[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
EFFECTIVELY TRANSFORMING OUR ELECTRIC
DELIVERY SYSTEM TO A SMART GRID
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JULY 23, 2009
__________
Serial No. 111-46
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
______
U.S. GOVERNMENT PRINTING OFFICE
50-945 PDF WASHINGTON: 2010
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001
COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chair
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
DAVID WU, Oregon LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington DANA ROHRABACHER, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York BOB INGLIS, South Carolina
PARKER GRIFFITH, Alabama MICHAEL T. MCCAUL, Texas
STEVEN R. ROTHMAN, New Jersey MARIO DIAZ-BALART, Florida
JIM MATHESON, Utah BRIAN P. BILBRAY, California
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
BEN CHANDLER, Kentucky PAUL C. BROUN, Georgia
RUSS CARNAHAN, Missouri PETE OLSON, Texas
BARON P. HILL, Indiana
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
VACANCY
------
Subcommittee on Energy and Environment
HON. BRIAN BAIRD, Washington, Chair
JERRY F. COSTELLO, Illinois BOB INGLIS, South Carolina
EDDIE BERNICE JOHNSON, Texas ROSCOE G. BARTLETT, Maryland
LYNN C. WOOLSEY, California VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
DONNA F. EDWARDS, Maryland RANDY NEUGEBAUER, Texas
BEN R. LUJAN, New Mexico MARIO DIAZ-BALART, Florida
PAUL D. TONKO, New York
JIM MATHESON, Utah
LINCOLN DAVIS, Tennessee
BEN CHANDLER, Kentucky
BART GORDON, Tennessee RALPH M. HALL, Texas
JEAN FRUCI Democratic Staff Director
CHRIS KING Democratic Professional Staff Member
MICHELLE DALLAFIOR Democratic Professional Staff Member
SHIMERE WILLIAMS Democratic Professional Staff Member
ELAINE PAULIONIS PHELEN Democratic Professional Staff Member
ADAM ROSENBERG Democratic Professional Staff Member
JETTA WONG Democratic Professional Staff Member
ELIZABETH CHAPEL Republican Professional Staff Member
TARA ROTHSCHILD Republican Professional Staff Member
JANE WISE Research Assistant
C O N T E N T S
July 23, 2009
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Prepared Statement by Representative Bart Gordon, Chairman,
Committee on Science and Technology, U.S. House of
Representatives................................................ 9
Statement by Representative Brian Baird, Chairman, Subcommittee
on Energy and Environment, Committee on Science and Technology,
U.S. House of Representatives.................................. 7
Written Statement............................................ 7
Statement by Representative Bob Inglis, Ranking Minority Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 8
Written Statement............................................ 9
Prepared Statement by Representative Jerry F. Costello, Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 9
Witnesses:
Ms. Patricia Hoffman, Acting Assistant Secretary, Office of
Electricity Delivery and Energy Reliability, U.S. Department of
Energy
Oral Statement............................................... 10
Written Statement............................................ 12
Biography.................................................... 17
Ms. Suedeen G. Kelly, Commissioner, Federal Energy Regulatory
Commission
Oral Statement............................................... 18
Written Statement............................................ 19
Biography.................................................... 24
Dr. George W. Arnold, National Coordinator for Smart Grid Inter-
operability, National Institute of Standards and Technology,
U.S. Department of Commerce
Oral Statement............................................... 25
Written Statement............................................ 26
Biography.................................................... 32
Mr. Paul De Martini, Vice President of Advanced Technology,
Southern California Edison
Oral Statement............................................... 32
Written Statement............................................ 34
Biography.................................................... 39
Mr. Jeffrey L. Ross, Executive Vice President, GridPoint, Inc.
Oral Statement............................................... 39
Written Statement............................................ 41
Biography.................................................... 47
Mr. Michael A. Stoessl, Group President, Cooper Power Systems
Oral Statement............................................... 47
Written Statement............................................ 51
Biography.................................................... 52
Discussion
Anticipated Development Timeline............................... 53
Features of Smart Meters....................................... 54
Flexibility and Pace of Standards Development.................. 54
Net Metering................................................... 56
Inter-operability Standards.................................... 56
National Security Concerns..................................... 58
Energy Storage................................................. 60
The Purpose of the Smart Grid.................................. 62
First Steps to a Smart Grid.................................... 63
Potential Energy Production Savings............................ 66
Potential Energy Savings....................................... 68
Financial Benefit to Consumers................................. 68
Job Creation and Workforce Development......................... 69
Incorporating Social Behavioral Aspects........................ 72
Electromagnetic Pulses......................................... 74
Superconduction................................................ 75
Public Education............................................... 76
Interagency Coordination....................................... 77
Appendix 1: Answers to Post-Hearing Questions
Ms. Patricia Hoffman, Acting Assistant Secretary, Office of
Electricity Delivery and Energy Reliability, U.S. Department of
Energy......................................................... 80
Ms. Suedeen G. Kelly, Commissioner, Federal Energy Regulatory
Commission..................................................... 82
Dr. George W. Arnold, National Coordinator for Smart Grid Inter-
operability, National Institute of Standards and Technology,
U.S. Department of Commerce.................................... 83
Appendix 2: Additional Material for the Record
Statement of Katherine Hamilton, President, The GridWise
Alliance....................................................... 86
Statement of Gordon W. Day, Ph.D., 2009 President, the Institute
of Electrical and Electronics Engineers--United States of
America (IEEE-USA)............................................. 90
EFFECTIVELY TRANSFORMING OUR ELECTRIC DELIVERY SYSTEM TO A SMART GRID
----------
THURSDAY, JULY 23, 2009
House of Representatives,
Subcommittee on Energy and Environment,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:08 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Brian
Baird [Chairman of the Subcommittee] presiding.
hearing charter
SUBCOMMITTEE ON ENERGY AND ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
Effectively Transforming Our Electric
Delivery System to a Smart Grid
thursday, july 23, 2009
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
Purpose
On Thursday, July 9, 2009 the Subcommittee on Energy and
Environment will hold a hearing entitled: ``Effectively Transforming
Our Electric Delivery System to a Smart Grid.''
The hearing will explore the roles of both the Federal Government
and industry in transitioning our aging power generation and
distribution infrastructure into a smart grid. A smart grid will
function as a two-way communication system offering utilities and
consumers more information regarding electricity supply, consumption,
and price which would ultimately modify patterns of electricity usage.
Continued efforts to research and develop innovative smart grid
technologies and establish the appropriate inter-operability standards
to enable all these devices and systems to communicate with each other
are necessary to make this transformation and realize significant
efficiency, reliability, security and environmental benefits. Today,
our massive interconnected power grid is a century old and over-
burdened. It is imperative that we modernize our electric delivery
system so that our economy can thrive and growing power needs will be
met efficiently and reliably.
Witnesses
Ms. Patricia Hoffman is the Acting Assistant Secretary for
the Department of Energy, (DOE) Office of Electricity Delivery and
Energy Reliability. Ms. Hoffman briefly will describe the Department's
vision for development of a smart grid and offer testimony on the
current research, development and demonstration activities at DOE to
achieve widespread use of innovative smart grid technologies. She will
discuss the challenges associated with a successful transition to a
smart grid and how DOE is working with other federal agencies and
stakeholders to address these issues. She also will describe the
Department's strategy and timeline for distributing funds available
under the American Recovery and Reinvestment Act for smart grid
demonstrations, investment grants, transmission planning and other
related initiatives.
Ms. Suedeen Kelly is a Commissioner at the Federal Energy
Regulatory Commission (FERC). She will provide a brief overview of
FERC's actions and programs designed to modernize our electric delivery
system and the issues that we must address to ensure we have a
successful transition to a smart grid. She will describe FERC's
collaboration with NIST to develop inter-operability standards for
smart grid devices and systems. In addition, she will explain the
important role of the states in this transition and the tools FERC has
available to help the states implement smart grid strategies.
Dr. George Arnold is the National Coordinator for Smart Grid
Inter-operability at the National Institute of Standards and Technology
(NIST). Dr. Arnold will offer testimony regarding NIST's progress
toward facilitating the development of a framework for standards and
protocols to achieve inter-operability of smart grid devices and
systems. He will discuss some of the technical challenges presented
with standards development and how NIST will address those issues. In
addition, he will describe how NIST is working with other federal
agencies and interested stakeholders to achieve widespread use of
innovative smart grid technologies.
Mr. Paul De Martini is Vice President of Advanced Technology
at Southern California Edison (SCE). SCE is the largest subsidiary of
Edison International and supplies electricity to eleven million people
in southern California. Mr. De Martini will testify about SCE's
research, development and pilot programs related to advancing smart
grid technologies and modernization of our electric grid. He also will
give an overview of SCE's strategy to deploy innovative smart grid
technologies, their work with DOE and NIST, provide a utility
perspective on integrating these new technologies with existing
technologies, and discuss some of the benefits anticipated for the
company and consumers as that strategy is implemented.
Mr. Jeff Ross is the Executive Vice President at GridPoint.
GridPoint is a technology company engaged in the development of
innovative smart grid platform that enables utilities to optimize
electrical grid management. Mr. Ross will discuss GridPoint's
technology portfolio to illustrate the type of innovation that will
facilitate the modernization and advancement of the Nation's
electricity system, as well as some of the challenges encountered along
the way. He will also describe GridPoint's experience in the smart grid
demonstration in Boulder, CO.
Mr. Michael A. Stoessl is the Group President for Cooper
Power Systems. Cooper Power Systems engineers and manufactures medium
and high-voltage electrical equipment, components, and systems that
deliver reliable electric power to homes, industries, businesses, and
institutions worldwide. The company is a member of the National
Electrical Manufacturers Association (NEMA) and he will testify on
NEMA's behalf. Mr. Stoessl will provide a brief overview of NEMA and
its history in developing standards for power equipment and the grid.
He will discuss how the association is fulfilling its Congressionally-
directed role to work with federal agencies and accelerate the
deployment of innovative smart grid technologies. In addition, he will
describe the technical challenges of integrating new smart grid
technologies with the current grid and provide examples of successful
deployment.
Background
In the 20th century, widespread electrification brought power to
our homes, businesses, farms and cities, changing our lives
dramatically. In 1935 President Roosevelt established the Rural
Electric Administration (REA) and directed the agency to electrify the
continent. As part of that massive undertaking, innovations were
undertaken that included standardized designs for distribution lines,
mass production and construction techniques, system protection and wide
area distributed power planning. Now, nearly seventy-five years since
the REA was created, we still consider electrification one of the
greatest engineering achievements of the 20th century.
Electricity has to be used the moment it is generated. While this
system has worked for decades, it is not very efficient. Demand for
power varies greatly throughout the day and throughout the year as
demands for lighting, heating and cooling fluctuate through the
seasons. Because the capacity for generation of power matches the
consumption of power, the electricity supply system must be sized to
generate enough electricity to meet the maximum anticipated demand
(e.g., peak demand). This inefficiency becomes more evident when
considering that it is possible the peak electricity demand for any
given year could be for a very short period--a few days or even hours.
The deployment of innovative smart grid devices is intended to reduce
this inefficiency.
Our century-old power grid is the largest interconnected machine on
Earth consisting of more than 9,200 electric generating units with more
than one million megawatts of generating capacity connected to more
than 300,000 miles of transmission lines.\1\ Currently, our electric
grid is a centralized, generator-controlled network where electrons and
information flow in one direction, from generator to end-user. The
transition to a smart grid will change this completely. A modern power
grid is envisioned to operate more like an energy internet with a two-
way flow of electricity and information that will be capable of
monitoring everything from power plants to customer preferences to
individual appliances. This transformation will give utility operators
and customers the proper tools and information so that electricity
generation is better-managed and consumer choices are exercised to
control costs and lower electric bills.
---------------------------------------------------------------------------
\1\ The Smart Grid: an Introduction. Prepared by Litos Strategic
Communication for the U.S. Department of Energy, 2008, page 5.
---------------------------------------------------------------------------
Smart grid technologies, including energy storage technologies will
offer operators new opportunities for managing distributed power
production and zero-emission power generation from solar and wind
sources. Also pushing modernization of our electric infrastructure is
the increasing demand for electricity driven by population growth,
bigger homes, and greater appliance use. While our electric grid is
considered one of the most reliable in the world, there have been five
massive blackouts over the past forty years, three of those occurring
in the past nine years. The recent Northeast blackout of 2003 resulted
in a $6 billion economic loss to the region.\2\ Further compounding the
reliability risks is the trend in our economy to become ever-more
digital and to be more reliant upon electronic equipment and automated
manufacturing. These trends place increasing demand on our electric
delivery system.
---------------------------------------------------------------------------
\2\ Ibid, page 7.
---------------------------------------------------------------------------
Even as we anticipate continued rising demand for power, under-
investment in the upgrading of our electric infrastructure has left the
grid overburdened and inefficient. According to the Department of
Energy, if the grid were just five percent more efficient, the energy
savings would equate to permanently eliminating the fuel and greenhouse
gas emissions from 53 million cars.\3\ The American Recovery and
Reinvestment Act (ARRA) authorized the Department of Energy to spend
approximately $4.5 billion on smart grid projects under programs
established in Title XIII of the Energy Investment and Security Act of
2007 to begin to address these needs.
---------------------------------------------------------------------------
\3\ The Smart Grid: An Introduction. Prepared by Litos Strategic
Communication for the U.S. Department of Energy, 2008, page 7.
---------------------------------------------------------------------------
From the funds made available by the ARRA, the Department of
Energy's Office of Electricity Delivery and Energy Reliability (OE) has
issued Funding Opportunity Announcements for smart grid demonstrations,
smart grid investment grants, and a smart grid information
clearinghouse. The goal of the demonstration projects is to verify
smart grid technology viability, quantify smart grid costs and
benefits, and validate new smart grid business models at a scale that
can be readily adapted and replicated across the Nation. These projects
could fund different energy storage technologies, including battery
storage, compressed air energy storage and other new promising storage
options. In addition, these projects could demonstrate synchrophasor
measurement technologies and approaches to improve transmission system
reliability through large-scale deployment of synchrophasor technology.
These synchrophasors or ``phasors'' have the potential to significantly
improve transmission reliability because they take data measurement
with Global Positioning System (GPS) timing. The gathered data allow
grid operators to see dynamic conditions on the grid in a more real-
time (time and location) manner and with greater accuracy. As a result,
the operators have better system control and earlier detection of
potential grid disturbances for better mitigation.
The Smart Grid Investment Grant Program is intended to gain
improvements in cost and performance of smart grid technology. The
program will provide federal assistance to fund up to 50 percent of
investments by electric utilities and other entities for projects that
promote the goal of deployment of smart grid technologies. The
investments are designed to help implement the necessary digital
upgrades to the electric grid enabling it to work more efficiently and
make it better able to effectively integrate power generated from
renewable energy technologies, energy efficient technologies, and
demand management practices. Demand Response or load management is
defined as the planning, implementation, and monitoring of utility
activities designed to encourage consumers to modify patterns of
electricity usage, including the timing and level of electricity
demand. These practices or programs refer only to energy and load-shape
modifying activities that are undertaken in response to utility-
administered programs and not the normal operation of the
marketplace.\4\ Demand response practices are used today, but will be
ever-more prevalent as we transition to a smart grid.
---------------------------------------------------------------------------
\4\ Keeping the Lights On in a New World, Electricity Advisory
Committee, January 2009, page 84.
---------------------------------------------------------------------------
The Smart Grid Information Clearinghouse is intended to consolidate
public technical, legislative, and other information on smart grid
development and practices, and direct web site users to additional
information sources both in the United States and internationally. The
goal is to facilitate coordination among all smart grid stakeholders to
support the development and deployment of smart grid technologies.
EISA also authorized a federal Smart Grid Task Force that is led by
DOE's Office of Electricity Delivery and Energy Reliabilty to
coordinate federal activities related to smart grid technologies and
practices. The Task Force works closely with the Federal Energy
Regulatory Commission and the National Institute of Standards and
Technology. The Department also established an Electricity Advisory
Committee which issued a report in January 2009 entitled: ``Keeping the
Lights On in the New World.'' The report discusses current trends for
our electricity infrastructure related to both power demand and supply,
and it offers options for meeting future electricity needs with
recommendations for specific actions by DOE.
The Recovery Act also included $10 million for NIST to conduct its
work on inter-operability standards for smart grid devices and systems.
This standards development process covers the entire electricity system
including generation, transmission, distribution and end-user equipment
and devices. These standards are essential to ensure that all the
different software and hardware components of a smart grid, supplied
from various vendors, will work together seamlessly and secure the grid
against disruptions. In other words, such standards will support the
ability of different devices to exchange data, communicate, and
participate in business activities regardless of the operating systems
or programming languages underlying those devices. NIST has established
domain working groups and is identifying and evaluating existing
standards and measurement methods to support the transformation of our
electric delivery system.
In mid-May, Secretaries Locke and Chu announced the initial batch
of sixteen NIST-recognized inter-operability standards. NIST is
directed to issue a report to Congress when it determines that the work
is completed or that a federal role is no longer necessary for
standards development. EISA further calls on FERC to institute a rule-
making proceeding to adopt such standards and protocols as may be
necessary to insure smart-grid functionality and inter-operability in
interstate transmission of electric power and regional and wholesale
electricity markets. FERC has authority to determine when NIST's
process has led to sufficient consensus of the stakeholders.
A Smart Grid
There is a lot of talk about deploying smart meters, a process that
is underway. It is important to note that metering is just one of
numerous possible applications that make up a smart grid. The smart
grid is far more than meters as it will function like an energy
internet and innovative technologies will be empowered by the two-way
digital communication and plug-and-play capabilities that exemplify a
smart grid.
For consumers, the smart grid means they will have access to real-
time pricing and these price signals will help to educate consumers
about energy consumption and actively engage them in energy decisions.
Ultimately, consumer participation will result in reduced peak demand--
when electricity demand is its greatest. Today our electric bills
provide little information about energy consumption patterns and costs,
and the bills come monthly, days after actual consumption takes place.
New smart grid technologies will allow consumers to see the price they
are paying for their energy in real-time, helping them to lower their
electric bills as they use less electricity during peak demand times
when prices are high. This behavior in turn benefits the utilities
because shedding load at peak demand times will help to relieve stress
on the grid and avoid costly infrastructure and maintenance costs.
Reducing peak demand also allows utilities to reduce reliance on its
least efficient generating plants that are necessary to meet peak
demand.
It is estimated that smart grid enhancements will ease congestion
on the grid and increase capacity significantly, sending 50 to 300
percent more electricity through existing energy corridors.\5\
Maximizing the efficiency of the electricity infrastructure reduces the
need for owners and operators to pay for additional generation capacity
to meet our nation's growing demand for electricity. Transforming our
power system to a smart grid will save money, save energy, and lower
emissions from the utility sector making this transition a smart
alternative to building more power plants, substations, transformers
and transmission lines.
---------------------------------------------------------------------------
\5\ Ibid, page 17.
---------------------------------------------------------------------------
In addition, a smart grid will increase reliability of the grid and
enhance the grid's security. Today's grid is dominated by central
generation with many obstacles for distributed energy resources
interconnection. This centralized system can be vulnerable to
disruptions from natural or human events. A modern grid would more
readily integrate distributed energy resources, such as electric
vehicles and other storage technologies, making our power supply less
centralized and less vulnerable. Smart grid technology will include an
immense communications network and will vastly improve the utilities'
ability to manage the grid under emergency conditions. A smooth
transition of our electricity delivery system to a smart grid is
critical to realize the benefits associated with a more efficient,
reliable and secure electricity infrastructure.
Chairman Baird. If our guests will take their seats, the
hearing will come to order.
Good morning to everyone, and welcome to today's hearing on
``Effectively Transforming Our Electric Delivery System to a
Smart Grid.'' I would like to welcome our expert panelists who
will discuss both the role of the Federal Government and
industry stakeholders in transforming our power grid.
Even today with tremendous advancements in technology,
electrification is considered the greatest engineering
achievement of the 20th century. However, parts of this
infrastructure are nearly a century old and our increased
reliance on electrical power is straining our system's
capacity.
In the past nine years, we have experienced three big
blackouts. It is estimated that the blackout of 2003 resulted
in a $6 billion economic loss to the region. In order to
improve efficiency of power delivery and incorporate renewable
energy technologies, we need to modernize our grid
infrastructure.
A smart grid is a sophisticated, two-way communication
system for managing our electric infrastructure. It will
operate more efficiently and reliably and empower consumers to
more actively engage in energy use decisions. The technology to
encourage their participation in these decisions will be at
their fingertips. Accurate and timely price signals will help
consumers reduce energy consumption during peak demand when
prices are highest. This shaving off of the peak load, in turn,
offers power plant operators the opportunity to avoid
investment costs for new generation capacity. In addition,
utilities will be better equipped to manage their systems and
integrate energy from renewable sources, plug-in-electric
vehicles and other storage technologies.
Also, there is growing recognition that a smart electric
grid is extremely important for responding to environmental
problems such as ocean acidification and lethal overheating of
our planet. More efficient energy production and increased use
of renewable energy resources will help to set us on a course
to address these environmental challenges.
I would like to thank the witnesses for their participation
today, and I am looking forward to your testimony. I am
sincerely excited and interested in this as I think so many of
us are as it is going to be central to solving our nation's
energy problems, and we have an outstanding panel of experts.
With that, I yield to our distinguished colleague and my
friend, Mr. Inglis, for an opening statement.
[The prepared statement of Chairman Baird follows:]
Prepared Statement of Chairman Brian Baird
Good morning and welcome to today's hearing on ``Effectively
Transforming Our Electric Delivery System to a Smart Grid.''
I would like to welcome our expert panelists who will discuss both
the role of the Federal Government and industry stakeholders in
transforming our power grid.
Even today with tremendous advancements in technology,
electrification is considered the greatest engineering achievement of
the 20th century. However, parts of this infrastructure are nearly a
century old, and our increased reliance on electrical power is
straining this systems' capacity.
In the past nine years, we have experienced three big blackouts. It
is estimated that the blackout of 2003 resulted in a $6 billion
economic loss to the region. In order to improve efficiency of power
delivery and incorporate renewable energy technologies we need to
modernize our grid infrastructure.
A smart grid is a sophisticated, two-way communication system for
managing our electric infrastructure. It will operate more efficiently
and reliably and empower consumers to more actively engage in energy
usage decisions. The technology to encourage their participation in
these decisions will be at their fingertips.
Accurate and timely price signals will help consumers reduce energy
consumption during peak demand when prices are highest. This shaving of
the peak load, in turn, offers power plant operators the opportunity to
avoid investment costs for new generation capacity. In addition,
utilities will be better-equipped to manage their systems and integrate
energy from renewable sources, plug-in-electric vehicles, and other
energy storage technologies.
Also, there is growing recognition that a smart electric grid is
extremely important for responding to environmental problems such as
ocean acidification and lethal over-heating of the planet. More
efficient electricity production and increased use of renewable energy
resources will help to set us on a course to address these
environmental challenges.
Again, I would like to thank the witnesses for their participation
today, and I look forward to your testimony.
Mr. Inglis. Thank you, Mr. Chairman, and thank you for this
very important hearing.
In our last hearing, we discussed obstacles in getting
renewable energy, wind and solar in particular, into the
electricity market in a meaningful way. One of the biggest gaps
we heard about was getting renewable energy onto a grid
designed for centralized generation from conventional power
plants. In order to move away from fossil fuels, we need to
upgrade the grid. A smart grid presents many exciting
opportunities. First, we will be able to use distributed
generation to supply our population centers, enabling a shift
toward renewable power. Second, we will improve efficiency and
increase capacity on the electricity grid. Finally, we will
create a new model of consumer participation. With the two-way
communication made possible by smart grid technologies,
consumers will have access to new information about their
energy use and prices and get more involved in how they use
electricity.
So now we have to figure out how to get to a modern
electricity grid. I am looking forward to hearing from our
witnesses about where we are now and where we have to go.
Governments and professional associations will certainly play
an important role in the research and development of smart grid
technologies and in setting the standards that will govern the
new electricity delivery system. Private enterprise will step
in with cutting-edge technology designed to integrate the grid,
better manage peak loads, and give consumers the tools they
need to make informed decisions.
I have several questions about smart grid. We are working
on developing a new grid and a new pattern of energy generation
at this time. I hope to learn all these efforts are working in
tandem and if we are going forward at the right pace. I also
wonder what the proper relationship between private and public
investment is in a project like this that serves both interests
together.
Finally, the smart grid will support electricity from
sources far away from population centers. While this will
support development of renewable electricity, it may also
support continued reliance on old and polluting facilities that
operate in some remote areas. I hope we can address these
concerns today, and I thank the Chairman for holding this
hearing.
[The prepared statement of Mr. Inglis follows:]
Prepared Statement of Representative Bob Inglis
Good morning and thank you for holding this hearing, Mr. Chairman.
At our last hearing, we discussed obstacles in getting renewable
energy, wind and solar in particular, into the electricity market in a
meaningful way. One of the biggest gaps we heard about was getting
renewable energy onto a grid designed for centralized generation from
conventional power plants. In order to move away from fossil fuels, we
need to update the grid.
A smart grid presents many exciting opportunities. First, we'll be
able to use distributed generation to supply our population centers,
enabling a shift toward renewable power. Second, we'll improve
efficiency and increase capacity on the electricity grid. Finally,
we'll create a new model of consumer participation. With the two-way
communication made possible by smart grid technologies, consumers will
have access to new information about their energy use and prices and
get more involved in how they use electricity.
So now we have to figure out how to get to a modern electricity
grid. I'm looking forward to hearing from our witnesses about where we
are now and where we have to go. Governments and professional
associations will certainly play an important role in the research and
development of smart grid technologies and in setting the standards
that will govern the new electricity delivery system. Private
enterprise will step in with cutting edge technology designed to
integrate the grid, better manage peak loads, and give consumers the
tools they need to make informed decisions.
I have several questions about the smart grid. We're working on
developing a new grid and a new pattern of energy generation at the
same time; I hope to learn how these efforts are working in tandem and
if we're going forward at the right pace. I also wonder what the proper
relationship between private and public investment is in a project like
this that serves both interests together. Finally, the smart grid will
support electricity from sources far away from population centers.
While this will support development of renewable electricity, it may
also support continued reliance on old and polluting coal facilities
that operate in the same remote areas. I hope we can address these
concerns today.
Thank you again for holding this hearing, Mr. Chairman.
Chairman Baird. Thank you, Mr. Inglis.
If there are other Members who wish to submit additional
opening statements, your statements will be added to the record
at this point.
[The prepared statement of Chairman Gordon follows:]
Prepared Statement of Chairman Bart Gordon
Thank you Chairman Baird. I am very pleased that the Energy and
Environment Subcommittee is holding this hearing today to discuss our
efforts to transform our electricity infrastructure into a smart grid.
Digitizing our electrical power grid is a massive endeavor that
offers exciting possibilities and a wide range of benefits.
Modernization will increase the reliability of our grid, provide
significant energy efficiency gains, and will enable us to broaden the
use of renewable energy sources and energy storage technologies. A
smart grid will allow active consumer involvement in decisions to use
energy, and businesses will reduce their energy costs by managing their
demands for power.
Because transformation of our electricity delivery system is such
an enormous undertaking, it comes with many challenges as well. We are
investing billions of federal dollars toward the smart grid transition,
and we need to make certain those dollars are invested well.
I look forward to hearing from our panel of expert witnesses about
our progress to deploy innovative smart grid technologies and the
hurdles we must yet overcome to modernize our power infrastructure.
I thank the witnesses for testifying today and I look forward to an
interesting dialogue.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good morning. Thank you, Mr. Chairman, for holding today's hearing
to transition our aging electric delivery system to a smart grid
infrastructure.
Our current electric grid is inefficient and outdated. These
problems have been highlighted by the three massive blackouts the
Nation has experienced in the last nine years. Smart grid technology
will reduce inefficiency, provide consumers more control over their
electricity costs, and give utility operators more flexibility in
generating and transmitting power. In addition, smart grid technology
will improve the security of our electricity infrastructure, making it
less susceptible to threats. With the House of Representative's passage
of the American Clean Energy and Security Act, the need for a
modernized, clean electricity grid has become increasingly important.
Developing and demonstrating these technologies will require
coordination between the Federal Government and the private sector. The
American Recovery and Reinvestment Act's $4.5 billion investment in
smart grid technology was an important step in moving forward with
early smart grid research efforts. DOE has distributed these funds to
universities, including the Illinois Institute of Technology, and
private companies to move these projects towards large-scale
demonstrations. I would be interested to hear from our witnesses how
Congress can continue to support these collaborative efforts. In
particular, how can Congress support efforts to move these important
projects towards commercial application?
I welcome our panel of witnesses, and I look forward to their
testimony. Thank you again, Mr. Chairman.
Chairman Baird. It is now my pleasure to introduce our
witnesses at this time. Ms. Patricia Hoffman is the Acting
Assistant Secretary of the Office of Electric Delivery and
Energy Reliability at the Department of Energy. Ms. Suedeen--am
I pronouncing that right? Is it Sueldeen or Suedeen?
Ms. Kelly. Suedeen.
Chairman Baird. Suedeen G. Kelly is the Commissioner of the
Federal Energy Regulatory Commission. Dr. George Arnold is the
National Coordinator for Smart Grid Interoperability at the
National Institute of Standards and Technology. Mr. Paul De
Martini is the Vice President of Advanced Technology for
Southern California Edison, Mr. Jeff Ross, Executive Vice
President for GridPoint Incorporated, and finally, Mr. Michael
Stoessl is the Group President of Cooper Power Systems. We
thank you all. As I think you have been briefed by staff, we
try to keep the testimony as near to five minutes as we can. As
my distinguished friend, Dr. Ehlers, used to say when he
chaired the Committee, as you go past five minutes there is a
risk the chair drops out from under you and you don't get to
testify for the rest of the hearing. Please keep your comments
brief, but we sure appreciate your testimony. Following your
comments, then we will have a series of questions from the
panel Members.
So with that, I will start from Ms. Hoffman from the
Department of Energy. Thank you. Please begin.
STATEMENT OF MS. PATRICIA HOFFMAN, ACTING ASSISTANT SECRETARY,
OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY, U.S.
DEPARTMENT OF ENERGY
Ms. Hoffman. Thank you, Mr. Chairman and Members of the
Subcommittee for the opportunity to provide an update on the
current status of smart grid activities at the Department of
Energy as well as future directions and priorities.
The Energy Independence and Security Act of 2007 and the
American Recovery and Reinvestment Act expanded the role of the
Federal Government substantially in research, development,
demonstration and deployment of smart grid technologies, tools
and techniques. To fulfill this role, the Department of Energy
and the Office of Electricity Delivery and Energy Reliability
are carrying out smart grid activities in three primary areas:
smart grid investment grants, smart grid demonstrations and
smart grid research and development.
One of our top priorities is to responsibly disburse funds
made available under the Recovery Act to develop and deploy
smart grid technologies designed to modernize our nation's
electric system. On June 25, 2009, we released two funding
opportunity announcements, one for smart grid investment grants
and the second for smart grid demonstrations. We are expecting
to evaluate hundreds of applications over the coming months and
to make awards for projects that will show the benefits of a
more modern grid that uses smart grid technologies, tools and
techniques for the betterment of electricity consumers across
America. We expect this funding to spark innovation, create
businesses and provide jobs for American workers. We believe
these programs represent a once-in-a-generation chance for
game-changing investments, and we are dedicated to making sure
that the American taxpayers get maximum value from these
investments in terms of a more reliable, secure, efficient,
affordable and clean electric system.
While these programs are about transforming the delivery
and management of electric power through the application of
today's smart grid technologies, tools and techniques such as
phasor measurement units and advanced metering infrastructure,
we are simultaneously working on the next generation systems
for expanding the capacity and increasing the flexibility and
functioning of the electric transmission and distribution
system. Our fiscal year 2010 budget request for smart grid and
related R&D is aimed at harnessing the Nation's scientific and
engineering talents in electric systems and focusing it on
discovery and innovation for new materials, algorithms,
concepts and prototypes for power lines, substations,
transformers, storage systems and power electronics.
