[Federal Register Volume 75, Number 180 (Friday, September 17, 2010)]
[Notices]
[Pages 57006-57011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23251]
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DEPARTMENT OF ENERGY
Addressing Policy and Logistical Challenges to Smart Grid
Implementation
AGENCY: Office of Electricity Delivery and Energy Reliability,
Department of Energy.
ACTION: Request for Information.
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SUMMARY: The Department of Energy (DOE) is seeking comments from
interested parties on policy and logistical challenges that confront
smart grid implementation, as well as recommendations on how to best
overcome those challenges. DOE is undertaking this Request for
Information (RFI) on behalf of the Administration and in consultation
with key stakeholders from state regulatory bodies. The RFI will assist
these parties
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as they seek to assure smart grid deployments benefit consumers, the
economy and the environment. In particular, comments on the RFI will
help inform the Administration's analysis of policy challenges and
possible solutions being developed by the Smart Grid Subcommittee of
the National Science and Technology Council's Committee on Technology.
The Subcommittee seeks to base its analysis on an up-to-date
understanding of the context in which smart grid technologies, business
models and policies operate. This is the third in a series of RFIs
issued by DOE regarding smart grid implementation. Prior RFIs sought
comment on data access, data usage and privacy issues, and on
communications requirements for the smart grid. In this RFI, DOE seeks
specific input on: the best way to define the term ``smart grid'' for
policymaking purposes; the consumer-level benefits from, and challenges
to, smart grid deployment; the benefits and challenges associated with
smart grid implementation on the ``utility side'' of the meter; the
ways in which policy makers at all levels of government can share
experience and resources; and the broader, economy-wide benefits and
challenges associated with the smart grid. In so doing, this RFI avoids
duplicating questions that were raised in prior RFIs.
DATES: Comments must be transmitted or postmarked by no later than
November 1, 2010.
ADDRESSES: You may submit comments identified by ``Smart Grid RFI:
Addressing Policy and Logistical Challenges'' via any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov (following
the instructions for submitting comments);
E-mail: [email protected]. Include ``Smart Grid RFI:
Addressing Policy and Logistical Challenges'' in the subject line of
the message; or
Mail: U.S. Department of Energy, Office of Electricity Delivery and
Energy Reliability, 1000 Independence Avenue, SW., Room 8H033,
Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT: Michael Li, Electricity Policy
Specialist (202) 287-5718. For media inquiries you may contact Tiffany
Edwards at 202-586-6683.
SUPPLEMENTARY INFORMATION:
Introduction
As noted in earlier RFIs, the smart grid has significant promise.
The smart grid better integrates information, communication, and
intelligent control technology, into the nation's electrical system. It
will offer new tools to maintain reliability and improve flexibility.
It has the potential to improve power quality, manage power scarcities
and reduce transmission congestion costs. A truly smart grid should
achieve environmental goals at lower cost than the traditional grid, be
able to respond more quickly to natural or man-made outages and,
overall, operate the electrical system more efficiently without
reducing system cyber security or reliability.
President Obama's energy and climate change policy aims to reduce
harmful greenhouse gas emissions and U.S. dependence on foreign oil, to
create jobs, and to help U.S. industry compete successfully in global
markets for clean energy technology. Smart grid deployment is an
important component of the Administration's broader strategy. The
American Recovery and Reinvestment Act of 2009 (``Recovery Act'') took
large, initial steps to accelerate the smart grid transition. The
Recovery Act included $11 billion for smart grid technologies,
transmission system expansion and upgrades, and other investments to
modernize and enhance the electric transmission infrastructure.
