POWER IN NUMB3RS

Iowans take a load off

Published In: Intelligent Utility Magazine March/April 2010

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BOB HAUG WON'T LIKELY BE SUITING UP for a role in ''The Nutcracker'' anytime soon. But in his quest to showcase strength and synchronicity among a string of small Iowa utilities, the journeyman leader is cognizant that he needs to be as nimble-minded and -footed as master choreographer George Balanchine.

An artistic overlap of home energy management and the ballet? Who knew? Welcome to the inventive and nontraditional era of the smart grid.

In this case, the ''dance'' Haug is adapting centers around load management. As executive director of the Ankeny-based Iowa Association of Municipal Utilities (IAMU), he secured a $5 million American Recovery and Reinvestment grant via the U.S. Department of Energy to install programmable thermostats in 32,000 households and businesses served by 75 electric utilities.

Stimulus encourages mass utility movement

The monumental value of stimulus funds is to encourage utilities to move in the same direction at the same time, said Haug, head of the trade association since 1986.

''I asked myself, how does it make sense for small utilities to transition into smart grid technology? My answer is that it doesn't make sense to install smart meters unless you have dynamic pricing because there is no bang for the buck. Otherwise, smart meters are just an expensive way to get automatic meter reading,'' he said.

''What does make sense is to capture the short-term benefits associated with demand response. By building smart grid investments on load management, utilities can afford the technology that will lead to other smart grid technologies,'' he said.

Iowa customers receiving the new thermostats can save an estimated 10 to 15 percent on heating and cooling costs if the devices are programmed properly. Slicing peak load reduces costs because most IAMU utilities purchase power from the wholesale market.

''In short, we have the ability to tell customers what the prices of electricity are at different times,'' Haug pointed out. ''And we allow them to automate the response to those prices. Customers don't want to sit around watching a box to see which way the price of electricity is going.''

''In our part of the country, utilities tend to be very small and there is a community identity with the utility. Customers know that if they reduce the cost to their utility, they are reducing their own costs,'' he said.

''Our message is that it's good for you, good for the community and good for the environment,'' Haug said.

Programmable thermostats could save 57 MW

Installers familiar with Iowa communities will be hooking up the 32,000 programmable thermostats as soon as the final contract with DOE is inked. Upon completion, each participating utility expects to meet its target saturation goal-that is, penetration in 50 percent of all residential air conditioners and 25 percent of all commercial air conditioners.

Each recipient agrees to an energy efficiency assessment, a thermostat programming lesson and an incentive payment- $25 per household and $50 per company. Optimally, such joint action could save 57 megawatts of power, the size of a small energy plant.

IAMU is capitalizing on the cooperative bonds of the region by sharing marketing materials and operating on a customer opt-out basis to save money, foster participation and stick to a tighter schedule.

DOE's $5 million covers about 40 percent of the $12.5 million price tag for the smart thermostat program. That stimulus grant also covers the installation of 400 smart meters in some of those same households and businesses.

Pairing smart thermostats with smart meters allows utility managers to verify the effects of load control, track exactly when energy was saved and witness the benefits of interoperability. This, Haug said, is a great leap forward from utilities' older and clumsier attempts at load management.

Dynamic pricing pilot also planned

In tandem with that larger-scale initiative, three IAMU utilities are simultaneously participating in a $520,124 dynamic pricing pilot project that includes an additional 1,000 smart meters. Iowa's Office of Energy Independence is covering $210,000 of that total with a separate pot of federal stimulus money.

''The beauty is that this utility control system, the infrastructure that's necessary to control thermostats, also allows for other smart meter functions,'' he said. ''It pays for itself in two or three years and then utilities are ready to rock and roll.'' Software for the system is hosted at a single secure site to limit cyber security risks.

Utilities can send text messages about electricity prices directly to thermostats. As well, customers can choose to directly program their thermostat or access it via a Web portal. Most likely, utilities won't be deploying a pricing schedule in real time. Instead, Haug said, customers will be able to choose from three tiers: off-peak, on-peak and critical-peak.

Rates among IAMU members are locally regulated, so they can be adjusted to maximize benefits for utilities and customers.

''Together, these two grants give us all of the tools we need to determine the price elasticity of demand, or what price differences make customers change their behavior,'' Haug said. ''Electricity doesn't cost the same all the time. But we're telling customers we can develop a rate that will save you money.''

So, music for ''The Nutcracker's'' overture is cued. Haug is eager to push Iowa's novice load management experiment onto center stage and watch it morph into a prima ballerina.

''We can take advantage of economies of scale by working together,'' he said. ''This will make a significant difference because nothing would happen at this scale without stimulus money.''

This article was written by Elizabeth McGowan

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