We Built This City

Imagine if you could plan your electricity usage to take advantage of cheaper rates and increase efficiency while using cleaner sources of energy? That dream is coming true in the Smart Grid City of Boulder, Colorado, thanks to Xcel Energy. Marie Shields gets the scoop from CIO Mike Carlson.

“Smart grid is very analogous to the internet; it has to have the same iteratively progressive expansion”
-Michael Carlson, Xcel Energy

Thanks to its Smart Grid City project in Boulder, Colorado, Xcel Energy is helping to make the intelligent power grid a reality. But before delving into the specifics of the project, let’s go back to basics – the meaning of the term ‘smart grid’ itself.

The more people you talk to about smart grid, the more you realize how many different definitions there are. Some people hang the definition solely on smart metering, while others take a broad approach. Xcel Energy is one of the latter, as CIO Mike Carlson explains: “There are all kinds of different definitions, but the way we look at it is the horizontal integration of the entire energy path from generation through consumption, with the use of advanced communication and control technologies to optimize energy production, transport and consumption.”

Carlson is particularly insistent that the concepts of ‘smart grid’ and ‘smart meter’ are not synonymous: “We have held the belief for a very long time that a smart meter is not a smart grid. It’s not the definition of a grid is in its entirety; the meter is one component of it. A smart meter does help the utility automate its billing and maybe some of its analytics processes.

“But the meter is a secondary component of a smart grid. If we’ll allow ourselves to look into the future, I think we should be questioning whether a meter is part of the puzzle at all. That’s not to say that you don’t have to measure your electric consumption in some way, shape or form. But do you need a meter to do it? A meter is an archaic device that at the end of the day only serves to measure. It can’t control. It can provide information, albeit not by itself. We need to ask ourselves, are there other, more efficient, effective and less expensive ways to accomplish those tasks?”

Carlson says that if the industry is smart, it will build a grid with foundation optionality that gives short-term benefits today, and the long-term opportunity to naturally expand. From his point of view, there is a big risk in building something that then has to be ripped out and built again.

“Once you make the investment you’re almost required to run the course of that investment before you change it,” he explains. “The risk of this is to not get so far ahead of ourselves that we miscalculate and island an investment that can’t be leveraged to the next iterative expansion point of smart grid.

“That probably describes one of my biggest concerns about the investment in AMI. It’s a huge cost that could become an island investment five years from now, because it can only provide X amount of capability, and because of the cost and complexity and time to deploy. This might limit you from being able to go to the next iterative level of opportunity.”

Defining the possibilities
However you define it, smart grid seems certain to bring benefits to both consumers and utilities. “Short-term you’re probably looking at the smart grid giving benefits to the utility back-office function,” explains Carlson. “This is what we’re finding out in Boulder both in terms of what’s possible and what’s feasible. These are things that are very non-evident to our customers, such as a more effective use of our resources, better dispatch of our crews, avoiding outages through better monitoring and detection and extending our asset life because we’re avoiding breakage.

“It will take some time for the data to prove this, but we believe that by better managing and balancing the grid we will see reduced line loss and improved efficiencies in the way the system operates. These are things that will not be directly evident to the customer, but they will manifest themselves in cost avoidance into the future, and a couple of percent in cost avoidance can show up in real dollars in savings to our customer.”

Carlson believes that one of smart grid’s big initial benefits is that it’s fueling what he calls energy transparency to the customer. He says that this is where smart meters will provide some value: smart grid will be a catalyst for driving energy information and transparency about energy consumption to Xcel Energy’s customer base.

“Short term, I’m not a big fan of providing information for just to say it’s out there,” he emphasizes. “It will drive some education to our customers about what their consumption is and why their consumption is the way it is and what options they’ve got to start considering different ways to better impact and improve that energy consumption profile. Some will look solely at costs, while others will look at emissions or environment – everybody’s got their drivers.