To build on the Recovery Act's initiatives, the National Science
and Technology Council's (NSTC) Committee on Technology has established
a Subcommittee on Smart Grid, co-led by DOE's Office of Electricity
Delivery and Energy Reliability and the Department of Commerce's
National Institute of Standards and Technology (http://www.smartgrid.gov/news/nstc_subcommittee). The Subcommittee on Smart
Grid is working to ensure the federal government develops and executes
a long-term, comprehensive strategy in partnership with the states that
will further President Obama's comprehensive energy and climate plan,
as well as the Recovery Act's effort to catalyze the development of a
smarter grid. The Subcommittee will develop policy options and
recommendations for the Administration as a whole and guide federal-
state cooperative efforts. It will investigate emerging technologies
and provide analysis about ways to advance the smart grid in a cost-
effective and appropriate manner.
DOE's Office of General Counsel issued two RFIs on May 11, 2010 on
smart grid policy issues. (75 FR 26203 and 75 FR 26206) The first RFI
sought comments on ongoing federal, state and private sector efforts to
make more effective use of consumer energy usage data, while at the
same time safeguarding consumer privacy. The second RFI sought comments
to assist the Department in identifying the present and future
communications needs of electric utilities as smart grid technologies
are deployed more broadly. This RFI seeks to collect information and
open a dialogue about a wide range of additional issues dealing with
smart grid technology, applications, consumer interaction, policy
initiatives and economic impact.
Background
The smart grid has the potential to add devices and applications
that improve power quality, reduce transmission congestion costs, read
meters and provide prompt feedback that allows better decision making;
better synchronize consumption with generation; help integrate variable
renewable generation and electric vehicles into the electric system;
detect and address equipment problems and outages; and provide central
and end-user control over energy consumption. The United States can be
a global leader in developing these innovative technologies. For many
reasons, then, it is important to continue to research, develop and
deploy smart grid systems.
DOE is aware that technology, business, consumer and regulatory
issues interact in complicated ways. The smart grid will be composed of
numerous vast, evolving and interrelated systems including
communication networks, sensors on transmission and distribution
systems such as phasor measurement units (PMU) and advanced metering
infrastructure (AMI), and controls such as programmable communicating
thermostats. It will facilitate changes in how electricity is produced,
distributed, consumed and conserved.
DOE also recognizes that while it may be possible to estimate the
benefits of current efforts to deploy smart grid technologies and
applications, it may be unrealistic to precisely quantify their future
impacts because the smart grid is not fully developed and its future
applications are likely to change. Nevertheless, even unavoidable
uncertainty should not deter federal and state authorities, utilities
or other interested parties from assessing current implications of,
barriers to, and the best-available estimates of the likely impact of
making the grid smarter. For example, certain smart grid and demand-
response applications have been deployed by utilities and electric
cooperatives for
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many years.\1\ These applications include automated collection of
detailed meter data, direct load control, and systems that vary prices
based on typical or actual grid conditions at the time the customer
used power. We seek to learn from those preexisting efforts, as well as
newer projects and pilots.
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\1\ Fed. Energy Regulatory Comm'n, Assessment of Demand Response
and Advanced Metering, 8, 65 (Dec. 2008), available at http://www.ferc.gov/legal/staff-reports/12-08-demand-response.pdf.
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Request for Information
The following questions cover the major areas we seek comment on.
They are not a determination of the final topics that DOE and the NSTC
Smart Grid Subcommittee will address, and commenters may address any
topic they believe to have important implications for smart grid policy
regardless of whether this document mentions it.
In response to any question that asks about smart grid technologies
broadly defined, please describe the set of smart grid technologies
your response considers. To aid the discussion of the relevant issues,
commenters are welcome to use the following categories to classify the
technologies they discuss, adding any clarifying language they view as
appropriate.
Instrumenting and automating the transmission and generation
system
Distribution automation
Upgraded metering, such as AMI or even enhanced technologies
that improve the capabilities of traditional AMR
Consumer facing programs such as feedback, demand response,
energy efficiency, and automation strategies
Integrating new end user equipment like distributed generation
and electric vehicles
Commenters can assume a high degree of general knowledge on the part of
DOE and the Subcommittee. Commenters are encouraged to cite or include
relevant data and analyses in their responses. In addressing the
following questions, we ask stakeholders to be concise. We primarily
seek facts and concrete recommendations that can augment that general
knowledge. We encourage stakeholders to use concrete examples of
benefits, costs, and challenges or to bring novel or underappreciated
sources of evidence to our attention wherever possible.
