneration. Some of themain applications of co-generation in the industrial sector include:

• Pulp and paper industry: Thepulpandpaperindustryhasbeenthe primary industrial user of cogeneration. Large quantities ofburnablewastesareusedtofuelcogenerationsystemsforelectric-ity generation.

• Chemical industry: The chemical industry is another significantuser of cogeneration.Historically, the chemical industryhashadthe third largest installed cogeneration capacity in the industrialsector. It uses about the same quantity of steam annually as thepulp and paper industry. The large thermal demand makes co-generation adesirable option.

• Steel industry: Open-hearth steel-making processes produce anoff-gas that is capable of providing fuel to produce steam. Thesteam is then used to drive blast furnace air compressors andfor other applications. Cogeneration is applicable (and currentlyused)forsteelmillsoftheopen-hearthtype;however,newermillsutilizingelectric-arctechnologydonothaveasignificantthermaldemand, and therefore, cogeneration is not as applicable.

• Petroleum refining industry: Thepetroleumrefiningindustryhasa significant thermal demand and is verywell suited for cogen-eration.

• Food processing: The demand for cogeneration in the food in-dustry is on the rise. Themain limitation is the cyclic nature ofits thermal demand.

Thermal Energy Storage Thermal energy storage (TES) can also be considered an indus-trialenergysource.TES is thestorageof thermalenergy inamedium(i.e., steam,water, oil or solids) for use at a future time. TES is usedto manage energy in several ways. For example, TES provides peak


load coverage for variable electricity or heat demands, it allows fortheequalizationofheat supplied frombatchprocesses,and it enablesthestorageofenergyproducedduringoff-peakperiodsforuseduringpeakperiods.TESisalsousedtodecouplethegenerationofelectricityandheat incogenerationsystems.Betterenergymanagement throughthe use of TES can help industries reduce their dependency on utili-ties forenergysupply. Inaddition,TESsystemscanprovideabackupreserveof energy in the event of apoweroutage.

Industrial Energy Management Programs Theestablishmentofanenergymanagementprogramisacrucialpartoftheprocessofsettingandachievingindustrialenergy-efficiencygoals.Firstandforemost, theestablishmentofanenergymanagementprogram requires a commitment from management to initiate andsupport such a program.Oncemanagement is committed, an energymanagement program should be custom designed for each specificapplication, since efficiency goals vary with the type and size of theindustry. However, there are several main guidelines that are appli-cable to any energymanagement program. In general, the procedurefor settingupanenergymanagementprogramrequires the followingsixmain steps:

• Appoint energymanagers and steering committee• Gather and reviewhistorical energyusedata• Conduct energy audits• Identify energy-efficiencyopportunities• Implement cost-effective changes• Monitor the results

Thisgeneralproceduremaybeappliedtoanytypeoffacility,in-cluding educational institutions, commercial buildings, and industrialplants.

Manufacturing Processes The industrial revolution brought about radical changes in howitems were produced. The automation of manufacturing processeshas improved the modern world’s standard of living and continuesto do so. In recent times, these productivity gains have come from


the introduction of the computer intomanufacturing, automating re-petitive tasks and allowing for improved quality control and processmanagement. Manufacturing processes today are heavily automatedand dependent on robots and computers to perform functions. Thisdegreeofautomation,inturn,requiresreliableandhigh-qualitypower.Manufacturing is also very energy intensive and can have negativeenvironmental impacts. Technological innovations that can improveupon existing manufacturing processes, making them more produc-tive, cost-effective, energy-efficient, and environmentally responsiblearedepicted inTable 11-5.

ELECTROTECHNOLOGIES

Electrotechnologies, while often existing technologies, are mostoften categories of end-use technology not considered as energy-efficient. Interestingly, therearemanyendusesof fossil fuels that areinefficient froma totalenergybalanceandenvironmentalperspective.Thisisduetothephysicsofenergyconversionwhereinmanyend-useapplications of electricity are far superior in conversion of electricitytoactualdesiredheat,motivepower,comfortorotherderivedenergyconversionneedthatfossilfuelsare.Theseelectrotechnologiessavesomuchenergyatthepointofendusesoastomorethanoffsetlossesinelectricity production anddelivery.Also, as a result, they have lowerCO2 emissions.

Residential Sector Thereareeightelectrotechnologiestypicallyconsideredashavingthe potential for consideration as superior when compared to fossil-fuel end-use applications in the residential sector. Table 11-6 summa-rizes these eight electrotechnologies.

Table 11-5. Innovative Technologies for Manufacturing and Control of Air Emissions


Commercial Sector Twentyelectrotechnologieshavethepotentialforconsiderationaselectrotechnologiesinthecommercialsector.Table11-7liststhetwentyelectrotechnologies in the commercial sector.

Industrial Sector Table11-8summarizestheindustrialelectrotechnologiestypicallyconsidered as having the potential to be superiorwhen compared to

Table 11-7. Commercial Electrotechnologies

Table 11-8. Industrial Electrotechnologies

Table 11-6. Residential Electrotechnologies


fossil-fuel applications.A fewaredescribed inmoredetail in the sec-tionwhich follows.

Induction Process Heating Induction heating systems use electromagnetic energy to induceelectric currents to flow in appropriately conductive materials. Thematerials are then heated by the dissipation of power in the interiorofthematerials.Inductionheatingissimilartomicrowaveheatingex-ceptthatinductionheatingutilizeslowerfrequency,longerwavelengthenergy.The approximate frequency range is 500 to 800kHz.

Dielectric Process Heat Dielectric heating is accomplished with the application of elec-tromagnetic fields. The material is placed between two electrodesthatare connected toahigh-frequencygenerator.Theelectromagneticfields excite the molecular makeup of material, thereby generatingheat within the material. Dielectric systems can be divided into twotypes: RF (radio frequency) and microwave. RF systems operate inthe 1 to 100MHz range, and microwave systems operate in the 100to 10 000MHz range. RF systems are less expensive and are capableof larger penetration depths because of their lower frequencies andlongerwavelengths thanmicrowavesystems,but theyarenotaswellsuited for materials or products with irregular shapes. Both types ofdielectric processes are good for applications inwhich the surface tovolume ratio is small. In these cases, heating processes that rely onconductive, radiative and convectiveheat transfer are less efficient.

Infrared Process Heat Infraredheatingisusedinmanydryingandsurfaceprocesses.Itis based on electromagnetic radiation at smallwavelengths of one tosixmicrons and high frequencies (~108MHz). Because of their smallwavelengths of energy, infrared heating systems typically are not ca-pableofpenetratingmore than severalmillimeters intomaterials andare,therefore,bestsuitedforsurfaceapplications.Typicalapplicationsincludedryingpaperandtextiles,hardeningsurfacecoatings,andac-celerating chemical reactions.

Electric Arc Furnaces Electric arc furnaces use a large percentage of the energy thatis consumed in the primary metals industry. They are used primar-


ily formelting andprocessing recycled scrap steel. The refinement ofscrapsteel requiresonlyabout40%of theenergyrequiredtoproducesteel from iron ore in a typical oxygen furnace. Since its inception,electric arc technologyhas improved substantially, and improvementsare continuing. The percentage of steel produced in arc furnaces in-creased from 15% in 1970 to 38% in 1987, and the percentage is stillrising.Inaddition,theelectricityuseperunitofproducthasdecreasedsignificantly. Energy improvements include the use of better controls,preheatingofthematerialwithfuelcombustionorheatrecovery,wasteminimizationbyparticle recovery, and ladle refining.

Efficiency Advantages of Electric Process Heat Systems• Quick start-up:Electromagneticsystemsarecapableofquick

start-up. Fuel-fired furnaces require long warm-up periods.As a result equipment is often left on continuously. Electricsystems canbe turnedoffwhennot inuse.

• Faster turn-around:Electricsystemsaccomplishtherequiredheating at a faster rate than furnaces. This can result in in-creasedproductivity and smallerheating times.

• Less material loss: Faster electricheating rates result in lessmaterialscaling.Theamountofscalingisrelatedtothetimeand quantity of exposure to oxygen at high temperatures.Energy is indirectly saved in the formof lessmaterial loss.

• Direct heating process: Direct heating systems aremore ef-ficient than indirect systems because energy losses from theheat containment system to the work piece are eliminated.Implementation of direct electric heating with infrared ordielectric technology can reduce energy use for industrialprocess heating by up to 80%,with typically a payback pe-riodof one to threeyears.

• Heat generation inside material: In inductionanddielectricheating systems, heat is generated throughout the material,regardless of the material’s thermal conductivity. This isin contrast to radiative and convective heating systems, inwhichtheeffectivenessandefficiencydependsonthemateri-


al’sthermalconductivity.Sincethematerialsareheatedfromwithin, less energy is lost and the heat is distributed moreuniformly.This also results in increasedproduct quality.

• More process control: By varying the frequency of the en-ergy,theheatingparameterscanbeoptimizedforthespecificapplication.As a result, energy loss is reduced. In addition,electric processes can direct the energy to the desired loca-tionmoreprecisely.Energyuse is reducedby the avoidanceofheatingunnecessarymaterial or equipment.

MERITSOFELECTROTECHNOLOGIESBEYONDENERGYEFFICIENCY

Thereareseveralbenefitstotheincreaseduseofelectrotechnolo-gies in the residential sector aside from the energy and CO2 savingsthat they offer.A few of the specificmerits of the electrotechnologiesselectedforanalysisrelativetotheirfossil-fueledcounterparts includethe following:

• Urban Emissions Reduction: Emissions from direct combustionof fossil fuels aremoved fromhomes to central generation sites,which tend tobe located farther fromcity centers.

• Heat Pumps Leverage Ambient Heat: Therefore, inmany heat-ing applications, the primary energy source is the sun,which isa renewable and local energy source.

• Dehumidification: Heat pump water heaters cool and dehu-midify the surrounding airwhenoperating.

