[Senate Hearing 114-31]
[From the U.S. Government Publishing Office]
S. Hrg. 114-31
``THE STATE OF TECHNOLOGICAL INNOVATION RELATED TO THE ELECTRIC GRID''
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
``THE STATE OF TECHNOLOGICAL INNOVATION
RELATED TO THE ELECTRIC GRID''
----------
MARCH 17, 2015
Printed for the use of the
Committee on Energy and Natural Resources
S. Hrg. 114-31
``THE STATE OF TECHNOLOGICAL INNOVATION RELATED TO THE ELECTRIC GRID''
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
``THE STATE OF TECHNOLOGICAL INNOVATION
RELATED TO THE ELECTRIC GRID''
__________
MARCH 17, 2015
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
______
U.S. GOVERNMENT PUBLISHING OFFICE
94-050 WASHINGTON : 2015
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Washington, DC 20402-0001
COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota ANGUS S. KING, Jr., Maine
LAMAR ALEXANDER, Tennessee ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia
------
KAREN K. BILLUPS, Staff Director
PATRICK J. McCORMICK III, Chief Counsel
KELLIE DONNELLY, Deputy Chief Counsel
ANGELA BECKER-DIPPMANN, Democratic Staff Director
SAM E. FOWLER, Democratic Chief Counsel
SPENCER GRAY, Democratic Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska... 1
Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from
Washington..................................................... 3
WITNESSES
Howard, Dr. Michael, President and CEO, Electric Power Research
Institute 4
Littlewood, Dr. Peter, Director, Argonne National Laboratory..... 58
Taft, Dr. Jeffrey, Chief Architect for Electric Grid
Transformation, Pacific Northwest National Laboratory.......... 69
Barton, Lisa, Executive Vice President, Transmission, American
Electric Power................................................. 82
Edgar, Hon. Lisa, President, National Association of Regulatory
Utility Commissioners and Commissioner, Florida Public Service
Commission..................................................... 92
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Barton, Lisa
Opening Statement............................................ 82
Written Testimony............................................ 84
Responses to Questions for the Record........................ 334
Cantwell, Hon. Maria
Opening Statement............................................ 3
Edgar, Hon. Lisa
Opening Statement............................................ 92
Written Testimony............................................ 94
Responses to Questions for the Record........................ 352
Howard, Dr. Michael
Opening Statement............................................ 4
Written Testimony............................................ 7
2011 Technical Report by EPRI entitled ``Estimating the Costs
and Benefits of the Smart Grid''........................... 114
Responses to Questions for the Record........................ 371
Littlewood, Dr. Peter
Opening Statement............................................ 58
Written Testimony............................................ 60
Responses to Questions for the Record........................ 390
Murkowski, Hon. Lisa
Opening Statement............................................ 1
Taft, Dr. Jeffrey
Opening Statement............................................ 69
Written Testimony............................................ 71
For the Record: Pacific Northwest Smart Grid Demonstration
Project entitled ``A Compilation of Success Stories''...... 271
Responses to Questions for the Record........................ 412
``THE STATE OF TECHNOLOGICAL INNOVATION RELATED TO THE ELECTRIC GRID''
----------
TUESDAY, MARCH 17, 2015
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:07 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
The Chairman. Good morning.
We're calling to order the Energy Committee. We are here
for a Grid 2.0 hearing, and it should excite us all.
This is a good subject. It is an opportunity for us this
morning to hear testimony from a panel of experts to evaluate
what's actually happening with technological innovation for the
electric grid. No other electricity network on Earth provides
as much power to as many people as reliably and affordably as
our American grid. It really is a modern marvel, and I think we
should be proud of what we have accomplished.
Keeping the lights on, as all segments of the industry have
for the past 100 years, is not just about flicking the switch
or changing a bulb. It is a highly complex and technical
undertaking that requires scores of talented individuals.
We have also reached a very good point in time to be
looking at this subject this morning. The grid was built
incrementally, but the rate at which it changes, or is
compelled to change, appears to be accelerating. A combination
of market forces, technological innovation, and policy
directives at both the federal and the state levels could well
result in an unprecedented transformation of the electricity
sector.
Today's developments have tremendous potential, but they
also present a number of challenges, like smoothing out the
intermittency of variable, weather dependent generation. With
the rise of distributed generation and smart grid technologies,
Americans are gaining more control over how they use and
consume electricity, but the grid must be even more closely
integrated as a result.
Innovation and new technologies, such as commercially
viable storage, are clearly necessary to assist in this
transformation. We are talking a lot in my state about
microgrids. Many people don't think of Alaska as being a
pioneer in some of these areas, but what we are doing with
microgrids--which used to be called ``isolated islanded
grids''--is really making a difference in a state where
sometimes it is tough to keep warm or keep the lights on.
It is always best when public policy responds to proven
technology advancements. Today, however, we must hope
technology can deliver solutions to meet political mandates
while satisfying our expectations for reliability and
affordability. Two major questions that I have, and I will be
proposing these to the panelists this morning, are over what
time period can solutions be developed, and at what cost?
Credible estimates hold that new grid technologies alone will
require a cumulative investment of between $300 and $500
billion over the next 20 years.
This Administration has rightly classified the electric
grid as uniquely critical infrastructure because so many
things--communications, roadways, hospitals--depend upon a
functioning grid. The reliability of our nation's grid is
therefore paramount, and the impact of policy directives must
be seriously considered--not dismissed as somehow anti-
environment or anti-future.
I focused our Committee on drafting broad energy
legislation and expect that electric issues will be a key part
of it. We have an impressive group of panelists with us this
morning whose testimony will assist us in this effort.
We have Dr. Michael Howard, who is President and CEO of the
Electric Power Research Institute. He is going to start us off
with an overview of the changing integrated grid. He had hoped
to use a computer for his presentation, but we are still using
19th century technology here in the Senate, so we are stuck
with posters, but thank you for that.
We have also Dr. Peter Littlewood, who is the Director of
Argonne National Laboratory. He is joining us because research
is really the foundation of the federal role, and his lab is a
key part of our efforts on grid modernization and energy
storage.
We also have Dr. Jeff Taft, who is the Chief Architect for
Electric Grid Transformations at the Pacific Northwest National
Lab. He's here to tell us more about PNNL's work with smart
grid technologies and grid modernization.
We have Lisa Barton, who is the Executive Vice President
for Transmission for American Electric Power. She is here to
share the perspective of a major utility that operates the
nation's largest electricity transmission system with 40,000
miles of transmission lines to deliver electricity in 11
states.
To round out the panel this morning we have The Honorable
Lisa Edgar, a Commissioner at the Florida Public Service
Commission and President of NARUC, the National Association of
Regulatory Utility Commissioners. She will present the state's
perspective which, of course, is invaluable because so much of
this transition is happening at the retail level.
So I welcome all of our panelists, and I look forward to
your presentations.
We do have a couple of votes coming up a little after 11
o'clock this morning, so we may be a little bit disjointed
here, but we certainly intend to spend the full time this
morning getting the most that we can from our panelists.
With that, I would like to turn to my Ranking Member,
Senator Cantwell.
STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Madam Chairman and thank you
for holding this important hearing today. I also join you in
thanking the witnesses for being here to discuss these issues.
As our economy has evolved and information technology has
evolved, we have seen it has disrupted many industries and
business models, everything from the telecom industry to the
music industry. So I think today we'll have a little bit of
discussion about what that disruption is also going to mean for
the electricity industry and how the advanced electrical grid
is part of efficiency that will drive savings to consumers and
businesses.
The grid of tomorrow should offer new opportunities for
consumers, savings on their electricity bills, and lower costs
for businesses through new technology. These aren't obscure
academic or regulatory debates. These things are hitting the
streets today.
States as diverse as Idaho, Georgia, New Jersey, and
California have sped ahead with distributed generation, smart
meters, and net metering. Some places around the world, like
South Africa and Uganda, have skipped the capital-intensive
steps of developing centralized grids and just used pre-pay
options so consumers can benefit from cheap electricity using
American technology. Cities in the United States like Spokane,
Monterey, Salt Lake, and McAllen, Texas, have installed or are
considering electric bus designs that include wireless charging
stations embedded in roadways.
My point is that we can't predict where the technology will
take us, but we can invest in efficient electricity grids that
make these innovations possible and give consumers more
options.
Our hearing today is about the savings, no matter what the
source of generation, and putting that to use in a smarter way.
It doesn't matter if your state relies on hydro power, like my
State of Washington, or nuclear or fossil fuels. The cost of
wind and solar has come down, and the cost of natural gas has
come down along with the integration of smart appliances. The
grid is being used in new ways to drive double digit savings.
The challenges and opportunities we face in upgrading our
electricity grid and thinking about the global markets is what
the debate of this panel is today.
According to a 2011 Electric Power Research Institute
report, investments in the grid will require $300 to $500
billion of new investment over the next 20 years.
Bloomberg New Energy Finance calculated that global smart
grid investments alone reached $15 billion in 2013, and Pike
Research estimates that global spending on this will reach $34
billion by 2020.
I say those numbers because there's an opportunity here for
the United States to continue to perfect technology that will
then become a global platform.
The first job of utilities, power producers, and technology
vendors in each of our states is to sell and deliver reliable
electricity. The federal government is uniquely situated to
take the broadest and longest view of that electrical grid as a
platform for economic development and diversification. This
broad view enables smart people like the national labs, that
are here today, and a program like ARPA-E, to explore solutions
that are creative and promising, but offer no short term return
and will challenge us on how to implement these over the long
run.
The grid's efficiency, enhancing its resiliency, security,
and new technologies are all part of the decisions that we're
going to hear from actual regulators today and how they're
implementing those. Obviously some of these solutions are
already being pushed in the marketplace and can deliver new
efficiencies.
As Chairman Murkowski and I discuss with our colleagues our
broader energy policy for this Congress, I hope we can find
some common ground on continuing the federal investment in grid
technologies. It does pay off for consumers and our economy.
The Bonneville Power Administration helped lead the way 15
years ago towards a responsive grid by installing the first
network of sensors to take wide-area measurements of
transmission systems.
We'll hear from Dr. Taft today from the Pacific Northwest
National Lab, headquartered in Richland, Washington. The lab
has a long history of working hand-in-hand with industry on
pioneering new methods of controlling our rapidly changing
electrical grid, with all sorts of new energy storage, new
tools for predicting, and integrating the output of variable
generation such as wind and solar. It was also an integral part
of the largest smart grid demonstration project in the country.
Grid technology companies like Itron, Schweitzer, and
Alstom all have roots in Washington State and employ thousands
of people. And as our economy grows, it continues to find new
sources of distributed generation.
