North Carolina-based Duke Energy Plots Course Beyond the Smart Grid

Sep 11, 2007

North Carolina-based Duke Energy has been quietly turning itself into one of North America's Smart Grid leaders -- if not in the quantity of its short-term deployments, then certainly in the quality of its long-term thinking. SGN Prediction: The approach Duke is taking (to planning) and the demands it is making (to vendors) will set the tone for hundreds of utilities to follow.


SGN recently spent time with Vice President and Chief Technology Officer David Mohler, the man charged with turning Duke Energy into the nation's leading "utility of the future." This article gives a quick overview of Duke's plans, discusses seven underlying principles, and concludes with links to more information.



Background

Duke Energy (NYSE: DUK) is one of North America's largest electric power companies. Headquartered in Charlotte, NC, it has nearly 37,000 MW of generating capacity (plus 4,000 MW more in Latin America) and serves nearly 4M customers. It operates in the heart of "coal country" in the Southeast and Midwest and derives roughly 70% of its power from coal.


Duke Energy's initial Smart Grid pilots are already underway as it seeks to fine-tune its network configuration for various topographies (urban, suburban, rural). Two examples include:

Piloting advanced metering and distribution automation in Charlotte to test potential communications systems, distribution sensors, meters and in-home applications
Integrating non-BPL communications and multiple meter types in Bloomington, IN to create a Smart Grid "testbed" and to serve a varied customer base that includes industrial, commercial, urban, rural and large campuses
Duke Energy's full-scale Smart Grid rollout will begin in the second half of 2008 and continue for several years.



Key Principles

Over the past 18 months, Duke has met with dozens of top experts, consultants and vendors as it put together a master plan. In our research and interviews, we noted seven prominent principles:



1. A Smart Grid is the foundation for a next-generation utility

Duke is aiming far beyond advanced metering infrastructure (AMI) or the Smart Grid, setting its sights on a fully transformed utility of the future. A Smart Grid is the foundation for that future or, as Mohler puts it: "the central nervous system."



2. A Smart Grid is the enabler of industry consolidation

Provided the Smart Grid is done in an open, plug-and-play fashion, it can make it easier for utilities to merge. As Duke builds out its new system, it hopes to "bolt on new acquisitions," Mohler says, "using the same technology platform for cost efficiency."



3. A Smart Grid is dumb unless it uses open standards

Once you understand that the Smart Grid must make it easier for utilities to combine, then it becomes clear why it must be interoperable. Duke is demanding an IP-based open architecture. "We are getting really, really tough with vendors about standards," says Mohler, "to the point where we are saying 'if you don't publish [your standards], we don't purchase.'"



Mohler also admits that ”meter vendors are the hardest to crack." "They all like their black box,” he says. “But we are pleased that at least two vendors are now working to open things up by putting USB ports on their meters."



Standards are also critical to the back-end information technology (IT) piece. "This is where we have done the most thinking about how to bolt things on," says Mohler. "We can't afford to install it today and then rip it out in two years." At this point, Duke is aiming for a systems-oriented architecture (SOA) with the ability to plug IT apps into a data bus. (See the links at the end for a recent SGN article on SOA.)



4. Establish the business case solely on utility benefits

Some utilities hope to include societal, community and business benefits in their Smart Grid discussions. Duke’s objective is to cost justify its buildout based on system benefits alone.




5. Make the public case by including societal benefits

When it comes to explaining its plans to the customer base, Duke Energy is presenting many public benefits. In particular, it is one of the first utilities to promote grid improvements and energy efficiency as a way to address climate change. As Duke's "save-a-watts" efficiency programs grow, Duke will retire coal plants, thereby reducing emissions.



6. Efficiency can slow demand growth

In May 2007, Duke filed a first-of-its-kind plan with the North Carolina Utilities Commission to make energy efficiency the company's "fifth fuel" side-by-side with nuclear, coal, natural gas and renewables. The plan seeks to reduce demand growth by 1,700 MW in four years.



7. Build out the Smart Grid in phases

Duke's plan begins with the installation of smart meters and communications. Advanced metering will be an initial application, which can also include utility benefits such as improved outage detection and response. From there, Mohler expects to add system optimization "correlating data to allow us to fine-tune voltages and reactive power and optimize on a feeder-by-feeder basis, so we don't overbuild."



Eventually, Duke will begin to experiment with microgrids. "Although it is only in the talking phase, we intend to choose areas where we want to make the investment to operate independently of the larger grid," Mohler says.



Revolution by Evolution

Although Duke Energy is moving forward in a phased manner, its ultimate target is no less than the reinvention of the electric utility. "Our goal is to transform the use of electricity in the same way today’s cell phones replaced rotary dial telephones," explains Ted Schultz, the vice president of Energy Efficiency. Just as no one living in 1977 could have predicted the iPhone of 2007, the company realizes that the Smart Grid it will install beginning in 2008 will enable new applications we cannot yet predict. "One of the things that gets me most excited," Mohler says, "is that we are opening the door to a future we can't even fully imagine."