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The Changing Power Landscape

Written by Tim Hansen SoGES 2014-2015 Sustainability Leadership Fellow, and PhD Candidate in the Department of Electrical and Computer Engineering

In 2003, the National Academy of Engineering named electrification as the greatest engineering achievement of the 20th century [1]. During the 100 years, power stretched across the country (and world) and drastically changed the world we live in. Although power became more widespread, and technologies became more advanced, the basic power system has remained relatively static over the past century.  Power is conventionally generated in rural areas by large power plants and transferred vast distances to where it is consumed, occurring losses along the way (see Fig. 1). As climate change has become a pressing issue, we have become more conscious of where our power comes from, how it is generated, and what impact it has on global environmental sustainability. This change in thinking of how power is generated was put into policy as the Energy Independence and Security Act of 2007 (EISA) during the second Bush administration, ushering in the new era of the “Smart Grid” under Title XIII of the aforementioned act. The Smart Grid challenges the centralized, one-way flow of power that prevailed in the 20th century, ushering in renewable energy sources, such as solar and wind, closer to where power is consumed [2].

Figure 1. Classic electric power grid model with bulk generators transferring power long distances to reach the consumer.  Image courtesy of NetGain Energy Advisors.

Why should this change in thinking with respect to power matter to you, the power consumer? My current research, and the research of many others, is attempting to address this. The bottom-line, is that with Smart Grid there are increased opportunities for saving money and reducing the environmental impact of power. To understand how the Smart Grid will change the way power is consumed, we must first understand how the power market works today. In a normal market, such as with bananas, there are multiple suppliers offering the same product to the consumer. Based upon the demand for the bananas, there is a market price.  If, for some reason, one producer raises the price for their bananas, the consumer can purchase the same product elsewhere. If the producer makes too many bananas, they can store the excess in a warehouse until a later date when they are needed. The electric power market, however, is different.  First, there is generally only one supplier of electricity for your area (the local utility). Additionally, we currently cannot efficiently store (warehouse) electricity to be consumed at a later time, like we can with bananas. This means that when electricity is produced, it must be immediately consumed. In the traditional power grid with bulk centralized generation, this was not a problem.  However, with increased renewables, such as solar and wind, the production of this renewable energy often does not occur when it is needed during peak times. This often leads to inefficiencies in the generation of electricity. The Smart Grid is attempting to eliminate, or reduce, these inefficiencies by making the power market work more like a traditional market. 

In places like Germany, the electricity market has been deregulated. What this means is that instead of there being one incumbent local utility, the consumer has their choice of electricity provider.  Like in the banana analogy, this means if your current utility makes a change that is undesired, it is possible to switch providers. As far as “warehousing” electricity, Elon Musk (of Tesla and Space X) has recently announced plans to make a battery factory with the end goal of having batteries large enough to store power on the scale necessary for the power grid [3,4]. These two changes in electricity markets will usher in profound changes to the existing grid, benefitting all participants.

My research is trying to leverage these market changes by creating a home energy management system (HEMS).  A HEMS is a way to manage the electricity in your house (see Fig. 2), such as from your electric water heater and your HVAC system [5].  By smartly using your electricity you can save money. One example is with electric heating and air conditioning.  When no one is home, it does not matter as much what the temperature inside your house is.  However, when you arrive home from work, the temperature is immediately important. If everyone waits until they arrive home to start cooling their house, a large spike in electricity usage is seen on the electric power system (leading to more power generators being turned on, leading to increased carbon emissions and a higher cost of electricity). If, however, you had a HEMS installed to your HVAC system you could pre-cool (or pre-heat in the Winter) your house before you arrive home when electricity is cheap and save money (with the additional benefit of the house being comfortable as you walk in the door). If we can make small changes at the household level, they will add up across an entire city, from cities to states, and from states to the entire nation. From the sum of these individual changes, we are able to greatly reduce the peak power demand, which will in turn reduce the number of dirty generators required to meet this demand and lead to increased economic and environmental sustainability.

Figure 2. A smart home with a home energy management system for managing electricity usage.  Image courtesy of Digi-Key Corporation.

What can we as consumers, with respect to electricity usage, do now? The answer, unfortunately, is that it depends.  Some areas have been more proactive than others.  In Texas, it is possible to choose your electricity provider. In Chicago, it is possible to opt into a real-time pricing program that charges you different prices depending on the time-of-day. Other areas have been slower moving and may still be years away from adapting. No matter what area you live in, however, as new technologies and markets are adopted, there is increased chance to participate as a consumer and leverage your demand for your economic benefit and the benefit of the environment. It will pay, literally, to be aware of these exciting changes in the electric power system.

Additional Reading

[1] National Academy of Engineering, “Greatest achievements of the 20th century,” 2003. [Accessed]: Oct. 23, 2014. [Available]: http://www.greatachievements.org/.

[2] U.S. Department of Energy, “The Smart Grid: An introduction,” 2009. [Accessed]: Oct. 23, 2014. [Available]: http://energy.gov/oe/downloads/smart-grid-introduction-0.

[3] Dana Hull, “Tesla CEO Elon Musk: Gigafactory will take battery production to another level,” May 14, 2014. [Accessed]: Oct. 23, 2014.[Available]: http://www.mercurynews.com/business/ci_25761219/tesla-ceo-elon-musk-gigafactory-will-take-battery.

[4] Tom Randall, “Why Musk is building batteries in the desert when no one is buying,” Sep. 11, 2014. [Accessed]: Oct. 23, 2014.[Available]: http://www.bloomberg.com/news/2014-09-11/why-musk-is-building-batteries-in-a-desert-when-no-one-is-buying.html.

[5] Steven Castle, “New energy management/monitoring systems make savings easy.” [Accessed]: Oct. 23, 2014. [Available]: http://www.electronichouse.com/lutron/article/new_energy_management_monitoring_systems_making_saving_easy

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