Anticipating the Smart Grid

Designers, building owners, and operators should understand how the emerging Smart Grid will impact individual buildings.


Figure 1: High-voltage ac power lines transmit electrical power from power generation stations to the local utility distribution grid. Courtesy: Sunondo RoyIn these times of smartphones, smart cars, smart this, and smart that, how is a building to compete? Well, it’s no news to the readers of Consulting-Specifying Engineer that buildings are already pretty smart with building automation systems (BAS) that allow building managers to know exactly what’s happening to the myriad energy consuming components required to make a building functional and comfortable for its users and profitable for its owners. 

Making buildings capable of reacting to their internal and external surroundings has been evolving for more than 40 years—from manually adjusting boiler and chiller outputs to incremental advances in control and automation, and from pneumatic controls to analog electrical controls to modern direct digital controls. The next step is integrating buildings into the rapidly evolving Smart Grid. The Smart Grid is transforming last century’s national electrical grid from a local, one-way, passive power distribution system to a reactive, interactive, two-way power distribution network.

The Smart Grid will allow regional power producers at the macro level to communicate directly with individual commercial or residential buildings at the micro level. 

This level of communication will enable the Smart Grid to know where demand is required—even to the individual building level. Knowing where and how much power is needed allows the Smart Grid to adjust power distribution in real time. The agility of matching power demand with power production minimizes the amount of power that generating facilities must dump, and keeps base-load plants running at minimum capacity. 

Smart Grid primer

The electrical power grid is one of the most massive and complex undertakings in the U.S. Amazingly, the entire grid was developed independently by countless local power producers without significant coordination by the federal government until fairly recently. 

In 1882, Thomas Edison’s Pearl Street Station, the first power plant, produced 100-V dc power and distributed it to several hundred street lamps serving a single neighborhood of New York. However, by the late 1800s, the predominant power system was ac, which allowed electricity to be transmitted at high voltage to minimize line losses, and then to be stepped down at point of use at a safer, lower voltage. Local power grids were developed throughout the U.S., but it wasn’t until the 1930s that they became regionally connected by means of analog substations. Most of the grid’s infrastructure has been upgraded. What we consider the national transmission grid has been in place since the 1950s. The national transmission grid in the U.S. actually comprises three independent conglomerations of interconnected local transmission lines: the Eastern Interconnected System, the Western Interconnected System, and the Texas Interconnected System. Portions of these grids are also interconnected to the Mexican and Canadian transmission grids. 

Figure 2: The U.S. electrical power grid connects power stations, the transmission grid, and the local utility distribution grid. Courtesy: CCJM EngineersThe electric power grid is comprised of three main components: power stations, the transmission grid operating at 110,000 Vac or above connecting the various power stations to their distributed substations, and the local utility distribution grid operating at 33,000 Vac or less (see Figure 2). The greatest challenge to the power grid is transmitting the electricity from the power plants to the local utilities where and when it’s needed. The production of electricity is dynamic, varying by region and by capacity. Similarly, the use of that electricity is dynamic, also varying by region and by demand. 

Because there is virtually no storage capacity in the transmission grid, it is up to the power producers, the transmission grid operators, and the local utilities to coordinate production capacity with user demand. By the 1980s, the substations were starting to become automated with analog switching, although they were still controlled by human intervention. By the 1990s, the automation was upgraded to digital controls with limited human intervention. The growth of renewable energy plants also added impetus to improve the automation. Unlike fossil fuel power stations, renewable energy plants have limited control over when they can produce power. If the wind stops blowing at a wind farm or if nightfall or heavy cloud cover puts a solar array below its production threshold, the grid needs to be able to react virtually instantaneously to pick up the lost supply from other sources. 