Section 1302 of the Energy Independence and Security Act
directed the Secretary of Energy to report to Congress
concerning the status of smart grid deployments nationwide and
any regulatory or government barriers to continued deployment.
This week the Department of Energy released its Smart Grid
Systems Report. The report finds that while many smart grid
capabilities, are still emerging, penetration levels for
substation automation, smart metering and distributed
generation technologies are growing significantly.
A part of the vision for a smart grid is its ability to
enable informed participation by consumers, making them an
integral part of the electric power system with bi-directional
flows of energy and coordination through communication
mechanisms. A smart grid should help balance supply and demand
and enhance reliability by modifying the manner in which
consumers use and purchase electricity. These modifications can
be the result of consumer choices that motivate shifting
patterns of behavior and consumption. These choices involve new
technologies, new information regarding electricity use, and
new pricing and incentive programs.
A key aspect for implementation of smart grid technologies
is the need to address inter-operability and cyber security.
Development of industry-based standards governing how the many
different devices involved in a smart grid can communicate and
inter-operate with each other in a seamless, efficient and
secure manner is one of the top priorities for DOE and other
federal and State agencies. Since the smart grid vision
involves the two-way flow of information and electric power,
for higher degrees of automation and control than what exist
today in the electric transmission and distribution system, it
is necessary for there to be standards that guide manufacturers
and smart grid developers, foster innovation and provide a
platform that enables a wide range of offerings to come to
market and have the opportunity to compete. As occurred with
the telecommunications and the evolution of the Internet,
effective standards form the basis upon which entrepreneurs can
bring innovations to the marketplace, build new businesses and
create job opportunities.
The public-private partnerships on phasor measurement units
have been instrumental in the development and deployment of
this technology and the formation of the North American
SyncroPhasor Initiative. The SyncroPhasor Initiative is an
important technology to provide greater insight into system
operating conditions and holds the promise to enable better
indication of grid stress as well as other performance
characteristics. An important goal is to use the phasor
measurement unit (PMU)-derived information to trigger
corrective actions and maintain reliable system operation.
This concludes my statement, Mr. Chairman. Thank you for
the opportunity to testify. I look forward to answering any
questions you or your colleagues may have.
[The prepared statement of Ms. Hoffman follows:]
Prepared Statement of Patricia Hoffman
Thank you Mr. Chairman and Members of the Subcommittee for the
opportunity to provide an update on the current status of smart grid
activities at the Department of Energy as well as our future directions
and priorities.
The Energy Independence and Security Act of 2007 (EISA) and the
American Recovery and Reinvestment Act of 2009 (Recovery Act) expand
the role of the Federal Government substantially in research,
development, demonstration, and deployment of smart grid technologies,
tools, and techniques. To fulfill this role, the U.S. Department of
Energy (DOE) and the Office of Electricity Delivery and Energy
Reliability (OE) are carrying out smart grid activities in three
primary areas: (1) Smart Grid Investment Grants, (2) Smart Grid
Demonstrations, and (3) Smart Grid Research and Development (R&D).
One of our top priorities is to responsibly disburse funds made
available under the Recovery Act to develop and deploy smart grid
technologies designed to modernize the Nation's electric system. On
June 25, 2009 we released two Funding Opportunity Announcements
(FOAs)--one for Smart Grid Investment Grants and the second for Smart
Grid Demonstrations. We are expecting to evaluate hundreds of
applications over the coming months and to make awards for projects
that will show the benefits of a more modern grid that uses smart grid
technologies, tools, and techniques for the betterment of electricity
consumers across America. We expect this funding to spark innovation,
create businesses, and provide new jobs for American workers. We
believe these programs represent a ``once-in-a-generation'' chance for
game-changing investments and we are dedicated to making sure that
American taxpayers get maximum value from these investments in terms of
a more reliable, secure, efficient, affordable, and clean electric
system.
While these programs are about transforming the delivery and
management of electric power through application of today's smart grid
technologies, tools, and techniques (such as phasor measurement units
and advanced metering infrastructure), we are simultaneously working on
``next generation'' systems for expanding the capacity and increasing
the flexibility and functionality of electric transmission and
distribution systems. Our fiscal year 2010 budget request for smart
grid and related R&D is aimed at harnessing the Nation's scientific and
engineering talent in electric systems and focusing it on discovery and
innovation for new materials, algorithms, concepts, and prototypes for
power lines, substations, transformer banks, feeder lines, storage
systems, and switchgear to increase efficiency, reliability, security,
resiliency, functionality, throughput, and energy density while
reducing costs, footprint, and environmental impacts.
Smart Grid Performance Metrics and Trends
Section 1302 of Title XIII of the Energy Independence and Security
Act of 2007 directed the Secretary of Energy to ``. . . report to
Congress concerning the status of smart grid deployments nationwide and
any regulatory or government barriers to continued deployment.'' This
week the Department of Energy released the Smart Grid Systems report.
The report finds that while many smart grid capabilities are emerging,
penetration levels for substation automation, smart metering, and
distributed generation technologies are growing significantly.
A part of the vision of a smart grid is its ability to enable
informed participation by customers, making them an integral part of
the electric power system. With bi-directional flows of energy and
coordination through communication mechanisms, a smart grid should help
balance supply and demand and enhance reliability by modifying the
manner in which customers use and purchase electricity. These
modifications can be the result of consumer choices that motivate
shifting patterns of behavior and consumption. These choices involve
new technologies, new information regarding electricity use, and new
pricing and incentive programs.
Supporting the bi-directional flow of information and energy is a
foundation for enabling participation by consumer resources. Advanced
metering infrastructure (AMI) is receiving the most attention in terms
of planning and investment. Currently AMI comprises about 4.7 percent
of all electric meters and their use for demand response is growing.
Approximately 52 million meters are projected to be installed by 2012.
As many service areas do not yet have demand response signals
available, a significant number of the meters installed are estimated
not being used for demand response activities. Pricing signals can
provide valuable information for consumers (and the automation systems
that reflect their preferences) to decide on how to react to grid
conditions. A Federal Energy Regulatory Commission (FERC) study found
that in 2008 slightly over one percent of all customers received a
dynamic pricing tariff, with nearly the entire amount represented by
time-of-use tariffs (energy price changes at fixed times of the day).
Lastly, the amount of load participating based on grid conditions is
beginning to show a shift from traditional interruptible demand at
industrial plants toward demand-response programs that either allow an
energy-service provider to perform direct load control or provide
financial incentives for customer-responsive demand at homes and
businesses.
Distributed energy resources and interconnection standards to
accommodate generation capacity appear to be moving in positive
directions. Accommodating a large number of disparate generation and
storage resources requires anticipation of intermittency and
unavailability, while balancing costs, reliability, and environmental
emissions. Distributed generation (carbon-based and renewable) and
storage deployments, although a small fraction (1.6 percent) of total
summer peak, appear to be increasing rapidly. In addition, 31 states
have interconnection standards in place, with 11 states progressing
toward a standard, one state with some elements in place, and only
eight states with none.
Gross annual measures of operating efficiency have been improving
slightly as energy lost in generation dropped 0.6 percent to 67.7
percent in 2007 and transmission and distribution losses also improved
slightly. The summer peak capacity factor declined slightly to 80.8
percent while overall annual average capacity factor is projected to
increase slightly to 46.5 percent. Contributions to these measures
include smart grid related technology, such as substation automation
deployments. While transmission substations have considerable
instrumentation and coordination, the value proposition for
distribution-substation automation is now receiving more attention.
Presently about 31 percent of substations have some form of automation,
with the number expected to rise to 40 percent by 2010. The deployment
of dynamic line rating technology is also expected to increase asset
utilization and operating efficiency; however, implementations thus far
have had very limited penetration levels.
The Smart Grid Investment Grant Program
The overall purpose of the Smart Grid Investment Grant Program
(SGIG) is to accelerate the modernization of the Nation's electric
transmission and distribution systems and promote investments in smart
grid technologies, tools, and techniques to increase flexibility,
functionality, inter-operability, cyber security, situational
awareness, resiliency, and operational efficiency.
The goals of the program involve accelerating progress toward a
modern grid that provides the following specific characteristics that
DOE believes define what a smart grid would accomplish:
Enabling informed participation by consumers in
retail and wholesale electricity markets.
Accommodating all types of central and distributed
electric generation and storage options.
Enabling new products, services, and markets.
Providing for power quality for a range of needs by
all types of consumers.
Optimizing asset utilization and operating efficiency
of the electric power system.
Anticipating and responding to system disturbances.
Operating resiliently to attacks and natural
disasters.
The SGIG FOA issued on June 25th calls for the submission of
project applications in three phases. Phase I applications are due
August 6, 2009; Phase II applications are due November 4, 2009; and
Phase III applications are due March 3, 2010. We expect to make Phase I
selections in September 2009.
There is approximately $3.4 billion available for this solicitation
for projects in two categories:
Smaller projects in which the federal share would be
in the range of $300,000 to $20,000,000.
Larger projects in which the federal cost share would
be in the range of $20,000,000 to $200,000,000.
We expect about 60 percent of the funds will be allocated to larger
projects and about 40 percent for smaller projects. The period of
performance for awarded projects is three years, or less.
Project applications will be considered in six topic areas:
Equipment manufacturing,
Customer systems,
Advanced metering infrastructure,
Electric distribution systems,
Electric transmission systems, and
Integrated and/or crosscutting systems.
A technical merit review of the applications will be conducted by
our own staff plus experts from colleges, universities, national
laboratories, and the private sector. Reviewers will be subject to non-
disclosure and conflict of interest agreements and will apply the
following technical merit review criteria:
The adequacy of the technical approach for enabling
smart grid functions;
The adequacy of the plan for project tasks, schedule,
management, qualifications, and risks;
The adequacy of the technical approach for addressing
inter-operability and cyber security, and
The adequacy of the plan for data collection and
analysis of project costs and benefits.
The Smart Grid Demonstration Program
The overall purpose of the Smart Grid Demonstrations Program (SGDP)
is to demonstrate how a suite of existing and emerging smart grid
technologies can be innovatively applied and integrated to investigate
technical, operational, and business-model feasibility. The aim is to
demonstrate new and more cost-effective smart grid technologies, tools,
techniques, and system configurations that significantly improve upon
the ones that are either in common practice today or are likely to be
proposed in the Smart Grid Investment Grant Program.
The SGDP FOA was also released on June 25th and calls for
applications to be submitted by August 26, 2009 in two areas of
interest:
Regional demonstrations, and
Grid-scale energy storage demonstrations.
The regional demonstration area covers projects involving electric
system coordination areas, distributed energy resources, transmission
and distribution infrastructure, and information networks and finance.
The grid-scale energy storage demonstration area covers battery storage
for load shifting or wind farm diurnal operations, frequency regulation
ancillary services, distributed energy storage for grid support,
compressed air energy storage, and demonstration of promising energy
storage technologies and advanced concepts.
Approximately $615 million is available for awards with 8-12
regional demonstration projects and 12-19 energy storage projects
expected. The period of performance for awards is three to five years.
Inter-operability and Cyber Security
A key aspect for the implementation of smart grid technologies,
tools, and techniques nationwide is the need to address inter-
operability and cyber security. Development of industry-based standards
for governing how the many different devices involved in smart grid can
communicate and inter-operate with each other in a seamless, efficient,
and secure manner is one of the top priorities for OE and other federal
and State agencies. Since the smart grid vision involves the two-way
flow of both information and electric power, and for higher degrees of
automation and control than exist in today's electric transmission and
distribution system, it is necessary for there to be standards that
guide manufacturers and smart grid developers, foster innovation, and
provide for a platform that enables a wide range of offerings to come
to market and have the opportunity to compete. As occurred with
telecommunications and the evolution of the Internet, effective
standards form the basis upon which entrepreneurs can bring innovations
to the marketplace, build new businesses, and create job opportunities.
At the same time, it is paramount that smart grid devices and
inter-operability standards include protections against cyber
intrusions and have systems that are designed from the start (not
patches added on) that prevent hackers from disrupting grid operations
from gaining entry through the millions of new portals created by the
deployment of smart grid technologies, tools, and techniques.
Through the Federal Smart Grid Task Force, we are collaborating
with the National Institute of Standards and Technology (NIST) and
other agencies and organizations in the development of a framework and
roadmap for inter-operability standards, as called for in EISA Section
1305. Cyber security is a critical element of these efforts. Our
collaboration with NIST includes financial assistance involving $10
million of Recovery Act funding that was designated to support the
development and implementation of inter-operability standards.
As a demonstration that the DOE is working to eliminate cyber
security risks, the following language is part of the smart grid FOAs:
Cyber security should be addressed in every phase of the
engineering life cycle of the project, including design and
procurement, installation and commissioning, and the ability to provide
ongoing maintenance and support. Cyber security solutions should be
comprehensive and capable of being extended or upgraded in response to
changes to the threat or technological environment. The technical
approach to cyber security should include:
A summary of the cyber security risks and how they
will be mitigated at each stage of the life cycle (focusing on
vulnerabilities and impact).
A summary of the cyber security criteria utilized for
vendor and device selection.
A summary of the relevant cyber security standards
and/or best practices that will be followed.
A summary of how the project will support emerging
smart grid cyber security standards.
DOE intends to work with those selected for award but may decide
not to make an award to an otherwise meritorious application if that
applicant cannot provide reasonable assurance that their cyber security
will provide protection against broad-based systemic failures in the
electric grid in the event of a cyber security breach.
The following technical merit review criteria will be used in the
evaluation of applications and in the determination of the SGIG project
awards. The relative importance of the four criteria is provided in
percentages in parentheses.
1. Adequacy of the Technical Approach for Enabling Smart Grid
Functions (40 percent)
2. Adequacy of the Plan for Project Tasks, Schedule,
Management, Qualifications, and Risks (25 percent)
3. Adequacy of the Technical Approach for Addressing Inter-
operability and Cyber Security (20 percent)
4. Adequacy of the Plan for Data Collection and Analysis of
Project Costs and Benefits (15 percent)
Smart Grid Research and Development
OE's fiscal year 2010 budget request contains a new line item to
support a suite of activities to develop the next generation of smart
grid technologies, tools, and techniques. While the FOAs are intended
to accelerate existing systems, the R&D activities are aimed at new
inventions, discoveries, and technology advances. We view grid
modernization as a multi-decade process based on private sector
investments and business innovations across a variety of markets and
applications. This will be a highly dynamic process and will require
agility and flexibility in the way OE manages its activities. There is
direct linkage between the FOAs and the R&D, as lessons learned during
implementation will generate use cases, best practices, and experience
that will guide R&D directions and priorities.
Smart grid R&D priorities for fiscal year 2010 include:
Integrated communications,
Advanced components,
Advanced control methods,
Sensing and measurement,
Improved interfaces and decision support, and
Grid materials research.
Integrated communications involves projects to create an open
architecture and support inter-operability for a ``plug & play'' smart
grid environment. Advanced components include projects to develop power
electronics devices for high-voltage energy conversion and flow
control. Advanced control methods includes projects to provide
operating and control solutions for integrating renewable and
distributed energy systems into the electric transmission and
distribution system, including plug-in electric vehicles. Sensing and
measurement includes projects for advanced devices to evaluate system
conditions and feed back such information to both grid operators and
consumers for optimized operations and controls. Improved interfaces
and decision support includes projects to develop tools for grid
operators and consumers to use information streams from smart grid
devices for real-time decision-making and diagnostics. Grid materials
research includes projects to explore advanced materials for
conductors, insulators, power electronics devices, and other equipment
that involve materials that change shape or functionality in response
to external conditions where new qualities and performance features
will be needed when those devices operate in a smart grid environment.
Another R&D priority for 2010, and one that is closely related to
and coordinated with our work in smart grid R&D, involves Clean Energy
Transmission and Reliability and projects involving the deployment of
Phasor Measurement Units (PMUs). OE leadership has been instrumental in
the development and deployment of this technology and in the formation
of the North American SyncroPhasor Initiative (NASPI), which involves
OE collaboration with the Nation's leading electric utilities, power
transmission companies, independent system operators, universities,
national laboratories, and the North American Electric Reliability
Corporation. The NASPI mission is to improve power system reliability
and visibility through wide area measurement and control.
Synchrophasors are precise grid measurements now available from
monitors called phasor measurement units (PMUs). PMU measurements are
taken at high speed (typically 30 observations per second--compared to
one every four seconds using conventional technology). Each measurement
is time-stamped according to a common time reference. Time stamping
allows synchrophasors from different utilities to be time-aligned (or
``synchronized'') and combined together providing a precise and
comprehensive view of the entire interconnection. Synchrophasors are
providing greater insight into system operating conditions and hold the
promise to enable a better indication of grid stress. An important goal
is the use of PMU-derived information to trigger corrective actions
that maintains reliable system operation.
A map of PMU installations shows growing numbers across North
America including the Eastern Interconnection, Western Interconnection,
and the ERCOT Interconnection (which comprises most of Texas). Devices
called phasor data concentrators aggregate PMU data for use by system
operators for wide area visibility and measurements. There are
significant computational challenges in organizing and analyzing phasor
data and in developing models and analysis tools for grid operators and
visualization and decision-making support. Such models and tools are
essential for making key system-level improvements, including:
Wide-area, real-time interconnection monitoring,
visualization, and situational awareness of precursors of grid
stress, e.g., phase angles, damping,
Monitoring of key metrics and compliance with
reliability standards,
Translation of data and metrics into information
dashboards for operator action,
Model validation (e.g., dynamic models, load models),
Event analysis of root causes and forensics,
Small signal stability monitoring and oscillation
detection,
Automated control actions--smart switchable networks,
Definition of ``edge'' and reliability margins for
real-time dynamic system management, and
Computation of sensitivities and analysis of
contingencies.
OE priorities in this area for fiscal year 2010 include development
of prototype small signal monitoring tools for damping of
characteristic grid oscillations, development of dynamics analysis
capabilities for PMU-based networks, development of advanced
visualization and decision-making tools, assess possible PMU
installations to monitor dynamics from wind and other variable sources
of renewable generation, research in new algorithms and computational
methods for solving complex power system problems, and assessments of
human factors requirements for grid operators using operational
simulations and scenario-based assessments.
Conclusion
OE's smart grid activities are among our top priorities and
crosscut virtually everything we do in electricity delivery and energy
reliability. Our immediate attention is on the successful
implementation of the two Recovery Act programs in smart grid
investment grants and demonstrations. At the same time we are moving
forward on smart grid R&D to accelerate development of the next
generation of smart grid technologies, tools, and techniques. All of
these efforts are aimed at modernizing the North American electric
grid. We believe that grid modernization is paramount for achieving
national energy, environmental, and economic goals for reductions in
oil consumption and carbon emissions, as well as creation of new
businesses and jobs for American workers.
This concludes my statement, Mr. Chairman. Thank you for the
opportunity to testify. I look forward to answering any questions you
and your colleagues may have.
Biography for Patricia Hoffman
Patricia Hoffman is the Principal Deputy Assistant Secretary for
the Office of Electricity Delivery and Energy Reliability at the U.S.
Department of Energy. The Office of Electricity Delivery and Energy
Reliability leads the Department of Energy's (DOE) efforts to modernize
the electric grid through the development and implementation of
national policy pertaining to electric grid reliability and the
management of research, development, and demonstration activities for
``next generation'' electric grid infrastructure technologies.
Hoffman is responsible for developing and implementing a long-term
research strategy for modernizing and improving the resiliency of the
electric grid. Hoffman directs research on visualization and controls,
energy storage and power electronics, high temperature
superconductivity and renewable/distributed systems integration. She
also oversees the business management of the office including human
resources, budget development, financial execution, and performance
management. Before joining the Office of Electricity Delivery and
Energy Reliability, Hoffman was the Program Director for the Federal
Energy Management Program which implements efficiency measures in the
federal sector and the Program Manager for the Distributed Energy
Program that developed advanced natural gas power generation and
combined heat and power systems. She also managed the Advanced Turbine
System program resulting in a high-efficiency industrial gas turbine
product. Hoffman holds a Bachelor of Science and a Master of Science in
Ceramic Science and Engineering from Penn State University.
Chairman Baird. Thank you, Ms. Hoffman.
Ms. Kelly.
STATEMENT OF MS. SUEDEEN G. KELLY, COMMISSIONER, FEDERAL ENERGY
REGULATORY COMMISSION
Ms. Kelly. Thank you, Mr. Chairman and Members of the
Subcommittee for the opportunity to testify today. My name is
Suedeen Kelly. I am a Commissioner on the Federal Energy
Regulatory Commission, and what I am going to do now is
describe FERC's efforts to develop and implement a range of
technologies which has come to be known collectively as the
smart grid. I am going to discuss three topics: our authority
to act, the coordinated efforts we have undertaken to date with
other federal regulators and State regulators, and the activity
that we have undertaken on our own.
Regarding our authority to act, it derives from two
statutes: the Energy Independence and Security Act passed in
2007 and the Federal Power Act, which has been with us for over
70 years now. The Energy Independence and Security Act gives
FERC authority in the area of inter-operability standards for
the smart grid. The Federal Power Act gives FERC jurisdiction
over part of the electricity industry and part of the
electricity market. Specifically, there are three areas under
the Federal Power Act where we have jurisdiction that are
relevant to smart grid development.
First, we have jurisdiction over the transmission of
electricity by public utilities but we don't have jurisdiction
over the distribution of electricity, which is subject to State
regulation. We have jurisdiction over the wholesale sales of
electricity in interstate commerce by public utilities, but we
don't have jurisdiction over retail sales, which is under the
jurisdiction of State regulators. And we have jurisdiction over
the approval and enforcement of reliability standards for the
bulk power system.
We have been coordinating over the last two years with
federal and State agencies. In the federal arena, smart grid
efforts involve a broad range of government agencies and the
federal agencies include primarily those who are with you
today: the Department of Energy, the National Institute of
Standards and Technology, and FERC, as Ms. Hoffman has
described DOE's role on smart grid and Dr. Arnold will soon
describe the role of NIST. NIST will be involved in setting up
the framework for inter-operability standard development and
overseeing that development. Once FERC determines that NIST's
work has led to sufficient consensus regarding a standard, then
FERC's role under the Energy Independence and Security Act is
to adopt the inter-operability standards ``needed to ensure the
functionality and inter-operability of smart grid.'' So it may
be that some of the standards developed through the NIST
process will not ultimately fall into the category of ``needed
to ensure the functionality and inter-operability'' but to the
extent those standards do fall into that category, it is FERC's
responsibility to adopt them as regulations, or at least we
have the authority to do that.
Development of the inter-operability framework, as Dr.
Arnold will discuss, is a very challenging task. Recent funding
for NIST's efforts will help but coordination among government
agencies as well as among industry participants is just as
important. DOE, NIST and FERC have been working with each other
to ensure progress, and those efforts will continue.
In the State arena, as I mentioned, utilities are regulated
by FERC at the transmission level and the wholesale level, and
most of them are also regulated by one or more State regulatory
commissions at the distribution level and the retail sales
level. Now, because smart grid technologies span the grid from
the transmission through the distribution level, the concurrent
jurisdiction of federal and State regulators, we believe, will
best be served if both federal and State regulators adopt
complementary policies to avoid sending regulatory signals. To
address this as well as other issues related to deployment of
smart grid technology, I and Mr. Fred Butler, who is Chairman
of the New Jersey Public Utility Commission as well as
President of the Association of State Utility Commissioners,
formed a collaborative and we co-chair that collaborative
between FERC and the State commissions. At present, there are
21 states that have become a member of that collaborative.
Since its creation 15 months ago, the collaborative has
explored a host of technological and regulatory issues
involving the smart grid including the development of a
clearinghouse of information at the Department of Energy as
well as the drafting of criteria that we suggested to the
Department of Energy for the funding of smart grid technologies
under the stimulus bill and we are now participating with the
help of Lawrence Berkeley Lab and the Pacific Northwest
National Lab in the NIST process as a collaborative and in the
development of DOE's clearinghouse for information from smart
grid demonstration projects.
A critical issue as smart grid is deployed is the need to
ensure grid reliability and cyber security. FERC can use its
existing authority to facilitate implementation of smart grid
under the Federal Power Act. Last week FERC adopted a smart
grid policy statement that basically has two parts. The first
part identified priorities that we see from our position of
regulator of the electric industry for the development of
inter-operability standards. Cyber security is one of those
priorities as is standardized communication across intersystem
interfaces. We also listed four functional priorities: wide
area situational analysis, demand response, electric storage
and electric transportation. The policy statement also
specified certain cost recovery mechanisms available for
recovery of costs of transmission-owning utilities that want to
invest in the smart grid facilities.
I appreciate the opportunity to testify today and I would
be happy to answer any questions that you might have.
[The prepared statement of Ms. Kelly follows:]
Prepared Statement of Suedeen G. Kelly
Introduction and Summary
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to speak here today. My name is Suedeen Kelly, and I am a
Commissioner on the Federal Energy Regulatory Commission (FERC or
Commission). My testimony addresses the efforts to develop and
implement a range of technologies collectively known as the ``smart
grid.''
Our nation's electric grid generally uses decades-old technology
and has not incorporated new digital technologies extensively. Digital
technologies have transformed other industries such as
telecommunications. A similar change has not yet happened for the
electric grid. As detailed below, a smart grid can provide a range of
benefits to the electric industry and its customers, enhancing its
efficiency and enabling its technological advancement while ensuring
its reliability and security. While we are moving forward expeditiously
on smart grid, its implementation will take time.
Smart grid efforts involve a broad range of government agencies, at
both the federal and State levels. The federal agencies include
primarily the Department of Energy (DOE), the National Institute of
Standards and Technology (NIST) and the FERC. DOE's tasks include
funding research and development; awarding grants for smart grid
projects; managing the Smart Grid Task Force, discussed below; and
developing a smart grid information clearinghouse. NIST has primary
responsibility for coordinating development of an ``inter-operability
framework'' allowing smart grid technologies to communicate and work
together. The FERC is then responsible for adopting inter-operability
standards, once FERC is satisfied that NIST's work has led to
sufficient consensus.
Development of the inter-operability framework is a challenging
task. Recent funding for NIST's efforts will help, but cooperation and
coordination among government agencies and industry participants is
just as important. DOE, NIST and FERC have been working with each other
and with other federal agencies to ensure progress, and those efforts
will continue. FERC also has been coordinating with State regulators,
to address common issues and concerns.
The FERC can use its existing authority to facilitate
implementation of smart grid. For example, through its recent final
smart grid Policy Statement (Policy Statement), the Commission has
specified criteria for recovery of costs of investing in jurisdictional
smart grid facilities.
A critical issue as smart grid is deployed is the need to ensure
grid reliability and cybersecurity. The significant benefits of smart
grid technologies must be achieved without taking reliability and
security risks that could be exploited to cause great harm to our
nation's citizens and economy.
Finally, if the intent of Congress is that everyone must comply
with the smart grid standards adopted by the Commission under the
Energy Independence and Security Act of 2007 (EISA), additional
legislation would need to be considered.
What is the Smart Grid?
``Smart grid'' refers to the effort to modernize the electric grid
to improve the way we deliver and use power. The smart grid takes the
existing electricity delivery system and makes it smarter by linking
seamless communications systems to the electrical transmission and
distribution system between any point of generation and any point of
consumption. It can monitor, protect and automatically optimize the
operation of the interconnected elements. The smart grid will provide a
two-way flow of electricity and information to create a more automated
and efficient energy delivery network.
The smart grid concept encompasses all levels of the electric
system, and, therefore, a comprehensive list of applications and
technologies could be quite long. Two key examples, however, include:
(1) smart thermostats capable of receiving and responding to
electricity price or dispatch signals to lower or raise demand as
necessary to balance available supply at the device level; and (2)
advanced sensor networks on the distribution and transmission grids to
improve awareness of actual system conditions and, thus, permit more
advanced control and use of those grids.
How do Technology and Regulation Interact?
Existing retail and wholesale regulatory frameworks generally
assume that load (i.e., customer consumption; also called demand) is an
uncontrollable variable that can only be addressed with controllable
generation. Accordingly, load pays to consume the energy it needs, and
generation is paid to meet that need no matter how variable and
unpredictable it may be. This mutes any incentive for load to shift its
usage in grid-favorable ways and increases the challenge and cost of
accommodating such load with generation. The smart grid concept seeks
to move away from this framework by making all aspects of the electric
system, including the load side, more transparent, interactive, and
responsive.
This interplay between technology and regulation is visible in the
Commission's examination of its rate policies in light of the new
Congressional directive in the EISA to initiate rule-makings on smart
grid inter-operability standards. As explained in more detail below,
the Commission recently issued a smart grid Policy Statement that
adopts an interim rate policy to help encourage investment in smart
grid systems.
At the consumer level, a smart grid could include smart devices,
such as smart thermostats capable of receiving and responding to
electricity price or dispatch signals to lower or raise demand as
necessary to balance available supply at the device level. State
regulators have the authority and ability to provide pricing and
dispatch signals at retail. If signals reflect real-time costs,
consumers are likely to buy and install smart devices. For example,
consumers might install smart thermostats if regulators provide real-
time price signals.
What Federal Regulation Applies?
Federal regulation relevant to smart grid is found in the following
statutes: EISA; the Energy Policy Act of 2005; and the American
Recovery and Reinvestment Act of 2009. The provisions of the FPA can
also be used to advance smart grid technologies. These are discussed
below.
Section 1301 of the EISA states that ``it is the policy of the
United States to support the modernization of the Nation's electricity
transmission and distribution system to maintain a reliable and secure
electricity infrastructure that can meet future demand growth and to
achieve'' a number of benefits. Section 1301 specifies benefits such
as: increased use of digital technology to improve the grid's
reliability, security, and efficiency; ``dynamic optimization of grid
operations and resources, with full cyber-security;'' facilitation of
distributed generation, demand response, and energy efficiency
resources; and integration of ``smart'' appliances and consumer
devices, as well as advanced electricity storage and peak-shaving
technologies (including plug-in hybrid electric vehicles).
Section 1305(a) of the EISA gives NIST ``primary responsibility to
coordinate the development of a framework that includes protocols and
model standards for information management to achieve inter-operability
of smart grid devices and systems.'' NIST is required to solicit input
from a range of others, including the GridWise Architecture Council and
the National Electrical Manufacturers Association, as well as two
international bodies, the Institute of Electrical and Electronics
Engineers and the North American Electric Reliability Corporation
(NERC). Many of the organizations working with NIST on this issue
develop industry standards through extensive processes aimed at
achieving consensus.
Although the EISA does not define inter-operability, definitions
put forth by others often include many of the same elements. These
include: (1) exchange of meaningful, actionable information between two
or more systems across organizational boundaries; (2) a shared meaning
of the exchanged information; (3) an agreed expectation for the
response to the information exchange; and (4) requisite quality of
service in information exchange: reliability, accuracy and security.
(See GridWise Architecture Council, ``Inter-operability Path Forward
Whitepaper,'' www.gridwiseac.org)
Pursuant to EISA section 1305(d), once the Commission is satisfied
that NIST's work has led to ``sufficient consensus'' on inter-
operability standards, it must then ``institute a rule-making
proceeding to adopt such standards and protocols as may be necessary to
insure smart-grid functionality and inter-operability in interstate
transmission of electric power, and regional and wholesale electricity
markets.'' Section 1305 does not specify any other prerequisites to
Commission action, such as a filing by NIST with the Commission or
unanimous support for individual standards or a comprehensive set of
standards.
The Commission's role under EISA section 1305 is consistent with
its responsibility under section 1223 of the Energy Policy Act of 2005.
Section 1223 directs FERC to encourage the deployment of advanced
transmission technologies, and expressly includes technologies such as
energy storage devices, controllable load, distributed generation,
enhanced power device monitoring and direct system State sensors.
