Customer Side Smart Grid Installations Preparing for the Future

ELECTRI International—The Foundation for Electrical Construction, Inc.

NEW BUSINESS SECTORS

California Polytechnic State University Renewable Energy Institute

Dr. Thomas Korman, PE Lonny Simonian, PE Associate Professor Associate Professor

Aric Carracino Colin Leong Graduate Research Assistant Undergraduate Research Assistant ELECTRI International The Foundation for Electrical Construction, Inc.

Customer Side Smart Grid Installations Preparing for the Future

California Polytechnic State University Renewable Energy Institute

Dr. Thomas Korman, PE Lonny Simonian, PE Associate Professor Associate Professor

Aric Carracino Colin Leong Graduate Research Assistant Undergraduate Research Assistant

ELECTRI Council ELECTRI International—The Foundation for Electrical Construction, Inc.

As of October 2014

PRESIDENT’S COUNSEL ENVOY $1,000,000 or more $300,000 or more Contractors Contractors The Hugh D. ‘Buz’ and Irene E. ‘Betty’ Allison Trust, Hugh D. ‘Buz’ O’Connell Electric Company, Walter T. Parkes* and Michael Parkes Allison, d. NECA Chapters and Affiliates The Richard W. and Darlene Y. McBride Trust, Richard W. McBride* Northeastern Line Constructors Chapter, George Troutman The Al and Margaret Wendt Trust, Albert G. Wendt*, d. Western Pennsylvania Chapter, Robert J. Bruce NECA Chapters and Affiliates Manufacturers and Distributors National Electrical Contractors Association*, John M. Grau Greenlee/A Textron Company, Scott Hall Manufacturers and Distributors Viewpoint Construction Software, Karl Rajotte Schneider Electric / Square D, Marvin R. Shotts, Jr. REGENT PROGRAM GUARANTOR $250,000 or more $500,000 or more Contractors Contractors Cannon & Wendt Electric Company, David E. Fagan McCormick Systems, Jack McCormick Capital Electric Construction, Robert E. and Sharon Doran* – In memory of Robert E. Doran, Jr. NECA Chapters and Affiliates John R. Colson, TX Electrical Contractors Trust of Alameda County, Thomas F. Curran Maron Electric Co., Jerold H. Nixon, d., and Eric F. Nixon Manufacturers and Distributors Miller Electric Company, H. E. “Buck” Autrey**, Henry Brown and The Okonite Company, Bruce Sellers David Long Robert L. Pfeil, d., IN AMBASSADOR NECA Chapters and Affiliates $450,000 or more Chicago & Cook County Chapter, Daniel J. Divane, IV Contractors New York City Chapter*, Ciro J. Lupo Southern Contracting Company, Timothy McBride Northeastern Illinois Chapter, Craig Martin Northern California Chapter, Greg Armstrong DIPLOMAT $350,000 or more Northern Indiana Chapter, Anthony J. Maloney NECA Chapters and Affiliates Puget Sound Chapter, Michael J. Holmes Boston Chapter, Paul A. Guarracino Santa Clara Valley Chapter, Michael Jurewicz San Diego County Chapter, Earl C. Restine Southeastern Michigan Chapter*, Daniel T. Tripp

Manufacturers and Distributors Manufacturers and Distributors Trimble featuring Accubid Products, Giovanni Marcelli Thomas & Betts Corporation, Chad Simpson Eaton Corporation, James L. Golly Graybar, Anthony Frantal CHAMPION $200,000 or more NECA Chapters and Affiliates Greater Toronto Electrical Contractors, Paul Sheridan Los Angeles County Chapter, Steve Watts

* denotes founding member of ELECTRI’21 COUNCIL (1989–1990); d. denotes deceased ** first contributor iii CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

GOVERNOR Alterman, Inc., John C. Wright $150,000 or more Amaya Electric, John Amaya Contractors ARS Proyectos, Mexico, Carlos Anastas Bana Electric Corporation, Stephen Bender B&D Industries, Inc., Clinton Beall Center Line Electric, Inc., Clyde Jones Bagby & Russell Electric Co., Franklin D. Russell – In memory of Robert Chapel Electric Company, Dennis F. Quebe L. Russell Brian Christopher, OR Baker Electric, Inc., Ted N. Baker Clennon Electric, Inc., Lawrence H. Clennon Boggs Electric Company, Inc., Michael H. Boggs Cogburn Bros Electric, Inc., Larry Cogburn and Ron L. Cogburn Daniel Bozick, d., CA Ferndale Electric Co., Arthur Ashley Bruce & Merrilees Electric Co., Jay H. Bruce J. Ranck Electric, Inc., James A. Ranck Richard L. Burns*, d., FL M. J. Electric, LLC, Stephen J. Reiten Carl T. Madsen, Inc., Rocky Sharp Michels Corporation, Gerald W. Schulz Chewning & Wilmer, Inc., Robert M. Zahn PPC Partners, Inc., Richard R. Pieper, Sr.* Christenson Electric, Inc., Sonja Rheaume The Superior Group, A Division of Electrical Specialists, Gregory E. Stewart Continental Electrical Construction Co., David A. Witz United Electric Company, Inc., Dan Walsh Ben and Jolene Cook, TX VEC, Inc., Rex A. Ferry Corona Industrial Electric, Herbert P. Spiegel – A tribute in memory of Flora Spiegel Zenith Systems, LLC, Michael B. Joyce CSI Electrical Contractors, Inc., Steve Watts NECA Chapters and Affiliates Thomas F. and Alana Curran, CA Cascade Chapter, Dave Ginestra Daniel’s Electrical Construction Company, Inc., Thomas G. Ispas Central Indiana Chapter, Darrell Gossett DiFazio Power & Electric, LLC, Robert DiFazio Finger Lakes New York Chapter, John Amicucci Dillard Smith Construction Company, Brian Imsand* Greater Cleveland Chapter, David Haines Divane Bros Electric Co., Daniel J. Divane IV – In memory of William T. Illinois Chapter*, E. Wes Anderson Divane, Sr. and Daniel J. Divane III Kansas City Chapter, Kenneth C. Borden Edward G. Sawyer Company, Inc., David MacKay Long Island Chapter, Donald Leslie, Jr. Electric Power Equipment Company, James C. McAtee Northern New Jersey Chapter, Henry J. Sassaman Electrical Corporation of America, Jack W. Welborn Oregon-Columbia Chapter, George Adams ERMCO Electrical and Systems Contractor, Greg Gossett Oregon Pacific-Cascade Chapter, Thomas Kyle Ferguson Electric Construction Co., Ron Markowski Penn-Del-Jersey Chapter, Kenneth R. MacDougall Fisk Electric Company, Orvil Anthony South Florida Chapter, James G. DiLullo Giles Electric Company, Inc., Bradley S. Giles South Texas Chapter, Robert Corbo Gregg Electric, Inc., Randy Fehlman* Washington, D.C. Chapter, Andrew A. Porter Gurtz Electric Company, Frank Gurtz – In honor of Gerald Gurtz

Manufacturers and Distributors Hardt Electric Inc., Peter D. Hardt Harrington Electric Co., Thomas A. Morgan Lutron Electronics Co., Inc., Richard Angel Panduit Corporation, Jeffery Mehrer Holmes Electric Company, Michael J. Holmes Eddie E. Horton, TX FOUNDER Hunt Electric Corporation, Michael Hanson $100,000 or more Jamerson & Bauwens Electrical Contractors, Inc., Kenneth J. Bauwens Contractors Johnson Electrical Construction Corporation, Donald Leslie, Jr. Abbott Electric, Inc., Michael C. Abbott Jordan-Smith Electric, Travis A. Smith ADCO Electrical Corporation, Gina M. Addeo Kelso-Burnett Company, Brad Weir Alcan Electrical & Engineering, Inc., Scott Bringmann L. K. Comstock & Co., Inc., Ben D’Alessandro Allison Smith Company LLC, Chris Reichart Lighthouse Electric Company, Inc., Todd A. Mikec iv ELECTRI Council

The Lindheim Family, Michael Lindheim* Arizona Chapter, Joel Fritz Lone Star Electric, Mark A. Huston Atlanta Chapter, Chris Foster Long Electric Company, Gregory D. Long Canadian Electrical Contractors Association, Colin Campbell Mark One Electric Company, Inc., Carl J. Privitera, Sr. Central Ohio Chapter, Brian Damant Mayers Electric Company, Howard Mayers Dakotas Chapter, Ed Christian McCoy Electric, Max N. Landon Eastern Illinois Chapter, Greg Outsen McPhee, Ltd., Michael McPhee Electrical Contractors Trust of Solano & Napa Counties, Gregory D. Long MJM Electric, Inc., Mark J. Mazur Greater Sacramento Chapter, Frank Schetter MONA Electric Group, David McKay Kansas Chapter, Phil Nelson Motor City Electric Co., Richard J. Martin* Michigan Chapter, Michael L. Crawford Newkirk Electric Associates, Inc., Ted C. Anton Milwaukee Chapter, Dave Washebek Oregon Electric Construction, Jeff Thiede Minneapolis Chapter, Duane Hendricks Parsons Electric Company, Joel Moryn Missouri Valley Line Constructors Chapter, Joe Mitchell Patraba Electrical Systems, Benjamin Appiah North Central Ohio Chapter, Scott Goodspeed Peter D. Furness Electric Co., John F. Hahn, Jr.* North Florida Chapter, Kevin Tighe Potelco, Inc., Gary A. Tucci North Texas Chapter, Steve Hargrove Pritchard Electric Co., Tom Braley San Francisco Chapter, James P. Young Red Top Electric Company Emeryville, Inc., Michael C. Curran – In Southeastern Line Constructors Chapter, C. Stephen Gaines, Jr. honor of George T. and Mary K. Curran UNCE – Union Nacional de Contructores Electromecanicos, A. C. Rex Electric & Technologies, LLC, Dominic M. Sergi (Mexico), Oscar A. Torres Robertson Bright, Inc., Wally Budgell Western Line Constructors Chapter, Jules W. Weaver Roman Electric Company, Phillip G. Rose West Virginia-Ohio Valley Chapter, James Smith R. W. Leet Electric, Inc., Tim Russell Wisconsin Chapter, Daniel Shea

