Challenges in Smart Grid Supply-Chain Management

Electric power systems are an important foundation of modern civilization, but they present major sustainability challenges that cannot easily be addressed with traditional hierarchical control structures and fixed-rate pricing.  Existing electricity grids currently deal with peak demand, balancing, and reserve capacity using utility-scale resources. By definition, the bulk of these resources are unused most of the time. The need for these resources depends on the accuracy of demand forecasts. Increasing penetration of variable-output renewable sources (solar and wind, for example) cannot directly replace base-load capacity without increasing the need for reserve capacity. Variable-output supplies also complicate the forecasting problem, which in turn increases the need for balancing resources. Dynamic pricing and demand-management schemes can further complicate the forecasting problem. Large numbers of plug-in electric vehicles have the potential to make the peak demands much worse. On the other hand, electric vehicles and various thermal storage systems from cold-storage warehouses to domestic water heaters have the potential to be managed as balancing and peaking (or peak-reduction) resources. Researchers are just beginning to understand the potential value of electric vehicle batteries and thermal storage resources as replacements for utility-scale reserves and storage resources. This talk will survey a number of interesting research questions in the areas of customer involvement and market-based approaches to solving these important problems.