Recently, the American Recovery and Reinvestment Act of 2009 (the
``Stimulus Bill'') appropriated $4.5 billion to DOE for ``Electricity
Delivery and Energy Reliability.'' The authorized purposes for these
funds include, inter alia, implementation of programs authorized under
Title XIII of EISA, which addresses smart grid. Smart grid grants would
provide funding for up to 50 percent of a project's documented costs.
In many cases, State and/or federal regulators could be asked to
approve funding for the balance of project costs. The Secretary of
Energy is required to develop procedures or criteria under which
applicants can receive such grants. The Stimulus Bill also states that
$10 million of the $4.5 billion is ``to implement [EISA] section
1305,'' the provision giving NIST primary responsibility to coordinate
the development of the inter-operability framework.
The Stimulus Bill also directed the Secretary of Energy to
establish a smart grid information clearinghouse. As a condition of
receiving smart grid grants, recipients must provide such information
to the clearinghouse as the Secretary requires.
As an additional condition, recipients must show that their
projects use ``open protocols and standards (including Internet-based
protocols and standards) if available and appropriate.'' These open
protocols and standards, sometimes also referred to as ``open
architecture,'' will facilitate inter-operability by allowing multiple
vendors to design and build many types of equipment and systems for the
smart grid environment. As the GridWise Architecture Council stated,
``An open architecture encourages multi-vendor competition because
every vendor has the opportunity to build interchangeable hardware or
software that works with other elements within the system.'' (See
``Introduction to Inter-operability and Decision-Maker's Checklist,''
page 4, www.gridwiseac.org)
The Commission's interest and authority in the area of smart grid
derives not only from the EISA but also from its authority under the
Federal Power Act (FPA) over the rates, terms and conditions of
transmission and wholesale sales in interstate commerce and its
responsibility for reliability standards for the bulk-power system.
Specifically, the Commission has jurisdiction over transmission and
sales for resale of electric energy in interstate commerce by public
utilities pursuant to FPA section 201 and over the approval and
enforcement of reliability standards for the bulk-power system under
FPA section 215.
An additional issue involves enforcement of smart grid standards
promulgated by the Commission under EISA section 1305. This section,
which is a stand-alone provision instead of an amendment to the FPA,
requires the Commission to promulgate standards, but does not provide
that the standards are mandatory or provide any authority or procedures
for enforcing such standards. If the Commission were to seek to use the
full scope of its existing FPA authority to require compliance with
smart grid standards, most of its authorities apply only to certain
entities (i.e., public utilities under its rate-making authority in
sections 205 and 206, or users, owners and operators of the bulk power
system under its reliability authority in section 215). The Commission
also has asserted jurisdiction in certain circumstances over demand
response programs involving both wholesale and eligible retail
customers. However, The Commission's authority under the FPA excludes
local distribution facilities unless specifically provided; its rate
authority under sections 205 and 206 applies only to public utilities;
and its section 215 reliability authority does not authorize it to
mandate standards but rather only to refer a matter to NERC's standard-
setting process. Further, its section 215 reliability authority
excludes Alaska and Hawaii. If the intent of Congress is that everyone
must comply with the smart grid standards adopted by the Commission
under the EISA, additional legislation should be considered.
While FERC, by itself, may be able to take steps to foster smart
grid technologies, achieving the full benefits of a smart grid will
require coordination among a broad group of entities, particularly DOE,
NIST, FERC and State regulators. For example, Congress itself
recognized, in EISA section 1305(a)(1), the need for NIST to seek input
from FERC, the Smart Grid Task Force established by DOE and ``other
relevant federal and State agencies.'' On another front, DOE's
authority to support up to 50 percent of the cost of a smart grid
project must be matched with regulatory approvals allowing utilities to
recover the rest of their costs in rates. Similarly, the concurrent
jurisdiction of the FERC and State commissions over many utilities will
require regulators to adopt complementary policies to avoid sending
conflicting regulatory signals. More fundamentally, a smart grid will
require substantial coordination between wholesale and retail markets
and between the federal and State rules governing those markets.
Similarly, smart grid standards may require changes to business
practice standards already used in the industry, such as those
developed through the North American Energy Standards Board, and the
industry and government agencies should support the work needed to
evaluate and develop those changes.
How are the FERC, NIST and DOE Collaborating?
As required by EISA section 1303, DOE has established the smart
grid Task Force. The Task Force includes representatives from DOE,
FERC, NIST, the Environmental Protection Agency and the Departments of
Homeland Security, Agriculture and Defense. The Task Force seeks to
ensure awareness, coordination and integration of Federal Government
activities related to smart grid technologies, practices, and services.
The Task Force meets on a regular basis, and has helped inform the
participating agencies of the smart grid efforts of other participants
as well as the efforts outside the Federal Government. FERC has
designated two employees (one from the Office of Energy Policy and
Innovation and one from the Office of Electric Reliability) to the Task
Force. These employees bring a policy, rates, reliability and
cybersecurity perspective to the Task Force. The FERC routinely updates
the Task Force on the FERC/NARUC smart grid Collaborative, discussed
below, and other FERC orders regarding smart grid policy.
Independent of the Smart Grid Task Force, the Commission has
coordinated closely with NIST and DOE on the development of inter-
operability standards for the smart grid. Several FERC commissioners
and staff have participated in relevant meetings and conferences as
speakers and/or session chairs. FERC staff also confers regularly with
NIST and DOE staff on inter-operability standards, discussing matters
such as accelerating the timeline, strategies to achieve consensus, and
setting priorities.
How is FERC Collaborating with the States?
In February 2008, FERC and NARUC began the Smart Grid
Collaborative. I and Commissioner Frederick F. Butler of the New Jersey
Board of Public Utilities co-chair the collaborative. Initiation of a
collaborative effort was timely because State regulators were
increasingly being asked to approve pilot or demonstration projects or
in some cases widespread deployment in their states of advanced
metering systems, one key component of a comprehensive smart grid
system.
The Collaborative began by convening joint meetings to hear from a
range of experts about the new technologies. A host of issues were
explored. Key among them were the issues of inter-operability, the
types of technologies and communications protocols used in smart grid
applications, the sequence and timing of smart grid deployments, and
the type of rate structures that accompany smart grid projects.
Through these meetings, Collaborative members learned of a range of
smart grid projects already in place around the country. The smart grid
programs in existence were varied in that they used a mix of differing
technologies, communications protocols and rate designs. Collaborative
members began discussing whether a smart grid information clearinghouse
could be developed that would then allow an analysis of best practices.
This information could help regulators make better decisions on
proposed smart grid projects in their jurisdictions. In keeping with
the Stimulus Bill, DOE is working to establish such a clearinghouse.
The Collaborative members have begun to look beyond the information
clearinghouse to who could best analyze this information to identify
best practices from smart grid applications. Funding is being sought
for a project under the auspices of the Collaborative that could act as
an analytical tool to evaluate smart grid pilot programs, using the
information developed by the clearinghouse, once the clearinghouse
information becomes available. DOE recently selected a contractor to
set up the clearinghouse.
The Collaborative also developed criteria to apply to projects
seeking smart grid grants. The Collaborative members focused on
criteria that could help them fulfill their legal responsibilities as
to smart grid projects they would be asked to approve. DOE has adopted
many of the Collaborative's suggested funding criteria regarding data
disclosures, cybersecurity, inter-operability and requirements related
to the identification of project benefits.
In addition, the Collaborative has met with DOE staff to discuss
possible funding for technical assistance to the Collaborative and
State regulators as they engage with NIST and other stakeholders in the
development of smart grid inter-operability standards and protocols.
The Commission and NARUC also have a Demand Response Collaborative
headed up by FERC Chairman Jon Wellinghoff, Commissioner Phyllis Reha
of the Minnesota Public Utilities Commission, and Commissioner Katrina
McMurrian of the Florida Service Commission. The Demand Response
Collaborative often focuses on smart grid issues because demand
response will play an integral role in the smart grid. Smart grid
technologies have considerable potential to facilitate demand response,
and demand response can help address bulk-power system challenges,
including reliably integrating unprecedented amounts of renewable
resources into the grid.
How is the FERC Reaching Out to Industry?
The Commission performs continuing outreach within the electric
power industry to ensure that regulated entities are aware of NIST's
process for the development of the framework for inter-operability
standards and to encourage participation in this process. Numerous
discussions have occurred with regional transmission organizations, the
ISO-RTO Council (a coordinating entity comprised of ten independent
system operators and regional transmission organizations in North
America), and public utilities that have been actively involved in
smart grid projects, including Xcel, AEP, SoCal Edison, PG&E, Oncor,
Consumers Energy, and Duke. The Commission has also followed the
efforts of the GridWise Architecture Council in order to get a better
understanding of smart grid inter-operability standards from an
information technology point of view. The GridWise Architecture Council
was formed by DOE to promote and enable inter-operability among the
many entities that interact with the Nation's electric power system.
The FERC's Policy Statement
Last week, the Commission approved its smart grid Policy Statement.
This action was preceded by the issuance of a proposed policy statement
on March 19, 2009. Over 70 comments were received in response to the
proposed policy statement.
The Policy Statement prioritizes the development of key inter-
operability standards. This prioritization will facilitate progress on
the smart grid technologies that will provide the largest benefits to a
broad group of market participants.
The Policy Statement establishes two cross-cutting and four
functional priorities for inter-operability standards. The cross-
cutting priorities are cybersecurity and standardized communication
across inter-system interfaces. To insure the integrity and reliability
of the underlying bulk-power system, the Commission has required a
demonstration of sufficient cybersecurity protections in all proposed
smart grid standards to be considered in the FERC rule-making process
directed by the EISA, including, where appropriate, a proposed smart
grid standard applicable to local distribution-related components of
smart grid. The Commission has also recognized that development of a
common semantic framework and software models to enable effective
communication and coordination across the inter-system interfaces is
critical to supporting all of the smart grid goals, such as system
self-healing, integration of diversified resources and improved system
efficiency and reliability.
The four functional priorities are wide-area situational analysis,
demand response, electric storage, and electric transportation. First,
wide-area situational analysis awareness is imperative for enhancing
reliability of the bulk-power system because it allows for greater
knowledge of the current state of available resources, load
requirements and transmission capabilities. Second, smart grid
technologies have considerable potential to promote demand response,
which can reduce wholesale prices and wholesale price volatility and
reduce potential generator market power. Third, as the technology
advances, electricity storage will become a valuable resource providing
a variety of services to the bulk-power system, including helping to
address large-scale changes in generation mix. Finally, to the extent
that new electric transportation options become more widely adopted in
the near future, maintaining the reliable operation of the bulk-power
system will require some level of control over when and how electric
vehicles draw electricity off the electric system. Therefore, the
Commission has urged the early development of standards that can permit
distribution utilities to facilitate electric vehicle charging during
off-peak load periods.
In the Policy Statement, the Commission also adopted an interim
rate treatment to encourage the near-term deployment of smart grid
systems capable of helping to address challenges to the operation of
the bulk-power system, if certain conditions are met. Those conditions
include showing that (1) the smart grid facilities will advance the
smart grid concept, (2) reliability and cybersecurity of the bulk-power
system will not be adversely affected, (3) the applicant has minimized
the possibility of stranded investment in smart grid equipment, and (4)
the applicant must share feedback useful to the inter-operability
standards development process with the Department of Energy Smart Grid
Clearinghouse. The conditions that FERC has put in place for FERC-
jurisdictional costs may serve as a model for retail regulators.
Conclusion
A coordinated and timely deployment of smart grid can provide many
positive benefits to the Nation's electric industry and its customers,
if we are careful to maintain and enhance grid security and reliability
at the same time. Indeed, I would expect smart grid to evolve in many
unanticipated but beneficial ways. Well-designed standards and
protocols are needed to make smart grid a reality. They will eliminate
concerns about technology obsolescence, allow system upgrades through
software applications, and ultimately permit plug-and-play devices,
regardless of vendor. The dynamic nature of smart grid technologies and
practices are, in some cases, creating challenges in government
oversight of the power industry. There is a great need for continued
collaboration between State and federal regulators and between industry
and government in general. The FERC is committed to working closely
with DOE, NIST and others to facilitate rapid deployment of innovative,
secure smart grid technologies.
Thank you again for the opportunity to testify today. I would be
happy to attempt to answer any questions you may have.
Biography for Suedeen G. Kelly
Suedeen G. Kelly is a Commissioner at the Federal Energy Regulatory
Commission, who has served since November 2003. In December 2004, she
was confirmed to a second term that expires June 30, 2009. Previously
she was a Professor of Law at the University of New Mexico School of
Law, where she taught energy law, public utility regulation,
administrative law and legislative process. She also worked with the
law firm of Modrall, Sperling, Roehl, Harris & Sisk in Albuquerque from
2000 through 2003 and the law firm of Sheehan, Sheehan, and Stelzner
from 1992 through 1999. In 2000, Ms. Kelly served as counsel to the
California Independent System Operator. In 1999, she worked as a
Legislative Aide to U.S. Senator Jeff Bingaman.
Prior to joining the faculty of the Law School, Ms. Kelly served as
Chair of the New Mexico Public Service Commission, which regulated New
Mexico's electric, gas and water utilities. She had been a lawyer in
the Office of the New Mexico Attorney General and with the New Mexico
firm of Leubben, Hughes & Kelly. She also worked in Washington, DC, for
the Natural Resources Defense Council and Ruckelshaus, Beveridge,
Fairbanks & Diamond.
Education: University of Rochester, B.A. with Distinction in Chemistry
and a J.D. cum laude from Cornell Law School. She is admitted to the
bars of New Mexico and the District of Columbia.
Chairman Baird. Thank you, Ms. Kelly.
Dr. Arnold.
STATEMENT OF DR. GEORGE W. ARNOLD, NATIONAL COORDINATOR FOR
SMART GRID INTER-OPERABILITY, NATIONAL INSTITUTE OF STANDARDS
AND TECHNOLOGY, U.S. DEPARTMENT OF COMMERCE
Dr. Arnold. Chairman Baird, Ranking Member Inglis and
Members of the Subcommittee, thank you for this opportunity to
discuss NIST's progress in accelerating the development of
standards needed to realize a secure and inter-operable
nationwide smart grid.
Working with industry, government and consumer
stakeholders, NIST is providing strong national and technical
leadership to help make a reliable, robust smart grid a
reality. The Recovery Act provided NIST with $10 million from
the Department of Energy and we are using this funding to speed
up the process to build a standards foundation for the smart
grid. First, I would like to summarize our three-phase effort
to expedite development of this foundation.
Phase I is well underway and nearing completion. On the
basis of stakeholder input, we have identified an initial slate
of 16 standards and 64 more are undergoing public review. In
September, we intend to issue for public comment Release 1.0 of
the NIST framework and roadmap for smart grid inter-operability
standards. The document that we deliver to FERC will describe a
reference architecture, an initial set of standards to support
secure and inter-operable implementation and prioritized action
plans to fill gaps. In Phase II, which we launched last month
with a request for proposal, NIST is establishing a formal
standards panel, a private-public partnership to drive long-
term progress in the development and implementation of the
hundreds of standards that eventually will be needed. Later
this year in Phase III, NIST will announce plans for a
framework for testing and certifying how standards are
implemented in the smart grid devices, systems and processes.
As we work with the many stakeholder groups, we are
uncovering and addressing many issues that are impediments to a
fully operational smart grid. For example, there is a
foundational smart meter-related standard that is so feature-
rich that different meter vendors have implemented it in
different ways. This ambiguity undermines inter-operability. We
have commissioned a fast track effort to revise the standard
and to ensure upgradability to extend the useful life of smart
meter deployments.
We are also focusing on the plethora of wired and wireless
communications technologies being employed by the smart meter
manufacturers. The goal is to provide guidance on the selection
of communication standards--one size does not fit all in this
case--and not to mandate the use of a particular technology or
spectrum.
Then there is the matter of supporting plug-in electric
vehicles, or PEVs. The interface between the PEVs and the grid
needs to support two-way flow of electricity and information
and to meet relevant standard codes. At least seven sets of
standards under the auspices of five different standards
development organizations needs to be completed or revised to
provide this functionality. These are but a few of the many
technical issues that we are addressing with the engagement of
the many hundreds of stakeholders in our process.
Mr. Chairman, I would like to conclude with some final
thoughts. First and foremost, we will continue to stress the
critical dimension of security in our work. We need to design
in the necessary safeguards at the very beginning. Second, I
believe the approach we are taking to develop standards for the
smart grid, a strong public-private partnership forged with
active White House and Cabinet-level leadership is the right
one. Third, we must aim to develop and use international
standards wherever possible to enable U.S. manufacturers to
capture global market opportunities. Fourth, NIST is engaging,
as Commissioner Kelly has cited, the states as integral
partners in the standards effort. And finally, it is essential
that we base the smart grid on open standards in order to
foster innovation.
In conclusion, NIST is proud to have been given such an
important role in the smart grid effort. We are committed to
achieving the Administration's vision of a cleaner, greener,
more efficient and effective electric power grid that creates
jobs and reduces our dependence on others to meet our energy
needs.
Thank you for this opportunity, and I would be happy to
answer any questions.
[The prepared statement of Dr. Arnold follows:]
Prepared Statement of George W. Arnold
Introduction
Chairman Baird, Ranking Member Inglis, and Members of the
Subcommittee, I am George Arnold, the National Coordinator for Smart
Grid Inter-operability at the Department of Commerce's National
Institute of Standards and Technology (NIST).
Thank you for the opportunity to appear before you today to discuss
NIST's progress in accelerating the development of standards needed to
realize a secure and inter-operable nationwide Smart Grid.
A Smart Grid would replace the current, outdated system and employ
real-time, two-way communication technologies to allow users to connect
directly with power suppliers. The development of the grid will create
jobs and spur the development of innovative products that can be
exported. Once implemented, the Smart Grid is expected to save
consumers money and reduce America's dependence on oil by improving
efficiency and spurring the use of renewable energy sources.
President Obama's comprehensive energy plan sets ambitious short-
and long-term goals. And, the American Recovery and Reinvestment Act
includes $11 billion in investments to ``jump start the transformation
to a bigger, better, smarter grid.'' \1\ The President's Council of
Economic Advisors estimates that the number of environment-based jobs
will increase by more than 50 percent between 2000 and 2016, and jobs
created by the Smart Grid are part of this.
---------------------------------------------------------------------------
\1\ ``The American Reinvestment and Recovery Plan--By the
numbers,'' http://www.whitehouse.gov/assets/documents/
recovery-plan-metrics-report-
508.pdf
---------------------------------------------------------------------------
The Smart Grid is a critical piece of the Administration's overall
goal of fostering and creating millions of jobs in a green economy
through the creation of whole new industries and green entrepreneurs,
who are able to grow and thrive as a result of the investments made in
a Smart Grid. NIST's mission to advance innovation and U.S. industrial
competitiveness fits perfectly with this goal and we're committed to
helping make that vision a reality.
Modernizing and digitizing the Nation's electrical power grid--the
largest interconnected machine on Earth--is an enormous challenge and a
tremendous opportunity. Success requires a combination of quick action
and sustained progress in implementing and integrating the components,
systems, and networks that will make up the Smart Grid.
NIST is providing strong national leadership to drive the creation
of inter-operability standards needed to make the Smart Grid a reality.
We are carrying out our standards-related responsibility with a strong
sense of urgency. We are engaging industry, government, and consumer
stakeholders in an open, public process to expedite identification and
development of standards critical to achieving a reliable and robust
Smart Grid. An initial slate of 16 standards has already been
identified, 64 more are undergoing public comment, and a roadmap for
development of additionally-needed standards will be published in
September.
Congress assigned NIST responsibility to coordinate development of
these standards in the Energy Independence and Security Act of 2007.
The Recovery Act provided NIST with $10 million in funding from the
Department of Energy (DOE) to ensure that we had the resources to get
the job done. Development of standards typically occurs at a glacial
pace. ARRA funds are the providing the major boost needed to
dramatically speed up this process.
NIST is well suited for the role of leading the charge for rapid
standards development. The agency has earned a reputation as an
``honest broker''--an impartial, technically knowledgeable third party
with a long history of working collaboratively with industry and other
government agencies. These partners include the DOE, which leads the
overall federal Smart Grid effort. They also include the Federal Energy
Regulatory Commission (FERC), State regulatory commissions, and many
others.
In its role as the Nation's metrology institute, NIST has provided
measurement technology and technical assistance to utilities, equipment
manufacturers, and other power-system stakeholders. For example, NIST
has developed measurements and a special calibration service for power
monitoring instruments so that utilities can know the operational state
of the power grid in real time to minimize disruptions and outages.
With such an integrated monitoring system major blackouts that have
ravaged regions of the Nation in the past can be mitigated. NIST
participates in key international standards organizations, and NIST's
measurement and testing expertise is recognized worldwide.
NIST also is a recognized expert in advanced networking technology
and in the cyber security countermeasures needed to prevent or detect
and mitigate intrusions and network disruptions. NIST also has
collaborated with businesses and standards organizations on guidelines
and standards to protect industrial supervisory control and data
acquisition (SCADA) systems and to secure their interfaces to the power
grid. NIST know-how extends to standards and measurements for building
control systems and their links to the grid.
These strengths are allowing NIST to make a unique contribution to
public and private sector efforts to build the Smart Grid.
NIST Plan to Expedite Standards for the Smart Grid
The need to get this critical standards development work done now
is clear. A recent Congressional Research Service report,\2\ for
example, cited the ongoing deployment of smart meters as an area in
need of widely accepted standards. Ultimately, the U.S. investment in
smart meters is predicted to total $40-$50 billion.
---------------------------------------------------------------------------
\2\ S.M. Kaplan, Electric Power Transmission: Background and Policy
Issues. Congressional Research Service, April 14, 2009.
---------------------------------------------------------------------------
Globally, 100 million new smart meters are predicted to be
installed over the next five years.\3\
---------------------------------------------------------------------------
\3\ ON World, ``100 Million New Smart Meters within the Next Five
Years.'' June 17, 2009; http://www.onworld.com/html/newssmartmeter.htm
---------------------------------------------------------------------------
DOE's Smart Grid Investment Grant Program will provide $3.4 billion
for cost-shared grants to support manufacturing, purchasing and
installation of existing smart grid technologies that can be deployed
on a commercial scale.
Sound inter-operability standards are needed to insure that these
technology investments are not stranded. Such standards enable diverse
systems and their components to work together and to securely exchange
meaningful, actionable information.
NIST took aggressive action in March of this year to accelerate the
identification of needed standards. The agency established a Smart Grid
National Coordinator position--my role--to provide visible leadership
at the national level and focus accountability for managing NIST smart
grid resources to ensure success.
In April, NIST launched a three-phase plan to expedite development
and promote widespread adoption of Smart Grid inter-operability
standards. This plan was developed after consulting with dozens of
stakeholders in industry, the standards community, and Federal and
State government. It satisfies the need to rapidly establish an initial
set of standards, while providing a robust, well governed process for
the evolution of smart grid standards.
Here's a rundown of the three phases, parts of which run in
parallel:
Phase I--Engage stakeholders in a participatory public process to
identify applicable standards, gaps in currently available standards
and priorities for new standardization activities.
The work required in this phase is a very large task being done
over a short period of time. Work on Phase I began in April and will
conclude in September with the publication of Release 1.0 of the NIST
Inter-operability Framework. To expedite progress, NIST augmented its
own technical resources through a contract with the Electric Power
Research Institute (EPRI). EPRI assisted NIST in engaging Smart Grid
stakeholders in assessing existing standards and identifying new
standards needs.
EPRI technical experts compiled and distilled stakeholder inputs,
including technical contributions made at two EPRI-facilitated, two-
day, public workshops--one in April and the other in May. The two
workshops drew more than a thousand participants. The results are
documented in EPRI's ``Report to NIST on the Smart Grid Inter-
operability Standards Roadmap,'' which NIST released for public comment
on June 18. NIST is using this report, along with comments received, as
an input in developing the NIST framework for Smart Grid inter-
operability standards, as called for in EISA. Other inputs include the
accomplishments of five Domain Expert Working Groups established by
NIST in 2008, and the Cyber Security Coordination Task Group
established in 2009. Cyber security is a top priority. The Cyber
Security Coordination Task Group was established to help ensure that
NIST is addressing the cyber security requirements of the Smart Grid as
part of the NIST Smart Grid Inter-operability Framework. The group
includes over 150 experts from industry, academia and government
agencies.
Early next month, NIST will convene another public workshop to get
down to the nuts and bolts of developing plans and setting timelines
for development of the new or revised standards identified through this
process. Representatives of standards developing organizations--SDOs
and user groups--will lead sessions at this workshop.
Developing standards for an advanced metering infrastructure is an
example of one priority area. Research suggests that the combination of
smart meters and demand response could reduce peak power demand by more
than 20 percent. Such benefits will also require standards for grid-
connected consumer products and building systems.
The September Release 1.0 document will describe an initial Smart
Grid architecture; priorities for inter-operability standards,
including cyber security; an initial set of standards to support
implementation; and plans to meet remaining standards needs.
Phase II--Establish a formal private-public partnership to drive
longer-term progress.
While initial standards for the Smart Grid will be identified in
2009, further standards development will be needed to address gaps,
harmonize standards, and incorporate evolving technology. Industry has
made it clear that a representative, reliable, and responsive
organizational structure is needed to support and sustain this
evolutionary development. By the end of 2009, NIST plans to use ARRA
funds to establish, through a contract, a more permanent public-private
partnership entity--a Smart Grid Inter-operability Standards Panel to
serve this function.
Phase III--Develop and implement a framework for testing and
certification.
Testing and certification of how standards are implemented in Smart
Grid devices, systems, and processes are essential to ensure inter-
operability and security under realistic operating conditions. Industry
has indicated that this is a high priority. NIST, in consultation with
industry, government, and other stakeholders, intends to develop an
overall plan for a testing and certification framework by the end of
2009 and initiate steps toward implementation in 2010.
Now, I'd like to shift to some observations on the process and to
identify several issues that could impact standards-related efforts
and, ultimately, progress toward realizing the Smart Grid vision.
Pace, Perseverance, and Perspective
The task of developing standards for a national infrastructure like
the Smart Grid is a large and complex undertaking. However it is
eminently doable. There have been several previous national
infrastructure standards projects of similar magnitude that were
accomplished successfully and with which I have personal experience.
Thirty years ago, Bell Laboratories successfully put in place
architecture for the complete automation of maintenance and operations
in the nationwide telecommunications network, with an underlying
foundation of protocols and standards that utilized distributed
computing and data networking technology of that era. That job was
comparable in scale to the current challenge of the Smart Grid; however
the coordination challenge was a bit easier because the national
network at that time was owned and operated by a single entity with a
captive manufacturer rather than 3100 utilities and many more
suppliers.
A more recent effort that required industry-wide cooperation was
the development of standards for so-called ``next generation networks''
that are transforming legacy voice networks into packet networks
integrating voice, video and data. These networks are being
successfully deployed, embodying hundreds of standards developed over a
five-year period.
However, the situation we face with the Smart Grid is that the
deployment of some elements is out pacing the availability of firm
standards. Clearly, the need for identification and development of
Smart Grid inter-operability standards is urgent. This means that the
diverse community of Smart Grid stakeholders must commit to picking up
the pace of standards development and to engaging in productive
collaboration.
Fortunately, executives in government and industry agree with the
Administration that the challenge, while daunting, must be addressed as
quickly and as thoroughly as possible to ensure success. Energy
Secretary Steven Chu and Commerce Secretary Gary Locke hosted a meeting
at the White House of 70 industry leaders from the IT, utility,
manufacturing, and other sectors. The secretaries encouraged the
executives to devote the organizational energy, will, and resources
necessary to expedite the development and adoption of standards. The
response was overwhelmingly positive.
Yet, by its very nature, the process of developing voluntary
standards from scratch can be painstakingly slow. Years--not weeks or
months--are the customary measurement units. In fact, when NIST
announced its three-phase plan to expedite the process, a newsletter
called it an ``unnaturally paced standards effort.''
So, if the standards process were a track competition, it would be
part sprint, part mid-distance race, and part marathon.
In the sprint portion, we are identifying already-existing
standards that can be applied to Smart Grid needs. In May, after
analyzing input received at our first workshop, NIST identified 16
standards for inclusion in the initial Smart Grid inter-operability
standards framework. This list of standards--all of which require
further development--was submitted for public review and comment.
There are additional examples of this ``low hanging fruit.'' In
fact, the EPRI report identified more than 80 existing standards that
could be applied or adapted to Smart Grid inter-operability or cyber
security needs.
EPRI's report to NIST also flags 70 gaps and issues, and NIST
continues to identify others. We are in the process of distilling,
categorizing, and prioritizing these gaps and issues. For those at the
top of the list, we are developing ``priority action plans,'' in
consultation with standards organizations and other stakeholders.
Our goal is to achieve agreement on individual and collaborative
responsibilities of the standards development organizations--the SDOs--
to address and resolve standards issues and gaps. And, we are asking
the SDOs to achieve ``personal bests'' in terms of the time required to
go from start to finish.
This is the mid-distance portion of the effort, and we will be
setting ambitious timetables for developing sound standards, along with
associated conformance requirements. Clearly, there is a need for
speed, but the standards process must be systematic, not ad hoc.
That, in effect, will complete the first leg of the marathon.
Ultimately, a robust, secure Smart Grid that fosters sustainability and
promotes innovation will be built on an infrastructure consisting of
hundreds of inter-operability standards. Persistence and perseverance
in the domestic and international standards arenas will be required
over a span of, perhaps, a decade or more. The standards panel, which
will be established in the second phase of the plan, will help to
maintain the consistency of effort that will be critical to success.
Standards are necessary but not sufficient--a testing and
certification regime is essential. Developing a framework for testing
and certification constitutes the third phase of the NIST plan.
Examples of Issues
I would like to give you a few examples of the issues we are
uncovering and how we are going about addressing them in collaboration
with industry and the SDOs.
Smart Meters are one of the earliest elements of the Smart Grid to
be deployed and they play an important role by allowing near real-time
collection of data on power usage that enables new forms of demand
response programs and pricing. One of the ``low hanging fruit''
standards identified by NIST is the ANSI C12.19 standard, which
specifies the data tables captured by these meters. The National
Electrical Manufacturers Association (NEMA) was the lead for this
standards effort. This is one of the most fundamental standards needed
for the Smart Grid. Through our workshop process, it was determined
that this standard is so ``feature rich'' and allows so much room for
interpretation that different meter vendors have implemented it in
different ways. This is a serious impediment to inter-operability. We
now know the standard will have to be revised, and it will take some
time to gain industry consensus on the revision.
As soon as we learned this, we called upon NEMA to convene a
standards effort with the leading meter manufacturers to develop a plan
to upgrade the related standards and develop an upgradeability standard
for smart meters to ensure that firmware in meters to be deployed in
near future can be upgraded to accommodate needed changes to the ANSI
C12 standard. This effort will ensure that deployment of smart meters
conforming to this specification can proceed without risk of becoming
stranded investments that are prematurely obsolete.
I would like to commend NEMA and the involved industry participants
for recognizing the issue and for rising to this challenge.
We are also urgently focusing efforts on the plethora of
communications technologies being employed by the smart meter
manufacturers, both wired and wireless. There are proposals for new
approaches, such as the Utility Telecom Council's proposal for the
allocation of dedicated spectrum for utility communications. With the
high demand for spectrum from many different kinds of radio systems,
the concept of dedicating spectrum for one particular application must
be considered carefully so as not to use the critical resource
inefficiently. A standards issue is the need that multiple standards be
supported to meet different real-world requirements and is in keeping
with Congress's requirement that the NIST Inter-operability Framework
be technology neutral to encourage innovation. However, the Federal
Communications Commission has received reports that some wireless
meters operating on unlicensed frequencies have experienced
interference from other unlicensed devices that share the same
frequencies. The potential for interference to wireless meters will
require study in order to develop recommendations and guidance on
appropriate standards and technologies for wireless smart meter
communications.