So I want to applaud Secretary Moniz and the Department of
Energy for convening the Grid Modernization Laboratory
Consortium. This will help spread the wealth of the creativity
of our national labs through our state, private, and academic
partners.
As I've said, I will continue to work with the Chair as we
think about energy policy on how to support the investments in
a smarter grid. Thank you.
The Chairman. Thank you, Senator Cantwell. With that, we
will begin with our panel. We'll start with you, Dr. Howard and
just go straight on down the line.
I ask that you to keep your comments to five minutes. Your
full testimony will be included as part of the record.
Welcome and good morning.
STATEMENT OF DR. MICHAEL HOWARD, PRESIDENT AND CEO, ELECTRIC
POWER RESEARCH INSTITUTE
Dr. Howard. Thank you very much, Chairman Murkowski,
Ranking Member Cantwell, and members of the Committee. I'm Mike
Howard, President and CEO of the Electric Power Research
Institute.
This is EPRI's 43rd year. We were started by the electric
utility industry to focus on advancing the science and
technologies needed to ensure that society continues to have
reliable, affordable, and environmentally responsible
electricity. That's been our focus for 43 years.
We are a global organization. We work with utilities across
the country and in 30 different countries globally, so we have
a global perspective of some of the challenges that we're
facing.
Our research at EPRI focuses on the generation of
electricity to the delivery of electricity to the end use of
electricity including energy efficiency. Last year we published
a report. The report is entitled, ``The Integrated Grid,
Realizing the Full Value of Central and Distributed Energy
Resources,'' and my remarks today are going to focus on that
report and some of the key insights from that report.
I'm going to use this chart, and you should have a handout
as well. It's a simplified version of the electric utility
industry, but I'm going to refer to that.
Today's power system is extremely complex. It's an
interconnected machine that includes everything from generation
on the left-hand side, to delivery in the middle, to consumers
on the right-hand side. Traditionally, the system was designed
to flow electricity from the left-hand side all the way to the
right-hand side.
The system has to make sure that at every given second
there is enough generation to supply consumer's demand for
electricity, and that is a paramount criteria for the safe
operation of the electrical power system. But the entire power
system is changing, and it's changing at a very, very fast
pace. Faster than I've seen in my 35 year career in this
industry, and that's an exciting time to observe and be part of
the technologies that are evolving.
As an example of these changes, let's look at the customer
side generation, which is on the right-hand side. It's causing
power, in some cases, to flow from the right to the left, and
this is introducing a two way power flow. It's just one example
of some of the changes that are occurring.
Most of these changes occurring in the power system are
occurring on the right-hand side of this chart, which is at the
edge of the distribution system, and they're related to
technologies referred to as distributed energy resources. These
important technologies include energy storage, demand response,
and smart thermostats, which is another example of some of the
technologies that are occurring.
Our research suggests that the successful integration of
these distributed energy resources must begin with the existing
power system. However, the existing power system, specifically
the distribution system, was not designed to accommodate this
high penetration of distributed energy resources. To fully
realize the value of these distributed energy resources and to
serve all customers at the established standards of quality and
reliability, we must integrate these technologies into the
planning and operations of the entire power system.
Most grid connected distributed energy resources benefit
from the electrical support and the flexibility and reliability
of the entire power system but are not integrated into the
power system. For example, customers with distributed
generation may not consume any net energy from the grid, yet
they need the power at times when their own generation, such as
rooftop PV, does not provide enough immediate electricity. So
consumers need the ability or capacity to tap into the grid and
even use grid power, though at different times of the day they
may return actual energy to the grid. So with increased
distributed energy resources capacity related costs will become
an increased portion of the overall cost of electricity.
One of the key points that I want to emphasize today is the
importance of understanding capacity and energy and the impact
that it has on the system.
In my written testimony I've outlined in more detail the
important items policy makers should consider to enable the
integrated grid. I appreciate the opportunity to be here this
morning, and I look forward to your questions. Thank you.
[The prepared statement of Dr. Howard follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Dr. Howard. We will be sure to
have some. Thank you for the model here of your integrated
grid.
Let's go to Dr. Littlewood. Welcome.
STATEMENT OF DR. PETER LITTLEWOOD, DIRECTOR, ARGONNE NATIONAL
LABORATORY
Dr. Littlewood. Good morning, Chairman Murkowski, Ranking
Member Cantwell and members of the Committee. Thank you for the
opportunity to appear before you.
A reliable, efficient, and secure electrical grid is, of
course, essential to the United States' prosperity,
competitiveness, and innovation. As we've just heard, our
existing grid struggles to accommodate the new economy that is
emerging as the nation and the world shift to clean energy and
to digital technology.
Much of the grid was designed and built using technologies
and organizational principles developed decades ago to serve
vertically integrated markets with large scale generation
sources located dozens of miles from consumers. They were
designed to use centralized control schemes that deliver a one-
way flow of power to customers. The emerging national economy
needs a flexible modern grid that accommodates two-way flow of
electricity and information, provides strong protection against
physical and cyber risks and the impacts of natural disasters,
and integrates widely varying, widely distributed energy
sources such as solar and wind that produce electricity
intermittently depending on the weather.
Argonne National Laboratory is a DOE Office of Science lab
with a long and distinguished history in power R & D. We
recently joined 13 other DOE laboratories in the Grid
Modernization Laboratory Consortium. I'll refer to this as the
GMLC, a new initiative started last November by Energy
Secretary Ernest Moniz.
The GMLC is developing a vision and a plan for moving
forward and has already identified three specific goals that
can be achieved through a coordinated national effort to
modernize the grid and to have in operation by 2025 which would
yield a 10 percent reduction in the societal cost of power
outages, a 33 percent reduction in the cost of utility's
reserve margins, and a 50 percent reduction in the cost of
integrating energy distribution within the grid.
The GMLC estimates conservatively that achieving these
three goals would save the nation's economy $7 billion a year.
In addition, a coordinated national grid modernization effort
would help ensure that the future grid is a flexible platform
for innovation by entrepreneurs and others who can develop
tools and services that empower consumers and businesses
helping them make informed energy decisions.
The GMLC has identified significant opportunities and needs
in six broad technical areas that are critical to the
establishment of the future grid. Sensing and measurement to
report real time data from across the grid.
Devices and integrated systems that can talk to each other
over the Internet allow customers to make decisions about their
energy use and implement those decisions remotely. For example,
Argonne is helping to make hybrid and electric vehicles future
grid friendly by working with the automotive and electrical
supply industries to develop and test systems and technologies
that let electric vehicles communicate with grid operators and
to enable ``smart'' charging and discharging, depending on the
condition of the grid.
Advanced energy storage systems are critical to integrating
intermediate, intermittent electricity sources within the grid.
The Secretary of Energy recently stressed the need for us to
consider grid and storage as an integrated activity. An
excellent example of this integration is DOE's Joint Center for
Energy Storage Research which leverages and expands current
investments in energy storage research and is a vital component
of the overarching grid strategy.
We need to work on system operations and power flow,
because today's grid relies primarily on control rooms and
centralized operations.
The future grid must also be secure and resilient in the
face of disruptive threats that range from natural disasters to
terrorist attacks.
Today's grid is largely reactive, responding to failures
after they happen. Although advanced control systems have
improved automatic outage responses, they can expose the grid
to new cyber risks as digital components proliferate and create
new points of entry.
As I mentioned earlier, advances in energy storage are
critical to integrating clean, renewable energy sources such as
wind and solar into our electricity supply and also to
supporting fluctuating demand on microgrids. Breakthroughs in
battery technology are needed to reduce our dependence on
petroleum through a broader use of electric vehicles.
Grid modernization will provide the nation with a reliable
and secure system that delivers increasingly clean energy to
business and residences in ways that optimize customers'
ability to control how, when, and where they consume energy.
Grid modernization also assures a system that remains resilient
to a range of threats and vulnerabilities. Success will not
only save the nation billions of dollars annually, it would
also create new suites of advanced technology.
Thank you for your time and attention to this critically
important topic.
I'd be pleased to respond to any questions you may have.
[The prepared statement of Dr. Littlewood follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Dr. Littlewood.
Next let's go to Dr. Taft, please. Good morning.
STATEMENT OF DR. JEFFREY TAFT, CHIEF ARCHITECT FOR ELECTRIC
GRID TRANSFORMATION, PACIFIC NORTHWEST NATIONAL LABORATORY
Dr. Taft. Thank you, Senator Murkowski and Ranking Member
Cantwell and the Committee, for inviting me here today.
I'd like to offer three main points in my discussion.
First, we're re-engineering the grid with advanced
technologies, some of which you've heard about, to support many
new capabilities. Second, these changes are actually
challenging our existing grid structure and the methods that we
use to operate it. Third, there are certain key technologies
that can help resolve the widening gap in our ability to manage
the grid reliably as we go forward.
In the U.S. our modernization efforts with advanced
technology support many new goals and emerging trends that were
not envisioned for the 20th Century grid. It was thought of as
a one-way electricity delivery channel with large centralized
generation to passive users who had little or no choice in
their energy sources, and it had surprisingly little in the way
of sensing and measurement to guide operation of that grid.
Our present modernization efforts are driving new
technologies at an unprecedented pace, and some of these new
goals that we have include expanding the diversity in consumer
choice in electricity sources including distributed and clean
generation sources.
The emergence of what we call prosumers. That's a
combination of a customer who has both the ability to produce
and consume energy and so thereby put energy back into the grid
at times.
The ability of non-utility assets such as ordinary
buildings to provide services to the grid and cooperate in
managing grid operations. The convergence of fuel networks,
transportation networks, and even social networks with the grid
itself.
And then, of course, a desire for greatly improved
reliability, resilience, and security for the grid.
These changes, some of which are actually occurring virally
rather than being planned, are modifying the characteristics,
the behavior, and in some cases the very structure of our grid
and vastly increasing its complexity of a system that's already
extremely complex.
The forgoing are causing this widening gap in the ability
of us to manage this grid as it evolves. As that gap widens,
the ability of utilities to manage the grid reliably is
increasingly challenged. The uneven penetration of new
technologies mixed with legacy systems only increases that
challenge. We need new methods and new tools for operating the
grid in addition to having these new technologies, and we need
some new kinds of components to help with the grid as well.
Among all of the very valuable technologies that are being
applied to the grid, a few stand out in particular as being key
to resolving this widening gap between the grid as it is
changing and our ability to operate it. These technologies are
crucial to the future of the grid regardless of how
modernization proceeds.
In particular they are sensing and data analysis--the
electronic measurement and then the processing of the
information that results from those measurements to extract
useful information on very large scales requires new kinds of
analysis tools for the utilities.
High voltage power electronics, adjustable electronics
allow us to control grid power flows in ways that are more
sophisticated than our present on/off, electric-mechanical
switches.
