What is Smart Grid and what effect can we expect it to have on the future of electric utilities? We hear about it a lot. If you were at a party, and asked 20 people, you probably would get 15 different answers about what Smart Grid is. And the other five people would probably back away, and look for someone else to talk to. I wouldn't, but some people would. I may or may not know this from personal experience. Basically smart gird is all about combining providing electricity with information technology or IT. And this can happen almost anywhere along the grid structure, from generation to our meters as customers. Why do this? Well, it's so the system can be monitored and controlled. And that means better efficiency, more reliability, and an easier time balancing demand with supply. There are many highly technical applications using powerful computing and information technology that helps manage operations and data. It's extremely technical, but these systems basically do things like help reduce electric losses along the system. And as you can imagine, less loss means a more efficient system, and that generally means less expense for the utility and customers, so it's a total win win. Smart devices also can detect when there's an equipment fault. Because these faults can get isolated by the smart technology, power can be rerouted. This means greater reliability in general, and faster restoration if there is an outage. As you already know, our system is very old in some areas. In fact, General Electric reported that the average age of a power transformer in the US is 40 years old. Smart technology makes it possible to get the most out of our aging equipment, because it can monitor, so little things don't become big things. And this helps a lot when planning to replace equipment. You know that for over 100 years, electric utilities and customers had mostly a one way relationship. Electricity came from the utility to us, the customers. And information generally flowed one way too. The utility provided us information. We provided information. Basically just to let them know when we were out, or maybe to sign up for a program. You also know that this relationship is changing. The concept that has gotten regulators attention, is how smart technology can be used for demand optimization. You remember in an earlier module, we talked about how energy efficiency programs and other programs that reduce peak usage work, well this is kicking it up a notch. Fundamental to smart grid is smart meters, these are meter that are installed on your house and measure how much electricity your home or maybe your business uses. They do this in intervals of an hour or even less. If you compare this to an analog meter, those are read about once a month by a meter reader. Which is a person that would probably win any fitness track or fitness challenge he or she entered. If your gate is locked or Precious the pit bull is out, the utility typically has to do an estimated bill. The information from the smart meter is sent back to the utility on an ongoing basis for monitoring. So not only do you get a more accurate bill, you also know that your liability is being monitored. Believe it or not, with old school meters, there's a reason why electric utilities used to tell you to call if you're out. Because they didn't always know. There are actually two electric smart meter types, one way, or automated meter reading, AMR, which allows utilities to read meters for billing. And there's two way, or AMI, which stands for advanced metering infrastructure meters, and these allow utilities and customers to interact. So this allows smart consumption applications. You can see on this chart that there is a switch that occurred. And that's what AMI surpassed AMR and that occurred pretty rapidly. >> When we think of AMI in our space we just thinking of the meters and there is an advantage to the utilities on automated meters and being able to remotely read and know what's going on on our systems from headquarters. Not having to have folks walking door to door checking meters, dealing with dog bites, and maybe unhappy people when you're trampling through their yard. There's just the advantage from the utilities perspective of that. From the customer's perspective on that, the ability for me to potentially hop on my phone, dial up or down my air conditioning. Dial up or down my toaster may be in the future. Who knows what that home of the future, that smart home is going to look like. But being able to do with my electric consumption that I do with any other of my apps on my phone. It's just such a cool thing to think about. >> The advanced technology like an automated meter reading, or now the basically, the AMI. So we have two-way communications to meters, is something that we didn't have five years ago, ten years ago. And now it means we're able to actually more fairly allocate the cost, and move them Into the right areas with rate design. Which causes problems because everybody knows what we were and not necessarily where we are heading or what those real costs are. >> I think the exciting thing about AMI is the potential for greater choice and control for us as customers. These includes special pricing for peak time or time of use, green power options, voluntary control of high energy use things in our home like air conditioning. And home energy management and usage management of your appliances. That's how it looks at an individual level. But what if thousands of customers chose to do their laundry, wash dishes, or run a manufacturing line at a non-peak time? We already know that utilities build their capacity to meet the peak. Remember the example of a church on Easter Sunday? Or a mall parking lot, for the busiest day of the year? Well if you can reduce how much electricity's consumed during these peak periods, that lowers the need for costly standby power plans, or purchasing power on the open market. This means less expense, which is passed onto us as customers. This greater agility proves really helpful when we're looking at putting some of the less predictable renewable energy power onto the grid. As you know the more predictability we can build into this system, the easier time we have balancing customer need for electricity with supply. The US Energy Information Administration reported that there were about 58.5 million AMI meters in the US in 2014. 88% of those were on residential homes. Sounds like a no brainer, right? Not so fast. There are opponents to smart meters, and they have tried hard to put a halt on them. The response of regulars has been more about giving customers who don't want them the ability to opt out, and keep their old analog meters. To present a balanced view why would people have an issue with these meters? Basically, it boils down to concern with health, privacy, and/or security. Kind of like those concerned about cell phones. Some people are concerned about the radiation coming from the radio frequencies that allow communications between the meter, utilities, and smart appliances, like a thermostat. Even though our cell phones are largely glued to our ears and smart meters obviously are not, this is something that people are concerned about. And smart meters don't transmit data all of the time, only brief pulses. I did some research from a reputable source, the American Cancer Society. On their website, they say, smart meters give off RF radiation, which is low energy radiation and doesn't have enough energy to move charged particles. And so it's called non-ionizing radiation. Non-ionizing radiation has enough energy to move atoms in a molecule around, or cause them to vibrate, which can lead to heat, but it can't damage DNA directly. The American Cancer Society goes on to point out that the International Agency for Research on Cancer classifies RF radiation as a possible carcinogenic to humans. Based on a finding of a possible link in at least one study about cellphone use and a specific brain tumor type. We're exposed to multiple man and non-manmade RF radiation all the time. But if you want to learn more, I recommend you look at a reputable source like the American Cancer Society. And beware of sensationalized or any reports that are sponsored by an organization that could introduce bias. Beyond the health concerns, some other customers worry about our shift of yet another industry to reliance on computer technology. They're nervous that this would make our electric grid highly vulnerable to cyber attacks, with some really dire consequences. As you can imagine, a move to smart meters entails an exponential increase in data points. Think about it for a second, if your electric company used to read your meter once a month, that's 12 reads annually, but if the meter is reading every hour, that's 8,760 reads. I totally did that math on my head and that is if it's only once an hour, many of these meters are capable of reading meters in much smaller time increment. So for example, every 15 minutes, and if you think about the fact that utilities can have millions of customers, that's a lot of data. Customers worry about their information being breached, exposing some of their personal habits related to usage. And in this age where credit cards get breached all the time, this really increases their sensitivity. Because of the concerns, states do allow customers to opt out, but so far, that's been relatively few who have decided not to have those smart meters. So what's the hold up for smart meter adoption? Well, remember the module on regulation? Rate-based funding for smart meters is one of those things that typically goes through public utility commission approval. For some states that didn't do a particularly good job of educating communities and the consumer, this hasn't always been easy. But we're seeing more and more of these and we'll likely see more in the future. By the way, if you're interested in knowing if you have a smart meter, many of them actually say smart meter right on the device or you can always call your utility.