Moreover, regardless of the outcome of these technical studies,
there is no intention to mandate for smart meter systems the use of
specific spectrum (licensed or unlicensed) or the use of specific
wireless technologies. Thus, all current systems, as well as all
systems under development, which fully comply with FCC requirements,
will be allowed.
I would like to discuss one final example to illustrate the
complexity of the coordination task to develop standards for new smart
grid applications. Consider the standards that are needed to support
the wide-scale deployment of plug-in electric vehicles (PEVs).
Supporting PEVs on the grid is not just a matter of plugging them
into an ordinary electric socket. Ideally PEVs should be charged when
demand on the grid, and hence the price of electricity, is low. The
charging system into which a PEV is connected needs to be integrated
into the Smart Grid demand response capability. The batteries in PEVs
can also be a source of energy for the grid, providing regulation
service or even energy support during periods of peak demand. Thus, the
interface between the PEVs and the grid needs to support two-way flow
of electricity. In order to be deployed, these interfaces and charging
systems need to meet relevant electric codes to ensure safety.
There are at least seven sets of standards developed or being
developed by five different organizations that need to be completed or
revised to provide this functionality. SAE International\4\ is
developing the standards for the connector on the vehicle and the
associated charging system; IEEE\5\ develops the standards that are
needed for these charging systems to feed power back into the grid;
NEMA develops the standards for smart meters that need to be able to
support the two-way flow of electricity and information; and
Underwriters Laboratories Inc. (UL), National Fire Protection
Association (NFPA), and IEEE develop standards needed to ensure
electric safety of the overall system.
---------------------------------------------------------------------------
\4\ SAE--formerly known as the Society of Automotive Engineers is
now referred to by the acronym SAE only.
\5\ IEEE--formerly known as the Institute of Electrical and
Electronics Engineers, Inc., is now referred to by the acronym IEEE.
---------------------------------------------------------------------------
An additional standard that will be needed is an information
management standard to allow electricity usage for roaming vehicles to
be billed appropriately.
Observations
To conclude, a few overarching observations:
First, the scale and complexity of this standards effort may be
unprecedented. Consider, for example, that the 5.4 million miles of
distribution and transmission cables that make up today's grid could
circle the Earth at the equator more than 200 times. The grid includes
some 22,000 substations and 130 million watt-hour meters. But as I
observed earlier, we have faced similar challenges before,
successfully, and have valuable experience to draw upon to ensure the
success of this effort.
Second, I believe the approach we are taking to develop standards
for the Smart Grid--a strong public-private partnership forged with
active White House and Cabinet-level leadership--illustrates the
effectiveness of the U.S. approach. The American way abhors ``one size
fits all'' solutions and prizes innovation and flexibility. In the
Smart Grid we are capitalizing on our strength--a dynamic and flexible
decentralized system--as well as our innovation in solving problems.
Our spirit of public/private partnership motivates cooperation to find
the right balance of ``top down'' and ``bottom up'' to achieve the
coordination needed for the smart grid. The rest of the world is
following our effort closely.
Third, it is important that we base our standards, wherever
possible, on international standards or work to get our approaches
adopted as international standards. This will maximize the
opportunities for U.S. suppliers to address a large, global market
opportunity. Fortunately, we are well-connected to International
Electrotechnical Commission (IEC), IEEE and other international
organizations and are pursuing those connections vigorously in our
effort.
Fourth, one of our challenges is our regulatory complexity.
Jurisdiction over the grid is divided among 50 states, the District of
Columbia, and the Federal Government. Regulatory uncertainty can impede
investment and create an inertia that slows innovation and the adoption
of new technology. NIST is working closely with National Association of
Regulatory Utility Commission (NARUC) and the FERC/NARUC Smart Grid
Collaborative to engage the states as integral partners in the
standards effort.
However, the regulatory model for the Smart Grid will need to keep
pace with the reality that the information and communications
technologies that enable the Smart Grid have a much faster life cycle
than traditional power system technologies.
Fifth, it is essential that we base the Smart Grid on open
standards. This is essential to unleash the power of innovation and
competition to create new applications and businesses that grow the
benefits that the Smart Grid can offer to the economy and the
environment.
Finally, and most important, we need to continue to stress the
critical dimension of security in our work. This is an area in which we
need to take the time to do it right because security must be built
into the foundation of the Smart Grid. It cannot be added on later. We
are treating this aspect with the utmost priority and I would refer to
my NIST colleague, Cita Furlani's July 21, 2009 testimony before the
House Committee on Homeland Security's Subcommittee on Emerging
Threats, Cyber Security, and Science and Technology, which describes
NIST's approach to ensuring the security and reliability of the
information and communication aspects of the Smart Grid.
Conclusion
The Smart Grid, with the unique investment opportunity afforded by
the American Recovery and Reinvestment Act, represents a once in a
lifetime opportunity to renew and modernize one of the Nation's most
important infrastructures. NIST is proud to have been given such an
important role and is committed to achieving the Administration's
vision of a cleaner, greener, more efficient and effective electricity
grid that creates jobs and reduces our dependence on others for our
energy needs..
Thank you for the opportunity to testify today on NIST's work on
Smart Grid inter-operability. I would be happy to answer any questions
you may have.
Biography for George W. Arnold
George Arnold was appointed National Coordinator for Smart Grid
Inter-operability at the National Institute of Standards and Technology
(NIST) in April 2009. He is responsible for leading the development of
standards underpinning the Nation's Smart Grid. Dr. Arnold joined NIST
in September 2006 as Deputy Director, Technology Services, after a 33-
year career in the telecommunications and information technology
industry.
Dr. Arnold served as Chairman of the Board of the American National
Standards Institute (ANSI), a private, non-profit organization that
coordinates the U.S. voluntary standardization and conformity
assessment system, from 2003 to 2005. He served as President of the
IEEE Standards Association in 2007-2008 and is currently Vice
President--Policy for the International Organization for
Standardization (ISO) where he is responsible for guiding ISO's
strategic plan.
Dr. Arnold previously served as a Vice President at Lucent
Technologies Bell Laboratories where he directed the company's global
standards efforts. His organization played a leading role in the
development of international standards for Intelligent Networks and IP-
based Next Generation Networks. In previous assignments at AT&T Bell
Laboratories he had responsibilities in network planning, systems
engineering, and application of information technology to automate
operations and maintenance of the nationwide telecommunications
network.
Dr. Arnold received a Doctor of Engineering Science degree in
Electrical Engineering and Computer Science from Columbia University in
1978. He is a Senior Member of the IEEE.
Chairman Baird. Leave it to NIST to hit it within one
second of the time. I am sure you are proud of that, and we are
appreciative. Well done, Dr. Arnold.
Mr. De Martini.
STATEMENT OF MR. PAUL DE MARTINI, VICE PRESIDENT OF ADVANCED
TECHNOLOGY, SOUTHERN CALIFORNIA EDISON
Mr. De Martini. Thank you, Mr. Chairman and distinguished
Members of the Subcommittee, for the opportunity to be here
today.
Southern California Edison is one of the Nation's largest
utilities, serving a population of nearly 14 million people in
a 50,000-square-mile service territory. As a subsidiary of
Edison International, Southern California Edison is uniquely
qualified to share our experience, progress and vision in the
development of a smarter electricity grid.
Edison purchases more renewable energy than any utility in
the country including 65 percent of the Nation's solar power.
We pioneered demand response programs and helped our customers
conserve more energy than any other utility. We are a leader in
the implementation of advanced transmission and distribution
technologies, including one of the largest smart meter programs
in the country, and 20 years ago we launched an electric
transportation program that includes our electric vehicle
technology center opened in 1993, allowing us to be a critical
player in the development not only of the electric vehicle but
also of improved battery storage technologies.
As Members of this committee are well aware, the current
stakes for addressing climate change, energy independence and
infrastructure security could not be higher and our nation's
climate and energy goals simply cannot be met by our aging
grid. We need a smarter, more robust electricity infrastructure
if we as a country are to rely on greater amounts of
intermittent renewable energy, use electricity as a fuel for
vehicles, empower our customers to manage their monthly energy
bills, and ensure the continued reliability and vitality of our
nation's energy economy.
In California, we are on a critical path as we also have a
number of ambitious climate and energy policy goals that will
require many aspects of our smart grid vision to be operational
by the year 2020. Southern California Edison saw the
limitations associated with aging grid and began implementing
components of a smarter grid over the past decade to improve
our ability to anticipate and prevent outages and empower our
customers to make smarter consumption decisions in the best
interests of our environment and their bottom line. Three
examples illustrate the breadth of these investments.
Edison pioneered synchrophasor technology that allows
operators and engineers the ability to monitor the grid at
critical points every one-thirtieth of a second, which
significantly reduces the likelihood of widespread outages or a
system collapse, such as the 2003 Northeast blackout. Edison
also has one of the largest deployments of substation and
distribution automation technologies in the industry including
an advanced distribution circuit called Avanti co-funded by the
Department of Energy. After the California energy crisis,
Edison deployed smart meters to all of its largest commercial
and industrial customers that consume in total about 60 percent
of the energy delivered on our grid. Over the next four years,
Edison is making an additional capital investment of $1.5
billion in smart grid infrastructure that has already been
approved by the California Public Utilities Commission. This
year, Edison's new meter program will begin rolling out to our
five million small commercial and residential customers. We are
also expanding our synchrophasor technology to all of Edison's
bulk transmission system, which will be the largest deployment
in the United States.
As we look forward, Edison believes the deployment and
development of a smart grid is a journey that will evolve over
the next decade or more and will require significantly more R&D
and capital investment to achieve our goals. It will require
new technology, open standards and more robust security. We are
actively collaborating with research institutes, universities,
product manufacturers, aerospace and defense and information
technology firms to identify opportunities to develop game-
changing energy technologies such as energy storage, high-
temperature superconducting equipment as well as adapting
telecommunications, cyber security and data management
technologies. Edison believes that advancing the smart grid
inter-operability and security through standards adoption
fosters innovation and accelerates robust, secure and reliable
technology developments. We have been active for the past five
years in several DOE-sponsored efforts including the GridWise
Architecture Council and have been increasingly active with Dr.
Arnold in the National Institute of Standards and Technology
efforts to identify and recommend standards for the smart grid.
As the smart grid technology is deployed, we believe
consumer adoption of new pricing, energy conservation and
demand response programs will be one of the largest behavioral
change management initiatives undertaken in public policy.
However, the time appears right for introducing change.
Edison's research indicates consumers more clearly recognize
that the smart use of energy will save them money and help make
a positive difference for the environment.
In conclusion, Edison is making significant investments in
both capital infrastructure and R&D to accelerate our country's
transition to a cleaner, smarter energy future. We look forward
to continuing to work with Members of this committee, Congress
and the Administration to make our vision a reality in the best
interests of our customers, our environment and our economy.
Thank you.
[The prepared statement of Mr. De Martini follows:]
Prepared Statement of Paul De Martini
Thank you Mr. Chairman and distinguished Members of the
Subcommittee for the opportunity to share Southern California Edison's
smart grid strategy and activities to enable federal and California
climate and energy policies over the next decade.
My name is Paul De Martini, I am the Vice President for Advanced
Technology for Southern California Edison. My responsibilities include
Smart Grid and Electric Transportation strategy, policy and technology
research, development and demonstration. Southern California Edison
(Edison) is a subsidiary of Edison International and one of the
Nation's largest electric utilities, serving a population of nearly 14
million via 4.9 million customer accounts in a 50,000-square-mile
service area within Central, Coastal and Southern California. Edison is
a recognized global leader in the development and implementation of a
smarter electric grid. This leadership is based on solid research and
development capabilities and existing and current capital deployments
in advanced technology to create a smarter grid.
Edison Smart Grid Strategy
The United States has arrived at a critical juncture in its energy
future. The current stakes for addressing climate change, energy
independence and infrastructure security could not be higher. Federal
and State policy-makers alike have recognized the need for a smarter,
more robust electricity infrastructure if we as a country are to rely
on greater amounts of renewable generation, use electricity as a fuel
for vehicles, enable consumers to become active participants in the
energy supply chain, and ensure the continued reliability and vitality
of our nation's energy economy.
Edison is in the process of modernizing and expanding its electric
power delivery systems. In doing so, it is critical that Edison deploy
technologies that enable it to provide service in a manner consistent
with present and future customer needs, while accommodating changes in
market participation. Edison's vision of a smart grid is to develop and
deploy a more reliable, secure, economic, efficient, safe and
environmentally-friendly electric system. This smart grid will
incorporate high-tech digital devices throughout the transmission,
substation and distribution systems and integrate advanced intelligence
to provide the information necessary to both optimize electric services
and empower customers to make informed energy decisions.
Consistent with the 2007 EISA and the U.S. Department of Energy's
and National Energy Technology Laboratory's Vision for the Modern Grid,
Edison's smart grid will enable the increase of intermittent and
renewable resources (such as wind and solar power) and spark greater
use of Plug-in Electric Vehicles (PEVs) by increasing system
flexibility; reduce greenhouse gas emissions; avoid the economic losses
associated with catastrophic failures and wide-area blackouts; foster
energy conservation, energy efficiency and demand response capabilities
by providing customers with better energy use information and choices;
reduce operating costs and improve reliability and safety by providing
real-time information for system monitoring and system automation;
improve maintenance and operations practices on the electrical grid;
and facilitate the development of a ``Clean Tech'' economy, which is
expected to include the creation of new jobs. We believe a true smart
grid can help America achieve a more secure energy future and
meaningful greenhouse gas reductions.
Additionally, Edison believes that many aspects of our smart grid
vision will need to be operational by the year 2020 to enable
California's ambitious policy goals, such as the AB 32 greenhouse gas
reductions, zero net energy homes, California Solar Initiative, smart
metering infrastructure, California's renewable portfolio standard, low
carbon fuel standard, and wide-spread consumer adoption of plug-in
electric vehicles.
To accomplish this objective, Edison's overall smart grid strategy
encompasses six areas that address a broad set of requirements:
Renewable and Distributed Energy Resources
Integration
Grid Control & Asset Optimization
Workforce Effectiveness
Smart Metering
Energy-Smart Customer Solutions
Secure Telecommunications & Computing Systems
Smart Grid Research, Development & Deployment
Edison seeks to discover, evaluate, and adopt energy and
information technologies to implement our smart grid strategy. It is
important to keep in context that California is the Nation's leader in
many of these areas and as such, several components of a smart grid are
already in development within Edison's service territory. For example,
Edison has already achieved significant results in energy efficiency,
demand response, and renewable energy, and is a recognized national and
international leader in these three areas. Other aspects of a future
smart grid are under development, but their future implementation will
enable Edison to meet increased renewable energy goals, further reduce
greenhouse gas emissions, and improve system reliability and safety.
Existing Smart Grid System
Edison has made significant investments over the past decade in the
deployment of transmission system measurement and control technology,
distribution and substation automation, and smart meters for our large
commercial and industrial customers. Edison has been a leading
developer of wide area measurement and control technologies for over 15
years. Edison's pioneering efforts in the area of synchronized phasor
measurement systems allows operators and engineers the ability to
monitor the grid at critical points every one-thirtieth of a second.
This is a significant improvement in our ability to assess and respond
to the dynamic operating characteristics of the grid that can help
avoid widespread electric system collapse. Synchrophasors as compared
to SCADA systems is analogous to MRI as compared to X-ray. Edison's
synchrophasor efforts were awarded the 2007 T&D Automation Project of
the Year award from Utility Automation & Engineering T&D magazine.
Edison has one of the largest deployments of substation and
distribution automation in the industry with over half of its 900
substations equipped with automation technology, including state-of-
the-art microprocessor-based systems. Edison has also equipped over a
third of its 4,300 distribution circuits and most of its nearly 10,000
capacitor banks with automation equipment that operates using wireless
networks. Edison's automation strategy allows for both remote control/
monitoring and autonomous control of critical grid components, which
helps protect the system during abnormal conditions and maintain
reliability.
After the energy crisis in California, it was recognized that
providing energy use and pricing information to customers would allow
them to make informed decisions about energy consumption that could
mitigate wholesale market constraints. As part of a State initiative,
Edison deployed smart meters to all of its largest commercial and
industrial customers to provide timely energy information and online
energy analysis tools to help them manage their energy costs. These
customers with peak demand of 200kW or greater consume about 60 percent
of the energy delivered on our grid. Edison's new smart meter program
is designed to extend this capability to our small commercial and
residential customers.
Current Smart Grid Projects
Edison is currently poised to take our grid to the next level over
the next four years with another round of investments. In 2008, the
California Public Utilities Commission (CPUC) approved our deployment
of our Edison SmartConnectTM meters to five million residential and
small commercial customers beginning this year and proceeding through
2012. Earlier this year, the CPUC approved Edison's 2009 general rate
case that included about $270 million in smart grid investments related
to advanced electric grid measurement and control systems that enable,
in part, the integration of large-scale and distributed renewable
generation and improve the overall operation of the electric grid.
Also, Edison will expand synchrophasor technology to all of Edison's
bulk transmission system--the largest deployment in the United States.
Combined, these projects bring Edison's planned level of smart grid
capital investment to about $1.5 billion over the next four years. This
investment will provide important foundational elements, but more
technology investment over the coming decade will be required to meet
federal and California climate, renewable and energy policy objectives
and to realize additional operational efficiencies.
RD&D Overview
In the electric utility industry, Edison has a unique and
comparatively large research, development and demonstration (RD&D)
effort to support the achievement of our 2020 objectives. The current
RD&D strategy is focused on three key themes:
1. Integration and managing complex systems
Renewable integration modeling and analysis
Telecommunications
Computing systems and data management
Inter-operability standards development
Cyber-security
2. Game-changing energy technology
Energy storage
Superconductivity applications
Electric transportation
Self-healing distribution automation
Consumer end-use technology
3. People and processes
Customer adoption of energy smart technology
21st Century electric utility workforce
Robotics, unmanned aerial vehicles, mobile
workforce automation
Safety equipment
A significant level of complexity will be introduced to the
electric grid over the next decade. Edison is working with leading
research universities such as Caltech, MIT, Stanford, University of
Southern California and Carnegie Mellon to better understand ``system
of systems'' complexity, designing computing systems models and event
scenarios to understand the nature of the future electric grid. Edison
is also working with aerospace-defense and information technology firms
to identify opportunities to adapt telecommunications, cyber-security
and data management technologies.
Several game-changing energy technologies are expected to become
commercially and economically viable over the next decade, including
various forms of energy storage, high-temperature superconducting
equipment, various forms of electric transportation, advanced self-
healing distribution automation equipment and energy smart consumer
devices/appliances. Edison is working with several national research
labs, EPRI and manufacturers on the development of products from
prototype testing to field demonstrations through commercial
introduction on Edison's system. One example is the live demonstration
of second generation distribution circuit automation on a Department of
Energy (DOE) co-funded project called Avanti that also includes the
world's first high temperature superconducting fault current limiter.
Another is the work Edison is conducting at our Electric Vehicle
Technology Center (EVTC), where we work closely with auto manufacturers
on electric-drive systems and battery manufacturers on emerging mobile
and stationary storage applications. Edison was honored to have
President Obama visit our EVTC facility earlier this year.
In the area of people and processes, Edison is looking ahead to
evaluate the consumer, organizational and workforce impacts of
introducing a vast range of new technologies, customer programs and
related operational process changes. Edison has engaged a consortium of
universities to conduct research on the ``Energy Workforce of the 21st
Century'' and has conducted consumer research to better understand
technology adoption behavior with leading design firms like IDEO.
Edison is actively pursuing stimulus funds for two smart grid
demonstrations and development of electric transportation. For smart
grid, Edison will seek matching funds for both utility-scale energy
storage utilizing automotive grade batteries and a regional smart grid
demonstration that includes the development of a secure energy network
for the smart grid. Edison participated in three electric
transportation proposals currently under evaluation with the DOE. One
was related to the development of plug-in electric vehicles with GM,
The second proposal was for plug-in hybrid utility bucket trucks with
Ford and Eaton and the third expands public charging infrastructure
with Ford, the California Air Resources Board and other stakeholders in
Southern California.
Inter-operability Standards and Cyber-security
Edison recognizes that advancing smart grid inter-operability and
security through standards adoption fosters innovation and accelerates
robust, secure and reliable technology deployments. This is achieved by
lowering the barriers to entry for vendors; accelerating secure and
inter-operable product time to market; and ultimately lowering costs
for consumers. Unfortunately, realizing the benefits of standardization
requires more than just selection of a standard. Full realization of
the benefits will require a shared government, utility and product
supplier focus on a common set of smart grid functions, and a standards
life cycle framework supporting those functions. The goal of this
standards life cycle framework is to align policy, standards
development, product development and procurement actions to create a
self-sustaining smart grid market. A successfully operating, self-
sustaining smart grid product market is defined by public policy
supported by standards that are rapidly adopted by product suppliers
seeking certification, and driven by utility procurement agents only
buying products certified to those standards.
To realize this goal, Edison has been active over the past five
years in several DOE sponsored efforts, including the GridWise
Architecture Council to define use cases, user requirements, and
reference designs. Over the past year, we have been increasingly active
with the National Institute of Science and Technology's efforts to
identify and recommend standards for the smart grid. Edison's long
standing participation with several industry and standards
organizations provided an opportunity to work more closely with both
DOE and NIST on the development of standards in several areas,
including customer access to energy information and a set of smart grid
cyber-security specifications and profiles. For example, Edison is one
of a dozen utilities that contributed funding to the smart meter
security effort with DOE last year and is currently co-funding a
broader smart grid effort in collaboration with DOE and NIST. Also,
Edison along with several other utilities has been championing the
development of an open standard and secure interface for customer
access through a web services provider to customer related energy
information on utility computing systems. NIST is leading an effort to
coordinate the development of such a standard and Edison is actively
supporting the effort.
Integration of new technologies with existing technology
Edison defines ``inter-operability'' as a characteristic that
permits seamless communication and exchange of information between
diverse, disparate systems. The national and utility grids will need
inter-operability of key future smart grid technology components to
support a robust, flexible, and secure energy infrastructure. Edison's
vision for a smart grid has long been premised on the idea of ``inter-
operability from the generator to the customer, and everywhere in
between.'' This is important for stimulating vendor competition,
fostering innovation, and realizing lower costs. Edison also supports
criteria that, where appropriate, call for future smart grid
deployments and enhancements to be inter-operable with existing capital
investments. The challenge is developing a systems architecture and
roadmap that provides a graceful transition from the existing systems
to the future state. For example, Edison has invested heavily in
substation and distribution automation, and believes it is prudent to
leverage this existing infrastructure for future smart grid
enhancements as much as possible. Computing systems and
telecommunications have evolved over the past twenty-five years to the
mostly plug and play state that we know today--Edison expects the smart
grid to similarly evolve over the next two decades given the typically
long asset lives and the need to balance large capital costs with
consumer rate impacts.
Smart grid benefits & Consumer adoption
Smart grid benefits can be generalized into three categories;
utility operational benefits, customer energy savings benefits and
societal benefits. In terms of utility operational benefits, many of
the smart grid technologies involve automation of existing business
practices that create substantial reductions in labor. For example,
Edison's residential smart metering program created benefits that
exceeded costs by about 110 percent on a net present value basis, with
nearly 60 percent of the benefits derived from reduction in labor and
related costs due to the elimination of the meter reading function.
Other operational savings result from operational efficiencies in
financial transaction management and field operations. The other 50
percent of the smart metering benefits come from energy procurement
cost savings as a result of enabled demand response programs and
reduction in residential energy consumption due to energy information.
Consumers will have a new range of energy management services and
programs available from utilities and third parties that are enabled by
smart metering, energy storage, energy smart appliances and plug-in
electric vehicles. In a survey of research studies by Oxford
University, and subsequently validated in limited field trials in the
industry, consumers are expected to save on average between 5-15
percent on their monthly electric bills if they actively participate in
dynamic pricing and energy conservation related programs. Consumer
benefits also include improved customer experience from automated
services like turning the electric service on when moving in to a house
or apartment. Over 20 percent of Edison's 4.9 million customers move
each year so this is a significant improvement. Customers will also
experience improved service reliability and faster outage response as
the smart grid is deployed.
A substantial portion of smart grid benefits are societal in nature
and include national and State priorities, such as achieving energy
independence, reducing greenhouse gas emissions, and increasing grid
security, safety, and reliability. These benefits are often difficult
to quantify, they may vary widely in their justification of various
smart grid technologies, and they are multi-tiered in terms of who
benefits from them. Benefits may relate to Edison customers, California
residents in general, or society at large. These benefits should be
considered by policy-makers within the context of a complete portfolio
of smart grid technologies, as the benefits may not accrue to any one
project, but the integrated system which would necessarily be deployed
over an extended time horizon.
Consumer adoption of new pricing, energy conservation and demand
response programs will be one of the largest behavioral change
management initiatives undertaken in public policy. However, based on
Edison's research, we believe our customers are ready to change how
much and when they use electricity. Edison has conducted persona based
customer research over the past five years and the majority of our
customers now are actively looking for a way to either reduce their
energy costs to manage their monthly budget or reduce their energy use
to reduce their carbon footprint. Consumers do not want to be wasteful
and recognize that the smart use of energy will save them money and
help make a positive difference for the environment.
One key is to provide customers information that is actionable.
This is one of the values of a smart meter system especially combined
with dynamic pricing. Another key is make the process simple and use
technology to automate the customer's desired outcome. For example, to
enable a customer who wants to manage to a monthly budget amount for
electricity, Edison is creating a daily electric budget manager that
notifies the customer if their usage will likely exceed the target
budget in advance through online, text messages or cell phone
application. Edison is also working with many product and service
providers to create this type of automation. Edison recognizes that we
have a once in a lifetime opportunity to engage and educate our small
commercial and residential customers when we replace all our
approximately five million meters over the next three plus years.
Conclusion
The electricity infrastructure delivering power from a variety of
generating sources to our homes, businesses and communities is not
suitable for today's needs. The challenges that face our nation's
energy future simply cannot be met by our aging electric grid. Growing
renewable energy capacity requirements, global climate change
provisions, and the pressing need for more energy self-determination on
behalf of customers all require a smarter, more intelligent grid.
Edison is making significant investments in both capital infrastructure
and smart grid R&D to accelerate our ability to support the future.
Biolography for Paul De Martini
Paul De Martini is Vice President of Advanced Technology in the
Transmission & Distribution Business Unit of Southern California Edison
(SCE). Advanced Technology is SCE's R&D organization responsible for
SmartGrid development, which includes advanced grid technologies,
electric transportation, smart metering and integration of energy smart
consumer products.
Prior to joining SCE in 2002, De Martini held senior management
positions with ICF Consulting, Sempra Energy, Coastal Corporation and
PG&E Corporation.
De Martini is a member of the California Energy Commission's Public
Interest Energy Research (PIER) Advisory Board, Electric Power Research
Institute's Power Delivery and Utilization Sector Council and Smart
Grid Advisory Committee, Co-Chair of both the Utility Smart Grid
Executives working group and the Western Electric Industry R&D
Collaborative.
De Martini earned a MBA from the University of Southern California
and a BS from the University of San Francisco. He also completed the
technology management program at the California Institute of
Technology. De Martini is currently a Fellow of the Wharton School,
University of Pennsylvania.
Chairman Baird. Thank you, Mr. De Martini.
Mr. Ross.
STATEMENT OF MR. JEFFREY L. ROSS, EXECUTIVE VICE PRESIDENT,
GRIDPOINT, INC.
Mr. Ross. Good morning, Mr. Chairman, Ranking Member Inglis
and distinguished Members of the Subcommittee. Thank you for
the opportunity to testify today. I am Executive Vice President
at GridPoint, a leading smart grid software company. We have
developed an online energy management solution that enables
customers to obtain near-real-time information on their energy
use and empowers them to make informed decisions about their
energy consumption.
Our solutions also help utilities better balance supply and
demand across a wide range of areas including electric vehicle
charging, storage, integration of renewable energy and demand
response in an economical, efficient and environmentally
beneficial manner.
I have three points I would like to leave with you today.
First, while the infrastructure of smart meters and advanced
communications is important in modernizing the Nation's grid,
to realize the benefits of increased efficiency, reliability,
security, we also need software that allows utilities to better
control and optimize load. Second, we need to realign the
regulatory and economic policies and incentives guiding
investor-owned utilities such that those utilities are
motivated to invest in smart grid technologies. Third, we must
provide consumers with greater information on their energy use
if we expect them to be able to reduce their consumption and
their energy costs.
The term ``smart grid'' refers to energy delivery and
distribution using two-way communications and digital
technology to enhance the grid with sensing, communications,
analysis, feedback and control technologies in order to improve
efficiency, increase reliability, ensure security and reduce
environmental impacts. The Energy Independence and Security Act
of 2007 and the American Recovery and Reinvestment Act provide
for regional demonstration projects to develop advanced
techniques for measuring peak load reductions and energy
efficiency savings from smart metering, demand response,
distributed generation and storage systems and to validate new
business models and best practices for implementing advanced
smart grid technologies that can be replicated throughout the
country. These goals encourage the testing of new technologies.
While the smart grid will benefit from investments in smart
meters and advanced communications, these investments alone
will not realize the true promise of the smart grid. Smart
meters and advanced communications cannot by themselves manage
peak demand, integrate renewable energy, manage electric
vehicle charging and storage, or provide customers with
information they can use to manage their energy consumption,
all of which can help the electric grid operate more
efficiently and reliably. The electric grid needs software and
applications to work in conjunction with meters and
communications to realize these benefits.
Xcel Energy's Smart Grid City is the U.S.'s first full-
scale pilot project designed to test smart grid technologies
and the new business models they enable. Since 2008, Xcel
Energy and its partners have developed a website portal for
customers to better manage their energy use, launched the
Nation's first test of plug-in hybrid electric cars with
vehicle-to-grid capability, turned the Chancellor's residence
at University of Colorado into the Nation's first fully
integrated ``smart house'' with solar, backup power, electric
vehicle charging and consumer controls, installed nearly 15,000
smart meters and implemented a wind-to-battery program to
create a more predictable, reliable source of energy. The city
of Austin, Texas, also announced late last year a new smart
grid deployment called the ``Pecan Street Project'' that would
create a virtual 300-megawatt clean power plant through a
combination of efficiency and clean power. These types of
efforts would likely increase as funding under the Recovery Act
is awarded.
There is real value in these types of demonstration
projects because they provide a test bed for new and innovative
smart grid technologies. Only through testing new technologies
can we determine what works in order to spur innovation.
Studies have shown that when consumers have more information
about their energy use, they typically reduce their consumption
by 10 to 20 percent. Near-real-time information on energy use
through a portal or an in-home display will empower consumers
to control their energy consumption. The portal, or in-home
display, provides customers with energy savings tips and a
comparison of their use against earlier periods, among other
benefits, which will help them lower their energy consumption.
In conclusion, we have an historic opportunity to transform
and modernize our nation's electric grid. To do so, we need to
look beyond smart meters and communications and invest in the
applications that reside on top of this infrastructure to make
the smart grid more efficient, reliable and secure. We must
create the regulatory and economic structures that incentivize
utilities to make smart grid investments and we need to provide
consumers with information about their own energy use to
empower them to control their energy consumption.
Thank you for this opportunity to testify here today. I am
happy to answer any questions you may have.
[The prepared statement of Mr. Ross follows:]
Prepared Statement of Jeffrey L. Ross
Good morning Chairman Baird, Ranking Member Inglis, Full Committee
Chairman Gordon, Ranking Member Hall, and distinguished Members of this
subcommittee. Thank you for the opportunity to testify at today's
hearing. My name is Jeffrey L. Ross, and I am an Executive Vice
President at GridPoint, a leading smart grid company that has developed
an online energy management solution for consumers, as well as products
and services that help utilities manage energy in the areas of electric
vehicle charging, storage, integration of renewable energy, and demand
response. We are a private company headquartered in Arlington, VA with
approximately 130 employees. I would like to request that my full
statement be entered into the record.
