There are many experts who feel that the market potential of renewable energy will only be fully realized if smart grid technologies and services are successful. But first, we need to define the smart grid.

In the broadest sense, “smart” refers to a kind of reactive and interactive capability of the energy transmission and distribution infrastructure that is driven both by the generators of electrons and the demands for those electrons. So, the smart grid is defined as “digital energy” by those that focus on the information and communications technologies that will help build the interactive capability of its promise.

For the utility stakeholders, the smart grid is an “intelligent utility infrastructure.” And because of that, utilities with have to change their business model (and sometimes the regulatory context in which that model functions) as well as make changes to their entire operations to encompass the commodity aspect of energy and step up their customer interactions.

Finally, some refer to it as the “modern grid,” recognizing that this new infrastructure represents a 21st century approach to retrofitting a 19th century understanding of energy flows.

I will be referring to the interaction between technologies and services in this space as the “smart grid,” since it seems that is becoming the dominant way to describe this new system.

Late last year, the DOE awarded $435 million to sixteen different smart grid pilot projects in the U.S. A map of pilot projects can be found on OpenEI’s Smart Grid Gateway. In addition, the DOE organized a “smart grid task force,” whose activities and resources can be found here. These projects represent field research on how all the different stakeholders and technologies will combine to expand these projects into a smart grid that will transform our infrastructure.

When awarding these funds, the DOE focused on these critical goals for the grid:

Increased reliability

Increased security

Greater economic efficiency

Greater energy efficiency

Improvements to the environment

Increased safety

Utilizing a vision; not randomly implementing technologies

You may note that in this list, better integration of distributed renewable generation is not made distinct, though one could back into it through diversification of energy resources as increasing reliability and security. Interestingly, just like the many definitions for the smart grid, there are many opinions about the need for renewable energy in the smart grid, with some feeling that renewables are central and others feeling renewables are irrelevant.

The DOE funded nine demonstration projects to specifically address the issue of renewable integration into the grid. In these projects, it is looking for a 15% peak load reduction on a distribution feeder through both renewable and efficiency technologies.

Pilot Project in Boulder

Right in NREL’s backyard, a community scale “demonstration” smart grid project is underway in Boulder, CO. The first in the U.S. the Denver smart grid demonstration project preceded those that are now in development as a result of the recent funding from DOE. This initial experiment has had mixed reviews.

The success of the smart grid depends on the private and public sector’s stakeholder involvement with systemic issues of transparency versus security. According to many businesses that are building smart grid “solutions,” there are two aspects to the way that energy should be thought of in terms of efficiency. Adrian Tuck, the CEO of Boulder-based smart grid company Tendril, recently gave testimony to Congress on the matter.

He said, “Energy efficiency is best measured across at least two dimensions. On the one hand, we can and must focus on improving the throughput efficiency of the electric system and the buildings it serves, including programs to fund improvements in insulation, caulking and replacing appliances. On the other hand, we must also consider the real-time market and environmental information that can drive true transactional and behavior changes. The impacts of these changes can drive tangible energy efficiency and environmental benefits.”

In other words, consumers will (hopefully) make better energy choices if they have access to energy information in their homes and/or businesses. “Smart” in the smart grid lexicon then also refers to smarter consumer choices. It is this access to information that has some Boulder residents grumbling; the smart meters exist in their homes, but the information that these meters are collecting in this program is not shared with the homeowner.

The utilities involved in Boulder were not able to provide energy information to the homeowners for a few reasons, most of which stem from their not being equipped to handle the onslaught of customer questions that they feared would come as a result. In addition, a case can be made that consumer behavior would be even more changed if customers were billed based on time-of-use (TOU) pricing. Since the utilities involved in this program didn’t have TOU pricing for residential customers in place, it could be argued that customer usage data wouldn’t have much value for the customers anyway.

Building customer information systems that are capable of accepting detailed demand data and displaying it for customers and customer service representatives who accept calls from customers will require massive utility investment. Investing in and implementing this type of infrastructure and implementing TOU pricing requires approval by utility commissions, which can take years.

The challenge for all of us will be to align the right incentives for existing energy providers with the right mechanisms for sharing energy information with energy users.

Smart Grid and Renewables

Why is the smart grid so important to renewable energy generation, and specifically distributed renewable energy generation? If smart grid is done correctly, information in the electricity infrastructure will allow the grid to “intelligently” accept more energy from intermittent sources like solar and wind. Without this intelligence, the existing grid will have difficulty incorporating larger amounts of intermittent renewable energy.

Think of the situation as analogous to the interaction between automobiles, roads and traffic lights. If we were to introduce ever-increasing numbers of vehicles to our roads with no signals to direct the flow of traffic, the whole system would collapse quickly into accidents and blockages. It is this “intelligence” – the signals that direct the traffic – that enables vehicles to move through the system relatively seamlessly. Since the roads need to be accessible by the vehicles being introduced to the system, potentially more roads will need to be built to accommodate these new vehicles from wherever they originate.

Similarly, power generated from sustainable sources like wind and solar pose problems in terms of controlling how and when this power is generated and introduced into the grid. Energy from these intermittent sources needs to be matched intelligently to the needs of the end user in order to be able to integrate these newer renewable resources as an asset to our energy infrastructure as opposed to a liability. Without these measures, renewables may never penetrate markets beyond niche applications.

Those of us who have been working in renewables for years (and my own organization having a 30 year track record), may bristle at the idea that we are “new” but if we are to become the status quo, smart grid may be an important element to how we get there.

For more information about where Smart Meter Pilot Projects are taking place in the U.S. and beyond, check out the Clean Energy Infrastructure section of the Clean Energy Economy, developed by NREL.