Fast and flexible bulk electric storage which can act as
the buffer that evens out variations in power fluctuations
caused by various diverse energy sources.
And finally, advanced planning and control methods. We need
new methods that will require the next generation of high
performance computing coupled with new control mathematics.
The last three of those have so much potential for positive
impact that we view the combination of storage, power
electronics, and advanced control to be a new general purpose
grid component as fundamental as a power transformer or a
circuit breaker.
The Grid Modernization effort that you've already heard
about, launched by Secretary Moniz, is an important effort to
systematically address all of these emerging challenges. It's
designed to leverage the broad assets of the national
laboratory system and to deliver an integrated plan that
connects all of the grid efforts in the Department of Energy.
It also recognizes the importance of partnering with industry,
the states and regional stakeholders in addressing these
challenges going forward.
Thank you, and I'd be happy to answer any questions.
[The prepared statement of Dr. Taft follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Dr. Taft.
Ms. Barton, welcome.
STATEMENT OF LISA BARTON, EXECUTIVE VICE PRESIDENT,
TRANSMISSION, AMERICAN ELECTRIC POWER
Ms. Barton. Good morning, Chairman Murkowski, Ranking
Senator Cantwell, members of the Committee and fellow
panelists. I appreciate the opportunity to speak with you here
today.
My name is Lisa Barton. I'm the Executive Vice President of
Transmission for American Electric Power. I also serve on the
Board of Directors of Reliability First Corporation.
There are three key points that I'd like to leave you with
today for your consideration.
The first is that the grid is a natural enabler of new
technologies. When I think about the grid and what it does for
new technologies, I make the analogy between its and our robust
data network. Today we have the ability with smart devices at
any time, nearly anywhere, to pull out that device and be able
to do tasks that ten years ago we never would have dreamed
possible. The high voltage electric grid is similar and plays a
similar role in society. It provides the backbone that supports
diverse generation and distributed energy technologies.
The AEP grid is designed to accommodate two way power
flows, so it is different from the distribution system, and
it's a point worth noting.
It is also designed to withstand component failures,
designed to withstand the loss of a large generator and the
loss of one or more large transmission lines, so it is an
extraordinarily robust system. The grid ensures that
electricity is delivered in a cost effective, efficient, and
reliable manner whether it's produced at a large power plant or
on the roof of a house.
The second point that I'd like to convey is the importance
of ensuring a reliable and resilient grid for our economy and
for our national security.
The grid has evolved over time from a fragmented group of
small, inter-dispersed systems to one that is a networked, a
very strong networked system. It has been touted as the largest
synchronist machine on the Earth. We own the system that many
nations aspire to own. Therefore it is vital that we do not
casually discount the power of the grid, the existing fleet of
generation, and the tens of thousands of utility workers,
particularly line workers, who stand ready to address system
needs during times of system emergencies.
The grid serves as the foundation of our economy,
prosperity, and national security. As policy makers examine and
evaluate the purpose of the grid and the potential for new
technology such as wind, solar, distributed generation, battery
technologies, and microgrids it's important to recognize that
the benefits to consumers will be maximized by combining the
strengths of these resources. It's imperative that we view
these resources as complementing each other as opposed to
competing with each other.
Finally, it's imperative that we support diversified
technological solutions. To maximize the benefits to the grid,
we really need to avoid picking winners and losers and instead
allow the market to identify the best solution for the
particular circumstance.
With respect to AEP's territory, one of the unique things
that we have is a unique perspective given the vastness of the
territory. We have 11 states where we have transmission
facilities, and we're also constructing new projects in two
additional states. Our service territory touches Mexico and
goes as far north as Michigan.
As noted in my testimony there are different solutions that
are in place to fix the problem at hand. We do not have the
same system in West Virginia as we do in Texas and therefore
the technologies that we employ in the system itself are very
different in each of those areas. There is no one size fits all
solution with respect to the grid.
Imagine a world where say, three years ago, we chose one
application or one technology over another. We would have
missed out on a much more advanced and better solutions, so
it's important that we don't make those same mistakes with
respect to the grid. By supporting a diverse set of generation
resources continuing to invest in the backbone of the grid, we
will ensure that energy is available, affordable, and reliable
while enabling customers to optimize cutting edge technologies
for their benefits.
I thank you for the opportunity to speak with you here
today, and I welcome any questions.
[The prepared statement of Ms. Barton follows:]
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The Chairman. Thank you, Ms. Barton. And finally, let's go
to Ms. Edgar. Welcome.
STATEMENT OF HON. LISA EDGAR, PRESIDENT, NATIONAL ASSOCIATION
OF REGULATORY UTILITY COMMISSIONERS AND COMMISSIONER, FLORIDA
PUBLIC SERVICE COMMISSION
Ms. Edgar. Thank you. Good morning, Chairman Murkowski,
Ranking Member Cantwell, Committee Members. My name is Lisa
Edgar, and I have the honor of serving as President of the
National Association of Regulatory Utility Commissioners, also
known as NARUC. I'm also a member of the Florida Public Service
Commission, and my comments today reflect both
responsibilities.
Thank you for the opportunity to testify on issues
regarding technological innovation and the electric grid. I
applaud the Committee for holding this hearing and for
recognizing the role and advances the states have made to
improve electric service. For state utility regulators ensuring
the safe, reliable, and affordable delivery of essential
utility service is our most pressing duty.
Today's hearing is very timely. Coast to coast change is
happening all around the electricity industry from smart grid
deployments to energy efficiency and distributed generation
projects, state public utility commissions are on the front
lines and pursuing new and innovative programs across the
country. As you've heard today DG can offer economic,
reliability, and environmental benefits to consumers who are
able to access and use them. When combined with smart meters
and other resources DG can significantly change how some
consumers use and consume electricity.
These resources may also transform our current utility
construct in ways we haven't even imagined. Yet it is important
to remember that while consumers come in all shapes and sizes
from residential to large industrial, the expectation and the
need for affordable, reliable service is the same no matter who
is producing or delivering their electricity.
To be sure, states are leading the way in implementing DG
programs. At last count over 43 states and the District of
Columbia had adopted net metering policies. In addition
numerous states have deployed smart and distributed resources.
For example, in Florida, my state, one of our utilities
recently installed a smart grid system called Energy Smart
Florida. This program installed over four and a half million
smart meters. Now, of course, this did not come for free or
without controversy, but it is a concrete step to keep Florida
on the path for a smarter, nimbler and more reliable grid.
But while DG can have multiple benefits it also brings
idiosyncrasies and challenges that cannot be ignored. Solar and
wind resources are not dispatchable. So if they are needed at a
time that the sun or the wind isn't producing those
contributions are limited. Solar and wind also need support to
operate under many different scenarios and configurations.
Likewise small, backup fossil units can have worse air
emission profiles than utility scale units. Grid operators
generally don't control these resources, and it is hard to
predict when they will come into the system, where and for what
time period. These advantages and tradeoffs must be better
understood and balanced while making policy and cost allocation
decisions.
In our view experience has demonstrated that states
pursuing these initiatives at their own pace is good policy. We
understand the value these technologies bring, but we also
recognize the challenges associated with integrating them into
the grid. Utilities are required to provide electricity 24
hours a day, seven days a week. We need to ensure that the core
responsibilities of reliability and affordability are
maintained while taking into account our local and regional
differences.
At NARUC our members have passed resolutions recognizing
the many collaborative efforts between regulators, consumer
advocates, utilities and other key stakeholders to address the
potential for DG and other technologies. These efforts continue
to be important as we work to better evaluate the benefits and
the costs as these technologies grow throughout the country.
In addition hearings like this help ensure that necessary
consumer protections are maintained.
It remains our responsibility to facilitate the continued
provision of safe, reliable, resilient, secure, cost effective,
and environmentally sound, energy services at fair and
affordable rates. As regulators part of our job is to bring
certainty into this fast changing and uncertain dynamic to
ensure safety, reliability, customer affordability, customer
satisfaction, environmental sustainability, and financial
viability. Our unique reality is that we must regulate in the
public interest for consumers and communities while these
systems are in transformation.
Given our statutory responsibility many of these decisions
are best addressed at the state level.
Thank you for the opportunity to continue a dialogue and so
that we all better understand the opportunities and the
challenges. Thank you.
[The prepared statement of Ms. Edgar follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Edgar.
Thank you to all of the panelists this morning for your
comments and for beginning what, I think, is going to be a
very, very interesting discussion.
Ms. Edgar, you summed it up there when you were talking
about your responsibility as a state regulator to ensure the
safety, reliability, customer affordability, environmental
sustainability, and financial viability and do this all at the
same time where every day you have to do the basic function of
making sure that it happens. You have to be able to perform
while at the same time you're pushing out and you're really
leading.
Ms. Barton, you mentioned that we are the envy of the world
with our grid and what we have, yet we are certainly not
sitting still here every day.
We are seeing advances that lead us to be able to do more,
quicker, faster, and smarter. But this, I think, is our real
challenge here, and I would like to propose to anybody that
wants to jump in here.
You have got, almost, a do no harm type of philosophy that
you have to get up every morning with, while you're pushing out
at Argonne with new technologies. Those that are implementing
and integrating need to make sure that you're able to do so
without being so out of the way that things don't function
anymore.
The question I have is whether or not we can keep going at
the rate that we are with the innovation and still keep the
commitment to reliability, affordability, the financial
security, and the environmental security. Is this sustainable?
And I hope you say, yes. [Laughter]. Let's start with you, Dr.
Howard.
Dr. Howard. Okay. The answer is absolutely yes. The
hallmark of this industry has been innovation and implement
that while at the same time you absolutely maintain
affordability and reliability, and that is the keystone of this
industry.
The Chairman. What do you think is the biggest impediment
to doing all of this? What is your anchor here?
Dr. Howard. Well----
The Chairman. Your rock?
Dr. Howard. We're advancing technologies and that's coming
along. We need to continue to make investments in research so
that we can continue to advance these technologies and many of
which we talked about here today, power electronics, energy
storage and reconductoring with advanced cables and so on. So
there's a variety of different technologies and we need to make
sure we continue to lead in innovation, that we can implement
these innovations at the regional level because what happens in
one part of the country is going to be different in another
part of the country. So there's a lot of regionality issues.
And we need to make sure that we continue to focus on not just
an interconnected system which the system is now but an
integrated system from end to end.
These are very tough challenges, but I think it comes down
to research, development and innovation that we're so good at
in this industry.
The Chairman. So just in terms of keeping up as these new
technologies are being developed, being incorporated, you have
your integrated grid here. It's being used in ways for which it
was not initially designed. We have now recognized that you've
got this flow both ways.
