This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.




Deregulation is the reduction or elimination of government power in a particular industry. The goal of deregulation is to create more competition and let the free market prevail. In the energy industry, a deregulated market is one where utility companies must divest all ownership in generation and transmission of energy. The utility companies are only responsible for distribution, operation, maintenance of the interconnection between the grid and the meter, and billing of the customer.
In a regulated market, customers can only purchase utilities from their local supplier. The price is government-regulated and since only a single distribution source exists, this is what all customers pay. This creates a monopolistic marketplace. Regulation of the UK Electricity Industry diagramDeregulation was introduced in the 1980s. This allowed customers to choose from which energy supplier they wanted to purchase energy. The competition between companies eventually led to competitive prices in the energy market that are visible today in deregulated markets.



The United Kingdom’s (UK) energy market is deregulated. This process of deregulation, or privatization, began in 1989 with the Electricity Act of 1989. This act provided the foundation for privatizing the electricity supply industry in the UK.

Prior to the decision to deregulate, the UK had three state-owned electricity transportation grids that covered the following regions: England and Wales (responsible for 90% of demand), Scotland, and Northern Ireland. England had one main generation and transmission company and nine regional distribution companies, which provided the power to the majority of the UK (England and Wales). The Central Electricity Generation Board (CEGB) owned all of the transmission rights and controlled the production and distribution of electricity in England and Wales. The remainder of the market was split between the South of Scotland Electricity Board (SSEB) and the North of Scotland Hydro-Electricity Board (NSHEB).

After the UK chose to deregulate its energy market, the CEGB was divided into four different companies. Three of these companies were generating companies: PowerGen, National Power, and Nuclear Electric. PowerGen and National Power were privatized, while Nuclear Electric remained under public ownership. The fourth company that was created from dissolving CEGB was National Grid Company (NGC). National Grid Company was privatized as well and is responsible for all transmission activities.

The nine regional distribution companies were privatized with the legislation that dissolved the CEGB and these companies covered twelve distribution regions. During privatization, the regional distribution companies had to make an accounting separation between their distribution and retail activities. This was because the distribution rights gave these companies a regional monopoly and the profits needed to be monitored to ensure fairness for the customers. Initially in the 1989 legislation, the twelve regional distribution companies were given joint ownership of the NGC, but the 1995 legislation required the companies to sell this ownership.

The Scottish portion of the market was divided into three companies following the 1990 legislation. SSEB was divided into two companies. The nonnuclear assets were privatized as Scottish Power whereas the nuclear assets were renamed Scottish Nuclear and remained public. The NSHEB was privatized and renamed to Scottish Hydro.

The Electricity Act of 1989 also established a regulatory agency named the Office of Gas and Electricity Markets (OFGEM). The OFGEM is a government department, and they are governed by the Gas and Electricity Markets Authority (GEMA), which is a board of appointed members that monitor the running of the OFGEM. The primary duty of the OFGEM is to protect the interests of existing and future electricity and gas consumers by promoting competition between the various private energy companies.

Following the deregulation of the energy market in the UK, the OFGEM established price controls to help new competitors break into the market. In 2000, the Competition Act was implemented. With this act, the price controls were removed and competition between the energy suppliers was allowed to occur without interference. The OFGEM released a review of the markets and concluded that supply competition had delivered substantial price benefits for all customers.


Electricity flow and market structure8.1.3 CURRENT STATE OF DEREGULATION IN THE UNITED KINGDOM

After deregulation in the UK, four key areas of competition for energy companies remained: electricity generation, transmission, distribution, and retail. Before deregulation took effect, three major power producers in England accounted for 75% of the UK’s total electricity generation. The highly concentrated market became more diverse throughout the deregulation process, and now over 38 major power producers operate in the UK with a growing number of small power producers. Market diversification in the electric industry has helped the UK transition from a primarily coal-powered country to a country with various means of producing energy.

The electricity that is produced by generators goes on the national transmission network. The NGC controls this transmission system and is the sole system operator. As the system operator, the NGC is responsible for regulating the supply that exists on the national transmission network. Three transmission operators fall under the system operator to develop, operate, and maintain the high voltage grid. They are the Scottish Power Transmission Limited for southern Scotland, Scottish Hydro Electric Transmission plc for northern Scotland and the Scottish islands groups, and the NGC. Since only a few of these groups exist, the OFGEM has to regulate the NGC, as it is a natural monopoly. To regulate the NGC, the OFGEM sets a maximum revenue that the NGC can recover from users of the grid.

The national transmission network is a grid of high voltage transmission lines. From these lines, the electricity is passed to distribution networks, which run at lower voltages to the industrial, commercial, and domestic users. Fourteen licensed distribution network operators (DNOs) are in Britain. These DNOs are responsible for providing electricity to regional areas, and each one is assigned a regional area to service. In addition to the DNOs are Independent Network Operators (IDNOs). The IDNOs are smaller networks that will operate in an area covered by the DNOs. Both the DNOs and IDNOs must hold a license to be able to distribute electricity. The licenses have limits on the amount of revenue the company can recover from their customers, which allows the OFGEM to regulate the DNOs and IDNOs from imposing unfair monopolist prices on the customers.

The last key area for companies to compete in is the retail market. This is the area where consumers can see the changes from deregulation. Customers are now able to shop around and compare electricity suppliers to get the best deal. The retailers buy electricity from the wholesale market or from generators. The retailers then set prices for this electricity, which is what they will charge their customers. The customers’ ability to shop around for the best price from the suppliers places pressure on prices and drives better customer service. In addition, competition for customers incentivizes the suppliers to create more innovative products and services to gain a competitive advantage. The OFGEM monitors these retailers to ensure fairness to the customers.



While deregulation has been implemented in the UK for a little over two decades now, the OFGEM is always looking for better ways to improve the energy market to ensure fairness for the customers. Despite the growing number of players in the generation, distribution, and retail markets, six big companies are still in control of the majority of these markets. In order to allow the free market to prevail, the OFGEM will need to continue to work on policies to help distribute market share.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



7.6.1 Outage Management System

The most definitive characteristic of a smart grid is the ability to share near real-time data throughout the enterprise. Then, this gathered information is further shared across other smart grid information systems to deliver operational and business benefits to the utility. The deployment of advanced metering infrastructure is a prime demonstration of smart grid infrastructure that enables this type of interoperability.

Many utilities have already accomplished interfacing AMI with a meter data management (MDM) solution that automatically validates, edits, and estimates meter readings, streamlines billing processes, and supports beneficial rate designs. Now, industries with AMI are looking for ways to integrate MDM with outage management systems (OMS.) By

Power Outage Map Seattle

implementing this, utilities may obtain operational intelligence that allows more efficient and accurate outage detection, restoration, and verification. OUTAGE DETECTION

Prior to smart meters and more advanced technology, the biggest input to OMS was customer phone calls, e.g. “My lights are out.” But in general, less than 20% of affected customers will report an outage for a variety of reasons – for example, not being home, or assuming that the outage has already been reported by others. The integration of AMI and OMS allows utilities to be very accurate in defining the impacts of a power outage, which leads them to employ proactive communications systems – telling the customer about a power problem instead of the customer telling the utility.

This level of customer notification service is taken for granted in industries such as travel (“Your flight is delayed”) and banking (“Your monthly statement is ready.”) Seeing customers translate these same expectations of service to utilities is not surprising. Access to smart devices is expanding rapidly for customers, as is their thirst for information. A customer’s ability to access information during a power outage is increasingly based on channels including text messaging, websites, and smart phone applications. By offering better information on a variety of channels during a power outage, utilities can proactively reach out to all affected customers and provide the latest updates on power problems, while increasing customer satisfaction in the long run.

While consumer-reported events must be tracked and managed by OMS, AMI event reporting is more immediate, reliable, and available. An OMS can quickly leverage this information using the tracing and prediction analysis functions of a real-time operations distribution network model to determine the location and hierarchy of the affected devices and faults. AMI cannot do this on its own since the topologies of AMI communication networks have no knowledge of the power distribution network beyond the relationship of a meter to a customer’s service point and premise. Leveraging the utility’s geographic information systems (GIS), the OMS can accurately maintain the current state of the network and provide users with a geospatial view of network activity. OUTAGE RESTORATION

Smart meter sends a last gasp message to the utility’s OMS system before the meter loses power. Not all last gasp messages make their way to the OMS, but usually enough messages are received to help the utility adequately determine which customers and areas are affected. This outage event data can increase the accuracy of outage predictions and help utility personnel to promptly and accurately react to power failures. The end result is that utilities operate more efficiently, field activities are assigned to the repair crews more accurately, and customers can get back to their normal life more quickly, all at a lower cost.

During major power issues prior to smart meter technology, it was common for utilities to dispatch crews to restore service to a customer whose service had already been


restored or had never had problems that required a field visit. Utilities maximize the value of smart meters for service restoration through automated integration with AMI and OMS. This integration provides utility personnel the ability to visualize the full scope of damage, locate the area, prioritize work order, and then pass information to appropriate crews with essential details before dispatching them for restoration.

In addition, the OMS interfaced with the AMI allows automatic or manual pinging of meters. While the response time of a ping request is variable, utilities using this functionality experience significant savings by validating events, eliminating unnecessary truck rolls, and consequently making more efficient use of crews. OUTAGE VERIFICATION

Another benefit of integration of AMI and OMS is verification of power restoration. Restoration verification is accomplished when a meter reports in with normal usage data after being reenergized. This provides automated and positive verification that affected customers have been restored, no nested outages are detected, and associated outage events as well as work orders are closed before restoration crews leave the area.

Similarly, pinging meters remotely to validate restoration helps identify any residual or nested outages resulting from multiple faults downstream of a specific device. The OMS prediction engine performs the business logic required to create new incidents for the existing nested outages.

Endpoint Power Restore

Identifying nested outages while restoration crews are on site eliminates the associated customer callbacks, customer service costs, and

most importantly, duplicate trips to the field.

With outage causes identified and isolated more quickly, the synergy of integrated AMI and OMS brings all the advanced tools and functions needed to reduce outage duration and cost due to faster response and restoration. AMI LEADS TO INTEGRATION WITH NMS/OMS

Most meters used in advanced metering infrastructure (AMI) systems have a last-gasp capability, which is a high-priority message transmitted by the meter that service is out. With a large outage, the last-gasp functionality can overwhelm an AMI system because of message collisions in the communication network.

New AMI technology is able to overcome such problems. Some AMI systems do not just send a single last-gasp. Rather, they send a series of “power out” status messages, which are device outage events. Some mesh networks also combine outage information. As a result, instead of having countless distinct outage messages, a utility might only have a packet with outage information. The same amount of information makes its way through the network, but more efficiently. Furthermore, some AMI systems have the ability to filter or throttle the amount of outage information that is making its way to the OMS so that it doesn’t overwhelm the OMS. BENEFITS OF INTEGRATION WITH NMS/OMS

Integration with NMS and OMS is revolutionizing how utilities deal with outage activity. Increased customer satisfaction and decreased costs to restore power is the ultimate goal of utilities when it comes to outage management. This goal can be achieved from multiple perspectives.