I appreciate the leadership you, the Full Committee, and this
Congress have demonstrated in supporting the Energy and Independence
Security Act of 2007 (EISA) and the American Reinvestment and Recovery
Act of 2009 (ARRA), the provisions of which have the potential to
reshape positively the energy ecosystem in our country.
I am here to provide GridPoint's perspectives on the role of the
Federal Government and industry in transforming the Nation's electric
grid from an over-burdened, outdated system into an interconnected,
intelligent ``smart grid.''
I have three points I would like to leave you with today:
1. First, while the infrastructure of smart meters and
advanced communications is important in transforming the
Nation's grid, we also need other new innovative technologies
to realize the benefits of increased efficiency, reliability,
and security.
2. Second, we need to realign the regulatory and economic
policies and incentives pertaining to investor-owned utilities
(IOUs), such that utilities are motivated to invest in smart
grid technologies.
3. We must provide consumers with greater information on their
energy use if we expect them to better manage their energy
consumption.
An Historic Opportunity
The term ``smart grid'' refers to the means by which energy is
delivered from generators to consumers using two-way communications and
digital technology to improve efficiency, increase reliability, and add
transparency. This generally involves enhancing the grid with sensing,
communications, analysis, feedback, and control technologies to realize
operational efficiencies and improve environmental impacts. Much of the
attention around ``smart grid'' has focused on the distribution side of
the electricity system, which is where GridPoint offers its solutions.
While this area benefits from improvements in ``smart'' meters (often
referred to as Advanced Metering Infrastructure (AMI) ) and advanced
communications systems, there needs to be a wider range of technologies
adopted to realize the full benefits of the smart grid. These
technologies will provide utilities and consumers with the ability to
understand and better manage energy consumption. They also will help
improve energy efficiency and/or reduce demand, and thereby help reduce
greenhouse gas emissions.
EISA and the ARRA set forth the following goals and benefits for
smart grid: create a modern electric grid, enhance security and
reliability of energy infrastructure, and facilitate recovery from
disruptions to the energy supply. The ARRA and EISA envision that there
will be a variety of regional demonstration projects to develop
advanced techniques for measuring peak load reductions and energy-
efficiency savings from smart metering, demand response, distributed
generation, and electricity storage systems; quantify costs and
benefits; verify technology viability; and validate new business models
and best practices for implementing advanced smart grid technologies
that can be replicated throughout the country. These goals encourage
the testing of new technologies, in addition to improvements in smart
metering and advanced communications infrastructure.
The ARRA provides $4.5 billion in funding for the smart grid
investment program. More than $2 billion of this funding will likely be
spent on smart meters and advanced communications systems. While this
new metering and communications infrastructure is important, it is
critical to include applications that run on this infrastructure as new
smart grid projects roll out. Without the applications to improve
efficiency, reliability, security, and provide consumers and utilities
with additional information, the true promise of the smart grid will
not be realized.
The Promise of the Smart Grid
Our system for generating, transmitting, and producing electricity
was developed more than a century ago when all we required of
electricity was that it be cheap, ubiquitous, and reliable. Over the
last century, we have constructed a complex network of power plants
that are connected regionally via transmission lines to population
centers, with electricity distributed to homes and businesses over
power lines. Today, this system is experiencing issues with
reliability, efficiency, and security. We are increasingly asking more
from the electric grid--not just greater demand, but also that delivery
of our energy be efficient and green. Without significant technological
upgrades, our electric grid cannot meet these 21st century challenges.
If we take advantage of the historic opportunity presented to us
today, with the policies set in place in EISA, to upgrade our grid and
make it ``smarter,'' the benefits are limitless. Imagine if you could
access real-time information about how much energy you were consuming,
and which appliances and devices in your home consumed the most energy.
What if, armed with that information, you could make small changes in
your behavior that would save significant amounts of energy and lower
your monthly utility bill?
What if solar panels on peoples' roofs and electric vehicles in
garages were networked together such that their capacity could be used
to relieve areas of stress and high demand in the grid? What if your
utility and your electric vehicle were smart enough to delay your
charging until nighttime, when electric rates are less expensive,
demand on the grid lower, and more renewable energy is available?
What if a utility could sense an overheating transformer, and
divert its load by shifting it to other resources in the system?
Imagine if a utility could make wind reliable and predictable by
storing electricity in the form of a battery to back up the
intermittent renewable power so, together, these became a continuous,
reliable source of energy? That is, the wind could be used to charge a
large battery. When the wind blew at night the battery would charge,
and when the wind died down, the battery would discharge to keep a
constant amount of power available.
Smart grid technologies exist today to enable all of these
benefits. Just imagine if utilities and consumers were to implement
them. How many power plants could we avoid building? How much money
would we save? How much carbon dioxide would we prevent from entering
the atmosphere?
The technologies that can make the ``smart grid'' a reality offer
consumers greater insight and control over their energy usage and
improved environmental benefits, while utilities gain greater
efficiency in their operations, improved reliability, and increased
security.
GridPoint's Technology and the Benefits of a Modern Grid
GridPoint has developed a software platform (i.e., management
system) that enables utilities to have visibility into, and manage,
their distributed energy assets. The platform seamlessly integrates
five solutions: online energy management, load management, electric
vehicle management, storage, and integration of renewable energy. With
GridPoint's platform, utilities efficiently balance supply and demand
in an economical, scalable and environmentally beneficial manner.
In online energy management, the GridPoint solution offers
utilities a portal to provide their customers far greater awareness of
their energy consumption. It also provides consumers with insight into
their energy usage with features such as carbon calculators,
comparisons to their bill from a previous month or year, and energy
savings tips based on their consumption patterns. Consumers benefit by
having control over, and being able to reduce, their energy usage.
Studies have shown that simply providing consumers information about
their energy use can lead to reductions in consumption of between 10 to
20 percent. Providing consumers with information about their energy use
is an important first step in empowering them to control their energy
consumption.
The GridPoint load management solution assists utilities in
managing capacity-strained areas by providing visibility and control of
devices in the home or business to address peak loads. This increases
reliability in the electric grid. The solution provides utilities
detailed measurement and verification of achieved reductions against a
projected baseline, which enables carbon measurement. It allows the
utility to shift load and reduce peak demand through demand response
programs with circuit-level visibility and control of large load
classes by type (e.g., Air conditioners) either in aggregate or by
substation, feeder or individual customer.
By market share, 70 percent of automobile manufacturers have
announced plans to launch electric vehicle models, the first of which
will hit the road, and the electric grid, in 2010. The GridPoint smart
charging solution controls the flow of electricity to plug-in electric
vehicles, allowing utilities to balance real-time grid conditions with
the needs of individual drivers. During peak periods, the flow of
energy can be delayed or slowed to shift the charging load into an off-
peak period--minimizing grid stress and ensuring service reliability.
When wind or solar power is available, the charging rate can be
increased to expand the use of renewable energy in the grid. The
solution enables smart charging at every charging level and from any
point on the grid, whether the driver is at home, work, or a public
charging station.
The GridPoint storage management solution provides aggregated,
real-time control over the charging and discharging of distributed
storage assets located in the utility's transmission and distribution
systems. Its software algorithms allow energy storage devices to be
managed in isolation or aggregated at various levels of the system and
dynamically dispatched in a coordinated fashion. Charging and
discharging scenarios include: load leveling, load shaping, integrating
renewable energy, economic dispatch based on price signals, system
regulation, and spinning reserves to respond to an unexpected power
disruption. These capabilities allow utilities to manage the grid more
cost effectively; increase predictability, availability and
optimization of renewable energy sources; and improve the efficiency of
transmission and distribution resources.
Finally, the GridPoint renewable integration solution predicts and
precisely monitors the production of distributed renewable power
systems, like a solar panel array, to allocate the associated energy,
renewable credit, and carbon credit value streams. It also maximizes
the value of grid-connected renewable power sources, both residential
and utility-scale, by balancing output variability via automated
dispatch of other distributed energy assets, including demand response,
storage, and plug-in hybrid vehicles. Utilities benefit from the
monitoring and prediction of residential and commercial grid-connected
renewable systems. Consumers benefit by having insight into their
personal solar production and consumption, reductions in their carbon
footprint due to environmental data based on renewable production and
consumption, and weather information to help predict their future solar
energy production.
Challenges to Realizing a Truly ``Smart'' Smart Grid
With all of the tremendous benefits inherent in a ``smart grid,''
one might ask why the technologies are not being adopted more widely by
utilities. There are several reasons, but perhaps the most important is
that the regulatory model for investor-owned utilities (IOUs) does not
incent those utilities to make investments in smart grid technologies.
IOUs make money for their investors by receiving a guaranteed rate
of return on capital to deploy generation, transmission and
distribution assets and to ensure system reliability. The more energy
IOUs need to produce, the more capital they can deploy to purchase
these assets. This, in turn, allows them to include those assets into
the rate base and receive a return on their investment. Therefore, the
more power an IOUs produces, transmits, or distributes, the more money
that IOU will earn.
One of the benefits of smart grid technologies is that they create
efficiencies in the electric grid, thereby reducing the amount of
energy needed to serve the same population. If an IOU deploys smart
grid technologies, it could serve its customer base while producing
less energy. This would benefit ratepayers, who would not face an
increase in rates, and the environment, by reducing the need for
additional power generation assets. However, this scenario--under the
current regulatory structure--would leave the IOU without the need to
deploy new generation, transmission or distribution assets and would
reduce the IOU's ability to receive a return on investment. IOUs may
actually risk losing money if they deploy smart grid technologies that
serve their customers more efficiently and improve environmental
impacts. Not all IOUs face this economic deterrent all of the time;
however, the challenge of this economic and regulatory model is
prevalent enough to dampen IOUs investment in smart grid technologies.
Xcel Energy's SmartGridCity (Boulder, CO)
SmartGridCity is the U.S.'s first and largest full-scale pilot
project designed to test smart grid technologies and the new business
models they enable. It is sponsored by Xcel Energy Corporation, a
fully-integrated power utility, headquartered in Minnesota, with a
service territory extending into eight states, including Colorado, and
a total of 3.3 million electric and 1.8 million gas customers. Xcel is
a leading utility in the use of wind power, with nearly 3,000 MW of
capacity installed. SmartGridCity is a demonstration project designed
to understand how the utility and its customers collectively manage
power generation, delivery, and energy consumption.
SmartGridCity is a multi-phase project that began in the spring of
2008. The first phase, over 18 months, was designed to test
capabilities and gauge customer reaction. It involves upgrades to two
substations and five feeders, as well as 15,000 residential and
commercial premises. The second phase will be a full deployment with a
larger reach to a broader customer base, and includes an additional two
substations, 20 feeders, and 35,000 premises. Grid Point is providing
demand and supply side management, solar integration, plug-in hybrid
electric vehicle support, online energy management and integration
services to the SmartGridCity project.
Xcel Energy conceived of this project as a way to test a number of
business, customer and social issues. The principal benefits centered
on the following:
1. Peak Energy Consumption: Can real-time pricing and
environmental signals, in conjunction with advanced in-home
energy management systems reduce residential peak energy
consumption?
2. Grid Reliability: Will there be a reduction in the number
and duration of customer outages as a result of the technology
installed in the distribution network?
3. Capital Expenses: Will the reduction in peak load demand
result in a deferral of capital spent on distribution and
transmission infrastructure?
4. Operating Expenses: Will there be cost savings to Xcel from
the implementation of smart meters, distribution automation and
home energy automation?
5. Carbon Footprint: Will there be a meaningful and measurable
reduction in carbon emissions as a result of the lowered
residential peak demand and other efficiency programs?
Xcel's vision is to make SmartGridCity a fully-connected and
horizontally-integrated system that would require real-time and
automated decision-making across all parts of the network. The project
includes:
1. High-speed communications network (broadband over power
line and wireless) and sensing equipment.
2. Smart meters with the ability to provide near real-time
data on consumption.
3. Improved intelligence at the substations.
4. A feeder distribution system with communications-enabled
reclosers and switches, and other assets to provide power
system information.
5. Power analyzers at each transformer to provide real-time
data on power consumption, outages, restorations and fault
locations.
6. Integration of renewable energy generation and distributed
storage, including a large scale wind-to-battery project.
7. Integration and optimization, or smart charging, of plug-in
hybrid electric vehicles within the grid.
8. Customer programs and incentives that help them save
energy, track energy usage, and manage demand in response to
real-time price signals, all through a custom web portal
interface that provides: (a) control to set energy preferences;
(b) analysis of information, billing history and a means for
helping customers discover how to best manage energy; and (c)
information to effectively educate customers about how their
energy is produced and how to lower their carbon footprint.
The SmartGridCity project is about half way through its duration.
Since construction began in 2008, Xcel Energy and its partners have:
Installed nearly 15,000 smart meters with another
10,000 more ``opt-in'' customers;
Launched the SmartGridCity Control Room and
Operations Center;
Implemented over 327 network elements for grid
communication and monitoring;
Developed a web site portal for customers to better
manage their energy use;
Launched the Nation's first test of plug-in hybrid
electric cars with vehicle-to-grid capability;
Turned the Chancellor's residence at the University
of Colorado into the Nation's first fully-integrated ``smart
house,'' with solar, back-up power, PHEV smart charging and
consumer control; and
Implemented Xcel Energy's wind-to-battery program to
test the control and firming quality of an integrated wind and
storage system.
Although we are still at an early stage in the project, Grid Point,
as a participant, has learned some valuable lessons about demonstrating
and deploying ``smart grid'' technologies as we move forward with the
SmartGridCity team to create a more resilient and responsive grid.
There is real value in demonstration projects such as SmartGridCity
that can provide a test bed for new and innovative smart grid
technologies. Consumers must be able to understand their energy
consumption and usage with greater frequency and granularity than the
information in their bill at the end of the month. Near real-time
information on energy usage can influence positively consumers'
behavior and provide them with the means to control their energy
consumption.
Importance of Smart Grid Demonstration Projects and Innovation
Other cities have begun to follow Xcel's SmartGridCity project with
their own demonstration projects. The city of Austin, Texas announced
late last year a new smart grid deployment called the Pecan Street
Project that would create a virtual 300MW clean power plant through a
combination of efficiency and clean power. The City of Miami, Florida
likewise has announced a high-profile project. These efforts will
likely increase as funding under the ARRA is awarded. It is important
that smart grid demonstration projects test a broad range of new
technologies and measure and verify the costs and benefits of the
technologies. Only by doing this, can the best technologies gain
recognition and acceptance to improve the grid.
Conclusion
In conclusion, we face an historic opportunity today to transform
our nation's electric grid. To do so, we need to leverage the funding
Congress has made available. While we need the advanced infrastructure
of meters and communications, we also need the applications that reside
on top of the infrastructure to make the grid more efficient, reliable,
and secure. We need to continue to work toward regulatory and economic
structures that incent utilities to make smart grid investments.
Finally, we need to provide consumers with information about their own
energy use to empower them to control their energy consumption.
Thank you for this opportunity to testify here today.
Biography for Jeffrey L. Ross
Jeffrey L. Ross is Executive Vice President at GridPoint, Inc., a
leading smart grid software company. Mr. Ross works on business
development, marketing, and corporate development matters for the
company. Prior to GridPoint, he served as a partner at Dakota Ventures,
a technology investment fund.
Earlier in his career, Mr. Ross served as General Manager & Vice
President of the Identity & Enterprise Security business for Gemalto
North America. In this role, he was responsible for sales, marketing,
solutions development and management, strategy, partnerships and
alliances, and customer delivery and technical support. He previously
served as Vice President for Marketing & Solutions for Gemplus' North
American Enterprise Security & Identity and Banking & Retail
businesses.
Prior to joining Gemplus in 2004, Mr. Ross founded Alereon, Inc., a
leading wireless semiconductor company focused on ultra wideband
technology for wireless USB and next generation Bluetooth. He held the
position of Executive Vice President at Alereon responsible for
finance, marketing, strategy, and administration. Mr. Ross also worked
as Senior Vice President for Corporate and Business Development at Time
Domain Corporation from 1999 to 2003. Prior to Time Domain, Mr. Ross
practiced corporate law at Patton Boggs in Washington, D.C.
Mr. Ross has considerable experience working with growth clean
technology, wireless, software, and semiconductor companies. Mr. Ross
is a frequent speaker on technology issues and has appeared on
television and radio and in print in such venues as CNBC and the Wall
Street Journal. Mr. Ross holds a B.A. Degree, magna cum laude, from
Washington University in St. Louis and a law degree from the University
of Virginia.
Chairman Baird. Thank you, Mr. Ross.
Before moving on, are you any connection to the Ross of the
Ross Power Station fame in the Pacific Northwest?
Mr. Ross. No, not that I am aware of.
Chairman Baird. Ross is a great name in Northwest energy,
so there may be some connection there.
Mr. Stoessl.
STATEMENT OF MR. MICHAEL A. STOESSL, GROUP PRESIDENT, COOPER
POWER SYSTEMS
Mr. Stoessl. Good morning, Mr. Chairman and Members of the
Committee. On behalf of the National Electrical Manufacturers
Association, I am Mike Stoessl, Group President of Cooper Power
Systems. I have been asked to appear here today to help
describe some of the challenges our industry faces in actually
making the grid smart.
Now, Cooper Power Systems has been providing equipment and
solutions to the electric utility industry literally since the
days of Thomas Edison. We provide transformers and components
needed to connect and restore energy, switchgear and automation
technology needed to make the electrical grid reliable and
efficient as well as AMI and demand response capabilities that
help manage the grid's overall load. Our solutions cover the
range of smart grid intelligence.
Now, all smart solutions have in common the ability to
sense activity on a grid, communicate that information back to
some sort of decision support application, send a decision back
to the grid and actually make some change.
So as an example, we brought a picture here of a sensor that
can help determine when the grid is becoming more or less
efficient. If air conditioning comes on in the middle of the
day, the grid can actually start wasting energy as it responds
to that increase in load. So the sensor you see in the upper
right working with the capacitor bank controller that you see
in the middle on the left can determine that inefficiencies are
occurring. Equipped with radio technology or some other form of
communication, it will send a signal back to the utility
alerting them to the situation. They in turn can then choose to
take that capacitor bank, which is in the lower middle of the
screen, and turn it on or off using the cap bank switch. This
is just one example of a smart application and the sort of
things that have to be installed in the field to make it work.
Now, one of the big challenges we face with building out
the smart grid is the integration of legacy equipment that
already exists. Many pieces of apparatus installed on the grid
do not provide or support any external interface or have custom
communication protocols. So, for example, this recloser that is
pictured here provides over-current protection to our overhead
lines.
If there is a fault, for instance, a branch falls and shorts
out a power line, the recloser will open, isolate the circuit
and basically try to restore power. Many of these devices do
not support two-way communications, so while they are an
effective isolated solution, they cannot be truly part of a
smart grid without being replaced or being retrofitted. The key
to doing these kind of upgrades will be an economic cost
benefit to the utility, or it is going to be government
incentives based on the value, more intangible value of a truly
more reliable grid. With more than 500,000 of just these type
of reclosers out in service today, retrofits of product like
this will be an important part of making the grid smart.
Another challenge we face in building out the smart grid is
the range of communication options that are already available.
In the past three years we have seen an increase in
availability of cost-effective two-way communication
technology. Cellular, Wi-Fi, WIMAX, Mesh RF, line-of-sight RF
are a few of these technologies. Now, these cost-effective two-
way communications have become an enabler of adding
intelligence to the grid but they also present a host of
challenges. So as an example, the fault circuit indicator shown
here in the upper left is a great example of a successful
product making the transition from being a dumb, isolated
solution to a smart, integrated solution.
The original form of a fault circuit indicator had no
communication capabilities. It simply displays a local orange
visual indication when a fault has occurred on the line. And
prior to communications capabilities, the utility would
literally dispatch their line crew, who would drive the lines,
looking up, trying to find the orange indicator. When they
found it, they knew where the fault was and they could begin
repair. When you actually can communicate with the utility, the
utility can now know that a fault has occurred, dispatch
linemen directly to the source of the fault, which reduces fuel
consumption, reduces CO2 emissions and also
potentially can reduce the time of an outage from hours into
minutes. That is just one example of what the smart grid can
do. However, what is pictured directly below the fault circuit
indicator are the range of hardware options that we have to add
into the device in order to communicate. Even though there are
standards, if we want to communicate over the AT&T cell
network, there is a different card required versus
communicating through a Mesh RF network versus a line-of-sight
network versus the Verizon cell network. Each different choice
necessitates a new card. Each card then requires that we
integrate it into our package so it has to fit into the device
itself, validate it with a variety of standards, certify it
with a communications provider and then write software, which
we grabbed some screenshots and put at the bottom to actually
interface it with our software as well as the software that the
utilities themselves use and have deployed over past decades.
So in conclusion, Cooper Power Systems believes Congress,
NIST and the DOE should continue to drive smart grid standards.
We also commend the DOE in their preparation for evaluating
grant applications for the $4.5 billion stimulus for smart grid
investments. We believe the swift and judicious release of
these funds will help stimulate the economy and support the
process of converting the legacy grid into a smart grid. We
would also encourage Congress to consider favorable incentives
for utilities and vendors for replacement or upgrades to
existing legacy equipment.
Thank you for the opportunity to appear before you this
morning and I am prepared to answer any questions you may have.
[The prepared statement of Mr. Stoessl follows:]
Prepared Statement of Michael A. Stoessl
Good morning, Mr. Chairman and Members of the Committee,
On behalf of the National Electrical Manufacturers Association
(NEMA), I am Michael Stoessl, Group President of Cooper Power Systems.
Cooper is represented on the NEMA Board of Governors and on its Smart
Grid Advisory Panel. NEMA is the leading trade association in the U.S.
advancing the interests of 430 electrical manufacturers of a wide array
of electrical industry products used in utility, industrial,
commercial, institutional, medical imaging, and residential
applications.
NEMA companies are actively engaged in the research, development,
manufacturing and promotion of a wide range of smart grid technologies
and products, including advanced transmission devices, end user
controls, and utility distribution equipment. NEMA is an ANSI-
accredited standards development organization and publishes several
hundred standards, including dozens used today in electrical grid
equipment. In the 2007 Energy Independence and Security Act, Congress
directed NEMA to advise the National Institute of Standards and
Technology on a smart grid inter-operability framework. NEMA along with
its member companies are actively supporting NIST in identifying
standards and protocols that will accelerate deployment of smart grid
technologies, including the one(s) in my presentation today.
Cooper Power Systems has been providing equipment and solutions to
the electric utility industry since the days of Thomas Edison. Our
product range covers the transformers and components needed to connect
and restore power, the switchgear and automation technology needed to
make the electric grid reliable and efficient, as well as AMI and
Demand Response capabilities that help manage the grid's overall load.
Our solutions cover the range of ``Smart Grid'' intelligence. Our
``Smart'' offerings include Smart Metering (AMI/AMR), Demand Response,
VAR Management, Voltage Regulation, Over-current Protection, Outage
Detection and Substation Automation. These solutions are known as
``Smart'' because they are communications equipped and provide decision
support both locally on the grid and in back office software solutions.
What they all have in common is the ability to sense activity on the
grid, communicate that information back to a decision support
application, send a decision back to the grid, and then make an actual
change to the grid itself. As an example, consider that electricity
flow can become inefficient as central air conditioning load increases
on a hot day. ``VAR'' sensors on the grid [picture] can detect this
inefficiency, alert decision support software, which can use two-way
communication to turn on capacitor bank and improve the load flow
efficiency. Cooper has been developing and providing these types of
solutions to the industry since the late 1980's.
One of the big challenges we face with building out the smart grid
is the integration of legacy equipment in operation on our grid. Many
pieces of apparatus installed on the grid do not provide or support any
external interfaces, or use custom communication protocols. For
example, these reclosers provide over-current protection to overhead
lines on the distribution grid. In the event of a fault (say a tree
branch momentarily short circuits a line) it will open the circuit to
try to isolate the problem. Many of these devices do not support two-
way communications, so while they are effective as an isolated
solution, they can not be part of a truly ``Smart'' grid without being
replaced, or being retrofitted to integrate with the grid. The key to
these upgrades will be an economic cost benefit to the utility through
operational savings, a variety of government incentive programs, or a
combination of both. With more than 500,000 of these types of devices
in service today, this is an important undertaking.
Another challenge we face in building out the smart grid is the
range of communication options available. In the past three years we
have seen an increased availability of cost effective two-way
communications technology. Cellular, Wi-Fi, WiMAX, Mesh RF, and Line of
sight RF are a few of those technologies. These cost effective two-way
communications have become an enabler of adding intelligence to the
grid but also present a host of challenges. As an example, Cooper's
Faulted Circuit Indicator (FCI) [see photo] has been one of the
successful products making the transition from ``dumb'' to ``smart.''
Our legacy FCI has no communications capabilities. It simply displays a
local visual indication that a fault has occurred; it is visible to
utility line crews from the ground. When a power outage is reported,
utility line crews drive along the overhead distribution grid beginning
at the substation looking for an FCI indicating a fault. We have
transformed this product using today's low cost communications into a
communicating FCI. These devices report the outage event to the utility
control center allowing them to dispatch the crew directly to the
correct FCI location. This can translate into less miles traveled thus
saving fuel and reducing CO2 emissions. It also can
potentially reduce outage time from hours to minutes. One of our
challenges with this technology is that we must support a host of
communication technologies within this device. Each communication
technology must be integrated into our package, validated with a
variety of standards, often certified by the communications provider,
and interfaced into utility backend IT infrastructure. This adds to the
amount of time it takes to bring each communication technology to the
market and the amount of research and development investment made by
companies like ours.
Cooper Power Systems believes Congress, NIST, and the DOE should
continue to drive smart grid standards, as they have begun to do. These
industry standards should be directed through standards organizations
like NEMA, they should be based on existing or de facto standards, and
they should be able to evolve with the emerging smart grid technology.
We commend the DOE in their preparation for evaluating FOA grant
applications for the $4.5 billion stimulus for smart-grid investments.
We believe the swift and judicious release of these funds will help
stimulate the economy and support the process of converting the legacy
grid into a smart grid. We would also encourage Congress to consider
favorable incentives to utilities and vendors for smart grid
replacement or upgrades to existing ``dumb'' equipment, and for U.S.-
based research and development investments in smart grid technology.
Thank you very much for the opportunity to testify.
Biography for Michael A. Stoessl
Michael A. Stoessl was named Group President, Cooper Power Systems
in 2004, reporting directly to Kirk S. Hachigian, President and CEO,
Cooper Industries. He had been President, Cooper Bussmann since 2002.
Mr. Stoessl joined Cooper Bussmann from Emerson Electric Company where
he had been employed from 1993 to 2002, most recently as General
Manager and Vice President of a unit of Emerson's Liebert Power
business. In his nine years at Emerson, Mr. Stoessl held a number of
positions, starting as a Marketing Manager in Emerson's Specialty
Motors business, to President of Hurst Manufacturing, to President of
Rosemont Analytical Uniloc and then to General Manager and Vice
President of Astec DC-DC Power Supplies before joining Liebert.
Prior to Emerson, Mr. Stoessl was with the Circuit Protection
Division of Raychem Corporation for four years, serving in marketing,
strategic planning and operations management positions.
Mr. Stoessl began his career as a Business Analyst with McKinsey &
Company, Inc. after graduating with Highest Honors from Princeton
University with a B.S. in Computer Science and Electrical Engineering.
Mr. Stoessl also holds an M.B.A. from Harvard University where he
graduated as a Baker Scholar.
Cooper Power Systems manufactures equipment, components and systems
for the distribution and management of electrical power for electrical
utilities, industries, businesses and institutions worldwide.
Headquartered in Waukesha, WI, Cooper Power Systems has manufacturing
facilities in ten domestic locations and three foreign locations, and
approximately 3,400 employees worldwide.
Cooper Industries, Ltd. (NYSE: CBE) is a global manufacturer with
2008 revenues of $6.5 billion, approximately 88 percent of which are
from electrical products. Founded in 1833, Cooper's sustained level of
success is attributable to a constant focus on innovation, evolving
business practices while maintaining the highest ethical standards, and
meeting customer needs. The Company has eight operating divisions with
leading market share positions and world-class products and brands
including: Bussmann electrical and electronic fuses; Crouse-Hinds and
CEAG explosion-proof electrical equipment; Halo and Metalux lighting
fixtures; and Kyle and McGraw-Edison power systems products. With this
broad range of products, Cooper is uniquely positioned for several
long-term growth trends including the global infrastructure build-out,
the need to improve the reliability and productivity of the electric
grid, the demand for higher energy-efficient products and the need for
improved electrical safety. In 2008, 61 percent of total sales were to
customers in the Industrial and Utility end-markets and 37 percent of
total sales were to customers outside the United States. Cooper, which
has more than 29,000 employees and manufacturing facilities in 23
countries as of 2008, is incorporated in Bermuda with administrative
headquarters in Houston, TX.
Discussion
Chairman Baird. I thank our witnesses for a very
interesting and informative testimony. I recognize myself for
five minutes for questions.
Anticipated Development Timeline
Give us a sense of the glide path of when we begin to see
these technologies becoming more adopted. You know, the
temptation is to say when will this be ready. I know it is
going to be a gradual transition but give us kind of a sense,
metrics that give us a sense of what will be established by
what time, and I know that is dependent also on incentives and
markets, et cetera, but give us some thoughts about that. Mr.
De Martini, you might be in one of the best places.
Mr. De Martini. Sure. Well, I think certainly across the
country we are seeing, and California in particular, the
adoption of smart meter technology as a foundational element as
was discussed. Certainly as we see over the next, in our case
in California, over the next three and a half years all three
investor-owned utilities will have smart meters deployed for
all their customers, building on what we have done already for
our largest industrial customers. At the same time, there is a
lot of push, and we are certainly at the forefront, but others
looking at opportunities as part of the ARRA funds for
synchrophasor technologies. It is very cost-effective. So we
see that over the next couple years, that being deployed on the
transmission systems, and that has two benefits, not only the
one that I mentioned in terms of helping to reduce, or improve,
I should say, the reliability and reduce the exposure to these
large blackouts. It also has the benefit of allowing us to be
able to understand how large amounts of wind energy can be
integrated into the grid because of the very dynamic nature of
wind energy. So that is one of the things that we look at in
California with the strong reliance on renewable energy in our
system. We are anticipating over the next five years as much as
4,500 megawatts of new wind energy coming on and so we are
looking at that. As we look at these other distribution
automation technologies, while we have deployed and many others
in the country have deployed quite a bit of distributed
automation, what we have had in the last 10 years needs to be
taken further. I think it was mentioned in the other
testimonies and I think at the outset in the opening comments
that when we start to look at two-way power flow in the
distribution system, many of the protection schemes, how we
think about and design these distribution systems, need to be
taken to another level. So part of what we are looking at with
this Avanti circuit but also other demonstration projects is,
how do we accommodate two-way power flow on the distribution
system that for the last 100-plus years has been designed as a
one-way power flow from central plant down to the customer?
Features of Smart Meters
Chairman Baird. Excellent summary. If I am an average
citizen and you say the word ``smart meter,'' you are
installing a smart meter, what is the difference between the
dumb meter I have outside and the smart meter?
Mr. De Martini. Well, the dumb meter hasn't really changed
in 50 years and really in basic form type in 100-plus years. So
it is an electromechnical device. It has magnets and it spins
on a disc. I think most folks have taken a look at one of
those. It is extremely difficult to read because of the way the
clocks in terms of the numbers are there so it is very
difficult for folks to understand, the average consumer. What
the digital meter will do, first and foremost, it is digital.
It is two-way communicating, has two forms of communication
included in the meter, one two-way communication methodology
back to the utility to be able to do remote metering----
Chairman Baird. Real time?
