Engineering a smarter grid

Engineers should understand what will soon change in how we use electricity and interact with our provider, what building owners and consultants should know, and the current status of this national and international project.

By Chris Edward, KJWW Engineering Consultants, Naperville, Ill. June 11, 2012

The Smart Grid is about getting more information. It encompasses the concept of giving the electric grid the ability to collect and distribute data about itself. There is a growing need for utilities to know what is going on in their systems, and there will soon be an even greater need for building owners and residential customers to become more involved in their usage.

Why is the Smart Grid needed? What are the benefits for power consumers? This article will attempt to explain what will soon change in how we use electricity and interact with our provider, what building owners and engineering consultants should know, and the current status of this national—and international—project.

Electricity is already bought and sold by providers from generating facilities in real-time auctions (see Figure 1). Utilities purchase power when demand exceeds their own capacity at the going rate for that moment in time. For most customers these fluctuations in price are summed together and represented on the electric bill as a single, steady rate. The implementation of a smarter grid and two-way communication will allow utilities to charge customers different rates for usage throughout the day based on the rules of supply and demand. This implies that end users will need to track not only their power consumption, but also when it is used to avoid higher costs.


A smarter grid will give more power to the utility and the consumer. Those that already have smart advanced metering infrastructure-type electric meters have seen this, as they are given data about their usage, usually by 15-minute intervals. Receiving more information allows the user to change habits that they may determine are more costly than necessary. On the larger scale, utilities have started to install this data gathering system over their power lines, along with the equipment necessary to monitor, track, and react. This capital-intensive effort allows a utility to locate outages, read meters, see trends, and control demand faster and easier, without the level of resources currently required in most areas. The benefit to everybody is, in theory, a more robust electric grid with shorter and fewer outages.

When owners ask, “How do I connect to the Smart Grid?” the most basic answer will be that their utility will need to install a smart meter for them. This is something a utility typically does for all of its customers or none. Many of the pilot-type programs and initial implementations for a smarter grid have been in installing these smart meters. The upgraded meters allow two-way communication and power readings by any chosen increment. They communicate wirelessly to what could be called a router to collect and send the information back to the service provider. Millions of new meters have been installed across the country to this point, usually after a federal grant has been secured to help offset the cost.

Utilities have met some resistance to the new meters, but not a great amount. A 2011 study by the Smart Grid Consumer Collaborative looked across the country at peoples’ perceptions of the movement toward the Smart Grid. The study found that few consumers know how our power system works, and it suggests that the utilities with smart-meter programs have not been effective in helping customers understand what the meters do. The study also found, however, that the majority of people are open to changing how they deal with the power company, and that pricing pressure and more choices will cause a shift in consumer electricity usage. Figure 2 indicates the states where utilities have been most heavily involved in smart meter installations.


So what do consultants need to tell their clients about the Smart Grid? First, both parties must understand how the changes will affect an owner. A data-heavy electrical distribution system only gives information. An owner or facility operator will have to decide how to use that information to manage electricity costs. There will continue to be more options available to customers, more requirements, and more decisions to make that will take more time out of the user’s day.

Many new choices will deal with the ways that power customers can interact with their providers to manage costs and, in several cases, earn revenue. These options should be examined so that facilities can be prepared for an evolving system. The current energy demand across the country has grown only slightly in the past couple of years. Even in this time of slow growth, building codes and standards adopted by most states have continued to aggressively push for higher energy efficiency in new construction and renovations. It’s also assumed that many of the current incentive-based grants and rebates involved with energy efficiency and Smart Grid technologies will become requirements in the not-so-distant future.

Building owners have been forced to become more sophisticated with building automation systems, heat recovery, lighting control, and water conservation. A smarter grid will enable owners to extract greater cost savings from their systems by allowing the exchange of information necessary to create a beneficial relationship between the customer and the utility. It’s likely, however, that this effort will mean keeping the facility’s energy costs flat rather than rising when new pricing structures are put into place.