Ms. Edgar, this is probably best directed to you so how do
pricing mechanisms then need to be adjusted so the value that's
generated from both the grid and the distributed generation is
captured? Because if you've got a system that was in place and
this is your base and you've got all these changes, is that
keeping up with the technology?
Ms. Edgar. Thank you, Madam Chair, for the question. As
you're well aware, customers all across the country have
invested a great deal of money, money from their utility bills,
money from their monthly family bills, into the system that we
have. A concern that I believe needs to be part of the
discussion is that those customers continue to get value from
those investments as we are integrating new technologies and
new systems into the larger system.
The Chairman. Are we getting that yet?
Ms. Edgar. In some areas, yes and perhaps in some areas,
less so. One of the discussions here today has been about how
to maximize efficiencies by using new technologies, and that's
an important balance in all of these discussions. As is how do
we use traditional rate making, innovative rate making, how do
we attract investment while giving good value to customers and
continuing to have that reliable, resilient system?
The Chairman. Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair.
I think I am going to try to get three things in, since I
don't know what is going to happen with votes.
Dr. Taft, could you tell us what you think the three
federal priorities should be to accelerate the transition
that's already happening?
Dr. Littlewood, how far do you think we are from game
changing storage?
Ms. Edgar, isn't the grid investment really part of our
security? Ms. Barton mentioned it as well.
When you talk about grid security or any security, it is
always about hardening the targets and redundancy. And
basically continuing the development of smart grid gives us an
incredible amount of redundancy, juxtaposed to some of the
other ideas that are being talked about in other committees.
Investing in smart grid will help us with our security.
Dr. Taft. I'll start. We need to be able to take advantage
of the start we already have in adding instrumentation and
measurement capability to the grid. A lot of work has already
been done at the transmission level with the deployment of
phasor measurement units. More work like that is being done at
the distribution level. It produces enormous amounts of data.
Going forward one of the things we need to do is be able to
process that data to extract the useful information and connect
that to decision and control.
So it's really a three step process: measure, analyze and
then control. We need more advanced capabilities for that
control including distributed control as well as centralized
control, and for certain key technologies like storage we need
to continue driving the cost down so those become very
practical.
Lastly, I'll say because of the complexity and the growth
in complexity we need better ways to look at and manage and
understand that.
We need architectural tools that help people. All kinds of
stakeholders appreciate that you have this large tapestry and
if you pull on the thread on one end something happens on the
far edge. We see that in the New York REV process, for example,
where they're working with and struggling with all the
complexities. So we need tools to help them visualize and
understand the consequences of changes too.
Senator Cantwell. Dr. Littlewood, how far away are we from
game changing storage?
Dr. Littlewood. Because game changing storage is really a
research activity, it's rather difficult to predict that. Let
me first say that conventional storage technologies are
improving slowly, a few percent a year, and have been doing so
for a long time. Of course, if you project forward the time
scale where they will have impact in this business it's
probably another 20 years at that rate. So it isn't good
enough. So that's why, of course, there are some major research
efforts sponsored by Department of Energy and other agencies of
the government to try and break out of that.
What I will say is that the space, intellectually, for
being able to do that is very large. And I am confident that on
some time scale, which unfortunately I can't give you, we'll
make the discoveries needed to get forward and do that.
I would also say that there's a point where you're already
beginning to see incorporation of storage within microgrids. I
think the experiments that we'll be doing in the United States
where microgrids are gradually being introduced in various
areas and we learn how to integrate storage, wind, solar, small
scale energy generation in rural areas will propel this much
faster than it has been at the moment.
Senator Cantwell. Thank you.
Dr. Littlewood. I'm actually very bullish on this. I think
there are great opportunities that will make a big difference.
Senator Cantwell. Great. Thank you. Ms. Edgar, under 30.
Ms. Edgar. Thank you, Senator Cantwell. Coming from
Florida, clearly you can recognize that resiliency and
redundancy are issues that are very important to us. When I
first came to the Public Service Commission the issues that we
were dealing with on a day to day basis were because over the
course of two years Florida had eight hurricanes and two named
storms hit our coastline and even into the central areas. We
had areas of the state that had large outages, three, four,
five times over the course of two years.
That resiliency and redundancy is near and dear to the
issues that we deal with. Changes with technology and
incorporating new technology certainly will help us withstand
cyber security risks, physical security risks, weather risks,
but it also, as we make these changes, brings in new technology
issues that need to be addressed. And one of the things, as a
state regulator, that we want to do is make sure that no
customer group is left behind and that there is transparency as
we have the discussions about investment and cost allocation.
Senator Cantwell. Thank you.
Ms. Edgar. Thank you.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you very much, Madam Chairman.
Dr. Littlewood, in your testimony you state that our
electric grid must be secure and resilient in the face of
disruptive threats that range from natural disasters to
terrorists attacks. You explain resiliency research is a
particular strength at the Argonne National Laboratory, and go
on to say that Argonne and other labs have developed the
beginnings of a foundational key to secure the grid, the
national power grid, simulator. The simulator would run virtual
experiments to test potential vulnerabilities and to develop
responses to various types of attacks.
In January the Department of Energy's Inspector General
released a report examining how FERC, the Federal Energy
Regulatory Commission, conducted a similar process. In 2013
former FERC Chairman, Jon Wellinghoff, directed FERC staff to
identify critical electric substations by location. Chairman
Wellinghoff also directed FERC staff to create failure
scenarios to simulate the impact of the loss of these
substations. The Chairman then decided to share this
information with individuals and entities outside of the
federal government. The Inspector General actually found that
Chairman Wellinghoff made the decision to share the information
without determining whether the information was classified and
did so even though FERC staff expressed concern that the
information, ``could provide terrorists and other adversaries
with data they might use to disable portions of the grid.''
Now personally I find these actions deeply troubling, but
I'm even more troubled that emails between the Chairman and
FERC staff on this issue were missing from the Chairman's email
account.
I understand that Argonne National Laboratory handles
sensitive information on a regular basis. What steps do you, as
the Director of Argonne, take to safeguard this information?
Dr. Littlewood. Sir, Argonne has a prominent role,
actually, in cyber security in a large number of areas, so we
actually work very hard to make sure that all transactions like
this are appropriately vetted and are not shared
inappropriately.
I share your concern, Senator, about the risks of
potentially advertising the vulnerabilities of our network.
I also think that we need to work, in fact, to develop
cyber security protocols for how the future grid will operate.
And this is a very important part, a kind of hidden part, of
making sure that any developments that we move forward with on
the future grid are, in fact, robust against terrorist acts and
terrorist intrusions and other such things.
Senator Barrasso. One other thing. I noticed in your
testimony you compare the electric grid with the interstate
highway system.
Dr. Littlewood. Right.
Senator Barrasso. The comparison might suggest that
Washington should assume virtually all of the responsibility
for funding the electric grid, but today the vast majority of
investment for the electric grid actually comes from entities
other than the federal government. Are you suggesting that the
federal government be the principle source of funding the
electric grid or how do you view that whole thing?
Dr. Littlewood. I certainly didn't intend to suggest that,
and it's none of my business, actually, to decide what the
federal government should be doing in that area. I was simply
pointing out the physical scale of the infrastructure.
As I think I said earlier with regard to microgrids, one of
the advantages the United States has over much more centrally
planned economies is the ability to do experiments and actually
to develop infrastructure in a way that's responsive to the
market and enables us to take great advantage of the
intellectual and scientific and engineering strengths that we
have.
So one of the challenges, I think, for the industry and we
discuss this a great deal, is developing business models which
are appropriate to be able to deal with that. Notwithstanding
as we've already heard from EPRI something like $300 to $500
billion of investment are expected to be required over the next
20 years.
Senator Barrasso. Thank you. Thank you, Madam Chairman.
The Chairman. Senator Warren.
Senator Warren. Thank you, Madam Chair.
Last month Energy Secretary Moniz came before this
Committee to discuss the Department's budget request, and
during that hearing we had a chance to talk about the power
grid and specifically how to make sure that the grid can
reliably distribute electricity throughout the country.
Well, our power grid has been reliable for so long that,
for the most part, no one even thinks about it. The grid is
aging. Much of the technology was developed by Thomas Edison
and much of the structure was built shortly after World War II,
and now this aging grid faces new challenges, particularly with
the rise of extreme weather events that threaten to shut down
parts of the grid during weather emergencies.
During our earlier hearing, Secretary Moniz said that,
``Distributed generation and microgrids are themselves a
resiliency tool,'' meaning that in addition to the
environmental benefits a power grid with more wind and more
solar spread across multiple locations can actually help
protect against extreme weather.
Dr. Littlewood, your testimony discusses how resiliency
research is a specialty at Argonne National Laboratory which
you run. Can you explain to us in more detail how it is that
distributed generation itself can produce system wide
resiliency?
Dr. Littlewood. Thank you very much, Senator. That's a very
prescient and precise question.
The grid is a very complicated object, so even now when
it's being driven in a one-way mode it interacts in very
complicated and very subtle ways. And actually we do not
understand it.
If you look at it as a basic principle of resilience, you
look for individual units that can continue to fight the war
after the command or control has somehow been taken out. So
that's one very basic principle about how you build a resilient
network. It cannot be a single connected object. It has to be a
web in the same way that the Internet is a web. So by having
microgrids that can operate independently but still
communicate, you have the opportunity in the case of a natural
disaster to be able to reroute energy around affected areas to
be able to make sure that the other infrastructure, which may
be affected in the area of a natural disaster, is also not
impacted.
One of the dangers in major disasters, of course, is that
you lose first the grid, then the Internet, then water, then
the ability to distribute many, many different kinds of things.
And the very basic principles of resilience tell you that one
monolithic big thing is a dangerous thing to be working with.
So the other side of that, the need that actually my
colleagues have commented on for the ability to model,
understand and work the operation of the grid in real time. And
so that's the high level infrastructure which is necessary to
monitor it, the sensors, the data, the integration, the high
performance computing.
Senator Warren. Thank you very much.
The Energy Secretary and the technical experts at the
Department are not the only folks who made this connection. A
recent analysis from the World Bank showed that when there's
more diversity of energy sources, including more renewable
energy that's connected to the grid, the grid becomes more
resilient. Similarly a Massachusetts Climate Change Adaptation
report from 2011 also recommended diversifying energy supplies
as a strategy to make our system less prone to failures.
Extreme weather events are on the rise. Every year these
events stress the capacity of our power grid. If our technical
experts are telling us that plugging more renewable energy into
the system can help protect the grid in the face of these
extreme weather threats, then we should make it a priority.
Whatever you think about climate change, we all have an
interest in keeping the lights on. Thank you.
The Chairman. Senator Risch.
Senator Risch. Thank you, Madam Chair.