Definition and Scope
The deployment of technology to make the nation's electric grid a
more interactive, efficient and responsive system is already underway.
At the early stages of any major technological shift, stakeholders
often use the same term-of-art to mean different things which can lead
to miscommunication. To minimize confusion as we identify policy
challenges and recommendations, this RFI uses the broad definition of
Smart Grid laid out in Title XIII of the Energy Independence and
Security Act of 2007 (EISA). Title XIII mentions that the smart grid
uses communications, control, and information technology to optimize
grid operations, integrate distributed resources including renewable
resources, increase energy efficiency, deploy demand response, support
electric vehicles, and integrate automated, interactive interoperable
consumer devices. We encourage commenters to reference the full text of
EISA section 1301.
We invite comment however on whether this is the best way to define
the smart grid. What significant policy challenges are likely to remain
unaddressed if we employ Title XIII's definition? If the definition is
overly broad, what policy risks emerge as a result?
We also invite comments on the geographic scope of standardization
and interconnection of smart grid technologies. Should smart grid
technologies be connected or use the same communications standard
across a utility, state, or region? How does this vary between
transmission, distribution, and customer-level standards? For example,
is there need to go beyond ongoing standards development efforts to
choose one consumer-facing device networking standard for states or
regions so that consumers can take their smart appliances when they
move and stores' smart appliance will work in more than one service
area?
Interactions With and Implications for Consumers
Typical consumers currently get limited feedback about their daily
energy consumption patterns and associated costs. They also have
limited understanding of variations in the cost of providing power over
the course of the day and from day to day. Many smart grid technologies
aim to narrow the typical consumers' knowledge gap by empowering
consumers with greater knowledge of and ability to control their
consumption and expenditures. This vision transforms many consumers'
relationship with the grid, which prompts us to ask the following
questions.
For consumers, what are the most important applications of
the smart grid? What are the implications, costs and benefits of these
applications? What new services enabled by the smart grid would
customers see as beneficial? What approaches have helped pave the way
for smart grid deployments that deliver these benefits or have the
promise to do so in the future?
How well do customers understand and respond to pricing
options, direct load control or other opportunities to save by changing
when they use power? What evidence is available about their response?
To what extent have specific consumer education programs been
effective? What tools (e.g. education, incentives, and automation)
increase impacts on power consumption behavior? What are reasonable
expectations about how these programs could reshape consumer power
usage?
To what extent might existing consumer incentives,
knowledge and decision-making patterns create barriers to the adoption
or effective use of smart grid technologies? For instance, are there
behavioral barriers to the adoption and effective use of information
feedback systems, demand response, energy management and home
automation technologies? What are the best ways to address these
barriers? Are steps necessary to make participation easier and more
convenient, increase benefits to consumers, reduce risks, or otherwise
better serve customers? Moreover, what role do factors like the trust,
consumer control, and civic participation play in shaping consumer
participation in demand response, time-varying pricing, and energy
efficiency programs? How do these factors relate to other factors like
consumer education, marketing and monthly savings opportunities?
How should combinations of education, technology,
incentives, feedback and decision structure be used to help residential
and small commercial customers make smarter, better informed choices?
What steps are underway to identify the best combinations for different
segments of the residential and commercial market?
Are education or communications campaigns necessary to
inform customers prior to deploying smart grid applications? If so,
what would these campaigns look like and who should deploy them? Which
related education or public relations campaigns might be attractive
models?