Sargent Electric Company, Frederic B. Sargent Manufacturers, Distributors, Utilities and Affiliates Schultheis Electric / TSB, Inc., Tim Schultheis 3M, Daniel J. McGurran Gerald W. Schulz, WI Acuity Brands, George McIlwraith Shaw Electric Company, David W. Kurtz Advance/Philips Electronics, Ray Hurt Sidney Electric Company, John S. Frantz Crescent Electric Supply, Dick Schmid Sprig Electric Company, Inc., Pepper Snyder E2E Summit, Timothy Speno St. Francis Electric, Robert Spinardi Encore Wire Corporation, Kevin Kieffer TEC-Corp / Thompson Electric Co., Skip Perley – In memory of Alfred C. Focus Investments Advisors, Andrew Wasa Thompson GE Lighting Toomer Electrical Co., Inc., Ronald J. Toomer Ideal Industries, Inc., Matthew Barrett Tri-City Electric Co., Inc., D. R. “Rod” Borden, Jr.* Legrand North America, Steve Killius Triangle Electric Company, Roy C. Martin Mayer Electric Supply, Kyle Walters Truland Systems Corporation MCA, Inc., Heather Moore Truland Walker Seal Transportation, Inc. Milwaukee Electric Tool Corporation, Scott Kopriva Turner Electric Service, Inc., Robert J. Turner, II Moss-Adams LLP, Buddy Wall United Electric Company, Inc., Jarrett D. Hayes Rexel/Gexpro, John Kudlacek Universal Systems, Gene W. Dennis Ruud Lighting, Alan J. Ruud Zwicker Electric Company, Inc., David Pinter San Diego Gas & Electric, James Boland NECA Chapters and Affiliates Thomas Industries, Inc., Guy Petruccelli Alaska Chapter, Larry Rhymer Werner Company, Jeff P. Campbell American Line Builders Chapter, Richard V. Miller

v GUIDE FOR ADDRESSING ELECTRICAL INSTALLATION SEISMIC REQUIREMENTS

Acknowledgements

The research team is grateful to ELECTRI International for their ongoing sponsorship of research supporting the electrical contracting industry. The project team wishes to thank the task force for their guidance and insight throughout the project process.

Dan Laurx Andrew Lawler Werner Company Lutron Electronics Company, Inc.

Thomas Kyle Glenn Patterson Kyle Electric, Inc. Christenson Electric, Inc.

Erika TenEyck Sonja Rheaume NAED Christenson Electric, Inc.

Doug Eichner Tim Speno Greenlee/A Textron Company E2E Summit

Henry Brown Michael Jurewicz Miller Electric Company Sprig Electric Company, Inc.

This ELECTRI International research project has been conducted under the auspices of the Research Center. ©2014 ELECTRI International—The Foundation for Electrical Construction, Inc. All Rights Reserved The material in this publication is copyright protected and may not be reproduced without the permission of ELECTRI International. vi Table of Contents

Executive Summary...... 1 Research Methodology...... 1 Suggestions for Further Studies...... 1 1. Introduction...... 3 Definition of the Smart Grid...... 3 Implications of the Smart Grid for the Customer...... 4 2. Customer Side Smart Grid Technologies...... 9 Demand-Side Management...... 10 Energy Generation...... 19 3. Marketing Strategies for Electrical Contractors...... 27 Monitoring and Identification of Current Energy Needs...... 27 Consumer Risk...... 30 Specialty Contractor Advantages...... 32 Subcontractor Risk...... 35 Framework for Certification Program...... 36 4. Conclusion...... 39 References...... 41

vii

Executive Summary

The implementation of the smart grid is gradually changing the nature of the electrical distribution system in the United States. With the smart grid, electrical power generation and distribution is becoming a two-way process between customers and generators. Being a bi-way process, there are two sides of the smart grid: the utility side and the customer side. As the utility side smart grid is implemented, customers will have the opportunity to tailor their electrical power usage and reduce energy consumption costs through the customer side components of the smart grid. This includes energy management systems, micro-generation, and energy storage systems. This presents many new opportunities for electrical contractors to enhance existing systems in residential, commercial, and industrial facilities. This report focuses on how electrical contractors can expand their business opportunities taking advantage of this market by implementing smart grid technologies on the customer side. It serves as a guide for electrical contractors to procure customer side smart grid work and assist in their marketing strategies. The report includes the outline for a future certification program that could be implemented to certify electrical contractors as smart grid technology installers. Certification would be an important and valuable addition to the smart grid arena. Certification would be helpful for contractors to be able to demonstrate a base level of technical competency to both public agencies and private owners and provide assurance to all parties in the supply chain that equipment is being installed safely and in compliance with all codes.

Research Methodology The methodology used to complete the report included researching existing and future smart grid technologies, evaluating business opportunities for electrical contractors specifically targeted for residential, commercial, and industrial facilities, and developing a framework for a certificate program that is able to demonstrate technical competence for electrical contractors. Information was obtained through interviews with manufactures, site visits to construction sites, and a literature review of published work.

Suggestions for Further Studies As the technology for customer side smart installation evolves, a review of these emerging technologies will need to be updated. Related to the technology, a review of manufactured products for customer side smart grid installations will be necessary as well. Lastly, the framework for the certification program will need to be developed.

1. Introduction

Many consider traditional building systems to be ineffective at automatically adjusting to user needs because they require complex programming that is not flexible or adaptable with changing environments and different end users. Smart grid technologies, however, are designed to be adaptive and self-programing to the needs of the user. They have the potential to save energy consumers up to 15 to 30 percent in energy costs (Thompson 2012). Additional long term savings can be achieved through reduction in maintenance costs. Although the cost of these systems is currently greater than that of traditional systems, long-term benefits for energy consumers can be substantial. With the help of electrical contractors, these sophisticated systems can help propel facilities into the future and set new standards of efficiency and usability. Owners and electrical contractors have the potential to see a greater return on investment from installed systems in terms of energy consumption. However, these systems are currently in their infancy and require the services of electrical contractors for successful implementation. Small-scale smart grid operations have been installed by the United States military and serve as a proof-of-concept model for customer side smart grid installations in the civilian consumer market. These installations were first performed on military bases using digital control systems that sought to balance electrical production, storage, and demand dynamics (Cacas 2013). The goal was to match correct production of power-to-load based on the demand at any point in time. To achieve the maximum savings, smart grid technologies will need to be implemented on a macro- and micro-scale. The macro-scale refers to the infrastructure demands, which consist of conventional power plants (hydro, nuclear, coal), solar farms, wind farms, etc. The micro-scale consists of customers: residential, commercial, and industrial buildings. By diversifying and developing each sector, increased savings is achievable in both the private and public sectors. This report focuses on the development of the consumer side smart grid. The installation benefits and risk are considered in this report from both an owner’s and contractor’s perspective.

Definition of the Smart Grid The smart grid is essentially the digitization of electric power, where there is an increased ability to communicate and control power flow to improve the operating efficiency and reliability of the U.S. electric infrastructure. Essentially, it is an integration of the entire electrical energy supply chain, where there is no storage of electricity and supply and demand is constantly being balanced. The Department of Energy describes the smart grid as having the following five elements: ■■ Integrated communications for real-time control ■■ Monitoring real-time system conditions ■■ Control and monitoring capability to permit timely reaction to system changes and problems

3 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

■■ Improved interfaces and decision-support tools throughout the system ■■ Development and deployment of advanced transmission and distribution equipment and materials While this reference refers to the national grid, which includes a proposed new 765 kV backbone to work with the existing 765 kV system, the National Institute of Standards and Technology (NIST) defines the term “smart grid” as: “a modernization of the electricity delivery system so it monitors, protects and automatically optimizes the operation of its interconnected elements—from the central and distributed generator through the high-voltage transmission network and the distribution system, to industrial users and building automation systems, to energy storage installations and to end- use consumers and their thermostats, electric vehicles, appliances and other household devices.” This definition includes consumers and their role in the customer side of the smart grid. In this context, “thermostats, electric vehicles, appliances and other household devices” may be considered “utilization equipment”. The NIST Smart Grid Collaboration Site (http://www.nist.gov/smartgrid/twiki.cfm) lists a wide range of energy management applications and electrical service provider interactions, including: 1. On-site generation 2. Demand response 3. Electrical storage 4. Peak demand management 5. Forward power usage estimation 6. Load shedding capability estimation 7. End load monitoring (sub metering) 8. Power quality of service monitoring 9. Utilization of historical energy consumption data 10. Responsive energy control Figure 1 illustrates how NIST perceives customers will function in the new smart grid environment.

Implications of the Smart Grid for the Customer The implementation of the Smart Grid changes the nature of the electrical distribution system. Under the existing grid system, electrical power distribution to customers was largely a one-way process; where customers receive electrical power generated from a generation plant that is transmitted and distributed via the existing grid; a limited amount of instrumentation data can be transmitted from a customer to the service provider under this scheme, and in some instances, remote control could be executed. Under the smart grid system, electrical power generation and distribution becomes a two-way process between the bulk generators and customers through the grid. In order for this to work effectively and safely, the processes of power generation and distribution requires increased instrumentation to manage and control the flow of energy between bulk generators and customers. The primary instrumentation being used to accomplish this is the installation of smart meters on the customer side to replace traditional meters. Figure 2 illustrates the differences between the traditional grid and smart grid systems.

4 1. Introduction

Figure 1: Smart Grid Customer Domain

Source: Report to NIST on the Smart Grid Interoperability Standards Roadmap (Contract No. SB1341-09-CN-0031). Prepared by the Electric Power Research Institute, June 17, 2009.

Figure 2: Differences Between Traditional and Smart Grid

M Customer SM Customer M Customer SM Customer Bulk Bulk M Customer Generation Generation SM Customer M Customer SM Customer M Customer

Traditional Grid Smart Grid System System

5 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Smart Meter Installations With the implementation of the smart grid, many electric utility providers are either in the process of—or have already completed the replacement of—existing customer meters with smart meters. A smart meter is a digital upgrade to the conventional mechanical meters. As described by the Federal Energy Regulatory Commission (Federal Energy Regulatory Commission Assessment of Demand Response & Advanced Metering), “A smart meter is usually an electrical meter that records consumption of electric energy in intervals of an hour or less and communicates that information at least daily back to the utility for monitoring and billing purposes.” According to Pacific Gas and Electric (PG&E), a major electric utility provider for northern and central California, a smart meter collects electric usage data from residential and commercial customers. It is able to record usage in 15-minute increments and allows customers to view hourly electric energy usage data. Customers are able to determine how much energy they are using over the course of the day, week, or month. Essentially, a smart meter is an advanced electric meter that records consumption in intervals of one hour or less and communicates that information at least daily via some communications network back to the utility for monitoring and billing purposes (telemetering). Smart meters are a less costly alternative to traditional interval or time-of-use meters and are used on a wide scale with all customer classes, including residential, commercial, and industrial. It should be noted that smart meters may be part of a smart grid, but alone do not constitute a smart grid. Most smart meter systems currently in development use programmable solid-state meters with secure wireless network technology. Each smart meter is equipped with a network radio, which transmits meter data to an electric network access point. Smart meter network access points collect meter data from nearby electric meters and periodically transfers this data to the electric utility via a secure cellular network. In addition to smart meters being able to transmit consumption data, utilities are able to communicate and transit information to the meter. This is known as two-way communication.

