The Xcel Benefits Summary clearly defines the challenges and possibilities for SmartGridCity and while the paper was developed in 2008, it is still very current and deserves reviewing in light of the rush to national demonstration projects to take advantage of Stimulus Act incentives.

A summary of the key points is provided below (italicized text is taken directly from the Xcel paper, text in parentheses are my comments)

• Need for a hypothesis driven approach as the utility industry has been hampered by the need for tried and true “prudent” investments.
  • Consequently, true boundary-stretching R&D happens too infrequently.
  • If the smart grid project is unnecessarily conservative, then Xcel believes it will have lost a true opportunity to plow significant new ground.
• Long term benefits assumptions
  • Reduced customer outages (through more dynamic management than is current industry standard)
    • Proactively identify devices approaching imminent failure
    • Provide more accurate and targeted information to outage response teams
    • Establish real time maps of outage areas… (presumably down to the house level since could determine if a home is energized)
  • Customer benefits
    • Allow customers to shift usage to times of the day when renewable generation is available and/or when prices are lower, if desired.
      • However, real-time pricing programs have previously been unpopular with customers because they have been complex and inconvenient.
      • Xcel plans to counter this resistance by using a system that allows customers to establish preferences, with the ultimate decisions being made by Xcel.
  • Reduced Billing and Customer Service costs
    • Reduced costs of meter reading (no need for meter readers)
    • Smaller call center since problems can more accurately be identified and addressed
    • Reduced theft of electricity
    • Ability to connect and disconnect remotely (and presumably much more quickly)
  • System Losses (this is rarely described as a major benefit, but many utilities have no real understanding of their actual losses and how these can be reduced)
    • Through using remotely controlled capacitor banks, can better provide reactive power adjustments which help to manage power factor and reduce the amount of real power that needs to be generated
    • Ability to better redistribute power and management of grid components
  • Asset Optimization
    • Through extensive metering at a vast array of grid points, an ability to discover failing components before they create outages.
    • Through better more efficient management of the system, then less need to add new generation capacity (related to understanding system losses and how to more effectively system flows).
  • Power Generation
    • If they are able to more efficiently manage grid capacity, then less need for new generation and standby capacity
  • Renewable energy integration
    • Better able to integrate highly variable distributed generation units (e.g wind and solar)
  • Vehicle to Grid
    • Ability to use electric vehicles as energy storage devices that could be drawn upon if there was a need to redirect power to other sources and/or to reduce costs of peak power purchases. (although the benefit of using electric vehicles as passive energy storage is years off due to few vehicles on the road)

The WSJ (Feb 9, 2009) provided some insightful perspectives on the groundbreaking smart grid test in Boulder, CO.

• $100 million experiment to test the viability of the latest smart grid technologies
• Political challenges include persuading regulators and consumer advocates to accept a radical new rate structure
• Orwellian control and perhaps utilities should focus on improving efficiency as the top priority?
• In test to date, some customers complain that it is too complicated and confusing… resulting in a slow behavioral changes even among the city’s most committed environmentalists.
• Changes to usage included discussion on whether to use the dryer or clothesline, possibly ditch the second freezer and/or do they want to run the dishwasher only when wind power is available?
• Potential for Xcel to remotely control multiple appliances within the home
• Difficulty with customers in determining the “value” of their actions (environmental and/or price)
• Challenges with information standards among appliances and meters… much more complex than VCR versus Betamax.