Ms. Barton and Ms. Edgar, this question is for you. On the
Intelligence Committee, we spend hours and hours and hours
listening to and wringing our hands about the cyber threats.
There's a lot of us who are convinced that that's going to be
the next big one that hits the country.
Can each of you please explain how this plays out in the
real world? What challenges do you face in the real world
dealing with this? Ms. Barton, why don't you start with you?
Ms. Barton. Certainly. The cyber threats are something that
the utility industry takes extremely seriously. We have a
number of people who basically sit behind a desk, 24/7, and
monitor all of the threats that are going on, the attacks that
are happening, whether it be through fishing attacks and so
forth or direct attacks with respect to the system itself.
The ability of this industry to work with the federal
government and other service providers has been outstanding in
terms of being able to mitigate any threats. We have a number
of people on our staff who have a secret clearance so they can
get access to all kinds of different information.
We have also paid a lot of attention with respect to
physical security and our control houses and making sure that
they are much more resilient than they have been in the past.
In the end system redundancy is diversity and redundancy are
really at the heart of reliability. So from a physical
standpoint one of the things that we are doing is working with
the RTOs who are responsible now for planning and determining
what new transmission needs to be built, we are really
encouraging them to take an accelerated view with respect to
transmission investments so that the system itself can be more
reliable by diversifying.
Senator Risch. Thank you. I appreciate that, and it is
interesting to hear you talk about your relationship with the
federal government. As you know, we're struggling with that
when you have the issues of privacy versus the issues of what's
got to be done in order to stop this, so I appreciate your
input on that.
Ms. Edgar.
Ms. Edgar. Thank you, Senator, and I'll approach the
question from perhaps a slightly different angle.
First off, I will say that, again, the issues of cyber
security are truly something that, as regulators, do keep us up
at night. None of us wants to get that call from the governor
that says, the system is down. Somebody has hacked it. What are
you doing to fix it?
However, I can tell you I recently attended a meeting
that's an ongoing collaborative effort between the Department
of Energy, the Department of Homeland Security and EEI. I found
it to be a very progressive and very forward thinking
collaborative effort between the private industry, state
regulators and the federal agencies, so I can tell you that a
lot is going on that should give us all reassurance.
However, as a state regulator one of the things that we
struggle with, again, is the cost. Because much of this
information is and necessarily so, confidential, it is
difficult when utilities come to us, as a state regulator and
economic regulator, and we are asked to approve these
investments and put them into the rate base, into the monthly
bills of consumers. Yet, because of the security issues, we
cannot really closely evaluate where that money is going and
what for. That is something, at the state regulatory level,
that is still a puzzle that we are needing to work through.
Senator Risch. That's interesting. I think most consumers
really aren't fully aware of the challenges the utilities face.
We all take for granted when we flip the switch, the light goes
on. And when that doesn't happen, the reasons for it are
complicated and could be a real danger to the security of the
United States. So, thanks, thanks for all of that.
My time is almost up.
Dr. Taft, I'm aware of the Pacific Northwest smart grid
demonstration project that you're working on, and I have a
couple of questions regarding that. Since my time is up and
with respect to the other people, would it be alright if I
submit those in writing and you could respond?
Dr. Taft. Absolutely. We will be very happy to respond.
Senator Risch. Thank you very much, Dr. Taft. I appreciate
it.
Senator Barrasso [presiding]. Thank you, Senator Risch. To
members of the panel, we're in the middle of roll call voting
on the Floor of the Senate. You'll see some of the Committee
members leave and then come back.
And with that, Senator Franken, you're next.
Senator Franken. Thank you. I'm sorry. I'm going back and
forth to the HELP Committee, health hearings.
Dr. Howard, I like distributed energy, and I like
distributed generation. It makes our grid more resilient,
allows critical infrastructure, like hospitals and military
bases and others, to stay online during an outage which is very
important. That's why I've always supported the increased
deployment of things like combined heat and power and district
energy, which we have in St. Paul, burns clippings and tree
limbs and stuff like that then provides electricity for
downtown St. Paul and heats and cools the buildings. So I like
distributed energy.
So I want to ask the panelists about another aspect of
distributed energy and that's grid scale storage. I apologize
if this has been discussed already, but I think this is a real
game changer because it will allow us to deploy renewables,
more renewables, wind and solar, when needed. It will help
stabilize the grid, and it will improve our resiliency by
making sure that we have electricity available on demand and in
case of an outage.
Can the panelists in the national labs please describe some
of the recent advances in grid scale storage and what your
visions are for deploying this technology in the future?
Dr. Taft. So let me start, Senator Franken. One of the
things that we have been doing is looking at storage both in
terms of the core technology, the fundamentals of how the
storage devices work, but also how they can be used as system
components. And you mentioned grid scale storage in particular.
The ability to use storage in multiple modes is one of the
things that makes it most interesting. There are a variety of
functions that it can supply that are useful to the grid, and
unlike most components, storage can be used in multiple ways
simultaneously.
So one of the things that we have been working on is how
you actually use that in a multi mode fashion because that
helps spread the cost over more capabilities and make it more
cost effective.
The reason that we think of storage, power electronics and
advance control as a new grid component is because of those new
capabilities and so many of them as opposed to other components
that have one function. That's why we think that will become a
general purpose tool for buildings and grids of the future, and
so we focus a lot on how to apply it as a system component.
I'll stop there and let my colleague take over.
Dr. Littlewood. Thank you. I agree with those comments. Let
me focus a little bit on the technology side of that.
Since the need for grid scale storage has only recently
emerged, it turns out that there's a substantial vacuum in
technology and science which is needed to support that. Unlike
mobile storage which has been driven by the consumer
electronics industry for the last few years, this is a recently
emerging driver. And that's one of the reasons that the DOE has
been heavily investing in fundamental research on the basic
science to be able to do this with the main goal of taking
prototypes that we already know and understand and have
opportunities to work with and drive the cost down so that they
are appropriate for the grid.
I actually think that on grid scale storage, at least
electrical storage, we will make some very substantial advances
within the next few years of driving costs down because this is
an area which has been underexploited for quite some time.
Senator Franken. I agree, and I'm glad you're doing this.
Let me ask about like electric vehicle storage. I mean,
there you have like at night, wind blows, wind. Electric
vehicles can store at night. Drive, less gas. Then during the
day the sun is shining so we get solar, and what are the
benefits of this approach in terms of reducing our carbon
emissions?
Dr. Littlewood. I think they're actually very substantial
over the long term.
In the short term, it actually involves getting, you know,
the electric vehicles to a stage where they are widely adopted.
And that's largely, again, a matter of cost in it, cost to do
this.
Senator Franken. Right.
Dr. Littlewood. It also involves, I think, doing
experiments with microgrids because this is the first
opportunity to do so.
I think there are big opportunities in rural areas and
there are big opportunities in certain subdivisions to design
microgrids that are able to take solar, wind and electrical
storage and use them effectively. I think a number of utilities
are actually exploring models by which they can introduce those
and that involves developing new business models which go along
with the technologies as they're being invented.
Senator Franken. I know I'm out of time, but this is
exploding. I mean, this is happening faster than anyone could
have conceived. If you look at the explosion in cell phones and
think about that technology and think about what we're going to
be doing with all of this stuff. This is a revolution, right?
And it's good, right? Except for Ms. Barton, right? It's good
for you too?
Ms. Barton. Diversity in the generation portfolio is always
a good thing.
Senator Franken. Okay, good. I'm sorry I went over my time.
Senator Barrasso. Thank you, Senator Franken. Senator
Daines.
Senator Daines. Thank you, and thanks for holding this
hearing today.
I represent the State of Montana. Certainly innovation and
reliability in the electric grid is an important topic for our
consumers back home. And thank you for what the witnesses have
relayed today regarding the challenges that the modern electric
grid faces.
But too often the change in generation sources is brought
by misguided federal policies. And somebody from a state like
Montana we have truly an all of the above energy portfolio. The
sun shines a lot. The wind blows a lot. We have an abundance of
coal, oil, natural gas and hydro, but Montana consumers rely on
over half of their electrical supply from coal. Montanans are
severely concerned about the impacts of the EPA's regulation on
their energy prices, transmission capacity, grid reliability
and the very jobs that depend on coal production in Montana.
The Crow Tribe, for example, their unemployment rate today
is 50 percent. If we lost the coal mining jobs on the Crow
Reservation, their unemployment rate goes to somewhere north of
80 percent.
The tax revenue of coal production in Montana is $118
million a year. That is how we fund our infrastructure, our
teachers and our schools. These proposed EPA clean power plant
rules could threaten operations at Colstrip.
In fact it threatens coal-fired plants in other states like
Michigan. In fact it's coal for Montana that powers those
plants in Michigan, that supplies electricity for the auto
manufacturing industry there in Detroit.
My questions surround the impact of clean power plan on
electricity reliability.
Ms. Barton, Nick Akins, the CEO of American Electric Power,
has been outspoken on grid reliability. About a year ago he
stated in testimony before this very Committee that the
country, ``dodged a cannonball during the polar vortex.'' He
also reiterated a point he made a month earlier that AEP used
89 percent of generation that will retire in 2015 to meet
electricity demand during the polar vortex.
My question is this. Will the EPA 111D rule on existing
power plants impact conventional sources of electricity like
coal? And if so, how will that impact grid reliability?
Ms. Barton. Thank you. Will the EPA 111D impact
conventional generating units? Yes, it will.
One of the things that we have been doing is we have been
studying the grid, in particular, studying the PJM system, to
really understand and appreciate the impact of what some of
these retirements are. I think it's important to note that when
you talk about the grid, the grid is the combination of the
generation, transmission and distribution system that is there
in a given area. The grid in New York City is very different
from the grid in Montana, the grid in Texas and so forth. And
so it's very important that we appreciate the inner workings of
the grid in those regional areas.
PJM, for example, has actually recently done a study and it
has gotten some news attention. And that is an economic study.
An economic study really is just looking to determine is there
a sufficient amount of generation on the system. Their next
stage is to look at a load flow analysis. The load flow
analysis really looks at can you get power from that generation
to your load centers. In that recent analysis there are
basically five load pockets that did not have enough import
capability in a post 111D world, to be able to function
reliably.
So when you look at the impacts of really any government
initiative, whether it be 111D or what have you, it's important
to take a step back and really take a look at the reliability
of the grid. We have incredible modeling technology. We have
folks who basically are station operators who are looking at
the system and appreciating what needs to happen to keep the
system reliable at any given moment.
We then have a number of regional transmission planners who
are looking at that system ten years into the future, five
years into the future. What you end up having in some of these
situations is a chicken and egg situation. You need to first
identify well, what generation is retiring? Where is it
retiring? What then changes are necessary with respect to the
transmission grid to be able to maintain the reliable and
stable system we have today?