  • Improved device prediction accuracy by using meters to verify outages in a timely manner. Ideally, the OMS will identify and validate an outage before the first customer calls to report the outage. The interactive voice response (IVR) should notify the customer that the utility is aware of the outage and responding. This leads to improved customer satisfaction.
  • Improved crew management and utilization by reducing the crew effort required to return, repair, and restore nested outages by pinging meters to validate power restoration of all customers affected.
  • Improved outage detection and management process where outage can be verified even without customer intervention. It supports real time outage events, which means when an outage happens to an AMI meter, the meter sends out the outage event to downstream systems, including NMS. So NMS is made aware of an outage reported by smart meters. When power is back and meter is powered up again, it sends a restoration event to NMS. These events with time-stamps make sure customers will not be charged during the outage window. NMS also has the ability to ping a meter to confirm power on at the utility side of the meter base, they are more informed when dealing with customers who have been disconnected for payment arrears.
  • Detection of outages at distribution transformers or other common points of failure can improve response times and reduce restoration costs. This is especially valuable in remote areas where the crew would normally have to spend a significant amount of time patrolling the grid to find the exact fault location.
  • Improved accuracy of distribution network reliability statistics by detecting outages in a timely manner.
  • Prioritizing restoration efforts and managing resources based on defined criteria such as the size of outages and the locations of critical facilities.
  • Validation of liability claims. Detection and recording of outages allows utilities to know which claims attributed to outages actually correlate to an outage and which do not. LIMITATIONS OF NMS/OMS

Like any other systems, NMS or OMS has its own limitations. Utilities need to understand the limitations and prepare additional plans to cover the business process that NMS or OMS does not reach.

  • OMS does not “manage” the utility’s restoration. It is not a substitute for the utility’s emergency restoration plan (ERP).
  • OMS does not provide information about damage.
  • OMS does not directly provide estimated restoration times or other information that would be valuable to customers.
  • An OMS can become overwhelmed in extreme situations and may not be able to deliver promised benefits in all scenarios.


Average Monthly Total KW7.6.2 LOAD PROFILE

In electrical engineering, a load profile is a graph of the variation in the electrical load versus time. In real life, a load profile will vary according to customer types, temperature, and holiday seasons. Utilities use this information to plan how much electricity they will need to make available at any given time.

In an electricity distribution grid, the load profile of electricity usage is important to the efficiency and reliability of power transmission. The power transformer or battery-to-grid are critical aspects of power distribution; sizing and modelling of batteries or transformers depends on the load profile. The factory specification of transformers for the optimization of load losses versus no-load losses is dependent directly on the characteristics of the load profile, which the transformer is expected to be subjected to. This includes such characteristics as average load factor, diversity factor, utilization factor, and demand factor, which can all be calculated based on a given load profile. LOAD PROFILE FOR UTILITIES

For utility companies with AMI, the data being collected by smart meters can be utilized in many ways. Depending on how the reading is set up, usage data could come in daily, hourly, or even every fifteen minutes or less.

It doesn’t matter whether the data is hosted onsite at utilities or offsite at the AMI metering companies. In order to make good use of this data, it must be correctly analyzed. This data can also be called load profile data. The concept of load profile is not new, and it has been available for many years on the high- end meters for commercial and industrial customers. With the implementation of AMI, now even residential customers can benefit from individual load profile to manage their power consumption more wisely. LOAD PROFILE USE SCENARIO – RESIDENTIAL

Here’s a scenario for a regular residential customer:

Let’s say a customer is complaining that their electricity bill is way too high, and they are not using the amount of electricity the meter says they are. Their AMI watthour meter was setup to report on fifteen minute intervals. By pulling up their load profile data, the customer representative gets a graph of the usage every fifteen minutes of the day. First, look at the graph during times that the customers are sleeping to see if the load is constant. Spikes may occur during the night when the A/C comes on and off and when the water heater comes on and off. These regular spikes can be spotted right away. What takes more attention to discover is whether usage is constant overnight. If usage is constant, then compare it during the day and see if it goes off then. If it does not, then the customer needs to track it down and turn the device off. After all, the customer could be having a problem with an appliance that does not go off, or they kept something plugged which consumes much more electricity than expected. LOAD PROFILE USE SCENARIO – COMMERCIAL AND INDUSTRIAL

Here’s a scenario for commercial and industrial customer:

A customer calls in and complains that their demand charge is way too high, and they want to know how they can lower it. In order to meet commercial and industrial customers’ complicated consumption needs, it requires the utility company to keep a vast array of expensive equipment – transformers, wires, substations, and even generating stations on constant standby. The amount and size of this equipment must be large enough to meet peak consumption periods, i.e., when the need for electricity is highest. Utilities and public service commissions around the country have determined that the most equitable way to cover the cost of this equipment is to have those customers who create this demand and the need for power during these peaks pay for its availability, which translates to a separate charge in their electricity bills. By examining the load profile data for that customer and showing them different spikes throughout the day, they may realize that the cause of high demand is due to coming in first thing in the morning and turning on their machines, lights, and A/C all at once. This naturally resulted in their demand being high, but only for a small amount of time throughout a working day. One of the things that the customer can do to reduce their demand is to stagger when they turn everything on.


7.6.3 GIS

To fully take advantage of the link between AMI and OMS, utilities are exploring opportunities to link the technologies with their supervisory control and data acquisition, customer information systems (CIS), IVR and GIS, all of which can generate additional useful information during outages. For instance, CIS and GIS are base data systems that feed into OMS. They help to determine where all the meters are and which customers are associated with which meters. This doesn’t help the OMS determine outages. However, as AMI data flows into the OMS, it includes a tag, such as the meter or premise ID, so the OMS knows which customer should be assigned the outage. GIS is then needed to analyze the locations of customers and determine work order solutions at different locations. BENEFITS OF INTEGRATION WITH GIS

Further integration with GIS makes turns millions of service locations into a big picture.

  • GIS is widely used to optimize maintenance schedules and daily fleet movements. Typical implementations can result in a savings of 10-30% in operational expenses through reduction in fuel use and staff time, improved customer service, and more efficient scheduling. The cost of fuel and labor is reduced from greater efficiency.
  • GIS is the go-to technology for making better decisions about location. Common examples include real estate site selection, route/corridor selection, evacuation planning, conservation, and natural resource extraction. Making correct decisions about location is critical to the success of an organization.
  • GIS-based maps and visualizations greatly assist in understanding situations and in storytelling. They are a type of language that improves communication between different teams, departments, disciplines, professional fields, organizations, and the public.
  • Many organizations have a primary responsibility of maintaining authoritative records about the status and change of geography. GIS provides a strong framework for managing these types of records with full transaction support and reporting tools.
  • GIS is becoming essential to understanding what is happening and what will happen in geographic space. Once we understand, we can prescribe action. This new approach to management—managing geographically—is transforming the way organizations operate.



If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



7.5.1 L&G

Landis+Gyr is a “global industry leader in metering solutions for electricity, gas, heating, cooling, and water for energy measurement solutions for utilities. Since 1896, the company has been helping customers overcome operational, regulatory, and consumer-driven challenges by capturing the advantages and benefits of technology. Focused on quality, reliability, and innovation, the group offers a complete portfolio of energy meters and integrated smart metering solutions, enabling utilities and end-users to make better use of scarce resources, save operating costs, and protect the environment by managing energy better – and to build the smart grid.

L&G offers the following Gridstream solutions in addition to numerous products and services:

Advanced Metering Infrastructure (AMI)

Advanced metering goes far beyond the simple reading of a meter. It sends and receives information from every touchpoint on the distribution system – enabling big data for intelligent operation.

Landis+Gyr offerings allow for real-time communication and control of smart meters for electricity, heat, and gas. At the same time, sensing devices and data management software ensure data is available and correct for analysis and billing.

AMI functions include –

  • Measurement and monitoring.
  • Communications network monitoring and management.
  • Command and control.
  • Data collection.
  • Meter data management.
  • Customer connection and tariff management.

Customer Intelligence

In the digital age, utility customers demand more visibility into, insight around, and control over their energy usage. That’s why Landis+Gyr invests in technologies that enable utilities to engage better with their customers and meet end customer needs via software, platforms, and products that help them manage their own energy usage better.

Custom Intelligence functions include:

  • Access to energy usage data.
  • Billing options, prepayment and tariff management.
  • Microgeneration management.
  • Home automation.
  • Consumer engagement programs.

Distribution Intelligence

Distribution Intelligence is about seeing what is happening on the grid and providing utilities with the tools to take action, as needed, to ensure the reliable and efficient delivery of energy in a dynamic environment. In a word, Gridstream will make your distribution system smarter. An increasingly intelligent grid that can model, control, and seamlessly optimize assets is required to manage supply and demand, adjust to two-way power flow from distributed generation, and ensure power quality remains high. Gridstream provides a combination of intelligent sensors, storage, communications and software technologies to get the job done.

Distribution intelligence functions include:

  • Outage and restoration management.
  • Distribution automation.
  • Distributed energy resource management.
  • Distribution grid visualization and optimization.
  • Energy storage.
  • Grid planning, monitoring, and management.
  • Electric vehicle integration.
  • Demand and supply side management.”

7.5.2  ELSTER

Elster is a “leading global provider of gas, electricity, and water meters and related communications, networking, and software solutions.

Elster Group GmbH employs more than 7,000 staff and operates in more than thirty-nine countries. Their diverse portfolio of products and solutions are used to accurately and reliably measure gas, electricity, and water consumption as well as enable energy efficiency and conservation. Elster sells products and solutions to utilities, distributors, and industrial customers across gas, electricity, water, and multi-utility organizations for use in residential, commercial, and industrial settings. Their customers operate in more than 130 countries and include numerous large, medium, and small utilities. Elster meets the expanding needs of utilities by providing advanced metering products and services worldwide. They provide the following electricity solutions in addition to various gas and water metering.

Electricity Solutions

Their solutions bring together an experienced team of people, cutting-edge technologies, and strategic partners to deliver world class products, systems, and services to our utility clients worldwide. The company has two main areas of business – electricity metering products and smart metering and smart grid system solutions. Elster engineers fully interoperable smart electricity metering products through custom-made options for utility customers and award-winning, end-to-end solutions for the smart grid and multi-utility advanced metering infrastructure (AMI) systems for water, gas and electricity around the world.

Energy Management

Energy management solutions from Elster EnergyICT enable utilities to grow and maintain energy efficiency programs with continuous savings. Their solutions provide with the information, the insight, and the intelligence utilities need to control energy consumption across the entire organization.”