Figure 3: Illustration of a Smart Grid Mesh Network

SM Smart Meter Mesh Network

6 1. Introduction

Smart meters enable two-way communication between the customer’s meter and the electrical utility serving the customer. The system uses radio frequency (RF) mesh technology, which allows meters and other sensing devices to securely route data via nearby meters and relay devices, creating a “mesh” of network coverage. Smart meters use wireless technologies that transmit radio frequencies to provide two-way secure communication of the aggregate data on the electricity usage to the electric company. Each RF mesh-enabled device (meters, relays) is connected to several other mesh- enabled devices which function as signal repeaters, relaying the data to an access point. The access point device aggregates, encrypts, and sends the data back to the electric utility over a secure commercial third-party network. The resulting RF mesh network can span large distances and reliably transmit data over rough or difficult terrain. If a meter or other transmitter drops out of the network, its neighbors find another route. The mesh continually optimizes routing to ensure information is passed from its source to its destination as quickly and efficiently as possible. An example of a smart mesh network is shown in in Figure 3. The use of RF communication allows electric utility providers to no longer send out meter readers. Some smart meters have remotely upgradeable systems, such as firmware, allowing for easy and secure implementation of future innovations. These additional features differentiate smart meters from automated meter reading (AMR). With the installation of smart meters, electric utility providers are also able to implement a number of metering structures and energy management schemes. The most common that will impact residential and commercial customers are time of use metering, tiered rate metering, and load shedding/demand response.

Time of Use (TOU) Metering Time of use (TOU) metering enables electric utility providers to charge different rates at different times throughout the day. This metering method is made possible through the use of a smart meter. Instead of a single flat rate for energy use, time-of-use rates are higher when electric demand is higher. This means that when energy used is just as important as the amount of energy that is used. Since a smart meter records energy usage throughout a twenty-four hour period, a utility is able to easily apply TOU metering and rate structures. Most TOU metering rate structures have a higher cost for electricity used during the day and during peak usage periods and lower rates during the night when electricity usage is low. An example of a TOU metering structure is provided in Table 1.

Table 1: Time of Use Metering Example

Time of Day Electric Rate ($/kWh) 6:00 AM to 11:00 AM Off-Peak (Morning) .15 11:00 AM to 4:00 PM Peak .24 4:00 PM to 10:00 PM Partial Peak .17 10:00 PM to 6:00 AM Off-Peak (Night) .15

Depending on the electric utility provider, winter usually has two rate periods (off-peak and partial-peak), and summer may have three rate periods (off-peak, partial-peak, and peak). The California Public Utilities Commission has set forth a plan to make time-of-use rates the commercial standard for all of the state’s major electric utilities. As a result, electric utility providers in California are in the process of transitioning commercial and agriculture customers to time-of-use rates.

7 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Many commercial customers have already taken advantage of a time of use pricing system, in which they perform non- critical operations at times when the rate structure favors a lower rate. For example, a commercial customer may produce ice during the night to use during the day for a chilled water system.

Tiered Rate Metering Tiered rate metering is designed to encourage consumers to conserve energy. Most tiered rate metering has four pricing tiers. Each consumer is allotted an amount of electricity, which establishes a baseline. The baseline allowance corresponds with the lowest rate per kWh. Electricity rates rise progressively as electricity usage reaches the second, third and fourth tiers. Many utilities will very this slightly from winter to summer. The largest increase in rates is when usage moves into the second and third tiers. An example is provided in Table 2.

Table 2: Tiered Rate Metering Example Total Standard electric rates ($/kWh) Electric Rate Tiers Summer Winter Baseline Tier 1 .15 .15 101% to 130% of Baseline Tier 2 .17 .17 131% to 200% of Baseline Tier 3 .35 .33 Above 200% of Baseline Tier 4 .37 .35

Each monthly billing period begins at the lowest rate (Tier 1). With an excess of about one third the allotment of Tier 1, Tier 2 costs slightly more (+. 02). The rate for Tier 3 increases dramatically (+.18). Finally, in Tier 4, consumers are using more than twice their baseline allotment, and the rate increases by an additional .02 from Tier 3.

Load Shedding/Demand Response Load shedding is an intentional, utility-initiated loss of electrical power to a specific customer or group of customers. Electric utility providers have historically used load shedding as a last-resort measure in order to avoid a total blackout of the power system. Load shedding typically occurs at times when there is an extremely high period of electricity usage. One example of this may occur during an extremely hot weather period and air-conditioning usage is higher than normal. A utility may choose to implement load shedding of certain types of electrical loads. Some electric utility providers have created incentive programs to encourage residential and commercial customers to voluntarily participate in load shedding programs. These programs work by allowing the utility to install devices on circuits feeding loads that are able to be shed, such as lighting, cooling, and non-essential equipment. In the event of a high electrical usage within a utility’s service territory, the utility will cut power to those electrical components, thus shedding loads. One example of this is PG&E’s SmartAC™ program that offers customers the opportunity to prevent summer energy supply emergencies from disrupting day-to-day activities. When customers opt to join the SmartAC™ program, PG&E installs a SmartAC™ device at the air conditioner that communicates with the smart meter. If there is an energy supply emergency, PG&E sends a signal via the smart meter to activate the SmartAC™ device. The SmartAC™ will then lower the demand of the air conditioner, thus helping to avoid power interruptions.

8 2. Customer Side Smart Grid Technologies

Customers who adopt smart grid technology gain control over the amount and time of day of electrical consumption loads. As mentioned above, the smart meter is able to provide customers with their usage information monthly, weekly, daily, and hourly, reported in 15-minute increments. Therefore, customers now have the increased ability to manage and control their energy consumption on a real-time basis rather than waiting for a monthly energy bill from their electric utility provider. A few examples of how customer may choose to manage and control their energy consumption are ■■ Implementing a home energy management system to manage energy usage of appliances, equipment, lighting, etc. and to balance TOU metering ■■ Installing an on-site energy generation systems in order to mitigate increased energy cost due to tiered rate metering ■■ Scheduling electric vehicle charging to take advantage of off-peak pricing rates ■■ Implementing smart charging for electric thermal storage systems (i.e., in-ground heating systems, unit heaters, etc.) ■■ Implementing load shedding The use of these smart grid energy strategies for residential, commercial, and industrial facilities will impact the electrical system in several ways including ■■ Dramatic increases in data communication, including dedicated low voltage wired systems, low voltage wired systems impressed upon line voltage carriers, and wireless systems between smart grid appliances/outlets and smart meters, or between devices and home energy management and control systems ■■ Critical circuits for life-safety systems—including special needs equipment such as patient care equipment (ventilators, diagnosis equipment, etc.) which need to remain powered during load shedding ■■ Power and/or control wiring to tie into panel boards/load centers ■■ Grounding and bonding for all new smart grid components ■■ Sensors to connect major electrical loads to a smart meter ■■ Current and overload protection for smart systems to prevent frequent current inrush from switching of large appliance loads ■■ Harmonics protection induced from Class 2 wiring With smart grid technologies, consumers can generate their own electricity and then a) distribute power back into the grid, b) consume power on-site, and/or c) store power for future consumption. The customer may acquire additional devices/systems to take advantage of the information and communication provided by their smart meter. Therefore, current and emerging smart grid technologies were reviewed and the implications that these technologies may have

9 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

upon the building electrical system were assessed. This included all power distribution and control systems throughout a facility. Specific areas of focus include the electrical service or utility point of connection interface (smart meter), energy generation and micro-generation systems (such as photovoltaic cells, wind power, micro hydro, emergency and standby generators, and fuel cells), energy conversion/storage systems (such as uninterruptible power supplies), plug-in vehicles, and community energy storage.

Demand-Side Management With evolution of the smart grid and installation of smart meters by utilities, customers can now automate the management of their consumption. The primary technologies are described below.

Energy Management and Control Systems (EMCS) A considerable amount of research has been conducted on design, construction and operational technologies, and practices which would lead to buildings that use zero net energy. One critical step to increase energy efficiency is to understand how energy is currently used and identify where improvements can be made. Demand-side management begins with the implementation of an energy management and control system (EMCS), sometimes referred to as an energy information system (EIS). An EMCS or EIS can be broadly defined as performance monitoring software, data acquisition hardware, and communication systems used to store, analyze, and display building energy data. EMCS can provide the information necessary to improve the efficiency and comfort within a building. Energy savings may be realized via an EMCS in a number of ways: ■■ Benchmarking and base-lining ■■ Off-hours energy use ■■ Anomaly detection ■■ Load shape optimization ■■ Energy rate analysis ■■ Retrofits and retro-commissioning

Figure 4: Generic Framework for an Energy Management and Control System (EMCS)

Customer Dashboard Smart Plug Strips

AMI/ Sub-metering Internet IP Intranet EMCS IP Access SM Smart Thermostats

On-site Generation

10 2. Customer Side Smart Grid Technologies

Essentially, an EMCS is a software integration tool that provides the analysis tools to convert energy data into actionable information. It often includes graphical analysis and reporting features to convey the information to operators, facilities, managers, owners and occupants. Information gathered from an EMCS can be used to guide the operation of the building or facility and assist in creating systems that can be implemented into new and existing buildings to make real- time improvements to operational technologies and practices. EMCS can be used with a variety of technologies such as real-time or near real-time sensors, power outage notification, and power quality monitoring.

