Dan Probst, Chairman of Energy and Sustainability Services, Jones Lang LaSalle (Q2 / Spring 2013)
As power outages become more frequent, affect larger populations, and cost businesses ever-increasing sums, both governments and large companies are looking for cost-effective ways to mitigate the risks. What they’re finding is that smart technology — in electrical grids and in building automation — can not only help reduce the frequency and damage of power failures, but also pay for itself quickly through reduced energy usage and cost.
Big power failures are on the rise. According to an article from the University of Minnesota College of Engineering and Science, the pace of U.S. blackouts affecting 50,000 or more electrical customers more than doubled over the past decade, from 140 during 2000–2004 to 303 during 2005–2009. The trend has continued in recent years, with 52 large blackouts in 2010 and 109 in 2011.
The rise in the number of power outages is due in part to an increase in severe weather events in recent years. The additional wear and tear on equipment, plus the outdated and aging infrastructure in place in most of the country, has led to increasing power outages for most people and businesses — as well as increasing power costs.
A recent study co-conducted and reported by The Associated Press found that the average U.S. electrical customer spent 112 minutes without power in 2011, despite spending 43 percent more to maintain and repair existing infrastructure than a decade earlier. But the direct cost to address grid problems is tiny compared to the financial cost of frequent failures. The Department of Energy calculates that outages cost Americans $150 billion annually — about $500 per person every year — and some estimates are as high as $180 billion.
One of most damaging outages of 2011 affected nearly seven million people in Southern California, Arizona, and Sonora, Mexico. Originating from a field engineer’s attempt to repair a capacitor bank, the failure swept across the region, knocking out switching stations across five utilities. Many areas were without power for 12 hours, and it took 24 hours to return service to all customers.
During the power outage, the San Diego skyline went dark, cars were gridlocked for more than four hours, and several car collisions were blamed on failed traffic signals. San Diego’s trolley system and trains in Los Angeles stopped running, and one hospital lacked power for hours when its backup generator failed. A sewage treatment plant lost power and released sewage, contaminating beaches and damaging the water supply. Add to that the lost productivity of millions of workers, and the perishable inventory of thousands of restaurants and stores, and the case for smart technology makes financial sense.
Alleviating the Problem
Could smart-grid technology have prevented the 2011 outage from spreading? Could it have shortened the recovery period?
Chattanooga’s Electric Power Board had just started installing 1,500 automated circuit switches and sensors on 164 circuits when nine tornados struck the area in April of 2011, knocking out power. The power authority used the 123 smart switches in service to re-route power, saving customers thousands of hours of outage time and avoiding the cost of 250 “truck rolls” for maintenance and repairs.
Smart grids have cost benefits beyond preventing blackouts. Oklahoma Gas and Electric (OGE) expects implementation of smart technology to allow it to save the capital expenditure of a new power plant. The utility started time-based rates with 6,000 customers in a program that included in-home displays, web portals, and programmable communicating thermostats to reduce peak demand. The initial results led OGE to expand the program to 150,000 customers over the next several years, resulting in a 210-megawatt increase in power capacity.
These and other success stories come from a Department of Energy report on its Smart Grid Investment Grant Program, which matches $3.4 billion in federal funds with an equal amount from private-sector sources to deploy 99 smart-grid projects. Among other things, the program will result in more than 15 million smart meters across the country — double the number that existed before the program, but still just a fraction of the 65 million meters estimated by industry analysts to be in place by 2015.
Smart meters are just one part of smart grid technology. A complete modernization of the national grid is expected to cost $340 billion to $480 billion, according to the DoE report. But that much and more is being lost through power outages and inefficient energy management. At a time when energy cost and carbon emissions are increasingly important considerations, companies are considering the long-term cost and reliability of energy in making their location decisions, and in smart-building automation that spans their global portfolios.
Next: Making It Work - System Compatibility & Other Factors
Making It Work: System Compatibility & Other Factors
The past few years have seen tremendous gains in smart-building technology. In the past, buildings with control systems by different manufacturers could not “speak” a common language, but recent breakthroughs now make it possible for entire portfolios to be monitored from a single remote location, with smart technology performing continual commissioning on buildings, making adjustments to keep buildings running at peak efficiency, and alerting the command center staffed by smart people when a maintenance or repair call is needed.
Retrofitting an automated system with this analytical capability has been shown to save 18 to 24 percent on energy cost alone in buildings where it has been implemented. That’s not including the savings from longer equipment life, or the much larger potential benefit of enhanced system reliability. As companies rely more on data centers and other mission-critical facilities — and as these facilities use an increasing share of electricity — the cost of power failure and the value of reliability and resiliency are increasing geometrically.
The cost of wasted energy is significant as well. The EPA’s ENERGY STAR program estimates that the country’s 4.8 million commercial buildings spend about $108 billion on energy, and 350,000 industrial plants use another $85 billion. ENERGY STAR also notes that about 30 percent of that energy is wasted. That’s potentially $65 billion a year that could be gained from better monitoring and management of energy in commercial buildings.
Portfolio monitoring systems enhance efficiency in ways that are similar to smart grids. Part of the cost reduction comes from the system’s ability to conduct continual commissioning and to shift energy usage to nonpeak periods. Identifying equipment in need of maintenance or repair extends its useful life, reducing the owner’s capital cost and helping to guide capital planning. And just as regions with smart grids can reduce truck rolls, smart building systems make facility management staff more productive, by conducting menial tasks automatically, and by pointing professionals to likely causes of energy waste.
Smart grid infrastructure can supercharge the benefits of site-level energy strategies. The two-way communication and energy transmission of smart grids means that surplus power from on-site solar installations and co-generation plants could be sold to utilities rather than wasted. And an integrated smart grid/building system would facilitate demand response, the mechanism by which a building gets cheaper energy by agreeing to reduce or shut off grid power during peak times at the utility’s request.
Lost in Transmission
Creating a market for excess energy generated at the site level would also reduce the amount of energy lost in transmission. It is estimated that about 10 percent of energy from power plants is lost on the way to its destination, but the loss factor rises as the distance between the source and the end-user increases.
For cities and states, smart infrastructure attracts businesses that want more affordable and more reliable energy. A big bonus for state and municipal governments is the reduction in greenhouse gas emissions, an issue that continues to move to the forefront of public agendas.
It’s almost hard to imagine that the electrical grid holding together our digital world is not itself digital. The risk to business and economic development is huge and getting bigger. Meanwhile, companies are recognizing that similar technology pays for itself within a year or two through energy savings in buildings. Although the simple payback is longer for infrastructure grids, it’s still a compelling case. And we have only started to imagine the opportunities that an integrated smart grid/smart building platform will bring in the coming years.