“I’m a big proponent of moving the system from load following to load balancing or demand management, but I do acknowledge that it’s going to be long term in its acceptance. Unfortunately, in the way people look at it today, they take that as the energy company controlling when and why they use electricity. And I would rather have it articulated that the energy company is going to provide information and technology to the customer so that they can participate in load management with us, as opposed to just be the recipient of it.”

Smartening up
Smart Grid City is billed on the Xcel Energy’s website as ‘the nation’s first fully integrated smart grid community,’ which will apparently boast ‘the largest and densest concentration of these emerging technologies to date.’

Carlson says the development of Smart Grid City can be described in two different ways. “Phase I was the targeted installation and enablement of an entire system on two of our substations and about a third of the city. We put all components in two substations, seven feeders, 15,000 customers, on the grid with advanced communication, broadband over powerline monitoring and advanced meters. We did put 15,000 advanced meters into Boulder so we could measure the incremental impact of them, and then advanced in-home devices.

“Phase II then becomes finishing the rest of the city with advanced communication capability, but spreading out those monitoring meters and homes: instead of having a concentrated feeder and substation you’ve 10 percent penetration. The reason we’re doing that is to compare the benefits versus the cost of having everybody on an identical system, as opposed to having a portion of the city on those advanced capabilities.

“Phase III in that model was described as the software integration of all of the different points along the system from generation to consumption and the software analytics and decision point controls that would be put in against all that monitoring and capability.”

Carlson describes the alternative way of looking at it as phase I being the establishment of infrastructure: communications, monitoring, measurement and control. Phase II is customer engagement: automated home response, information portals, demand response programs. And Phase III is the quantification and evaluation of the investment that was made.

The birth of an idea
In 2003, Xcel Energy established a ‘Utility of the Future’ utility innovations advisory board: a group of partners mandated to think outside the box in conjunction with the utility, to come up with ways of applying technology to enhance and improve its operations.

In September 2006, the company convened a group of about 45 people – regulators, public officials, industry consultants, energy managers – to brainstorm what a better managed grid would look like. From this arose what ultimately became Smart Grid City.

Why Boulder? Carlson says that as part of the planning process, they began to recognize that the utility industry is very fond of pilots. He explains that these are usually very small pilots, and while they often produce an answer or prove or disprove the intent they were designed for, they are so small that they either require a large number of assumptions to be made around them, or result in a new set of questions that requires a new pilot.

“We wanted to envelop the entire system in testing what we feel is a very integrated solution,” Carlson says. “Just testing demand response without testing load control, without having advanced communications, we didn’t feel was a value-add. The other part of our vision is to establish a continuous living, breathing environment that allows us to iteratively test and validate benefits and opportunities.

“Under that guise of design, we then looked at where in our system we had the physical attributes, the architectural designs and the mix of customers we would need to carry out such a project – mature homeowners, transient residents, college students, some amount of commercial and industrial. Where did we have a mix of customer base? Where did we have enough size that we could statistically validate our results? And we came up with about eight different locations within the Xcel Energy footprint. Then we went to the next level of engagement by the state, the city and the customers’ willingness to participate.

“After all these criteria were evaluated and assessed, we worked with our partners on where they felt they’d get the most benefit and confidence of results, and we ended up in Boulder.”

Show me the money
One of the questions with such a large, long-term project is: where will the money come from? Carlson describes Smart Grid City as having an at-risk funding model. “The reason we’re at-risk is we did not want the culture of the industry model, meaning you can’t spend money without the confidence that that money is going to produce value, and hence you then start to limit your focus of spend on things you know will work. Then because you’re only exploring things that you know will work, you’re passing up the opportunity to give a different view of the model.

“Because of that, we wanted to take the money out of the normal regulated process and perform the study at risk to allow us to fail, I guess is the best way to describe it. And as such, Xcel has taken the risk, along with its partners, to fund Boulder in the validation of value that will come back to the customer, ultimately, in the system.”