What should federal and state energy policymakers know
about social norms (e.g. the use of feedback that compares a customers'
use to his neighbors) and habit formation? What are the important
lessons from efforts to persuade people to recycle or engage in other
environmentally friendly activity? What are the implications of these
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insights for determining which tasks are best automated and which
should be subject to consumer control? When is it appropriate to use
social norm based tools?
How should insights about consumer decision-making be
incorporated into federal-state collaborative efforts such as the
Federal Energy Regulatory Commission's (FERC) National Action Plan on
Demand Response?
Interaction With Large Commercial and Industrial Customers
Large commercial and industrial customers behave differently than
residential consumers and small businesses. They regularly use
sophisticated strategies to maximize their energy efficiency, to save
money and to assure reliable business operations. Indeed, some already
are or others are seeking to participate directly in wholesale energy
and ancillary services markets. Please identify benefits from, and
challenges to, smart grid deployment that might be unique to this part
of the market and lessons that can be carried over to the residential
and small business market. Please identify unmet smart grid
infrastructure or policy needs for large customers.
Assessing and Allocating Costs and Benefits
Regulators pay a great deal of attention to the costs and benefits
of new investments, appropriate allocation of risk and protection of
vulnerable customer segments. The many unknowns associated with smart
grid programs make these ubiquitous questions particularly challenging,
which suggests a great need to share perspectives and lessons.
How should the benefits of smart grid investments be
quantified? What criteria and processes should regulators use when
considering the value of smart grid applications?
When will the benefits and costs of smart grid investments
be typically realized for consumers? How should uncertainty about
whether smart grid implementations will deliver on their potential to
avoid other generation, transmission and distribution investments
affect the calculation of benefits and decisions about risk sharing?
How should the costs and benefits of enabling devices (e.g.
programmable communicating thermostats, in home displays, home area
networks (HAN), or smart appliances) factor into regulatory assessments
of smart grid projects? If these applications are described as benefits
to sell the projects, should the costs also be factored into the cost-
benefit analysis?
How does the notion that only some customers might opt in
to consumer-facing smart grid programs affect the costs and benefits of
AMI deployments?
How do the costs and benefits of upgrading existing AMR
technology compare with installing new AMI technology?
How does the magnitude and certainty of the cost
effectiveness of other approaches like direct load management that pay
consumers to give the utility the right to temporarily turn off air
conditioners or other equipment during peak demand periods compare to
that of AMI or other smart grid programs?
How likely are significant cost overruns? What can
regulators do to reduce the probability of significant cost overruns?
How should cost overruns be addressed?
With numerous energy efficiency and renewable energy
programs across the country competing for ratepayer funding, how should
State Commissions assess proposals to invest in smart grid projects
where the benefits are more difficult to quantify and the costs are
more uncertain?
What are appropriate ways to track the progress of smart
grid implementation efforts? What additional information about, for
example, customer interactions should be collected from future pilots
and program implementations? How are State Commissions studying smart
grid and smart meter applications in pilots? In conducting pilots, what
best practical approaches are emerging to better ascertain the benefits
and costs of realistic options while protecting participants?
How should the costs of smart grid technologies be
allocated? To what degree should State Commissions try to ensure that
the beneficiaries of smart grid capital expenditures carry the cost
burdens? Which stakeholder(s) should bear the risks if expected
benefits do not materialize? How should smart grid investments be
aligned so customers' expectations are met?
When should ratepayers have the right to opt out of
receiving and paying for smart grid technologies or programs like
meters, in home displays, or critical peak rebates? When do system-wide
benefits justify uniform adoption of technological upgrades? How does
the answer depend on the nature of the offering? How should regulators
address customer segments that might not use smart grid technologies?
How might consumer-side smart grid technologies, such as
HANs, whether controlled by a central server or managed by consumers,
programmable thermostats, or metering technology (whether AMR or AMI),
or applications (such as dynamic pricing, peak time rebates, and remote
disconnect) benefit, harm, or otherwise affect vulnerable populations?