Senator Daines. Thanks for your insights into the supply
chain. I appreciate that.
Commissioner Edgar, similarly, do the federal regulations
like 111D help your Commission create certainty or do these
regulations create uncertainty for consumers?
Ms. Edgar. Certainly. Thank you, Senator.
Well at this point there is great uncertainty. As you're
well aware, we are in the stage of, still in the stage of
rulemaking or EPA is still in the rulemaking stage. Many, many
discussions have occurred about what the proposed rule really
means, what it requires, what costs will come from the changes
that it may or may not require? But of course, it's still a
proposed rule at this point in time.
And consumers, regulators, states and industries are
continuing to make investment decisions in order to meet the
needs of customers, short term and long term, not knowing what
the final rule is going to be or even once it comes out what
the implementation processes will be. So yes, there is
certainly uncertainty now as that process moves forward.
Senator Daines. Thank you.
Ms. Edgar. Thank you.
The Chairman [presiding]. Thank you, Senator Daines.
You will see that members have fled for the votes, but they
are on their way back. So as members come in I will turn to
them, but let me ask another series of questions here.
I mentioned in my opening comments my interest in the
potential that we have for microgrids and recognizing, as you
pointed out, Ms. Barton, that there are great differences
region to region and that's why there can't be a one size fits
all application when it comes to our energy sources and how our
grid functions here.
Dr. Littlewood, what kind of coordination goes on with our
national labs and what the states are doing or even more
locally? For instance, in a very small village in the
Southwestern part of Alaska, not connected by road, there's a
village by the name of Kongiganak, with their own little
microgrid between three wind turbines, a battery storage unit
and small heating units within homes which is perfect for them.
They've really pioneered much of what they have provided for
their community of several hundred.
How much coordination goes on between the labs and then
what we're seeing within the states, whether through our
universities or just from those that, by necessity, are pulling
together these very small microgrids?
Dr. Littlewood. So one of the things that the labs are
doing is trying to develop test beds that can be used for
communities to do virtual experiments within the lab system to
be able to design systems that could be exported to be used in
small communities.
So I'll mention a program at the NREL, National Renewable
Energy Lab, which is ESIF which actually provides a kind of
basic test bed. There's similar work been going on at PNNL and
at Argonne and at many of the labs.
So, of course what we can't do always is to connect with
individual communities one by one, but we do work quite closely
with a view, to get a view, both from regulators or from within
individual states with those states running those kind of
experiments.
I think the labs would say that they would, in fact,
benefit from the attention coming from states who have
particular problems and particular issues that they want to
solve. For example, I think my colleagues would be interested
to come and study while it's actually going on on the ground.
And we do, in many places, like can't vouch for the fact that
we've been to a particular village in Alaska, although I'm sure
that there are some pretty creative ideas which are on the
ground there already.
The Chairman. I think it would be helpful for all of us to
have a better understanding in terms of what is happening in
some pretty unique situations, because of necessity in so many
of these areas, and then integrating that with our brilliant
minds that we have in our laboratories.
Dr. Taft, you had mentioned four technologies that are key
to modernizing the grid. And this is a sensing and data
analysis, high voltage power electronics, fast and flexible
bulk energy storage and then the advanced planning and control
methods and tools. Which of these is most readily deployable?
And as we are moving toward this modernization, of these four,
where's our biggest challenge? So what can we do to deploy
quickly? And again, what's our drag here?
Dr. Taft. The utilities have had an opportunity recently to
expand their capability to make measurement, especially at the
transmission level, some at the distribution level. More is
coming.
So we're at the point of needing to be able to manage and
analyze that data. And just to give you a sense of how much
more data we're talking about, an ordinary utility in the past
might collect up enough data to fill up a book like a Tale of
Two Cities, once every second. And what we're looking at now in
the future is being able to fill up a book like War and Peace,
846 times a second.
So the need there is to be able to sift through all of that
data and get the useful information and then act upon it.
That's an immediate need because the sensor capability is
coming online. The tools to do that in other industries exist
but the tools to do it in the utility industry are somewhat
lagging. So we need that. We need it immediately. We also need
advanced controls.
And you talked about microgrids. You know, when we did the
grid architecture work for DOE last year we looked at
microgrids as a specific example, looked at NRCA work in that
area because that more distributed architecture has lessons for
us to learn. And so we started to gather that kind of
information and make use of it and think about that in terms of
how we would go forward.
The control systems for all of that are an area where we
need considerable work. And there's a lag there because the
industry doesn't invest a lot in research. They can't do a lot
in research. So the vendors see a thin market and there's a
nice role for the federal government to do the key development
and demonstration of that capability so that it moves forward.
The storage technologies are moving forward commercially,
but there's a great deal to be done to drive the costs down to
make them more effective and to make them flexible.
So all four of those technologies are, kind of, in the same
place in a sense of there's not one that's way ahead of the
other as we, kind of, need all four. But that's why I talked
about them as a group. That we need to advance all of those
together and when you put together the power of electronic
storage and control, in particular, you get this remarkably
flexible tool that can be applied at the microgrid level, at
the bulk system level, even at the individual building level,
for example, if you think of a building as acting like a
microgrid on its own.
It's imperative that we move those forward because they
have so much flexibility to help us deal with all of these
variations, fluctuations and complexity that we're faced with
going forward.
The Chairman. Thank you.
Dr. Howard, you have said that a consumer with distributed
energy resources is not necessarily a self-sufficient energy
consumer. Talk a little bit about that because I think you have
folks that think, well, wait a minute, I've got solar. I've got
panels on my home, and I'm seeing those benefits. I am a self-
sufficient energy consumer.
You say that they are not necessarily so. Speak to that and
what would it take for an energy consumer to really become
completely self-sufficient?
Dr. Howard. Okay. The answer to that question really gets
to the issue of capacity and energy. A consumer that has, for
example, solar PV, may at certain times have excess energy that
is being produced. But when they don't have that excess energy
they need to tap into the grid. And at that point they hope
that the capacity is available to get access to that energy
that they need.
And so it's really a two way street. And that's why it's
important going forward that we really understand that a lot of
these different technologies may be rich in energy, but you
need to also tap into the power system to get access to that
capacity that's needed so that when the sun doesn't shine, they
have electricity now.
The Chairman. But hope doesn't necessarily----
Dr. Howard. That's right.
The Chairman [continuing]. Get you to the reliability----
Dr. Howard. That's right.
The Chairman [continuing]. Piece of it, so----
Dr. Howard. That's right. So you need devices that we
referred to here like smart inverters or power electronics. You
need sensors. Also energy storage can play a very important
role in helping to certainly end those times when the sun isn't
shining then you can either use energy storage or the biggest
energy storage device is the grid itself and tap back into the
grid to get the electricity that you need.
So it all has to work together. But as we look forward I
think there's a whole new approach that we need to think about,
not just energy, but also making sure that we have the capacity
available at every single minute to provide the energy that's
needed.
The Chairman. Well, let's talk about the capacity here. And
you used the term capacity related costs because in my opening
statement I, kind of, teased and said I wanted to know what's
our time line for development here and what are those costs.
I'm pretty sure that Senator Cantwell used the same number
that I did that we're looking at a cumulative investment of
between $300 and $500 billion over the next 20 years to really
modernize our grid here.
When we're talking about this capacity related cost is this
the number that we're talking about here?
Dr. Howard. Yeah, yeah, that's right. We, EPRI, did a
report in 2011, and it's called ``Estimating the Costs and
Benefits of the Future Grid.'' I will make sure that that
report is available for this Committee.
The Chairman. Okay.
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Dr. Howard. It outlines that the costs over a period of 20
years is at the top end of about $500 billion.
Now capacity, a lot of times we mistake capacity as being
generation capacity. But we also have to think about it in
terms of capacity on transmission and distribution as well. And
so, you know, is the capacity available in the distribution
system to provide the energy?
The study that we did in 2011 looks at all of those costs
and we estimate that, at that point, about $500 billion is the
top end.
The Chairman. Is there agreement on the panel that this is
the number that we're looking at as effectively, $500 billion,
top end?
Ms. Barton. I think generally speaking, yes. One of the key
things I think that's important to remember is that if you have
market-based solutions you can make sure that these
technologies, using your words, Senator Murkowski, pass the do
no harm test, but I would add, at a reasonable cost to
consumers. And what that cost to consumers is with respect to
these integrated technologies really varies in terms of what is
that technology is thought to be integrated in order the system
needs. If it's a market-based solution then consumers will
really choose what's important to them.
We have used, for example, in Presidio, Texas, which is on
the border of Mexico. And it would have cost a lot of money for
a new transmission line to be put in place there. We basically
have two, 2.4 megawatt NaS batteries in place to basically
serve to enhance the transmission grid there. So that's just an
example of how technology can be used to meet a specific need.
And I think it's very important that it be solution-based.
The Chairman. Senator Cantwell, I have been asking a series
of questions and have gone well over my allotted five minutes.
But if you're ready to proceed?
Senator Cantwell. Yes.
The Chairman. I will turn to you. Thank you.
Senator Cantwell. Thank you. Thank you, Madam Chair.
I don't know all the questions you asked, but we were
discussing earlier about, obviously, how do we make investment
and get recovery on these issues. Ms. Barton, your company
operates in 13 states and I understand that in Ohio the federal
government funded about half of your 150 million smart grid
demonstration projects.
Ms. Edgar, your association represents regulators in every
state. In your own state, Florida Power and Light's smart meter
installation program was funded in part through $200 million in
the Recovery Act.
What examples can each of you give of investments and the
cost of recovery mechanism?
Ms. Barton. Sure, I'll start. As you mentioned, we have
transmission facilities in 13 states. We have regulated utility
operations in 11 states and by virtue of that territory it
gives us a unique perspective and information from which to
draw from.
So in Indiana, for example, we have launched a solar
project, a pilot program, where we're looking to basically have
about 16 megawatts worth of solar capacity integrated into the
system. That's been very successful.
I just recently talked about a project in Presidio, Texas,
and we also had one in West Virginia which uses NAS batteries
which is Sodium Sulfur batteries.
These technologies, while they are expensive, in unique
grid situations can really amount to be the best solution.
We've had tremendous success in a number of our states with
bolt bar technology. And what bolt bar technology is is
basically controlling through a series of complex communication
the voltage on the system through regulators and capacitors.
What that does is basically reduce the level of voltage that
folks receive in their home and it results in significant
energy savings.
So in the jurisdictions that our states have been
supportive of that technology, we have gone forward with that
technology. We try to stay very close with our states and our
regulators to make sure that we're implementing the types of
technologies that meet the state's needs.