• Manufacturing Development: Wider adoption of heat pumptechnologies in the U.S. will present the opportunity for manu-facturingdevelopmentintheU.S.and,consequently, jobcreationin thegreenmanufacturing sector.

One unique characteristic of electricity is that it is the only fuelsourcethatcandecrease itsCO2 intensity.Ononehand, this isdueto


theabilitytochangethefuelmixofgeneration,i.e.,increasedpenetra-tionofnuclearand renewablegeneration sources.On theotherhand,there is increased research and development relating to technologiesto reduce the amountofCO2 entering the atmosphere at fossil-fueledgeneration sites, i.e., carbon capture and storage. In contrast, directcombustion of fossil fuels will always produce the same amount ofCO2,withonly small variationsbasedon fuel composition. In the industrial sector, electrotechnologies have some uniqueadditional advantages over fossil-fueled technologies in industrialprocesses.Forone,electricity isanorderlyenergyform, incontrast tothermalenergy,whichisrandom.Thisorderlinessmeansthatelectricalprocessesarecontrollabletoamuchmoreprecisedegreethanthermalprocesses.Inaddition,sinceelectricityhasnoinertia,energyinputcaninstantlyadjusttovaryingprocessconditionssuchasmaterialtempera-ture, moisture content, or chemical composition. For instance, lasersand electron beams canproduce energydensities at thework surfacethatareamilliontimesmoreintensethananoxyacetylenetorch.Theirfocalpoints canbe rapidly scannedwith computer-controlledmirrorsormagneticfieldstodepositenergyexactlywhereneeded.Thisfocus-ing can be a tremendous advantage in, for example, heating of partspreciselyatpointsofmaximumwear, therebyeliminating theneed toheatandcooltheentirepiece.Assuch,electricitycandeliverpackagesofconcentrated,preciselycontrolledenergyandinformationefficientlyto virtually any point. It offers society greater form value than otherforms of energy since it is such a high-quality energy form. Formvalueaffordsflexibility,whichinturnallowstechnicalinnovationandenormouspotential for economic efficiency andgrowth. Afewofthespecificmeritsoftheelectrotechnologiesselectedforanalysis relative to their fossil-fueled counterparts include the follow-ing:

• Electric Boilers: Smaller footprint; quicker response to loadchanges.

• Electric Drives: Lowermaintenance andoperating cost; reducedcoolingwateruse; improvedprocess control.

• Heat Pumps:Reducedwasteheat; loweredeffluent temperature;improvedprocess control; improvedproduct quality.


• Electrotechnologies for Process Heating:Reducedoperatingandmaintenance costs; improved process control; improved productquality.

CONCLUSION

One of the most important actions which can be undertaken tomeet the energyneeds of consumers is tomake certain that endusesare as efficient aspossible.

ReferencesHealthy Buildings, Healthy People: A Vision for the 21st Century, EPA-402-K-01-003, EPA,

Washington,DC:October 2001.Lee Smith, “History Lesson: Ductless Has Come a LongWay,”ACHR News, April 30,

2007.Energy Market Profiles—Volume 1: 1999 Commercial Buildings, Equipment, and Energy Use

and Volume 2: 1999 Residential Buildings, Appliances, and Energy Use,EPRI,PaloAlto,CA, 2001.

Clark W. Gellings, Saving Energy with Electricity,DiscussionPaper,EPRI,PaloAlto,CA:2008.

PhaseIReports:Potential forEndUseTechnologies to ImproveFunctionalityandMeetConsumerExpectations, 2006,www.galvinpower.org.

245

Chapter 12

Demand-side Planning

INTRODUCTION

From the energy issues first raised in the 1970s, participants intheelectricsectorhavelearnedtheimportanceofaflexibleanddiversemanagement strategy that will help them succeed in an increasinglycompetitive and uncertain market.A key challenge through these de-cades continues to be balancing customer demand for electricity withcost, environmental concerns, and stakeholder requirements. Recogniz-ing andplanning for the integrationof customerprograms like energyefficiency, demand response and electrification can help mitigate theneed for futuregenerating capacity, assure efficientutilizationof facili-ties, andaugment the rangeof choicesavailable toutilitymanagementinmeeting the environmental challenges of the future. Table12-1 liststhedefinitionsused indiscussingdemand-sideplanning. Thischapter is intended toprovideanoverviewof thekey issuesinthatregard.Thisfocusesonthebroadissuesofdemand-sideplanningranging frommotives for considering energy efficiency, to techniquesfor analyzing the cost-effectiveness of alternatives, and to analyses ofimplementation issues. In summary, the key issues that will be devel-opedhereare:

• Demand-sideplanningcanelucidateabroadrangeofalternativesfor electricitydemand.Thus, itwarrants examinationbyvirtuallyevery participant in the electric sector. These options are equallyapplicableanddesirable for investor-owned,municipal, and ruralelectric utilities, whether distribution, transmission or generation,aswellassystemoperators,third-partyprovidersorenergyserviceentities.

• The arrangement between consumers and providers can be dy-namic.Thereisaneedtoconstantlyassessthedemandforelectric-


ityandaneedtoaltercourseaseconomicoroperatingconditionschange.

• Demand-sideprogramsandinitiativescanprovidecustomerswiththeopportunitytheydesiretobettermanagetheirtotalenergycostandusageandthe impact theyhaveontheenvironment,but inamanner thatwillholdmutualbenefits.

• Demand-sideprogramsandactivitiesincludemanynewactivities,such as electrification, which can lead to increased efficiency inoverall customer energy use and to improve customer productiv-ity.

Table 12-1. Key Definitions

Demand-side Planning 247

• Theimpactsofcustomerprogramsarehighlyspecific,butthereisawealth of data and a very rapidly growing experience base onwhich todraw.

• Demand-side activities warrant the same level of attention andresources that are given to whole-market and other supply-siderequirements—i.e., theyearsofplanningandscheduling,rigorousanalyticalmodeling,andcalculationsconcerningreliability,opera-tion, andmaintenance.

• Theextenttowhichmarketparticipantscansuccessfullycarryoutdemand-side initiativeswilldependonanumberof factors,noneof which will be more important than the active support of topmanagementandregulators.Theessenceofdemand-sideprogramsliesinhowproviderscanrelatetotheircustomersandtotheregu-latory community. Theymust be permitted to treat demand-sideactivitiesasassetsinmuchthesamewaytransmission,distributionorgenerationassets are treated.

What is Demand-side Planning? Demand-sideplanningistheplanningofthoseactivitiesdesignedtoinfluencecustomeruseofelectricityinwaysthatwillproducedesiredchangesintheutility’sloadshape—i.e.,changesinthetimepatternandmagnitudeofautility’sloadortheadoptionofnewelectrictechnologieswhichdisplacefossilenergyuses.Programsfallingunderthisumbrellaincludedemandresponse(suchastimeofuserates, loadmanagement,and direct-load control), new efficient uses, energy efficiency and dis-tributedgeneration.Demand-sideactivitieshaveevolvedandexpandedover the last fewyearsas seen inFigure12-1. Demand-side activities involve a deliberate intervention by themarketparticipant through theestablishmentofan infrastructureandprograms so as to alter the overall pattern and/or demand for elec-tricity. Under this definition, customer purchases of energy-efficientrefrigerators would not be classified as part of a utility program.Rather,theywouldbeconsideredpartofnaturallyoccurringresponsesof consumers to prices, and the availability of improved devices. Ontheotherhand,aprogramthatencouragescustomerstoinstallenergy-efficient refrigerators, through either incentives or advertising, meetsthe definition of demand-side programs. While this distinction be-


tween “naturally” occurringand deliberately inducedchanges inenergyconsump-tion and load shape is attime difficult to make, it isnevertheless important. Notealsothatdemand-side alternatives extend be-yond demand response,energy efficiency and loadmanagement to includepro-grams designed specificallyto incorporate new efficientuses of electricity whichcould add loadoverall or inpeak and off-peak periods.Thus, demand-side alterna-tives warrant considerationregardless of the regulatoryarrangements and businessmodels involved.

Why Consider the Demand Side? Whyshouldelectricenergyprovidersbeinterestedincustomers?Since the early 1970s, economic, political, social, technological, andresourcesupplyfactorshavecombinedtochangetheutilityindustry’soperating environment and its outlook for the future. Now, if 2007,many providers are faced with staggering environmental concerns,capital requirements for new plants, significant fluctuations in de-mand and energy growth rates, declining financial performance, andregulatoryandconsumerconcernaboutrisingprices.Whileembracingcustomers is not a cure-all for thesedifficulties, it does provideman-agementwithagreatmanyadditionalalternatives.Thesedemand-sidealternatives are equally appropriate for consideration by all electricsectorparticipants. For areas with strong load growth, demand response and en-ergy efficiency canprovide an effectivemeans to reduce the need forwholesalecapacitywhileminimizing theenvironmental footprint.Forothers, deploying new uses of electricity and deliberate increases in

Figure 12-1. Growth in the Range of De-mand-side Activities


themarketshareofenergy-intensiveusescanimprovetheutilityloadcharacteristics, reduce overall environmental impacts, and optimizereturn.Asidefromtheseratherobviouscases,changingtheloadshapethataprovidermustservecanreduceoperatingcosts.Changes intheload shape can permit adjustments in short-term market purchase,generation operations, and the use of less expensive energy sourcesaswell as in sourceswith lower environmental impact.

Selecting Alternatives Finally,demand-sideplanningencompassesplanning,evaluation,implementation, and monitoring of activities selected from among awidevarietyofprogrammatic and technical alternatives.This is com-plicated by the various values customers and providers have. Thiswide rangeofalternativesmandates thatproviders seriouslyconsiderthedemand-sidebyincludingitasapartoftheiroverallplanningpro-cess.Duetothelargenumberofalternatives,however,assessingwhichalternative is best suited for a given energy service provider is not atrivial task. The choice is complicated by the fact that the attractive-nessofalternativesisinfluencedstronglybyarea-specificfactors,suchas the regulatory environment, current generatingmix, expected loadgrowth,capacityexpansionplans, loadfactor, loadshapesforaverageandextremedays,andreservemargins.Therefore,itisinappropriatetotransfer these varying specific factors fromone service area or regionto anotherwithout appropriate adjustments.