What steps could ensure acceptable outcomes for vulnerable populations?
Utilities, Device Manufacturers and Energy Management Firms
Electricity policy involves the interaction of local distribution
utilities, bulk power markets and competitive markets for electrical
appliances and equipment. Retail electricity service is under state and
local jurisdiction. Generally, bulk power markets are under FERC
jurisdiction. Appliances comply with federal safety and efficiency
rules. Smart grid technologies will change the interactions among these
actors and should create new opportunities for federal-state
collaboration to better serve citizens.
Greater collaboration seems essential. Some state regulatory
agencies already oversee energy efficiency programs that help
ratepayers acquire equipment like energy efficient appliances. Those
appliances also are subject to federal regulatory oversight. As the
smart grid evolves, these types of ties are likely to deepen. Moreover,
EISA foresees a federal role in developing potentially mandatory
standards for some smart grid equipment and voluntary standards for
smart-grid enabled mass-produced electric appliances and equipment for
homes and businesses. Many commentators suggest that utilities may lack
appropriate incentives to invest in the most cost effective smart grid
infrastructure and allow that infrastructure to be used to conserve
energy, because most service providers generate revenue based on the
number of kilowatt hours sold and pass through the capital costs of
things like smart grid infrastructure. If this is accurate, then those
disincentives are an impediment to achieving national and state goals
and, therefore, merit state and federal policy makers' attention.
In issuing this RFI, DOE is mindful that the states oversee retail
electric service and that state regulation differs state by state.
Within states different types of service providers may be subject to
different regulatory schemes depending, for example, on whether the
service provider is investor owned, publicly owned or a cooperative.
Recognizing the primary role of states in this area, we ask the
following questions:
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How can state regulators and the federal government best
work together to achieve the benefits of a smart grid? For example,
what are the most appropriate roles with respect to development,
adoption and application of interoperability standards; supporting
technology demonstrations and consumer behavior studies; and
transferring lessons from one project to other smart grid projects?
How can federal and state regulators work together to
better coordinate wholesale and retail power markets and remove
barriers to an effective smart grid (e.g. regional transmission
organization require that all loads buy ``capacity'' to ensure the
availability of power for them during peak demand periods, which makes
sense for price insensitive loads but requires price sensitive loads to
pay to ensure the availability of power they would never buy)?
How will programs that use pricing, rebates, or load
control to reduce consumption during scarcity periods affect the
operations, efficiency, and competiveness of wholesale power markets?
Will other smart grid programs have important impacts on wholesale
markets? Can policies improve these interactions?
Do electric service providers have the right incentives to
use smart grid technologies to help customers save energy or change
load shapes given current regulatory structures?
What is the potential for third-party firms to provide
smart grid enabled products and services for use on either or both the
consumer and utility side of the meter? In particular, are changes
needed to the current standards or standard-setting process, level of
access to the market, and deployment of networks that allow add-on
products to access information about grid conditions? How should the
interaction between third-party firms and regulated utilities be
structured to maximize benefits to consumers and society?
How should customer-facing equipment such as programmable
communicating thermostats, feedback systems, energy management systems
and home area networks be made available and financed? Are there
consumers behavior or incentive barriers to the market achieving
efficient technology adoption levels without policy intervention?
Given the current marketplace and NIST Smart Grid
Interoperability Panel efforts, is there a need for additional third-
party testing and certification initiatives to assure that smart grid
technologies comply with applicable standards? If there is a need for
additional certification, what would need to be certified, and what are
the trade-offs between having public and private entities do the
certification? Is there a need for certifying bodies to oversee
compliance with other smart grid policies, such as privacy standards?
Commenters should feel free to describe current and planned
deployments of advanced distribution automation equipment,
architectures, and consumer-facing programs in order to illustrate
marketplace trends, successes, and challenges. And they should feel
free to identify any major policy changes they feel would encourage
appropriate deployment of these technologies.
