This week in 2003, a chain of events that started with power line brushing against some overgrown trees resulted in a power outage across the northeastern United States and southeastern Canada. For up to two days, some 50 million people were left without electricity. (See related pictures: “World’s Worst Power Outages.”)
We have seen other major U.S. outages since then—Hurricane Sandy in 2012, for example. As it happens, I am writing this piece from a quarterly meeting focused on the North American grid. The North American Electric Reliability Corporation (NERC)’s board of trustees meetings are focused on efforts to assure the grid’s reliability, security and resilience. (See related story: “Can Hurricane Sandy Shed Light on Curbing Power Outages?“)
Thanks to a detailed investigative report issued in 2004 by a U.S. and Canadian task force, some notable changes to the grid have already been made. Those include the creation of mandatory reliability standards and regional reliability entities in North America; improved system operation and planning; the deployment and integration of advanced monitoring devices that track changes in grid conditions; and improved protective devices/relay settings. (See related story: “Preparing for the Zombie Apocalypse: Are Microgrids Our Only Chance?“)
Despite this progress, the World Economic Forum ranked the U.S. electric power sector 55th in the world for energy architecture in 2013, so several questions still need to be addressed.
1) Is our grid getting smarter?
Very slowly. Infrastructure investments started declining in the early 1980s and have continued ever since. While we invest less in the overall infrastructure, we continue to push more through it. As a result, from 2000 through 2004, the U.S. had 149 outages that affected 50,000 or more consumers.From 2005 to 2009, that figure jumped to 349. (See related post: “‘American Blackout’: Four Major Real-Life Threats to the American Grid.”)
Eighteen years ago depreciation of the infrastructure started exceeding the actual investment and steps toward upgrading the current grid to a smart grid have not been taken. Only $7.8 billion, a fraction of what’s needed to upgrade, has been invested by the national stimulus plan and via industry investments.
2) What factors are hindering grid improvements?
On any given day, half a million people in America are without electricity for two or more hours. Rather than focusing on revitalizing the entire grid to prevent or self-heal outages before they have a significant effect, we only fix them after they occur. This strategy provides temporary solace, but does not address the grid’s underpinning deficiencies. Revolutionizing the grid can limit the impact of outages and ultimately restore lost power more rapidly and efficiently.
The power industry in the U.S. is just beginning to adapt to a wider spectrum of risk and continues as we implement strategies, technologies and practices to harden the grid and improve restoration performance after a physical disturbance. Current and future investments in advanced metering infrastructure and in distribution automation are only the beginning of a multi-decade, multi-billion-dollar effort to achieve an end-to-end, intelligent, secure, resilient and self-healing system.
Also, investments to harden the grid and support resilience will vary by region, by utility, by the legacy equipment involved and even by the function and location of equipment within a utility’s service territory.
Additionally, uncertainty in the public and private sectors hinders the smart grid’s development. The absence of a coordinated national decision-making body and a policy framework to incentivize collaboration in grid modernization for both energy distribution and cyber-physical security are major obstacles. The bulk electric system is federally regulated but the distribution grid, metering, and other aspects are state regulated.
3) How do the costs of developing a smart grid compare to the costs of not developing one?
The cost of a smart grid depends on how much instrumentation you install, like communications backbone and security. The price tag ranges from $340 to $480 billion, which, over a 20-year period, would amount to $20 billion annually. However, the immediate benefits are $70 billion annually in reduced costs from outages, and in a year where lots of hurricanes, ice storms, and other disturbances occur, that benefit goes even further. System efficiency would increase by 4.5 percent, reinstating $20.4 billion annually and reducing CO2 emissions by 12-18 percent by 2030.
This is also about job creation and an economic benefit. For every dollar invested, the return is about $2.80 to $6 to the broader economy. And this figure is very conservative.
Other key questions persist: Can utilities, public and private stakeholders innovate to deliver new services to customers? How do we invest in infrastructure when revenues are shrinking? Most importantly, are we willing to make significant investments today to modernize our grid for greater economic prosperity and national security in the future? What are the consequences if we do not make this progress?
Our society and quality of life fundamentally depend on reliable electricity. The next few years are crucial, as the utility business model will need to undergo significant changes in the next 10 to 15 years to support our nation’s economy and security. So while much has been accomplished since 2003, there is more work to be done. (See related post: “As U.S. Plans $7 Billion Effort to Electrify Africa, It Faces Challenges at Home.”)