Mr. De Martini. Real time--well, near real time. So we can
get the information and we can collect it on an hourly or up to
15-minute increments and then we usually download it once a day
or a couple times a day, but we can get real-time reads off the
meter as needed. The other communication goes into the home so
many of us are looking at wireless technology. Zigbee in
particular is one that we are looking at that allows us to
bridge to many of the devices that Mr. Ross talked about in
terms of being able to allow energy management systems in the
home to get the read right off the meter every 10 seconds,
really real-time information, and take advantage of that. So
these sorts of things and more processing and memory capability
in the meter are really what distinguish it, and features like
remote service switches that allows us to remotely turn on the
power when somebody moves in. In our case, we have over 20
percent of our customers move every year. That is over a
million and a half customers moving.
Chairman Baird. Thank you. I am not going to have time to
ask a couple other questions but I will just put those out if
someone could be kind enough to share down the road with us. If
we get to a second round of questions, we will get to it. I am
interested in the extent to which the energy bill that we
recently passed out of the House--a number of folks mentioned
incentives as key to adopting or not adopting some of these
technologies--how the system of allowances and credits, et
cetera, particularly in the cap-and-trade system would relate
to incentives, or disincentives possibly for adoption of this.
The other thing is, Dr. Arnold, you know, when we travel the
world we are used to now carrying these little plug adaptors,
and I am interested in, you mentioned global standards. I am
interested separately in how we are coordinating with the rest
of the world smart grid technology so that, you know, we don't
create yet another layer of incompatibility for international
travel and international trade and consumption of international
goods. With that, I recognize Mr. Inglis for five minutes.
Flexibility and Pace of Standards Development
Mr. Inglis. Thank you, Mr. Chairman. Mr. Ross was talking
earlier about the feedback loop of customers figuring out how
much power they are using. The first house that my wife and I
bought was heated with electric baseboard resistance heaters
and so the first time it turned cold, I went outside and
watched the meter and I called out to her to turn them on. I
thought the thing was going to come busting through the glass
and become a dangerous projectile going through the
neighborhood, it was going so fast. That was the beginning of
the feedback loop but 30 days later when we got the bill was
when the real feedback came about, gee, do we have to change
this technology, and so we changed pretty rapidly because even
in warmer South Carolina it is not that cold, you know, but
wow, was it expensive. So I can see the value of a quick
feedback loop to change behavior because you realize oh, my
gosh, this is costing a fortune to heat this house.
Mr. Ross, Dr. Arnold is working on standards. You are in a
rapidly evolving area. Software moves rapidly. Is it time for
standards? Are you ready for standards or are you hoping for
more development before he gets his standards in place or do
his standards help you implement your technology?
Mr. Ross. We have been very supportive of the NIST
standards efforts and really would like to commend Dr. Arnold
and all the work that they have done there. You know, they are
dealing with a huge area and have set forth a plan in multiple
phases that really is moving with good, deliberate speed while
taking into account all the complexities of the issues they are
needing to deal with. From our standpoint, I think most people
in industry are supporting open standards. It would be helpful
to have the standards in place obviously as quickly as possible
but you really need to balance that with getting it right and
making sure there is enough time to investigate and work
through all the issues.
Mr. Inglis. Is there a way to keep this flexible? Because
it seems to me in an area of rapidly evolving technology, which
I hope is what we are dealing with, particularly in the
software, to keep those standards flexible. It may be a
question for Mr. Ross and Dr. Arnold.
Mr. Ross. I can just comment, and then Dr. Arnold would
have a lot more to say. I think there is. I mean, I think the
intent is not to pick winners or losers or very specific
technologies, but to be able to pick the types of technologies
broadly that will at least allow for inter-operability and
connectivity, which is a hallmark of the smart grid, but I will
let Dr. Arnold talk about that.
Dr. Arnold. Thank you. Well, we have to be careful not to
overspecify things because we do need to facilitate innovation,
which will benefit the consumer. There are certain aspects in
the standards that everyone agrees have to be common like you
have to have some common understanding of what data are you
going to have, how is it going to be represented, and these are
things that people can agree on. We can allow a lot of
flexibility in terms of things people can innovate and get
benefits to consumers and they are built on this foundation,
sort of the key fundamental standards, data models and so
forth. So we are proceeding to address this in I think a
thoughtful fashion.
Net Metering
Mr. Inglis. What is the holdup with net metering? I hear,
you know, a lot of people have trouble with--theoretically I
think EPACT 2005 really requires power companies to allow us to
do that, right? But then there are all kinds of questions about
the ability, the actual ability to sell your power back to the
grid. What is the holdup? Is it technological or is it a
business issue and we really don't want to move quickly if you
are in the power business?
Mr. De Martini. In terms of net metering, there are
actually two dimensions. One is net metering where you are
netting out how much energy is being used by the home, and then
there is the metering that involves a separate meter to be able
to then get paid for, for the energy being produced at the
home. The current meters that we are deploying, the electronic
meters have capability to do net metering. They also have the
ability if we put a discrete measurement device on, say, a
solar panel to be able to measure that and we are looking at
this also for the vehicle--I think Dr. Arnold talked about
this--as well as when we look at energy storage potentially in
the home or at the business, how we would be able to measure
that as well in terms of its contribution to the grid, not only
for energy but also what other services it might provide in
terms of grid stability. So we are looking at that. It is
really--it is not a technology issue. I think we are looking at
what the new form factors need to be to be able to do that and
then there are standards both in terms of interconnection
standards that might be required as well as some technology
standards to deal with these different form factors because in
most cases these meters would have protection on them, unlike
the meter on the side of the house that doesn't and so there
are different safety considerations.
Mr. Inglis. Thank you.
Chairman Baird. Mr. Lujan.
Inter-operability Standards
Mr. Lujan. Thank you very much, Mr. Chairman. I would like
to start off where our Chairman and Ranking Member's questions
have gone as well with talking about some of the open standards
and not picking winners or losers, but the importance of inter-
operability, and as we look to see some of the technologies
that we depend on every day, our cell phones as an example,
which are developed in open platforms but in the United States
have not kept up with some of the technological advances that
have occurred in other nations, and when you talk about an open
platform but some of the restrictions that are placed on
consumers as a result of carving out niches within this
industry. Can you talk about the importance of inter-
operability and some of the minimum performance standards that
should be included so that way we are able to maximize
efficiency, cost-effectiveness when we are looking at
consumers' implementation and the integration with utilities as
well?
Dr. Arnold. Well, I think we have to be careful not to fall
into the trap of thinking that one size fits all because the
smart grid has to accommodate a nationwide infrastructure.
Environments in rural context are very different than urban
areas so there will have to be a range of technologies that
utilities can employ, and we don't want to impede innovation.
So the challenge in this effort is to identify the critical
interfaces in which there needs to be a standard and the nature
of the standard has to be right as well. One example that I
will give you is that a standard for communicating dynamic
pricing information across the grid is going to be a very
fundamental standard for the smart grid, but we have 53
jurisdictions in the United States that set tariffs and rates
and they are not all the same. So we can't have one pricing
model. So the type of standard that we need, there is language
to describe pricing models, and this is quite doable. So it is
a combination of recognizing which are the key interfaces and
applying the right type of technology to create the right type
of standard.
Mr. Lujan. Very good. Does anyone else want to comment on
that?
Ms. Kelly. From the regulatory perspective, both the
federal and State regulators have recognized the importance of
inter-operability at some level. And in the absence of inter-
operability of open architecture, and the State commissions
adopted a resolution at their meeting, their national meeting
yesterday, that pledges the State commissions to ensure that
any smart grid technology that is sought to be deployed on
their systems that they will require that the architecture be
open. (And in FERC's policy statement for cost recovery, we
have made the same statement.)
Mr. Lujan. Thank you. And I would also like to second the
thoughts of Mr. Inglis as well as it pertains to net metering.
As we are looking to smart meters and the importance of making
that inclusion as we are making this critical investment now to
prepare homes and the investments to be made with smart meters
for those individuals that would like to get involved in that
type of an environment, I think it is critical and I hope that
that would be some type of a parameter that would be
established.
And lastly, Commissioner Kelly, just to applaud your
efforts with what you have done in the collaborative effort
between FERC and NARUC\1\ to bring those two entities together
to talk about the regulatory environment that exists, the
framework that has to be adopted and how the two can truly
adopt best practices throughout the United States to help carry
this out. And if you can just touch upon any of the practices
that you have already identified or the progress that can be
made and how we as a Congress can provide the support that you
need, whether it is for FERC, DOE, NIST, with NARUC to help you
do what it is that we need to do, recognizing that all of your
testimony supports the robust investment that has been made in
smart grid applications, recognizing the investments that can
be made and the progress that can be made over the next five,
10 and 15 years.
---------------------------------------------------------------------------
\1\ National Association of Regulatory Utility Commissioners
---------------------------------------------------------------------------
Ms. Kelly. Well, thank you, Congressman. It has been a very
fruitful effort, this collaboration between the states and the
Federal Government. In addition to adopting a policy that
inter-operability has to be met by all smart grid investment,
cyber security has also been a concern of State regulators as
well as federal, and we have pledged ourselves to demand that
any smart grid technology that comes before us for approval for
deployment to the grid will have to be shown to be cyber
secure. You already have helped us with the stimulus funds and
in the ARRA you created a clearinghouse of information which
the Department of Energy is working to establish right now, and
we see both of these as very helpful for the encouragement of
deployment of the smart grid. With the stimulus funds, we are
anxious to see them spent on demonstration projects that
actually demonstrate a range of technologies from the
transmission end down to the distribution end, because some of
these technologies are not known. So if we can have a
demonstration project and get the information from that project
that shows that this technology performs, that it actually
provides benefits that we can quantify and report on and that
it has been accepted by consumers, this is a wonderful way to
kick start the deployment of smart grid technology and advance
it. So thanks for your legislative efforts.
Mr. Lujan. Thank you, and thank you, Madam Chair. I see my
time is expired. I want to invite any of the other panelists to
submit a response to that question if you so choose in writing
for the record. Thank you very much. Thank you, Madam Chair.
Ms. Giffords. [Presiding] Thank you, Mr. Lujan.
The Chair will recognize Mr. Bartlett.
Mr. Bartlett. Thank you very much.
National Security Concerns
Just about a week before the G-8 ratified the framework
agreement that ended the Kosovo conflict, I was sitting in a
hotel room in Vienna, Austria, with three members of the
Russian Duma and the personal representative of Slobodan
Milosevic. One of those Russians was Vladimir Lukin, who is
Ambassador here and at that time the Chair of what would be our
Foreign Affairs Committee. He was very angry. He spent two days
with his arms crossed looking at the ceiling and finally he
said if we really wanted to hurt you with no fear of
retaliation, we would launch an ICBM.\2\ We would detonate a
nuclear weapon high above your country and shut down your power
grid and your communications for six months or so. The third-
ranking Communist was there, Alexander Shabanov, and he smiled
and said and if one weapon wouldn't do it, we have some spares
like about 10,000, I think. What was he talking about? I won't
ask Ms. Hoffman because I know that she knows what he was
talking about. Let us start with Ms. Kelly. Because it really
is relevant to this hearing and what you all are doing. What
was he talking about?
---------------------------------------------------------------------------
\2\ Intercontinental Ballistic Missile
---------------------------------------------------------------------------
Ms. Kelly. Well, Congressman, he was talking about
electromagnetic pulse and he was thinking about using it as a
threat to the stability of the United States, and it is a
concern. It is a physical threat as opposed to a cyber threat,
but nevertheless a very real threat.
Mr. Bartlett. Dr. Arnold.
Dr. Arnold. Well, this is indeed a very serious concern
that we must address in the context of the smart grid, and
although it is a physical threat, it does have cyber
implications because the greatest damage with that threat is to
the control systems which are based on electronics. We consider
that threat to be within the scope of the cyber security task
force within the NIST standards program. We have a number of
EMC\3\ experts who participate in that group and NIST has
expertise as well. I would just like to say that I am aware
that some of the manufacturers are at least sensitive to the
issue and several of the manufacturers on our working groups
have informed us of research they are doing on component
technologies that are more EM immune than conventional
circuits. There are existing approaches with layered magnetic
shielding to create EMP\4\-resistant designs and there are
applicable standards. IEC\5\ Subcommittee 77C has had work
underway for some time and has produced a series of standards.
The real challenge in this, and I am reminded of this by the
report of the commission to assess the threat to the United
States on EMP attack in which it says it is not practical to
try to protect the entire electrical power system or even all
high-value components from damage. So I think the key to this
is identifying which are the critical assets that need to be
protected and to apply the relevant design standards to ensure
their protection.
---------------------------------------------------------------------------
\3\ Electromagnetic Compatibility
\4\ Electromagnetic Pulse
\5\ International Electrotechnical Commission
---------------------------------------------------------------------------
Mr. Bartlett. Yeah, the smarter we make the grid, the more
vulnerable we are, and unless you are incorporating EMP
protection, you are simply making it worse rather than better
as far as security is concerned.
Mr. De Martini.
Mr. De Martini. Yes. In addition to what Dr. Arnold
described, the other potential threat, physical threat, has to
do with the long-cycle currents that are induced under one of
the three different scenarios. There are three different pulse
sort of effects that result from EMP. The second looks and acts
like lightning on the system and the current grid use of
lightning arrestors and protection devices will mitigate that.
The third, though, is the one that has the most potential
physical damage for things like transformers and others large
equipment that we have on our bulk transmission system and also
in our distribution and subtransmission systems. There are ways
to approach this. This is also similar to a phenomenon, solar
flares, which is fairly well understood. There have been a
number of scenarios over the last 20, 30 years, one by Hydro
Quebec in the 1980s and some of the technologies that they have
deployed. Again, I think to Dr. Arnold's point, what we need to
look at is sort of a risk assessment and looking at what we
think are the key vulnerabilities. In the case of the physical
infrastructure, it is long lead time items like transformers so
if a transformer was to fail, getting a new replacement
transformer for a 500,000-volt transformer is very long.
Mr. Bartlett. What is ``very long''?
Mr. De Martini. Could be two to three years, if we had a
very wide scale. Usually if we have one fail, you know, there
is a sharing arrangement usually with other utilities and
manufacturers so that we can get something quick as in the case
of an earthquake, but when we talk about widespread, you know,
damage, then we would exhaust those standbys. So looking at
ways to isolate those transformers or dampen those currents
that may get induced into the system is something we can look
at, and our 500-KB system, for example, in the West, and
particularly in California, we have series capacitors to help
actually shorten the lines, which is one of the things you can
do to mitigate the exposure from EMP.
Mr. Bartlett. My time is up. Let us come back to this in
the second round because it really needs more exploration
because if we don't adequately respond to this, it could
really, if we had that event, end life as we know it in this
country. So let us come back to that in the second round. Thank
you, Mr. Chairman.
Chairman Baird. Thank you, Dr. Bartlett.
Ms. Giffords.
Energy Storage
Ms. Giffords. Thank you, Mr. Chairman, and thank you to the
panelists for being here today. I come from southern Arizona,
and it is a state that is abundant in solar energy and
incredible potential in its natural resources. As you all know,
smart grid technologies provide a real relevance to the goal of
making our state and the country more dependent on renewable
energy and particularly solar because of the storage capacity
issues that deal with the sun setting at night and clouds
coming overhead, so I want to talk a little bit about what
happens under the traditional rate-making process. There are
very few ways currently that utilities can monetized the
benefits of storage. Since storage technologies do not fall
into any of the traditional asset classes like generation or
transmission or distribution, it is really a struggle for the
utilities to use storage as part of their rate base. So my
question is, what can FERC do to encourage the use of energy
storage in light of these circumstances, and should FERC
institute a separate asset class for storage since it provides
benefits for the generation and transmission and distribution
of energy?
Ms. Kelly. Thank you, Congresswoman. You are absolutely
right. Storage is not a traditional resource on the system. The
traditional resources are generation, transmission and
distribution, and that is how rates have been set. Storage can
potentially act as any one of them or all three of them, and
that is where the difficulty comes in. If it is acting as a
generator, for example, pump storage, a traditional storage
facility, then it receives revenues as a generator. Some of the
issues that get more difficult come if the deployer of the
asset wants to capture multiple revenue streams. I know that
there was a proposal by AEP that was at the distribution level
in Texas that would have been a distribution asset and the
Texas commission did approve that in distribution rates and I
believe also allowed them to recover revenues as a generator at
the same time. One thing that FERC has done to facilitate
storage is to allow--in our organized markets, we have seven
organized markets in the United States and we have allowed
storage to qualify. We changed the rules so that storage can
qualify as a demand response provider and we have lithium ion
batteries in particular that, although they are expensive, can
provide ancillary services because those ancillary services are
costly. So we are working to change market rules to allow
storage to sell power into the market. We also have an office
of policy and innovation, and two months ago they began an
effort internally to decide whether this is something that we
should develop a comprehensive policy on or whether it is
something that we should decide on a case-by-case basis,
because you are absolutely right; storage can act as a number
of different kind of entity within the system, and the question
of whether or not they can recover as a transmission asset and
a generation asset has a lot of implications for the market and
the competitiveness of the market and cost recovery, but it is
something that we are undertaking to look at to see whether we
should come up with some sort of comprehensive policy.
Ms. Giffords. Thank you, Ms. Kelly.
Would anyone else like to comment? Ms. Hoffman.
Ms. Hoffman. I just would like to comment that the best
thing we can do for the industry is to develop a clear
definition of those services and what can be covered under what
cost structure so that the industry knows how to move forward
and where they can get cost recovery so it is completely
transparent and consistent.
Mr. Ross. I would just like to say, we agree with your
view. Storage is, you know, a very attractive solution for
utilities. The price points are coming down now with some of
the advantages gained through the development of batteries for
electric vehicles, and I think those price points are now
approaching new generation and I think more clarity would be
beneficial for the industry because today where we are at,
there are some utilities that have deployed storage solutions,
grid-scale storage solutions, but it has tended to be basically
on a pilot basis and not more widespread.
Ms. Giffords. Mr. Chairman, just in closing, this seems to
me a real key part of how we are going to figure out
transitioning to renewable energy and, you know, I am glad that
you are holding this hearing today and I look forward to
working with all of you to make sure that we can actually get
these changes in place so that we can really move forward and
transform our economy and our energy usage.
Chairman Baird. Excellent point, as always, Ms. Giffords.
Maybe we want to pursue specifically a hearing on the issue of
storage in some more detail.
Ms. Giffords. That would be a great idea.
Chairman Baird. Dr. Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman. I don't know about you
but I am having fun. It is not every day we have a panel on
which every member knows what they are talking about. So I have
learned a lot.
Just one quick comment on the EMP. When I look at that
issue, I just think this is so far beyond what anyone should do
that it almost is in the category of mutually assured
destruction as being the only defense against it. We can
protect some things but good grief, given all the processors
around, if every car stops because of EMP, you have total
gridlock, the Nation doesn't function. So it is something we
would rather not think about it but I really think it is very,
very difficult to address the whole issue.
On the smart grid, it seems to me a smart grid requires
smart people too, and I think the comments about digital
meters--I think we would do everyone in this country a great
favor if every major energy consuming appliance had a digital
display on the appliance showing how much energy it was using
at that moment. You know, this would apply to stoves, dryers,
washers, dishwashers, the major appliances, perhaps even the
furnaces and air conditioners, although you wouldn't want the
display on the machine per se but somewhere in the house.
People have to become much more conscious about their energy
usage if we are really going to be serious about conserving
energy, and so I would--you know, I don't know, Dr. Arnold,
whether you want to put this as one of the standards but I
certainly wouldn't mind seeing a recommendation in there that
this is something we should move towards, and perhaps it
requires legislation at some point. I think the public will
make intelligent decisions if they know the facts, and we have
to make sure that we let them know the facts in every way
possible.
The Purpose of the Smart Grid
The question I have is, what is the primary purpose of the
smart grid? It seems to me its origin was in the blackouts and
concern about that, but what you are talking about today and
discussing is far beyond just dealing with blackouts, and I
don't have much time left but if you can each give just a short
response of what really are we trying to accomplish with a
smart grid. What is our purpose? What is our goal? We will
start with--well, let us reverse the order. Ms. Hoffman, you
get nabbed every time. Mr. Stoessl, and just go down. I am
looking for short answers, not long ones.
Mr. Stoessl. I think unfortunately smart grid has become
something that is ubiquitous. Everybody takes anything going on
in the grid and calls it smart grid application but from our
perspective, improving reliability is a key part of it.
Improving conservation of resources, reducing waste is a key
part of it, and providing signals to both consumers as well as
the utilities on how to reduce waste, reduce usage is also a
key part of it.
Mr. Ehlers. Thank you.
Mr. Ross.
Mr. Ross. Yeah, I would agree with a lot of that. I think
it is to create efficiencies. I think it is to improve
reliability. We should have as a goal to increase security and
I think there is a lot of work being done on that, and I think
those are the main prongs.
Mr. Ehlers. Mr. De Martini.
Mr. De Martini. I would say there are three things. One is
that if we look at renewable energy integration, involving
large amounts of wind and distributed solar energy, we need a
different set of technologies to be able to integrate that
energy in a reliable, safe manner. The other is the grid
efficiencies that were talked about, two elements. One is,
there are superconducting technologies that can make our grid,
the inherent grid more efficient which means less energy wasted
through losses on the system, and then obviously engaging our
customers in the process that you described in terms of using
more-efficient energy. So I would say those, and then overall
reliability of the grid in terms of providing better service
for our customers.
Mr. Ehlers. Dr. Arnold.
Dr. Arnold. I think of it as reducing energy usage,
allowing consumers to manage their use of energy, increasing
reliability and benefiting the environment.
Mr. Ehlers. Ms. Kelly.
Ms. Kelly. Congressman, I think of it as doing the same
thing that the dumb grid does, which is send electricity, only
doing it better, more efficiently and more reliably, and then
increasing our ability to do things with the grid that it has
never done before like sending electricity two ways, allowing
for net metering and allowing for dynamic price signals and
automated demand response, things that we can't do with the
dumb grid today.
Mr. Ehlers. Ms. Hoffman.
Ms. Hoffman. I will summarize it as sensing, measurement,
information, decision-making and automation such that we have a
greater--as you eloquently stated, an educated consumer and a
more sophisticated industry.
Mr. Ehlers. Thank you very much. Just to summarize, most of
you mentioned the issue of efficiency, which I think is a huge
issue that we have to deal with internationally, not just in
this country, and I appreciate your comments. They are right on
target. Thank you.
Chairman Baird. Dr. Lipinski.
First Steps to a Smart Grid
Mr. Lipinski. Thank you, Mr. Chairman, and thank you for
holding this hearing today. It is very important that we talk a
lot about alternative energy. This is another critical part of
the equation that oftentimes gets overlooked. I will start out
by asking about this. I read recently that the National
Association of Regulatory Utility Commissioners reported that
the most effective place for initial investment in the smart
grid for smart grid improvements is on the electric grid itself
where energy and cost savings are immediate and that rely upon
change in customer behavior or for customers to purchase and
install in-home energy-saving devices. So I was wondering what
the panel thinks about the commissioner's assessment. Do you
think that that is the best way to start building the Nation's
smart grids? Maybe we will start with Ms. Hoffman.
Ms. Hoffman. I actually think we need to drive innovation
and smart grid technologies on all three levels, at the
transmission level with the phasor measurement units, at the
distribution level through substation automation, and at the
customer level. The safest route from a regulatory
commissioner's perspective is something that is dealing
directly with the industry, or within the utility industry
itself. The most competitive and most innovative aspect of the
smart grid is on the consumer side for consumer decision-
making.
Mr. Lipinski. Ms. Kelly.
Ms. Kelly. Congressman, I would agree with Ms. Hoffman. The
State utility regulators are concerned because the technology
that we are talking about putting in is new to them and so I
think that the DOE demonstration projects will be very valuable
in demonstrating that the technology does perform, that it does
provide benefits and that it is accepted by the consumers. The
technology that they referred to is technology that we
understand pretty well and we could put on the transmission
system, and I think that is one reason they endorse it because
it is well known and we know how much efficiency can be
delivered by it. And so from that perspective, I think that it
is important that that kind of technology be deployed but in
parallel we should be undertaking these demonstration projects
to show that other technology can also work well.
Mr. Lipinski. Does anyone else have a comment? Mr. De
Martini.
Mr. De Martini. Yes. Thanks. I think that is important to
recognize, for example, in California and certainly in southern
California Edison's case, our peak, system peak is occurring on
less than 60 hours of the year. During the period from 2002 to
2007 when we were experiencing the dramatic growth in our
economy, our average peak demand was growing by about 1,000
megawatts a year. That peak, 30 percent of that peak, 7,000
megawatts is air conditioning load. As we look at investing
more in capital to try and meet that type of growth, which we
anticipate that we will see again once we come out of this
downturn, it is important that we engage our customers in a way
that they can see what prices are, what the cost of this energy
is going to be so that we can have this, you know, mutually
beneficial relationship that we can meet their needs but also
that they can recognize what the cost of this is so we can end
up with a much more efficient system. It is just not possible
to continue to try and meet that sort of growth.
Mr. Ross. Yeah, I would like to just comment on that as
well. I agree with what the other panelists have said. I would
like to point out that a lot of the work that has been done to
date, though, really has been on the grid operations and
reliability side. So we have done a lot in transmission, and we
are doing a lot at substations and distribution automation.
Where we haven't done a lot so far really is on the demand side
and looking at efficiency, and so a lot of those things
hopefully through the smart grid demonstration projects and
elsewhere we will see new technologies that can be deployed,
but those things have done, you know, at best very small
pilots. So a real focus on efficiency and addressing the demand
side as well as the supply side I think is needed.
Mr. Lipinski. Thank you. With the little time I have left,
I want to ask Ms. Hoffman, is DOE spending any of the stimulus
dollars on efficiency improvements on the electric grid itself?
Ms. Hoffman. We are. Through the demonstration program we
will have a complete portfolio of generation as well as smart
grid technologies that will hopefully show improvement in
efficiency of the whole system, the system as a whole. For the
investment grant program, there are very technology-specific
actions or proposals that will be submitted to the Department
so some of them could but not all of them probably will.
Mr. Lipinski. Thank you. I see my time is up. Thank you for
your answers, and I yield back.
Chairman Baird. Thanks, Dr. Lipinski.
Ms. Biggert.
Ms. Biggert. Thank you, Mr. Chairman. This must be smart
grid day. I co-chair a caucus on high-performance buildings,
and the title of what we are having today is ``Connecting
Buildings in the Smart Grid.'' So it obviously is a topic that
is very much in the forefront. I do chair this caucus with
Representative Carnahan from Missouri, so if you happen to be
down in the basement of Rayburn around 11:30, that is when that
starts, if you need some more talk about the smart grid.
I read recently that the National Association of Regulatory
Utility Commissioners has reported that the most effective
place for initial investment in smart grid improvements or
immediate investments in the smart grid improvements is on the
electric grid itself where energy and cost savings are
immediate and do not rely upon changes in customer behavior and
do not need customers to purchase and install in-home energy-
savings devices. Do you agree with that assessment as the best
way to start building this Nation's smart grids? Ms. Hoffman.
Ms. Hoffman. Congresswoman, thank you. I believe that we
really need investments at the transmission-level system as
well as at the distribution and at the customer levels. The
innovation that is occurring on the system is occurring at the
customer level as you look at the wealth of technologies
including the appliances, with intelligence. It will provide
great advancement and great education to the industry as well
as consumers on their energy consumption.
Ms. Biggert. Thank you.
Ms. Kelly. Congresswoman, the technology that they are
discussing there will indeed provide a lot of efficiency and
translate into a lot of savings for consumers. However, I don't
think we want to lose sight of the fact that adding smart grid
technology at the retail level in the home also has the
potential to accomplish similar types of savings.
Ms. Biggert. Thank you. Anybody else?
Mr. Stoessl, you mentioned something in your testimony
about----
Mr. Stoessl. Absolutely, and I think that while it is
essential that we invest everywhere, I think if you really want
immediate gains, the fastest response is going to come from
going after management of efficiency on the grid itself.
Voltage management and reactive power management, that first
example that I provided, looking at how you turn capacitor
banks on and off or turn voltage regulators on and off when
demand shifts and the load comes up and down, that is something
the utility can manage directly without relying on consumers to
get cues and individually make a whole host of actions. And so
I think there are opportunities for immediate benefits going in
that direction while waiting for all the cues that the
consumers will need to manage their own consumption, which is
going to be very important down the road as well.
Ms. Biggert. Well, you know, we hear a lot about the smart
meters and the programs to enable consumers to reduce energy
use, you know, usage and shift part of it, you know, to
particular times of the day but it seems that there is more to
the smart grid, essentially making the utility systems
themselves self-healing as you mentioned, Mr. Stoessl, and
making them more reliable and more efficient and lowering the
cost of electric delivery. But if this is so, Ms. Hoffman, how
is DOE encouraging the deployment of these types of smart grid
systems?
Ms. Hoffman. Well, hopefully we will get some wonderful
proposals through the American Recovery and Reinvestment Act
that demonstrate some of the objectives that the legislation
asks us to do in advancing consumer behavior, managing load on
the system as well as we look at supply and demand, increasing
the availability of renewable resources. I believe that through
the American Recovery and Reinvestment Act solicitations for
both the demonstration as well as the investment grants, we
will have taken a major step in the right direction in doing
projects as well as documenting the benefits of these projects.
Ms. Biggert. Thank you. I yield back.
Chairman Baird. Thank you, Ms. Biggert.
Mr. Davis.
Potential Energy Production Savings
Mr. Davis. Mr. Chairman and Ranking Member, thanks for
having the hearing today to better inform those of us who will
be making decisions on energy issues in the future where
America can become more energy independent and more
economically secure and have greater national security. I look
at the issues today that I hear discussed so often from
everyone in this room and everyone in the District I represent
and throughout the country, and each seems to have a better
mousetrap. The windmills quit moving when the wind quits
blowing and the solar systems quit working at least to 100
percent efficiency when the sun goes down. We are putting--50
percent of our energy production is from coal, which belches
into the atmosphere carbon emissions that seems to be
destroying our planet, about 24 to 25 percent from nuclear
energy. We have no place to send the spent rods. And then some
20 percent or so would come from natural gas or from fuel oils
and then one or two percent from hydro and the wind and the
solar. And now we talk about a grid that would transfer all of
the energy that we are producing where the source may be in a
more efficient and effective way where perhaps we can reduce
the amount of generation, which means we would reduce the
amount of pollution and more efficiently and more effectively
transfer electrical energy that we are producing in certain
locations throughout America. It is my understanding today, and
I live in the Tennessee valley area, I represent Kingston where
the spill is located, and so obviously all of us are trying to
find some way to find a better use of that. So with the grids
that we have, my understanding is, we transfer now energy being
produced from one particular company to another, from one area
and one region to another. How do we redo the grid system to
where it can become more effective, and if we do with the costs
we are talking about, how much more can we wring out and how
much can we reduce the generation that we have today as a
result of that? One percent, two percent, three percent, five
percent? Would you give me an estimation of how, if we had the
perfect grid system based upon your knowledge and study, how
much can we save in production?
Ms. Hoffman. I don't have an exact number for the savings,
but I will characterize it a little bit differently. If we can
reduce the peak on the system, we can show great savings. If we
actually can flatten the loads of customers and flatten the
transfer on the transmission system, we will get the greatest
value and benefit. There are some numbers out for peak load
reduction. I don't remember the exact savings numbers but I can
provide that to you.
[The information follows:]
Information for the Record
A 2009 industry report (Faruqui and Sergici with the Brattle Group,
``Household Response to Dynamic Pricing of Electricity--a Survey of the
Experimental Evidence,'' funded in part by Edison Electric Institute/
Electric Power Research Institute) analyzed the results from the most
recent 15 pricing pilot programs. The study concluded that, ``Across
the range of experiments studied, time-of-use rates induce a drop in
peak demand that ranges between three to six percent and critical-peak
pricing tariffs induce a drop in peak demand that ranges between 13 to
20 percent. When accompanied with enabling technologies (i.e.,
programmable thermostats), the latter set of tariffs lead to a drop in
peak demand in the 27 to 44 percent range.''