With a smarter grid, the foreseeable interactions between the customer and the utility will be most significant in the following areas:

  • Communication of power outages
  • Management of energy usage
  • Connection of distributed generation
  • Demand response programs.

The better communication of power outages comes from the utilities’ ability to digitally locate where an outage has occurred and how widespread it is, resulting in shorter downtime. This is not a down-to-the-sq-ft scenario, but knowing the mile marker still helps. In most areas today, the information comes from telephone calls and search crews. The goal for better energy management is more about the awareness of when and how energy is used than about forcing appliances and other power-consuming items to use less energy. The overall transmission system may operate more efficiently, but most energy savings will come from changes in consumer behavior. These changes in consumer habits are forced by the real-time pricing and accessibility of data that has been discussed. Users that can avoid costs will adjust to avoid further costs eventually. Consumers will also be more able than ever to gain revenue from utilities as advancements in the electrical grid continue.

The last two customer-utility interactions have the potential to generate revenue for the user. Distributed generation is the idea of private owners providing electricity back onto the grid from several small-scale generators, including those based in wind, solar, biomass, and natural gas. Demand response is an increasingly popular program in high-density areas where the electric utility often has to purchase power and work hard to avoid blackouts. These two ways for reducing demand are options from which most types of electricity consumers can benefit.


A demand response program is a relationship between the electricity provider and the customer to reduce power consumption during times of higher than normal demand. It can be thought of as an emergency response system for when usage approaches the limits of capacity, but an emergency doesn’t need to happen for participants to gain revenue. Figure 3 follows the load a utility might see during a peak summer day. If a utility projects an overload condition, a peak event may be called where those customers participating in the demand response program are triggered to reduce load, allowing the utility to drop overall demand when the load of regular customers continues to increase.

The provider can be the power company that an owner gets its bill from, an independent system operator (ISO), or a third-party administrator. The ISO is the stock exchange of electricity that manages the flow and pricing of power among utilities. ISOs exist by region across the country, with a total of 10 in North America. Utilities have a great interest in ensuring that they will be able to avoid a blackout or painfully high prices when necessary, which is a good reason for trying to convince their users to shed load when necessary.

The ISO often administers the demand-response program. Many are currently available in California, Texas, New York, and elsewhere to allow customers above a certain mean usage level to enroll and get paid to reduce their usage when needed. The customer may not even get called on during the course of a year, but will still receive a check for being available under many programs. The revenue amounts reflect the price of electricity during those times of peak demand, which can be significant. During an actual high-

demand event, an owner participating in the program pays less by reducing the building’s demand, and will be paid for the usage reduction at the same time. The programs do require a yearly test to ensure the resource is available. Overall, most end users find they can accommodate the very occasional interruption for the revenue trade-off.

Data compiled by a November 2011 Federal Energy Regulatory Commission (FERC) report estimated that 7% of record peak load was available for demand response in 2010. These incentive-based programs are broken out into two main types: a customer can elect for voluntary or involuntary load control. Involuntary means that the customer does not receive a fixed payment, but if the utility calls and asks the customer to reduce usage, the customer will be paid for doing so. The highest incentive comes in participating in direct load control. In this situation, the utility is able to directly power down part of a facility to automatically reduce load. Direct load control assures the utility that it can shave peaks when needed, and it is willing to pay for this ability. This option can also be set up to require the user to shed load without direct control, with consequences for a failed response.

The U.S. Green Building Council, which oversees LEED certification, is issuing a new credit for buildings implementing the demand response program. The credit has been a pilot for two years and recognizes the potential benefit to the owner and the electric grid as a whole. When a power company is able to shave peaks in its demand, the need to start up natural gas reserves becomes less frequent, and the building of new power plants can be postponed, keeping costs down.


A main goal of the Smart Grid is to allow better integration of distributed generation. As previously mentioned, this includes most renewable energy resources. These resources may be “free,” but currently they are not viewed as reliable by utility standards. Industry professionals often point to a weather event in Texas a few years ago where a large front moved across the state and left thousands of wind turbines dead in the air. Nearly all wind power in the state went from high production to zero in a matter of minutes. Texas has its own ISO, and this event reaffirmed the notion that power plants need to be producing the capacity to carry the majority of the system at full load, whether or not wind and solar sources are supporting the grid.

