Smart Grid: Is Your Business Poised to Reap the Benefits?
How much energy do you use? And, more to the point, how much energy do you waste and how much does that cost? Not too long ago the power grid was strictly a transmission system. From the end user’s perspective it was as dumb as a box of rocks and hadn’t changed significantly in 40 years, but that is changing.
With a dramatic surge in both energy demand and associated costs already underway – oil has gone from $20 per barrel to $100 per barrel and spiked at $147 per barrel along the way – a great deal of attention has been leveled at how we can reduce our energy usage and expenditures and applying intelligence and automation to our energy transmission systems – the Grid – is high on the list.
“Smart Grid is suddenly an idea whose time has come because we can’t afford to stand still. I firmly believe that the speed and magnitude of change we’ll see from Smart Grid will rival the Internet revolution,” says Raj Batra, president of the Alpharetta, Ga.-based Industry Automation Division for Siemens U.S. Batra was addressing the issues and opportunities surrounding smart grids at CSIA2010, a large conference for systems integrators.
Those are pretty strong words, but government and industry seem to be backing them up.
Even before the economic downturn the US government had established a Grid Modernization Commission, dedicated $100 million per year from 2008 to 2012 and demanded matching programs at the State level for smart grid development through the Energy Dependence and Security Act of 2007. The American Recovery and Reinvestment Act of 2009 boosted that investment by a further $11 billion.
Meanwhile, a December 2009 report from Austin, Tex.-based market research firm Zpryme says the Smart Grid market is on course to double within four years. According to the report, the US Smart Grid industry was valued at roughly $21.4 billion in 2009 and is forecast to hit at least $42.8 billion by 2014. The global market is predicted to grow even more dramatically, expanding from $69.3 billion in 2009 to $171.4 billion in four years.
But what exactly is a Smart Grid?
The smart grid is an evolution of existing energy transmission technology that overlays the traditional power distribution grid with an intelligent information monitoring and net metering system. The Smart Grid keeps track of all electricity flowing in the system and, when so programmed by the end user, can be programmed to control appliances at consumers’ homes and businesses to save energy, reduce cost and increase reliability. For example, at peak times the grid could be programmed to turn off specific appliances and processes that can be run at flexible times and then reactivate them when power is least expensive. It also incorporates the use of superconductive transmission lines for less power loss, as well as delivering the capability of integrating renewable electricity such as solar and wind.
Smart meters in private homes are one of the first things people think of when they think of Smart Grids, and those devices are already a reality in many places. For example energy companies in Ontario, Canada have been signing up consumers to an opt-in program that deploys smart meters in and helps control energy usage. But the big opportunity, and correspondingly the biggest benefit, lies in the industrial sector.
According to a May 2010 report by Dedham, Mass.-based ARC Advisory Group, there are many things companies can be doing to reduce energy usage and related emissions and prepare themselves too take full advantage of the Smart Grid when it becomes fully available. “Industry is one of the largest consumers of energy in the US economy, and ever-increasing worldwide demand for energy will continue to push prices upward,” say the report’s authors, Tom Fiske and Allen Avery.
Fiske and Avery point to the ongoing work many manufacturers are doing to repair or replace old or inefficient equipment, and the deployment of maintenance, instrumentation, and automation programs. “However, energy efficiency is only the first step in building and maintaining an effective energy management program. Organizations need to have a broader perspective, and take a holistic approach to energy management that goes beyond discrete projects at the equipment and plant level. Those that actively manage energy inputs and emissions on a daily basis and leverage automation and information technologies to address energy consumption in a systematic and consistent manner will have a competitive advantage going forward.”
Batra agrees. “Many industrial processes are out-of-date in terms of energy efficiency because they were developed during times when the cost of energy was almost too small to measure in relation to total operating costs.”
In many cases new technology is available today to replace or improve these processes, but in a cheap energy environment the drive to adopt or fully utilize them wasn’t there. Today, ignoring these options is no longer really an option.
“The key concept here is smart energy management,” he says. “More and more, it’s not a matter of choice, but a matter of necessity or even government regulation.”
- The US government is pushing industry to achieve energy reduction through programs like the Department of Energy’s “Energy Star” program for industry.
- Municipal governments and utilities are offering rebates for installing energy efficient motors.
- The pending carbon trading and pricing legislation makes it even more important to understand how you’re using energy.
Say Fiske and Avery, “Companies that can accurately measure, monitor, predict, and control their energy usage have many other opportunities to lower their energy consumption, wastes, and costs. Many energy management strategies, functions, and solutions are available today. Energy efficiency begins with energy-efficient process and equipment design. To manage ongoing operations effectively, organizations must address energy management from the enterprise level down to field devices and motor controls.”
Companies that get a grip on these factors earlier rather than later also have the opportunity to turn energy management into something that helps pay for itself, at least partially. Many companies that have deployed renewable energy sources such as wind or co-gen to protect themselves from brown-outs and other grid issues can – and in some cases already do – take advantage of the Smart Grid model of two-way energy exchange to sell capacity back to the grid. Industrial plants are often located in rural settings and have space to add renewable energy generation such as wind, solar, geothermal, or bio. Finally, and possibly most significantly, industry can make more use of non-peak energy prices by shifting energy-intensive processes and production away from high-priced periods of peak demand to low-priced off-peak periods.
The smart Grid is coming and it’s coming with a bang. Will the changes that come along with it rival the impact of the Internet? Most experts say it’s too early to tell, but there can be no arguing with the increasing demands for energy on a global basis and the need for companies to adopt some kind of holistic power management solution to get a grip on their energy usage and expenditures. That can be rather profound on its own.Have an Inquiry for Siemens about this article? Click Here >>