Mr. Davis. But when it gets to 100 degrees in Tennessee and
it is 150 percent humidity, we all turn our air conditioners on
and we want it to be about 75 degrees, and so that produces a
peak. How do we convince that customer--and what you are saying
is, we need to reduce the amount that we are consuming so
therefore we don't have a peak. How do we do that? How does the
grid system bring about a reduction in peak use for those
customers who feel they need that energy?
Ms. Hoffman. Well, one of the technologies is, you actually
can cycle the air conditioners through peak price signals. They
can cycle some sort of incentive program for cycling the air
conditioners, and that has been a common program.
Mr. Davis. And that works, because I just put like a 16
series in my house from propane to electricity and we just
changed all of the light bulbs, so we are not talking about
grid now, we are talking about actually efficiency and
conservation.
Ms. Hoffman. And consumers' decisions. You can have the air
conditioning running and there might be a price signal but the
consumers may say okay, well, I am not going to start my
dishwasher at this time, so you look at all the factors that
pull together and not just the air conditioning.
Mr. Davis. Yes, Ms. Kelly.
Ms. Kelly. Thank you, Congressman Davis. FERC recently
completed a study which the Energy Independence and Security
Act asked us to do on assessing the national potential for
demand response, and in that study we determined that in a
perfect world, we could reduce peak 20 percent over the next 10
years. Those are the numbers I think that Ms. Hoffman was
talking about. Now, that would be a perfect world but that
perfect world would be all consuming entities having a smart
meter and having that smart meter send the real-time price
signals, dynamic pricing, and having the devices and appliances
have smart chips in them that could automatically respond to
the price. But that estimate, 20 percent, is very significant.
Mr. Davis. Yes.
Ms. Kelly. It would be 120 gigawatts. Today we consume on
peak about 820 gigawatts, so it would be very significant.
Mr. Davis. At our home, it has reduced more than 20 percent
the actual consumption of energy as a result of those two. So
we are not necessarily talking about a grid that makes it
smarter use, we are talking about customers who will be smarter
users of the energy that we produce and that is a task for us.
Thank you, and I apologize for running over my time.
Chairman Baird. Thank you.
Mr. Rohrabacher.
Potential Energy Savings
Mr. Rohrabacher. Thank you very much, Mr. Chairman. It has
been a very educational hearing, and again, I agree with Mr.
Ehlers that all of the panelists have contributed to our
knowledge base on this issue which I consider to be vitally
important because I think that in the future, our country will
be relying on electricity. Electrifying America even more than
it is is probably the answer to the pollution problems that we
face, the challenges that we face today. I might add that those
of us who don't believe that global warming is a problem caused
by CO2 are very concerned with pollution and very
concerned with America's energy independence as well.
I would like to get back to the question that my colleague
just brought up about how much energy we are talking about
here. You guesstimated that with the smart grid, we would have
20 percent more efficiency in operating. What about today? How
much of the electricity that is put into our system is
dissipated in some way that wouldn't be dissipated if we were
handling it in a smarter way? And I don't know, whoever can
answer that. How about the guy from Southern California Edison?
They know all that.
Mr. De Martini. Thank you, Congressman. I don't have the
exact number for our system but it is not unusual to have a
system loss from the time it goes from generation down to the
customer, somewhere in the neighborhood of maybe seven percent.
Mr. Rohrabacher. Seven percent?
Mr. De Martini. Yes.
Mr. Rohrabacher. Okay. And so we are actually producing
seven percent that never goes into some electric device in your
home and things like that, that is just not used for the
benefit that it could be used for?
Mr. De Martini. That is right. That is through the losses
in the transmission of the power over the power lines as well
as through the transformer, so in the transformation from one
higher voltage to a lower voltage we are stepping up in that
transformation. And actually superconducting materials both
applied to the conductors but we think that there is a lot of
potential to apply it to the transformers and that is an area
that we are putting a lot of focus on to see if we can't get
some of that developed because that could be pretty easy to
replace over the next decade.
Financial Benefit to Consumers
Mr. Rohrabacher. So one of the goals of a smart system
would be to bring that seven percent number down, which could
pay for itself actually, when you think about what we are
talking about here. And when we talk about smart meters and
two-way meters, would a customer in the future be expected if
he put solar power panels on his roof or finds a way of
producing electricity with whatever method that would be, would
that customer be expected to receive a financial benefit from
that other than just the fact that he is not buying it? In
other words, putting into the grid, would he receive some
benefit? Is that what the goal is, or is that not the goal?
Mr. De Martini. Yes, Congressman, that is what we mean by
two-way flow of power.
Mr. Rohrabacher. So what would that be? Would someone be
able to receive payment back or credit for that would be in the
same dollar amount as what it would cost him to take out--he or
she?
Ms. Kelly. Congressman, it really depends on the nature of
the marketplace that they are selling into. If it is a
traditional regulated utility, then it would be an offset from
the bill. If they are in an organized--we have seven organized
markets within the United States, doesn't cover all of the
United States but two-thirds of the consuming areas of the
United States. If they sold into that organized market, they
would get the clearing price of that market, the market price
at the time they sold into it.
Mr. Rohrabacher. So they get the market price, so if
someone----
Ms. Kelly. They could get the market price.
Mr. Rohrabacher. So if someone has like Dr. Bartlett here
has a farm and he produces more electricity because he has got
all the solar and the wind going, he would actually make the
same amount of money as Southern California Edison in producing
what he is producing. Is that right?
Ms. Kelly. Particularly if he sold it back on peak when the
price is higher.
Mr. Rohrabacher. Okay. Well, thank you very much. Again,
this has been very educational. I appreciate your leadership,
Mr. Chairman.
Chairman Baird. Mr. Tonko.
Job Creation and Workforce Development
Mr. Tonko. Thank you, Mr. Chair. I apologize that I had to
leave the hearing to go off to another meeting, so if I ask a
question that has been asked, just tell me.
Workforce development as it relates to smart metering and
in upgraded grid, has any discussion been had in that regard?
Are there things you would advise this committee in terms of
the human infrastructure that is required in order to do this
in the most effective way, whether it is retraining workforces
out there or entering some new, and what potential exists in
the future? Are there career developments we should be doing as
early as high school? In the State of New York, we have an
operation that will deal with some of the developments of more
trade-related aspects. Are there any comments that any of you
would wish to share?
Ms. Hoffman. Let me start, Congressman. Thank you for the
question. It is a very important question as we look at our
aging workforce today. In the American Recovery and
Reinvestment Act there is $100 million that is set aside for
workforce training. The issues surrounding workforce training,
I think as we look at putting more advanced technologies on the
system, we will need to retrain workers that traditionally may
do line work, but may have to also be able to handle solar
cells on a pole on an electric system, as well as we need to
have more sophisticated workforce coming into the electric
industry as we start advancing power electronics. And as we
look at cyber security, the information technology is probably
not the way current line workers have utilized information
technologies. There will be significant advancements with
respect to computer use and information technology on electric
systems that we need to make sure we advance the workforce in
having them up to speed, and I think that--I believe that
requires education at the high school level and at the starting
point with respect to computers, mathematics and following that
all the way through the two-year colleges.
Mr. Tonko. Anyone else?
Mr. De Martini. Southern California Edison agrees, you
know, with Ms. Hoffman. We believe this is actually one of the
larger issues when we start to look at a smart grid. As Ms.
Hoffman pointed out, there are fairly large challenges with the
workforce that we have today. You know, the average age of our
workforce is nearing retirement or already retirement eligible.
Mr. Tonko. And that is a pattern across the country, I
think, especially in states where they deregulated?
Mr. De Martini. Well, across the industry, so we are not
unique in that regard, and one of the things that we have seen
is that over the last 15 years when construction and growth of
the electric industry slowed down after the 1980s, you know,
the university systems largely dropped their power system
certificate programs for the electrical engineering curriculum
so there hasn't been a lot of graduates of electrical
engineering programs specializing in power systems development.
The other thing that we see clearly as we move forward, it is
not just enough to reinstitute those curriculum because today a
power system engineer also needs to understand computing
systems. So we are working with a number of universities to try
and reestablish the certificate programs and expand that to
include computing systems, computing sciences as part of that.
The line worker is a real challenge because most of our line
workers and field workers are basically high school graduates
and so they haven't had extensive, you know, sciences or
certainly not electronics, and it isn't just the solar cells,
although that would be a challenge as well. We are going to
have a lot of power electronics out in the system, out on a
circuit, as Mr. Stoessl highlighted. So as we have that, our
folks need to understand, you know, electronics, which means
that there is more education, so this is something we look at
both with the labor unions in their development of their
apprenticeship programs, community colleges we are reaching out
to. This is a very large issue that the industry across the
board is trying to----
Mr. Tonko. Is the planning element of that all structured
enough or should the Feds step in or states step in and make
certain that all this is getting accomplished in the most
effective way?
Mr. De Martini. I believe most utilities are very well
aware of this, and we have been looking at this issue and
starting to put in place plans to develop it. Obviously, you
know, certain budgets and many of the locations across the
United States for education are, you know, under pressure and
so developing new programs can be quite challenging to be able
to move this forward.
Mr. Tonko. Thank you. I had one second left, Mr. Chairman.
I wanted to point that out.
Chairman Baird. Well done, Mr. Tonko.
Mr. Tonko. I am following our leader there.
Chairman Baird. Mr. Olson.
Mr. Olson. Thank you, Mr. Chairman, for allowing me to
participate in this hearing today. I greatly appreciate that.
I would like to follow up on my colleague from New York's
questions about workforce development and specifically job
creation. In April of 2009, Vice President Biden announced
funding in the amount of $4 billion through the American
Recovery and Reinvestment Act for smart grid initiatives. He
did so under the premise of job creation. And that same day, a
notice of intent was released by the Department of Energy which
stated that job creation would be a primary criterion for
ranking projects receiving funding under the program. However,
revised guidance issued on June 26 has eliminated job creation
as a primary criterion for funding. The funding opportunity
announcement for smart grid initiative grants in the section
entitled ``frequently asked questions,'' it states that DOE
remove the criterion on the extent of jobs creation and will
now require applicants as stipulated within the Recovery Act to
report quarterly on the number of jobs created and retained.
And we were told during the debate we had on the Floor in the
stimulus package that the urgency behind the measure was due to
the need for job creation, and yet we have seen, it looks like
the exact opposite is occurring, and so my question for you,
Mrs. Hoffman, why the change in criteria?
Ms. Hoffman. The final funding opportunity announcement
that came out recognizes that job creation is recognized
throughout the solicitation. The major goals of the
solicitation as listed in the introductory section says job
creation is a goal. The proposers have to write towards those
goals and recognize job creation as part of the proposals as
well as the companies themselves must define the workers they
require to implement projects in that solicitation, so we
thought that--or we included job creation in almost every
aspect of the technical requirements and the evaluation
criteria of the proposal.
Mr. Olson. I appreciate that answer, but let me read to you
from the document that was issued on June 26. ``The question
is, will DOE use the number of jobs estimated to be created
and/or retained as a criterion for rating a proposal on
funding,'' and the answer is no. And then they downgrade it and
say, ``Although job creation is not included in the technical
criteria used to rate proposals, it plays an important role
throughout the grant process and grant recipients again are
required to submit the numbers of jobs created and retained in
their quarterly reports to DOErecovery.gov,'' and to me, that
is a significant de-emphasis of job creation as part of the
smart grids initiative.
And following up on that, Ms. Hoffman, if jobs creation, as
you say, is still a factor driving the force behind these
grants, how many jobs do you foresee will be created using the
smart grid initiatives?
Ms. Hoffman. We are following the Council of Economic
Advisors' methodology for job creation, and I don't have the
number off the top of my head that they have quoted as part of
their methodology.
[The information follows:]
Information for the Record
We anticipate that the Smart Grid Investment Grant Program and the
Smart Grid Demonstration Program will result in 36,712 and 6,685 job-
years (full-time equivalents), respectively. These estimates were
derived from the methodology provided by the President's Council of
Economic Advisors, which prescribes that $92,000 of federal spending
equates to one job-year.
Job creation was applied within our review process to determine
relative merit. Based on our review of applications, we expect that the
funding provided by these programs will produce highly skilled jobs
within the engineering, information technology, and business analysis
professions.
Mr. Olson. I appreciate if you could get that to us. And a
follow-up for you, Dr. Arnold, as well. In your testimony, you
stated that smart grid is a critical piece of this
Administration's overall goal of fostering and creating
millions of jobs in the green economy, and again, how does that
statement coincide with the shifting standard that I have been
talking about?
Dr. Arnold. Well, I can talk about the role that standards
play in that, and one aspect is enabling global market
opportunities for U.S. manufacturers. And addressing Chairman
Baird's question, we are working very actively with the key
international bodies such as the International Electrotechnical
Commission, the IEEE and others as a vehicle for promulgating
standards that we are going to use in the U.S. smart grid. We
are also engaging directly with other countries that are really
following what we are doing. I would say we are in the lead in
the world on this so that we can collaborate in the creation of
international standards that will provide those global market
opportunities for U.S. manufacturers.
Mr. Olson. Thank you very much. I see my time is ending. I
just want to encourage you all not to de-emphasize the jobs
creation part of this. That is critical. If this is going to go
forward, we need to create jobs and it appears it is being de-
emphasized. And Mr. Chairman, I yield back my time.
Chairman Baird. I thank the gentleman. I am told by staff
we may have votes in about 10 or 15 minutes. I know, Dr.
Bartlett, you had a follow-up. I would like a brief follow-up.
We will go ahead and start. I will try to shorten my time a
little bit as well and ask colleagues to do the same.
Incorporating Social Behavioral Aspects
We had a markup in this committee this week earlier on a
proposal to put social behavioral science program within DOE's
work, and I am thinking about smart grid here and I am
thinking, for goodness sake, please don't make this like
programming my VCR or I am going to have a thermostat that
flashes 12 constantly at me. The question really on a more
serious note is, how are we working either at NIST or various
companies here to incorporate the behavioral, cognitive,
emotional even aspect of--I say ``emotional'' because my wife
and I go round and round about what the heat should be in our
home--of this technology? It is not a frivolous question at
all. How do we incorporate that human behavior interface with
smart grid work? Please, Mr. Stoessl.
Mr. Stoessl. If I may, I can give you one perfect example
that one of the electric co-ops in Delaware has taken the lead
on. They have a program called Beat the Peak, and it is going
exactly to the behavioral element of this. They know and
anticipate when peak costs are going to strike their
membership, and they are looking for a simple in-home display.
Right now, what the head of that utility does is literally send
out an e-mail to his membership saying, we expect peak rates
from 4 to 6 p.m. this afternoon, please curtail your usage, and
his members do, and what we are now developing for him and what
he is looking for is a simple in-home display, just a simple
red-green kind of thing that when that light is red, please
curtail usage, whatever you can do. Go ahead and run your air
conditioner if you want, but if you can curtail, please do. And
that simple indication, which will be triggered by
communications through his meter and through his communication
infrastructure, is a behavioral way of going at it. Very
simple, no programming required, just be aware if that light is
on and you can do something, please do it.
Chairman Baird. Are there other examples or comments?
Ms. Hoffman. Just one comment, sir. The way the technology
should be developed has to keep consumer behavior in mind and
consumer sophistication, and I think that is not a one-size-
fits-all. We must tailor the technology to the customer, so if
a customer just wants to know a price and have it automated on
the system, we should be able to do that, whereas if a
sophisticated customer that wants to go in and manipulate
things just like he is sophisticated, say, on the stock market,
we need to tailor the technology to meet the needs of the
customer.
Chairman Baird. Is that being incorporated in the work
being done by DOE for NIST, et cetera?
Ms. Hoffman. I am hoping we will see it as part of the
projects that are proposed.
Dr. Arnold. Chairman Baird, I would say that standards also
play a key role in this and creating a standard for customer
access to energy usage information. The standard I referred to
earlier for communicating pricing information will enable the
creation of software tools that can put this information in
formats, you know, on a web browser or what have you that are
easy for customers to see or even a simple red light-yellow
indicator for customers who don't want to be that
sophisticated.
Chairman Baird. We go crazy over a 50 percent discount on
cereal boxes at the grocery store, you know, you save your
coupons and all this stuff. If somebody said you can run your
dishwasher now but it is going to cost you much more now if you
run it, and back to this peak issue, it would help a great
deal. Ms. Kelly, did you want to comment?
Ms. Kelly. I was going to say that a follow-up to that is
something that the collaborative is excited about, and that is
the DOE clearinghouse of information. Any of the demonstration
projects that receive stimulus funds will have to report
information to the clearinghouse, and it is one of our goals
that the consumer acceptance, which I think is another way of
describing what you are talking about, is something that will
have to be monitored and followed and reported so that we can
understand what kind of consumer interfaces work well as well
as which ones don't work.
Chairman Baird. That is encouraging.
Mr. Ross. Mr. Chairman.
Chairman Baird. Yes, please.
Mr. Ross. I was just going to add that there has been a lot
of work done in this area that can be translated from Internet
and telecommunications technologies, and I think what you are
seeing now is a lot of companies that for a long time have been
developing new and innovative products in those areas moving
into energy management systems. And there is a lot of work to
be done there. There are some studies that have shown that, you
know, programmable controllable thermostats, about 70 or 80
percent of people don't actually bother to go ahead and program
them, and so the new types of devices that are coming out are
either portals for people to use online, in-home displays or
some are even developing it through television interfaces. What
they are finding is with just simple information, rather than
waiting until the end of the month on the utility bill, people
are reducing their energy consumption 10 to 20 percent.
Chairman Baird. I would suggest we take a page out of the
behavioral economics retirement investment models which suggest
that if you preextract people's retirement 401(k) match, you
have a much greater participation than if you wait for people
to opt in, and let us ship the thermostats with preset things
and adjust that to some easily, you know, wireless clock reset,
and then if they want they can go with the default, it is a lot
easier. So thank you for the insightful answers.
Mr. Inglis.
Mr. Inglis. Mr. Chairman, I have no further questions.
Chairman Baird. Mr. Bartlett.
Electromagnetic Pulses
Mr. Bartlett. Thank you very much. I was genuinely pleased
at the panel's knowledge of EMP. I would just like to note that
the usual things that we say that give us some comfort probably
aren't relevant here, the mutually assured destruction. An EMP
blast over North Korea would have little or no effect on North
Korea. They just don't have any infrastructure that would be
affected by EMP. As Vladimir Lukin said, with no fear of
retaliation, if it comes from the ocean, how do you know from
where it came? Two days ago, the Secretary of Defense was here
and he made the observation that they were counting on
deterrents to protect us from EMP, and I said Mr. Secretary,
that is not going to work, because as Vladimir Lukin said, with
no fear of retaliation. You know, we keep watching for whether
North Korea or Iran has a missile which will reach us. That is
irrelevant. Neither of them--I have been to North Korea. I
spent three or four days there. They may be evil. They are not
stupid. They are not going to launch a missile from their soil.
It is going to come from the ocean, and all one needs is a
tramp steamer, $100,000 to buy a Scud launcher and a crude
nuclear weapon. You couldn't shut down the whole country with
that but you could shut down all of New England with that. And,
you know, if you missed by 100 miles, it is as good as a bull's
eye because it really doesn't matter.
You know, this is really a tough thing, but unless we
protect ourselves against that--Mr. De Martini, you mentioned
that it took two or three years to get these big transformers,
and that is the kind of thing that Vladimir Lukin was referring
to when he said it would shut down our grid and our
communications for six months or so. Indeed, we don't even make
those in our country, do we? You order them from overseas. So
some of the smaller ones, maybe 18 months or so, and some of
the larger ones that long a time. And in a cascading collapse
of the grid, we would expect a number of these to be destroyed,
would we not?
Mr. De Martini. In a very large--you know, depending on the
altitude that as I understand it in terms of where it would be
exploded, it could impact a much wider area as you described
and so yes, smaller distribution transformers, we actually have
a lot of those in stock and those can be done relatively
quickly. It is the very large high-voltage transformers that
are essentially custom made. Those would be longer and most of
that manufacturing is not done in our country.
Mr. Bartlett. It is all done overseas and you order one and
they will make one for us because these are on nobody's shelf
including the manufacturer's shelf. They make them when you
order them. This is such an incredible consequence that you
just shy away from it. You know, it is the old saying if it is
too good to be true, it is probably not true, and this is so
horrible that maybe it is not true, but the reality is that it
could be true. As a matter of fact, there is a new book out
called One Second After, and the movie rights have already been
sold to the book and it looks at what happens in our country to
a--and their story is probably true to what will happen if it
happens, and we hope it does not. And by the way, if we are
immune to it, it is less likely to happen. Vulnerability
invites attack. But the launch comes from the ocean and then
the ship is sunk. There are no fingerprints. What do you do? In
any event, what do you do when they have simply shut down your
computers? And that is what it will do, just fry everything
that is microelectronics. And do you then vaporize their
grandmothers and their babies because they did that? It is a
very difficult thing. You know, if we really are prepared, it
won't happen because if we are not vulnerable, there will be no
benefit in doing it. So thank you very much for your knowledge
of this and hope you take it into account. Thank you very much.
Chairman Baird. Dr. Bartlett, my strategy in that
eventuality is to come to your place.
Mr. Bartlett. Thank you, sir. You will be welcome.
Chairman Baird. Mr. Tonko.
Superconduction
Mr. Tonko. The application of superconductive cable and the
promises that it might hold for dealing with some of our
delivery system, our transmission systems primarily, any vision
as to when we might be up and ready with the superconductive
application?
Mr. De Martini. The discussions we have been having with
manufacturers in terms of both cable and transformers in
particular, it looks like, you know, the technology is getting
to a point where we can start to look at demonstrations within
three to five years, particularly on transformation. We think
that is a real opportunity to focus on in the near term, and
which could lead to products being, you know, put into
production into our service, you know, within a decade. So we
see a lot of promise there. We already have today
superconducting full current limiter that we have put in our
system earlier this year. It is one of the first in the
country, and we are working with actually American
Superconductor.\6\ This was part of the award that was
announced by Secretary Chu this week, a transmission-level
superconducting full current limiter that will be going in our
system in 2012. So we see the technology evolving and certainly
over the decade we expect to see more of this going into
service.
---------------------------------------------------------------------------
\6\ American Superconductor Corporation
---------------------------------------------------------------------------
Mr. Tonko. It seems to me we have trouble with the siting
of many lines oftentimes which traverses several communities,
expectedly. If we can do that with far greater capacity and the
same dimension of cable, that we should really speed our
investment in R&D, and I know that in New York State there are
those companies who are breaking their own records in terms of
development of the superconductive opportunity. Thank you.
Chairman Baird. Mr. Tonko, thank you.
Dr. Ehlers.
Public Education
Mr. Ehlers.--secondary schools both before I got here and
after I got here, and it continues to amaze me, I meet parents
who say well, I don't see why it is necessary, Johnny already
has enough math, he just doesn't--but this is a good example.
If you are going to as I suggested earlier put digital devices
on every appliance showing what the rate of energy usage is and
you have a smart grid where you can also indicate the cost, you
also have to have people who know how to use it and who program
their thermostats and so forth, and there just has to be a
basic level of intelligence and training of the American public
if we are really going to make this work. I think also it is
very important for the utilities. I think you mentioned that,
Mr. De Martini, of trained workers, and I had an experience
just in the past six months which surprised me. My wife and I
came home, turned on a few lights and she started preparing
dinner, and suddenly some lights dimmed, a couple went out and
others were working fine. And I said aha, we have lost one
phase of our three-phase electricity. So I called the power
company, and the first question, she said are your lights out,
and I said well, some are, some aren't, and I explained to her
that we obviously had lost one phase of the electricity. She
had no idea what I was talking about. She says well, we don't
send trucks out immediately on a rush unless all your lights
are out, and I tried to explain to her again what was going on.
I just got nowhere and so I went out of the house, went up and
down the street knocking on neighbors' doors and said please
call in. She had told us that the more--if they got more calls,
then they would send a truck out. And so I knocked on
neighbors' doors and said please call this number and tell them
your electricity is out, and as a result we got the truck there
quicker than we would have before. But it just struck me that
an employee of a power company would not, especially when
dealing with the public, would not understand someone calling
in like that. So at every level we have to have better training
including the general public, but especially your employees in
the utilities.
I thank you, Mr. Chairman. That is the end of a very good
hearing and I thank you for calling it and thank the panel for
being here.
Chairman Baird. Thank you.
Interagency Coordination
I do have one last question, and it sort of integrates much
of what has been discussed and it is this. It seems to me there
is, hopefully, a positive synergy with the team that we see
here, but you represent a much broader spectrum, and it is
this. So you have got NIST working on standards, private sector
working on innovative tools, electrical companies and
distribution companies putting all that in place, DOE doing
research. Are you comfortable in FERC regulating so much of
this? Are you all comfortable that you are working together
well enough? In other words, is there cross-pollination and
cross-coordination? How is it going?
Ms. Hoffman. In my opinion, in working on several programs
within the Department of Energy, this has been one of the best
working groups I have had to work with.
Chairman Baird. Ms. Kelly.
Ms. Kelly. We are very, very satisfied with the way things
have been working.
Dr. Arnold. The teamwork has been incredible with both the
other agencies, federal and State level, and the private
sector.
Mr. De Martini. I think for utilities, we have all come
together, not just regionally but also across the Nation and
working very well with DOE, the regulatory agencies and NIST
and this current effort and obviously with our suppliers in
terms of these new products and innovations that are coming to
the market.
Mr. Ross. I would just reinforce what the other panelists
have said. There seems to be a great deal of coordination among
the federal agencies that are involved, and I think there is
increased cooperation and participation in and among industry
and with the utilities.
Mr. Stoessl. And I will echo with the panel. I think there
has always been good cooperation from the utilities and
suppliers but with this particular issue with the government
involvement that there has to be, there has been very, very
good interaction and NEMA (National Electrical Manufacturers
Association) has stepped in to really help pull industry
together to give us one voice when we are interacting with the
various councils, various standard bodies.
Chairman Baird. Government, private sector, industry
working together. Not a bad way to close the hearing. Thanks
very much. Have a great day.
[Whereupon, at 12:09 p.m., the Subcommittee was adjourned.]
Appendix 1:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Patricia Hoffman, Acting Assistant Secretary, Office of
Electricity Delivery and Energy Reliability, U.S. Department of
Energy
Question submitted by Chairman Brian Baird
Q1. This May, the House passed the ``Waxman-Markey'' bill (H.R. 2454)
to regulate carbon emissions and promote energy efficiency and
renewable energy sources. How does the system of allowances and credits
established therein, particularly in the cap-and-trade carbon system,
relate to incentives or disincentives for industry to promote smart
grid technologies?
A1. Smart grid technologies do not directly cause or reduce emissions
of carbon or other greenhouse gases. Thus, the cap-and-trade carbon
proposal with its allowances and credits does not provide either
incentives or disincentives for smart grid technologies. Smart grid
technologies are information and control technologies that can enable
more efficient operation of the electricity system from generation to
delivery and encourage customers to reduce their electricity
consumption, particularly during times when power is relatively
expensive. Smart grid technologies can also facilitate the integration
of new renewable sources into the grid, thus indirectly supporting the
goals of cap-and-trade.
Questions submitted by Representative Daniel Lipinski
Q1. The National Association of Regulatory Utility Commissioners has
reported that the most effective place for initial investment in Smart
Grid improvements is on the electric grid itself, where energy and
costs savings are immediate and do not rely upon changes in customer
behavior and do not need customers to purchase and install in-home
energy savings devices. During hearing questions, you and Ms. Kelly
indicated that you felt that improvements upstream of the customer are
worthwhile, other parts of the smart grid are at least as important.
Can you qualify the potential energy savings and costs associated
with these two categories of smart-grid technologies? Which will result
the greatest savings for residential customers?
A1. The costs associated with upgrading customer systems (meters and
load management applications) for integration with a smart grid were
estimated at $62 billion, based on a 2004 industry report by the
Electric Power Research Institute (EPRI). This estimate, although a bit
outdated, fell within an order of magnitude with a 2009 estimate of $40
billion for nationwide implementation of smart meters (Faruqui and
Sergici with the Brattle Group, ``Household Response to Dynamic Pricing
of Electricity--a Survey of the Experimental Evidence,'' funded in part
by Edison Electric Institute/EPRI). The benefits from implementing
smart meters with pricing programs with and without in-home energy
saving devices are documented in the 2009 report after analyzing the
results from the most recent 15 pricing pilot programs. The study
concluded that, ``Across the range of experiments studied, time-of-use
rates induce a drop in peak demand that ranges between three to six
percent and critical-peak pricing tariffs induce a drop in peak demand
that ranges between 13 to 20 percent. When accompanied with enabling
technologies (programmable thermostats), the latter set of tariffs lead
to a drop in peak demand in the 27 to 44 percent range.'' Thus, the
peak demand reduction and associated energy savings from customer
systems are highly significant, reflecting a non-zero price elasticity
of demand for electricity.
The net costs associated with upgrading the transmission and
distribution (T&D) grid for smart-grid readiness were estimated to be
$165 billion (not including those concurrent investments needed for
meeting load growth and correcting deficiencies), from the same 2004
EPRI report. The $165 billion in T&D modernization included a portion
of the $62 billion for customer systems above; however, the exact
portion was not known. Although the report concluded with an overall
benefit to cost ratio of 4:1 to 5:1, the benefit breakdown used a
different set of attributes, not those of peak demand reduction and
energy savings.
These industry studies evaluate the potential benefits of smart
grid technologies deployment based on limited pilots. As part of its
American Recovery and Reinvestment Act efforts, the Office of
Electricity Delivery & Energy Reliability is developing a consistent
cost/benefit analysis methodology to be applied to all smart grid
projects to assess a broader experience. All cost/benefit data will be
stored in the Smart Grid Information Clearinghouse to allow direct,
comparative analysis, which will also address the question of what
investment would benefit the residential customer most.
Q2. What percentage of the stimulus funds that DOE is awarding goes
toward smart grid technologies that improve the efficiency of the
electric grid itself, as compared to technologies that produce savings
only when consumers change their behavior?
A2. The $3.4 billion in the Recovery Act Smart Grid Investment Grant
(SGIG) funding opportunity covers six topic areas: smart grid equipment
manufacturing; customer systems; advanced metering infrastructure;
electric distribution system; electric transmission system; and
integrated and/or crosscutting systems (i.e., covering two or more of
the preceding topic areas). The SGIG does not prescribe a funding range
for each topic area; rather, all proposals will be evaluated based on
their respective merits, including costs and benefits (economic,
reliability and power quality, environmental, and energy security) and
other performance merits. The selection of these proposals is still
under way. The portion of the funding that will be allocated to
programs that affect customer behavior, such as dynamic pricing, is not
known at this time.
In regard to the approximately $615 million in Recovery Act funds
for new Smart Grid Demonstrations, $415 million of the total will
support regional demonstrations and the balance will fund grid-scale
energy storage demonstration projects. All proposals are still being
evaluated, in accordance with the merit-review criteria including
savings benefits. Again, it is too early to tell what portion of the
$415M will be allocated to dynamic pricing programs.
Question submitted by Representative Lincoln Davis
Q1. During the re-hearing, we discussed the potential savings in power
production that could be realized with smart grid deployment. Can you
please provide EERE's numbers on this potential savings at peak load or
otherwise?
A1. The Federal Energy Regulatory Commission (FERC) issued a report in
June 2009 that assessed demand response potential. The study projects
that the peak demand in 2019 could be reduced by 44 GW, 100 GW, and 150
GW under the expanded business-as-usual, achievable participation, and
full participation scenarios, as compared to the base scenario of
business-as-usual. The differences among these scenarios are defined by
varying deployment levels of smart grid technologies and practices
(advanced metering infrastructure, dynamic pricing offering, enabling
technologies, and customer participation in the above). The 150 GW of
peak demand reduction in 2019 under a full-participation scenario is
equivalent to elimination of the need for 2,000 peaking power plant
operations (based on 75 MW of output by a typical peaking power plant)
or represents 16 percent of peak demand in 2019.
Peak demand reduction from modernization of the T&D grid will be
tracked by DOE through its data collection/analysis efforts to be
implemented on all smart grid projects funded under the Recovery Act.