The smarter grid will be able to better integrate all distributed resources. While wind and solar farms may appear to be promising in some regions, coordinating the efforts of thousands of customers’ internal combustion generators—along with wind turbines and solar panels—may hold the larger benefit (see Figure 4).

Several points of generation close to the load can make the grid more flexible and resilient. A utility provider must be able to track what is going on at key points in the system to allow these kinds of connections on a large scale—and the new data network will accomplish this task. A smarter grid also makes the facilitation of financial transactions easier than the individual net metering accounts that are in place today.

Distributed generation is a focus of the Smart Grid for several reasons. Peak shaving is an important one. Inefficiencies and costs are highest when the grid is stretched to the limit. The promise of better battery technologies means that wind and other distributed resources will become more viable options for peak shaving strategies. This also suggests that a single wind turbine may become a more plausible source of revenue for building owners. Grid voltage stabilization has also been identified as a benefit of this future integration.


So what would a brand new, limitless-budget Smart-Grid-ready facility look like? First, it should exceed the newest standards for energy efficiency. ASHRAE and International Energy Conservation Code standards are among these. More importantly, the building would be able to react to events communicated over a two-way data network. Real-time pricing information will be the biggest driver of actions to be performed, and standards will soon be available to normalize the communication between end-user systems and the utility grid.

An air conditioned manufacturing plant probably has the highest potential to implement the widest range of Smart Grid technologies. Here, the building automation system would be linked to the utility communication network. Several companies are heavily invested in the development of Smart Grid products and technologies, knowing that their automation systems will be needed to handle the influx of information. A period of high energy cost communicated by the grid would trigger the BAS to cycle facility air compressors, start up a cogeneration plant, and shut down lines that can afford a break in production.

In this plant, the air conditioning system would be supported by thermal energy storage, where ice is made during nighttime hours when electricity is cheapest. Revenue would be generated by a grid-tied wind turbine and solar panel array with provisions for a demand response system (see Figure 5). The demand response system allows an event signal from the utility to automatically reduce facility energy usage. The BAS will operate as it would under a period of high energy cost, activating predetermined load shedding procedures.

The inclusion of these technologies into a single building is obviously cost prohibitive for most owners. Cogeneration alone is extremely expensive—more so than in the past due to the new Tier 4 rating required by the U.S. Environmental Protection Agency for nonemergency generators. It’s true, though, that construction costs have always increased, and designers should know that the implementation of even one of these systems can help control energy costs that are likely to only increase.


Most of the recent Smart Grid progress has been in the development of standards to allow for nationwide implementation. Millions of meters have been installed, replacing more than 15% of standard static meters, according to FERC. More than 1,000 phasor measurement units have also been installed to enhance grid infrastructure.

Several standards bodies have been working on everything from architecture to cyber security to utility deregulation. These areas have been identified as remaining challenges to the industry. The coordinating body behind the overall “Smart Grid Interoperability Standards” is the National Institute of Standards and Technology. Others working in cooperation to develop standards required for a nationally viable Smart Grid are IEEE, NEMA, ASHRAE, GridWise, and several manufacturers. Technology companies are pursuing packaging and transmission methods for handling electric grid information. The U.S. Dept. of Energy has invested in simulation and modeling for the complex variables of a more dynamic electric grid. Demonstration projects for grid-level energy storage have also seen some success in the advancement of the concept.

The idea of what the Smart Grid will be is not near physical completion. The highest level of standardization has yet to be agreed upon. However, many people and companies are still heavily involved in implementing the communication networks—and the grid is getting smarter every day.

Edward is an electrical engineer at KJWW and has created designs for multiple renewable energy installations. He is a graduate of Purdue University and has served as an executive committee member for the Iowa/Illinois section of IEEE.