Carlson explains that because the cost of Boulder was more than Xcel Energy was willing to put at risk, the company solicited partners for at-kind investment. The result of this is that the majority of the project is funded by Xcel Energy’s partners: Current Group, Accenture, GridPoint, Ventyx, OSIsoft and Schweitzer Engineering Laboratories. All the partners have contributed an investment of people, money, equipment and technology into Boulder at risk of recovery. Carlson’s expectation is that pieces of the program will demonstrate themselves and be eligible for that recovery. He adds, however, that, “The predication going in was if everything fails, we’ve all got an investment that we’ll have to write off at the end of the day.”

With so many companies involved, there could be the potential for conflict, but Carlson praises the partners for their outstanding participation and their willingness to share. “No one company has a full solution – a smart grid in a box ,” he points out. “So the need to bring this various expertise together is key.

“I’m not going to say that underneath the covers it’s not a more difficult model to manage, but I can’t say enough about all the partners and their willingness to think outside the box – their ability to put what would be traditional competitive concerns somewhat aside. All of our partners have had to step up and swallow occasionally. But in that process they’ve all recognized that there is quite a bit of benefit for them and their businesses. More benefit than risk would be the way I’d describe it.”

Each of the project’s partners provides a key component of the technology needed to make the project a success. According to Carlson, Current Group is providing broadband over power lines for communications, along with a natural monitoring and control technology embedded into the communications system. This provides grid monitoring and grid control along with a high speed, low latency, high bandwidth communication backbone.

Schweitzer Engineering provides substation distribution control: from switches and capacitor bank to advanced analytics. There are several other partners on the customer home side, including GridPoint, Control4 and Lixar, supplying advanced thermostat, gateway controls and meter reading.

Landis + Gyr provides the meter technology being leveraged in just under half of the city, and Ventyx contributes two discrete components of technology solution load dispatch analytics for generation planning and integration of work management paths.

Carlson explains how the technology would work in a sample scenario: “Say the transformer on Feeder 69 overheats. Current Group technology monitors that, and an alert comes back through the communication bus, into analytics software from Accenture, which provides the integration of all the software points. It’s identified as a field event that needs a crew dispatched to it, which is then automatically dropped into our work management system through Ventyx’s technology. This will ultimately end up in a field dispatch of a crew with a mobile terminal in their truck. OSIsoft provides the technology layer of real-time data management for all these data flows.”

Set to run and run
Carlson has mixed feelings about how long the project should continue. “Smart grid is very analogous to the internet. If in 1990 you had sat down and tried to design the internet for what it does in 2009, you can imagine that it would never have occurred. Smart grid has to have the same iteratively progressive expansion.

“On the other hand, we have to put a box around it so we can get conclusion and completion. For Smart Grid City, we are targeting the end of the year to have completed the build-out, assessed the capabilities and finalized the business case to the point of defining what our go-forward strategies are for smart grid at Xcel Energy.

“On a variety of levels, we want to have an articulated strategy for smart grid across our service territory. We want to have a next steps design of what we need to do and what our technology partners need to do. There are three legs on the stool in this model: What can technology do? What are our customers wanting and willing to do? And the third leg is, what does the regulator want to step up to?

“With the regulator, it’s a chicken and egg situation. We point a finger at the regulator needing to facilitate this, and in the regulator’s defence, without seeing what technology can do for them, they don’t want to step out too far in front of the cart.

“So another key objective is having a plan for how we start to partner with the regulators on examining different models for an electric utility that has been operating for 75 years and fundamentally hasn’t changed. Long term, what I expect to see out of smart grid over a three to five-year range is the opportunity to remake the way electric services are consumed and paid for in this country,” Carlson concludes, as he laughingly explains that the chance to achieve such a big goal is why he enjoys going to work.

Whatever route we end up taking toward a more energy efficient future, it seems that all roads lead to – or at least through – Smart Grid City.

At the time of interview, Michael Carlson was Vice President and Chief Information Officer for Xcel Energy. He recently left Xcel to take up an executive position with GridPoint.

“I see the opportunity to remake the way electric services are consumed and paid for in this country”
-Michael Carlson, Xcel Energy