Insights from the California smart grid deployment plans

Automation Insight – July 2011

On July 1st, the three California investor-owned utilities (IOUs)—Pacific Gas & Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E)—submitted their official smart grid deployment plans to the California Public Utilities Commission (CPUC). The different smart grid projects and investments for each of the utilities can be broadly classified into three sectors: customer, markets, and utility.¹ In addition, each utility explicitly outlined foundational projects that cut across all three sectors. Of the three sectors, the customer domain figures preeminently in the smart grid deployment plans. 

As reflected in the cost estimates, the utilities have divided their deployment plans into two consecutive time periods: 2011-2014 and 2015-2020. The utilities provided significantly more details for the scope and cost estimates of projects scheduled for the near term (2011-2014) than for projects planned for the long term (2015-2020). Projects planned for the long term are presented in technical detail, but their associated cost estimates are highly variable and essentially provisional.² 

A central idea among all of the deployment plans is to think of the smart grid as an evolution not a revolution. The near-term projects offer a view of the utilities’ incremental progress in updating their infrastructures. The long-term projects showcase how the utilities envision their smart grids to evolve. For example, SCE labels its near-term projects as “platform investments” and its medium-term projects as “incremental investments.” Platform investments serve as the smart grid foundation and are designed to be the critical steps to enable smart grid capabilities. Incremental investments are designed to leverage the foundation provided by platform investments. 

The question the utilities face is: How quickly can they deploy platform projects, and what will their grids evolve into as a result? In recognition of this challenge, the utilities have taken an adaptive management approach to allow their roadmaps to evolve with future changes. Many technologies that are enabled as a result of the smart grid have the potential to significantly disrupt utility grid operations and planning. For example, increasing interconnections of distributed generation resources, deepening integration of demand response, and significant penetration of electric vehicles (EVs). 

The Customer
The utilities go to great lengths to show how their smart grid plans will engage and educate customers; maintain the privacy of customers; and most importantly, benefit customers.

All of the utilities have a similar vision for their customers:

• Empower customers to make informed decisions about energy
• Help customers maximize the value of their energy usage and generation
• Ensure that the grid can meet future energy needs and loads more efficiently   

California customers have presented a great challenge and opportunity to their utilities, as they have been adopting technologies like solar PV and electric vehicles at higher rates than anywhere in the country. To date, the main customer project for each utility has been the deployment of smart meters. All three utilities anticipate completing their smart meter deployments in the near term. As of December 31, 2010:

• SDG&E had installed 1,820,000 electric and gas smart meters.
• SCE had installed 2,022,221 electric and gas smart meters.
• PG&E had installed 7,474,163 electric and gas smart meters which has made it the largest smart meter program in the country. 

So, what are the next customer-focused projects after smart meters?

In the near term, the first project set focuses on deploying, utilizing, and maximizing home area networks (HAN). The goal is to enable HAN as the common platform for integrating different types of customer devices that improve energy efficiency. With fully functioning HANs, customer devices can communicate with the utility, and the utility can communicate with the customer devices.

The second project set revolves around demand response. In particular, the utilities seek to improve the following:

• Program effectiveness
• Forecasting (by using more granular customer data from smart meters and HANs)
• Bidding into the California Independent System Operator energy and ancillary services markets 

To a certain extent, the utilities see the maximization of HAN as the key way to enhance and optimize demand response.  

The third project set consists of utility pilots to integrate electric vehicles. All three utilities see 2015-2016 as the point when EV customer adoption will begin to grow exponentially. Prior experience with EV integration in the near term will be crucial to each utility’s smart grid success in the long term.

Concurrent to these project sets, the utilities plan to enable customer-controlled and authorized third-party access to customer meter consumption through the use of Open Automated Data Exchange. Third-party energy services based on smart meter data offer an additional avenue to reduce customers’ energy costs, and the number of services offered is expected to grow and diversify over time.

One of the major barriers for customer empowerment is the delay in the adoption of the Smart Energy Profile 2.0 HAN national standard. The utilities expect this capability to become available around 2014. 

Regulatory principles
On July 20, the National Association of Regulatory Utility Commissioners (NARUC) published several policy resolutions, which included a resolution that listed 15 smart grid principles. The California utilities’ smart grid deployment plans appear to satisfy most of these principles. The CPUC is likely to scrutinize three potential areas: the allocation of risks and rewards for smart grid investment projects after 2014, cost recovery and the anticipated costs of future investments, and customer privacy issues.  Although it appears that the IOUs are intent on satisfying the privacy principle, it is unclear whether or not they do, in part because the NARUC best practice guide has not been published yet.

Outlook
With fairly mature smart grid baselines and customers that have been early adopters of new clean technologies, the three deployment plans offer an informative and insightful view into what utility smart grids may look like in the coming years. The question is whether or not the CPUC will approve the plans.  

Share your thoughts and insights on this article. Join the discussion at KEMA’s Utility of the Future blog. 

 

Footnotes

1) While the smart grid vision for each utility revolves around these three segments, each utility has a different number of program areas that fit within these sectors, and each utility has different names for the program areas. PG&E has four program areas, SCE has five program areas, and SDG&E has nine program areas. After reviewing the documents, the three program areas outlined above were chosen as a way to compare and contrast the different approaches between the utilities. 

 

2) Each utility has slightly different time periods for their conceptual/provisional projects. The estimated range for conceptual or provisional costs is highly variable: +- 25%, to +- 40-%, to unlisted/undefined.