Answers to Post-Hearing Questions
Responses by Suedeen G. Kelly, Commissioner, Federal Energy Regulatory
Commission
Questions submitted by Chairman Daniel Lipinski
Q1. The National Association of Regulatory Utility Commissioners has
reported that the most effective place for initial investment in Smart
Grid improvements is on the electric grid itself, where energy and
costs savings are immediate and do not rely upon changes in customer
behavior and do not need customers to purchase and install in-home
energy savings devices. During hearing questions, you and Ms. Hoffman
indicated that you felt that while improvements upstream of the
customer are worthwhile, other parts of the smart grid are at least as
important.
Can you quantify the potential energy savings and costs associated
with these two categories of smart-grid technologies? Which will result
in the greatest savings for residential customers?
A1. There are significant opportunities for potential energy savings
and other benefits that would be enabled by smart grid investments both
on the transmission and distribution grid level (that do not involve
any actions by customers) as well as on customer premises. It is,
however, difficult to quantify these benefits with precision and,
therefore, to identify whether one is greater than the other. However,
there is evidence that shows that the installation of new systems and
devices at customer locations can potentially produce significant
energy savings. At the hearing, I cited a recent report by the
Commission that estimated that pervasive installations of smart meters
and other enabling technologies such as smart thermostats could lead to
as much as a twenty percent reduction in peak demand.\1\ At the recent
GrldWeek 2009 conference, a senior researcher from the Pacific
Northwest National Lab reported preliminary results of an ongoing study
showing that overall energy savings could be as high as twelve
percent.\2\ In addition, savings that result from smart grid
investments upstream of the customer will likely also be substantial. I
therefore believe that both types of investments should be pursued in
order to maximize the efficiency of the Nation's transmission and
distribution system.
---------------------------------------------------------------------------
\1\ Commission Staff Report, A National Assessment of Demand
Response Potential, at 27-28 (June 2009), available at http://
www.ferc.gov/legal/staff-reports/06-O9-demand-response.pdf
\2\ See Rob Pratt, PNNL, Potential Energy and Carbon Benefits of a
Smart Grid, at 3 (Sept. 2009), available at http://www.pointview.com/
data/2009/09/31/pdf/Rob-Pratt-4771.pdf
---------------------------------------------------------------------------
Answers to Post-Hearing Questions
Responses by George W. Arnold, National Coordinator for Smart Grid
Inter-operability, National Institute of Standards and
Technology, U.S. Department of Commerce
Questions submitted by Chairman Brian Baird
Q1. During the hearing, I noted the need for international
compatibility with electric appliances. How is NIST coordinating with
other nations to ensure global standards for consumer goods and power
plugs and sockets?
Q1. NIST recognizes the importance of international compatibility for
the various elements of the Smart Grid. The use of internationally
accepted standards will enable U.S. manufacturers supplying components
to the Smart Grid to access foreign markets on an equitable basis.
Extensive use of internationally accepted standards will also help
reduce the cost of procurement, while increasing choices for customers
looking to source products, components and assemblies for the Smart
Grid in the U.S. The lack of common standards can significantly
increase the cost for U.S. manufacturers, who would be forced to adapt
their products for different countries.
As you have noted, the existing electric infrastructures throughout
the world use a variety of voltage levels, plugs and sockets, so there
is a need for appliances to have different physical and electrical
connections. Unfortunately such differences will continue to exist
since it is not practical to rewire plugs and sockets built into the
legacy physical infrastructure. However, it is possible to achieve
international harmonization of the communications and information
management aspects of smart grid applications and products, which are
independent of electrical voltage levels and electrical plugs and
sockets.
NIST is working closely with relevant international standards
organizations, such as the International Electrotechnical Commission
(IEC), the International Organization for Standardization (ISO), and
the International Telecommunication Union (ITU) to ensure that
communications and information management standards for smart
appliances are internationally harmonized wherever possible. The NIST
effort is also engaging many other standards developing organizations
domiciled in the U.S. which develop international standards, such as
the Institute of Electrical and Electronics Engineers (IEEE), the
Internet Engineering Taskforce (IETF), Open Geospatial Consortium
(OGC), and others. Numerous multinational companies that have an
inherent interest in the adoption and use of international standards
are directly involved in the NIST process. Many standards identified in
the draft NIST roadmap are international standards that are already
used around the world (e.g., BACNet ANSI ASHRAE 135-2008/ISO 16484-5
for Building Automation, IEC 61850 for Substation Automation and
Protection, IEEE 1547 for Physical and Electrical Interconnections
between Utility and Distributed Generation, ISO/IEC 18012 providing
guidelines for product inter-operability, and ITU Recommendation G.9960
covering in-home networking over power lines, phone lines and coaxial
cables, etc.).
Recognizing the importance of collaboration with other countries,
NIST is also engaged in bilateral discussions with counterparts in
other countries and regions about Smart Grid standards. NIST is
partnering with the American National Standards Institute (ANSI) to
engage the national committees of key countries (China, India, Japan,
Russia, Germany) and the European standards body CENELEC in discussions
about Smart Grid at the International Electrotechnical Commission (IEC)
General Assembly in Tel Aviv, in October 2009. NIST is partnering with
its sister DOC bureau, the International Trade Administration, to
initiate a dialogue about Smart Grid standards with the European
Commission and its relevant offices. Dr. George Arnold, the National
Coordinator for Smart Grid Inter-operability, will provide a key note
address at the Latin American Smart Grid Forum, in Brazil, and the
Smart Grids Asia conference in Singapore in November 2009.
Q2. This May, the House passed the ``Waxman-Markey'' bill (H.R. 2454)
to regulate carbon emissions and promote energy efficiency and
renewable energy sources. How does the system of allowances and credits
established therein, particularly in the cap-and-trade carbon system,
relate to incentives or disincentives for industry to promote Smart
Grid technologies?
A2. As outlined in the Energy Independence and Security Act (EISA) of
2007 (Public Law 110-140), the National Institute of Standards and
Technology (NIST) is responsible for developing a framework for
protocols and standards to achieve the inter-operability of Smart Grid
devices and system. Inter-operability--the ability of diverse systems
and components to work together--is vitally important to both the
performance of the Smart Grid and the development of Smart Grid
technologies. Given this focused, well-defined role, NIST does not have
a position on how the system of allowances relate to the incentives or
disincentives for industry.
That said, H.R. 2454 does promote the development of Smart Grid
technologies in a number of areas:
State regulatory authorities and utilities will
establish standards and protocols for integrating plug-in
electric drive vehicles into the electric grid, including Smart
Grid systems.
Inclusion of Smart Grid technologies and capabilities
in the Energy Star program.
Inclusion of Smart Grid capabilities and potential
energy savings information on appliance Energy Usage labels.
Appliances with Smart Grid features will be eligible
for rebates under the Appliance Rebate Program outlined in the
Energy Policy Act of 2005.
Appendix 2:
----------
Additional Material for the Record
Statement of Katherine Hamilton
President
The GridWise Alliance
Chairman Baird, Ranking Member Inglis, Members of the Subcommittee,
thank you for allowing me to submit testimony for your hearing
``Effectively Transforming Our Electric Delivery System to a Smart
Grid.'' On behalf of the GridWise Alliance, I would like to thank you
for your support and attention to our vision and goals, including
crafting the Smart Grid Title XIII in the Energy Independence and
Security Act of 2007 (EISA), enacting the American Recovery and
Reinvestment Act with significant funds for smart grid, and recently
passing the American Clean Energy and Security Act of 2009 which
provides incentives for smart grid deployment.
The GridWise Alliance is a coalition of 95 organizations advocating
for a smarter grid for the public good. Our members broadly represent
the Nation's interest in smart grid, including leading utilities,
independent system operators, large IT and communications companies,
small technology companies, manufacturers, consultants, investors,
universities, and research organizations. We operate on a consensus
basis and remain technology neutral, focusing on the policy issues
surrounding the deployment of a smarter grid. We believe the market
should determine which technologies prevail.
The GridWise Alliance advocates for making the entire grid
smarter--from the power plant bus bar through the transmission lines
and substations, along the distribution lines, and all the way to the
meter and appliances and equipment that consume electricity. A smart
grid is dynamic and interactive. The smart grid has monitoring,
control, and optimization capabilities that manage assets and demand,
integrate distributed resources, and route power flows to maximize
operation efficiency. All stakeholders on a smart grid can participate
and make informed energy choices. Two-way communication allows system
operators to observe what is happening on the grid and adjust
operations to increase grid reliability while improving delivery and
use efficiency. Smart grid technologies can provide increased
functionality and intelligence to existing distribution devices. A
smarter grid will include a variety of technologies and solutions,
depending upon the regional and local systems, as well as the goals of
the system.
The GridWise Alliance thinks of a smarter grid as a means to an
end--not an end unto itself. A smart grid can increase reliability,
improve security, optimize the entire electricity system from
generation to consumption, and contribute to the decarbonization of the
electricity industry. A smarter grid can also enable the integration of
dynamic forecasting, energy storage, clean distributed generation, and
energy efficiency technologies, including plug in hybrid vehicles. A
smarter grid allows for a more effective deployment of energy from
renewable sources, reaping the full benefits of wind, solar,
geothermal, hydropower, and biomass power. Smart grid technologies can
provide more dynamic power flow control, increased bulk transfer and
improved system efficiencies.
The GridWise Alliance believes that critical issues for deployment
of the smart grid through the Recovery Act funds includes establishing:
1) clear guidelines for funding projects, ensuring the incorporation of
the language of EISA as amended in the Recovery Act; 2) an expedited
contracting process consistent with the Office of Management and Budget
Initial Implementing Guidance for the Recovery Act; 3) a rational
approach that fully respects both preexisting Intellectual Property
rights and new intellectual property that emerge from the deployment of
existing intellectual property in research and development,
demonstration or investment projects ; 4) minimum smart grid standards
for other energy infrastructure projects that are undertaken pursuant
to provisions of the Recovery Act apart from those that contain the
specific smart grid language; and 5) a transparent, but not onerous,
process for monitoring allocations among different types of smart grid
endeavors and altering new allocations to secure balance as appropriate
in light of the overall Recovery Act and EISA objectives.
Since the purview of this committee includes National Institute of
Standards and Technology (NIST) oversight, the GridWise Alliance agrees
that the Recovery Act appropriately funded development and
harmonization of critical inter-operability standards framework through
NIST. In EISA, NIST was given an unfunded mandate to develop a
framework for smart grid standards; the Department of Energy (DOE)
funded the Pacific Northwest National Laboratory to begin the process
and created the GridWise Architecture Council to work closely with NIST
and industry to develop the architecture for system inter-operability
that could be used as a foundation in developing standards. While some
of the groundwork had begun before the Recovery Act was passed, the
generous funding and aggressive support of the NIST process has been
critical.
NIST has the appropriate mission, experience, and skills for
coordinating the development of consensus-based standards and protocols
in domains like building systems automation. These skills transfer
easily to smart grid inter-operability standards with the funding in
place. Dr. George Arnold, the National Coordinator for Smart Grid
Inter-operability, is fully engaged in the process and the GridWise
Alliance believes that NIST is on the right track in developing this
standards process. The Alliance has participated by attending the
meetings as well as providing detailed comments from the industry
perspective.
The inter-operability process will benefit from and be accelerated
by stimulus funding for projects. Since utilities and others deploying
smart grid technologies want to reduce the risk of stranded asset
investments, they are driving early inter-operability standards
development in domain expert work groups that feed into the NIST
process. They are also designing deployments such that firmware and
software could be revised, usually remotely, rather than change out
entire equipment investments. This is common practice in other
industries and is an effective means of driving deployment without
excessive redeployment cost once the standards are finalized. Finally,
the industry recognizes that standards should be applied where they are
relevant, cost effective and appropriate to the intended function of
the system. Too many times, we tend to assume all standards apply
everywhere. Through the many industry domain working groups, the
industry has established standards that are applicable for certain
uses. Additional work will be needed to assess the cost effectiveness
of those standards during deployment. It may be in the best interest of
energy costs to phase in additional standards over time rather than
replace legacy systems to accommodate new standards.
The GridWise Alliance prefers open standards and protocols so that
all players are enabled equal accessibility to compete in the market.
Because of the increased scrutiny on cyber security and data privacy
issues, certain criteria in developing technologies are critical.
Industry has been collectively engaged in this process through several
partnerships so that the security architecture for all smart grid
technologies will be consistent. Developing standards and protocols for
smart grid is important, yet entrepreneurs, utilities, universities,
and other businesses developing smart grid technologies will continue
to implement smart grid in advance of the NIST standard setting
process. We do not want to hold up these efforts that can, among
numerous other benefits, stimulate the economy, by waiting for
standards to be developed and adopted.
We agree that cyber security issues are paramount and should be
carefully addressed when installing intelligent two-way communication
devices on the grid. Best practices exist for segmenting different
business functions such as generation, transmission, distribution,
customer operations, and corporate and operational IT to ensure grid
reliability. Strong access control, secure authentication,
confidentiality, integrity, monitoring and non-repudiation mechanisms
have existed for many years and can be applied to securing the smart
grid. Further, security for smart grid technologies is being ``baked-
in'' from the start instead of ``bolted on'' as in the past; the
security of the grid will benefit from this up-front, holistic
approach. Digital devices have already been installed in many
transmission substations; smart grid investments will serve to upgrade
cyber security for these systems. The GridWise Alliance supports the
coordination of the Federal Energy Regulatory Commission (FERC), North
American Electric Reliability Corporation (NERC), and the National
Association of Regulatory Utility Commissioners (NARUC) with the
Department of Homeland Security and industry efforts as critical to the
development of cyber security standards.
Smart grid can be implemented differently in different places. The
design and implementation of a smart grid can vary depending on the
technologies and solutions deployed and the needs of the regional
utility, transmission operator, and customer mix. For example, in some
areas smart meters are a good first step in providing information to
allow consumers to make energy choices and to allow utilities to have
more data on consumer loads. In other areas, it would be wiser to start
developing the smart grid with transmission technologies like phase
shifting transformers. The issue is not so much which specific
technology application is better, but what improvements can be made to
the entire system and in what order the various applications are to be
developed to meet strategic roadmap objectives.
The GridWise Alliance believes that implementing smart grid
technologies on the current grid will provide a multitude of benefits--
from helping alleviate congestion and integrating distributed renewable
energy, more efficiently managing both the transmission and
distribution systems, and engaging consumers with information exchange
and new pricing programs. While we recognize the need for additional
transmission to alleviate congestion and take renewable energy
generation to load centers, we strongly believe that planning for this
increase should include integrating smart grid technologies. New
transmission coupled with smart grid applications like dynamic
forecasting and energy storage can enhance the ability to deploy
renewable energy and distributed generation sources onto our grid.
While the electric grid has the same basic mechanical components
everywhere, the entities operating and using the grid vary according to
region, as do the goals of those systems. For example, a rural
cooperative may have higher need for distribution system monitoring and
control because of radial nature of their systems. A municipal utility
may need to contain costs and have consumers adjust demand using rate
incentives and smart meter technologies. A data center may require
redundancy and increased security measures. The stimulus funding will
only go so far. Our government has additional resources that can assist
in developing the smart grid. We have experts in State energy offices,
Department of Commerce Manufacturing Extension Partnership offices, and
Department of Energy Industrial Assessment Centers. Many universities--
like Florida State, George Mason University, Northern New Mexico
College, University of Colorado, Washington State University, and North
Carolina State University, as well as many community colleges and trade
centers--have smart grid technology research and education programs.
Edison Electric Institute has worker training centers as does the
International Brotherhood of Electrical Workers (IBEW). This technical
expertise coupled with public utility commissions and regional planning
authorities should enable this country to maximize the grid we have and
make it smarter, stronger, efficient, more reliable, and freer of
carbon.
As with all technology development, the business case associated
with commercial success often drives continued research and
development. While we have substantial smart grid technology available
today that creates benefits for our grid, we can continue to enhance
these applications through research and development and demonstration.
Research and development does not end when commercialization begins,
but can continually improve performance, price, and other benefits from
any given technology. Smart grid demonstration projects can serve to
both spur widespread investment in these technologies and, as well as
to provide greater clarity of the need for any additional research and
development. Certainly continued robust funding for this research
beyond the stimulus funds will be important to the continued
development of new technologies for our grid.
The full benefits of a smart grid will not be realized without
allowing the consumers to make informed decisions on how they use
electricity. Modern information technologies have transformed almost
every other sector of our lives; many of those same technologies can
change the way we use our electricity. Most consumers will not change
behavior without energy consumption information or price signals,
education, and technological assistance. Because our electric system is
so ubiquitous and robust, we take it for granted when we flip the light
switch on the wall. Electricity has become an integral part of our
lives and a necessity for our nation's economic growth, prosperity, and
our personal lifestyles and well-being. Most people do not think about
where electricity comes from other than the outlet in their wall. They
get their bill at the end of the month and react based on the size of
the bill, but don't know what they did to make it go up or down. With
increased information, and technological innovation, consumers could
see in real time the impact of their electricity use and take action to
reduce their bills. Utilities in states like California and Texas that
have experimented with smart grid technologies have received positive
results and feedback from their customers. As we move forward it is
important that we not just deploy a smarter grid but build coalitions
with consumers and other stakeholders so that they are fully engaged in
the implementation of that smart grid.
There are many knowledge gaps the GridWise Alliance has identified
in the implementation of a smart grid that perhaps House Science
Committee could take under consideration.
One such gap is an understanding of how consumers
respond to continuous requests to curtail demand and how a
multitude of participants on the grid will figure into
implementing smart grid technologies;
Another gap is in understanding how transmission and
distribution markets will establish a common basis for
regulatory innovation to support smart grid deployment;
We will need to have an ability to quantify smart
grid benefits in order to demonstrate economic benefits, energy
efficiency, and operational flexibility as well as customer
service, outage management and enhanced emergency operations;
We will need to understand the framework for system
inter-operability between new smart grid communications and
markets and existing systems;
We will need measurements to understand how demand
side controls impact the supply side during outages;
We also need to know what regulatory support will be
necessary to provide meaningful demand response as renewable
generation increases;
Another gap exists in understanding what is needed to
protect customer data privacy in a two-way communications
system; and,
Finally, we will need more research to understand new
digital transmission monitoring systems evolve into control
systems and how these smart grid monitoring systems allow for
lower reliability risks at the interconnection level.
Smart grid was included in the Recovery Act because Congress
correctly identified the smart grid as a key potential economic
stimulator. The proof will be in the implementation, of course. We
expect DOE to fund a variety of competitively solicited projects that
can show a plethora of smart grid technologies and gather information
about how smart grid affects the system operators, utilities, and
consumers. We also expect that the projects will be spread around the
country to see how smart grid differs by location. These projects
should stimulate economic growth--by helping utilities retain jobs, by
spurring offshoot industries, and by increasing jobs through
installation of clean energy technologies. These projects are also
expected to further technological advancement and spur greater
investment in grid modernization and automation. But this is just the
beginning. The GridWise Alliance believes that, since a smarter grid is
a means to an end, additional smart grid policies need to be included
in legislation that involves our electricity system, as they were in
the American Clean Energy and Security Act. We will work with the House
Science Committee to make sure that a smart grid is the foundation to
fulfill our nation's energy independence, national security, and carbon
mitigation goals.
In conclusion, the GridWise Alliance reiterates that smart grid
projects funded through the Recovery Act will create the cornerstone of
a more reliable, affordable, and cleaner grid. In addition, smart grid
provisions included in energy and climate legislation will help those
goals to be met. The House Science Committee is uniquely qualified to
ensure that the research and development process for our evolving grid
is managed in a way that can transform the way in which we think about
and use energy. Our Alliance is always available to help define what
policies are important to the deployment of smart grid and we can
provide expert guidance as you move forward with your policy
initiatives. We thank you for allowing our voices to be taken into
consideration; we look forward to working closely with this committee.
Statement of Gordon W. Day, Ph.D.
2009 President,
the Institute of Electrical and
Electronics Engineers--United States of America
(IEEE-USA)
On behalf of nearly 210,000 engineers, scientists and allied
professionals who are IEEE's U.S. members, which includes many who are
responsible for designing, building and operating the Nation's electric
delivery system, IEEE-USA appreciates the opportunity to provide input
to the Subcommittee for its hearing to highlight the critical issues
involved in transforming the electric power delivery system into a
Smart Grid. Our comments will focus on the overall needs and
opportunities associated with this transformation, with a specific
focus on associated workforce, cyber security and standards issues.
Why the Smart Grid Transformation is Essential
Today, the U.S. electric grid is a network of 10,000 power plants,
150,000 miles of high-voltage (>230 kV) transmission line, millions of
miles of lower-voltage distribution lines, more than 12,000 substations
and millions of customers. Our national electric power system is
comprised of two key infrastructures:
An electric infrastructure--that generates and
carries the electric energy in the power system, and
An information infrastructure that monitors,
controls, and exchanges information between the utility and the
customer.
Over recent decades, the grid has been severely stressed by
increases in electric demand and a declining rate of new investment.
Since 1982, growth in peak demand for electric power has exceeded
growth in transmission capacity by almost 25 percent every year. The
result is grid congestion and higher transmission losses, which can
result in higher rates for electricity and lower reliability. The
Department of Energy recently estimated that the cost of power outages
ranges from $25 billion to $180 billion annually. The increasingly
complex and competitive bulk power market is also adding additional
stresses to the grid. Inadequate capacity, control and reliability are
impediments to the deployment of new sources of alternative energy and
limit our ability to increase the use of electricity in transportation.
Transforming the existing electric power system into a Smart Grid
is essential to mitigating these problems and promises several
important political, economic, and environmental benefits for the
Nation:
By supporting the interrelated goals of price
transparency, clean energy, efficiency, grid reliability and
vehicle/transportation electrification, a Smart Grid will help
reduce the Country's dependency on imported oil.
Enabling the real-time pricing of electricity will
allow consumers to make informed decisions about their energy
usage and reduce their energy costs.
Providing the information and control needed to
better manage electrical demand will help facilitate the
integration of alternative energy sources by providing a means
to help mitigate the variability caused by their intermittency,
as well as enabling increasing electrification of our
transportation sector including the integration of plug-in
hybrid electric vehicles into the grid.
Greatly expanding the connection of end-user loads to
grid information and control will facilitate energy efficiency
improvements.
Adding intelligence (including sensors,
communications and software systems) to our electric grid will
enhance the ability of systems operators to detect and address
problems before they become widespread grid disturbances,
limiting the effects of disruptions and significantly improving
the system's overall efficiency and reliability.
There are also likely to be numerous benefits of having a Smart
Grid that are difficult to quantify at present. Examples include the
flexibility to accommodate new requirements, the ability to accommodate
advances in grid and electric generation technology, and the ability to
support innovative new regulatory concepts, all without major
replacement of existing equipment.
Congress and the Administration recognized Smart Grid's potential
by passing the Energy Independence and Security Act (EISA) of 2007 into
law. Title XIII of the EISA Act mandates a Smart Grid that is focused
on modernizing and improving the information and control infrastructure
of the electric power system. The Smart Grid encompasses the
information and control functionality that will monitor, control,
manage, coordinate, integrate, facilitate, and enable achievement of
many of the benefits of innovations envisioned in national energy
policy.
Making an Effective Transformation
In our 2009 National Energy Policy Recommendations (http://
www.ieeeusa.org/policy/positions/energypolicy.pdf), IEEE-USA outlines
the following Smart Grid-related recommendations for governmental
action, which we believe are essential to make the transition to a
stronger and smarter electrical energy infrastructure:
Fully funding previously authorized EISA legislation
to support the Smart Grid development effort.
Supporting development of reference implementations
(field test) of Smart Grid standards to help rapidly resolve
technical issues and ambiguities either prior to or immediately
following adoption by Standards Developing Organizations
(SDOs).
Working with Standards Developing Organizations to
help them address issues that delay development of Smart Grid
standards or act as barriers to their widespread deployment.
Working with State regulators, the National
Association of Regulatory Utility Commissioners, and the
Federal Energy Regulatory Commission Smart Grid Collaborative
to resolve issues of ratepayer involvement, especially for
standards having benefits focused on national security and
energy independence issues.
Providing R&D funding to address issues regarding
implementation of Smart Grid functionality by technologically
or economically challenged residential customers. Some Smart
Grid technologies may require residential customers to acquire
and use relatively sophisticated devices. R&D will be needed to
design user-friendly devices, minimize their cost, and identify
Smart Grid concepts that best match the capabilities of users
of all capabilities.
Coordinating Smart Grid development efforts with
advanced broadband deployment. Coordination of these efforts is
essential to insure that the evolving broadband infrastructure
is available and can support Smart Grid communication
requirements.
Devoting necessary attention and adequate resources
to the issue of cyber security for Smart Grid control systems
and software. Increasing our reliance on the Smart Grid's
information infrastructure also increases the risk of malicious
cyber attack and potentially increases the consequences of a
successful attack. Examples of potential attackers include
hostile foreign governments, organized crime, terrorists,
market manipulators, and disgruntled employees. In recent
years, cyber security in electric power systems has received
increased attention at the federal level. The North American
Electric Reliability Corporation (NERC) has adopted Critical
Infrastructure Protection (CIP) standards enforceable under the
2005 Energy Policy Act. EISA 2007 mandates cyber security
throughout the Smart Grid. A high level of continued focus on
cyber security is warranted.
The Importance of Standards and IEEE's Role
A key focus of the Smart Grid effort will be to identify the
requirements for the new information and communications infrastructure
needed to support the Smart Grid and to define a body of compatible
(inter-operable) standards to be used in its implementation. From an
operational perspective, standards will be needed to enable the Smart
Grid to meet a variety of new requirements, including integrating
renewable energy sources, supporting new market concepts, helping
improve energy efficiency, and accommodating new uses of electricity
such as plug-in hybrid electric vehicles. Multiple standards
stakeholder organizations are being leveraged to help define these key
infrastructure requirements, which will enable a successful Smart Grid
implementation by industry and regulatory authorities.
IEEE is active in supporting the technologies and setting the
standards necessary for the evolution and deployment of the Smart Grid.
IEEE was identified as a key organization in the EISA 2007 and has been
part of the NIST Smart Grid standards effort since its 2008 initiation.
IEEE experts have been continuously involved in the NIST workshops and
will lead multiple breakout sessions including Electric Storage
Interconnection and Wireless Communications for the Smart Grid during
the 3-4 August NIST workshop.
IEEE is uniquely positioned to support the Smart Grid program
because:
IEEE leverages the global expertise and synergy of
its broad spectrum of organizational resources. IEEE integrates
44 technical societies and councils supporting technology
development, education, publication, in synergy with a global
standards community.
IEEE Standards Association enables technology
integration across a spectrum of fields, necessary for a
forward looking platform, e.g., power, communications, digital
information management controls technology, networking,
security, reliability assessment, interconnection of
distributed resources including renewable energy sources to the
grid, sensors, electric metering, broadband over power line,
and systems engineering.
As part of its new technology development effort, IEEE has
mobilized its various constituencies into a coordinated Smart Grid
effort, which includes a spectrum of activities and initiatives such as
technical publications (i.e., ``IEEE Transactions on Smart Grid''),
conferences, education, and industry recognized standards.
In March of this year, a new project focused on the smart grid was
approved by the IEEE Standards Board: IEEE P2030, Guide for Smart Grid
Inter-operability of Energy Technology and Information Technology
Operation with the Electric Power System (EPS), and End-Use
Applications and Loads under the leadership of Dick DeBlasio and the
sponsorship of a cross IEEE Standards Coordinating Committee (SCC21).
This project addresses a body of IEEE 2030 standards supporting
functional, inter-operability, and testing for verification of Smart
Grid attributes and end use applicability. This project will leverage
the work NIST is conducting in developing a standards framework. The
first meeting was held in June 2009 involving over 300 participants,
both on-site and remote. This program is projected to support the NIST
September Smart Grid report. More information is available at the
following web site: http://grouper.ieee.org/groups/scc21/2030/
2030-index.html
The ``NIST-Recognized Standards for Inclusion in the Smart Grid
Inter-operability Standards Framework Release 1.0,'' incorporated
several IEEE standards and standards series:
IEEE C37.118 Phasor measurement unit (PMU)
communications
IEEE 1547 Physical and electrical interconnections
between utility and distributed generation (DG)
IEEE 1686-2007 Security for intelligent electronic
devices (IEDs).
Other IEEE standards and standards projects are referenced in the
EPRI ``Report to NIST on the Smart Grid Inter-operability Standards
Roadmap,'' e.g., the IEEE 802TM.
The Workforce Component
The U.S. engineering and technician workforce is not yet prepared
for planning, building, operating and maintaining a Smart Grid. This
will make it difficult to realize the promised benefits of a Smart Grid
soon. The aging workforce is a major concern. Nearly 50 percent of
engineers and technicians currently employed in the electric utilities
and over 40 percent of the university power engineering faculty is
eligible to retire in the next five years. Increased and effective
efforts are needed to attract young people to power and energy careers,
and to becoming our next generation of educators.
The vision is that Smart Grid technologies will become widely
implemented in our nation's electricity delivery system. As a result,
federal policies must support education and training in the electricity
delivery field:
to prepare an engineering and skilled trades
workforce that has the necessary knowledge and skills to
design, plan, construct, operate, and maintain a modern
electricity delivery system, including power system
infrastructure , and information systems, as well as to
manufacture the necessary components of that system,
to enable retraining that will allow unemployed and
under-employed workers in other fields to find new job
opportunities in electricity delivery, and
to enhance, build and sustain the education
infrastructure at accredited educational institutions,
including community colleges and universities, offering credit
and non-credit education in electric power and energy.
A Smart Grid is transformative technology for the electric power
industry. Our nation's educational institutions have to be transformed
to respond to this technology advance. The Smart Grid will require
engineers, computer scientists, and technicians among others who
possess new and enhanced skill sets in information technology,
communications, alternative energy resources, cyber security and other
relevant technical fields. This workforce also must be prepared to be
highly innovative. Most of the benefits of a Smart Grid will come
through new applications that are not yet envisioned or developed.
Appropriate curricula need to be developed. To develop those
curricula effectively, a comprehensive study is needed to identify the
new workforce skills for successful deployment of a Smart Grid and the
training needed to equip the workforce with those skills. New and
innovative ways of delivering these curricula need to be developed to
meet the wide-ranging needs of learners. Support is also needed to
increase access to these new education programs through increased
financial assistance, and through effective and widespread
communication of training opportunities throughout the Nation.
The American Reinvestment and Recovery Act (ARRA) of 2009 (P.L.
111-5) anticipated the need for preparing the workforce for a Smart
Grid by appropriating $100 million for ``worker training activities''
related to electricity delivery and energy reliability funded through
the Department of Energy. These funds should be used for putting in
place the critical education infrastructure that supports job creation,
professional development, career advancement, and workforce mobility.
IEEE-USA's recommendations for the use of these funds can be found at
http://www.ieeeusa.org/policy/positions/electricityworkforce.pdf
Conclusion
The engineers, computer scientists and associated technical
professionals responsible for creating the Smart Grid will do their
part to ensure the Smart Grid is designed, built and operated to
maximum advantage.
The Federal Government can ensure an effective transition by
bringing key stakeholders and participants together as needed to ensure
consensus and collaboration on key decisions, by encouraging the
development of the needed standards, and by supporting research and
development needed to develop necessary technology, address user needs,
and ensure the security of the system. New standards will provide the
foundation on which the Smart Grid must be built. To make sure that a
well-trained engineering and technical workforce is available to build
and sustain the Smart Grid, targeted investments should be made in
education and training on the Smart Grid combined with broad support
for STEM workforce development.
IEEE, through its standards, technical publications, conferences
and members will play a key role in supporting efforts to create Smart
Grids in the United States and in other countries around the world.
Working through IEEE-USA, we stand ready to assist Congress and the
Administration with information and advice as you wrestle with Smart
Grid-related issues for the Nation.