Figure 5: Pulse Energy™ EMCS Implemented at Lawrence Berkeley National Lab

Wireless Sensing Network Wireless Sensing Network (SynapSense) (Federspiel) T T Web Console VFD’s T Power Meter

T T (Veris 4-20mA) P I T T T T T T RS-232 T T T T T LBNL Virtual Server T T T

Plug Load Meters Secure IP Secure IP (ACme) Web Console Web Console P Custom Analysis Secure IP Network Server P Tools (Dust SmartMesh) (FACS) P P P

P Smart Power Strips (InfoSys) P P Database (MySQL) Smart Plug Secure IP Network Smart Plug Strips Secure IP Network Strips

Smart Plug

E t h e r n Strips

EIS Secure IP Network IP (PULSE ENERGY) Web Access Server (iSmart) E t h e r n

Weather EIS DashBoard/Client Smart Plug Data USB Strips

B90 Data PC

Building Main Secure IP Network

k r o w t e N P I e r u c e Electric Meter Logger S Modbus RS (AcquiSuite)

-485 FMCS Data

Power Meters (LBNL) Gas Meters Pulse Modbus RS-485 (Dent) FMCS Temperature Other HVAC Data Data Modbus RS- IP / FMCS Server 485

Modbus TCP

Power Meters Power Meters Secure IP Network LEGEND (PSL Pqube) (Veris) Temperature Meter Optional Web Power Meter Access Gas Meter Other

11 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 6: Graphical comparison of HVAC, Lighting, and MELs in a Commercial Building

Source: Simonian, Lonny G., and Goodell, Nick (2011). “Energy Information System Dashboard Integrating Wireless Sensing Devices with Wired Metering and Controls - A Case Study.” Proceedings of the CIB W78 and W102 2011 International Conference, Sophia Antipolis, France, October 26, 2011

EMCS can also be used to obtain a favorable rate structure by allowing reductions in energy usage and responding to utility requests for reduced energy consumption, by activating reduced energy modes. Figure 5 represents a generic framework for an EMCS and Figure 6 is a specific example of the Pulse Energy™ EMCS implemented at Lawrence Berkeley National Lab as a case study. For an EMCS to be effective, separate metering of electrical loads by system type or category such as HVAC, lighting, or miscellaneous electrical loads (MELs) is necessary, as shown in Figure 6. HVAC and lighting energy usage are commonly understood; there is less information available for the electrical use and patterns for the plug-in devices that fall into the MEL category. However, the devices in this category can account for 10% to 50% of the energy used in commercial buildings and, as lighting and HVAC systems get more efficient, that ratio will only increase.

Installation Considerations Although common in commercial facilities, EMCS are a relatively new concept for residential buildings. EMCS interface the user with smart grid technology such as smart meters, smart plugs, and smart appliances. In the past, a residential energy management systems (EMS) tended to be wired; however, most new systems use one of a variety of wireless technologies, which enables the EMCS to be effectively retrofitted into existing facilities with a minimum of disruption. If a cabled system is selected, cabling needs to be deployed from the EMS to each major appliance (i.e., electric water heaters, electric ovens, air-conditioning systems, electric clothes dryers, pool pumps, refrigerators, etc.). Should a wireless system be selected, the need for such disruption is removed. The implementation of an EMCS requires evaluating the needs of the customer. The entails analyzing the existing systems in the building and determining what systems the customer desires to monitor and control. Most EMCS are robust enough to be able to handle typical systems found in residential and commercial buildings. For industrial facilities

12 2. Customer Side Smart Grid Technologies

with specialized systems a customized EMCS may need to be developed with the aid of the manufacturer. Currently, the major manufacturers include Agilewaves, Apogee Interactive, Automated Energy, Itron, Noveda, PECO, Powerit Solutions, Schneider and Triduim.

Advanced Metering Infrastructure (AMI) and Sub-metering An advanced metering infrastructure (AMI) refers to the full measurement and collection system that includes sub- meters at the customer site. Increasing energy costs are frequently the largest variable expense for commercial, industrial, institutional and multi-family facilities. The installation of sub-meters provides a variety of benefits to the building owner as well as the tenants: recording actual energy usage (no estimation); analytical tool for allocating costs to tenants, departments, etc.; analytical tool for energy management, compliance with green building initiatives; and measurement and verification of energy conservation programs. Benefits for the customer include early detection of meter failures, billing accuracy improvements, faster service restoration, flexible billing cycles, a variety of time-based rate options, and an energy profile for targeting energy efficiency/ demand response programs. All utilities can be submetered. Most manufacturers offer a complete line of electrical sub-metering products as well as products for monitoring electric, water, gas, BTU, etc. A communication network is necessary between the customer and a service provider (such as an electric, gas, or water utility) and EMS to make the information available to the service provider. AMI and sub-metering enables frequent collection and transmission of time-based information combining interval data measurements with remote communications. An example of a sub-metered power distribution system in a commercial building is shown in Figure 7 and the deployment and communication of distributed instrumentation is shown in Figure 8 (next page).

Figure 7: Electrical Distribution Tree in a Commercial Building, Showing Sub-Metering

CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 8: Instrumentation deployment and communication in a commercial building

Installation Considerations The implementation of an AMI and sub-metering requires evaluating the needs of the customer. This entails analyzing the existing systems in the building and determining what systems the customer wants to monitor and control. The electrical contractor then installs meters at those locations. A basic sub-metering project includes: ■■ Outlining loads/tenants to be monitored ■■ Ordering and installing sub-meters on the loads specified ■■ Establishing an interface with AMR reading meters and allocating costs to tenants, departments, equipment, common areas or other loads

14 2. Customer Side Smart Grid Technologies

It is recommended that electrical contractors verify communication capability with the software manufacturer. The installation of sub-meters is ideal for new or retrofit projects. Most meters are supplied with split-core current sensors so that they can be installed around load wires without interrupting power. Currently, the major manufacturers include EKM metering, DENT Instruments‎, and E-mon.

Load Shedding As mentioned above, load shedding can be implemented by the electric service provider through the use of smart meters to selectively “shed” designated loads, such as an air conditioner. Through the installation of energy management software that communicates with the smart meter, a customer now has the ability to selectively shed loads, i.e., electric water heaters, electric ovens, air-conditioning systems, electric clothes dryer, pool pumps, refrigerators, etc., during periods of high demand. An energy management system (EMS) is a network of smart appliances connected via a gateway that are linked to a smart meter. An EMS coupled with the use of a smart meter can function as a load shedder. The EMS can be a module in the smart meter or a stand-alone device. Demand response appliances can reduce an electrical utility’s base load during peak usage hours via a request from either the customer or utility provider. Several manufacturers are currently developing smart appliances (240V loads such as air-conditioning units, electrical ovens, electric clothes dryers, etc.) that communicate with—and can be monitored and controlled by—a smart meter.

Installation Considerations The implementation of a load shedding strategy requires an evaluation of the existing branch circuitry in the building. Once the branch circuits have been evaluated and identified, they should be categorized as either critical or non-essential. Using the EMCS, the individual branch circuits can then be controlled. The current best practice is to physically separate the critical and non-essential into two different electrical panels as shown in Figure 9 (next page).

Plug Load Management/Smart Plugs Phantom power (or vampire loads) has received more attention in recent years. Plug load management has become a strategy used to management the demand within residential and commercial facilities. Smart plugs are able to monitor and control the flow of electricity between a power outlet and connected devices. They can be used to connect the major appliances to the electricity supply and the EMS to wirelessly control them. Some of the features include power scheduling for creating on/off schedules for devices and local/remote control using smart plug applications that can be used to turn devices on/off from smartphones or tablets. Some smart plugs are able to connect to existing Wi-Fi with WPS (Wi-Fi protected setup), which requires no additional hub or device and will work with any Wi-Fi network. When used for appliances, some smart plugs have thermal protection capability with built-in thermal sensors that will automatically turn off overheating appliances. In addition, when used with an EMS, smart plugs can report energy usage statistics by monitoring power consumption of connected devices. An example of how a smart power strip can be configured is shown in Figure 10 (next page).

Installation Considerations Most smart plugs use an existing outlet; they are not hard wired, therefore, it is advisable that the circuit the smart plug is located on be moved and labeled in the panel as a critical circuit if load shedding is employed. Currently, the major manufacturers include DLink, Freelux, Thickeko, Watts Clever, and BITS Limited.

15 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 9: Critical and Non-Essential Electrical Panels

Critical Non-Essential

Refrigerator Clothes Washer Emergency Lighting Dryer Fire Detection Air Conditioner Fire Alarm Outlets Electric Range Lighting Security Fountain Pumps Critical Outlets

Separation of Critical and Non-Essential Loads

Figure 10: Smart Plug Strip Configuration

Appliances

Smart Plug Strips Miscellaneous

Intranet Plug Loads

Internet IP EMCS IP Access SM Intranet

Smart Plug PC Strips

16 2. Customer Side Smart Grid Technologies

Figure 11: Occupancy Use Sensor Configuration

Lighting

Occupancy Use Sensor Miscellaneous Plug Loads Intranet

Smart Internet Intranet IP IP SM Thermostat EMCS Access

Occupancy Use Sensors

Occupancy Use Sensors Occupancy use sensors can be installed to control lighting, equipment, appliances, and outlets. Most can be programmed to interrupt a circuit after a set amount of time. Included under the occupancy use category are lighting controls and controls for heating ventilation and air-conditioning. Most occupancy sensors have a wide detection range, between 15 feet and an area of 94 feet horizontal and 82 feet vertical from the sensors. In addition, they can also be used to communicate with smart thermostats to determine where a space is occupied. An example of an occupancy use sensor configuration is shown in Figure 11.

Installation Considerations Several different types of occupancy sensors exist on the market. They can be categorized as hard wired to a lighting fixture or stand-alone (used to control light fixture or outlets). Installation of an occupancy sensor hard wired to a lighting fixture requires the electrical contractor to wire the occupancy sensor directly into the lighting fixture or outlet on the hot leg of the branch circuit. The installation of occupancy use sensors to control lighting or outlets requires an additional power source other than the lighting fixture or outlet that it is monitoring and controlling. In this case, it is advisable that the circuit that the stand-alone occupancy sensor is located on be moved and labeled in the panel as a critical circuit if a load shedding strategy is to be employed. Currently, the major manufacturers include Lutron, Leviton, and Wattstopper.

Lighting Control Sensors Lighting control sensors can be installed to control lighting fixtures. Most can to be programmed to control a light fixture depending on the amount of light detected in the space. Most lighting control sensors have a low threshold of 65

17 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

lux and can be used with LED, CFL, fluorescent, HID, incandescent and natural light sources. They can also be used with optional light pipes that eliminate the effects of ambient sunlight or other light sources. A typical lighting control sensor configuration is shown in Figure 12.

