July/August 2011
Cover Story

Smart Grid for industrial disciplines

Unraveling Smart Grid concepts and buzzwords

Fast Forward

  • Learning Smart Grid buzzwords is the first step in understanding the topic.
  • Monitoring electrical energy in production is essential to take advantage of the Smart Grid.
  • The goals of the Smart Grid are analogous to production load balancing in a plant.
By Barry Contrael

coverstory01Smart Grid is certainly a new buzzword in industrial circles. As with every previous initiative good and bad, it requires a bit of education to get to the point where you understand how you can implement it in a way that does more than go through the motions and creates immediate and sustainable improvement.

With Smart Grid, you hear terms like Smart Generation, Smart Storage, Cyber Security, Smart Distribution, Smart Consumption, Demand Response, Alternative Energy Sources, Meter Data Management, and Micro Grids. In industry, we tend to speak in terms like, Capital Equipment, Inventory, Labor Efficiency, Lean Manufacturing, Takt Time, Overtime Premium, Bottlenecks.

It is confusing. When I became involved in my first supervisory control and data acquisition (SCADA) applications, I was also confused and scared to death of the secret technology. After a short time, I remember telling one of my high-school buddies who was a computer programmer that it was not as complicated and magical as I had thought. I remember him saying: "Now that you are on the inside, you can't tell anyone."

Let me take some time to remove your fear of Smart Grid and bring you to the inside.

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Line balancing and Takt time

For the readers that have assembly lines, you certainly practice line balancing. You don't allow one station of the line to have 3-4 times the load of the other stations. When you find this, you move load from one station to another. I would equate each station to an hour in the utilities day.

You probably also have variability in the standard hours by product line. When you have non standard operations, you take them offline or add temporary capacity to that workstation. Similarly, the utility can either fire up expensive peaker plants or shed the load to another period. The challenge for them is they need you to cooperate if they want to shed load.

Some of the manufacturing people reading this will recall Eli Goldratt's first book The Goal. One of his messages was improvement of $1 in a bottleneck was worth tens or hundreds of dollars of value through the entire system. We now realize the entire system for our energy delivery encompasses Generation and Consumption. If you try to sub-optimize one or the other, you do not get the synergy that is Smart Grid. The utility can not get access to the entire system benefits without your participation. They now have to make some of those hundreds of dollars of benefit value available to you if they are to get the balance of the benefit for themselves. This is a big enough issue for our country that the government is putting some of the up-front cash in place to "stimulate" action and "incentivize" good behavior. This is a huge change. We industrials no longer have to think of the return on investment (ROI) of just saving the cost of a generic kilowatt-hour (kWh) of electricity. We are the big industrial users. If we are willing to change our behavior, we can get our hands on that money.

Where do I start?

We could be flying blind. I can tell that my ovens, induction furnaces, die casters, paint lines, and welders are probably the big electric users, but exactly how much is at best a calculated guess from the nameplate data? I have little information on utilization or duty cycle. No information on seasonal consumption changes and the impact from ambient variables.

Can't manage what you can't measure

We are going to be spending money, right? If I want to do this more than once, I will need to be able to prove I had ROI. Most industrial users will have a hard time seeing their daily gross electrical usage let alone usage by bay, process, or machine. And how will we create that critical pareto chart of usage to determine the largest opportunity for return if there is no discrete data.

Electrical power monitoring systems

The first step is to install a proper electrical power monitoring system (EPMS). Industrial users must be sure to include power quality not just energy monitoring. Power quality monitoring will allow you to assess the information to manage your power factor, as well as wasted harmonic distortion and transient spikes that can kill sensitive microprocessors in your automation equipment. Your electric bill will most likely include charges for power factor, kilo volt-amps not just kWh usage. The EPMS software, metering, monitoring, and control hardware will provide the needed load profiles, trending, and historical data needed to execute energy management.

Eliminating waste

Do not throw good capital money to waste. You may be surprised where some of the largest energy is used and wasted. You should not invest in renewable energy to generate or cogenerate power that is ultimately not value add. It is still financially much better to eliminate this usage than to automate the shedding for demand response rewards. One of the most fruitful endeavors is to drive your idle usage as low as humanly possible. This usually involves some lighting control, some motion sensors, and many small simple projects to interlock things like ventilation fans and idling motors to the equipment or processes that they serve. The EPMS will track your progress and calculate the savings.

Continuous improvement, changes in behavior

Now we have the right basis for my industrial engineers to think about true change in factory behavior. I can also stop thinking about my energy cost as a fixed or uncontrollable cost. It is variable and can be managed that way. I already understand my core competency in production. I can now correlate my electrical usage to activity. I can apply an analytical approach to decisions to build temporary inventory buffers during non-peak times on energy hogs so they can be used the next day during peak production. I can evaluate the cycling of ovens and other equipment to temporarily reduce loads while maintaining specification during demand response opportunities. I can automate and employ cogeneration when called upon, or I can choose to install solar that inherently generates when the sun is out, which coincidentally is peak time.