7.5.3 ITRON

Itron is the largest manufacturer of smart meters in the world. It is an “American technology company that offers products and services on energy and water resource management. Its headquarters is in Liberty Lake, Washington, United States. Its products and services include technology solutions related to smart grid, smart gas, and smart water that measure and analyze electricity, gas, and water consumption. Its products include electricity, gas, water, and thermal energy measurement devices and control technology, communications systems, software, and managed and consulting services. Itron has over 8,000 customers in more than 100 countries. Itron offers the following solutions in addition to numerous gas and water metering solutions:

  • Advanced Metering Infrastructure (AMI)
  • Smart Grid and Distribution Management
  • Meter Data Management
  • Smart Payment
  • Advanced C&I Solutions
  • Electric Meters and Modules”



GE as it is popularly known is one of the biggest global players in the green industry. General Electric, like other industrial conglomerates such as Siemens, Areva, and others are low-risk players in the green investing sector. GE is strong across most of the green sectors today particularly in the area of smart grid and energy efficiency. GE is not that big in the smart meter market, but with its overarching scale it has quickly won a number of contracts.



One of the largest electrical and energy equipment suppliers in the world, Schneider has been one of the most aggressive in mergers and acquisitions. The company provides energy efficiency solutions to residential markets, buildings, industry, infrastructure, and data centers. The company’s range of services and products is quite awesome and provides a holistic solution to its customers. Though not a major player in the smart meter market yet, the company cannot be underestimated in the future.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.


7.4.1 ENERGY (kWh)

Energy is a measure of how much fuel is contained within something or used by something over a specific period of time.

The kilowatt hour is a unit of energy equivalent to one kilowatt (1 kW) of power sustained for one hour. If the energy is being transmitted or used at a constant rate (power) over a period of time, the total energy in kilowatt hours is the power in kilowatts multiplied by the time in hours.


7.4.2 POWER (kW)

Power is a measure of how fast something is generating or using energy.

The base unit of energy within the international system of units (SI) is the joule. The hour is a unit of time outside the SI, making the kilowatt hour a non-SI unit of energy. The kilowatt hour is not listed among the non-SI units accepted by the BIPM for use with the SI, although the hour, from which the kilowatt hour is derived, is.

Instantaneous Power

The instantaneous power (also known as instantaneous demand or instantaneous load) is the power that something is using (or generating) at any one moment in time. Put your laptop on standby and its instantaneous power will drop immediately. Bring it back to life and its instantaneous power will rise immediately.

If, at any particular moment, everything in an office building is switched on, that office building might be using 42 kW of power. That’s 42 kW of instantaneous power. If, at any particular moment, everything in the office building is switched off, that building should be using 0 kW of power. That’s 0 kW of instantaneous power.

The instantaneous power of most buildings varies constantly. People are constantly switching things on and off, and many items of equipment within the building have instantaneous power that is constantly changing too.

Average Power

The average power represents the power that something uses or generates, on average:

  • Over a specific period of time, e.g. yesterday.
  • Over multiple periods of time,e.g. across all the weekends on record.
  • Throughout a certain type of operation, e.g. typical laptop usage or typical building usage on Monday to Friday 09:00 to 17:00, or typical efficiency for something that’s generating power.

You can easily use these average-kW figures to compare the energy consumption of different periods and even different buildings.



The relationship between energy and power is similar to the relationship between distance and speed:

  • Energy is like distance. The amount of energy that you used over a specific period of time is like the distance that you travelled over a specific period of time, e.g. when driving to work you travelled 2 miles between 08:04 and 08:57.
  • Power is like speed. Your instantaneous power is like your speed at a specific instant in time, e.g. right now. Your average power over a specific period of time is like your average speed over a specific period of time, e.g. when driving to work you travelled at an average speed of 2.26 mph.

Both distance and speed are useful measures; and both are closely related. Sometimes it makes sense to talk in terms of distance, and sometimes it makes sense to talk in terms of speed. It’s the same for energy and power – you need both, but usually one makes more sense than the other.

In many cases, electricity use is metered and charged in two ways by utilities. First, based on total consumption in a given month (kWh). Second, the demand, based on the highest capacity you required during the given billing period (kW).

Depending on your rate structure, peak demand charges can represent up to 30% of your utility bill. Certain industries, like manufacturing and heavy industrial, typically experience much higher peaks in demand. This is largely due to the start up of energy-intensive equipment, making it even more imperative to find ways to reduce this charge. Regardless of the industry, taking steps to reduce demand charges will save money.



Reactive power (kVArh) is the difference between working power (active power measured in kW) and total power consumed (apparent power measured in kVA). Some electrical equipment used in industrial and commercial buildings requires an amount of reactive power in addition to active power in order to work effectively. Reactive power generates the magnetic fields which are essential for inductive electrical equipment to operate – especially transformers and motors. This load is measured via the reactive register on your half-hourly meter.

The theoretical definition of the reactive power is difficult to implement in an electronic system at a reasonable cost. It requires a dedicated DSP to process the Hilbert transform necessary to get a constant phase shift of 90° at each frequency.

The power triangle is based on the assumption that the three energies – apparent, active, and reactive – form a right-angle triangle that can then be processed by estimating the active and apparent energies and applying.

The reactive power: Sqrt[(Apparent power)^2-(Active power)^2]

Although this gives excellent results with pure sinusoidal waveforms, noticeable errors appear in presence of harmonics.


TOU Power Energy Meter7.4.5 TIME OF USE

Time of use, or TOU as it is commonly called, is the segregation of energy rates based on the time in which the energy is being consumed. TOU is a way in which utility providers attempt to alleviate demand during peak periods by enforcing a tariff structure that charges an increased rate within the typical peak consumption time periods. TOU is broken into three structures or groupings with various names in reference to peak, off peak, and the time of moderate use referred to as shoulder time or mid-peak. These TOU groupings can vary based on region and have become increasingly deployed in utility electricity charges.

TOU has been implemented to change consumer behavior and to ease the strain of energy usage required at its most in-demand time, thus decreasing the likelihood of power outages and overgenerated power. TOU has become an effective way for utilities to manage their production and allow for consumers to take control of their energy bills. This added control has led some savvy consumers to dramatically cut costs by reviewing their cost allocation and making use of tools and practices such as load shedding and running machines at off-peak hours.


Time of Use Power Meter

Remote Metering SystemA time of use power meter is a multifunction power meter equipped with TOU for single- and three-phase circuits. It features a Modbus RS485 serial connection in which the meter can connect to the free data logging software to take advantage of this feature. While connected to the software, the meter is able to segregate up to four different tariffs, twelve seasons, and fourteen schedules.

This option is a cost-effective solution for users monitoring a single circuit that are able to connect the meter to a dedicated computer and are typically featured in smaller applications where TOU billing has been implemented.


Time of Use Power and Energy Meter

A time of use power and energy meter is an intelligent multifunction power meter with TOU enabled for single- and three-phase circuits. The meter features Modbus RS485 communication standard and can be upgraded to include Modbus TCP Ethernet, BACnet, Profibus, and a variety of other communication protocols and I/O expansions for added versatility. The meter can be serially connected to a computer hosting the free software or can be remotely connected to the computer utilizing an ethernet connection.

As this meter has remote metering capabilities, multiple units are able to be connected to the same central computer or system allowing for utilization in larger projects with multiple users such as residential or commercial buildings or for a more granular look at machines and devices in order to take control of operating costs, generate cost allocation, and determine if load shedding is required.



Net Metering Solar Power System Diagram

Net Metering Solar Power System Diagram

Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. For example, if a residential customer has a photovoltaic (PV) system on the home’s rooftop, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the home’s electricity use exceeds the system’s output. Customers are only billed for their net energy use. On average, only 20-40% of a solar energy system’s output ever goes into the grid. Exported solar electricity serves nearby customers’ loads.

While net metering policies vary by state, customers with rooftop solar or other distribution grid systems usually are credited at the full-retail electricity rate for any electricity they sell to electric utilities via the grid. The full-retail electricity rate includes not only the cost of the power, but also all of the fixed costs of the poles, wires, meters, advanced technologies, and other infrastructure that make the electric grid safe, reliable, and able to accommodate solar panels or other DG systems. Through the credit they receive, net-metered customers effectively avoid paying these costs for the grid. BENEFITS OF NET METERING
  • The system is easy and inexpensive. It enables people to get real value for the energy they produce without having to install a second meter or a battery storage system.
  • It allows homeowners and businesses to produce energy, which takes some of the pressure off the grid, especially during periods of peak consumption.
  • Each home can potentially power two or three other homes. If enough homes in a neighborhood use renewable energy and net metering, the neighborhood could potentially become self-reliant.
  • It encourages consumers to play an active role in alternative energy production, which both protects the environment and helps preserve natural energy resources.

Net Metering Graph

  • Homes that use net metering tend to be more aware of, and therefore more conscientious about, their energy consumption.
  • It saves utility companies money on meter installation, reading, and billing costs.
  • The following graph illustrates the benefit of using net metering system for kw demand registers NET METERING GUIDING PRINCIPLES

Established in 1974, the Solar Energy Industries Association is the national trade association of the U.S. solar energy industry. Through advocacy and education, SEIA is working to build a strong solar industry to power America. As the voice of the industry, SEIA works with its 1,100 member companies to make solar a mainstream and significant energy source by expanding markets, removing market barriers, strengthening the industry, and educating the public on the benefits of solar energy. As the national trade association for the solar industry, SEIA continues to advocate equally for all forms of solar energy including residential, commercial, and central-station solar generation as well as solar heating and cooling applications. The following are guiding principles:


Right to self-generate, connect to the grid, and reduce grid electricity use: Every retail electricity customer has the right to install solar generation equipment at the customer’s site, interconnect to the utility grid without discrimination, and reduce his or her grid electricity use. Reductions in customer grid electricity use due to solar generation should not be imputed as a cost to the utility.


Properly valuing solar electricity and adequately compensating solar customers: Customer-sited solar generation offers many benefits to the electric grid system and by extension to non-solar customers, including but not limited to: reduction in utility energy and capacity generation requirements, reduction in system losses, avoidance or deferral of distribution and transmission investments, localized grid support including increased reliability benefits, fuel-price certainty, and reductions in air emissions and water use.  The aforementioned benefits should be quantified, and solar customers should be adequately compensated for the value their solar energy is delivering to the grid.


Non-discriminatory practices within cost of service recovery: In determining cost allocation, net energy metering customers should not be treated unfairly vis-à-vis other ratepayers and all benefits should be accounted for.  Punitive and non-cost based charges should be prohibited.  Consistent with SEIA’s rate design principles, a utility should have the opportunity to recover its costs of providing service and earn a return on investment as determined by regulators.


No net energy metering caps: Consistent with the policies laid out in these guidelines, no aggregate or statewide limit for net energy metering should exist.


Statewide application: Net energy metering rules, regulations, and practices should be standardized statewide.