Installation Considerations Similar to occupancy use sensors, lighting control sensors can be categorized as hard wired to a lighting fixture or stand-alone (used to control light fixtures or outlets). Installation of a lighting control sensor hard wired to a lighting fixture requires the electrical contractor to wire the lighting control senor directly into the light fixture through the hot leg of the circuit. The installation of a stand-alone lighting control sensor requires an additional power source other than the lighting fixture that it is monitoring and controlling. In this case, it is advisable that the circuit that the stand-alone lighting control sensor is located on be moved and labeled in the panel as a critical circuit if a load shedding strategy is to be employed. Currently, major manufacturers include Lutron, Leviton, and Wattstopper.

Smart Thermostats Smart thermostats are designed to self-program by learning from a customer’s schedule. Most devices on the market today can be controlled from a mobile phone. They claim that they can lower heating and cooling bills by up to 20 percent. Most can send customers a report detailing how long a system has been running each day and offering recommendations to reduce energy consumption. Figure 13 provides an example of a smart thermostat configuration.

Installation Considerations Installation of smart thermostats requires removing and replacing existing thermostats with a smart thermostat. It is advisable for the electrical contractor to verify the existing wiring circuit that runs from the AC unit to the main panel before any installation. There are two methods of powering the smart thermostat. If a “common” wire already runs from

Figure 12: Lighting Control Sensor Configuration

Lighting Control Lighting Sensor

Lighting Intranet

Lighting Internet IP IP Control Intranet EMCS Access SM Sensor

Lighting Control Sensors

18 2. Customer Side Smart Grid Technologies

the air conditioning (AC) unit to the thermostat, no additional wiring is required from the thermostat to the AC unit—the smart thermostat can be powered directly from a 24Vac source capable of at least 3VA. If there is no “common” wire in the existing wiring, one will need to be installed to power the thermostat or an additional power source will be required. This method requires an optional 120V to 12Vdc power adaptor. The power supply is plugged into a standard electrical outlet which connects to the equipment interface. In this case, the contractor will need to verify which branch circuit the outlet is located on that the power cord needs to be plugged into. It is advisable that this branch circuit be moved and labeled a critical circuit if a load shedding strategy is to be employed. Currently, the major manufacturers include EATON, NEST, Honeywell, Ecobee, and Lennox.

Lighting Retrofits and Controls According to the U.S. Department of Energy there are over five million non-residential buildings in the country and more than 75 percent of them were built before the energy-efficient lighting technologies we have today were available. By utilizing new lamp/ballast efficiencies, we could eliminate a large portion of the $50 billion wasted each year on outmoded lighting systems. Lighting controls offer functionality and convenience that are adaptable to commercial or residential applications to improve energy savings. The systems are easy for electrical contractors to install and allow customers to control lighting levels with any combination of up to 10 dimmers, switches, sensors or wireless controls.

Energy Generation Most utilities will not pay the same price for the electricity being distributed back into the grid as they charge for the electricity that they produce because their cost for the electricity includes generation, transmission, maintenance, billing, etc. Therefore, it is more economical for a customer to consume the electricity they produce on-site and reduce the

Figure 13: Smart Thermostat Configuration

EMCS

Smart Internet Thermostat IP Access IP SM

24VAC Source Intranet

EMCS

19 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

amount of electricity they purchase from a utility. If a customer cannot consume all of the electricity that they produce at the time of generation they have the option of storing the electricity for future consumption. If customers switch to a time of use pricing system, they can benefit by shifting non time-specific loads to operate during cheaper times, optimizing micro-generation systems for maximum output at high price times, and using on-site storage to supply the grid or the home at high price times. This includes all power distribution and control systems throughout a facility. There are several methods to generate electricity on site, including photovoltaics, built-in PVs, small scale wind turbines, micro hydro, fuel cells, and combined heat and power units. Regardless of the method utilized to generate electricity on the customer side there are four primary configurations: 1) battery-based off-grid systems, 2) batteryless off-grid systems, 3) battery-based on-grid systems, and 4) batteryless on-grid systems. The selection depends on the site, budget, and energy needs. Battery-based off-grid systems are appropriate for smaller systems far from utility lines, where the peak load exceeds the peak generation on a regular basis. Batteryless off-grid systems are appropriate when the generating capacity is 2 kW or more. Because the system cannot store energy, considerable amounts of power are typically diverted. Battery-based on-grid systems are very similar to their off-grid counterparts. The first of two primary differences is that excess energy can be sold to the grid for payment or credit. Batteryless on-grid systems use the grid as the “dump load,” sending excess energy back to the utility’s grid for their customers to use. These systems still may require a controller and dump load that only comes into play in the event of a utility outage. Batteryless grid-tied systems are considered to be the simplest and most reliable systems because they incorporate no batteries but have the grid available. Their drawback is the lack of backup for any utility outages.

Photovoltaics (PV) and Built-In PVs Photovoltaics (PV) is a method of generating electrical power by converting solar radiation into direct current (DC) electricity using semiconductors that exhibit a photovoltaic effect. Photovoltaic power generation employs solar panels comprising a number of cells containing a photovoltaic material. Photovoltaic arrays are often associated with buildings; either integrated into them, mounted on them, or mounted nearby on the ground. Arrays are most often retrofitted into existing buildings, usually mounted on top of the existing roof structure or on existing walls. Alternatively, an array can be located separate from a building but connected via cabling to supply power to the building. Building-integrated photovoltaics (BIPV) are increasingly incorporated into new domestic and industrial buildings as a principal or ancillary source of electrical power. Typically, an array is incorporated into the roof or walls of a building. Roof tiles with integrated PV cells are also becoming more common.

Installation Considerations PV systems can be grid-connected where power is available or “stand alone,” and can be backed up with a generator. A grid-connected system uses power from the electric utility provider when needed and supplies surplus generated power back to the utility provider. This is known as a “parallel” system. A “stand-alone” does not use any electric utility power. These systems typically require batteries to store power for the times when the sun is not shining. Stand-alone systems are generally considered “separate systems.” A system can be called a separate system if a building has electricity supplied to it from an electric utility provider if they are completely separated. The power produced can be metered in a manner that when power is produced by the PVs and sent into the grid the meter will run backwards. When power is brought in from the grid the meter will run in the regular direction. This is referred to as “net metering.” Either approach (stand-alone or grid interface) can be done partially, with PV’s being used in

20 2. Customer Side Smart Grid Technologies

conjunction with a generator in a stand-alone system, or with the central grid power serving as a primary power source in a grid-interface system. National Electrical Code (NEC) requirements apply to PV systems. Article 690 of the NEC specifically addresses PV systems. Other sections also apply to PVs (including Article 480 on battery safety), but when there is a conflict Article 690 takes precedence. It is recommend that electrical contractors confirm if there are specific local guidelines for PVs; private power producing systems must be verified by the local electrical utility provider, as there may be specific information relevant to the installation of a PV systems (grid connected or stand-alone) in their jurisdiction. Currently, the primary manufacturers of PV panels include Suntech, First Solar, Sungen Solar, Sharp, BP, SunPower, Hanwha Solarone, Jinko, and REC.

Small Scale Wind Turbines Wind turbines provide a means for the conversion of wind energy into electricity. Small-scale wind power is the name given to wind generation systems with the capacity to produce up to 50 kW of electrical power. Buildings that might otherwise rely on diesel generators may use wind turbines to decrease diesel fuel consumption. Individuals may purchase these systems to reduce or eliminate their dependence on grid electricity for economic or other reasons, or to reduce their carbon footprint. Wind turbines are becoming more frequently used for household electricity generation in conjunction with battery storage. Grid-connected wind turbines may use grid energy storage, displacing purchased energy with local production when available. Off-grid system users can either adapt to intermittent power or use batteries, photovoltaic, or diesel systems to supplement the wind turbine. Equipment such as parking meters or wireless internet gateways may be powered by a wind turbine that charges a small battery, replacing the need for a connection to the power grid. Options for small scale wind turbines include roof and ground mounted wind turbines and built-in integrated wind turbine.

Installation Considerations For a residential or commercial building connected to the grid, small scale wind turbines are becoming more popular after all the conservation and efficiency improvements have been made. A typical single family home consumes between 800 and 2,000 kWh of electricity per month, therefore, a 4 to 10 kW wind turbine is about the right size to meet this demand. At this size wind turbines are much less expensive than a PV system. They range in rated power capacity from about 400 watts to 10,000 watts (10 kW). According to most manufacturers, there is very little energy available in winds below about 12 mph due to the cubic relationship between wind speed and energy, so electrical contractors need to carefully analyze the site prior to recommending a small scale wind turbine installation. Currently the primary manufacturers of small scale wind turbines include Southwest Windpower, AeroVironment Architectural Wind, and Bergey Excel.

Micro Hydro Generators Micro hydro is a term used for hydroelectric power installations that typically produce up to 100 kW of power. These installations can provide power to an isolated home or small community, or are sometimes connected to electric power networks. There are many of these installations around the world, particularly in developing nations, as they can provide an economical source of energy without the purchase of fuel.

21 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Micro hydro systems complement photovoltaic solar energy systems because in many areas,water flow, and thus available hydro power, is highest in the winter when solar energy is at a minimum. Micro hydro is accomplished with a pelton wheel to generate high head, low flow water supply. The installation requires a small dammed pool at the top of a waterfall with several hundred feet of pipe leading to a small generator housing. Through the use of power control devices, generators can be operated at arbitrary frequencies and feed through an inverter to produce output to match the grid frequency. Very small installations—a few kilowatts or smaller—may generate direct current and charge batteries for peak use times.

Installation Considerations Most sites vary considerably in flow between winter and summer due to the differences in rainfall amounts. Electrical contractors need to make sure that the flow is sufficient to run the turbine. To extract maximum power from the turbine site, it is often desirable to install two turbines, switching in the second machine when the water flow allows. The following equation can be used to calculate power at a site: Power (watts) = Head (m) x Flow (liters/sec) x 9.81 (gravitational constant ‘g’) A typical water to wire efficiency is approximately 70 percent, therefore, a multiplier of 0.7 should be sued to obtain the actual amount of electricity that can be expected from the site. Currently, the primary manufacturers of micro hydro generators include Brownell Micro Hydro, Micro Hydro Power, and PowerSpout.

