SDG&E COO Mike Niggli: Cost-effective smart grid storage the 'holy grail' for utilities

The nation's nascent smart grid has begun its deployment, and the state with the most traction is California.

So what are the issues facing those utility companies at the forefront of the movement?

I spoke with San Diego Gas & Electric president and COO Michael Niggli to find out. Niggli, who also serves as COO of Southern California Gas, says his companies are taking advantage of the smart grid deployment to reconnect with their customers -- as well as set the foundation for clean transportation and improved transmission infrastructure.

Niggli spoke to me from his office about stimulus grants, clean energy, smart meters and the company's new Borrego Springs microgrid project, for which SDG&E is building the infrastructure to help a desert community develop self-sufficient power generation.

SmartPlanet: Let's start at the top: what is SDG&E doing with the smart grid?

MN: From soup to nuts, we're involved with the manufacturers of the various pieces of equipment that go into the smart grid. We're involved in setting the standards for the interoperability for the smart grid. We're involved in deploying equipment and interfacing with our customers. We're also involved significantly in customer outreach -- making sure they're aware of the changes coming and the opportunities that exist

We're making sure the marketplace is prepared.

Let's start at the house. When I think of interoperability, my first thought is at the smart meter -- the interface point between our customers and the grid. The smart meter is truly an enabler of new technologies. Our company will be the first utility in the United States to have all of its customers on smart meters, to finish in the latter half of 2011. That allows our customers to have a lot better information about their consumption patterns and therefore they can know more about when to consume. We send them price signals that help them conserve and shift their load.

Secondly, we link through to appliances. Ultimately there are going to be chips in your air conditioners, dishwashers, freezers and garage that allow communication, telling their homes how to react to heat waves and so forth.

If you remember back to Betamax-VHS [format] wars, we're trying to make sure that doesn't happen [with the smart grid]. Companies can build what they want, but the pieces will still talk to each other. The hurdle is getting a critical mass of companies together in the U.S. and the world [to work together]. A lower cost will allow innovation to be unleashed.

The other end of the spectrum goes to where the power is generated. In California, we're on the leading edge of climate change, energy efficiency and renewables. We're putting in a very large amount of solar power and wind power.

In the past, utilities used to have the gas pedal, if you will, on all of the power plants -- we had control of them, and move [the pedal] up and down to produce more or less power to match your needs.

In the future, many of these [renewable] power plants will be controlled by Mother Nature. We end up reacting to that -- having to be the interface between those naturally-controlled resources and the needs of our customers.

At the start of the decade, 2000, we were about 1 percent renewables. Today, we get about 11 percent from renewables. By the middle of this decade, we'll be over 25 percent renewable energy. By the end of the decade, we'll be right at 33 percent. This is actually the largest transformation of power supply sources in the history of our company, and probably the industry.

SmartPlanet: What's the mix of the other 89 percent of non-renewable energy in the SDG&E portfolio?

Nuclear is about 20 percent. The rest is generally natural gas-based, about one-half.

This is one of the largest transformations [in American history]. Ultimately, it affects every customer in the United States. This is a massive challenge -- to have our power supply to be focused on renewable energy.

California is, fortunately, very committed to climate change and renewables. We have a lot of policies to help start this movement fairly quickly. It does take time to connect the dots, though.

All of these things have fairly long planning and approval cycles. We have to plan well in advance to make this shift. And the technological changes have to happen along with it.

The United States has, by far, the world's most reliable grid.

SmartPlanet: Let's talk about transmission and distribution for a second. Renewable power is great, but not if you can't move it to where it's needed. What is SDG&E doing about it?

MN: We're working on a number of solutions. The eleven Western states, we're looking at how do we work together to get the lowest-cost most effective to load centers.

Wyoming and Montana have the best wind resources in the United States. But how do you connect Wyoming up to southern California? Years ago, major transmissions were built to connect hydro [power] for that purpose. So we move power thousands of miles from one area to the other, ultimately, in both directions. There is a need for more high-capacity infrastructure.

There is a significantly higher share of mind going towards knocking down these barriers. I don't know if we've seen any acceleration in the approval process, but clearly people are tackling the hurdles around siting, permitting, and the environmental protections around these facilities.

That's one of the bigger challenges with these renewables.

SmartPlanet: Tell me about your Borrego Springs project and what you're learning from it.

MN: Cost-effective electric storage is the holy grail for our business. If we can master storage at a reasonable price, then all of Mother Nature's resources can be harnessed for the betterment of our customers.

We're testing some smaller storage projects at our microgrid project at Borrego Springs. There's an awful lot of money being put into this space by various developers. We're trying to team with manufacturers to test these facilities and when they get deployed, maintain the level of reliability and power quality that we need.

We're trying a lot of different technologies to ensure that they'll be successful.

Borrego Springs is a community that is, as the crow flies, 50 or 60 miles from San Diego. It's a small desert community that has very few connections to the outside world. We thought it would be a great petri dish to test different technologies to see how they work together.

Plus, you can isolate the community onto its own power supply, once we get enough solar and backup storage capabilities in there. That means you have to have the proper electronic controllers, supply sources, storage capability and all of the interoperability that goes with that.

We're starting to roll equipment out in the latter part of this year. It's a very intriguing test. We're going to learn a lot from it.

We're testing the ability to incorporate a very high percentage of renewable resources. Most places around the country will have a small percentage of renewables [in their total power mix]. In a small place like this, we could put 60 to 80 percent of customers onto renewables, which would change from time to time.

Secondly, we'll be able to test some customer technologies on energy efficiency.

Thirdly, we're going to test security issues around the system, so that it all talks to each other and is reliable. Testing customer participation is going to be important.

SmartPlanet: Some early-adopter utility companies have faced challenges in selling the smart grid to consumers. How do you convince them?

MN: One of the things that's often overlooked is the focus on the customer with respect to the smart grid. What we've found in our trials is that everyone vastly appreciates the customer outreach.

We get to understand their usage on a much faster time increment than we ever have before. Plus, we get to see that back to the customers so they understand it.

If we tell you what your consumption pattern is, and what your bill is likely going to be, you might make changes.

The other intriguing thing as I think about the future, has a lot to do with electric vehicles. At night, we have a lot of extra capacity on our lines. But if you choose to charge during the day, we [legally] have to build a lot of new facilities to handle that. We'll offer lower prices at night to [urge] you to charge at night.

A modest-sized house at Borrego Springs has 110-degree temperatures during the daytime. During the day, it has 6 kilowatts of demand. If I add one Nissan Leaf to that house, [the new electricity draw] could be the equivalent of that house. All of a sudden, it's doubling the demand, if they connect at the wrong time.

One of the most important things is setting up the economic incentives to consume off-peak and putting smart chargers in the car. That's where Detroit can play an important piece of the game.

This post was originally published on Smartplanet.com