The Lithium-ion Battery That Could: How Well Reinvent the Grid

The Internet of Things is transforming the future of energy

On an early autumn afternoon in 1882, steam dynamos started driving electricity out of the Edison Illuminating Company on Pearl Street in Manhattan. One of the first commercial power plants in the United States, it was capable of lighting a grand total of 400 light bulbs. Todays electrical grid-six million miles of high-voltage transmission and distribution lines that link a network of generating stationsserves electricity to 143 million residential, commercial, government and industrial customers.

Even that massive energy grid is starting to come up against the demands of a power-hungry and carbon-conscious nation, however, with the help of two emerging technologiesthe Internet of Things and innovative devices for energy storage-U.S. utilities, tech companies and energy researchers are in the process of reinventing the way we keep the lights on.

The phrase "Internet of Things" (IoT) describes a vast network of devices that can monitor and manage energy use in everything, from thermostats and dishwashers to factories and office buildings (and a lot else) - even as it collects continuous tracking data on consumption that will allow the utilities to forecast and manage demand on the grid in real time and with great precision.

Worldwide, the market for IoT-connected devices and the IT services that support them is expected to grow from $655.8 billion in 2014 to $1.7 trillion in 2020, according to IDC, a market research firm in Framingham, Mass.

Meanwhile, ingenious new ways to store energy-such as the lithium-ion batteries that Tesla will begin manufacturing within a year at its $5 billion Giga Factory in the Nevada desertwill help keep the grid in balance, storing excess energy when prices and demand are low, providing backup during outages and helping to bring renewable sources of energy online in scale.

Though the electric grid has been called one of the greatest inventions of the 20^th century, the network is aging. Ifthe technologies employed in the grid do not change, it is likely to be difficult to maintain acceptable reliability and electric rates, warns an MIT study titled The Future of the Electric Grid. The U.S. electric utility industry has historically devoted a very small fraction of its revenues to R&D, instead relying primarily on its suppliers for innovation.

The grid matches energy supply to demand as it happens and cannot store energy. As a result, generators that rely on fuels such as coal, oil, gas and nuclear have to be powered up and down to meet fluctuating demand.

Power systems are built to be as big as they are so that they can meet peak demandduring the hottest days of the year, for example, when all air conditioners are blasting. But much of the time, plants stand idle. From 2005 to 2009 in New York and New England, more than 30 percent of capacity was in use less than 12 percent of the time, according to the MIT study.

By using IoT technology to gather precise metrics, such as running time and power consumption of air-conditioning units, smart homes, smart buildings and even smart cities, we will be able to make more precise predictions of the load on utilities, leading to both greater energy efficiency and a reduction of strain on the grid.

Nearly half of those who have bought smart home products say they would allow energy providers to adjust their thermostats, according to Parks Associates, a market research firm in Mountain View, Calif. In exchange, utilities could offer a peak-time rebate.

"Peak-time rebates represent a pay-for-performance model that does not require exhaustive pilots", writes Tom Kerber, director of research, home controls and energy at Parks Associates. Understanding customers daily usage and likely participation in an event allows retailers to create a plan for purchasing power on the day-ahead market and bidding demand response into the spot market.

In commercial offices, BuildingIQs Cloud-based software taps into existing sensors that measure pressure and temperature, making changes to the air handler that result in a 10 to 25 percent reduction in heating and cooling energy expenses. Some utilities are providing the software to their largest customers, calling on them to reduce energy automatically during demand response events.

IoT technology will also have a huge impact outside homes, in cities where sensors can detect patterns to determine when the lights should go on. "We're moving in the direction where the infrastructures we build will be smarter when it comes to energy usage", says Jason Mars, a computer engineering professor at the University of Michigan.

With the advent of renewable energy, cutting-edge batteries will also reshape the power grid. In 2010, renewable sources of energy other than hydropower accounted for only 4.2 percent of U.S. generation, according to figures cited in the MIT grid paper, but that figure varies greatly by state. In 2013, Californias three big investor-owned utility companies received 22.7 percent of their electricity from renewables other than hydropower, according to the states Public Utilities Commission. By 2020, legislation mandates that renewables must be up to a third.

But the supply of renewable energy fluctuates. Compared to a coal-fired plant, such sources may not produce the same amount from one hour to the nextfor example, if a cloud passes over the sun or the wind starts to gustmaking it difficult for grid operators to match supply with demand.

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