Scamming Uncle Sam? A Tale Of Two Smart Grid Pilot Projects
In 2010, I started writing about the smart grid. At the time, it seemed like the smart grid would be a game changer for electric utilities. Only a few months earlier, President Obama had signed into law the American Recovery and Reinvestment Act of 2009, which included $4.5 billion in federal funds for accelerating deployment of the smart grid.
I also knew that at least a few of the smart grid pilot projects supported by Uncle Sam had proposed to tackle critical grid interconnection challenges impeding customer adoption of distributed energy resources (DER). In particular, one of the smart grid projects performed by Consolidated Edison of New York on Uncle Sam’s dime proposed to develop interoperability “protocols and software to leverage multiple types of customer owned distributed generation (DG) along with evaluating the integration commercial building demand response.”
Con Edison had proposed to “demonstrate methodologies” for interconnecting customer-sited resources, including a combined heat and power (CHP) fuel cell system, to create a virtual power plant (VPP).
This was an important project for folks in New York’s CHP industry because it tackled two of the biggest problems impeding CHP projects in Con Edison’s service territory. First, interconnecting CHP projects to Con Edison’s distribution grid was expensive, time consuming and fraught with technical risks. Second, CHP systems are seldom afforded the same scope of opportunities to participate in energy markets and utility programs as other demand side resources.
Con Edison’s pilot project planned to spend tens of millions of dollars solving these problems. To put this in perspective, Con Edison’s demonstration project had a budget nearly twice the size of the total funding available for paying incentives to CHP projects in New York State over a multi-year period.
More than half a decade later, Con Edison reported that it had dropped CHP from the project altogether because the interconnection issue was too challenging.
Another objective was to develop an interconnection plan that would allow parallel operation of a customer facility and the distribution grid and injection of power into distribution grid. At the time the complexity and possible distribution grid problems associated with enabling this type of operation caused the project to focus strictly on load reduction and not parallel operation for participating facilities.
Of the $4.5 billion dollars spent on the smart grid, not a single dollar was spent addressing the issue of interconnection of distributed generation, according to the U.S. Department of Energy’s Smart Grid data portal.
In addition to abandoning the interconnection issues, Con Edison also dropped plans for integrating CHP into energy markets and utility programs. Instead, it replaced CHP with thermal energy storage. The rationale for replacing fuel cells with thermal storage was that “it wasn’t clear if the fuel cell would be able to be used to provide ancillary services to the [wholesale grid operator], while the [thermal storage plant] was definitely an acceptable technology for ancillary services.”
This rationale is baffling. The purpose of providing public funding for demonstration projects is to figure out how to do new things or how to do something differently. Pilot projects are reserved for activities where there is little or no clarity. That is why taxpayers ponied up the money to support a pilot project focused on CHP rather than thermal storage.