Long Term Issues: Managing a Grid With High Penetration of New
Technologies
Significant change in the technologies used to generate power and
to keep supply and demand balanced is likely to occur over the
foreseeable future. We invite comments on the steps that should be
taken now to give the grid the flexibility it will need to deal with
transitions that are likely in the next few decades. Commenters might
address the following questions, some of which have more immediate
implications.
What are the most promising ways to integrate large
amounts of electric vehicles, photovoltaic cells, wind turbines, or
inflexible nuclear plants? What approaches make sense to address the
possibility that large numbers of other consumer devices that might
simultaneously increase power consumption as soon as power prices drop?
For instance, what is known about the viability of and tradeoffs
between frequently updated prices and direct load control as approaches
to help keep the system balanced? How do factors like the speed of
optimization algorithms, demand for reliability and the availability of
grid friendly appliances affect those trade-offs?
What are these strategies' implications for competition
among demand response, storage and fast reacting generation? What
research is needed to identify and develop effective strategies to
manage a grid that is evolving to, for example, have an increasing
number of devices that can respond to grid conditions and to be
increasingly reliant on variable renewable resources?
What policies, if any, are necessary to ensure that
technologies that can increase the efficiency of ancillary services
provision can enter the market and compete on a level playing field?
What policies, if any, are necessary to ensure that
distributed generation and storage of thermal and electrical energy can
compete with other supply and demand resources on a level playing
field?
What barriers exist to the deployment of grid
infrastructure to enable electric vehicles? What policies are needed to
address them?
Reliability and Cyber-Security
We invite comment on the reliability opportunities and challenges
that smart grid technologies create, including: What smart grid
technologies are or will become available to help reduce the electric
system's susceptibility to service disruptions?
What policies are needed to facilitate the data sharing
that will allow sensors (e.g., phasor measurement units) and grid
automation to achieve their potential to make reliability and
performance improvements in the grid? Is there a need to revisit the
legal and institutional approaches to generation and transmission
system data collection and interchange?
What is the role of federal, state, and local governments
in assuring smart grid technologies are optimized, implemented, and
maintained in a manner that ensures cyber security? How should the
Federal and State entities coordinate with one another as well as with
the private and nonprofit sector to fulfill this objective?
Managing Transitions and Overall Questions
The following questions focus on managing incremental change during
the gradual evolution of the grid that may transform the power sector
over the next few decades.
What are the best present-day strategies for transitioning
from the status quo to an environment in which consumer-facing smart
grid programs (e.g., alternative pricing structures and feedback) are
common? What has been learned from different implementations? What
lessons fall into the ``it would have been good to know that when we
started'' category? What additional mechanisms, if any, would help
share such lessons among key stakeholders quickly?
Recognizing that most equipment on the electric grid,
including meters, can last a decade or more, what cyber security,
compatibility and integration issues affect legacy equipment and merit
attention? What are some strategies for integrating legacy equipment
into a robust, modernized grid? What strategies are appropriate for
investing in equipment today that will be more valuable if it can delay
obsolescence by
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integrating gracefully with future generations of technology?
How will smart grid technologies change the business model
for electric service providers, if at all? What are the implications of
these changes?
What are the costs and benefits of delaying investment in
metering and other smart grid infrastructure while the technology and
our understanding of it is rapidly evolving? How does that affect the
choice of an appropriate time to invest?
What policy changes would ensure that the U.S. maintains
global competiveness in smart grid technology and related businesses?
What should be the priority areas for federally funded
research that can support smart grid deployment?
Finally, as noted at the outset, we invite commenters to address any
other significant issues that they believe implicate the success or
failure of the transition to smart grid technology.
Issued in Washington, DC, on September 13, 2010.
Patricia Hoffman,
Assistant Secretary.
[FR Doc. 2010-23251 Filed 9-16-10; 8:45 am]
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