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Some process industries have energy costs that can be 20% of the total direct cost. They also have product variants that can have significantly different energy usage contents depending on variables like viscosity or heat of transformation. Several of these companies are now varying their production schedule and inventory trigger points to allow for production of the energy hogs only when real-time pricing is optimal and never during a demand response event.

Sustainable change

Now that we understand what Smart Grid is and how we can capitalize on the new opportunity, let's talk about sustainability. Not in the green sense but in how to make the improvements lasting. Energy management is not the core competency of most industrial users. Initiatives in non-core competencies are prone to fail in the long term through apathy, changes in personnel, assignments, and attrition. How do you maximize non-core competencies in your normal business? You standardize, automate, or farm it out to an expert in this area. Smart Grid is no different, although since energy usage is a live, real-time part of your activity bases, it has to be automated before outside firms can manage for you and help you maximize the benefit.

Lighting control, automated peak load shedding, active power factor correction, cogeneration, waste heat recovery, solar PV generation-these are automation technologies that can be engineered, installed, and managed without ongoing manual intervention within your own micro grid.

Other improvements can involve trend analysis and the need for outside data in order to maximize results.

Off-site energy monitoring, load profile analysis, power quality alarming, predictive HVAC maintenance, energy project audits and execution, building automation systems, imbedded engineers, and demand response services are a few of the ways professional companies are providing the expert assistance needed.

WIN/WIN is pleasant surprise

You may be surprised to find out your utility account manager is ready and eager to help you succeed. He or she is probably well-armed to offer you a selection of billing and real-time pricing programs best fitted to reward your willingness to change your behavior. Yes, he will often be happy to help you use less of his product especially in peak periods. The utilities have certain goals and mandates they need to meet. It may be avoiding the usage of peaker plants, avoiding buying energy at a premium from neighboring generation, carbon footprint goals, mandates that a certain percent of their production must come from renewable by year 2015. Guess what, just like a penny saved is a penny earned, the government will count a kWh curtailed the same as one generated from renewable sources. It may be as simple as they are managing the incentive program with aggressive participation goals.

For help or just education, I recommend you get in contact with your account manager near the beginning of your search. For one of my customers, it was from this exchange that they learned that stiff power factor surcharges were coming in the following year.

Real-life challenge

Do you remember the EPMS we installed in step one to gain transparency? It becomes a key part of the solutions as well.

A large Northeastern electric user was faced with a yearly electrical bill of approximately $10.5 million and was looking for ways to reduce this cost. Their peak demand usage was 14 megawatts (MW).

The campus has a 4-MW cogeneration system that generates electricity during the colder months to make steam, but they wanted to save on their electrical utility bills throughout the year, so they approached the local utility for ideas. The utilities management company suggested a demand response program. This program will save them 2 to 3 cents per kWh by having a system that could shed load from the utility and utilize the onsite generated power within 30 minutes of a phone call from the utility.

Siemens Access Energy Management engineers worked with facility engineers and consultants to define what the existing EPMS system could do to help them with the solution. The solution was to install new closed transfer switches and some additional generator sets. The new and existing generator sets and transfer switches would be tied to the EPMS system for manual control of the utility to on-site generation. There was also a need to send generated KW, data to the existing Building Automation System (BAS), via staged dry contact closures at 25%, 50%, 75%, and 90% loading to shed load in various buildings to reduce HVAC loads during peak summer and winter months. The BAS to EPMS link was also setup with e-mail alarming if any communications were lost to the electrical generator panel. If the system failed or lost communications, the generator system would fail in "safe mode."

The existing EPMS system was designed to not only monitor the entire campuses energy usage, but now provide the means to manually initiate the source change from the utility to on-site generation once a signal was received from the utility to shed load. Calculated results show that savings are resulting in a 2.0 year payback for the project, making the management very pleased.


The secret to execution is to use the strongest resources you have for planning and execution. The core competency for success is known to you and employed every day within manufacturing and process optimization. Take advantage of the resources offered by your utility, and utilize the growing number of professional companies offering products and processes to get off to an aggressive start. Let this be owned by the same people that have to answer for the production impact of the changed behavior and hold them accountable for the overall gain in effectiveness. Smart Grid lean resource utilization is within your reach.


Barry Contrael leads the Building Technologies (BT) Low Voltage Electronics segment of Siemens Industry. In this position, Contrael is responsible not only for the financial, operational, and competitive success of Siemens Industry Sector's power management and electronic circuit protection products but also for emerging technology products and solutions for Smart Grid, electric vehicles, and energy management.