Ms. Edgar. Thank you, Senator, for the question. Much of
what we've been discussing today is the recognition that the
grid is a technology integration network and that distributed
generation, although offering many advantages, is often
intermittent and that it does require investment in both new
transmission and distribution and in modernizing the system,
both transmission and distribution that is already there.
So the role of the federal government in supporting
research and in bringing that research in new technologies to
scale, cost effectively, so that states and communities and
consumers can take advantage of those resources is key, I
believe, in helping us move forward.
Senator Cantwell [presiding]. So how well established do
you think we are in those kinds of recovery ideas?
Ms. Edgar. You mean cost recovery?
Senator Cantwell. Yes.
Ms. Edgar. The rate making process at the state level is
tried and true. The cost causer pays looking at actual cost
before putting them into the rate base and then looking at
projected cost. The challenge now moving forward is how to
continue to attract capital investment so that consumers are
getting a good value from the investment that they are making
and also trying to look at alternative rate making mechanisms
to take advantage of the cost efficiencies that are out there
in the future that may not be here right now. And that is
something that we are grappling with.
Senator Cantwell. I remember probably 20 years ago when
some of the first ideas were being surfaced on metering and
things of that nature and they were turned down by UTC. But
now, how many states have policies around this?
Ms. Edgar. Probably most. I don't have an exact number, but
I would say more than half and probably beyond that.
You mentioned a project that I mentioned in my testimony,
and yes, that project was partially paid by federal dollars. I
do believe it's an important investment in my state to helping
us move the grid forward.
But of course, we're still learning how to take advantage
of that technology so that consumers really benefit and then
all of the other issues with data collection, data management,
privacy and security.
Senator Cantwell. Dr. Taft, could you talk about the
Recovery Act funds that were part of the $4.5 billion of money
that was spent and what lessons we've learned?
Dr. Taft. I can talk about some of that. I don't have all
the details with me, but a lot of those projects were to
improve the basic ability to measure on the grid. So we saw a
lot of investment in phasor measurement units. We saw a lot of
investment in AMI. We also saw large scale projects such as the
one in the Pacific Northwest to take a look at how to integrate
large numbers of resources and coordinate them in such a way
that they would operate collectively even though many of them
were not part of the actual utilities.
And the lessons coming out of those are going to be
available shortly. There's going to be a, actually, a report
and seminar about that project in particular.
So these projects move things forward because they brought
a lot of money off the sidelines and helped establish things
that the utilities needed to understand. When it comes to
things like storage there are quite a few projects that are now
finishing up this year that will have lessons learned, and
there are a number of states working on determining the cost
justifications based on those lessons. So, very valuable in
helping people understand how the technology can work, but also
how the economics of those technologies will work out going
forward.
And moving forward, fundamentally, the basic measurement in
observability/capabilities of the grid so that we begin to get
the data that we'll need for the next stages also has been a
crucial aspect of that very valuable for the utilities.
Senator Cantwell. Well I know we, in the region, talk so
much about some of the things we were able to do out on the
Olympic Peninsula, but maybe it's worth reminding people of
some of the efficiencies that were delivered through those
analysis and how we now take that data and try to scale it.
Dr. Taft. So I haven't brought all the numbers with me. I'd
be happy to supply them.
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Dr. Taft. But what has been demonstrated there is that you
can coordinate very large numbers of consumers and their
appliances and equipment in such a way that they reduce the
peak demands on the utility significantly. They operate in a
more efficient mode overall, and they do a better job of
coordinating with variable energy resources.
So the impacts have been significant. The final details are
coming out shortly, and we'd be happy to supply them for this
hearing.
Senator Cantwell. My understanding is that you were able to
demonstrate you might be able to get as much as double digit
savings out of current supply.
Dr. Taft. The indications from those experiments----
Senator Cantwell. I mean I'm not talking like 20 or 30,
but, you know, 10, 11, 12?
Dr. Taft. Yeah. The indications are, in fact, that such
results are practically achievable. The results from that
program showed that on scales that were larger than any that
have been tried anywhere else. So that's a solid justification
for saying that some level of double digit improvements are, in
fact, achievable using these methods.
Some of the methods involve new forms of control and new
forms of coordination necessary in order to make all those
pieces work together, but when you can do that there's an
enormous synergy from all those pieces and that's why you can
get the double digit savings.
Senator Cantwell. I know the people that will discuss what
does that mean to the consumer and as you said in this case,
they buy in. I'm waiting for the smart appliance that says turn
my dish washer on at the lowest megawatt rate today. And
obviously some intelligence for these, you know, big energy
users in the household.
Dr. Taft. Well and that's a crucial issue is how in fact
can you make that work and make it work in an unobtrusive
manner? People are not interested, probably, in spending a lot
of time trying to micromanage the thing, so it needs to be
automatic. And a lot of the work done on these programs is to
show how to automate that.
Senator Cantwell. Thank you.
Senator King.
Senator King. Thank you. Following up on that discussion.
If you have ever toured a sawmill most modern sawmills now
have a device called an optimizer which takes a computerized
picture of the log as it comes in, calculates the most
effective way to cut it and checks with the market at that
moment to see whether the market will value two by fours rather
than two by sixes. It seems to me that is exactly what we are
talking about here. We are talking about dishwashers and
clothes dryers and heaters that will check the grid, understand
what the needs are, what the price is and will automatically
optimize, if you will, I mean, that's sort of what we were
talking about.
That leads me into a, sort of, general observation here. We
are talking about a disruptive technology. We are talking about
a fundamental change in an early 20th Century model for how
electricity is generated and delivered. If you look back, I can
remember the phone company. I am old enough to remember the
phone company saying it's impossible. It will be disruptive. It
will ruin the system if people can choose their own phones.
Then, of course, it was cellular phones. You've got to have
a phone in your home. That's gone by.
Cable TV, you know, you can only get your news through
cable TV. All of a sudden people are getting--streaming.
I believe that distributive generation a, is going to
happen, b, it's a disruptive technology. The only question is
how do we manage it?
I think the real question is who will supply the battery?
Who will supply the battery for distributed generation on your
roof? Will it be the grid as the backup or will it be batteries
in your basement?
The grid, speaking largely as a large institution, has a
choice to make. They can price themselves out of that market
and thereby make batteries more economic which is what people
will then choose or they can choose to adapt to this disruptive
technology and figure out ways to make it work.
I think one of the great questions is how do we price store
it? How do we price backup? How do we price the backup charge?
I think it is reasonable that utilities should, if they
have to be there and maintain the wires and backup capacity,
how do we price that both in terms of benefits and costs? It
seems to me that is the really fundamental question here, and
the price should be reasonable and not so high as to be
punitive in order to ward off this change which is going to
come anyway.
Mr. Taft, what are your thoughts about how you price? How
do you price backup?
Dr. Taft. So, pricing is not a specialty of mine, but I do
have a couple of comments that are related.
You're probably familiar with the effort in the State of
California where they determined that they'll have 1.3
gigawatts of storage on their system. And the California ISO
has produced a road map for achieving that.
One of the things that's going on though now is exactly
that question of how to determine the pricing for the services
that can be supplied by storage, in particular. There's not a
settled answer to that yet, so they're working hard with
vendors and others in the State of California to see if they
can develop a model for that.
Separately, but in a sense related, is the activities going
on in the State of New York with the New York rev process where
they're looking at restructuring the rules and responsibilities
of distribution companies, and a lot of it has to do with the
penetration of distributed energy resources and storage. And so
they're looking at changing the very structure of the industry
in their state so that they can facilitate that but are faced
with the same question ultimately, and they're asking
themselves how are these going to be valued? The answer is not
known.
Several states are working on trying to determine value
propositions for storage, in particular, that includes the
State of Washington, for example, Oregon, Hawaii and so on. So
we don't have a settled answer for that yet.
And, you know, most people think that a way to get at that
is to make it a market function and let a market determine
those values.
Senator King. Well, you are talking about a classic non-
market situation. You are talking about monopolies who deliver
the power whether they're monopolies and generations. So saying
to let the market do it and then allow the utility to impose a
$100 a month backup charge--that's not the market. I am all for
markets, but only if they are real markets.
Dr. Taft. Well and I think that's what some of the states
are trying to sort out now is how they can actually accomplish
that. And I reference California ISO trying to understand how
they can allow third parties to offer services based on storage
and figure out what those values would be. So there is a
complex question there. I don't think it's settled.
Senator King. One market related point, and I will end with
this. This is not a central part of the discussion, but it
seems to me that time of day pricing is one thing that would
make some sense in order for the market to drive more efficient
utilization of the grid. There's a lot of excess capacity both
in terms of generation and transmission at night, and if you
had time of day pricing and people just routinely saying oh,
I'm not going to turn the dryer on until after nine.
I can remember making those decisions about long distance
phone calls, you know, looking at my watch and saying I am
going to make my call at 9:05. If people started making those
decisions about utilization of the grid that would be much more
efficient, but it won't happen unless people get the price
signals. It seems to me time of day pricing is something that
we ought to be thinking about because of the fact that there is
so much excess capacity.
Madam Chair, I am very pleased that you are having this
hearing. I think this is a fascinating topic, but the bottom
line for me is we are talking about a disruptive technology. We
have got to figure out how to adapt to it, not fight it and
strangle it in its crib because that isn't going to happen
anyway. I think this is a very important subject. Thank you.
The Chairman [presiding]. Well it is, Senator King. I
certainly agree with you.
When you mentioned the point about making telephone calls
based on the time of day, I think we're both dating ourselves
there. But that was absolutely----
Senator King. I do that all the time, but I have given up
on worrying about it.
The Chairman. Yeah, yeah, I suppose. [Laughter].
Let's go to Senator Heinrich.
Senator Heinrich. Thank you, Madam Chair.
I am not going to try and date myself that hard, but I will
say my father was a utility linemen, and I appreciate some of
the comments about the work that they do. One of the things
that I had when I was a kid was a t-shirt that said, I turn on
after seven, and I don't think I got the joke.
The underlying message from the utility he worked for was
about peak load management and about trying to shift loads to
later in the evening just in the way that the long distance
pricing regime shifted people to using their long distance
later in the day.
I think that Senator King is right. Anything we can do to,
sort of, actively make the market work in our favor in terms of
both loads and then hopefully storage and utilization of
storage over time.
So I want to start out with a quick question for Dr.
Littlewood. I am a big fan of the work that is being done at
DOE's joint center for energy storage research. And while I
think most of us here agree that the pricing regimes and the
market to the extent that we can have an efficient and
transparent market will settle out the winners and losers with
regard to energy storage over time.
I am wondering if you can talk a little bit about the state
different technologies for utility scale storage and the
challenges inherent in scaling that. What are you excited
about? What do you see rising to the top of that very exciting,
emerging technology sector?
