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The Smart Grid: A New Network for Minnesota's Green Economy

April 07, 2009 By Salman Mitha, Fellow & Emmett Costel, Undergraduate Research Fellow

New networks can bring economic growth, new businesses and prosperity. One of the benefits of the Internet was online shopping, that brought Amazon, buoyed retailers and delivered enormous growth for UPS and other delivery services. The customer's new found diversity in choice spurred the growth of the world market for specialty niche vendors. The particular effects of the Internet are novel but it is old news that investing in networks promotes economic growth. One of the great 19th century business innovations, the Sears Catalog, was based on the development of the railway network; people living in markets too small to be served by a store could get the same goods and services that their city brethren enjoyed. There are many networks upon which the US economy is dependent: the Internet, telephones, roads and the electric grid.

The Electric Grid
The electric grid is perhaps the most important of all networks. The economy went from a 20% reliance on electricity in the 1940's to 60% in the 1980's placing the electric grid at the center of economic activity. But America's electric grid has been falling behind the 21st century needs and is in no shape to support the new green economy. The Obama Administration has been promoting a new Smart Grid, declaring in January, that a smart grid could "save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation." Our current grid, often called "the most complex machine in the world," was developed over the past century without any coherent planning. It now stands fragmented with distributed ownership that often necessitates management by nonprofit intermediaries. Despite the problems the grid runs 24/7 because it has to run 24/7. When it stops running a huge number of people and businesses are affected, e.g. the blackout of 2003 that paralyzed large sections of the East Coast.

The grid was originally designed for simple load patterns with large power plants constructed close to cities. The large coal, gas and nuclear power plants were a stable and predictable supply of power and were coupled with consumption from large cities with business and homes with traditional appliances and predictable demand for power. However today's rapidly growing demand and the explosion of electronic gadgets creates new demands and stresses on the grid. The new renewable sources of power, the wind and sun are neither stable nor predicable and are usually far from major demand centers. The creation of a 'smarter' grid permits efficiency gains in three crucial ways:
 

1) Manage complex demand to control peak demand.

2) Transmit large amounts of power over long distances.

3) Manage supply from variable and intermittent sources such as solar panels and wind turbines.

All the while the Smart Grid will have to meet all these needs while remaining in balance 24/7.

Making the Grid Smart
For most people the Smart Grid is demand management. Instead of having to build new plants to manage the few days of peak demand in the summer, utilities can save money and pass the benefits on to the consumer for only a slight inconvenience. The idea is to spread the demand out so that peak power needs are controlled.  For example, instead of running your dryer during the day when demand and the cost is highest, the system would encourage you to do your drying in the evening when demand was low and by virtue, the consumer gets a price break. Many utilities are already doing demand management to shut down air conditioners on peak demand days allowing customers to get a break on their bills. This is a very rudimentary smart grid. The idea is to install smart meters that allow the utility to monitor and potentially manage electrical devices in the home to better control and predict demand. Xcel Energy has a large scale Smart Grid pilot currently running in Boulder, CO. 

The Obama Administration is also pushing another key piece of the new grid, long distance power transmission. Utilities have to locate power production wherever the wind blows and the sun shines. Wind power is available in the Midwest, especially the upper Midwest. Solar power is primarily available in the southwest. However most of the demand is on the coasts. In other words a very large quantity of power will have to be transmitted over very long distances. This is something the grid was not designed to do. The grid is more like a network of single lane highways with short and local multi-lane freeways. What are needed are long distance multi-lane freeways. A second component to the smart grid is a new type of electric transmission, called DC high voltage transmission that can transmit power efficiently over very long distances.

The third challenge and perhaps most important piece of the Smart Grid is managing green power. Wind and solar electricity place new demands on the grid because they are intermittent power sources. Current green contributions to the grid are about 2% and do not have an impact but if the 20%-30% goals are reached, utility companies may have difficulty regulating power since the grid needs to be balanced all the time. Part of the solution will come from sophisticated demand management that utilities are developing. But perhaps the most exciting piece is energy storage. If part of solar power could be stored during the day and released during the night, solar power becomes a stable base load power like coal or nuclear. The same argument is applicable for wind power. Utilities are starting to work on large batteries and other energy storage ideas.  

What is the Market Doing?
President Obama's economic strategy is riding on a market wave that has already started; green business. One of the key tenets of this administrations strategy is to invest in alternative sources of energy and to upgrade our grid to a 'smart' status. Even before the election of 2008 conservative oil businessman T. Boone Pickens had invested $5 billion in green technology. He may not be an environmentalist but there are sound economics behind greening the economy. And one of key talking points to both the McCain and Obama campaigns was about building a better grid.

Upgrading the grid is central to all the renewable energy plans. For example Google recently chose to develop a large server farm in rural Washington State to be close to a hydroelectric plant and avoid reliance on the grid. Google is a world class company and is not satisfied by the current state of electrical grid. The U.S economy prides itself on its capacity for innovation but it must have a progressive infrastructure upon which its businesses can innovate. The funding and political momentum is there and Minnesota needs to be at the forefront.

What can Minnesota Do?
Minnesota with its extensive wind power resource is well positioned to take full advantage of the Smart Grid. There are ample opportunities for Minnesota to developing all three parts of the Smart Grid.

Western Minnesota is home to many wind farms. The people in western Minnesota would be very interested in participating in programs that could help grow the local economy. Developing a safe load management component of the Smart Grid requires pilot programs that encompass entire communities. Xcel Energy has a pilot program in Boulder, CO, which has incorporated the principles of a smart grid. This framework can be replicated in Western Minnesota, which is home to many small communities that could be used to develop rural multi-community pilot programs by Xcel.

Minnesota is between the wind resource-rich Dakotas and the demand centers of Chicago and the east coast. Any transmission lines to utilize wind power from the upper Midwest will have to go through Minnesota. There is also opportunity for greater utilization of Minnesota's own wind resources if efficient and modern transmission lines are built. A proposed high-voltage power line would connect the wind turbine farms along Buffalo Ridge and points west to the Midwest's biggest cities. The 765,000-volt line would run 3,000 miles across seven states, including Minnesota, the Dakotas, Iowa and Wisconsin, carrying power to the Chicago region and points east. The line boasts "green energy" credentials and it would lead to a reduction of up to 34 million metric tons of carbon emissions, which is equivalent to the annual emissions of as many as nine 600-megawatt coal-fired power plants. While this is in part a national issue, Minnesota is uniquely positioned to be a leader in the movement towards providing our economy with the electric grid it needs to resuscitate and green itself. 

Finally Minnesota should also lead in developing technology and techniques to manage production fluctuation. With a great wind and roof top solar power potential, Minnesota stands to benefit greatly from energy storage solutions. In the past Minnesota has been a leader in pioneering renewable energy, from wind power to ethanol. With the green economy on the horizon, the time has come to forge ahead.
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