At the end of December, the Massachusetts’ Department of Public Utilities (DPU) issued an order that requires large energy providers to submit a ten-year grid modernization plan (GMP) by mid-2014.
The plan will require investing in advanced metering functionality that enhances communication between the utility companies and customers, and that is meant to increase efficiency and lead to energy and cost savings. According to a statement issued by Governor Deval Patrick’s office, “the necessary infrastructure includes smart meters, communications networks and new data management systems to give customers greater choice about their energy use and real-time information to enable the utilities to respond better to storms.”
“With this Order, we require the electric utilities to adopt a new business model that is more forward thinking,” DPU Commissioner David Cash said in the statement. “It encourages the continued expansion of clean energy technologies like solar, wind, storage and electric vehicles.”
In the order, the working group identified four broad objectives: reduce the effect of outages, optimize demand (which includes reducing system and customer costs), integrate distributed resources, and improve workforce and asset management.
Advanced metering functionality plays a major role in all of these objectives, as the order states, because “advanced metering functionality is a basic technology platform for grid modernization that must be in place before all of the benefits of grid modernization can be fully realized.”
Other added benefits of the upgraded system, according to the order, include “automated outage and restoration notification [and] two-way communication between customers and the electric distribution company.” With a customer’s permission, the technology will enable “communication with and control of appliances,” along with “remote connection and disconnection of a customer’s electric service, [and] measurement of customers’ power quality and voltage.”
Investor-owned utilities serve about three million, or 88 percent, of Massachusetts’ electricity customers, of which half are from the state’s two biggest utilities, NSTAR and National Grid. As part of the program, in an effort to promote transparency and fairness towards consumers, all energy investments relating to the state’s utilities and energy grid must first be authorized by state officials.
Massachusetts is the latest state to make a serious push for utilities to invest in the smart grid. Maryland, California, Oklahoma and Illinois all have metrics in place to measure and verify smart grid energy savings and costs in an effort to promote accountability for financed projects.
Four years ago the Department of Energy gave out $3.5 billion in smart grid investment grants as part of the federal stimulus package. When combined with $4.5 billion private-sector funding, the Smart Grid Investment Grant (SGIG) program represented a $7.9 billion, according to Greentech Media. Now some of those investments are starting to bear fruit at the commercial scale, such as in Ohio where AEP Ohio wants to expand smart meter availability by nine times to nearly 900,000 customers after receiving one of the largest DOE SGIG grants in 2009.
Ensuring that customers don’t end up paying an unfair amount for energy during this tumultuous and transitional period for utilities is a major issue in conversion to modern energy production and distribution methods.
“The overarching approach in the past is to focus on the least-cost solution,” David Malkin, GE Digital Energy’s deputy director of government affairs and policy, told Greentech Media in October. “We ought to flip that equation on its head and ask, ‘What is the approach that delivers the greatest long-term value to customers?’”
Looking out for customers involves keeping energy rates fairly priced, ensuring reliability along with the introduction of intermittent energy sources such as wind and solar and mitigating against cyber-attacks.
With the initial smart grid infrastructure taking hold in many places, the utility industry is putting more focus on the software the helps this technology flow. According to Greentech Media, startups in this area raised $159 million in venture capital in 2013, more than three times as much as was raised for similar endeavors in 2012.