Transparency, access to data: Customers, or solar companies on customers’ behalf, should have access to data regarding their own electricity consumption, such as load data including hourly profiles, with transparency into the tariffs available to them.  Billing statements from utilities should clearly show the net energy metering consumed from the utility, and any energy or dollar credits carried forward as a result of solar generation in previous billing periods. IMPLEMENTATION BEST PRACTICES

Individual System Capacity: Any individual system size limitation should be based only on the host customer’s annual load or consumption.

REC ownership: The owner of a net energy metered system should retain ownership of renewable-energy credits (RECs) produced by their owned system, unless transferred to the utility or another party in exchange for acceptable compensation.

Restrictions on “rollover”: Indefinite rollover, credited at retail rate, should be an option for customers. The only exception is allowing for payments for annual net excess generation.

Metering equipment: Consistent with all retail applications, the utility shall provide a meter that is capable of net energy metering.  Retail electric customers utilizing net energy metering must not be required to purchase new energy metering equipment.

Customer classes: All customers should be able to participate in net energy metering.

Aggregation: Virtual net energy metering and meter aggregation options should be available to all customers.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.


Of the physical components comprising smart grid architecture, the communications technology, a collection of communication network components that enable the flow of information throughout the grid, is the most complex.

Advanced metering with two-way communications has the potential to make meters a core element of an integrated system and better manage utility services. But what kind of communications are appropriate?

Advanced metering infrastructure (AMI) systems employ a wide array of communications technologies, including radio frequency (RF) mesh, power line carrier (PLC), RF point-to-point, and cellular. Since utilities must manage multiple communications networks, they often look for solutions that support a variety of applications and fully integrate into future operational plans.

Throughout the world, technology adoption varies by region. In Europe and North America, RF mesh and PLC are deployed most often, with Europe having a greater tendency toward PLC technology than the U.S. This is largely due to the fact that grids in Europe connect many more homes per transformer than in the U.S. Data sent from the meter over the power line may not have to pass through a transformer to reach a collector, so some PLC technologies used in Europe operate in wider bandwidths. Technology choices are oftentimes driven by local regulations. Many countries restrict use of RF mesh technologies, as unlicensed frequencies have raised concerns about interference.


7.3.1 PLC

Power-line communication (PLC) is a communication method using electrical wiring to simultaneously carry data and alternating current (AC) electric power transmission or electric power distribution.

This method is useful for utilities who want to make a more gradual migration to smart grid technology, because they can leverage existing power lines as the communications network. However, it should be noted that power lines are not well suited for fast, near real-time data communications.

Troubleshooting signal issues can be difficult when poor connections, feeder switching, worn or faulty line hardware, and other power line issues cause signal interference. It can also be difficult to push meter data in any volume from the field into the SCADA system or other applications in near real-time.

While these types of networks were once the only option for rural locations, new technologies have increased radio coverage capabilities in most geographical areas.


  • It’s cost effective. Power-line communication can transmit over long distances. In North America, this can be a cost-effective advantage for utilities serving rural communities. Because it is a hard-wired system, topographical and other physical obstacles do not affect performance.
  • It leverages existing investments. Because PLC utilizes existing infrastructure, the utility owns the communications system and there may not be as much of a learning curve involved with implementing this type of communication method.
  • It returns data useful in analyzing grid performance. This system uses the distribution network to send signals from the meter to the substation. Signal strength provides the utility with analytics that can help isolate and troubleshoot problems with insulators, transformers, and other grid devices.


  • Potential for network interference. Utilities with large industrial customers that may introduce noise and harmonics on the power line have found that this noise on the system may affect performance and distort communications.
  • Less bandwidth. Narrower available bandwidth can impact data capacity and the speed or rate at which data can be accessed in some applications.

7.3.2 POINT-TO-MULTIPOINT (Wireless)

Given the challenges with power line networks, point-to-multipoint networks began to gain popularity. These networks depend on high power transmitters to talk directly to each endpoint (or repeater) on the network.

While point-to-multipoint networks are an improvement over power line networks, they still depend on a limited number of radio paths between the endpoints and a radio base station. This makes these networks more susceptible to signal fading or shadowing caused by hills, valleys, and radio-reflective or radio-absorbing obstructions. Sometimes, the only remedy is an additional high-power base station or repeater, which can be relatively expensive.

Some providers of point-to-multipoint solutions require FCC licensing for their high-power networks. While sometimes sold as an advantage due to the designated spectrum on which they operate, FCC licensed spectrum has been subject to reallocation as recently as a last year when the VHF paging spectrum was “narrow banded.” As a result, any devices not capable of accommodating a new, narrower channel were left abandoned in the field or now require a mass hardware or firmware upgrade, or possibly both.

Operating under an FCC license does give the user a certain degree of legal recourse if someone or something accidentally or purposely encroaches on the dedicated frequency. But this in no way guarantees a “clean” channel.

Tracking down and finding sources of interference can be a difficult endeavor, and even then, this requires FCC action to enforce spectrum protections once any violators are identified.


  • It requires less infrastructure. One tower may be used to cover a large geographic territory.
  • It doesn’t raise interference issues. Since it is a licensed network, no concerns exist about other devices interfering with network communications.
  • It’s easy to deploy. Since the network may be deployed from a few towers, even a single tower, less infrastructure may be required.


  • Challenges of securing tower space: It may require installation or leasing of a tower. It may result in transmission congestion. The more meters and devices communicating to a single point, the more likely network congestion and bandwidth limitations are.
  • It’s not self-healing or self-routing. Unlike an RF mesh system, which offers many communications pathways, a point-to-point system has no built-in redundancy. So if the base station goes down, communication to thousands of meters may be lost. This can compromise grid performance and reliability.
  • It requires licensing. Along with a fee, a limited bandwidth is associated with each license. In addition, a second license may be required for distribution automation functions or other advanced grid management applications. The internal labor required to manage and maintain these licenses is also a consideration.

7.3.3 RF MESH (Wireless)

Many of today´s U.S. AMI deployments are built on an RF mesh framework. With wireless mesh networking technology, meters and other devices route data via nearby devices creating a mesh of network coverage.

Mesh networks enable end devices to communicate to the collector through multiple hops if necessary. This characteristic of mesh networks enhances network performance in three ways. First, it provides a cost-efficient way to deploy and build a network that encompasses greater distances while requiring less transmission power per device. Second, it improves system reliability since each end device can register with the collector via another communication path if the present communication path becomes inoperable. Third, by allowing end devices to act as repeaters, it is possible to deploy more nodes around a collector, thereby reducing the number of back haul paths –  a major cost factor.

Wireless mesh networks were originally developed for military applications. Over the past decade, the size, cost, and power requirements of radios has declined, enabling multiple radios to be contained within a single mesh node, thus allowing for greater modularity; each can handle multiple frequency bands and support a variety of functions as needed—such as client access, backhaul service, and scanning.

Some later wireless mesh networks use nodes with more complex radio hardware that can receive packets from an upstream node and transmit packets to a downstream node simultaneously (on a different frequency or a different CDMA channel), which is a prerequisite for a switched mesh configuration.


  • RF mesh technology can be regionally distributed, so the operator can target specific areas without needing to deploy the entire service territory.
  • It’s self-healing. If one module loses communication with the network, the network automatically finds another path to bring communications back to the head-end system. So, the network operator never needs to worry about the entire network being down.
  • It’s self-forming. The network’s intelligence enables the signal to find the optimal route back to the head-end system. This is particularly important in areas with many obstructions, such as mountains or high-rise buildings.


  • RF mesh technology may require more infrastructure than other options, especially in rural areas where meters are more spread out across the service territory.
  • It may raise interference concerns. Unlicensed frequencies used in RF mesh may raise some concerns about interference. Some countries restrict use of frequencies in the unlicensed spectrum, including RF mesh.



Smart meter traffic is characterized by small session duration, limited mobility, and a large number of devices. Therefore, it is not handled efficiently by existing wireless broadband access networks run the traditional way.

Broadband wireless networks provide ubiquitous wide-area coverage, high availability, and strong security and are, therefore, a strong candidate for handling smart meter communications. Wireless operators naturally see an enticing business opportunity in advanced metering infrastructure (AMI), because they stand to obtain additional revenue streams from existing cellular networks. Government agencies have encouraged such network sharing to reduce AMI’s energy footprint. Broadband wireless networks were not designed, however, to efficiently meet the traffic requirements of AMI.

Existing wireless broadband networks presuppose traffic that is typically modeled as consisting of individual sessions. In those sessions, duration or time scale exhibits a heavily tailed distribution and is usually orders of magnitude larger than the packet timescale. That is, the length of sessions varies widely and a typical session requires a great many packets to communicate digitally. This allows for each session to be treated as an independent connection, subject to admission control mechanisms, with associated signaling procedures for setup of radio and network resources. The signaling associated with connection setup represents minimal overhead compared to the total data transferred over the session duration.

In contrast, most AMI traffic is expected to originate from stationary devices or devices with very limited mobility and will consist of just a few payload packets between the meter and the meter data management system. Furthermore, it is expected that in normal operations, most meter traffic will be regular as opposed to being ad-hoc. That is, meters will periodically report data on the uplink and downlink data from the management system may follow. After that, a long period of inactivity until the next time meters report data will follow.

This deterministic behavior, coupled with potentially very long sleep durations between communication attempts with the network, allows for optimizing the operation of the meter so that it is scheduled to connect (or re-connect) to the wireless broadband network only at specific time instances and only for a limited period of time. During that connected interval, the meter and management system can exchange information as needed. We refer to this kind of system as time controlled scheduling.

The advantage of supporting time controlled operation is that the meter is connected to the wireless network only for short intervals of time, as needed, allowing networks’ resources to be more efficiently managed and for a very large number of devices to be multiplexed to a common base station. To contact a meter outside of its scheduled connection window, the protocol can be enhanced so that the network alternatively sends a notification indication to one or more neighboring meters located in a connected state at that time, and the meters in turn relay the request to the meter in question over a secondary wireless channel that uses an unlicensed spectrum, like ZigBee or Wi-Fi.

Congestion control is recognized as another challenge for AMI. The very large numbers of smart meters give rise to potential “traffic burst” scenarios, which can arise when large numbers of devices are simultaneously reacting to a common event, such as a power outage. To minimize the impact on the wireless broadband interface, an application layer congestion control protocol can detect the common event and stagger — that is to say, buffer or queue — transmissions from meters.

Each meter is assigned a probability (p) to transmit an alarm upon detection of a shared event. The meter will either queue (with probability 1-p) or transmit (with probability p) this event. If the message is queued, the meter will continue to monitor the air interface for an event notification from the network. This notification can be in the form of an explicit message sent from the base station or, alternatively, the base station may update the transmission probability p to 0. Upon receipt of such notification, which is sent only if another meter was able to successfully transmit the shared event notification to the station, the meter will discard the queued message.

