Smart Grid

The issue

The technology and gadgets we rely on today are much faster, more efficient and less costly than they once were. When cellular technology first debuted, the portable phone was expensive, clunky and required a battery in a bag in order to work – nothing like the smart phones in use today that fit in your pocket. This evolution of technology has occurred in every industry; the electric industry is no exception. And one thing is certain – tomorrow’s technology will be even faster, more efficient and more affordable.

The smart grid is a suite of customer programs and advanced technology initiatives that will transport us into a new era of energy delivery and customer service. Electric vehicles, smart appliances, energy storage and distributed solar generation are among the technologies being adapted and incorporated into our current infrastructure.

Smart grid programs can improve service quality and reliability, lower energy consumption, and offer additional customer benefits. The new technologies can help improve efficiency, identify and respond to outages more quickly, and better monitor and control operation of the distribution system. It can also provide customers with new and innovative programs and pricing options that allow them to monitor and control their own energy use, saving resources and money.

Additionally, the way our nation generates electricity is changing rapidly. Deployment of smart grid technology and transmission expansion may help us to address changes in generating capacity.

Spotlight on technology - Volt Var Optimization

Applying technology on our distribution system through monitoring and controlling voltage is another advancement to reduce the amount of energy that must be produced and delivered to customers on demand. Known as Volt Var Optimization (VVO), this technology has proven its technical viability and energy efficiency potential. Typically, customers receive electricity at a voltage between 114 and 126 volts. Using the full range of voltage is common practice in our industry. Studies and recent experience are showing that optimizing voltage – delivering voltages that more closely match the voltage level customers’ equipment was designed for – benefits customers and the grid. Customers continue to receive the electricity they need while reducing their demand from the grid and lowering their consumption. This contributes to energy efficiency at the customer’s location and makes for more efficient use of the distribution system.

AEP’s deployment of VVO began in AEP Ohio as part of the gridSMART® Demonstration Project and has since expanded to Indiana Michigan Power, Kentucky Power and Public Service Company of Oklahoma. Early results indicate that customers can reduce their energy consumption an average of 3 percent with this technology. The Indiana Utility Regulatory Commission and Michigan Public Service Commission have each ruled that VVO can be recognized as an energy efficiency program in their respective states. AEP’s operating companies will be selectively reviewing options for deploying this technology where conditions are favorable.

AEP’s gridSMART® projects in progress

AEP is deploying smart grid technologies in several states, with regulatory support.

  • AEP Ohio’s first phase of its gridSMART® demonstration project deployed a comprehensive suite of innovative smart grid technologies on 70 circuits serving 132,000 customers in Central Ohio. The $150 million project was funded through a $75 million federal grant, cost recovery support from the Public Utilities Commission of Ohio and in-kind vendor contributions. AEP Ohio has proposed to extend gridSMART® with a Phase 2 deployment that will include Advanced Metering Infrastructure (AMI) for approximately 894,000 customers, Distribution Automation Circuit Reconfiguration (DACR) for approximately 250 priority circuits, and VVO for approximately 80 circuits. The company is proposing to recover the $295 million project cost over five years.
  • AEP Texas has completed installation of a 1 million meter smart grid network. The $308 million project is being recovered through an approved 11-year regulatory surcharge. The company is also deploying DACR on 15 circuits.
  • Indiana Michigan Power (I&M) has deployed a smart grid network to approximately 10,000 customers. The $7 million project was funded through a settlement agreement approved by the Indiana Utility Regulatory Commission. I&M has installed VVO on nine circuits and received approval for its use as an energy efficiency program through filings in Indiana and Michigan. I&M is upgrading DACR on 11 circuits and installing it on 11 additional circuits.
  • Public Service Company of Oklahoma’s (PSO) initial gridSMART® project included approximately 31,000 customers with AMI, 14,000 of whom are served on 13 circuits equipped with advanced grid management technologies, such as VVO and DACR. The project was financed through an $8.75 million American Reinvestment and Recovery Act low-interest loan from the Oklahoma Department of Commerce, along with $2 million in annual revenues approved by the Oklahoma Corporation Commission. In January 2014, the OCC approved PSO’s application to broaden the scope of its AMI deployment to cover its entire 30,000-square-mile service territory for its remaining approximately 520,000 customers over three years. The timing for the completion of this approximately $135 million project could change pending the regulatory review process.
  • Kentucky Power Company is deploying advanced grid technology on approximately 30 circuits. The company is also installing distribution Supervisory Control and Data Acquisition (SCADA) on these circuits to provide greater visibility for dispatchers and to allow for the remote control of equipment. The existing technology investment is expected to be recovered in customer rates.
  • Appalachian Power Company (APCo) has installed three circuits with DACR and is installing the technology on four more circuits. APCo is also upgrading some circuits with SCADA. APCo was the first utility in North America to deploy a1-megawatt-scale sodium sulfur (NaS) battery at its Chemical Station in Charleston, W.Va., and has since deployed another 2-MW battery at Balls Gap Station near Milton, W.Va.
  • Southwestern Electric Power Company (SWEPCo) has DACR technology on two circuits, is upgrading the technology on 14 circuits, and is installing the technology on an additional three circuits.