Dr. Littlewood. Thank you very much, Senator. I'm glad you
like the program because we do too.
What else? I mean, I think our view of storage is that it
is not going to be a single solution.
There are solutions which may come through improved storage
which is actually mobile. We were discussing earlier that if we
could actually make electric vehicles more effective they are
affected. You also have storage medium on the grid. That will
be one class of storage. There will be classes of grid storage
which will involve very different technologies that can be very
large and cumbersome, not mobile, but have to be made extremely
cheap.
One should also remember that there are storage on the grid
which is distributed across the grid in a way that you can't
see it.
To be a little bit philosophical and look very far ahead, I
will say that our goal, actually, is to turn electrons into a
medium of exchange.
The thing that will happen in the very long term,
eventually, is that indeed this will be distributed where you
do not know how. But that you will be able to go there in the
same way that there's a bank. That means that I would also
expect that we would have a system which looks like the banking
system. There will be big banks. There will be small banks.
There will be local communities with local community banks. And
all of those will be based around different technologies and
different ways of doing it.
I think that we are doing very well in developing new
technologies which push the price down in the area of large
scale grid storage, and that's partly because this is an area
which has not been explored very much.
I think that there are vast opportunities, more broadly,
for moving forward even with conventional technologies based
around lithium ion, and the reason is that the community which
has been pushing that technology forward, which was your cell
phone, is now beginning to understand that there's a business
opportunity which involves something different.
So it's a very exciting time to be in there. I think it's
really important to be engaging in all of this. You know, one
shouldn't make predictions about the future, but I'm very
positive about it.
But just a quick philosophical comment on phones. I used to
work for Bell Labs, and I worked for Bell Labs at the time when
I was part of the long distance network and we were inventing
the cell phone. While my colleagues were doing that we were
kind of aware that we were putting our company out of business,
but it turned out that we were all so confident that that was
going to happen anyway we might as well be the ones that did
that invention.
Senator Heinrich. It's interesting that you bring that up
because it's always interesting to look back at what was said
about the adoption of cell phones early on and the penetration
and numbers of that adoption and how dramatically we all
underestimated that technology early on.
It's not unlike when, you know, 20 years ago in terms of
people looking at a technology that hasn't changed much in
terms of photovoltaics and what the eventual generation from
that would be. Looking last year at the gigawatts that were
installed in this country alone, I think, we are realizing now
that we are on the edge of a very changed landscape. We have a
lot of work to do to manage the grid and to manage the
transition in all of this into some very new territory.
Thank you, Madam Chair.
The Chairman. Thank you, Senator Heinrich.
You used the terminology, Ms. Barton, that the grid can be
a natural enabler of new technology. I think that this is what
we see play out all the time.
Let me ask just one last question for you and then I'll ask
if others have a desire for more. I know that we have some
panelists that need to leave at noon.
How can we do a better job in so far as the utilities
identifying or quantifying the costs of the ancillary services
that are provided by the grid and ensuring then that these
costs are perhaps born proportionately by all the customers
that are utilizing the grid? How do we do a better job here?
I'd ask Ms. Barton and then Ms. Edgar, if you'd like to comment
as well.
Ms. Barton. I think that's an excellent question. We've
talked a lot about distributed generation, and we've talked
about it as being a disruptor. I really think it is more of a
complementary technology to the grid.
And if you really think about the origins of the grid where
it started off as, quite frankly, a series of small microgrids,
is what you really could have called them back in the day. They
got stronger by being networked together.
There is an incredible value associated with having that
grid as a backup, and I'll just use the example of super storm
Sandy. While there are a number of customers who were out of
power for a few weeks, that's nothing compared to if their only
option was a roof top solar facility to provide them with
generating capacity.
So the grid has an incredibly inherent value, and a lot of
it has to do with the line workers and the tree crews who,
quite frankly, can travel across the country and get to any
place where they need to be through our mutual aid agreements.
There is value to that as well.
I think that that becomes part of the philosophical debate
as to what is the value of the grid, and I would say the value
of the grid is not defined as backup power. The value of the
grid is that it is an enabler and therefore you have to support
the costs and the infrastructure of that grid and so that those
costs are not disproportionally spread to other consumers.
Unfortunately that's some of the things that we're seeing
happening. If you advocate the view that I can just have my
solar roof top, solar generating facility and unplug from the
grid, you know, that's different than wanting it there as a
resource. And the vast majority of Americans have become very
relying upon a very reliable grid and an affordable grid.
It's that balancing act that we need to pay attention to,
but there's a lot of fantastic technologies out there. Right
now a lot of them come at a fairly significant cost and that
affordability feature is key.
The Chairman. Let me ask you for your comments, Ms. Edgar.
Ms. Edgar. Thank you, Madam Chair.
So many issues here and this kind of brings it all home,
the value of the grid.
Something that a number of states are looking at is trying
to put, for example, a value on solar as different states work
their way through their different processes, and the other
states can learn as they're moving through is part of what
makes all of this so exciting.
Many cost tools that are out there, capacity charge,
service charge, fee based, cost causer, time of use, all of
this, I think, needs to come into play as we recognize, again,
yes, the value of the grid, but also the very essential nature
for public health, for public safety, for community
interaction.
We haven't talked much today about economic development,
but the key for the grid and new technologies for job creation,
for work force. And then, I think, to bring it all back is, as
we have these discussions, what our members would ask of
Congress and governors and state legislators and other policy
makers, is that we have transparency as we are talking about
those cost allocation issues and cost burdens recognizing that
how that falls, for instance, on a very large industrial
customer is going to be different than how it falls on, for
instance, a retiree on a fixed income and how we try to make
sure that everybody is aware and is served well.
The Chairman. Very important considerations.
Senator King.
Senator King. Ms. Barton, I wanted to follow up. You made
one statement that I thought was very important. You said
diversity and redundancy are at the heart of reliability, and
it seems to me that that's part of what we're talking about
here, the ultimate in diversity and redundancy is distributed
generation. It's people having their electricity on their roof
as part of the system.
So it just seems to me that we are really on the edge of a
very important discussion to get back to what I mentioned
before. How do you value the plusses of distributed generation
in your own words, diversity and redundancy, versus the costs
which is the maintenance of the grid and the backup generation
in order to have customers ultimately make rational, economic
decisions, based upon the true costs of whatever it is that
they're using?
I just think that this is a development that's going to
happen anyway, and the real question is how is it adapted to
and how does the grid facilitate rather than block what I
think, in the long run, will be very salutary developments on
behalf of all of our citizens?
Ms. Barton. I think the key is that there's value on both
sides of the transmission system is maybe one way of looking at
it.
Senator King. Absolutely.
Ms. Barton. In terms of distributed generation can be
certainly valuable in terms if you aggregate. The grid is
really an aggregator. It's an aggregator in days of old, of
large generating plants and taking that power through
substations to consumers, and today it's basically an
aggregator in both directions. So it's aggregating those
distribution resources and distributive technologies as well as
the larger scale generating facilities.
When you look at the utility infrastructure, the math is
maybe a little bit easier in the sense that it's a cost-based
model. And for, you know, a reasonable level of return the
investors in the utility industry that we go to to borrow the
capital really require that level of transparency to say I know
I'm going to give you this dollar and you are going to give me
a return on this dollar, plus this dollar back in a reasonable
period of time. And so, I think, making sure that that is in
place helps to take care of the utility side of the equation.
With respect to the distributed energy side of the
equation, I think that there's a lot of different ways of
valuing that. Part of it can be from what does it do for the
benefit of that consumer? For example, the pharmaceutical
industry often needs to have a heightened level of reliability
that, quite frankly, they're willing to pay for that heightened
level of reliability. And so it's very valuable to them.
There's also benefits with respect to the ancillary
services market in various market driven ways of estimating the
value of those resources. And, you know, that can be done
through the RTOs and how they have established their energy
markets and how they're valuing those resources. So I think
it's really a balance of that.
Ultimately the states play an incredibly important role in
determining what level of energy efficiency, what level of
distributed generation that they want to advocate and how it's
paid for.
Senator King. Of course, there are two pieces to this which
is generation as backup and transmission and distribution to
deliver the generation. So there are two pieces of analysis
that have to be done. And part of the analysis of how much
backup capacity, generating capacity, do you need, is a
question of a complicated analysis of what are the resources on
the grid.
Insurance companies don't have all the money in the bank
for people's accidents or health insurance or particularly,
life insurance. They invest it. They have actuarial studies,
engineering studies, if you will, as to when the draw will be.
And so you don't have to have every bit of capacity there to
backup if every solar insulation goes out at the same moment.
And of course, as you distribute these kinds of facilities,
solar and wind, across the landscape you mitigate somewhat,
it's not going to be cloudy everywhere, for example. So I just
hope that we can develop policies that will be fair to all rate
payers, fair to investors, but also not inadvertently obstruct
what could be and can be and will be, I believe, very positive
developments both for rate payers, for individuals and we
haven't mentioned the environment much, for the environment in
terms of moving away from fossil fuel generation.
Thank you very much, Madam Chair.
The Chairman. Thank you, Senator King.
Senator Cantwell, any final questions, comments?
Senator Cantwell. Well I would just, again, thank all the
witnesses and Ms. Edgar said we really didn't talk about the
whole plethora of economic issues, but I do think it's
something we should work with our colleagues on. I went
recently to the 110th anniversary of the IEEE in Seattle. And
the fact that that organization has been around that long, of
electrical engineers and all the things that they have done and
then the next generation of things that they're creating I
think is important for us to remember that the workforce here
within the United States on these issues is a great potential
for us.
So, thank you and thanks for holding this hearing.
The Chairman. Well, thank you, and thank you to all of our
panelists. This has been very helpful and informative as we are
building out some of the discussions that have gone on with
some listening sessions and figuring how we move forward with a
broader energy vision, an updated vision. Clearly in the
electricity space what we have been talking about here this
morning is so key.
Again, a reminder that while there is so much happening out
there in terms of the technologies and the advancements and the
modernization, we can remain excited about it, but we also need
to make sure that the boring work of turning on the lights
around the country, every day, stays in place. So it's pushing
out on the technology side, but it's performance as well and
performance at a time that we are focusing on security,
absolutely the cyber piece, on reliability, on customer
affordability, on environmental sustainability and financial
viability as we have been reminded by Ms. Edgar.
It's a big challenge, but thank you for what you do within
your respective spheres to make it happen. We appreciate it,
and we appreciate the time that you have given us.
I know that members will likely have questions so we will
submit them to you and we look forward to those replies as
well. So thank you for being here before the Energy Committee.
And with that, we stand adjourned.
[Whereupon, at 12:01 p.m. the hearing was adjourned.]
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