Smart Grid technologies are steadily gaining ground in the United States. As of 2008, about 31% of electrical substations had some form of automation, and that number was expected to grow to 40% in 2010. On the customer end of the power line, however, the penetration of smart meters—technically known as advanced metering infrastructure—was much lower, at only 4.7%, or about 6.7 million meters, as of 2007. But smart meter installations are expected to gain momentum, growing by 52 million by 2012. That would represent a surge of about 36%, bringing smart meters to more than 40% of the nation's electric customers.
These figures are available to us thanks to the Smart Grid System Report, prepared by the U.S. Department of Energy (DOE). The Energy Independence and Security Act of 2007 not only presented a significant policy boost for Smart Grid development, but also recognized that the United States needs to better track the development and deployment of Smart Grid technologies throughout the country. As a result, the act required DOE's Office of Electricity Delivery and Energy Reliability to prepare a biennial report on Smart Grid deployment nationwide and on any regulatory or government barriers to continued deployment. Hence the Smart Grid System Report.
Tracking the development and deployment of a new and somewhat undefined technology such as the Smart Grid required DOE to work closely with electric industry stakeholders to help define the key metrics of the Smart Grid. In mid-2008, DOE brought together 140 experts, representing the various stakeholder groups associated with the Smart Grid, at a workshop in Washington, D.C. The objective of the workshop was to identify a set of metrics for measuring progress toward implementation of Smart-Grid technologies, practices, and services. That workshop initially defined more than 50; however, that list was later winnowed down to 20 key Smart Grid metrics that provide the foundation for the Smart Grid System Report.
These metrics are divided into two types: build metrics that describe attributes that are built in support of a Smart Grid, and value metrics that describe the value that may derive from achieving a Smart Grid. While build metrics tend to be quantifiable, value metrics can be influenced by many developments and, therefore, generally require more qualifying discussion. For instance, one build metric is the percentage of total demand served by advanced meters, while a corresponding value metric would be the percentage of customer complaints related to power quality issues. Because a number of factors can influence customer complaints, the latter metric requires more careful analysis.
DOE published its first Smart Grid System Report in July 2009, and in many ways, the report serves as a baseline measurement of Smart Grid activity in the United States. The report includes a compilation of research reports that were available at that time, and interviews conducted with a diverse set of 21 electric service providers. Several of the metrics, such as the percentage of load served by microgrids or the share of light-duty vehicles that are electric vehicles or plug-in hybrids, involve technologies that are in the nascent stages of development and could not be meaningfully quantified.
Among the quantifiable items, it is clear that advanced metering and substation automation is gaining ground in the United States, that grid operators are beginning to share their operating data, and that a moderate percentage of utilities now have standard interconnection policies for distributed energy resources. However, the percentage of load served by distributed generation and storage remains low, as does the fraction of the load served under demand management policies and technologies, with grid-responsive demand-side equipment remaining in the nascent stage.
At the transmission and distribution (T&D) system level, many transmission-related substations are now automated, but automation is less likely to be found in distribution-system substations. The penetration of advanced measurement technologies in substations remains low, and operating transmission circuits under dynamic line ratings remains a nascent operating approach. In terms of value metrics, T&D system reliability is declining and capacity utilization remains flat, but on the upside, customers are complaining less about power quality issues, and the energy efficiency of the nation's electrical system is gradually improving.
Of course, a major aspect of the Smart Grid is the information technologies associated with it, bringing two major concerns into focus: the cyber security of the Smart Grid and its ability to accommodate new technologies. The first Smart Grid System Report found both cyber security standards and interoperability to be at the nascent stage of development, although of course, both of these issues are now being addressed by federal initiatives.
The report also examined the business activity that is accompanying Smart Grid development. The news is good: venture capital funding of Smart Grid-related startups grew from $58.4 million in 2002 to $194.1 million in 2007, representing an average annual increase of 27%. The report anticipates a high growth rate for venture capital funding in the future.
Last but not least, the report examines the challenges to Smart Grid deployments, with the most obvious one being cost. As noted in the report, the Brattle Group has estimated an investment of $1.5 trillion to update the grid by 2030. Regulators face the challenge of trying to regulate a technology that is still evolving and changing. This requires regulations to be flexible enough to allow for innovation. And technical challenges still remain, particularly in the development of economical energy storage systems. Such systems could help address other technical challenges, including integrated distributed energy resources and addressing power quality problems.
Under the American Recovery and Reinvestment Act of 2009, DOE is investing heavily in Smart Grid demonstrations and deployment projects throughout the country. With major changes now underway, the first Smart Grid System Report truly serves to mark the baseline of the development of Smart Grid technologies.
When the next report comes out in 2011, the authors will have a much larger universe of Smart Grid projects and metrics to draw upon. Industry watchdogs can expect the next report to encompass the foundations laid by the Recovery Act, and perhaps show the initial gains from these Smart Grid projects. It will mark an exciting transition as the country moves more aggressively to develop and build a nationwide Smart Grid.