If no such notification message is received after a random period of time, the meter will again attempt to see if the message should stay queued or be transmitted. The process is repeated until either the message is transmitted or an event notification is received from the base station. The algorithm can be generalized to allow for different event transmission probability values for different categories of shared events, with high priority given to more critical events. The delay handling can be different for different categories of shared events. The back-off delay can be made shorter for more critical events.


  • Faster deployments. Cellular enables long-range communication and can be rolled out quickly using the existing cellular infrastructure.
  • It leverages an existing network maintained by the cellular company. In most utility service territories, cellular already reaches the majority of customers.
  • It’s optimal for targeted applications. Cellular can be deployed cost effectively to support small groups of customers, even a single customer.
  • It’s proven technology. In use for more than a decade, cellular technologies are well established and reliable and are continually improved upon — particularly as it relates to security.
  • It’s secure. Because they already provide service to billions of customers worldwide, cellular networks extend the promise of safety and performance to utilities.


  • It may require head-end system changes. In the North American market, most of the widely deployed head-end systems are optimized for either RF (mesh or point-to-point), PLC, or a combination of these. Incorporating a communications technology less-widely for AMI purposes, such as cellular, may require modifications to the head-end solution.
  • It has obsolescence issues. Cellular networks tend to roll over prior to the useful life of the metering technology, so many operators are concerned about how long a deployed technology will remain viable.
  • It’s a network availability issue. The mission-critical communications that smart grid networks require need nearly 100% network availability. When utilities share public cellular networks, they are often at the mercy of the carrier’s priorities in the event of an outage.
  • It can be unreliable. If a natural disaster impacts the cellular infrastructure, networks may become overburdened.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:


This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



Since the beginning of the global movement towards electricity deregulation and market-driven pricing, utilities have been looking for a way to balance consumption and generation. Traditional meters only provide information for total consumption between meter reads. They provide no information as to when the energy was consumed at each metered site. Smart meters provide a way of measuring this site-specific information, allowing utility companies to charge customers different prices for consumption based on the time of day and the season.

Smart metering offers many potential benefits from the consumer’s perspective, including:

  •  An end to estimated bills, which can be a major source of complaints for many customers
  •  A tool to help customers better manage their energy consumption – smart meters provide up-to-date information on gas and electricity consumption to help people manage their usage and reduce their energy bills

Electricity pricing usually peaks at certain predictable times of the day and the season. In particular, if generation is constrained, prices can rise if power from other jurisdictions or from more costly generation methods is brought online. Proponents of variable pricing state that billing customers at a higher rate for using energy during peak times will encourage customers to adjust their consumption habits to be more responsive to market prices. Furthermore, they suggest that regulatory and market design agencies hope these price signals could delay the construction of additional generation, or at least the purchase of energy from higher priced sources, thus controlling the increase of electricity prices. Whether or not low income and vulnerable consumers will benefit from time-of-use tariffs is a concern, however.

Another benefit of smart meters is the ability to connect and disconnect service and read meter consumption remotely. Not only does this save costs for utilities, the lack of manual meter readings also means the end of estimated bills. Smart meters offer additional possibilities for the future – such as improved time-of-day tariffs, offering cheaper rates at off-peak times to smooth out national energy usage throughout the day.



In-home display (IHD) units provide energy customers with real-time energy consumption feedback. IHD units can acquire consumption information through a sensor with built-in RF and/or PLC. However, a more effective solution transmits information from a smart meter via a home area network.

Types of IHD units can vary from simple wall-mounted segment LCD displays to battery-operated products with color TFT displays and touchscreens. Advanced IHDs can display energy consumption advice from energy providers in addition to raw energy consumption information.

Features and Benefits of In-Home Displays:

In Home Display Unity

  • Range of microcontrollers, from entry-level 8-bit to sophisticated ARM9 with embedded LCD graphics display controllers, provide flexibility to support any application.
  • Flexible touch solutions, from buttons and wheels to sophisticated touchscreens, provide support for a wide range of user interface features and capabilities.
  • Power line communications (PLC) system-on-a-chip (SoC) solutions with full digital implementation deliver best-in-class sensitivity, high performance, and high temperature stability.
  • Power-efficient solutions support battery-operated products.
  •  Low-power RF transceivers for connectivity.

In-house displays can range from a basic segment LCD to a more sophisticated color TFT. The display choice drives the processing power required, and the main microcontroller can be either an entry-level 8- or 32-bit microcontroller, to a more powerful embedded MPU with on-chip TFT LCD controller. As products become more sophisticated, the user interface will as well.

The communications within the IHD depend on the implemented architecture of the HAN (typically RF or PLC). Wireless connectivity can also be supported via secure digital input/output (SDIO) cards.



Home Network and Smart MeterUtilities can send commands to a smart meter by both radio and carrier current communications, depending on the type of meter being used.  For example, in California, the utilities presently deploying smart meters control the meters using a 902-928 MHz FHSS radio.  The intended range and frequencies used for sending commands to a smart meter can also vary from utility to utility.

Each smart meter electric meter is equipped with a network radio. The radio periodically transmits your hourly meter readings to an electric network access point. Then, his data is transmitted to the utility through a dedicated radio frequency network. Radio frequency technology allows meters and other sensing devices to communicate and route data securely. The electric access points and meters create a mesh of network coverage.

Data collected at the access points from nearby electric meters is transferred to the utility industry through a secure cellular network. Radio frequency (RF) mesh-enabled devices, such as meters and relays connect to other mesh-enabled devices. The devices function as signal repeaters, relaying data to access points. The access point devices gather the information, encrypt it, and send it securely to the utility industry using a third-party network. The RF mesh network sends data over long distances and various terrain. The mesh always seeks the best route to transmit data. This helps ensure that the info travels from its source to its destination quickly and efficiently.


Home Network and Smart Meter

Home network and smart meter access points are tightly coupled. The term “home network” is not confined within a home. It applies to a closely located territory. The home network is controlled by the home area network (HAN) that connects smart appliances, electric vehicles, storage, and on premise electricity generators to an access point – the smart meter. A smart meter is able to interface digitally. The devices working in concert allow load management at peak hours and overall energy control.  Peak load management is a critical consideration in the electricity market due to high associated costs. Other forms of energy control, though nice to achieve in theory, cannot currently incur the same level of reliability that is required.  The amount of data transfer at a given point will likely consist only of a number representing the instantaneous electricity use of each device, expressed in watts. Hence the bandwidth requirement usually falls between 10kbps – 100 kbps per device. The required bandwidth could grow exponentially for large office buildings, so the chosen networking technology must scale.

Low-power, short-distance, and cost-effective technologies are well suited for on-site communications. Several choices are available: 2.4 GHz Wi-Fi, 802.11 wireless networking protocol, ZigBee (based on wireless IEEE 802.15.4 standard), IEEE 802.15.4g wireless smart utility networks (SUN) and HomePlug (a form of power line networking that carries data over the existing electrical wiring). Internet protocol (IP) based on uniform standardization is widely used for communications on the premise.

It should be noted that in-home applications can leverage the smart grid. They can also exist independently without being part of a smart grid. For instance, any meter – smart or traditional – can be connected to a HAN. For example, a wi-fi enabled sensor can read a traditional meter and send data to a webserver to build many kinds of energy-related consumer applications. These kinds of applications, whether they use traditional meters or smart meters, allow consumer-facing functions without the need for any communications technologies beyond those already installed in a usual internet-connected household.


Concentration Point

The collected information from a home network to an access point now needs to traverse to a concentration point as part of smart grid. Data traversal is indeed bi-directional. However, the volume of data from a concentration point to a device will be lower than the volume of data from the consumer side flowing to the utility. A concentration point can be a substation, a utility pole-mounted device such as a transformer, or a communications tower. Bandwidth requirements are in the 10-100 kbps range per device from the home or office. However, if appliance-level data points as opposed to whole-home data are transmitted to the concentration point, the bandwidth requirement will bump up.

Initial solution installations relied on power line carrier (PLC). PLC transmits data from a device, meter, or command to a device or meter over existing power lines. PLC is the most common conduit. It is cost effective for utilities, especially in low-density areas where deploying wireless technology is not viable yet power lines are ubiquitous. Deploying wireless technology makes an appealing business case when expensive equipment installation can be shared. Deploying exclusive wireless technology across dispersed premises is cost prohibitive. However, at certain circumstances, PLC is susceptible to interference and PLC offers extremely low bandwidth – less than ~20 kbps. Real-time-data-intensive AMI requires bandwidth up to 100 kbps per device. In dense cities, AMI deployments use 900 MHz wireless mesh network for data transmission. In wireless mesh networks, connectivity between meters and collection endpoints is obtained via a dedicated network using unlicensed radio spectrum, run by the utility or a subcontractor. Stat network is another wireless alternative. It uses fixed points to a multipoint RF network using licensed spectrum and communication towers. More bandwidth supportive broadband communications, such as the IEEE 802.16e, mobile WiMAX, broadband PLC, next-generation cellular technologies, and satellite technologies, are other possible choices. With growing data and big data buzz, bandwidth requirements tend to go up.


Utility Data Center

Information flow from concentration points to the utility typically functions over a private network. A variety of technologies are available: fiber optic cable, T1 cable, microwave networks, or star networks can be used to send data from the hub to the utility. Sophisticated smart grid applications supporting two-way and frequent communication seek bandwidth in the range of at least 500 kbps to dispatch data from a concentration point to a utility. Currently, many AMI networks support intermittent connectivity to the utility – data gets aggregated at a neighborhood node and is only sent to the utility periodically. More bandwidth may be needed to support more functionalities or more real-time connectivity.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.


6.3 Electric Vehicle impact in the Grid

Electric cars are becoming more popular every day. What is the motivation for people switching from traditional gasoline cars to electric or plug-in hybrid vehicles? A host of reasons are cited for the increase in popularity including environmentalism, the cost of gasoline, the desire to distance ourselves from foreign energy sources, and the long-term cost and maintenance of electric vehicles cheaper. These reasons are a clear demonstration that electric vehicles are not simply a passing trend, but rather a monumental change in the way we think of daily transportation. Whether all of these are valid reasons to switch to electric vehicles is not the focus of discussion in this article. Instead, the size of the electric vehicle market, the effect of their increasing popularity, and the ways in which this changes the way electric utilities manage their operations and grid will be the focus of examination.


Electric Vechicle MarketThe following graph shows the total number of electric vehicles year over year. Over the last several years, the largest adopter of electric vehicles worldwide is by far the United States. In fact, nearly a third of the world’s electric vehicles are being driven on U.S. roadways, putting U.S. electric utilities in a unique position to define the way in which electric vehicles are managed in relation to the grid. Assuming this trend increasing electric vehicle ownership continues, some changes must be made in order to manage the influx of electric vehicles being plugged into the grid to charge.

