Conservation Voltage Reduction: Dominion’s “Fifth Fuel”

Todd Headlee, director of Dominion Voltage Inc., shows off the in-house electric circuit the company uses to model upgrades to its conservation voltage reduction system.

Todd Headlee, director of Dominion Voltage Inc., shows off the in-house electric circuit the company uses to model upgrades to its conservation voltage reduction system.

  • Dominion Voltage Inc.’s Conservation Voltage Reduction (CVR) system has the potential to cut U.S. electricity consumption 2-4% for relatively little cost.
  • The EDGE technology eases integration of small-scale solar and wind energy sources into the electric distribution network.
  • Dominion expects the market for EDGE to take off as electric utilities invest heavily in grid modernization over the next decade.

Nine years ago the Commonwealth of Virginia produced a state energy plan that included among its objectives the cutting of electricity usage by 10% over ten years. That directive landed on the desk of Phil Powell, planning director for Dominion Virginia Power, Virginia’s largest electric utility.

After surveying a host of energy efficiency strategies, Powell focused on one called Conservation Voltage Reduction (CVR). The idea behind CVR is to save energy by reducing the voltage on electric lines.

Electric companies must maintain their tap lines between 114 volts and 126 volts. Keeping within the low side of that range saves electricity, but power companies err on the side of caution. Voltage varies by distance from the sub-station and local fluctuations in the electric load; dropping below 114 volts can cause damage to machines, appliances and other devices. If it were possible to measure voltage on the grid with greater precision, Powell knew, Dominion could eke out a meaningful reduction in electricity consumption.

Electric companies had experimented with conservation voltage reduction, but they relied upon guesswork that made them reluctant to reduce voltage aggressively. As it happened, Powell also was involved in a Dominion pilot project to deploy smart meters that could provide the very voltage information he needed. “I was looking at CVR and smart meters at the same time,” he says, “and I began thinking about how to use them together.”

Powell assembled an ad hoc group to noodle the problem. Working on their own time, they tested their solution on an electric circuit where all the houses were equipped with smart meters. One of those houses, not entirely coincidentally, was Powell’s. From his home, he monitored the neighborhood voltage as people turned their HVAC, lights, TVs, dishwashers and dryers on and off. The technology worked like a charm. Not only did it conserve electricity, but Powell discovered that the system could give a heads-up when customers encountered voltage-related issues. The company could dispatch a crew to fix the problem almost before customers knew they had it.

Powell’s tinkering formed the basis of supervisory control and data acquisition product, EDGE, which Dominion hopes will help propel the electric grid into the 21st century. The company sees two vital applications. First, EDGE has the potential to shave electricity consumption by 2% to 4% globally if deployed across utilities’ entire service territories — equivalent to the output of dozens of utility-scale power plants. “This is a great environmental service to the world,” says Todd Headlee, executive director at Dominion Voltage Inc. (DVI), the non-regulated enterprise created to commercialize the product.

Second, the technology makes it easier to integrate rooftop solar into the distribution grid on a large scale. As a rule of thumb, a local distribution circuit cannot accommodate more than 20% solar capacity, due to rapidly changes in output, Headlee says. “With our product, we hope a circuit can get up to 80% capacity,”

DVI is doing business in Hawaii, California and other states where there are energy efficiency mandates and solar power is taking off.  The company also is pursuing business in Canada, Europe and Asia. where many of its patents have been approved.

Major regulatory barriers exist in many states, but the potential energy savings are so massive that Headlee is confident that conservation voltage reduction will take off. “Ten years from now,” he predicts, “every utility will be doing CVR, either with our technology or a competitor’ because the benefits are too big to ignore.”

* * *

The Central Lincoln People’s Utility District delivers electricity to about 48,000 customers on the Oregon coast. A beneficiary of the Obama stimulus package in 2009, the municipally operated power company received a $9.8 million grant to install smart metering systems for its customers. Shortly thereafter, engineering manager Bruce J. Lovelin arranged to install DVI technology to help conserve voltage for 1,400 customers.