Fuel Cells and Microbial Fuel Cells A fuel cell is an electrochemical cell that converts a source fuel into an electric current. It generates electricity inside a cell through a reaction between a fuel and an oxidant triggered in the presence of an electrolyte. The reactants flow into the cell and the reaction products flow out of it, while the electrolyte remains within it. Fuel cells can operate continuously as long as the necessary reactant and oxidant flows are maintained. Many combinations of fuels and oxidants are now possible. For example, a hydrogen fuel cell uses hydrogen as its fuel and oxygen (usually from air) as its oxidant. Other fuels include hydrocarbons and alcohols. Other oxidants include chlorine and chlorine dioxide. Two of the more well- known fuel cell technologies are proton exchange membrane (PEMPC) and solid oxide fuel cell (SOFC). A microbial fuel cell (MFC) is a device that converts chemical energy to electrical energy by the catalytic reaction of microorganisms. A typical microbial fuel cell consists of anode and cathode compartments separated by a cation (positively charged ion) specific membrane. In the anode compartment, fuel is oxidized by microorganisms generating electrons and protons. Electrons are transferred to the cathode compartment through an external electric circuit, and the protons are transferred to the cathode compartment through the membrane. Electrons and protons are consumed in the cathode compartment, combining with oxygen to form water. In general, there are two types of microbial fuel cells: mediator and mediator-less. Microbial fuel cells have a number of potential uses. The first and most obvious is harvesting the electricity produced for a power source. Virtually any organic material could be used to “feed” a fuel cell. It is conceivable that MFCs could be installed in septic tanks, where bacteria would consume waste material from the water and produce supplementary power for a building. MFCs are a clean and efficient method of energy production.

Installation Considerations Fuel cells offer great potential; however, there are currently no manufacturers for residential or commercial use. Redox Power is working on small units that will provide safe, efficient, reliable, uninterrupted power at a price competitive with current energy sources.

22 2. Customer Side Smart Grid Technologies

Combined Heat and Power (CHP) and Micro CHP (MicroCHP) Installations Combined Heat and Power (CHP) fuel cells have demonstrated superior efficiency for years in industrial plants, universities, hotels, and hospitals. Residential and small-scale commercial fuel cells are now becoming available to fulfill both electricity and heat demand from one system. Fuel cell technology in a compact system is currently available to convert natural gas or propane into both electricity and heat. In the future, new developments in fuel cell technologies will likely allow these power systems to be fueled from biomass instead of fossil fuels, directly converting a home fuel cell into a renewable energy technology. Micro combined heat and power (MicroCHP) systems such as home fuel cells and co-generation for commercial office buildings and industrial facilities are currently in development. The system generates constant electric power (selling excess power back to the grid when it is not consumed), and produces hot air and water from the waste heat. MicroCHPs are usually less than 5 kWh for a residential or commercial building fuel cell. MicroCHP fit either inside a mechanical room or outside the primary structure. They operate like a combination furnace, where hot water and electricity are produced from one compact unit. They can generate between 1 to 5 kWh in addition to providing heat for hot water applications. MicroCHPs are designed to operate 24 hours a day. They are connected to the grid through the main service panel. Most equipment is designed to integrate with existing building electrical and hydronic systems. In the event of an interruption of electric power via the grid, the MicroCHP are able to switch to a grid-independent operational mode to provide continuous backup power for dedicated circuits. In addition, most designs also allow for off-the-grid operation.

Installation Considerations Primary manufacturers include Honda, who introduced a MircoCHP into the US market in 2008, WhisperGen (New Zealand), and SenerTec Dachs CHP (Germany).

Direct Current (DC) Consumption With many customers choosing to generate electricity on site, more manufactures are choosing to manufacture appliances that use direct current. An evaluation of electrical loads is necessary to determine the amount of DC current that can be used directly. The greatest advantage is that neither a charge controller nor inverter is required. There are options available to store DC current for later use. In this case, a battery system and charge controller would be needed, but an inverter would not be required.

Installation Considerations DC appliances and equipment, although initially more costly than their AC counterparts, will use less power to operate. In some cases, such as pumps, DC motors are much more efficient. When DC is used in a building, a heavier gauge wire is required. Generally, #10 wire is best for DC applications, but larger wire may be necessary if the wire runs are long. An energy generation configuration is shown in Figure 14 (next page).

Energy Storage The term energy storage refers to devices designed to store energy to accommodate periods when the demand of energy exceeds what the utility grid is able to supply. Primary storage devices include, but are not limited to batteries,

23 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 14: Energy Generation Configurations

On-site Energy Generation

SM Charge Battery Controller

Direct Current Emergency System Rectifier

Portable Generator Optional/Recommended Back-up Generator

uninterruptible power supply systems, thermal energy storage, chemical, biological, electrochemical, electrical, mechanical, thermal, and fuel conservation storage. Each of these methods is described below.

Batteries Batteries are the most common method of storing energy for the periods when power can not be produced on the customer side. Batteries must be able to handle deep discharges that occur when power is generated on the customer side.

EV Storage Plug-in vehicles fall into one of two categories: plug-in hybrid electric vehicles (PHEV) or plug-in electric vehicles (PEV). The primary difference between plug-in electric vehicles and fossil fuel-powered vehicles is that they are able to utilize electricity for the powertrain of the vehicle. Plug-in vehicles require frequent charging from an external source of energy. PHEV and PEV that are manufactured today can be charged from conventional power outlets or dedicated charging stations. Depending on the voltage available (120, 208, 240, or 480 V), the process may take only a fraction of an hour to several hours. For residential applications, since the charging voltage is limited to 240V the process will usually take several hours. There is a corresponding relationship between the number of PHEV and PEV that are manufactured and sold and the increased demand for power from the grid. There is a common concern that the distribution system, and specifically distribution system transformers, will be undersized to accommodate the needs of PEV nighttime charging. As more PHEV and PEV are in use, they may become part of this grid energy storage system, referred to as vehicle-to- grid energy storage. Instead of PHEV and PEV just taking energy from the grid, they would be able to release energy back into the grid in times of very high demand.

24 2. Customer Side Smart Grid Technologies

EVs are an example of a technology that serves both as an electricity use (load) and an electricity source (supplying power back to the grid). They can compensate for varying grid conditions by providing or absorbing energy to help correct system voltage or frequency. Placing an energy storage device in the distribution grid to serve as both a load and as a distributed energy resource (DER) also offers new integration challenges and opportunities for increased reliability. An electric vehicle presents challenges in minimizing the grid impact of its charging and also in the opportunity for its use as a DER.

Integrated Storage Grid energy storage refers to a process where electricity generators distribute excess electricity into the grid to electricity storage sites. Community energy storage (CES) refers to the storage of energy in small, distributed energy storage systems. The concept behind CES systems is that they are available to a group of people who are connected or who opt in the system. Residential CES are typically 25 kW or less and have a 1 to 2 hour back-up time serving up to a dozen residences. They are designed to create an energy cushion in the event of a power failure from the grid. The primary difference between a commercial and residential CES is that commercial CES are able to supply 3 phase 277/480 volts. Figure 15 depicts a CES adjacent to a standard utility transformer feeding six to ten residential customers. CES units store 120/240-volt power for individual customers and are connected on the low-voltage side of the utility transformer. The intent is to place a utility-controlled device at the edge of the grid to provide voltage control and improve service reliability. As more sophisticated electronic loads, such as computers, appliances, etc. (which require greater service reliability) are added—along with additional PHEV charging units—greater control of voltage and power fluctuations to the customer will be required. With the addition of more EMCS that will enable energy flowing back into the grid when the power demand of specific customers is less than what they are producing, the amount of energy that dissipates back into the utility network can precede the customer load peak by two to three hours each workday. It is envisioned that CES units located throughout the network would allow excess energy to be captured locally with less line losses and re- dispatched back to the same customers when needed. As mentioned above, as more PHEV and PEV are utilized, the charging demand will affect load on the grid. CES is one method of balancing the demand of power from the grid if all neighbors plugged in their vehicles at the same time.

Figure 15: Community Energy Storage

Source: Can ‘energy storage as a service’ beef up the grid? CNET March 8, 2011. http://www.cnet.com/news/can-energy- storage-as-a-service-beef-up-the-grid/

25 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Another technology that has received renewed interest is direct current (DC), especially in localized grids called “microgrids.” For example, solar photovoltaic produces DC, batteries store DC, and loads such as computer equipment and variable speed motors operate on DC. The grid operates mainly on alternating current (AC), and conversions need to take place between AC and DC to interconnect DC generation or loads to the AC grid. In order to improve efficiency, the number of such individual conversions should be minimized, leading to exploring new concepts for managing electricity at locations involving these generation sources, storage methods, and loads. Also, local electricity generation, storage, and distribution systems should be improved to increase the self-sufficiency of end users.

Uninterruptible Power Supplies (UPS) Uninterruptible power supplies (UPS) systems are another option for energy storage. UPS systems utilize batteries to store energy and provide a short duration (five to ten minutes) safety net in the event of a power failure. UPS are frequently installed solely to protect and provide power to select loads. The number of UPS systems in place is relatively small and the majority are installed with personal computers to allow time to properly shut down in the event of a power failure. UPS systems range in size, but most only supply loads of 500 watts or less. In a smart grid environment, a UPS’s storage batteries could lower demand or supply the grid during peak hours or in response to an electricity provider’s request.

26 3. Marketing Strategies for Electrical Contractors

Three prerequisites are needed for the successful implementation of customer side smart grid installations: 1. Identification and monitoring of current energy needs 2. Creating and implementing changes for adaptive subsystems 3. Developing a centralized adaptive control system for optimization and unification of all subsystems Currently, there are approximately 76 million residential structures and 5 million commercial facilities in the United States. Buildings consume about one-third to one half of energy and two-thirds of electricity in the U.S. (DOE 2009).