With stricter policies regarding automobile emissions, friendly policies in regards to alternatively fueled vehicles including tax breaks and incentives, and the rapid expansion of electric vehicle manufacturing, it is only logical to assume that the number of electric vehicles on the road will continue to increase at a rapid rate. Many new electric vehicle models are being released to the market, and the current models are already selling quite well. In the long term, all of this translates to a larger population of drivers using and owning electric vehicles.

An important factor in determining which countries upgrade their grids to deal with increased demand and stress of EV charging is where electric vehicle ownership is concentrated within a country. It can be assumed that early adopters of electric vehicles will live in certain highly populated areas that offer charging centers and have the available infrastructure to accommodate electric vehicle charging. Currently in the U.S., the highest concentration of EV ownership is in California. Although the current electrical grid in the U.S. is said to be able to support 150 million battery-powered cars, electric vehicle adoption in concentrated areas can be problematic for local grids. Adding a specific fast charger to a grid can consume the same amount of electricity and generate demand equivalent to an entire small household. If multiple people in one neighborhood install these devices, it creates issues with local grids and transformers sized for smaller neighborhoods. A few solutions address this problem, and one solution is the modernization of the electrical grid.



Many electric utilities are already in the process of upgrading their grids through increased capacity, smart meters, and many more enhancements. These upgrades, especially ones which deal with capacity, must be introduced in high-demand areas first, so many programs have been developed to help pinpoint areas which need priority upgrades. One example is a customer-driven program in which utility companies ask their customers to let them know if and when they purchase an electric vehicle. Electric utilities are also using smart meter information and data to determine peak charging times and areas which generate the highest demand, so these areas can be prioritized in grid upgrades.



One of the most significant impacts of electric vehicles is the impact on peak usage. Many people come home from their commute and plug in their cars. As discussed previously, this can be problematic in smaller neighborhoods where the local grid cannot handle the increased demand usage of electricity. This can be handled in a few ways, including delayed charging, time-of-use, and shifted usage plans. Demand spikes can cause issues for utility companies that may need to suddenly shift their energy production to another plant or might need to suddenly increase production. These sudden increases not only cause stress on the grid, but can cost a significant amount of money as utilities must produce electricity to meet this increased peak in demand, especially considering most electric grids are currently built only for transmission and not storage. This means that any electricity that is produced and transmitted must be used when it is generated. This particular issue creates a unique opportunity for electric vehicles to fill gaps during peak demand times in which they are not charging but are still connected to the grid.



Thus far, we have discussed the potential negative impacts to the electric grid brought about by the advent of the electric vehicle and their increasing popularity. However, the rising popularity of electric cars also creates many positive impacts for the grid and for energy providers such as utility companies. We have already cursorily mentioned some of the potential benefits for the customers including saving money on fuel costs, low cost of maintenance for electric vehicles, and more. But, how does this benefit the utility companies?

The major opportunity for utility companies in the shift from fuel-powered to electric vehicles is the shift of the market from petroleum providers to utility companies. This allows utility companies to increase their bottom line and accommodate the emerging needs of their customers. Not only is this an opportunity for increased revenue, EVs also provide an opportunity for cost savings. As previously mentioned, many grids cannot store electricity, so in order to meet increased peak-demand times, generation must be ramped up. Electric vehicles, however, have the ability to store electricity. This means EVs could be used to supply power back to the grid during peak demand hours. Peak demand times are currently determined primarily by the need for heating and cooling peaks, which happen to coincide with the time people are generally not using or charging their electric vehicles. If enough electric vehicles are on the road and connected to the grid during peak demand time periods, it is possible they could help meet peak demand by using stored power in their battery cells.

If electric cars are used to combat peak demand from heating and cooling and various other demand generating events, how should utilities  handle the increased demand from EV charging?



With the advent of smart meters and the smart grid, it is possible to determine when and how people use electricity. The most effective way to combat peak demand generated by the charging of electric vehicles is to use time-of-use plans, which reward customers who shift their usage to off-peak times with lower billing rates for electricity. If the cost of electricity is more during on-peak times, then people will be less inclined to charge their cars during these times. In the long run, this can save utility companies a significant amount of money. This can also encourage EV owners to use the delayed charging capabilities of their electric vehicles,which allow a car to be plugged in, but not begin charging until a specified time. This approach in combination with electrical grid updates is the best way to mitigate any serious negative impacts that may arise from the rising popularity of EVs.

Electric vehicles are increasing in popularity, and this sudden and constant increase in EVs on the road will cause significant impacts on the electric grid. However, these impacts do not have to be negative if utility companies use their existing smart grid infrastructure to anticipate where upgrades need to be made as well as use the data collected by smart meters to enforce time-of-use plans, which can shift demand to off-peak times such as overnight charging. The advent of the electric vehicle is a unique and exciting opportunity, not only in terms of the potential for increased revenue for utility companies, but also to decrease our dependence on foreign energy sources and potentially distance ourselves from carbon-emitting fuel sources such as petroleum.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



Today, utility providers currently rely heavily on coal, natural gas, and oil for their energy. Fossil fuels are nonrenewable and finite resources that will eventually dwindle, becoming increasingly expensive and environmentally damaging to retrieve. In contrast, renewable energy resources are sources of energy that are constantly being replenished. These energy resources include: biomass, geothermal, hydrogen, hydroelectric, solar, and wind.

Most renewable energy resources come from the sun either directly or indirectly. For example, solar energy is either used directly with the use of solar panels or solar heat exchangers. However, solar energy drives winds, and plants convert solar energy into carbohydrates which later are harvested for food or fermented to create transportation fuels like hydrogen and ethanol.

Today, an emphasis is being placed on creating clean and renewable energy resources as a means of reducing the carbon footprint and its effects on climate change. In 2015, the United States generated about seven million Gigawatt (GW) hours of electricity. About two thirds of the electricity generated was from fossil fuels.

Renewable Energy SourcesMajor energy sources and percent share of total U.S. electricity generation in 2015.

  • Coal = 33%
  • Natural gas = 33%
  • Nuclear = 20%
  • Other renewables = 7%
  • Biomass = 1.6%
  • Geothermal = 0.4%
  • Solar = 0.6%
  • Wind = 4.7%
  • Hydropower = 6%
  • Petroleum = 1%
  • Other gases = <1%



When people think of renewable energy, they generally think of wind and solar. However, biomass, derived from plant material and animal waste, is one of the oldest sources of renewable energy. This energy source absorbs energy from the sun and regrows over a short period of time.

Compared to fossil fuels, which take millions of years to form, biomass has a clear advantage in the time it takes to be processed and used. Similar to fossil fuels, biomass is mainly used as a means to create heat through the process of burning material or creating transportation fuels for use in generators and engines.

In the United States, biomass fuels provide about 1.6% of the energy used for electricity generation and about 2.5% of the energy used in transportation fuels.  Of this, 46% of the energy from biomass was from wood and wood products, 43% from biofuels, and 11% from municipal waste.

Examples of biomass energy include:

  • Wood and Plant Wastes—burned to heat buildings, produce heat, and generate electricity
  • Agricultural Crops —burned or converted to liquid biofuels
  • Biodegradable Garbage—burned to generate electricity in power plants
  • Animal Manure and Human Sewage—converted to biogas and burned as a fuel to generate electricity BIOMASS POWER GENERATION

In biomass power plants, municipal waste, wood and wood waste, and biogas (predominantly methane) are burned to heat water and produce steam that runs a turbine and generates electricity. Additionally, biomass is burned to provide heat to industries and homes; burning wood in a fireplace is a great example.

Burning biomass isn’t the only way to use its energy. Biomass can be converted to other forms of energy. Transportation fuels such as ethanol and biodiesel are used to power automobiles, trains, and even ships. In the United States, corn and sugar cane are used as a sources of ethanol. To create ethanol, carbohydrate-rich crops are grown and fermented. The ethanol is then combined with gasoline. Today, most cars can run on 10% ethanol with some flex fuel cars capable of running on E85 (85% ethanol).



U.S. Geothermal Resources

Geothermal energy is heat that is generated from below the Earth’s crust. Molten rock, called magma, contains 50,000 times more energy than all of the natural gas and oil resources in the world.  Since access to geothermal energy is ubiquitous, significant advancements in technology have been made to tap into this renewable resource. These technologies range from complex power stations to small and simple pumping systems, each providing significant advantages over traditional energy resources. Methods to utilize these resources include: geothermal powerplants and heat pumps/heat exchangers. GEOTHERMAL POWER PLANTS

As of 2014, the United States has more than 3,300 Megawatts (MW) of installed generation capacity and is a global leader in this energy category. Eighty percent of this capacity is located in California, where more than 40 geothermal plants provide nearly 7% of the state’s electricity.

Geothermal power plants follow three basic designs. The first and simplest design, known as dry steam, uses steam directly from the geothermal source and transfers it through a turbine to generate electricity.

The second and most uncommon approach depressurizes hot water, which is then flashed into steam. The steam is then used to drive a turbine and generate electricity. Due to the limitations of deep drilling, this approach is both expensive and difficult to use.

The third approach, called a binary cycle system, passes hot water through a heat exchanger. The heat exchanger passes the heat where a second liquid (isobutene) is converted to steam and used to drive a turbine. This approach, commonly referred to as a closed loop system, prolongs the life of the geothermal source by retaining the super-heated water and reducing waste. Below is an illustration of all three approaches.

Basic Geothermal power plants

The Three Basic Designs for Geothermal Power Plants: Dry Steam, Flash Steam, and Binary Cycle GEOTHERMAL HEAT PUMPS

Almost everywhere, the upper 10 feet of the Earth’s surface maintains a nearly constant temperature between 50° and 60°F. Geothermal heat pumps tap into this resource to heat and cool buildings. These systems consist of a heat pump, an air delivery system or ductwork, and a heat exchanger. In the below figure, the heat pump pulls ground temperature water through a compressor, which, depending on the season, either condenses or evaporates the water to heat or cool a working fluid. In the winter, a heat pump moves heat by pumping water from the ground through a condenser and into the building to heat the air. In the summer, this process is reversed and the hot water from the building is moved through an evaporator to the ground loop and back to the building to cool the air.

In regions with temperature extremes, ground-source heat pumps are the most environmentally clean and energy-efficient heating and cooling systems available. Far more efficient than electric heating and cooling, these systems can circulate as much as five times the energy they consume in the process.

The U.S. Department of Energy conducted a study and found that heat pumps can save average households hundreds of dollars in energy costs each year. The system typically pays for itself in eight to twelve years. Tax credits and other incentives can reduce the payback period to five years or less.

Heat pump diagramToday, more than 600,000 ground-source heat pumps supply climate control in U.S. homes and in other buildings. Although this is a significant, it is still only a small fraction of the U.S. heating and cooling market with several barriers the market must overcome. For example, despite their long-term savings, geothermal heat pumps have higher upfront costs. In addition, installing them in existing homes and businesses can be difficult, since it involves digging up areas around a building’s structure. Finally, many heating and cooling installers are simply not familiar with the technology.



