THIS REGULAR COLUMN FOR INTELLIGENT UTILITY PRESENTS THE INSIGHTS of utility leaders regarding the development of the emerging smart grid and intelligent utility. Last issue's column focused on smarter ways to manage risk. This issue's column discusses benefits to utilities from conservation. Good environmental decisions may be made for the sake of doing good, but utilities should always consider the financial benefits of those decisions. Greg Flores, vice president of public affairs with San Antonio Water System (SAWS), and Patricia Lawicki, vice president and chief information officer with Pacific Gas and Electric (PG&E), present their experiences at water and electric utilities.
THE WATER TAKE
"We experienced the perfect storm for bringing together the benefits of conservation," said Flores.
SAWS's rates are largely driven by debt service on capital expenses for infrastructure and water supply. Conservation not only saves a valuable resource, water, but also saves dollars in these two areas.
San Antonio's population grew by over 400,000 in the past two decades, with no increase in water pumped. This has saved on the purchase of expensive water supplies and wastewater treatment. Delaying these costs for the past two decades has helped make San Antonio more attractive to new industry.
"San Antonio was able to bring in a Toyota plant and a Microsoft data warehousing facility recently, due in part to competitive utility rates. The Toyota plant injects approximately $120 million a year of new economic activity in San Antonio. The plant provides 2,000 jobs with an average annual salary of $60,000," explained Flores.
What would it have cost over 20 years to purchase additional ground-water rights to the Edwards Aquifer? $700 million. It would have cost $1.3 billion to desalinate water or $2.7 billion to acquire surface water. Cost to treat the additional water would be in the range of approximately $4 to $12 per gallon, depending on the method of treatment. Overall, there is a range of $350 million to $1 billion in wastewater treatment savings. The total avoided cost from conservation ranges up to $3.8 billion, with savings passed through to the rate payers.
How has SAWS achieved such a level of conservation? "Programs to install better equipment have helped. Over 60,000 high-efficiency toilets were distributed to older homes. We also retrofitted hotels and schools with high-efficiency toilets, shower heads and faucet aerators."
City ordinances state that under drought conditions residents may water lawns only once a week. Year-round, watering may not take place between 10 a.m. and 8 p.m. There is building code language requiring four inches of soil under sod, which keeps grass healthy and requires less water. There is also a drought-resistant landscaping program.
Flores recalled that SAWS conservation programs began with a federal lawsuit filed 20 years ago by the Sierra Club under the Endangered Species Act. "People turn in their neighbors for watering misuse during a drought. Our culture has changed around conservation," he noted.
San Antonio also has the nation's largest direct recycle system. "This enables the utility to resell treated wastewater to companies like Toyota and Microsoft," Flores said. "Toyota uses one million gallons of water per day in production, of which up to 80 percent is the recycled product. All municipal golf courses use recycled water. Every drop of recycled water used is a drop that does not have to be pumped from the Edwards Aquifer."
Can conservation efforts be further extended? SAWS is currently at under 140 gallons of use per capita per day. Their goal is 116 gallons of use by 2016. This is down from use of over 200 gallons per day 20 years ago.
WHERE SMART TECHNOLOGY STEPS IN
When automated meter reading (AMR) is implemented in San Antonio, the city will be able to remotely read meters up to four times per day, versus reading manually once a month. It will be possible to gather use patterns and notify the customer when their use is out of range. Allowing the customer an opportunity to fix a leak two to three days after it starts will save money for the customer and water for the utility. Flores describes the leak detection program as aggressive. "The industry standard is 10 percent. We were at 8 percent in 2007," he said.
The SAWS conservation program recently won an Innovations in Government Award from the Kennedy School of Government at Harvard University. With the award came a $10,000 grant to replicate its conservation program. SAWS held a two-day series of seminars in Atlanta. SAWS chief financial officer gave a presentation on money saved through conservation, contrasted to the old style of thought that conservation will kill the revenue stream.
ELECTRIC UTILITIES ANTICIPATE DISRUPTIVE CHANGE
Energy efficiency? Of course it's important to electric utilities, according to PG&E's Lawicki. "Capital is so tight right now that building new generation would be financially very risky."
Lawicki's current preoccupation is forecasting the incentives to come out of the new administration. Clearly, there will be a focus on technical initiatives. "What we have before us is a unique challenge. It's fascinating," she said. "The stimulus package may have a huge impact on where technology development funds go in the future. We all have three-year and five-year plans and road maps for the future. But emerging legislation is the wild card. It's like a drop of water that we know is going to fall, but we don't know when or how big the ripple will be."
She is also interested in the disruptive change that will be an outgrowth of the new legislation. "Someone working in a garage may get funding to develop totally new technology that we've never heard of," Lawicki said. What should they invent? "Anything to do with cleaner and more cost-effective energy technology."
"We're also looking toward the adoption of electric cars and how fast that will happen," Lawicki said. "There's a projection for 1.2 million electric cars on the road by 2014. Half of those will be in the San Francisco Bay and Washington, D.C. areas. Adoption will be dependent on emerging incentives. What will be mandated for mpg? What will happen to gas prices? What if carbon trading comes in as promised? What if new taxes are put on carbon generation?"
THE SMART HOME AND CONSERVATION
PG&E has a vision of the smart home/smart garage, which will be connected to the smart grid. "Until recently, these concepts were only discussed within the industry. It has rapidly become a topic of great public interest. Now, people at cocktail parties want to talk about this. Previously, their eyes would glaze over," Lawicki said. She adds that when a technology gets this amount of attention, investment will surely follow - especially in California where innovation is emphasized.
The primary purpose of Smart Home at PG&E is to serve the demand response program in California by reducing electricity demand wherever possible. Over the last 30 years, California has stayed relatively flat in per capita consumption of energy, while it rose by 50 percent nationwide. Smart Home will give customers more information about when and how they consume energy, enabling them to become smarter and more energy efficient consumers.
Given the concentration of high-tech companies and data centers located in PG&E's service area, along with a long history of developing and delivering energy efficiency programs, PG&E has developed a comprehensive portfolio of programs to assist companies in reducing their energy use and costs for data centers, as well as IT infrastructure. PG&E has rebate programs for companies implementing virtualization projects and addressing data center cooling reductions.
According to Lawicki, integration is the hardest part of working with the
technology. "How will the pieces and parts come together? There is no master plan today," she said. "Imagine getting a Lego kit for building a smart house. All the pieces are there and you have directions for how it works. But the current situation is more like having Legos and a bunch of other building blocks and they don't connect with each other."
Regardless of the exact structure of emerging legislation, Lawicki believes that conservation will certainly become increasingly important to electric utilities. "We're back to a more environmentally conscious generation," she said. "It's not necessarily acceptable today in California to be driving a big vehicle. It will be interesting to observe this sentiment move across the rest of the country."