NEWS: Federal Energy Regulatory Commission Creates Smart Grid Policy

Dispatch from SSC Intern Stephanie Castellano

What is a Smart Grid?

A smart grid improves the current energy transmission to an advanced two-way communication between suppliers and users. The enhanced system increases the efficiency of electricity transmission. The system allows users the flexibility to incorporate distributed energy generation (typically renewable energy) in their offices or homes. It gives all customers the ability to supply their own electricity and supply extra unused power back to the transmission system.

Smart Grid Policy

The Federal Energy Regulatory Commission (FERC) released on July 16th its proposed national smart grid policy. The policy will set standards for developing the national smart grid. Priorities set in the policy encourage and guide the industry in developing smart grid systems.

A few key points from the policy:

* Ensure cybersecurity through standards and protocols.
* Provide real-time system conditions to improve reliability.
* Identify further resources for improved energy storage.
* Develop and integrate electric vehicle transportation into smart grid such that users are encouraged to charge in off-peak hours.
* Form an interm rate policy to assure industry's recovery of smart grid technology costs.

The priorities set by the FERC's Policy were the ones expected, except for the interm rate policy which has been controversial. Some disagree that smart grid early adopters should be allowed to employ interm rates since cost-effective technologies have not yet been identified. However, many power companies agree with the interm rate idea because raising their rates allows them to recoup costs of implementing smart grid technologies.

FERC was called on to start policies and standards for smart grid technology in the Energy Independence and Security Act of 2007. In addition, both the Department of Energy and Obama administration have called for development of a national smart grid. The need for upgrading transmission equipments to improve efficiency has been considered important. FERC's Smart Grid Policy is one step in helping develop these improvements in the nation's energy transmission.

The Smart Grid Policy is guiding the National Institute of Standards and Technology (NIST) in creating standards to apply nationwide. The Institute has been busy working with the industry, developers, and stakeholders to form a protocol of model standards by this fall.

Check out the full policy statement here.