Hydrogen is the simplest of all the elements and consists of only one proton and one electron. Despite its simplicity, it’s the most plentiful element in the universe; however, hydrogen doesn’t occur naturally as a gas on Earth. It’s always combined with other elements in the form of molecules. Water, for example, is a molecule made up of hydrogen and oxygen to form (H2O).

Hydrogen is also found in many organic compounds, notably the hydrocarbons that make up many fuels, such as gasoline, natural gas, methanol, and propane. Most of the hydrogen produced today is separated from natural gas using a process called gas reforming. Additionally, an electrical current can also be used to separate water into its components of oxygen and hydrogen. This process is known as electrolysis.

Hydrogen in pure form is high in energy and can be burned to release that energy. The key advantage of using pure hydrogen as a fuel is when hydrogen is burned it produces almost no pollution, making it a clean and renewable source of energy. Currently the energy from hydrogen is produced using two main methods: hydrogen fuel and hydrogen fuel cells. PURE HYDROGEN

In the 1970’s, NASA was looking for a fuel source high in energy and clean burning. When combined with oxygen, hydrogen was used to power rockets and space shuttles. Today, some cars are using liquid hydrogen as a fuel with promising results.


Hydrogen Fuel Cell6.2.3.2 FUEL CELLS

A fuel cell combines hydrogen and oxygen to produce electricity, heat, and water. Similar to batteries, fuel cells convert the energy produced by a chemical reaction into usable electricity. Unlike batteries, as long as hydrogen is supplied, the fuel cell never loses its charge.

Fuel cells are a promising technology for use as a source of heat and electricity for buildings and as an electrical power source for electric motors propelling vehicles. Fuel cells operate best on pure hydrogen. But fuels like natural gas, methanol, or even gasoline can be reformed to produce the hydrogen required for fuel cells. Some fuel cells can even be fueled directly with methanol, without using a reformer. THE FUTURE OF HYDROGEN

In the future, hydrogen will join electricity as an important energy carrier. An energy carrier moves and delivers energy in a usable form to consumers. Renewable energy sources, like the sun and wind, can’t produce energy all the time. But they could, for example, produce electric energy and hydrogen, which can be stored until it’s needed.

Hydrogen could also be used as a fuel for zero-emissions vehicles, to heat homes and offices, and to fuel aircraft. However, before hydrogen can play a bigger role in energy production and become a widely used alternative to gasoline, many new facilities and systems must be built.



On Earth, water is constantly moving around in various forms. As an example, water evaporated from oceans combines to form clouds, which eventually condense and precipitate in the form of rain and snow. All this movement provides an enormous opportunity to harness useful energy. Hydroelectric generators take advantage of this movement to create electricity.



In the United States, hydropower has grown steadily, from 56 Gigawatts (GW) of installed capacity in 1970 to more than 78GW in 2011. In order to generate electricity from the kinetic energy in moving water, the water has to move with sufficient speed and volume to spin a turbine.  Roughly speaking, one gallon of water per second falling one hundred feet can generate one kilowatt of electricity. To increase the volume of moving water, impoundments or dams are used to collect the water. An opening in the dam uses gravity to drop water down a pipe called a penstock. The moving water causes a turbine to spin, which causes magnets inside a generator to rotate and create electricity.

Since hydropower depends on rivers and streams for generation, the potential to use hydropower as a source of electricity varies across the country. For example, the Pacific Northwest (Oregon and Washington) generates more than two-thirds of its electricity from hydroelectric dams.

In addition to very large plants in western states, the United States has many smaller hydropower plants. In 1940 there were 3,100 hydropower plants across the country, though by 1980 that number had fallen to 1,425. Since then, a number of these small plants have been restored. As of 2013, 1,672 hydro plants (not including pumped storage) were in operation.

Hydropower can also be generated without a dam, through a process known as run-of-the-river. In this case, the volume and speed of water is not augmented by a dam. Instead, a run-of-river project spins the turbine blades by capturing the kinetic energy of the moving water in the river.  Hydropower projects that have dams can control when electricity is generated because the dams can control the timing and flow of the water reaching the turbines. Therefore, these projects can choose to generate power when it is most needed and most valuable to the grid. Because run-of-river projects do not store water behind dams, they have much less ability to control the amount and timing of when electricity is generated. PUMPED STORAGE

Another type of hydropower technology is called pumped storage. In a pumped storage plant, water is pumped from a lower reservoir to a higher reservoir during off-peak times when electricity is relatively cheap, using electricity generated from other types of energy sources. Pumping the water uphill creates the potential to generate hydropower later on. When the hydropower is needed, it is released back into the lower reservoir through turbines. Inevitably, some power is lost, but pumped storage systems can be up to 80% efficient. Currently more than 90GW of pumped storage capacity is available worldwide, with about 20% of that in the United States. The need to create storage resources to capture and store for later use the generation from high penetrations of variable renewable energy (e.g. wind and solar) could increase interest in building new pumped storage projects. THE FUTURE OF HYDROPOWER

Advances in ‘fish-friendly’ turbines and improved data collection techniques to increase the effectiveness of fish passage technologies create exciting new opportunities for the hydropower industry. If constructed and operated in a manner that minimizes environmental and cultural impacts, hydropower projects can provide low-cost, clean sources of electricity to urban and rural areas throughout the world. Harvesting the power from our rivers can be part of a smart and diverse set of solutions for reducing our dependence on fossil fuels, and the impact they have on our climate and public health. The ability to ramp up and down hydropower generation is a valuable source of flexible generation on the electricity grid, which can directly displace coal and natural gas, and help integrate larger amounts of variable renewable energy resources, like wind and solar power.


6.2.5    SOLAR

Solar energy is energy from the sun that is converted into thermal or electrical energy. This form of energy is the cleanest and most abundant renewable energy source available. A variety of technologies convert sunlight into usable energy. The most commonly used solar technologies for homes and businesses are solar photovoltaics, concentrated solar heating, and passive solar heating.     SOLAR PHOTOVOLTAICS

Traditional solar cells are made from silicon and tend to be the most efficient. Second-generation solar cells are made from amorphous silicon or non-silicon materials such as cadmium telluride, and are called thin film solar cells. Thin film solar cells use layers of semiconductor materials that are only a few micrometers thick. Due to their flexibility, thin film solar cells can double as rooftop shingles and tiles, building facades, or the glazing for skylights. Solar cells, also called photovoltaic (PV), convert sunlight directly into electricity. PV gets its name from the process of converting light (photons) to electricity (voltage), which is called the PV effect. The PV effect was discovered in 1954, when scientists at Bell Telephone discovered that silicon created an electric charge when exposed to sunlight. Soon, solar cells were being used to power space satellites and smaller items like calculators and watches.     CONCENTRATED SOLAR HEATING

Fossil fuels are used by many of today’s power plants as a heat source to generate electricity. However, a new generation of power plants with concentrated solar power systems uses the sun as a heat source. The three main types of concentrated solar power systems are: linear concentrator, dish/engine, and power tower systems.

  • Linear concentrator systems collect the sun’s energy using long rectangular, curved mirrors. The mirrors are tilted toward the sun, focusing sunlight on pipes (receivers) that run the length of the mirrors. The reflected sunlight heats a fluid flowing through the pipes and is used to boil water in a conventional steam generator.
  • A dish/engine system uses a large mirrored dish similar to a satellite dish. The dish-shaped surface directs and concentrates sunlight onto a thermal receiver, which absorbs and collects the heat and transfers it to the steam generator.
  • A power tower system uses a large field of flat, sun-tracking mirrors known as heliostats to focus and concentrate sunlight onto a receiver on the top of a tower. A heat-transfer fluid heated in the receiver is used to generate steam and used in a steam generator.     PASSIVE SOLAR HEATING

Commercial and industrial buildings can use the same solar technologies used for residential buildings: photovoltaics, passive heating, daylighting, and water heating. Nonresidential buildings can also use solar energy technologies that would be impractical for a home. These technologies include ventilation air preheating, solar process heating, and solar cooling.

Solar water-heating systems are designed to provide large quantities of hot water for nonresidential buildings. A typical system includes solar collectors that work along with a pump, heat exchanger, and/or one or more large storage tanks. The two main types of solar collectors used for nonresidential buildings—an evacuated-tube collector and a linear concentrator—can operate at high temperatures with high efficiency. An evacuated-tube collector is a set of many double-walled, glass tubes, and reflectors to heat the fluid inside the tubes. A vacuum between the two walls insulates the inner tube, retaining the heat. Linear concentrators use long, rectangular, curved (U-shaped) mirrors tilted to focus sunlight on tubes that run along the length of the mirrors. The concentrated sunlight heats the fluid within the tubes. Many large buildings need ventilated air to maintain indoor air quality. In cold climates, heating this air can use large amounts of energy. However, a solar ventilation system can preheat the air, saving both energy and money. This type of system typically uses a transpired collector, which consists of a thin, black metal panel mounted on a south-facing wall to absorb the sun’s heat. Air passes through the many small holes in the panel. A space behind the perforated wall allows the air streams from the holes to mix together. The heated air is then sucked out from the top of the space into the ventilation system.


6.2.5    WIND

Humans have been harnessing the wind’s energy for hundreds of years, from old windmills used for pumping water or grinding grain, to ships using sails to move. Today, wind energy is captured by the natural wind in our atmosphere and converted into mechanical energy used to drive a generator that creates electricity.

Wind is the movement of air from an area of high pressure to an area of low pressure. This is caused by the uneven heating of the atmosphere by the sun, irregularities of the earth’s surface, and rotation of the earth. In an effort to capitalize on wind power, wind turbines are installed in areas where wind gusts are consistent all year round.     WIND TURBINES

Each turbine is equipped with wind assessment equipment and will automatically rotate into the face of the wind, and angle or “pitch” its blades to optimize energy capture.Wind turbines, like windmills, are mounted atop a steel tubular tower up to 325 feet, which supports both a “hub” securing wind turbine blades and the “nacelle” which houses the turbine’s shaft, gearbox, generator, and controls. Usually, the hub will have two or three propeller-like blades which are mounted on a shaft to form a rotor. Each blade acts like an airplane wing. When the wind blows, a pocket of low-pressure air forms on the downwind side of the blade which causes the rotor to turn and triggers an internal gearbox to spin. The gearbox then steps up the rotation speed of the rotor and spins an internal shaft which is connected to a generator that produces electricity.

Wind is a clean source of renewable energy that produces no air or water pollution. And since the wind is free, operational costs are nearly zero once a turbine is erected. Wind turbines can be used as stand-alone applications, or they can be connected to a utility power grid or even combined with a photovoltaic system. Mass production and technology advances are making turbines cheaper, and many governments offer tax incentives to spur wind-energy development.

