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Stimulus Funds to Pay Half of Smart Electric Grid in Lawrence

By   /   November 29, 2009  /   News  /   4 Comments

Next year a “smart grid” demonstration project may get started in Lawrence with the help of almost $20 million in stimulus funds.

Jim Ludwig at KU Energy Council Conference

Jim Ludwig at KU Energy Council Conference

Jim Ludwig, Executive VP at Westar Energy, recently spoke about this project at the 2nd Annual Energy, Innovation, and the Kansas Economy

sponsored by the KU Energy Council and held at the Dole Institute of Politics.

Ludwig explained how the smart grid can help “shave the peak” power demand, which can reduce the need to build additional power plants.

Power Generation

Ludwig gave an overview of the generating capacity of Westar Energy using coal, natural gas, nuclear and wind.

Westar Power Generation:  Nuclear, Coal, Natural Gas, Wind

Westar Power Generation: Nuclear, Coal, Natural Gas, Wind

Westar is a heavily coal-dependent utility, which is typical in the Midwest. Good rail service and ready access to inexpensive coal explains why electricity rates tend to be lower in the Midwest than in other parts of the country.

Ludwig explained that the cost of coal, especially to the environment, has never been reflected in electric rates completely. The cost has never reflected carbon emissions, but now includes the removal of sulfur dioxide, nitrogen oxide, particulates and mercury due to regulations and investments to control those pollutants.

In the last year and a half Westar has become one of the leading utilities in the country for the amount of renewable power from wind per customer.

Westar is considering a proposal to add 200 to 500 megawatts more of wind power, but nearly full transmission capacity in Kansas may limit expansion of wind farms. Frozen financial markets are also an impediment to expanding wind generation. Wind farms can be built faster than new transmission lines.

Growing Demand

Even with a sluggish economy Ludwig explained there is still a slow growth in demand for electricity caused by an explosion of new electrical devices and larger homes.

The supply of electricity must match the demand at all times or there will be brownouts or even blackouts.

Peak Capacity

Peak capacity drives planning for power generation. Ludwig explained the following facts:

Peak Generation Facts for Westar

  • About 10% of peak load occurs in the top 100 hours of the year
    • Primary cause is residential air conditioning especially 4-7 PM on hot days
  • The cost to generate electricity varies by time of day even though rates are constant.
  • On a peak day, 1 kilowatt-hour can cost 2 to 3 times more to generate!
  • By working together to shift load away from peak periods, expensive plants can stay offline and new generation can be deferred.
Matching power supply with demand for "typical day" at Westar

Matching power supply with demand for "typical day" at Westar

The chart to the right shows “base load power” provided by coal and nuclear power. Coal and nuclear are best suited for a constant load and are not particular good at ramping up and down. Base load is usually more capital intensive due to large plant construction costs, but its operating costs are lower.

The dynamic part of the load, the “peak power,” is shown in the graphic as being provided by natural gas.

Capital costs are typically lower for these gas turbine plants, but operating costs are much higher.

Even though Kansas has plentiful wind resources, unfortunately the wind tends to blow when needed the least. The best wind conditions often occur at night, and seasonally during the Fall and Spring, when people are not using as much electricity. The two wind peaks show the typical contribution of wind during the day.

Understanding the above chart is key to explain the economics of power generation. For example, the chart shows that reliable peak power is provided by natural gas.  The cost of non-reliable but renewable wind power facilities is additive to existing natural gas peak power costs, but operating costs for wind are obviously much cheaper.

“Shaving the Peak”

What if we can shave the peak in the above chart by controlling demand?

Shaving the Demand Peak

Shaving the Demand Peak

The “Smart Grid” can provide benefits by “shaving the peak” by reducing electrical demand during peak demand times.. The expensive construction of new power plants can be delayed by reducing this peak demand.

Another way to shave the peak might be to introduce dynamic pricing strategies that would encourage consumers to avoid consumption during peak periods.

A dynamic pricing strategy appeals to some, but not others. The cost to generate peak power can be 2-3 times the cost of base load generation. Such a strategy would price electricity with its generation cost.

Reducing the peak demand has environmental benefits since that energy is never used and is never generated.

Smart Grid

A “Smart Grid” system is one way to control peak demand and lower overall costs of power generation by avoiding construction of new capital-intensive power plants.

About $4 billion in stimulus money is being provided across the country to build smart grid infrastructure.

Westar applied for a stimulus grant of about $20 million but will also spend about $20 million of their own money for a demonstration smart grid project in Lawrence.

"Smart Meter"

"Smart Meter"

Westar’s SmartStar project will involve deployment of about 48,000 “smart meters” in the Lawrence area over a 27-month installation period  expected to begin in 2010.  That works out to about 60 Smart Meter installations per day each costing about $833.

A “smart meter” is a two-way communication device that can be used to monitor and control usage of electricity in real-time. You could adjust your thermostat remotely through a PC or cell phone with such a device.

What will SmartStar mean for Lawrence residents?

SmartStar will provide:

  • Daily energy usage/cost
  • Tips to reduce peak usage
  • Suggestions to save money
  • Reduce impact on the environment
  • Alerts and notifications (E-Mail, text)
  • Better reliability and response to outages

The result of the pilot study in Lawrence may lead to more consumer smart grids in Kansas, and may ultimately reduce the need for additional power plants in Kansas.

Listen to Jim Ludwig’s presentation at the KU 2nd Annual Energy, Innovation, and the Kansas Economy Conference:

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Here are the slides from Ludwig’s presentation:

Westar Energy: Preparing for Our Energy Future

Nearby Smart Grid Project in Kansas City, MO Much More Expensive?

Tuesday’s Kansas City Star reported KC’s electric efficiency gets $24 million boost:

KCP&L officials said the $48 million “smart grid” project should help 14,000 commercial and residential customers, including 4,000 in that zone.

The Kansas Watchdog will investigate why the Kansas City, MO smart grid project appears to cost much more than the one in Lawrence.  Per customer, the Kansas City project will cost about $3429 while the cost in Lawrence is only about $833.