Will the Smart Grid Be Stable: Approaches for Supply-Demand Imbalances

Electric utilities have been reluctant to embrace realtime pricing and the integration of renewables because both demand and supply will become uncertain. We quantify these risks as a function of solar/renewable penetration, and provide engineering analysis here to show it is possible to preserve the difference between supply and demand at levels manageable with current grid equipment and within the current deregulated market structure in the USA. First, we show how simple futures contracts and real-time energy management can motivate widespread acceptance of real-time pricing (RTP). Our illustrative calculations use data from a large commercial facility in New York. In the other parts of our analysis, we show how spatially distributed supplies of solar energy connected to the grid reduce unpredictability of power production. We also show a natural stabilizing effect - the correlation between local solar production and local consumption of air-conditioners.