Figure 12-2. A Renewed Partnership


ISSUESCRITICALTOTHEDEMAND-SIDE

Figure 12-2 illustrates the needs which customers and providersperceive indemand-sideprograms.These infereightcritical issues thatutilitiesconsidering thedemand-sidemust resolve.Theeightquestionsare listed in Table 12-2.

How Can Demand-side Activities Help Achieve Its Objective Although provider needs and characteristics vary widely withinthe industry, every utility should examine demand-side alternatives.Embracingthedemandsidecanofferautilityabroadrangeofalterna-tivesforreducingormodifyingloadduringaparticulartimeoftheday,duringa certain season,or annually.

The Utility Planning Process Insomecases,reviewsofdemandresponse,energyefficiency,anddeploynewefficientuseshaveemphasizedtheimpactsofasinglealter-nativewith little discussion on how that alternativewas first selected.Thepreferredapproach inassessing theoverallviabilityofplanning is

Table 12-2. Issues in Demand-side Planning


to incorporate the assessment as part of the utility’s strategic planningprocess. Discussion here focuses on a three-level hierarchy in utilityplanningrelatedtodemand-sideactivities:establishingbroadobjectives,setting specific operational objectives, and determining desired loadshapemodifications.ThisisillustratedinFigure12-3.Table12-3definesthe load shapeobjectives listed. The first level of an energy service provider’s formal planningprocess is to establish overall organizational objectives. These strategicobjectives are quite broad and generally include such examples as im-provingcashflow, increasingearnings,or improvingcustomersatisfac-tion.Clearly,theydifferdependingonthepositiononehasinthevaluechain(i.e.,whetheryouareadistributionutility,transmissionowneror

Figure 12-3. Hierarchy of Planning Objectives


Table 12-3. Load Shape Objectives*


operator, independentsystemoperator,powerproducer,vertically inte-gratedutility, or energy service providerwith no assets).Certain insti-tutionalconstraintsmaylimittheachievementoftheseobjectives.Theseconstraints represent the obvious regulatory environment that manyplayers face—competition, regulation, environmental considerations,and theobligation for some toprovide serviceof reasonablequality tocustomers.While all electric sector stakeholders face such institutionalconstraints, they differ between states and certainly between investor-owned and public power utilities, as well as across system operatorsandpowerproviders. Whileoverallorganizationalobjectivesare importantguidelines forelectricsystemlong-rangeplanning, there isaneedforasecondlevelofthe formal electric systemplanningprocess inwhichaprovider’s objec-tives are operationalized to guidemanagement to specific actions. It isat this operational level or tactical level that demand-side alternativesshould be examined and evaluated. For example, an examination ofcapital investment requirementsmay show periods of high investmentneeds.Postponingtheneedfornewconstructionthroughademand-sideprogrammayreduceinvestmentneedsandstabilizethefinancialfutureofthemarketparticipant.AsCO2constraintsemergeandtighten,includingdemand-sidealternatives,optionswillbecomeonlymoredesirable. Specific operational objectives are established on the basis of theconditions of the existingprovider—its businessmodel, regulatory, en-vironmentalandsystemconfiguration,casereserves,operatingenviron-ment,andcompetition.Operationalobjectivesthatcanbeaddressedbydemand-sidealternatives include:

• Reducing theneed for capacity• Reducing theneed for fossil fuels• ReducingCO2 emissions• Reducingorpostponingcapital investment• Controllingelectricity costs• Increasingprofitability• Providingcustomerswithoptionsthatprovideameasureofcontrol

over their electricbills• Reducing risksby investing indiversealternatives• Increasingoperatingflexibilityand systemreliability• Decreasingunitcostthroughmoreefficientloadingofexistingand

plannedgenerating facilities


• Satisfying regulatory constraintsor rules• Increasing sustainability• Improving the imageof theutility

Oncedesignated,operationalobjectivesaretranslatedintodesiredloadshapechangesthatcanbeusedtocharacterizethepotentialimpactof alternativedemand-sidealternatives. Thepotentialrole thatcanbefilledbythesedemand-sidealterna-tives in a planning process looks rather ambitious. Nevertheless, thedemand-side approach does provide management with a whole newset of alternativeswithwhich tomeet the needs of its customers. Theconcept that consumerdemand is not fixed but can be altereddeliber-ately with the provider, regulator, and customer cooperating opens anewdimension inplanningandoperation.

Demand Response & Energy Efficiency The obvious question in response to the above claims is: Candemand-side activities help achieve the broad range of operationalobjectives listed by merely changing consumer demand? The answeris that numerous industries have found that changing the pattern ofthedemandfor theirproductcanbeprofitable.Forexample, telephoneutilitieshavelongofferedreducedeveningratestoshiftdemandandtoencourage usageduring non-business hours.Airlines offer night coachfarestobuildtrafficduringoff-peakhours.Movietheatersofferreducedmatinee prices to attract additional customers.All of these examplesare deliberate attempts to change thedemandpattern for a product toencourageefficientuseof resourcesand thusprofitability.

What Type of Demand-side Activities Should Providers Pursue? Although customers andproviders can act independently to alterthepatternofdemand, the conceptofdemand-sideplanning implies arelationship that producesmutually beneficial results between provid-ers and customers. To achieve these mutual benefits, a provider mustcarefullyconsidersuch factorsas themanner inwhich theactivitywillaffect the load shape, the methods available for obtaining customerparticipation, and the likely magnitudes of costs and benefits to bothproviderandcustomerprior toattempting implementation. Because there are somany demand-side alternatives, the processof identifying potential candidates can be carried out more effectively


byconsideringseveralaspectsof thealternatives inanorderly fashion.Demand-side activities can be categorized in a two-level process inwhich the second levelhas three stepsand illustrated inFigure12-4.

Level I: • LoadShapeObjectives Level II: • EndUse • TechnologyAlternatives • Market ImplementationMethods

The first step in identifying demand-side alternatives is typicallythe selection of an appropriate load shape objective to ensure that thedesired result is consistent with utility goals and constraints. For ex-ample,loadforecastsmayindicatethatexistingandplannedgenerating

Figure 12-4. Characterization of Demand-side Alternatives


capacitywill fall shortofprojectedpeakdemandplus targeted reservemargins.Several supply-sidealternativesmaybeavailable tomeet thiscapacityshortfall:additionalpeakingcapacitycanbebuilt;extrapowercanbepurchasedasneededfromothergeneratingutilities;orperhaps,areductioninreservemargincanbetolerated.Therearealsoanumberof demand-side alternatives, including demand response, direct loadcontrol, interruptible rates, and energy storage, that can augment thenumberofplanningalternativesavailabletoautility.Choosingbetweenmeetingpeakversusreducingthepeakbecomesabalancebetweenthecostsandbenefitsassociatedwiththerangeofavailablesupply-sideanddemand-sidealternatives. Oncetheloadshapeobjectivehasbeenestablished,itisnecessarytofindwaystoachieveit.Thisisthesecondlevelintheidentificationprocesswhichinvolvesthreestepsordimensions.Thefirstdimensioninvolvesidentifyingtheappropriateenduseswhosepeakloadanden-ergy consumption characteristics generallymatch the requirements oftheloadshapeobjectives.Ingeneral,eachenduse(e.g.,spaceheating,lighting) exhibits typical and predictable load patterns. The extent towhichloadpatternmodificationcanbeaccommodatedbyagivenenduse isone factorused to selectanenduse fordemand-sideplanning. Thereareninemajorenduseswhichhave thegreatestpotential.They are space heating, space cooling,water heating, lighting, refrig-eration, cooking, laundry, swimming pools, and miscellaneous otheruses. Each of these end uses provides a different set of opportunitiesto meet some or all of the load shape modification objectives thathave been discussed. Some of the end uses can successfully serve asthe focusofprograms tomeetanyof the loadshapeobjectives,whileothers can realisticallybeuseful formeetingonlyoneor twoof theseobjectives. Ingeneral, spaceheating,spacecooling,andwaterheatingare the residential end uses with the greatest potential applicabilityforachieving loadshapeobjectives.Theseenduses tend tobeamongthe most energy intensive and among the most adaptable in termsof having their usage pattern altered. However, some energy serviceproviders and distribution utilities have achieved significant loadshapemodificationsbyimplementingprogramsbasedonorincludingcombinationsof other enduses. Theseconddimensionofdemand-sideplanninginvolveschoosingappropriatetechnologyalternativesforeachtargetenduse.Thisprocessshouldconsider thesuitabilityof the technology for satisfying the load


shape objective. Even though a technology is suitable for a given enduse, itmaynotproducethedesiredresults.Forexample,althoughheatpumps are appropriate for reducing domestic water heating electricconsumption,theyarenotappropriateforloadshifting.Inthiscase,anoption suchasdirect loadcontrolwouldbeabetter choice. Residential demand-side technologies can be grouped into fourgeneral categoriesasdescribed inTable12-4:

• Buildingenvelopealternatives• Efficient equipmentandappliances• Thermal storageequipment• DemandResponse(energyanddemandcontroloptions,including

dynamic response

Thesefourmaincategoriescovermostofthecurrentlyavailable,orsoon tobeavailable, customeroptions.Manyof the individualoptionscan be considered as components of an overall program and therebyoffer a very broad range of possibilities for successful residential de-mand-side program synthesis and implementation. These options aredescribed ingreaterdetail inTable12-4. The third dimension of demand-side alternatives dealswith vari-ousmethodsforencouragingthecustomertoparticipateintheprogram.Market implementation methods vary for different technologies. Fre-quently, two or more customer adoption strategies are used simulta-neously to promote a given program. The different types of customeradoption techniques represent varying levels of utility involvement.Direct incentiveprograms, forexample,representahighdegreeofutil-ity support in promoting demand-side programs. Customer awarenessstrategies can require lessutility involvement. Taken in sequence, the four steps of activities described provideanorderlymethodforcharacterizingdemand-sidemanagementalterna-tives.Thebasic stepsare:

• Establish the load shapeobjective tobemet• Determinewhichendusescanbeappropriatelymodified tomeet

the load shapeobjectives• Select technology options that can produce the desired end use

load shape changes• Identifyanappropriatemarket implementationplanprogram


How Do I Select Those Alternatives That Are Most Beneficial? Selectionof themostappropriatedemand-sidealternatives isper-haps the most crucial question a service provider faces. The questionis difficult since the number of demand-side alternatives fromwhichto select is so large. In addition, because the relative attractiveness ofalternatives depends upon specific characteristics, such as regulatory,environment, load shape summer and winter peaks, generation mix,customermix,andloadgrowth,transferofresultsfromoneserviceareatoanothermaynotbeappropriate.Inotherwords,whatisattractivetooneutilitymaynotbeattractive toanother. Completingdetailedevaluationsofdemand-sideprogramscanbecomplex andmay even appear overwhelming. These evaluations typi-callyrequireagreatdealofdataandacomputermodelforprocessing.However, a detailed analysis of demand-side alternatives is not thestartingpoint in the selectionprocess.

ReferenceDemand-side Management Planning,C.W.GellingsandJ.H.Chamberlin,PennWellPublish-

ingCo., 1993.

Table 12-4. Residential Demand-side Technology Alternatives

259

Chapter 13

Demand-side Evaluation

LEVELSOFANALYSIS

Becausetherearesomanydifferentdemand-sidealternativesavail-able, theyshouldbeanalyzed throughahierarchyofevaluation levels,startingwithanintuitiveselection,continuingwithanaggregateanaly-sis,andendingwithadetailedandcomprehensiveevaluation.Toalargeextent, the appropriate level of analysis depends upon the importanceof thedecision thatwillbe influencedby theanalysis. In thehierarchy,quick and less demanding analysis is used to identify themost attrac-tive candidates formoreextensiveanalysis.However, theanalystmustensure that the potential value of additional,more detailed analysis isnotoutweighedby the costof completing thedetailedanalysis.This isillustrated inFigure13-1.

Figure 13-1. Levels of Evaluation in Demand-side Planning


Although every service provider does not need to go through allthree levelsof analysisor even thefinal level in selectinganalternative,thestartingpointshouldbeanintuitiveselectionofthosealternativesthat,withoutextensiveanalysis,seemtosatisfytheprovider’sandtheutility’sneeds.Forexample,aproviderconcernedaboutitssummerpeakandlowload factor could be investigating heat pumps to buildwinter loads ordemandresponseprogramstoreducethesummerpeakgrowth.Optionssuchasweatherizationor thermal storagemaybeof lesser interest. The first level, intuitive selection, is based upon a thorough un-derstanding of the conditions within the service area, of the wholesaleelectricitymarket or native generationportfolio andplanned expansion,andoftheoperatingcharacteristicsofthedemand-sidealternatives.Notethattheintuitiveselectionprocessdoesnotidentifythosealternativesthatareinsomesense“best”fortheservicearea.Rather,theprocessidentifiesanumberofalternativesthatare,at least initially,appropriatetoachievestatedgoals. The next level in identifying alternatives is a more quantitativeanalysisthatexaminescostsandbenefitstoallpartiesaffectedbyimple-mentation of a specific program. Interested parties include the serviceprovider, third-party providers, the participants in the program, othercustomers, andoften society at large. To calculate the costs andbenefitsrequires quantitative information on the impact of the alternative onpeak, on the pattern of demand, and total energy sales, the expectedparticipationintheprogram,thecostsof implementation,andwholesalemarket or generating system data (such as costs for existing units). Forthis level of analysis, all expected costs andbenefits to theprovider, theprogramparticipants, and thepublicat largeareprojected for theentirelifeoftheprogram.Comparisonofthebenefit/costratioswillthenyieldpreliminaryrankingofprograms.Moredetailedrankingscanbemadeofcombinedprograms. Thefinalstepintheselectionof themostappropriatedemand-sidealternativeisadetailedanalysisofthemostcost-effectivealternatives.Ina typical detailed analysis, the performance of the electric system frombothanoperationalandafinancialviewpointisstimulatedovertimewithandwithouttheselecteddemand-sidealternative.Thisanalysisestimateschanges inwholesalemarket prices or in the generating system and itsoperation that will result from the altered load shape produced by theselecteddemand-sidealternatives. Itbuildsheavilyontheregion’sexist-inganalysis toolsandcooperatemodels.

Demand-side Evaluation 261

GENERAL INFORMATIONREQUIREMENTS

Such analysis requires a great deal of information on the existingand anticipated wholesale market, any native generation, and on thedemand-sideprogram.Whiletheinformationdescribingthecurrentandanticipatedwholesalemarketor theplannedgenerating systemand itsoperationisgenerallyavailablefromcapacityexpansionandproductioncosting analyses, obtaining the information for demand-side programsis often a challenge. Specifically, information on the load shape of theenduseandchangesinthatloadshaperesultingfromtheimplementa-tion of the selected demand-side alternative is required. In addition, itis necessary to characterize the enduse in the service area. In the caseof space heating, for example, this implies accumulating informationon the number of electric space heating customers, the annual heatingrequirements, the type of equipment (e.g., electric furnace, resistancebaseboard heat, or heat pump) and likely future changes in heatingrequirements. Finally, projections of customer acceptance and responseto theprogram, taking intoaccountcustomers’costsandsavings,mustbe developed for the planning horizon. Sincemuch of the informationneeded is related to the customer, marketing departments can plan amajor role ingathering it. Implicit in the selection process is a definite strategy to reducethe information requirements tomanageable levels consistentwith thetrade-offbetweenthedatacollection/analysisexpenseandtheresultinglevelofaccuracyintheevaluation.Thisstrategyfocusesonquicklyandefficiently reducing the number of alternatives appropriate for both agivenserviceproviderandgeographicarea.Althoughthedetailedanaly-sis is themost comprehensive and in some sense themost “accurate”assessment, theamountof informationprohibits itsuseonallpotentialalternatives. Thus, the selection process startswith informed personnel select-ing those alternatives that seemmost appropriate based upon insightinto their service area. Since demand-side alternatives focus on thecustomer,ormorecorrectlyonacustomer’senduses,customer-relatedbackgroundinformation isessential in thisfirststep.Thenextstep, thepreliminary cost/benefit analysis, requires more quantitative informa-tion but for only those alternatives that have some promise for theservicearea.Finally,thecomprehensiveanalysisisappliedonlytothosealternatives thathave thehighestbenefit-to-cost ratio.


The remainderof thisdiscussion focusesonanumberof impor-tant concerns in the evaluation process. Some of these are listed inTable 13-1.

Table 13-1. Concerns in Evaluating Demand-side Alternatives

SYSTEMCONTEXT

Demand-side alternativesmust be evaluated in the context of thesupply-side alternatives—the supply system. Just as in the analysis ofsupply-sidealternatives,theattractivenessofalternativesdependsupontheexistingandplannedsupplysystemandonthecharacteristicsofthealternatives themselves. Demand-side alternatives alter the load shapeand thus affect the operating efficiency and future capacity additions.Translating these effects into specific cost savings depends upon thecharacteristicsof the supply system.

TRANSFERABILITY

Caution must be exercised in transferring results of a selectionprocessfromoneserviceareatoanother.Whiletheanalysistechniques,andinsomecasesdata,canbetransferred,inmostcases,theresultscan-not.Thereareanumberofreasonsfor this.First,costsavingsresultingfromthe implementationofdemand-sidealternativesdependupon theprovider’s load shape and thewholesalemarket or generating systemithasbeendesignedtoserve.Mostoften, this isauniquecombination.Second, customer end-use characteristics often differ between serviceareas. For example, electric space heating and electric water heating


saturation levels are often quite different, even for providers in thesamegeographicarea.Thus,while the impactofanalternativemaybethe same on a per unit basis, the total impact resulting from the samesaturationwill bequitedifferent.Customer characteristics and climaticconditions also influence the impacts on a per unit or per customerbasis.Energy savings resulting fromheating, coolingorweatherizationprogramschange,dependingupondwellingtype(e.g.,single-familyvs.multi-family),dwelling size, andclimatic conditionsmeasured (e.g.,byheatingdegreedays).

DATAREQUIREMENTS

Detailed analyses of demand-side alternatives are data intensive,requiring information in fourmajor categories:

• Servicearea-specific customerandend-use characteristics (typeofequipment in use, stock estimates of this equipment, patterns ofusage).

• Operating/technical characteristicsof thealternatives.• Characteristics of the supply system (operating costs, reliability,

initial cost).• Customeracceptanceof alternatives.

Itisoftensaidthatdemand-sideplanningdatatendtobe“softer”andmuchmorecustomerorientedthansupply-sidedata.Becausesup-ply-sidedatatendtobemuchmorehardwareandengineeringoriented,they give the impression of greater reliability. However, since supply-sideplanningisbasedonprojectedfutureenergyrequirements(i.e.,cus-tomerdemands), it actually involves the sameuncertainties.Moreover,criticalvariablesinsupply-sideplanningareoftenknownwithnomoreaccuracy thandemand-sidevariables.

COST/BENEFITANALYSIS

Thecost/benefitevaluationapproachisthepreferredapproachtoassessdemand-sidealternatives.Althoughanalyststypicallyminimize


future revenue requirements in evaluating supply-side alternatives,thismeasureisinappropriateforevaluatingsomedemand-sidealterna-tives. For example, a programdesigned to build off-peakuse of elec-tricity, such as an add-on heat pump program, will increase revenuerequirements.However, increased utilization of existing capacitywilllower the unit cost of power—clearly a benefit to both the custom-ers and the utility. Regardless of whether the analysis uses requiredrevenues or unit costs as the measure of program impact, the costsand benefits of serving the load shape,with orwithout the demand-side alternative is place, must be estimated and compared over theplanning horizon. In this comparison, it is important to perform theanalysisonanequivalentunitbasis.Thus,twosystemsareassumedtobeequivalent if theyservetheloadatthesamelevelofreliability.Forutilitieswithexcessreservesattemptingtobuildload,itisappropriateto perform the analysis on the desired reserve level. In cases wherethereservelevelsarenotequal,someestimatesforthecostofoutagesmust be included in the analysis.

NON-MONETARYBENEFITS&COSTS

Factorsotherthaneasilyquantifiedmonetarybenefitsandcostsareoften important in the selection of demand-side alternatives.Althoughthe discussion has dwelt upon savings in monetary costs up to thispoint,thereareotherimportantfactorsinfluencingtheselectionofthesealternatives.Among theseare:

• PotentialuseofCO2 trading• Cashflow• Magnitudeof start-up• Public relations reaction• Compatibilityof alternatives• Uncertainty/riskassociatedwith successofprogram• Availabilityof competent installation/products• Customer reaction/participation• Realorperceivedcustomerhealth/safety issues• Ease/convenienceof service installation• Conformance tobuilding codesand standards• Regulatory/institutional limitationsandopportunities


Because such variables are difficult to quantify, they are typi-cally not included in a formal quantitative analysis. Instead, they areincorporated qualitatively in the summary assessment of the proposedprogram.However, there is increasing interest in explicitlyquantifyingCO2 savings fromdemand-sideprograms.

What Changes in the Load Shape Can Be ExpectedBy Implementing Demand-side Alternatives? Asoutlined in the introduction,demand-sideplanningfocusesondeliberatelychangingtheloadshapesoastooptimizetheentirepowersystem from generation to delivery to end use. This focus may givethe impression that they only load shape changes that occur are thoseinduced by demand-side programs and activities. Certainly this is notthecase.Systemloadshapechangescanoccurnaturallyduetofluctua-tionsincustomermix,theentryofnewindustriesintothemarketplace,the introduction of newprocesses, and the growth of end-use stock inthe residential and commercial sectors. Thus, to examine the impactof demand-side alternatives, it is important to differentiate naturallyoccurring changes in the load shape and those changes resulting fromdemand-sidealternatives. Customers purchase electricity to satisfy a need for energy, not tomeetutilitydemandgrowth.Theresidentialloadshapesareinfluencedbythecustomer’sdecisiontopurchaseanappliance,aswellastheresultinglevelofuseofthatappliance.Similarly, inthecommercialandindustrialsectors,installationofequipmentanditsutilizationaffecttheloadshape.Projections of thepurchase of appliances and the behavior of customerscombine to produce a forecast of the residential load shape. Numerousfactors influenceboth theselectionandutilizationdecision, including:

• Priceof electricityandcompeting fuels• Demographics (income,age, andeducation)• Appliance characteristics (saturation,usage, cost andage)• Behavioral factors• Utilitymarketing/programavailability• Mandated standards• Governmentprograms

The action taken by consumers once an appliance or device hasbeenpurchasedand installed, combinedwith thedesigncharacteristics


ofthedevice,resultsintheloadshapechangeorthecustomerresponseas illustrated inFigure13-2.

Figure 13-2. Factors Influencing System Load Shape

Thesamebasicmechanismusedtodescribetheloadshapeanditschangeovertimecanalsobeusedtoestimatechangesinthatloadshapedue todemand-sideprogramsandactivities.Changes in an individualcustomer’s load shape result from twodifferent factors:

• Changes in customer utilization of existing appliances or equip-ment (e.g., installation of clock thermostat setback in response toanadvertising campaignor conservation).

• Changes in theoperatingcharacteristicsor technology foragivenend use (e.g., substitution of a heat pump for an electric fur-nace).

Obviously, these factors are notmutually exclusive and often in-teract. System load shape changesare the cumulative responseof indi-vidual customer load shape changesplus the load contributed bynewcustomers. Whilebothoftheabovefactorsproducechangesintheloadshape,itisimportanttodifferentiatetheeffectsofeach.Inthecaseofbehavior-ally induced changes, the emphasis is on how the customer respondsand how permanent that response is. Since in many cases there is nocustomerinvestment,thechangesmayonlybetemporary,withcustom-ers eventually revertingback to theiroriginalbehaviorpatterns.


The technology-induced changes in the load shape depend uponthe relative usage level of the device, as well as its improved designcharacteristics.As such, the changes in the load shape tend tobe“per-manent” andmore predictable. Returning to the heat pump example,the load shapemay still change as the customerbecomesmore energyconsciousor responds to ademand responseprogram.However, thesechanges are limited when compared to the change resulting from theimproved operating characteristics of an advanced replacement heappump. The critical question remains—what is the level of customeracceptance of the device?Acceptance of demand-side alternatives isdiscussed inmoredetail later. Loadshapechangesthatcanbeexpectedfromtheimplementationof demand-side alternatives vary. This should not be surprising sincefactorsunique to the service area influence changes in the system loadshape. The remainder of the discussion in this section focuses on twocritical issues related to load shape impacts: program interaction anddynamic systems.

PROGRAMINTERACTION

Alternatives tend to interactmaking the estimation of changes inthe load shape difficult. Demand-side alternatives are often promotedand implemented as an integratedprogram. Promotion of heat pumpsnotonlyaffectsheatingrequirements,butalsocoolingloads.Moreover,if that heat pump program is coupled to a weatherization program,energy requirements are lowered for those customers participating inboth programs. Similarly, theremay be changes resulting from cyclingairconditioners thatcanbe influencedbytheuseofa“smart” thermo-stat.Thekindofthermostat“knows”thefuturepowerinterruptionandautomaticallylowerstheindoortemperatureinanticipationofexpectedreduced air conditioner operation. Interactions of alternativesmust becarefully examinedand their implementationsanalyzed.

DYNAMICSYSTEMS

Loadshapeimpactsofdemand-sidealternativesmaychangeovertheplanninghorizon. Just as the system load shape is dynamic and is


expectedtochangeovertime,soaretheloadimpactsofmanydemand-side alternatives. Failure to recognize and account for this can lead toserious future supply problems. For example, the amount of controlthat can be exercised over the cooling load using direct load controlwithoutadynamic systemwill changeover thecourseof theplanninghorizon. Formany utilities, the stock of central air conditioners is stillgrowing due to increasing saturation levels and/or customer growth.Therefore,assumingthesamelevelofparticipation intheprogram,thetotalamountofcontroltendstoincrease.Ontheotherhand,customersare replacingoldand inefficientunitswithmuchmoreenergyefficientones.Assuming the same amount of control, these efficiency improve-mentswould tend to decrease the impact of the load control interrup-tions. The net effect of these opposing trends depends on the specificconditionspresentintheservicearea.Theimportantmessage,however,isthattheloadshapeisdynamicandchangesovertheplanninghorizon.Table 13-2 gives examples of load shape changes resulting from selectdemand-sidealternatives.

How Can Adoption of Demand-side AlternativesBe Forecasted and Promoted? For many years, energy services departments successfully stimu-lated company growth by directing numerous advertising and salesefforts such as the “Live Better Electrically” Program conducted incooperation with appliance manufacturers. But, as electricity costs ac-celerated and national targets for utility use of petroleum and naturalgaswere set, supply-side issues took on a greater importance. Duringthe1970sand80s,manyofthesemarketingeffortsweredismantledandthemarketingstaffdispersedtootherdepartments. Ithasonlyrecently(albeitmodestly)beenrecognizednationallythatmarketingcanbeusedto shape load aswell as to stimulate it. Some customer-relateddepart-mentscanmakevaluablecontributionstodevelopingdemand-sidesolu-tions to load problems and to taking advantage of load opportunities.Thus, one of the first andmost fundamental issues to be addressed inthe development ofmarketing programs is to locate and pull togetherthe expertise and tools necessary to identify, evaluate, and implementsuccessfulmarketingprograms. Itisanoldadagethat“nothinghappensuntilsomeonesellssome-thing.”Inthedemand-sideplanningcontext,thismeansthatevenifthebestanalysistechniqueshavebeenapplied,datacollected,andtechnol-


ogydeveloped,thesuccessofdemand-sideactivitiesoftenhingesontheability topersuade customers toactivelyparticipate in theprogram. It is important forutilities tounderstandhow thesedecisions arereached.Customersdonotpurchaseenergyforthesakeofconsumingit,perse,but insteadare interested in theservice itprovides.Thisservicebrings warmth, cooling, artificial illumination, motive power, or otherconveniences. Asdiscussedintheprevioussection,potentialcustomerinterestinademand-sideprogramoractivitymaybebasedonanumberoffactorsincluding:

• Priceof electricityandcompeting fuels

• Demographics (income,age, andeducation)

Table 13-2. Typical Load Shape Changes Resulting From Select Demand-side Alternatives


• Appliance characteristics (saturation,usage, cost andage)• Behavioral factors• Utilitymarketing/programavailability• Mandated standards

Providersmust also be sensitive to the fact that the stage a con-sumerhas reached inadoptinganewproductor servicehasabearingon the typeofmarketing that should takeplace. The goal of the programs and their associated marketing effortis often to increase the engagement in the demand-side program oractivity.Tomake these successful, it is important toknow the currentmarket penetration of certain end-use devices. If market penetrationis deemed too low, a number of options are worth considering. Theprovidermay:

• Attempt to expand the number of people comprising the targetmarket.

• Enlargethenumberofdevicescoveredinprogramtoapproachthetotalmarketpotential.

• Increase or modify advertising/promotional efforts to encouragegreater response from theexistingmarket.

Caution shouldbeused,however, in settinggoalsnear theupperlimitofmarketpotentialduetothepossiblediminishingreturnsofmar-keting expenditures over time. The concept of “optimalmarket share”can be explored if the utility can quantify the benefits associatedwithalternativemarket share levels.

ESTIMATINGFUTUREMARKETDEMAND&CUSTOMERPARTICIPATIONRATES

Projectionsoffuturemarketdemanddependonalargenumberoffactors, including:

• Availability, frequency, timing, and use of programs and promo-tions


• Stateof theeconomy• Seasonality• Valueofprogram incentives

Marketdemandcanbeprojectedby severalmethods, including:• Buyer intention surveys• Middlemanestimates• Market tests• Time seriesanalysis• Statisticaldemandanalysis

Buyer intentionsurveyssolicitbuying intentions foranupcomingperiodfromasampleoftargetconsumers.However,buyershavinglessclear intentionsand thoseunwilling toreport their intentionsaffect thereliabilityofresults.Simple“yes—no”questionscanbeaskedora“fullpurchaseprobabilityscale,”whichissimilartoaLikertScaleinrefiningcustomer responses,maybeused. Middleman estimates consist of information supplied by dealers,salespersonnel,andfieldrepresentativesregardingequipmentsoldanddevicesplaced into thefield. Markettests/pilotprogramsareparticularlyappealingwhereanewproduct or service in planned and other forms ofmeasurement are notappropriate.Where there is no prior experience with a program, pilotprograms are developed and implemented to either a small part of aprovider’s service territoryor informallyoffered to customers aspart ofanotherprogram inorder tomeasureandevaluatecustomer responses. Timeseriesanalysesrelyonhistoricalbuyerdatatoestimatefutureconsumptivedecisions.Anumberof componentsofhistorical informa-tion are often analyzed, including trends, cycles, and seasons. Someuse this technique for operational programs that have stable customerresponse rates. Statistical demand analyses include additional variables thatmayeither co-vary or cause a change in the effect of product and servicerequests. Price, income, population, construction starts, and householdformationarethetypesofvariablesused.Sales,audits,installations,etc.,are viewed as dependent variables and price, households, etc., are theindependentvariables.


CONSUMER&MARKETRESEARCH*

Secondary and/or primary market data are collected and ana-lyzed as inputs to the market analysis methodologies. Regardless ofthetypeofresearchdataselected, theestimatorofmarketpenetrationmust consider these factors:

• Theaccuracyof thedataand its relevance to theestimating taskat hand.

• The cost (time andmoney) to collect andanalyze thedata.

• The accuracyof the resulting estimate.

Primary data are collected to answer specificmarketing or esti-mating needs. Primary data collection is usually categorized in twoways: qualitative and quantitative research. Frequently, qualitativeresearchprovidesthefoundationforquantitativeresearchbyclarifyingrelevant concepts anddeveloping researchhypotheses. Thetwomostcommonformsofqualitativeresearcharein-depthinterviewed and focus group discussions. Both techniques are usedto explore issues, identifymotivations and behavior, and develop anunderstandingof the consumer. Quantitativeresearchcanbefurthersubdividedintoobservation-altechniques,experimentation,andsurveys.Observationaltechniquesincludeavarietyofunobtrusivemeasures, for example,utilitymeter-ingofelectricaluse.Certainarchivalrecordsgeneratedbymarketpar-ticipantsandotherend-usetechnology-relatedindustriesmightalsobeclassified as observational. Experimentation includes test marketing,concept testing, and a variety of other relatively powerful techniquesdesignedtoestablishcausality.Theconceptofcontrolgroupsiscentralto experimentation. Surveys canprovidedata on socioeconomic char-acteristics,attitudes,behavior,andbuying intentions.The informationcanbeusedtoestimatemarketpotential,toforecastsales,ortoanalyzeconsumerpreferences.

*AdaptedfromResourcePlanningAssociates,Inc.,Methods for Analyzing the Market Penetra-tion of End-Use Technologies: A Guide for Utility Planners,publishedbytheElectricPowerRe-searchInstitute,October1982,mEPRIEA-2702(RP2045-2).EPRIhasalsorecently fundedaprojecton“IdentifyingConsumerResearchTechniques forElectricUtilities”RP1537)


Secondarysources includedatacollectedforsomepurposeotherthan estimating. For example, theU.S.DepartmentofCommerce,Bu-reau of Census, collects data on population and housing that can beusedtoestimatethepenetrationofcentralairconditioninginresiden-tial buildings. A further delineation of secondary data research con-cernsthesource—internalorexternal.Internalsecondarydataincludeproprietary price and sales records. External data are usually definedaspublished information. The use of secondary data in estimatingmarket penetration hasadvantages anddisadvantages. Thesedatausuallydonot answer theprecise estimating needs, and theremay be problems associatedwiththe way the data were originally collected or are presented. On theotherhand,secondarydataareeasilyavailable,usuallylessexpensive,and can serve todefine thephenomenon.

CUSTOMERADOPTIONTECHNIQUES

Executives have a number of market implementation methodsfromwhich to choose.Most of theseprogramoptions fall intooneofthe following categories:

• Alternativepricing (rate structures)

• Direct incentives

• Customer education

• Direct customer contact

• Trade ally cooperation

• Advertising andpromotion

Table13-3presentsanumberof specificprogramoptionswithinthese categories. Many of these alternatives have been used successfully in thepast.Theselectionof the incentives typicallydependsonaprovider’spriorexperiencewithsimilarprograms,thereceptivityofstateregula-tory authorities, and theorganizationalphilosophyof theutility.


Table 13-3. Examples of Customer Adoption Techniques


What is the Best Way to Implement Selected Demand-side Programs?* Withafewexceptions,manyofthecurrentprogramsbeingimple-mentedareeither“pilot”programsorlargereffortsthatareataprelimi-narystage.Onlyalimitedamountofinformationhasbeencompiledonmajorprogram implementationexperiences. Inthisoverview,programimplementationreferstocarryingoutde-mand-side programs after their cost-effectiveness has been determinedduring the demand-side programplanning and evaluation phase. Pro-gram implementation involves themanydetailed day-to-day decisionsthat must be made to realize the goals of demand-side managementprograms.

PROGRAMIMPLEMENTATION ISSUES

Implementingdemand-sideprogramsinvolvesthreemajorconsid-erations:

• ProgramPlanning• Programmanagement• Program logistics

Program Planning Aswithanysophisticatedprogram,ademand-sideprogramshouldbeginwithanimplementationplan.Theplanincludesasetofcarefullydefined,measurable,andobtainablegoals.Aprogramlogicchartcanbeused to identify theprogramimplementationprocess fromthepointof

*Muchof thematerialpresented in this section is adapted from:Linda Finley, “LoadManagement Implementation Issues,” December 1982, presentation

madeat theEPRISeminaron“PlanningandAssessmentofLoadManagement.”SynergicResourcesCorporation,Electric utility Sponsored Conservation Programs: An Assess-

ment of Implementation Mechanisms (forthcoming. Electric Power Research Institute,RP2050-11.

EnergyManagementAssociates,Inc.,Issues in Implementing a Load Management Program for Direct Load Control,March 1983. Published by theElectric PowerResearch Institute,ReportNo.EPRIEA-2904 (RP2050-8).

EnergyUtilizationSystems,Inc.,1982 Survey of Utility Load Management, Conservation, and Solar End-Use Projects, November 1982. Published by Electric Power Research Insti-tute,ReportNo.EM-2649 (RP1940-1).


customerresponsetoprogramcompletion.Forexample,inadirectloadcontrol program, decision points, such as meeting customer eligibilityrequirements, completing credit applications, device installation, andpost-inspection canbedefined.Actualprogram implementation canbecheckedagainst theplanandmajorvariances reviewedas theoccur. The careful planning that characterizes other operations shouldcarry over to the implementation of demand-side programs. The pro-gramsareexpensiveandprudentplanningwillhelpassureprogramef-ficiencyandeffectiveness.Thevarietyofactivitiesandfunctionalgroupsinvolved in implementing demand-side programs further accentuatestheneed forproperplanning.

Program Management The implementation process involves many different functionalgroupsordepartmentswithintheserviceprovider.Carefulmanagementis required to ensure efficient implementation. Managing the neededwidespreadactivitiesrequiresacompleteunderstandingandconsensusof program objectives and clear lines of functional authority and ac-countability. Ongoing programmanagement is also extremely important. Theneedforcostaccounting,monitoringemployeeproductivityandqualityassurance should be addressed; the use of direct incentives necessitateclose monitoring of program costs. For whatever reason, if periodicstatus reports are required, the requisite input data and the reportingofkeyperformance indicatorsmustbe carefully included.

Program Logistics Programsupportincludesstaffing,equipment,facilities,andtrain-ingrequirements.Aprogramimplementationmanualisausefultooltoprovideprogrampersonnelwithnecessarypolicyandprocedureguide-lines.Thesamplelistoffunctionalresponsibilitiesinanimplementationprogram (see Table 13-4) gives an indication of the activities thatmaybe included in suchamanual. Acustomeradoptionplan thatcoordinates theuseofmassmediaand other advertising and promotional activities (such as bill insertsanddirectmail)shouldbecarefully integrated into the implementationprogram.It isalwaysimportanttoestablishgoodrapportwithcustom-ers,evenmoresonow,becausetheindustryisenteringanewera—theera of providing energy services. This requires closer interaction with


customers,andgoodrapportisnecessaryregardlessofthedemand-sideprogram. Effectivemarketing andpublic education campaigns, aswellas quick response to customer concerns, will help achieve this goal.Customerconcernsshouldbeaddressedatall levelsofprogramdesignand implementation. Many demand-side programs and activities include installing aspecificpieceofequipmentorhardwarethatwillaltercustomerenergyuse to benefit both the customer and the utility. In this report, suchequipmenthasbeentermed“technologyalternatives”tocontrastitwiththeother threedimensionsoraspectsofdemand-sidealternatives—theintendedprogramobjective, theaffectedenduse,and the selectedcus-

Table 13-4. Sample Functional Responsibilities in Marketing Program Imple-mentation


tomeradoption techniqueormarketing strategy. Someof these technology alternatives are installed, used, ormar-keted as part of the demand-side program. The special issues relatedto such demand-side programs involving utility or third-party owner-ship and installed equipment include selecting the proper equipmentor hardware, establishing an appropriate customer adoption program,developingquality assuranceprograms, anddevelopingan installationandmaintenance schedule.

Selecting the Proper Equipment or Hardware Stakeholdersneedtoevaluateavarietyofconflictingfactorsiftheyare specifying the functional requirements for equipment or hardware.Thespecificationsforanynewequipmentmustbecoordinatedwithex-istingcustomerandutilityhardware.Intheequipmentselectionprocess,changes indemand-side technology (such as improvements in the effi-cienciesofspaceheatingandcoolingequipment)andevolvingproviderneeds (such as automation of the utility’s distribution system) shouldbeevaluated. Inaddition,distributionutilitiesneedalso to identify thesafeguards thatwill ensureproper equipmentuse.

Establishing an Appropriate Implementation Program Somemarketingprogramsarebettersuitedtopromotetheinstalla-tionofcertaindemand-sidetechnologyalternatives.Inmostcases,amixofimplementationtechniqueswillbeused.Theselectedimplementationmarketingmeasuresshouldbecompatiblewithanytechnologyalterna-tive that ispartof thedemand-sideprogram.

Identifying Quality Assurance Considerations Becauseofthepossiblelargenumberofdisperseddevices,serviceproviders can improve customer and utility system performance byconsidering quality assurance in the implementation program. In theexample of a direct load control program, failures may be attributedeither tomalfunctionsof thedevicesor to the communication links.

Developing an Installation and Maintenance Schedule Many expenses are involved in the installation,maintenance, andrepair of the numerous utility- and third-party-owned and operateddevices that are included in a demand-side program. Providers canreduce operating costs by developing prudent scheduling policies for


theirlimitedcrewresources.Efficientschedulingofequipmentorderingand installation ishelpful in reducingunnecessaryprogramdelays.

THE IMPLEMENTATIONPROCESS

Developing, installing, and operating a generating plant—that is,all the steps associatedwith “implementing” a supply-side program—takesyearsofplanningandscheduling,rigorousanalyticmodeling,cal-culationsconcerningreliabilityandmaintenance,andstrictconstructionscheduling.An equally rigorous approach is needed to implement thedemand-sidealternatives.There aremanyutility andnon-utility actorsinvolved in the implementation process, and this requires the carefulcoordinationof allparties.Figure13-3 illustrates the typicalprocess.

Figure 13-3. Stages in the Implementation Process of Demand-side Programs or Activities

The implementation process takes place in several stages. Thestagesmayincludeforminganimplementationprojectteam,completingapilotexperimentanddemonstration,and,finally,expandingtosystem-side implementation. This “time-phased” process tends to reduce themagnitude of the implementationproblembecause pilot programs canbeused to resolveprogramproblems before system-wide implementa-tion takesplace. Implementingdemand-sideprograms involvesalmostevery func-tional department within a service provider, and careful coordinationis required.As a first step, market participants may want to create ahigh-level,demand-sideplanningprojectteamwithrepresentationfrom


the various departments, andwith the overall control and responsibil-ity for the implementation process. It is important formanagement toestablishcleardirectives for theproject team, includingawrittenscopeof responsibility,project teamgoals and time frame. When limited information is available on prior demand-side pro-gram experiences, a pilot experiment may precede the program. Pilotexperiments may be limited either to a sub-region or to a sample ofcustomers. If the pilot experiment proves cost-effective, then initiatingthe full-scaleprogrammaybe considered. After thepilot experiment is completed, additional effortmustbegiven to refining the training, staffing,marketing,andprogramadmin-istration requirements.

How Should Monitoring and Evaluation of the Performance of De-mand-side Programs and Activities Be Best Achieved? Just as there is need to monitor the performance of supply-sidealternatives, there is a need to monitor demand-side alternatives.*The ultimate goal of themonitoring program is to identify deviationsfrom expectedperformance and to improve both existing andplanneddemand-side programs.Monitoring and evaluation programs can alsoserve as a primary source of information on customer behavior andsystem impacts, foster advanced planning and organization within ademand-side program, and provide management with the means ofexaminingdemand-sideprogramsas theydevelop. In monitoring the performance of demand-side programs, twoquestionsneed tobeaddressed:

• Was theprogram implementedasplanned?• Did theprogramachieve itsobjectives?

The first question may be fairly easy to answer once a routinemonitoring systemhas been adopted.Tracking and reviewofprogramcosts, customer acceptance, and scheduled milestones can help deter-minewhether the demand-sidemanagement programhas been imple-mentedasplanned.

*Portionsof thematerialpresented in thissectionhavebeenadapted fromvariousevalu-ationstudiesbySynergicResourcesCorporationandbyEricHirstandcolleaguesatOakRidgeNationalLaboratory.


The second question can be much more difficult to answer. Asnotedpreviously,demand-sideprogramobjectivescanbebestcharacter-ized in terms of load shape changes. Thus, an assessment of programsuccessmustbeginwithmeasuring the impactof theprogramon loadshapes.However,thismeasurementcanbedifficultbecauseotherfactorsunrelated to the utility’s demand-side program can have a significantimpacton customer loads.

MONITORINGANDEVALUATIONAPPROACHES

In monitoringandevaluatingdemand-sideprograms,twocommonapproaches canbe taken:

• Descriptive—Basic monitoring that includes documentation ofprogramcosts, activities completed, servicesoffered, customerac-ceptance rates, andcharacteristicsofprogramparticipants.

• Experimental—Use of comparisons and control groups to deter-mine relative program effects on participants or non-participants,orboth.

The twomonitoring approaches tend to address different sets ofconcerns; therefore, it may be useful to incorporate both in programs.Withadescriptiveapproach,managementshouldbeawareofbasicpro-gramperformanceindicators,intermsofbothadministrativeprocedureand target population characteristics. Information such as the cost perunit of service, the frequency of demand-side equipment installation,thetypeofparticipants(singlefamilyhouseholdsorotherdemographicgroups), and the number of customer complaints, can be useful in as-sessing the relative success of a demand-side management program.Recordkeeping and reporting systems can be helpful in completingdescriptiveevaluations. Thedescriptiveevaluation,however,isnotadequateforsystemat-icallyassessingtheloadshapeimpactsofthedemand-sideprogram.Toassessloadshapeimpactsrequiresthecarefuldefinitionofareferencebaseline againstwhich load shapeswith a demand-sidemanagementalternative can be judged. The reference baseline reflects those loadshape changes that are “naturally occurring”—that is, those changes


unrelated to thedemand-sideprogram itself. Insomecases,thereferencebaselinemightbetheexistingforecastwithappropriateadjustmenttoreflecttheshort-termconditionsintheservice area. Inother cases, the referencemightbe a control groupofcustomers not participating in the program. The energy consumptionand hourly demand of program participants could also bemeasuredbeforetheyjoinedtheprogramtoprovidea“before”and“after”com-parison. If the “before” reference is used, it is often necessary to adjustdataforsubsequentchangesinthecustomer’sapplianceorequipmentstockand itsusage.Addinganextraappliance (suchasawindowairconditioner)canmore thanoffsetanyreductions inenergyuseresult-ing fromaweatherizationprogram.Similarly, theeffectofdirect loadcontrol of a water heater can be altered by changes in a customer’sliving pattern resulting, for example, from retirement or from thesecond spouse joining the labor force. The “before” situationmust beclearlycharacterizedsothatappropriateimpactoftheprogramcanbemeasured. If the reference point is a group of non-participants, that groupmust have characteristics similar to those of the participants. This, ofcourse, requires a great deal of information on both groups to allowforpropermatching, includingnotonlyappliance stockdatabutalsosuch information as family size, work schedules, income, and age ofheadofhousehold.

ISSUES INPROGRAMMONITORINGANDEVALUATION

Although there are numerous issues facing utility managementas it undertakes demand-side programmonitoring, most of these is-sues can be grouped into one of four categories:monitoringprogramvalidity, data and information requirements, management concerns,andprogramorganization.

Monitoring Program Validity Monitoringprogramsstrivetoachievetwotypesofvalidity:inter-nal and external. Internal validity is the ability to accuratelymeasuretheeffectofthedemand-sidemanagementprogramontheparticipantgroup itself.Externalvalidity is theability togeneralize experimental


results to the entire population. For example, controlled water heat-ingmayreducepeakloadforasampleofparticipants,butthereisnoguarantee that all customerswill react in a similar fashion. Threats to monitoring program validity usually fall into twocategories: problems associated with randomization and problemsassociated with confounding influences. Randomization refers to thedegree to which the participating customer sample truly representsthe total customer population involved in the demand-side program.It canalso refer to thedegreeofbias involved inassigningcustomersto the experimental and control groups. Confoundinginfluencesrefertonon-program-relatedchangesthatmayincreaseordecreasetheimpactofademand-sideprogram.Insomecases, the effect of these non-program-related changes can be greaterthantheeffectofthedemand-sideprogram.Thelistofpotentialsourcesof confounding influences is extensive, including weather, inflation,changes inpersonal income,andplantopeningsandclosings.

Data and Information Requirements Data and information requirements involve the entireprocess ofcollecting,managing,validating,andanalyzingdatainthemonitoringandevaluationprogram.Thecostofdatacollection is likely tobe themost expensivepartof the evaluation study.Data collection costs canbereducedwithproperadvanceplanningandbyhavingsufficientre-cordkeepingandreportingsystems.Sourcesofevaluationdataincludeprogramrecords,customerbills,metering,andfieldsurveys.Typically,telephone surveys areusedbyutilities to completefield surveys.Thedatamustbevalid(measurewhatitissupposedtomeasure)andreli-able (the same results would occur if repeated, within an acceptablemarginof error). Thedata collection systemshouldbedesignedbefore the imple-mentation of the demand-side program itself. There are a number ofreasons for this:

• Some information is needed on a “before” and “after” programinitiationbasis.Ifthe“before”dataareinadequate,additionaldatamustbe collectedbefore the startof theprogram.

• Somedatacollectionstakeconsiderabletime,particularlyifmeter-ingof customerenduseshas tobeperformed.


• Monitoring the effect of the demand-side alternative throughouttheprogramallows foradjustmentsandmodifications to thepro-gram.

In addition, information on participant characteristics, awarenessof theprogram,motivations forparticipating, and satisfaction are veryimportant in evaluating theoverall successof aprogram. The information-gathering mechanisms may already be in placeat many utilities. Load research programs and customer surveys havelongbeenused to collectdata for forecastingandplanning.Theexper-tise gained in conducting these activities is helpful in considering thedevelopmentof amonitoringprogram.

Management Concerns Monitoring and evaluationprograms require carefulmanagementattention. Some of themost important hurdles thatmust be overcomein themanagementof amonitoringprogram include:

• Assuring sufficient advancedplanning todevelopand implementthe monitoring and evaluation program in conjunction with thedemand-sideactivity.

• Recognizingthatmonitoringandevaluationprogramscanbedataintensiveandtimeconsuming;therefore,evaluationprogramcostsmustbekept inbalancewithbenefits.

• Establishing clear lines of responsibility and accountability forprogram formulationanddirection.

• Organizing and reporting the results of the evaluation programto providemanagementwith a clear understanding of these pro-grams.

• Developing a strong organizational commitment to adequatelyplan, coordinateand fundmonitoringprograms.

MONITORINGANDEVALUATIONPROGRAMS

Monitoring and evaluation programs can be organized in fourstages: pre-evaluation planning, evaluation design, evaluation design


implementation, andprogram feedback. Pre-Evaluation Planning consists of working out beforehand theconceptualand logisticalquestions thatwillbeencounteredduring thefull-scale program. The “pre-program planning checklist” presentedbelowwill help guide this phase. Once the questions on the checklisthave been answered, an overall assessment can bemade of the needsof amonitoringandevaluationprogram.Refer toTable13-5. Evaluation Design focuses on organizing the overall evaluationeffortanddevelopingofspecificprogramevaluationdesigns.Adecisionwhether tousedescriptiveorexperimentalorsomecombinationof thetwomustbemade.Themajor elementsof anevaluationdesignare:

• EvaluationObjectives• EvaluationApproach• DataRequirementsandCollectionStrategy• DataAnalysisProcedures• FinalReportFormat• ProgramCost

Table 13-5. Pre-program Planning Checklist


• ProgramManagementPlan

Design Implementation refers to initiating the evaluation frame-work according to the actionplan, includingmonitoring, analysis, andrecordkeeping. Program Feedbackconsistsofreviewingtheevaluationresultsanddeterminingwhetheranyprogramchangesarewarranted.

How Do I Get Started in Addressing Demand-sidePlanning Issues as They Relate to My Utility? Thepreviousdiscussionhasfocusedonsevenmajorissuesrelatedto theassessmentofdemand-sidealternatives foran individualenergyservice.Theinformationrequirementstoaddresstheseissuesare,atfirstglance, extensiveandamajorhurdle ingetting started indemand-sideplanning. Typically, the information can be obtained fromdifferent or-ganizations,indifferentgeographiclocations,fordifferenttimeperiods,and using different collection methods. Thus, some adjustments andgeneralizationsareoftenrequired.Inanycase,thereisoftenasufficientinformationbasetoinitiateapreliminaryanalysisofdemand-sidealter-natives. In-house information that isofparticularuse includes:

• Customerappliance surveys.

• Consumerbehavior surveys.

• Load research data on customer classes or specific end-use loadshapes.

• In-houseprogramsorspecialstudiesonspecificenduses,suchascooling, electric spaceheating,orwaterheating.

• Cost comparisons for major end uses, primarily space heating,cooling, andwaterheating.

• Informationavailable fromsourcesoutside theutility includes:

• Energy consumptiondata for residential appliances.

• Loadshapesforselectedappliancesandadjustmentstomakethemappropriate to selected serviceareas.

• Customer responses to time-of-use rates.


• Descriptionsandoperatingcharacteristicsof specificdemand-sidealternatives.

• Customeracceptanceandmarketpenetrationofselecteddemand-sidealternatives.

• Analysis tools for theevaluationofdemand-sidealternatives.

• Housing characteristics and space and water heating system bydwelling type.

ReferencesDemand-side Management Concepts and Methods, C.W. Gellings and J.H. Chamberlin,

FairmontPress, 1993

289

Appendix

Additional Resources

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297

Index

Aadjustable speeddrives28, 37, 40advanceddistributionautomation

50, 124advertisingandpromotion190,

202, 273alternating current 93, 97alternativepricing190, 205, 273architecture3automation126

Bbottlenecks10, 116building integratedpower sys-

tems 84building systems163

CCalifornia182Capgemini 14China 179CO2 emissions6, 12cogeneration235communication167 architecture119, 124compactfluorescent lamps103connectivity to consumers117conservationvoltage reduction43Consortium forElectric Infra-

structure toSupport aDigi-tal Society114

consumerandmarket research272

consumereducation189consumer interface165

consumerportal 128customeracceptanceandresponse

193, 195customereducation273customer satisfaction198customer services121

Ddataand information216, 283data center99, 105, 111 energyefficiency229DCdistribution93, 109DCpowerdelivery100, 110 systems 98DC toDCconverters109demand response141, 142, 246,

252demand-sideevaluation259demand-side management 138,

139demand-sideplanning53, 245,

247device-levelpower system81direct consumer contact 189direct current 93direct customer contact 199, 273direct incentives192, 206, 273distributedenergy resources4,

124, 126, 132, 144, 150distributedgeneration99distributedpower systems87distributed resources121, 125distributionoperations121distribution transformerefficiency

46


DistributionVision201021domesticwaterheating32, 226ductless residentialheatpumps

andair conditioners227dynamicenergymanagement131,

134, 135, 140, 143, 146 systems 131, 148, 151, 156,

161, 267

Eefficiency inpowerdelivery43electric energy savingspotential

71ElectricitedeFrance23electricitydemand66electric transportation5ElectriNetSM 2electrotechnologies238, 242end-useenergyefficiency53, 171energyaudits 199energyefficiency252 improvement rates69 supply curve72energyefficient end-usedevices

132energyefficient technologies221energy information systems143energy management system 134,

142EnergyPortSM 155, 162energy storage109entertainment 169environment60EuropeanUnion23

Ffast simulationandmodeling122financial impacts55finite resources59

flexibleAC transmission technolo-gies 11

fully integratedpower system88

GGalvinElectricity Initiative78Galvin Initiative22GeneralElectric 19Germany 178Ghana 177green grid 12greenhousegas emissions61gridoperations9GridWise™ 19

Hheatpumpwaterheaters228heat rate 27high-level architecture122high-voltagedirect current 97HydroQuebec22hyper-efficient appliances226hyper-efficient residential appli-

ances229

IIBM 16implementation212increasingworldwidedemand for

energy 58independent systemoperators8indoorairquality224inductive charging110information technology105integratedenergyandcommuni-

cationsarchitecture120, 133intelligentnetworkagents123intelligentuniversal transformer

49

Index 299

IntelliGridSM 2, 17, 113inverters100

JJapan180

Llight-emittingdiode (LED) street

and area lighting 230lighting 222loadmanagement246load shape140, 246, 251, 265, 266,

269 objectives255load shifting252local energynetwork4low-carboncentralgeneration6

Mmarket implementation189marketoperations121mechanical system1micro-grid system100Middle East 185moderngrid strategy19monitoringandevaluation213,

281, 284motors37, 231 anddrives230multi-resolutionmodeling123

Nnational security59newsource review29N-l 9, 10nodesof innovation82, 83, 84, 88NorthAfrica185Norway175

Pparticipatorynetwork16peakclipping252peakdemand reduction75perfectpower system78, 80 configurations81phasermeasurementunits 8plug-inhybridelectricvehicles4,

5, 12policiesandprograms174polyphasealternating current 96Portland183powerdelivery system1powerelectronics100, 127powerflow114powerplant electricityuse28powerplant lighting29powerplant space conditioning

32price-smart 11processheating234programmanagement210programplanning210

Rrateof efficiency improvement57reactivepower114regional transmissionorganiza-

tions8reliability 9, 164renewable energy6

Ssafety 163, 166self-healing grid 117, 122self-healing system 11smartdevices150smart grid 1, 8space conditioning224


storage126 devices99supply curve forU.S. andend-

useelectric energy savings74

switched-modepower supply101

Tthermal energy storage236tradeally cooperation190, 201,

273transformerefficiency standards

48transformer losses47transmissionanddistribution7transmissionoperations121

UUKSuperGen21

unifiedmodeling language122uninterruptiblepower systems

104UnitedNationsFoundationesti-

mates 67U.S.peaksummerdemandreduc-

tionpotential 73

Vvalleyfilling252variable frequencydrives101variable refrigerantflowair con-

ditionings227visualizing10, 116

WWal-Mart 184wide-areamonitoring systems8

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