Smart Grid City Update

Well, unfortunately, Xcel and the PUC have really bungled the potentially exciting deployment of the Smart Grid City prototype in Boulder.

The whole business model for Smart Grid in Colorado is strange because it's a monopoly trying to save it's customers money.
The PUC tries to regulate against Xcel ripping off their customers, but they have almost no directive to promote investment now if it saves money in the future. Add to that some customer resistance to smart metering because it is viewed as an invasion of privacy, and you get a difficult if not impossible implementation.

Why do we care so much about the Smart Grid? Because if TRUE electrical costs could be accurately accounted for and allocated, a residential solar photovoltaic system can be shown to be a better investment than it currently is. We are firm believers in the theory that many small investments in renewables and efficiency can make faster and more nimble improvements in the US's overall energy problems. Big ideas and large projects take much longer to implement, because they are big. The large amount of capital required slows down the process too much, even if the ROI is significantly better than small projects.

If your home-based PV system gives you a return of 5%-15% on your money, millions of homeowners will quickly enter the green energy market as investors. Even if they have zero cash, they can partner with a 3rd party such as SunRun to get a system installed.

We have lots of politically conservative friends who even think PV is a good investment.

Although we were hoping that the Smart Grid could reduce PV system size, PV system cost has been dropping steadily, so this good news takes the sting out of Xcel's big fumble.

Connecting the Dots Between Google and the Smart Grid

How the Google Math Adds Up:

1. Google is rapidly becoming the nation's largest single consumer of electrical energy.

2. 2007: Google announces their goal of producing renewable (solar) electricity as cheap as coal. The goal: $ 0.025/kwh

3. Plentiful solar electricity is generated during the common peak demand periods, hot summer afternoons.

4. 2009: Google announces the PowerMeter to help implement the "smart grid" as they envision it. A properly implemented smart grid could increase the selling price of peak demand power to $ 0.25/kwh or more.

Therefore, #4 causes a 3x to 10x increase in the profits of #2, while #3 + #2 solves problem #1.

What Ever Happened to Off-Peak Electric Rates?

In the 1970's, PSCO introduced off peak electric rates, which were designed to flatten their demand profile. At the time, a kwh used between 10pm and 6am was priced at less than a third of the cost of an on-peak kwh. If utilities can just tweak their customers usage habits thru rate schedules, they can really drop their capital costs. That is, they won't have to build that new power plant just to cover three week long spikes in demand.

Over the years, the PUC added many "cost adjustments" to the electric bill, which watered down the off-peak savings to be had. Eventually, all customers lost interest in the whole program and it was cancelled. These cost adjustments are multiplied by the kwh usage, and now account for around 66% of a residential electric bill. It didn't matter if all the usage was off-peak, these adjustments were still there in full. So, in 1980 if you were saving 2/3 of your bill with off-peak rates, by 2008, your savings would be 2/3 of the remaining 34%, or only 22%.