SIEMENS

According to a saying at the power exchange in Leipzig, Germany, when brokers are frantic, kilowatt-hours sell for a premium. Indeed, during demand peaks, electricity has to be generated immediately in order to stabilize the grid. And that can call for switching on “peaking plants,” which is extraordinarily expensive. Demand peaks are often the result of chance events such as too many consumers turning appliances on at the same time, a problem at a power plant, or a downed transmission line. In such cases, power suppliers often have to pay ten to 20 times as much for electricity — and that can mean higher prices for consumers. Conversely, prices at power exchanges can go through the floor when electricity generation exceeds demand. Example: a wind park on a stormy night. With lots of electricity and virtually no buyers, a kilowatt-hour may go for nothing — or less. In fact, negative power prices were offered five times in Germany during the first quarter of 2012.

The underlying reason for such anomalies is technical. In order to ensure grid stability, the amount of electricity produced needs to be very nearly equal to demand. But that doesn’t necessarily mean that the only answer is to crank up or shut down power plants. A more efficient solution is to reduce demand. For instance, since 2011, the Paulaner brewery in Munich has worked with service provider Entelios AG in the context of a “demand-response” relationship.

When there are supply shortfalls in the producer’s network, the brewery can remove cooling units, which are large power consumers, from the grid for a short period. If, for example, “weiss beer” is being brewed, it doesn’t matter if the units aren’t running for a while. With this approach, Paulaner earns money in two ways: by cutting its energy costs, and by receiving part of the fee that Entelios gets from the power producer for demand management.

In the U.S., procedures of this kind have long been commonplace. In fact, Siemens is testing an automated demand-response system in which thousands of buildings can take part. In aggregate terms, this greatly reduces the load on the grid.

Projects like the one at Paulaner could play an important role in Europe in the context of a restructured power generation system based on a growing proportion of renewable energy sources. Together with a system of power plant management that takes current generation and demand forecasts into account, demand management could help to keep the electrical grid both stable and economically efficient. This is known generically as DSI — demand side integration.

In some cases, it is already common for large industrial consumers to power down or switch non-essential parts of their installations on and off by arrangement with power producers. But in the future, the same could be true for businesses and private households.

Smart meters and intelligent energy management systems might then perform this task practically automatically. As a first step in this direction, the European Union is encouraging rapid implementation of smart meters. By 2020, the majority of households are expected to have them. These offer many benefits compared with their conventional electromechanical predecessors, including a data interface with the utility company that allow remote reading.

Smart meters also enable communication in the other direction, to the consumer. For example, suppliers can inform customers of the real-time price of electricity. This multi-tariff functionality could then become the basis of new business models. Based on the preferences entered by the user, intelligent meters could decide how to respond to tariff changes. They could power appliances down, switch them off, or re-start them when electricity prices are lower. They might operate with rules such as: “Start the washing machine if power is below X cents per kW — but in any event, before tomorrow evening.”

Building automation systems plays an important role in intelligent demand management. A study on “Demand Side Integration” published by Germany’s Association for Electrical, Electronic, and Information Technologies (VDE), for instance, estimates that every day around 8.5 gigawatts (GW) of power could be managed in Germany with minimal sacrifice of comfort by consumers. Households, businesses, industries, and services account for half this sum. But theoretically, according to the study, up to 25 GW could be managed if all conceivable loads were added up.

According to the study, the potential for power management will continue to grow through 2030 because of the increased use of heat pumps, air-conditioning systems, and electric cars. A considerable portion of daily demand would then be available to shift around as appropriate. After all, Germany needs an average of around 60 GW of electrical power over the course of an average day. Of that amount, about a fifth currently comes from fluctuating renewable energy sources, which represent a special challenge for grid stability.

Identifying Power Hogs. Without practical experience, however, all these scenarios remain nothing more than theory. Since the end of 2009, Siemens Austria has therefore been taking part in the Smart Grid Model Region project in Salzburg, where the local power company, Salzburg AG, has already installed about 1,000 smart meters from Siemens. How are people reacting to the new opportunities? With the approval of participants, a group of scientists from the Vienna University of Technology and the AIT (Austrian Institute of Technology) are monitoring the behavior of smart meter users and the effects of demand management.

Through a Web portal developed by software specialist Green Pocket, project participants use smartphones or tablet PCs to keep track of their current electricity consumption. This allows them to uncover power hogs. The software issues a warning when the electricity bill exceeds a pre-established amount, which helps the researchers determine if this feedback changes the behavior of the people involved. There are also plans to move toward a smart grid based on associated consumption rules. Here, a smart meter takes care of everything. “Ideally, users won’t notice any of these processes and comfort and convenience won’t suffer,” says Wolfgang Schneider, head of the Siemens branch in Salzburg.

“Siemens has developed a method for communication between smart meters and the power company, whereby data packets piggy-back on the electrical lines. This ensures a robust and reliable data transfer,” adds Wolfgang Bauer from Siemens Austria. “It also provides sufficient scope for integration into future smart-grid functions as well as into existing network automation and energy management infrastructures.” While one project in the study involves shifting electrical loads in ten buildings, in another project, researchers are equipping the small community of Köstendorf, near Salzburg, with a critical mass of photovoltaic systems and electric cars in order to test their interactions with the grid.

And the first results are in. The management of private demand — by scheduling a washing machine to start at night, for example — is basically only of importance psychologically. “You can’t affect more than three percent of demand that way,” says Schneider. The buildings themselves are in a different league, however. Up to 85 percent of the energy loads in a building can be shifted if the heating or air-conditioning system uses electricity. This is due in part to a concept called thermal inertia, which Schneider explains as follows: “When the temperature outside is ten degrees Celsius, a building with average insulation cools down by only two degrees in about 40 hours when left unheated. Most people don’t notice that sort of change.”

In addition, in a future-oriented project, new buildings full of sensors are being built in Salzburg. For instance, an 18-meter-high hot water storage tank is being used to improve the thermal inertia of a building and to respond to demand peaks. The first detailed findings of the overall project should be available in the spring of 2013.
Everything now becoming a reality in Salzburg could be a part of everyday life everywhere within a decade. However, first it will be necessary to develop clear guidelines and, above all, achieve interoperability among the devices involved. Without standards, there won’t be a mass market. In 2012, the EU standardization mandate for smart grids is expected to inspire the leap from intelligent meters to intelligent grids at the European level. Experts are tweaking device standards and application scenarios alike — while giving special consideration to information security and data protection. The technology being used by Siemens in Salzburg is playing a key role in discussions focused on new standards.

In Germany, there is also lots of talk about a “smart meter gateway” through which it will be possible to not only acquire data, but also manage appliances. The next step has already been taken in this context in the U.S., where Siemens customers are using a device not unlike a smart meter. This “Smart Energy Box” reacts to fluctuations in electricity prices by itself. Here as well, the rules saved in the memory of such devices constitute the key to the piggy bank, as it were. In the future, this box will help to prevent unnecessary load peaks such as those associated with the cooling units at the Paulaner brewery.