The Smart Grid offers a design solution to this fundamental power grid problem. Where did the Smart Grid actually come from? It’s actually the existing distributed power grid that’s been around for the past 70 years or so. Like the smartphone and all those other smart devices we covet, the secret sauce that is making the old power grid into the Smart Grid is interactivity. Whereas the current power grid is essentially a one-way stream of power with relatively slow reaction to changes in demand, the quickly evolving Smart Grid will be able to react to power demand changes in real time and realign power production and distribution to match. It can also react to power inputs from customers producing off-grid renewable power and crediting the microproducers in real time. Although this is a gross simplification of the process, the concept provides the necessary background for the purpose of this article. 

Potential impact on the commercial building market

While the Smart Grid as a market is still in its infancy, smart owners/managers are monitoring the trends, staying alert for opportunities to cut costs, and planning to keep their buildings compatible in the future. The grid continues to get smarter, presenting building owners/managers with greater tech-based opportunities for cost savings. Concurrently, more sophisticated financial tools and legal structures are beginning to evolve to support the technology, slowly creating a stronger business case for investments in this sector. Major Smart Grid investment this early should be done only with significant research, but the day is coming when those unfamiliar or unprepared to interact with a Smart Grid will be at a competitive disadvantage in the commercial building market. 

Becoming familiar with available technology is the first step. Smart meters, BAS, and building energy management systems (BEMS) are basic tools building owners/managers can use to cut costs internally as well as take advantage of external opportunities. The degree to which a building is centrally controlled/monitored and able to interact with the outside world determines its potential to benefit from Smart Grid-related opportunities. For example, knowing and being able to isolate the individual energy use of each major piece of an HVAC system allows for more flexibility when taking advantage of dynamic electricity pricing or negotiating a demand response (DR) contract. 

Currently, the most common opportunities are related to DR agreements with utilities. The Federal Energy Regulatory Commission defines “demand response” as: “Changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices, or when system reliability is jeopardized.” It is important to note that DR agreements are negotiated contracts between businesses and utilities. As such, they are purely optional and intended to be a flexible way for large electricity customers and utilities to mutually benefit from the real-time information smart meters can now provide. Whether done manually or remotely through installed automatic demand response (ADR) components, it is a contractual agreement between two parties, and both parties must understand the expectations and benefits before moving forward. 

Aside from DR, owners/managers can use building smart meters to benefit from dynamic electricity pricing by running equipment with strategic intent. BAS can be set to limit cooling, for example, when power prices hit a setpoint or pre-cool a space when prices are low. This is another scenario where proper technology (smart meter + BAS/BEMS) can yield financial benefits and justify investment. 

Also, smart meters, and the advanced metering infrastructure (AMI) necessary to effectively use them, have not yet achieved widespread use. Much remains in both the R&D pipeline and regulatory negotiations before the fully functional AMI is ready for prime time. The transition to a fully integrated Smart Grid will take time, but it is a matter of when—not if. As this structure evolves technologically as a market concept, there will be more opportunities. Building owners should prepare their buildings now to take advantage of the opportunities that are on the horizon. 

How the Smart Grid will affect building owners

To capitalize on these rapidly evolving business opportunities of the emerging Smart Grid, building owners and managers should ensure their building infrastructure is set up to take advantage of them. Although there are many emerging technologies associated with the Smart Grid, most are related either to power stations or to transmission and distribution networks. Because this article is intended for building owners, managers, and designers, those technologies are not addressed in this article. Rather, the focus is on those emerging technologies that will be implemented at the micro-level of individual buildings up to a campus of related buildings. The common thread at this end of the power spectrum is targeted metering of power usage, disciplined and orderly power distribution within the facility, and, to the extent it is applicable, local renewable power production. 

Traditional metering is a one-way stream of usage data from the utility meter up to the local utility and eventually the power producer with a significant time lag from days to weeks. On the fully functional Smart Grid, a smart meter will be the communication gateway between the building and the local utility and also the other two parts of the grid: the transmission and the power stations. The goal of the Smart Grid is to allow all these components of the power grid—major producers, power transmitters, and end users—to react in real time to the aggregate power demands across their domains.

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