Smart grid needs smart buildings

By Clay Nesler and Terrill Laughton

The electrical distribution network has dramatically improved the standard of living for virtually every member of our society. This impact on our lives is one reason the U.S. National Academy of Engineering named the electric grid as the greatest engineering achievement of the 20th century. It has been reliable, affordable, and remarkably durable, with the same basic working structure for over 100 years. Robert Catrell from the New York State Smart Grid Consortium quipped that “if Thomas Edison came back today, not only would he recognize our electricity system, he could probably fix it.” From the factories we power to the buildings we cool and the homes we brighten, it is virtually impossible to imagine our life without the ability “to plug it in and turn it on.” But like all technology, the electric grid needs to be updated to meet our changing economy and societal goals. Investing in “smart grid” infrastructure will help meet these future needs, but only if we capture all the opportunities these investments create. This requires that from generation to consumption, the smart grid must be leveraged. Therefore, to have a Smart Grid you need to have Smart Buildings connected to it.

A "Smart Building" is the intelligent integration of dozens of systems that help to run a facility more efficiently and increase productivity. These systems (made up of sensors, software, controllers and user interfaces) coupled with high-level intelligence and control are capable of reducing operating costs, meeting corporate sustainability goals and keeping occupants safe, comfortable and productive. The smart grid will rely on a set of advanced technologies and automation to be able to facilitate the two-way flow of electricity and information throughout the entire network in the most efficient manner possible. When coupled together, smart buildings can both improve their performance and interact with the electric grid. This will enable buildings to drive deeper levels of demand response, integrate building response to real time price fluctuations and participate in the wholesale energy markets for a range of products as energy markets mature. Given that commercial buildings represent nearly 50% of the nation's peak electricity demandⁱ, the benefits could be enormous. Relieving the need for new power plants and transmission infrastructure, improving the reliability of the system, and enabling significant contributions from solar and wind power are all at stake; but the benefits will only be realized if buildings are involved. Smart Buildings will unlock the upside of the smart grid through innovation along three critical dimensions: automation, coordination and market participation.

AUTOMATION. As the grid is upgraded with more information and communication capabilities, it will be necessary for buildings to automatically receive and respond to signals like electricity price and curtailment events. Building professionals want to be able to develop an energy management strategy and have the day-to-day implementation be simple and not require constant oversight and manual interactions. Having the building respond in a predictable fashion ensures meeting occupant guidelines, validates that systems perform properly, and allows energy management strategies to be optimized over time. An automated and integrated response in a complex building will drive deeper demand reduction. In simple demand response programs, a study conducted by Pacific Gas & Electric showed that customers with an automated response reduced demand by a factor of 2 over those that did not.ⁱⁱ A smart building will respond to real-time price or curtailment signals by dimming lighting, adjusting zone temperatures, modifying central plant operations, dispatching stored energy, planning tomorrow's operations using weather forecasts and occupant schedules, and refining performance by monitoring comfort and productivity. Automation is the only practical way to achieve these benefits. Understanding a building's current level of automation, operating parameters and energy usage profiles will help identify the additional benefits a smart grid will enable.

COORDINATION. Building systems and assets are becoming more complicated and diverse. This creates challenges for the building operators and integration with the smart grid. Building operators have to juggle business priorities and operational costs and a smart grid will be challenged to interface with disparate systems. A truly smart building coordinates many different systems performing diverse functions and meeting multiple objectives for the operators and occupants. As a result, the building's response to communications from the grid needs to be done in a coordinated manner interfacing with a smart building management system. This creates several benefits that will increase the impact of the smart grid with consumers. This approach keeps the customers in control of their assets. Customer want and are looking for more data and information to balance their energy costs with occupancy requirements. Managing a single interface with the customer contains the scope and complexity for the utility. One could only imagine the order of magnitude increase of complexity if the smart grid interfaced directly with various systems within a building. A common interface also promotes the highest level of future flexibility and optionality for both the utility and the consumer. Enhancements to communications become simpler and the ability to add additional building systems or assets is dependent solely on the building management system, not a direct communication interface to the smart grid. For example, as more buildings add distributed generation, this will be managed as part of their entire portfolio and optimized for their given set of conditions at any point in time. Each building owner should evaluate the benefits of a coordinated response versus discrete actions to determine if there is a significant opportunity.

PARTICIPATION. Ultimately the smart grid is going to dramatically change electric power markets. Demand profiles of buildings will become much more elastic and many customers will also become producers (a.k.a. "prosumers"). Fundamentally, buildings will become more active participants in energy markets and will become a new "asset class" that will be called upon to balance the load. For buildings to actively participate in the markets at this level, they need to be smart. All transactions exchange three elements: a product/service, information, and money. Smart buildings will improve the efficiency of "building energy transactions" whether it is with the utility or the wholesale market. A smart building creates different types of building "energy products;" it gathers, calculates and exchanges more detailed and timely information about its product availability; and it helps to facilitate the financial transaction by enhancing and simplifying the measurement and verification process. As buildings move their level of participation from simple DR programs that require actions a few hours a year to a more active participation for potentially thousands of hours a year, the monetary incentives and the risks increase. The automation, coordination, and information the smart building system provides will be necessary to properly manage this tremendous opportunity. Since opportunities for buildings in the energy market are evolving and vary by region, each building will have unique short and long-term opportunities to evaluate.

The case for buildings and the grid to be more integrated will grow over time. The increase of on-site distributed generation, energy storage, electric vehicle charging, to name a few, will dramatically alter the demand profiles at the edge of the grid. To manage these changes and improve the reliability of the grid, better information needs to be exchanged. For the representative stake holders, independent investments in a smart grid or a smart building are compelling for the direct benefits they create. However, to truly capture the full value for all of society's stakeholders, these investments need to be made in concert with one another. To meet the needs of the future, capture the benefits envisioned and create another award winning achievement, a smart grid needs smart buildings.

i The Brattle Group, The Power of Five Percent, 2007

ii Pacific Gas & Electric Company, 2007 Auto-DR Program, Task 13 Deliverable, Auto-DR Assessment Study: http://drrc.lbl.gov/pubs/pge-auto-dr-assessment-study.pdf