In the United States, Texas has the most wind Farms (42) with a combined wind generated capacity of 17,713 MW. Nevertheless, the wind energy industry is booming. Globally, generation more than quadrupled between 2000 and 2006. At the end of 2015, global capacity reached more than 432,419 MW.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



Distributed generation is energy generated by small devices near the end user. These systems are known as distributed energy resources (DER). The traditional electric grid network in the United States consists of bulk generation located far away from the concentrated customer base.  This configuration is known as centralized energy, and a large transmission network is needed to transport this generated electricity long distances to the customer. In contrast, DER systems are known as decentralized energy sources because they are small, independent generators located near the consumer load. DER systems are often renewable energy sources such as photovoltaic systems, wind turbines, geothermal systems, small hydro units, biomass sources, or biogas generators. Distributed generation does not have a standard definition, but it is commonly accepted that DERs are less than 100 megawatts (MW) in size. However, they are usually less than 50 MW in order to fall below the maximum voltage accommodated by the distribution network.



Distributed GenerationAt the end of the 19th century, during the development of the electric grid, distributed generation accounted for all of the nation’s electricity needs in the form of direct current (DC) equipment, and only small pockets of the U.S. had access to electricity. The first commercial power plant was the Pearl Street Station in Manhattan. It was a central generation station that was still localized with its customer base. The development of alternating current (AC) technology allowed electricity to be safely transported over much longer distances, and this capability allowed for the creation of the centralized generation and transmission system of the 20th century. The demand for electricity grew exponentially during the early 1900s. Large generating units were developed to meet those needs, and economies of scale lowered the cost of providing electricity to end users.

However, the second half of the 1900s experienced a leveling off of energy growth. Rising fuel prices and uncertain markets spurred research into alternative energy generation methods. In the mid-1990s, research from the past decade had produced economically-viable methods of small-scale electricity generation that could compete with the cheap electricity generated from large scale equipment. Additionally, the Energy Policy Act of 1992 sought to bring competition to the power industry, a concept previously unheard-of in this industry of natural monopolies, and this policy gave non-utility and private investors motivation to implement distributed generation technologies.

Today, some states have deregulated, wholesale energy markets, and many offer incentives to the end user for generating their own energy and exporting surplus electricity to the grid. During 2012, $150 billion was invested in distributed generation, and out of the total amount of new generating capacity added that year, distributed generation accounted for roughly 39 percent.  As distributed generation and smart grid technologies advance, central and distributed generation sources will integrate and complement each other to produce a safe, reliable, environmentally-sensitive, economically-sound electric grid.



Distributed generation technologies can take many forms. They can be mobile, such as generators on large ships, but we will focus on the impact of stationary DER modules that supplement energy from the centralized power grid.  Units can be connected to the grid or kept off-grid and can be used for continuous, peak, or backup power.  Furthermore, distributed generation looks different

Distributed Generation Gridto industrial and commercial customers compared to residential users. Organizations are more likely to own small localized power plants, while individual energy consumers will own singular modules like a small solar panel array. Power plants on the local level can be connected directly to the public grid and produce electricity that is sold to the market, or kept off-grid and produce electricity used solely on-site. End user DERs are most often connected to the grid from the customer’s side of the meter rather than islanded, and only surplus energy that the customer cannot use is placed on the public grid. The former type can generate up to 100 MW of power, while the latter usually generate less than 10 MW. In contrast, the average coal power plant has a power output of 500 MW, and the power output of a typical nuclear power plant is 1000 MW.  The most common types of distributed generation are described below.

Currently, wind turbines produce the most power from renewable resources, excluding hydro. Wind power is appealing because it does not require fuel and is therefore unaffected by fluctuating fuel costs. No forms of pollution are generated from wind turbines, and the ratio of power generation to operating cost is very favorable compared to other generation sources.  However, wind turbine installation has high initial costs, and the energy production is unpredictable and volatile.

Solar power systems are the most common DERs among residential owners because photovoltaic or thermal panels can be installed on the roofs of homes.  The power output of these units can be customized to fit the budget and energy needs of the individual customer. The standard stationary solar panel has no moving parts and therefore, requires less maintenance than other generators. They require no fuel and are quiet, unobtrusive additions to a residential home.

Cogeneration, or combined heat and power (CHP), allow industrial businesses to capture and utilize heat from their processes that would have otherwise been wasted. The average efficiency of fossil fuel generation is 35-37 percent, and about two-thirds of the lost energy is wasted heat. CHP systems can recapture this heat for use in the industrial process and space or water heating. Efficiencies of 90 percent can be achieved with the addition of CHP.

Fuel cells use chemical reactions to convert fuel into energy as opposed to the combustion method. They consist of a cathode and anode with an electrolyte in between to allow charges to travel from one to the other. Water, heat, and carbon dioxide are the only emissions of fuel cells which make them a cleaner energy source than other fossil-fuel power sources. Their high efficiency, low noise, and quick installation make them an appealing alternative, but they have high initial costs, require frequent maintenance, and still rely on fossil fuels.



Centralized power plants are often old and have outdated equipment that produce large amounts of greenhouse gas emissions, and the concentrated nature of their emissions can drastically harm the ecosystems around the power plants. Most of the distributed generation in the U.S. comes from renewable energy sources and has significantly lower emissions than traditional coal power plants, which is a positive benefit for environmentally-concerned customers.

Some industrial and commercial companies look to distributed generation as a way to ensure constant power with zero interruptions and better power quality.  The Electric Power Research Institute (EPRI) estimated that power disturbances caused a loss of $119 billion in revenue for U.S. companies in 2007. Furthermore, 4 – 9% of electricity is lost due to old transmission technology and grid overload, and the electricity that does reach the customer often has poor power quality – that is, the electricity has fluctuations in voltage. Customers can limit their need of an expansive transmission network by investing in DER systems to use as backup systems or in parallel with the grid.

By providing localized power to the end user, distributed generation can reduce the electricity demand needed from bulk generation and remove some of the load from transmission lines, which is especially beneficial during peak times of demand. It is costly for utilities to produce and supply energy during peak demand.  They have to utilize extra power plants that might not be as efficient as their other generation sites, and the grid is often congested and overloaded. In some places, distributed generation can reduce enough peak demand from utilities that power plant and transmission expansions and upgrades are not needed to keep up with demand.

Limiting the need for new transmission and power plant investments is a significant motivation for the development of distributed generation technologies. Large power plants require significant capital investment, and fluctuating market conditions lead utilities to be cautious when making decisions to build new generation. Furthermore, building a new power plant increases a utility’s generation capacity by a large factor, but energy consumption has been increasing only moderately in recent years. This disconnect means utilities risk generating excess amounts of electricity, wasting valuable resources, and waiting several years to generate a return on their investment. On the other hand, DER systems allow the total generation capacity to be increased incrementally.

Lastly, centralized, fossil fuel-dependent energy networks present some security risks that can be mitigated by distributed generation. A large power plant presents a target for cyberattack groups and similar organizations that would prove disruptive to its customer base.  It would not be easy to quickly recover from grid failure if a large power plant were damaged and taken offline. Having many small generators located near consumption reduces criminal targets and gives the grid flexibility to respond to outages throughout the grid. Furthermore, distributed generation incorporates energy production from a variety of sources, including renewable energy.  By diversifying the power source, the economy is less sensitive to price fluctuations and fuel shortages.



First and foremost, a grid with significant amounts of distributed generation needs smart grid technologies in order to manage grid operations, maintain power quality, and balance the generation from all these sources with overall demand.  Some of the required capabilities include forecasting energy demand and availability of renewable energy generation, optimizing control of network switching, calculating generator schedules against controllable loads and storage capacities, and protecting communication and grid data across the network.

One of the biggest tasks to be tackled by the smart grid is the integration of unpredictable energy sources. This need is especially relevant to distributed generation because many DER systems contain renewable energy sources that are intermittent.  The uncertainty of how much variable distributed generation the grid can handle is a factor that potential owners and investors have to consider. The main mitigation of this risk is the addition of energy storage units to DER systems. This addition allows excess energy to be stored and used at a later time.  Currently, the most common form of electricity storage is lithium ion batteries, but size and cost are still restrictions that make energy storage an area that needs further development, though it is worth noting that the cost of these batteries is decreasing.

Furthermore, the capital investment required upfront for DER systems often puts them out of reach for the average residential consumer. Even if customers can afford DER systems, many states do not offer monetary compensation to customers who export their surplus energy back to the grid, which creates a much longer period of time before these customers see the return on their investment. Moreover, electricity customers in the U.S. are not typically encouraged to take an active role in managing their electricity use, so this lack of knowledge does not promote the adoption of small DER systems among residential customers. The customers are uncertain about what local regulations apply and what steps they need to take to connect a solar panel or other energy source to the grid.

All in all, distributed generation is a growing sector of electricity generation. More businesses and residential customers are choosing to supplement their services from their utility with localized generation. While DER systems are not likely to replace centralized power stations any time soon, their presence introduces new challenges that will alter utility operations and business processes. Not only will the utility have to invest in smart grid technology, it will have to redefine its relationship with the customer.  Despite these challenges, distributed energy resources will contribute to a more resilient, reliable electric grid that benefits utilities and customers alike.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.


Here is a list of relevant reading material our expert identified as sources for additional information:—prof-mohan-kolhe.pdf

This post is part of our Industry 101 Series, an ongoing campaign to provide a foundation of knowledge about our unique industry. To learn more about this campaign, please click here.



Transmission settlements are used for the same purpose as market settlements—to ensure that the supply and demand of power are in sync—but transmission settlements consider this balance from a grid perspective, rather than a consumer one.

Transmission settlements are settled between a transmission operator and a transmission customer, based on the customer’s use of the operator’s grid. Essentially, the transmission customer rents the grid from the operator and other non-competitive ancillary services provided by the operator, such as scheduling and voltage support. The charges for these transmission and ancillary services are based on a FERC-approved tariff, and the funds collected by the independent system operator (ISO) are distributed to the transmission owners or ancillary service providers.

Transmission settlement setups often predate the implementation of the energy market and can even exist in a regulated market. Most ISOs use a monthly invoicing process for transmission settlements, rather than the daily settlements used for market settlements, due to less market volatility and less granular data.

Let’s take an example from a midcontinent independent system operator (MISO) and try to understand their transmission settlement process:

  • Market participants’ use of the MISO transmission system and mandated, non-competitive ancillary services such as scheduling and voltage support are financially settled by the transmission settlements process.
  • Market participant charges for ancillary services and transmission are determined using the tariff approved by FERC.
  • The transmission owners and the providers of the mandated ancillary services receive the collected funds.
  • Transmission settlements utilize different applications than the market settlements.
  • Transmission settlements predate the market opening and continue to follow the existing transmission settlements schedule.


If you enjoyed this article, click here to start from the beginning of our Industry 101 Series.

Or to continue your journey, click here to access the next installment of our Industry 101 guide.

Here is a list of relevant reading material our expert identified as sources for additional information: