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GE, Google, and Grids

October 9, 2008


In a post entitled Updates on Solar Energy, I noted that if the dream of increasing the use of alternative sources of energy is to come true there will have to be a major investment in upgrading transmission grids across which such energy must flow. Two big names — General Electric and Google — recently announced that they are teaming up to address that problem [“Google and General Electric Team Up on Energy Initiatives,” by Miguel Helft, New York Times, 17 September 2008]. Helft reports:

“Google and General Electric … [announced] they would work together on technology and policy initiatives to promote the development of additional capacity in the electricity grid and of ‘smart grid’ technologies to enable plug-in hybrids and to manage energy more efficiently. The companies said their goal was to make renewable energy more accessible and useful.”

At the moment the partnership appears to be little more than a lobbying effort to get the federal government to invest in electrical grids to support more renewable energy generation.

“Google’s chief executive, Eric E. Schmidt, and G.E.’s chief executive, Jeffrey R. Immelt, … gave few details of their planned collaboration. In an interview after their presentation, Dan Reicher, director of climate change and energy initiatives at Google.org, an operating unit of Google, said the effort was in its planning stages and did not have a set budget.”

Although it’s too early to know if their lobbying efforts will do any good (the current financial crisis doesn’t seem to make this ideal time to be lobbying the federal government for anything), the fact that two corporate giants are turning the spotlight on the problem could encourage the private sector to act. Helft’s article implies that lobbying efforts will first be directed toward aligning federal policies that could help make the construction of more transmission lines easier.

“‘All this talk about renewable energy will not be realized if we do not build substantial additional transmission capacity,’ Mr. Reicher said. Without additional capacity, Mr. Reicher said, it would not be possible, for example, to get power from a solar plant in the Mojave Desert to Los Angeles, or from a wind farm in the Dakotas to Chicago. Mr. Reicher said that environmental standards, overlapping state and federal regulations and other policy issues were among the biggest impediments to building additional transmission capacity.”

Profits, not altruism, are the primary motivation behind Google’s and G.E.’s partnership; but that’s not a bad thing.

“Google and G.E. are … discussing how to combine their respective software and hardware expertise to enable technologies like plug-in hybrids on a large scale and to accelerate the development of geothermal energy. For Google, the partnership with G.E. is part of larger set of energy initiatives, including direct investments in green technology to help develop renewable energy that is cheaper to produce than coal-generated power. For its part, G.E. has made a large bet on green energy technologies, an initiative the company calls Ecomagination.”

The staff at GreenBiz.com provided a little more detail about Google’s and G.E.’s plans [“GE and Google Partner for a Smart Grid and Green Power,” 22 September 2008].

“The corporate giants said they want to give consumers more energy choices through a smart grid that will also accommodate the next generation of electric transportation and manage electricity more efficiently. Together the companies will collaborate on advanced geothermal technology and the software and services needed to help utilities integrate plug-in electric vehicles into the grid. They will lobby in Washington, D.C. through policy proposals, advocacy, public relations and information programs. The move comes as Congress considered an energy bill and the renewal of federal tax credits for green power, which are set to expire at the end of the year. ‘The current regulatory and economic model is failing to drive the innovation and investment we need in today’s electric grid,’ GE and Google said in a statement. ‘We will work to overcome regulatory and institutional barriers and advocate for appropriate incentives.’ Google launched an green power initiative last year, Renewable Energy Cheaper Than Coal, while GE’s ecomagination drive aims to push revenue of environmentally-focused products like wind turbines to $25 billion by 2010.”

Jeff St. John, from Greentech Media, indicates that the “smart grid technologies include energy management systems that can monitor and reduce energy use and so-called ‘smart meters’ that can track and manage power flows remotely.” Jeff Tolnar and Heidi Caroline explain why smart grid technology and greater grid capacity are essential [“New Smart Grid Technology Is Profoundly Anti-Gridlock,” EnergyPulse, 23 March 2007]. They write:

“The late Nobel laureate Rick Smalley observed that even though our civilization has many problems, energy is central to all of them. Critics of the U.S. utility industry declare that aging technology is placing the entire industry in a position of escalating risk – both from a power delivery perspective and a financial viability perspective. The emerging imbalance between energy supply and demand in the U.S. and throughout the world threatens electric system stability and reliability, power quality and the cost of power itself. The prospect of shifting the electrical grid from its current reactive environment where a utility company often has to rely on a customer call to be made aware of a problem to a dynamic two-way communication grid that can restore balance between energy supply and demand has been underappreciated for too long.”