Monitoring and Identification of Current Energy Needs Identification and monitoring of current energy needs is the first step in developing a profile of a residential, commercial, or industrial facility. By developing a profile, electrical contractors can identify areas of high-energy usage. Systems can then be passively or activity managed to be more energy efficient and cost effective. Figures 17 and 18 identify energy usage in commercial office buildings and residential structures in the Northeast, South, Midwest, and West. Although usage profiles for consumer offices differ, there are five common categories that account for the majority of usage. For example, for the Western US:

Commercial Office Buildings (EIA, 2009) Residential Structures (EIA, 2009) Heating Systems (28%) Heating Systems (~31%)

Cooling/Venting Systems (15%) Lighting and Appliances (~31%) Office Equipment and Other (21%) Water Heating (~27%) Lighting Systems and Appliances (26%) Air Conditioning (~6%) Water Heating (10%) Refrigeration (~5%)

Consumer Advantages Once an electrical profile has been produced, an electrical contractor can begin to provide cost saving solutions to assist consumers. Using their specific data profile, electrical contractors are able to generate cost benefit analysis for upgrades within a subsystem.

27 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 16: U.S. Energy Consumption in Office Buildings by End Use

For example, usage profiles for residential structures within the US differ quite substantially between the Northeast and the South. Space heating in the northeast accounts for 58 percent, while in the South space heating only accounts for 26 percent of the user profile. Lighting and other appliance account for 31 percent of user profiles in the South, while in the Northeast only accounts for 19 percent (EIA 2009). By studying and understanding their user profiles, electrical contractors can implement changes with the highest return on investment. In this example, the Northeast should invest in more effective heating solutions while the South should invest in reducing costs associated with lighting and other appliances.

Reduction of Energy Use Smart grid technology can be implemented into commercial and residential facilities to help reduce the amount of energy used. Smart technology adapts to a consumer’s needs; traditional technology requires programming by users. Once

28 3. Marketing Strategies for Electrical Contractors

Figure 17: U.S. Energy Consumption in Residential Homes by End Use

Source: Leveraging Natural Gas to Reduce Greenhouse Gas Emissions, Prepared by the Center for Climate and Energy Solutions, June 2013. http://www.c2es.org/publications/leveraging-natural-gas-reduce-greenhouse-gas-emissions programmed, end users must reprogram systems if there are any changing conditions. Traditional technology is difficult to program and lacks in adaptability; new smart technology is designed to program itself around a user. Programming is simple—the system goes through an initial learning phase, the computer system adjusts and finds patterns to create a usage profile for the occupants, and the system continues to adjust and refines patterns through its operational time. Traditional thermostats can be difficult to program and use. In most office and home settings, energy usage from heating and cooling accounts for over 50 percent of the usage profile (Nest 2014). By implementing smart technology, programing has become simplified and auto adjustable. Nest™ is a smart thermostat that senses a user’s daily schedule and automatically makes adjustments to create an efficient heating and cooling usage profile for the user. Once the user profile for the building is established, Nest™ is able to generate an electric profile which saves an average of 19.5 percent compared to normal heating and cooling programmed by fixed thermostats (Nest 2014).

29 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Similar to smart thermostats, lighting systems can be equipped with the same learning feature. Many commercial buildings are equipped with occupancy sensors and solar sensors. Although these systems are currently only real time based, future systems may include a smart component. If systems, occupancy sensors, and solar sensors integrate into a centralized computer, buildings can become self-programing and adaptive. According to the EPA’s energy star program, electric consumption by standby devices in the United States accounts for $10 billion in wasted energy cost per year (EIA 2012). Smart outlets and power strips are playing a larger role in creating a reduction in standby energy usage. Devices such as Smart Strip and Belkin Conserve Socket automatically cut electricity to devices on standby mode. Critical devices that must be always available can be placed on to a critical socket that doesn’t turn off.

Strategic Cost Savings from Variable Energy Cost Structures Energy usage rates are calculated through two different methods. Times of day metering and peak usage are not a factor for calculating pricing for residential homes. Home energy rates are currently calculated using a tiered pricing structure where each tier has an allotted maximum. Each unit of energy is then calculated with fixed unit rates specific for each tier (PG&E 2014). For commercial, industrial, non-residential and non-agricultural uses, energy rates are calculated based on demand. For example, Pacific Gas & Electric unit rates are associated with usage categorized as on-peak, off-peak, and part-peak (PG&E, 2014). Pricing will change throughout the day based on usage (see Table 1, page 7). With the implementation of a smart meter system, energy producers can identify how much and when energy was used by residential consumers. In the near future, residential pricing schemes will become similar to that in the commercial industry (PG&E 2014). To offset higher prices during peak hours, consumers and companies can implement smart grid technology to vary the usage of different type of energy. For example, many newer buildings are equipped with solar panels. Installation of an energy storage device, such as batteries or compressed air energy storage, can allow energy generated by sustainable sources to be used to offset the energy needs for peak hours. Energy suppliers may also choose to use a variety of energy sources to bring the cost per unit down. According to the U.S. Energy Information Administration (EIA), about 7 percent of energy is lost during the transmission and distribution process (EIA 2012). To create a more efficient system, energy production on-site may supply electricity to closer target areas thereby helping to reduce the inefficiencies associated with distribution and transmission.

Consumer Risk

Additional Facility Needs Additional facility needs include both maintenance and installation. With more complex systems, in-house facility management will require consulting with electrical contractors for developing and maintaining systems.

Complex Operation and Maintenance Initially, building systems will be created using complex smart systems. Installation and programming of new systems will require the help of electrical contractors. Although future smart systems will learn and program systems according to user’s usage, the initial systems will not be fully automated. Initial full control systems will require manual debugging.

30 3. Marketing Strategies for Electrical Contractors

More Sophisticated Facility Managers Many systems will be computer controlled and facility managers will require additional training to learn the new programming processes. New certification for systems and maintenance will be required. These training sessions should be done by electrical subcontractors with experience in integrating different systems and performing the initial installation.

Additional Space Allocations With additional equipment needs for a smart system, additional space needs to be allocated. Extra cooling cost will be required for the additional equipment. Additional mechanical air ducts may be needed to promote air circulation to specific equipment locations. The additional equipment spaces will take up room from usable space. In the future, however, equipment will become smaller and more efficient. Additional space for smart systems will become minimal or will be integrated into the devices themselves. If additional processing power is required, systems will be effectively programmed to work with Wi-Fi connections, processing power will be off-loaded to the cloud, and the uses of external servers will supplement the additional data requirements.

Additional Cost

Upfront Design and Installation Cost Different systems such as HVAC, electrical solar panels, and plumbing systems are not fully integrated with one another. There are currently no universal system off-the-shelf components that communicate with one another. Custom designed systems are required to generate a fully functional smart system. The complexity of these systems will require systems to be designed by subcontractors. The cost and fees with subcontractors will be higher than traditional systems. Once designed, installation of these systems consists of more wiring for control systems. To effectively transition to the building phase, owners should consider design-build specialty contractors. Although the upfront and installation costs will be greater during the inception process, the owner/user of the building will see long-term savings. Smart systems may not be right for every owner or user; consideration of financing and building life should be examined before choosing a smart system.

Operational Overhead Cost Although smart systems will generate energy savings over the life of a building, operational overhead needs to be taken into consideration. With additional equipment, maintenance and repair/replacement will be necessary. Owners have a few options when it comes to operations and overhead costs. These options include in-house maintenance, independent subcontractor maintenance, or maintenance and warranty provided by the original installation contractor. Each of these options will have different costs and benefits. In-house maintenance may be the most cost effective option, however finding trained and qualified people may be difficult. Independent subcontractors different from the contractor who originally placed the system may lack in experience and understanding of customized systems. Post installation modification may be more difficult to accomplish. Owners can opt for the installation contractor to also operate and maintain the equipment. This allows the specialty contractor to move from construction to the higher margin maintenance and servicing sector. The installation contractor will fully understand the complete operations and maintenance required of the customized system. Also, if modification or additions to the system are required, the specialty contractor can make changes to the system relatively easily.

31 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Delayed Savings/Breakeven point Depending on the original cost of the smart grid system, the breakeven point or savings realized will be seen later in the life of the building. The cost for the new technology may be steeper relative to current systems, but once the new technology is readily available the cost of these systems will be dramatically reduced. Owners need to determine if the long-term savings overcome the cost associated with early technology adoption. For owners who cannot initially finance the additional cost, it might be more economical to use traditional systems and adopt the smart grid technology when the it becomes more readily available and financially beneficial.

Specialty Contractor Advantages

Provide Additional Profitable Services Investment in smart grid systems requires more sophisticated equipment and techniques. Each step requires a specialized individual or company to fully implement unified systems that can communicate with each subsystem. Typically these applied systems are too complex for end users or facility managers to implement and install. Qualified specialty contractors are required in each step; design/consultant, installation of systems, and operation and maintenance. Each of these areas can be a profit center for specialty contractors.

Design/Consultant There are three readily available areas under design and consultant where changes can be implemented with little to no cost for a specialties design-build contractor. 1. Consumer profile analysis 2. Owner consultants 3. Design build systems Although there are generic energy consumption estimates, each business or home has its own unique profile and conditions that vary; optimum subsystems need to be chosen or modified. To optimize energy usage, companies and consumers will require external specialty contractors to generate profiles and analyze the results. Analysis equipment can be separated into two areas: circuit analysis and specific equipment analysis. A circuit analysis system, such as a TED Pro System™, allows a user to see real-time data for energy usage on specific branches of circuits (TED 2014). Relatively easy to install, the system can be applied to an existing service panel by installing a device that clips a loop around an existing system’s wiring. Although a circuit analysis system is good for tracking overall energy usage sometimes more in-depth details regarding equipment and devices on the circuit is required. For monitoring specific equipment, a device such as a Kill-A-Watt P3™ can be installed on an existing outlet and serve as a throughput outlet between specific pieces of equipment (Kill-A-Watt 2014)

Installation Once a profile is generated and subsystem optimization is identified and designed, specialty contractors are able to sell and install the proposed upgrades. In addition to hardware upgrades, special programming, testing, and calibrations are needed to optimize subsystems. Smart systems will require additional sensors and control wiring compared with traditional systems. Complexity and accuracy of installation will be critical.

32 3. Marketing Strategies for Electrical Contractors

Systems created earlier in the process will require a large amount of time in development. Once established, system programing will require less time through integration of smart computer systems. With the development of computer driven adaptive systems, smart systems can create, modify, and adjust user profiles by using pattern recognition. Future programming requirements will be minimal.

Operation/Maintenance Post-installation services are also a possible area of service for specialty contractors. Office buildings usually undergo tenant changes or remodels. Every time the space is changed the system needs to be recalibrated to clients’ needs.

