Envisioning a new, interconnected energy system

It's a summer day a few years from now. Some things are familiar - for one, you're stuck in a Philadelphia heat wave. Other things aren't.

You drive your plug-in hybrid car to work. At 3 p.m., when no one's home, your smart electric meter notices that power prices are rising. The meter switches your air-conditioner into energy-saving mode. No human intervention necessary.

At 4 p.m., also automatically, the smart electrical grid notices that same spiking demand, and sends a signal to your company's meter. The lights dim almost imperceptibly, and three pieces of machinery shift into maintenance mode. Sure, output drops for the day, but your business comes out ahead because it sells unneeded power back into the system as demand peaks.

At 5:30, you pull back into your garage and plug your car into its outlet. But with energy demand still high, the car battery doesn't start charging. Instead, it discharges some of its stored power into the grid, helping cool your neighborhoods' homes and control your own monthly bill.

This isn't reality today. But if the American Recovery and Reinvestment Act works as planned, it should soon be a few billion dollars closer.

Last week, when President Obama signed the massive $787 billion stimulus bill, he said it would help create "a newer, smarter electric grid" - a grid that he said "will make our energy bills lower, make outages less likely, and make it easier to use clean energy."

The bill targets $4.5 billion for modernizing the grid, among $65 billion in energy spending and tax credits. It won't buy a whole new power grid - far from it. But proponents, including high-tech businesses and environmental groups, hope it will speed the process and spur a wave of new energy investments.

The next major step would be winning passage of a new energy-policy bill, which congressional Democrats hope to deliver later this year. The biggest hurdle may be the need to streamline the politically tough process of finding routes for new high-voltage transmission lines - crucial to fulfilling the vision, shared by Obama, environmentalists and energy magnate T. Boone Pickens, of bringing wind power from Texas and the Plains to the Great Lakes and East Coast.

But the smart-grid concept won't stand or fall on a single question. Like the grid it aims to modernize, the smart grid isn't actually a single thing. Instead, it's a set of innovations that will bring two new elements to a grid built in bits and pieces over the last century: high-tech controls and two-way communications.

In today's grid, information flows in one direction: toward the operators at companies such as PJM Interconnection L.L.C., the Valley Forge manager of our region's 13-state power grid, which respond to rising demand by calling for energy from an increasingly expensive set of power plants.

The smart grid will rely on two-way communications, perhaps with data carried over the power lines themselves. That data can tell a manufacturer to ratchet back its operations as demand peaks - something that already happens through intermediaries that sell so-called "demand response" into today's electrical system. The smart grid will make such demand response widespread.

The benefits are potentially huge. PJM's spot-market wholesale price for a megawatt of electricity averages about $60, says spokesman Ray Dotter. During the handful of hours when prices are highest, a megawatt can cost 10 times that much or more.

The key to making two-way communications ubiquitous is a computerized upgrade to a familiar device: the electric meter. Smart meters don't just monitor power use. They can also control it, say, by adjusting key appliances when power prices are highest.

"My refrigerator will automatically defrost when it senses it needs to," Dotter said. "If you could send it a signal that says, 'Don't do it now,' there are tremendous savings."

Utilities can benefit along with their customers, says Michael Wood, spokesman for Philadelphia's Peco Energy Co. "You reduce peak demand, so you reduce your power- acquisition costs. And you also reduce the stress of peak demand on the system."

Pennsylvania already is moving toward smart-meter deployment. Under Gov. Rendell's energy plan, which won passage last year, the state's utilities must make smart meters available to all customers within the next 10 years.

Technology alone won't make the smart grid possible. Proponents say it's also crucial to change utilities' business models, so they can benefit financially from helping customers buy less, not more, of their product.

Smart-grid advocates say the benefits of reinventing the electric grid could be huge, and often point to the concept of a "network effect" - the idea that as any sort of network expands, benefits multiply to those it links.

But some potential benefits are both huge and concrete, at least to those with a technological imagination.

Reid Detchon, executive director of Energy Future Coalition, says plug-in vehicles are a perfect complement to wind energy, whose main flaw is that it flows more at night when power is needed less. Hybrid owners would be able to charge their batteries with cheap power overnight, and could even sell stored power back to the grid.

In 2006, the Department of Energy's Pacific Northwest National Laboratory estimated that the nation's unused off-peak power-production capacity could fuel 84 percent of the country's 220 million vehicles "if they were plug-in hybrid electrics."

Also concrete but less obvious will be the benefits from modernizing basic controls.

"Ordinary disruptions in power quality - not just blackouts but variations - cost the economy $100 billion a year," Detchon said.