“For a utility, it’s the holy grail to understand what’s happening at the meter,” Lovelin says. “EDGE allowed us to provide good quality voltage.”

Customers saw a 2% reduction in electricity consumption across the board. The beauty of the investment is that it delivered a savings to all customers, not just those who could afford to spend money installing LED lights or energy-efficient appliances. “This doesn’t distinguish between renters, owners, seniors or whomever,” says Lovelin.

The marginal cost of running the software amounted to about one cent per kilowatt hour — a fraction of the 3.5 cents per kilowatt hour it costs Central Lincoln to purchase power from the Bonneville Power Administration’s hydro-electric dams. It’s an even smaller percentage of what it costs most utilities to generate power.

“This type of energy efficiency is very, very cost effective,” says Lovelin. “That 2% number is derived from just one substation. I’m confident that we’ll do even better. It works so well, we’re in the process of deploying it to all of our customers.”

* * *

Headlee moved to Richmond from Minnesota four years ago, where he had built and sold a company in the smart-meter industry, and then launched and sold an energy-storage enterprise. Dominion recruited him to run DVI.

“What really attracted me to this — I had never seen anything like it — was the impact it would have on the country,” Headlee says. “There’s nothing else like it, and it’s so easy to do.”

There are other approaches to implement Conservation Voltage Reduction but, without smart meters, they require more guesswork and cannot safely aim for the lower bounds of the voltage range. “DVI is the only company that uses smart meters for CVR,” says Headlee, “and this method is patented.”

However, gaining acceptance for the product has taken years. One reason is that utilities are only beginning to deploy smart meters on a large scale. The Obama administration helped jump-start the industry with its stimulus package, and utilities have been using smart meters to automate their billing processes. But it has taken further advances in technology to reap the full benefits. Now that utilities have streamlined billing, many are thinking about how to maximize their investment by using the smart meters for CVR and solar integration.

Soon, Headlee predicts, smart meters will be ubiquitous. About half the U.S. is wired with them; by 2020, he says, the figure should be close to 100 percent.

Another issue is the structure of the electric power industry. Utilities make money by selling electric power. Promoting conservation cuts into revenue and profits.

As a non-profit “peoples’ utility,” it was easier for Central Lincoln to justify the acquiring EDGE because it purchased all of its electricity from the outside. If the company sold electricity, it just purchased less from Bonneville. It also didn’t have a public service commission to answer to.

But the investor-owned utilities that account for most electricity sales are rewarded for selling more juice and generating a return on investment on the capital invested to supply it. Only 14 states have “decoupled” their rate structures, meaning their profits are disassociated from its electricity sales. Instead, regulators adjust rates so utilities generate no more nor less revenue than required to cover costs and a fair rate of return.

(Virginia rates are not decoupled, but Dominion has deployed Conservation Voltage Reduction anyway to conserve electricity for the 300,000 or so customers who have smart meters.)

Early adopters are states that are resolutely pushing solar power, Hawaii foremost among them. Electricity, generated primarily by oil-burning plants, is the most expensive in the country. The state has set a goal of moving to 100% renewable energy sources by 2030. But the islands have their own tiny electric grids, which means they can’t dish off power to one another when winds die down or clouds float over. For a time, Hawaii had to stop accepting any new solar generation because local grids were getting too unstable.

Hawaii first incorporated EDGE into its grid to conserve energy. Soon thereafter it soon realized that the voltage-control system, which reported accurate, real-time data and provided control over voltage regulators, capacitor banks, and load tap changers in its distribution lines, could adapt to wide fluctuations in electricity output.

California’s predicament is not as dire as Hawaii’s, but it has been bumping up against the limits of solar capacity. Arizona is another promising market. Meanwhile, DVI is exploring other potential applications, such as controlling voltage at the building level. Here in Virginia, the company has installed EDGE for testing purposes in Fort Myer in Alexandria and Virginia Commonwealth University in Richmond.

“Investments in grid modernization will be significant in the next decade and the electric power industry is focusing more than ever on conservation,” says Headlee. “Energy efficiency can change the world. It’s the fifth fuel.”