Build Smart Grid Infrastructure

Assumptions

• Smart grid meters, modules, and networks have a 25 year life cycle
• 91 percent electric accounts in the city are residential, 9 percent are commercial
• Smart grid technology can reduce energy consumption by an average of 12 percent

Analysis

Building a smart grid in San Francisco would be a truly cutting-edge climate change policy that would reduce emissions significantly. Only one city, Boulder, Colo., is trying to build a citywide smart grid. The energy saved from smarter technology is predictable, and our estimate of 12 percent savings is conservative, given that Boulder is expecting to achieve a 20 percent emissions reduction. While not as cost-effective as energy efficiency requirements — which cost the City almost nothing and save building owners money after an up front cost — a smart grid is more cost effective than small renewable energy generation. The City could even attract private financing for such an innovative program.

What we do now
The system by which electricity is distributed today is centralized and unidirectional – transmitting power from a few large generation points to many end users. This is as true for San Francisco as it is for every other city in the country, and it is a legacy of how we built a national electric grid more than 100 years ago.

“Smart grid” infrastructure is being pioneered as a reinvestment strategy that will be more flexible, while accommodating distributed energy sources such as rooftop photovoltaic panels, plug-in hybrid vehicles and backup generators. A smart grid would allow grid managers to shift power provided in one place to power needed in another place, while managing demand.

A smart grid could take on key elements of grid balancing on its own, while minimizing distribution losses. A key piece of smart grid infrastructure is smart or advanced meters, which provide utilities with real time data on energy use, along with other helpful information such as leak detection,¹ meter tampering information and outage detection. Smart meters can also provide advantages to customers, allowing them to monitor energy consumption more closely, or to take advantage of off-peak pricing. Finally, smart metering can improve system reliability by helping match system capacity to loading, accurately forecasting loads and optimizing distribution.

What we could do
The cities of Houston and Dallas, and the state of Washington have each rolled out smart meters on a small scale, while the Boulder, Colo. is working to become the country’s first fully-integrated smart grid city. There, a partnership of electric utility Xcel Energy and software, hardware and management providers will install 50,000 smart meters and build a fiber optic loop around the city that connects households with the local utility. PG&E is running the largest smart meter deployment in the country, with plans to install more than 10 million meters in its territory — which includes San Francisco — over the course of the next five years. This will allow the utility to pinpoint outages and offer customers time-of-use rates that reflect real energy prices and provide incentives for conservation during peak times.

However, smart meters are only one piece of a smart grid, which is a more horizontally integrated solution. San Francisco could work with and support PG&E to build the broadband network technology needed to complement these modules.

Cost
Smart grid infrastructure costs vary. Devices that attach to existing meters to make them “smart” cost approximately $50 for a household and $500 for commercial or industrial facilities. According to a report commissioned for the U.S. Department of Energy, 85 percent of meters in the United States can be retrofitted with these “meter modules” without requiring a new meter.

The cost of the more integrated system being piloted in Boulder is expected to be $100 million.In analyzing the potential effects of its project in Boulder, Xcel Energy enumerated many areas of long term cost savings for the utility beyond energy savings for customers, including decreased distribution losses, reduced billing and customer service costs, and operational savings.

We estimate the range of costs for San Francisco in two ways. First, we multiply meter module costs by the number of PG&E electric accounts in the city. There are approximately 370,000 accounts, which are 91 percent residential and 9 percent commercial. We assume a lifetime for the meters of 25 years.² The annual cost for the hardware is $1.3 million. Second, we assume the costs of Boulder’s system on a per-household basis and apply those to San Francisco, which has 3.5 times as many households. The annual cost of that is $12.6 million.

Carbon savings potential
The California Energy Commission conducted a study of 2,500 households with smart meters deployed, and a variety of variable rate pricing plans. The study found that this technology could reduce energy consumption by an average of 12 percent. Xcel Energy estimated that a smart grid in Boulder could cut distribution losses by 20 percent, saving 500,000 tons annually, while the City of Boulder estimated that the smart grid pilot project could help the city meet 25 percent of its 2012 emissions reduction goal, or about 87,000 metric tons of carbon annually.³

If San Francisco were to achieve an electricity savings of 12 percent by using a smart grid — a conservative estimate that does not include potential distribution savings and reliability savings— we could save 137,832 tons of carbon annually. ⁴

The annual cost per ton is a range: $10-90.

Endnotes
¹ www.smartgridnews.com/artman/publish/grid_modernization_initiatives/The_Untapped_Value_of_Backup_Generation.html.
² Data provided by PG&E.
³ City of Boulder, Climate Action Plan.
⁴ In 2000, according to the Dept. of the Environment, San Francisco’s residents used 1,430 gigawatt hours, commercial facilities used 3,300 Gwh, and industrial facilities used 110 Gwh.