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The work of the American Recovery and Reinvestment Act's (ARRA) Smart Grid Investment Grant (SGIG) projects that were initiated in 2009 will see completion of equipment installation in 2014. Final project reports providing financial analyses, customer experiences and technical accomplishments will be poured over by many different stakeholders, and the way forward for smart grids will be promoted, debated and questioned by many different elements of the community. Here are some things to look for as 2014 unfolds.

Closer state regulatory scrutiny
During the initial grant, utility projects were subsidized by government funds to reduce utility capital expenditure (CAPEX) by something approaching 50% of the normal rate. For many regulatory agencies, this incentive was enough to allow utilities to participate in the program and recover the discounted CAPEX through the traditional rate structure.

But going forward, expansion of these projects will require 100% recovery through the rate structure. This will generate closer scrutiny by regulatory agencies. Already, there is discussion that all socioeconomic strata do not benefit equally in smart grid technology investment. Some regulators and consumer advocacy groups have begun to vocalize a requirement for significant modifications to the CAPEX recovery process, which may need to be developed before the next wave of smart grid deployment is approved.

Look for state regulators to call for input from consumer groups, utilities and state government representatives to form panels and focus groups to explore alternative CAPEX recovery and rate structure formulations that will seek to identify and couple beneficiaries of smart grid technologies with the costs associated with implementing smart grids. 

AMI slowdown

Sixty-eight percent of the SGIG money was released for advanced metering infrastructure (AMI) and closely related customer information systems. While AMI was projected to be one of the most promising aspects of smart grids, some of the pilot projects demonstrated the technology was not universally accepted as a positive experience among customers. 

Some of the reasons cited include the following:

- Customers have an increasing concern over loss of privacy. They have become aware that the information developed by interval meters can produce profiles of customers that are unwelcome.

- Some pilot projects have not demonstrated a positive rate of return to consumers for the investment in the AMI system infrastructure and cost of meters.

- Customer information systems and transactive programs offer benefits to higher economic strata, where discretionary electric use is high. However, the cost of the infrastructure is spread across the entire customer base, whether or not all customers benefit. 

- Time-of-use programs, in which customers are requested to reduce load or incur financial penalties, are detrimental to small businesses and residential customers with a lower ability to shift load to less costly periods. These customers can actually see higher electric bills on time-of-use programs.

- Concerns over safety due to meter technology and AMI meter communications emissions have developed. Some smart meters have caused fires. In other cases, opposition has developed to what is perceived to be unsafe radio wave transmissions emitted by smart meters communicating with the system infrastructure.

Given the aforementioned points and the fact that any new AMI investment will be at nearly twice the price in terms of CAPEX, look for a slowdown in the expansion of AMI and customer information system deployments as consumer advocacy groups petition utility regulators to do more research prior to allowing utilities to expand their AMI systems.

It is useful to note that in other countries where, as in North America, non-technical losses, such as theft of service and meter billing errors/omissions, are not a problem, similar findings and customer sentiment with regards to AMI have been observed.

Development of standards for DC in homes and commercial buildings
Increasing penetration of homes and commercial buildings with installed photovoltaics will drive interest in using DC for power distribution within homes and commercial buildings. Along with this interest will be a growing availability of consumer and commercial products that can accept DC power. 

There are several programs already investigating the technical, commercial and building code aspects of DC power. In the IEEE Standards Association, three Industry Connections programs are under way to determine the needs in order for this technology to progress. The University of Pittsburgh’s Business of Humanity Project and the E-Merge Alliance are also performing work in this promising field. Expect DC standards to begin taking shape in 2014 (building codes, voltage levels, plugs/outlets, etc.).

Utility cybersecurity

One of the major concerns that has been expressed about the reliability of smart grids is the cybersecurity of electric utility critical infrastructure facilities. Utility substations are of particular concern, as they are widely dispersed, usually unattended and contain a large number of intelligent electronic devices.

Until now, utilities had to develop one-off cybersecurity system approaches to meet North American Electric Reliability Corp. Critical Infrastructure Protection requirements. In 2014, work will be completed on IEEE Pc37.240, a joint project between the PES Power System Relay Committee and PES Substation Committee that will establish standards for substation cybersecurity. The standards will help address cybersecurity preventive methods and technologies, as well as reactive procedures when cybersecurity incidents are detected.

Conclusion

The ARRA SGIG was successful in that it allowed a wide variety of pilot programs to be installed to develop empirical data on various smart grid technologies. 2014 will see a focus on more cost-effective technologies to deliver on the promise of economic benefits to the entire stakeholder community.

Sam Sciacca is an IEEE smart grid expert and CEO of SCS Consulting LLC. He is a registered professional engineer with more than 25 years of engineering, marketing and sales experience in the domestic and international electric utility industries.


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