Why America's power grid is weathering the heat wave

As temperatures soared across America, power grid operators and utilities called on all their energy sources – from jet-engine-powered natural-gas turbines to coal-burning behemoths to glowing nuclear reactors – to meet the electricity demand.

Right now, the massive mechanical equipment is doing its job well, with only pockets of energy distress during the heat wave.

Why are things going so smoothly?

A lot of it has to do with a weak economy that has left plenty of backup power available. The rapid growth of energy-efficiency measures is also responsible, as well as something called demand response – when commercial and industrial electricity users are throttled back by the use of computer-controlled switches and the Internet.

"We have definitely seen an impact from increased energy efficiency and demand-response efforts," says Mark Lauby, vice president of reliability assessment and performance analysis for the North American Electric Reliability Corp. (NERC), an organization tasked with ensuring that the nation's power grid keeps running. "It's giving us more margin, more resources."

The recession had an impact on energy demand, as businesses closed or cut back operations. Nationwide, energy demand fell about four percentage points in 2009, before rebounding slightly in 2010. The net result has been a chunk of generating-capacity padding.

In Wisconsin, for example, the recession led to factory closings that chopped power demand from a 2006 peak. Yet this year, We Energies – a utility near Madison – completed new plants that were built in response to power shortages experienced during heat waves of the late 1990s, according to the Milwaukee Journal Sentinel. Result: plenty of capacity and few problems meeting power demand in Wisconsin.

"We're actually seeing some of these regions hitting records in power demand now despite the impact that recession had," says Mike Wilczek, senior markets editor for Platts, an energy reporting company. "But if you erased the recession – and had the same increase in electricity-demand growth – the load from this heat would be far higher."

A heaping helping of energy efficiency is also making things run smoothly. At least 26 states have set mandatory energy-saving targets for their utilities, says the American Council for an Energy-Efficient Economy (ACEEE).

Nine states with programs just kicking in slashed their energy use by 1 percent last year alone, while California and Vermont, longtime leaders in the field, last year saved 10 percent of the energy they each would have otherwise used.

Average savings among states with significant programs is about 2 percent annually. That savings means not having to build scores of power plants, says Steven Nadel, ACEEE's executive director.

"Utilities have definitely been ramping up energy-efficiency programs in recent years – and it's beginning to have a big impact," he says. "California and Vermont are really reaping the benefits now. But the other states are coming on strong."

There's also a new kid on the efficiency block: demand response. Though the concept has been around since the days of Thomas Edison, it's only been in recent years that computer-controlled switches, married to the Internet, have enabled the real-time throttling back of electricity users such as grocery stories, shopping malls, and manufacturing plants.

For instance, in the control center of EnerNOC, a demand-response firm based in Boston, operators send signals over the Internet to dim the lights slightly and raise the thermostat settings at scores of grocery stories. Those stores get paid for the amount of power they don't use.

It’s the same thing with manufacturing plants that have contracted with EnerNOC. The company may not need a certain process, so EnerNOC turns off that process – paying the company for not using that power. But overall, the company can keep its manufacturing line going.

This process, which can be used on brutally hot days like ones this past week, involves the sale of "nega-watts" to lessen the power load. A nega-watt is basically reducing power demand by one megawatt on request.

"We have 6,300 nega-watts we can pull off the grid – most of that in the US," says Gregg Dixon, senior vice president of marketing for EnerNOC. "That's equal to the amount of power used by 6 million homes – or if you think about it another way, it's like having the single largest power plant in the world."

Utilities are now eagerly integrating demand response into their game plans to moderate power demand on sweltering days. Efficiency, by contrast, provides a basically continuous savings in power use. Together, they are having an effect on grid reliability, Mr. Lauby says.

"Demand response and efficiency will have a greater impact going forward," he says. "There may be a few parts of the country where it doesn't make sense or that may be sparsely populated. But in California, the Northeast and Northwest and Midwest, there's still a lot of potential."

So far, efficiency gains and demand response together have shaved about 40,000 megawatts off of the peak demand that might otherwise be expected 10 years from now, Lauby says. Put another way, "it means you don't have to build as many power plants" to meet that peak demand, he says.

How many plants? A large nuclear plant, for example, may have 1,000 megawatts of capacity. So the savings is equal to about 40 nuclear plants – or about 80 to 100 large natural-gas-fired turbine power plants, Lauby says.