Partnerships with Electrical Distributors Partnerships with electrical distributors (ED) may also serve as another path to a building a customer base. In the traditional procurement process for electrical work, electrical contractors become involved after the design has been completed. It is often the case that design consultants have existing relationships with electrical manufacturers that help with the preparation of the technical specifications for electrical equipment. Figure 18 represents a simplified flowchart of the traditional procurement process. A report recently published by the National Association of Electrical Distributors (NAED) concluded that ECs were interested in developing stronger relationships with EDs in the area of energy efficiency retrofits. There are numerous ways in which electrical contractors and distributors can also be involved during the project identification and design phases; even in the traditional procurement process. Often in these projects, as with design-build projects, a performance specification is prepared by a design consultant and electrical contractors are tasked with selecting equipment that meets the performance specification. Electrical contractors may want to consider partnering with electrical distributors on potential projects. This may be particularly beneficial to electrical contractors if they are not fully committed to offering a full range of services.

Figure 18: Traditional Procurement Process

Traditional Procurement Process

Project Design Electrical Electrical Identified Consultant Contractor Distributors

Electrical Manufacturers

33 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

Figure 19: Electrical Contractor/Electrical Distributor Partnership

Electrical Contractor/Electrical Distributor Partnership Performance Specification

Electrical Contractor Project Design Electrical Identified Consultant Manufacturers Electrical Distributor

Figure 20: Collaboration to Improve Project Success

Project Collaboration

Electrical Electrical Contractor Distributors

Project Identified

Design Consultant Electrical Manufacturers

Furthermore, through increased collaboration between electrical contractors, design consultants, electrical distributors, and electrical manufacturers the success of the project can further be realized by achieving the expected and desired outcomes. It should be noted that some electrical distributors already serve as energy service companies (ESCOs) and are able to provide a line of products customized for residential, commercial, or industrial upgrades in the energy management

34 3. Marketing Strategies for Electrical Contractors

solutions market. In this case, the traditional supply chain flowchart—contractor, distributor, and manufacturer—would be reversed.

Subcontractor Risk

Additional Labor Training New training will be required for smart systems. Initially, training may require computer programmers for debugging, writing algorithms, and programming and licensed engineers for developing, sizing, and designing integrated systems. In addition to designing the systems, testing methods for integrated smart systems may need to be developed along with certifications programs for trained professionals. If a contractor chooses to operate and maintain an installed system, certified operators need to be trained. At this time there are no developed programs for commissioning smart grid systems. Specialty contractors will also need to develop training programs and in-house certification processes to ensure quality individuals are operating and modifying equipment.

Expansion of Design Services Traditional specialty contractors may have a small- to medium-sized design team. Product knowledge and integration is limited. In order to provide a full service, design teams may require additional employees who specialize in programming, products, and different specialty knowledge. The risk for expansion of design services may consist of an increased overhead cost for companies and may also expose specialty contractors to litigation regarding design liability. One mitigation method would be to create a separate company that performs design. Design-build specialty contractors may easily adapt their current structure to accommodate the design of smart systems. Operation and maintenance requires an additional set of skills for which typical subcontractor employees are not trained. Programing, modifying, and maintaining existing systems differs greatly from new construction. Training will be required with differing skill sets aligning more with facilities management. Specialty contractors may need to designate a specialized group to work on these projects because operations and maintenance fees tend to be shorter in duration.

Financial Risk and Financing Programs

Delayed profitability Through Lease Leaseback Development of smart grid technology will require investment and test trials. The best proof of concept to further the adoption would be to place the model into active use. Owners, users, and electrical contractors require savings in order to further invest and install smart grid systems. Adoption of new technology by owners is difficult; owners like to invest in tried-and-true systems. In order to expedite adoption, specialty contractors and general contractors may want to consider designing, building, and operating a building. A practical approach would be for contractors to produce a building for the owner, guaranteeing the performance of the new systems by taking responsibility for the building during uses. Lease leaseback has great potential for contractors to develop systems and prove the effectiveness of the system. This approach shifts the financial burden from the owner to the contractor. Because the contractor is financing this project, the fees and profits will

35 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

be higher and span over longer periods. Owners will benefit from having reduced energy cost and also a better building because contractors will want a higher quality building to reduce their cost for maintenance. This approach is similar to electrical contractor becoming an energy service company (ESCO). In short, a business that develops, installs, and arranges financing for projects designed to improve the energy efficiency and maintenance costs for facilities over a 7 to 20 year time period. ESCOs typically offer the following services: ■■ Develop, design, and arrange financing for energy efficiency projects. ■■ Install and maintain the energy efficient equipment installed. ■■ Measure, monitor, and verify the project’s energy savings. ■■ Assume the technical and performance risk that the project will save the amount of energy guaranteed. ESCO services are bundled into the project’s cost and repaid through the amount of energy guaranteed. This sort of lease leaseback arrangement may put contractors at risk since it reduces cash flow dramatically. Contractors who attempt this process must have strong financial backing and be able to design build a system. Typically, operations aren’t performed or provided by subcontractors. This may require the creation of a new division capable of handling the different requirements for operations and maintenance. With risk also comes profits—operations and maintenance will allow for greater fees to be charged by contractors.

NECA ECAP Program One program that NECA recently launched is the NECA Energy Conservation and Performance Platform (ECAP) to assist electrical contractors finance energy retrofit project. The NECA ECAP program integrates an electrical contractors project surety, project finance structuring, and project funding during the project development process. Through the NECA ECAP program, electrical contractors are able to provide project performance guarantees and performance based financing for clients using third-party insurance and project investors. For more information, NECA contractors are encouraged to visit the ECAP website: www.necaecap.com.

Initial Decreased Productivity for Learning Curve Smart grid system will require more complex wiring and control systems. Specialty contractors will need to spend more time on the initial systems, learning how to program, debug, test and commission smart systems. Specialty contractors need to determine the responsibility and the requirements for each different trade. Communication between the different trades will be key to creating an effective system.

Framework for Certification Program Although NECA is not a certifying body and may not want to pursue certification, this step would be an important and valuable addition to the smart grid area. The following is a suggested framework for a future program. When developed, the foundation for the certification program should be based on a detailed description of the work individuals are expected to perform. In determining the work description, the set of knowledge, skills and abilities required for customer side smart grid installations needs to be considered. Ideally, this would include a detailed listing of the skills and abilities that an installer of customer side smart installation should master. In reviewing the work elements that are common to smart grid installations—energy generation, demand-side management, and energy storage systems, a body of knowledge for each would form the basis for certification.

36 3. Marketing Strategies for Electrical Contractors

Training for each body of knowledge should be developed and would serve as a guide for the subsequent examinations for individuals to become certified. This would show and demonstrate that candidates possess the skills and knowledge of their peers, are experts in the field, and that they are deemed to have the necessary knowledge to do and perform the job well. Customer Side Smart Installation Certification would be a voluntary certification that would provide a set of national standards by which smart grid installation professionals with skills and experience could distinguish themselves from their competition. Certification provides a measure of protection to the public by giving them a credential for judging the competency of practitioners. It is not intended to prevent qualified individuals from installing PV systems or to replace state licensure requirements. The target candidate for the Smart Grid Installer Certification is a range of installation personnel including but not limited to installers; project managers; installation, foreman/supervisor, and designers. The development of the certification should be developed in accordance with the best practices of the certification field and authorized by the IACET.

Requirement for Certification Candidates for Smart Grid Installer Certification should have experience in the field acting as the person responsible for installing smart gird systems, a minimum of 24 hours of advanced smart grid training, and an OSHA 10 hour construction industry card or equivalent. Specific requirements for each category will vary according to experience and background.

Training In order to qualify for the Smart Grid Installer Examination, a candidate must successfully complete a minimum of 24 hours of advanced smart grid training before applying. All advanced training must be offered by one of the following education providers: ■■ Institutions accredited by an agency recognized by the federal Department of Education, or Canadian equivalent (universities, community colleges, etc.) ■■ U.S. Department of Labor Registered Apprenticeship Training Programs (http://www.doleta.gov/oa/) ■■ Accredited training programs, independent instructors, or independent master trainers certified by the Interstate Renewable Energy Council (IREC) to IREC or IREC ISPQ Standards. ■■ Training institutions approved by State Contractor Licensing Boards or Canadian Provincial equivalents ■■ State or Provincial Department of Education or equivalent registered vocational/technical training programs NOTE: Courses offered by private training organizations or businesses that are not accredited or taught by instructors certified by a recognized third-party will not be accepted for the minimum of 40 hours of advanced solar PV installation and design training. A maximum of eighteen (18) of the twenty-four (24) prescribed hours may be obtained from non-accredited, non- certified sources such as: ■■ Courses covering building and electrical codes relevant to the installation of solar PV systems ■■ Entry level coursework through a NABCEP registered PV entry level exam provider, provided that a passing score achievement was obtained on the NABCEP PV entry level exam. NOTE: Courses leading to the NABCEP entry level exam do not qualify for the minimum 40 hours of advanced PV installation and design.

37 CUSTOMER SIDE SMART GRID INSTALLATIONS: PREPARING FOR THE FUTURE

■■ Additional OSHA or equivalent workplace safety courses above and beyond the required OSHA 10 hour course ■■ Training programs and courses that are registered with NABCEP for Continuing Education Credits for the PV Installer Certification ■■ Any other coursework that addresses topics included in the NABCEP PV Installer Job Task Analysis (NOTE: the applicant will need to submit a course outline and signed letter from the training provider detailing how many hours were spent covering the NABCEP Solar PV Installer Job Task Analysis in the course.) Installations Depending on the category selected, all candidates for the Smart Grid Installation Professional exam must provide documentation for three (3) or five (5) installations where they have acted in the role of contractor, lead installer, foreman, supervisor, or journeyman. Candidates must provide system information, permits and inspections for each project that he/ she has installed. Additionally, if the name listed on the permit or inspection does not match that of the candidate, a letter to verify the role of the candidate is required.

38 4. Conclusion

This research recognizes that the number of customer side smart grid installations will continue to grow in future years. There are many opportunities for electrical contractors to procure this type of work, either through the retrofit of existing facilities or in new construction. Given the technologies and various financing options, there are several approaches to this, including utilizing the NECA Energy Conservation and Performance Platform (ECAP) and partnerships with electrical distributors.

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Markham, Derkek. 2012. “New Compressed Air Energy Storage System Could Deliver Double the Efficiency.” treehugger. November 7. http://www.treehugger.com/clean-technology/new-compressed-air-energy-storage-system-delivers-double- efficiency.html

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