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SDG&E hoping to get stimulus funds for its 'smart grid'

San Diego Gas & Electric is vying for approximately $100 million in stimulus money to fund an innovative, environmentally friendly "smart grid" system for the region.

Hoping to become the first region in the world to deploy a fully integrated, end-to-end smart grid, SDG&E officials believe they have a great chance of winning the grant, which is expected to be awarded in December.

"We're pretty excited about it," said Lee Krevat, director of smart grid for SDG&E. "We think it's an incredible project."

The project is estimated to cost $213 million, and the San Diego utility has recruited a coalition of 25-plus companies to help with the effort.

Consortium members, which include the University of California San Diego, CleanTech San Diego, SAIC (NYSE: SAI), Qualcomm (Nasdaq: QCOM), IBM (NYSE: IBM), Cisco (Nasdaq: CSCO), Intel (Nasdaq: INTC) and General Electric (NYSE: GE), will contribute a total of $40 million. SDG&E will provide the remaining $73 million.

A smart grid is a sophisticated system that allows household appliances and power centers to "talk" to one another, allowing for the most efficient use of energy. The grid employs "smart meters," which gives the utility and customers a detailed description of their energy consumption.

A smart grid derives its energy from renewable sources like solar and wind. Since those power supplies can be unpredictable because of the weather, the smart grid uses sensors to detect where best to draw its supply from.

For instance, if cloud cover suddenly limits solar power, or if winds top blowing at a windmill farm, sensors would tell a large storage facility to start discharging energy to make up the difference.

"Unlike traditional forms of generation, where we control (the output), with wind and solar, mother nature controls the generation," Krevat said. "We won't be able to control the supply. That's why we need sensors to make up for differences in production."

Additionally, SDG&E customers can volunteer to have some of their appliances shut off during an energy downturn, thereby relieving pressure on the grid.

"Our main focus is to keep that grid reliable and allow customers to leverage all the exciting new energy products that are here or soon will be coming," Krevat said.

The company already is moving forward on several features of a smart grid, becoming the first major utility to have a "smart meter" project. SDG&E has installed 100,000 smart meters so far and plans to have 2.4 million smart meters by the end of 2011.

"Smart meters certainly give the utility and transmission operator a much better knowledge of what is coming in the next five minutes or next hour in terms of demand, so they can smooth out that demand load," said Byron Washom, UCSD's director of strategic energy initiatives.

SDG&E recently won a Department of Energy award for two microgrid projects, worth $7.5 million and $3.5 million. As its name suggests, the microgrid is a smaller version of a smart grid and allows individual neighborhoods to break off from the grid in case of a power outage.

San Diego officials have experimented with smart grid technologies because of the area's geographic location. Situated between an ocean and a desert, with Mexico to the south, the region has been described as a cul-de-sac, forcing it to derived much of its energy locally.

Only about half of the energy used in the county is produced locally and the area has only one main transmission line, according to Irene Stillings, executive director of the California Center for Sustainable Energies.

"We have, by default, been in this necessity of thinking about how to optimize local generation and distribution," said Washom. "We're just one border from being an island.

"Geographically, it's imperative we participate in this market."

Since San Diegans have been creative with their energy supply, this makes the region a strong candidate for the stimulus money, according to SDG&E's Krevat.

"Because we're at the end of the road, we've had to solve our problems by putting in smarter systems (and) levering (new) technology," he said. "We're ready to take that next step to the smart grid."

Krevat said the region can't afford to wait, since SDG&E executives have committed to increasing its renewable energy portfolio to 33 percent by 2020.

San Diego also will be receiving a $20 million federal grant to build an infrastructure for electric vehicles. A smart grid would help the implementation of the electric car program by telling people when the best time is to charge their cars.

"We want to make sure the grid is smart enough to make the decision not to charge vehicles when electricity is the most expensive and has the most environmental impacts," Krevat said.

UCSD's Washom said it's important for San Diego to win the smart grid grant because it not only could mean jobs and innovation, but also a lower cost of service to ratepayers.

Stillings, of the California Center for Sustainable Energies, is a big proponent of smart grids.

"Really, it's simply the application of computer technology to the electric system," she said. "With meters you can take advantage of two-way communication, which you don't have with an average meter."

Stillings said smart meters can help reduce energy usage by making it cost more to use at peak times.

"It (differential rates) can work," she said. "Look what happened to gasoline consumption when gas was $5 a gallon."

Stillings said smart grids are an opportunity to make significant increases in the efficiencies in how homes or businesses are run.

"It's not the answer to everything," she said. "It's one more (piece) in the portfolio of things that we need to do to help make us a more sustainable planet, community and home."

UCSD is establishing its own smart-grid system on campus. The school has started a $72 million energy efficiency retrofit program. It plans to install a variety of renewable generation systems that will supply 80 percent of its needs.

Washom thinks once a large municipality implements a smart grid, the technology will take off.

"I think just one successful demonstration of a smart grid will lead to a loud and nationwide call for such a system to be implemented in their area," he said.

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