They go on to explain that the future relies more on managing the demand side of the equation than the supply side. Past approaches have simply embraced the construction of more generating capacity. With more and more states balking when asked to approve new coal-fired generation plants, Tolnar and Caroline believe that the time for a new approach has arrived.

“Without a change in approach, this imbalance would have to be addressed by sinking hundreds of billions of capital dollars into new electric generation capacity. The expected increase in the supply side of the equation is necessary and will occur. The demand side of the equation has long been forgotten as generation resources were plentiful and sometimes viewed as inexhaustible. Technologies exist today that can now manage the demand side of the equation. A variety of programs known as Demand Management (DM) have been developed to better match the higher cost of delivering at peak demand levels to the price charged. These programs encourage customers to react to the time-value of electricity and have the potential to rapidly even out demand at a relatively low cost, thereby freeing up existing peak load capacity to meet near term growth in demand, and mitigating the reliability and cost issues that arise from the imbalance. Meaningful success of DM initiatives depends upon the implementation of cost-effective solutions that can, within minutes, send signals to thousands of customers, confirm interruptible load shedding activities, or directly control loads or generation at customer sites. DM technology is a very viable alternative to the traditional method of energy imbalance remediation, which is the construction of new generation facilities which can take up to 15 years to construct and are extremely expensive.”

Demand management rests at the heart of most smart grid systems. Past approaches to demand management, they assert, have been “inherently constrained” because they provide insufficient data exchange and rely on a customer’s “ability and willingness at the time of peak conditions to actually make a change in their consumption.” They recommend a new technology called Demand Dispatch.

“Demand Dispatch sidesteps the unpredictable commitment shortfalls of consumers and avoids the implausible premise that ‘committed’ customers will be at their premises to take an energy reduction action at the precise moment and time necessary. Demand Dispatch technology allows for automated curtailment of energy usage as curtailment is needed. Using robust two-way communications and power system software to manage a network of premise controllers, Demand Dispatch technology can efficiently manage interruptible load in very granular way – device by device in a customer’s premises. … Utilities gain operational efficiencies and improved asset protection. The granularity of a demand dispatch system enables the utility to manage load at very specific points of its grid. Loads can be shed over an entire operating region to optimize generation needs or on a substation by substation level to protect assets. If a feeder or substation transformer is nearing its capacity then specific loads can be shed to take it within its operational threshold. The development of powerful management algorithms provides the utility with a much more automated approach to distribution automation and asset protection.”

Tolnar and Caroline note that there are upsides for customers using Demand Dispatch as well as benefits for utility companies.

“Customers gain more direct control over their electric bill. They can sign up for a ‘comfort range’ within which air conditioning or heating devices can be interrupted. In return they benefit in the savings and contribute to a greener environment. As compared to 20 years ago, a much larger percentage of load is non-essential. The square footage per family home and person has doubled in the last 30 years. 100% of new homes in the Southern U.S. have air conditioning throughout. Many more homes have pools and pool pumps – all non-essential load devices that can be shed in peak energy usage periods, given a consumer’s participation in the program. Demand Dispatch can communicate specifics about the type of load, pinpointing non-essential load and shedding it within the confines of the customer agreement. Utilities cannot be in the position of shedding load inappropriately (they wouldn’t want to reduce power on a home dialysis system, for example), but with more intelligent sensors, they can shed load intelligently.”

In other words, Demand Dispatch puts the smarts in a smart grid. Tolnar and Caroline conclude:

“Demand Dispatch deployed optimally will refocus the real issues related to supply and demand. Regulatory drivers are shifting focus from building more generation to using existing generation more strategically by managing non-essential loads more aggressively. Demand Management that includes Demand Dispatch functionality has the potential to reduce operating costs, delay capital investment in new generation capacity and improve grid reliability. It also allows utilities to serve energy consumers better. As the world’s appetite for power accelerates, the need for significant new generation capacity over the next decade makes this a problem to be solved today. We have the tools in the emerging technologies of a Smart Grid. Utilities and regulators have the opportunity to take on this technology risk and address core issues faced by the industry. The first step is a more intelligent use of the existing resources, and the technology available to do so is here today.”

I’m not sure that delaying capital investments is a good idea — we’re already behind the power generation curve — but I agree that making the most efficient use of today’s power generation capacity and distribution grids is essential. Google and General Electric only see the problem getting worse as people start embracing plug-in cars for transportation. The bottom line is this: we need to get smarter fast.

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