New York City’s power grid is an original, from Thomas Edison’s first-ever direct current generating station at Pearl Street Station in 1882 to the always-on power that keeps Wall Street’s microsecond cyber-trading flowing without fail.

But the city’s grid can’t handle much more. About 86 percent of its 130,000 miles of wires are underground, crowded into conduits stuffed with all the other cables that have been installed through the decades. Hometown utility Consolidated Edison is spending $1.2 billion in 2012 to upgrade its grid (PDF), including $928 million on distribution and $208 million on new substations. But there are still corridors and neighborhoods constrained in how much power they can draw at any one time, with underground pipes that can’t really take any more electricity.

Green Charge Networks, a Brooklyn-based utility IT consultancy founded in 2008, is working with ConEd on a project that aims to solve this problem. Funded by about $18 million out of ConEd’s total of $181 million in smart grid stimulus grants, the project places batteries at 7-Eleven stores and an Avis rent-a-car EV charging stations at La Guardia airport, amongst other sites, and ties them into a grid control platform meant to fine-tune load control to individual streets and addresses, CTO Vic Shao said.

“Energy efficiency is all well and good. But the next evolution of this is power efficiency,” Shao told me in a Wednesday interview. That’s to say that Green Charge’s system, built in partnership with ConEd’s engineering department, is meant to solve a peak power problem faced by utilities and customers alike.

That’s peak demand charges -- the penalty that ConEd customers pay when their usage exceeds a certain threshold, not in a month or a day, but at any one moment in time. Demand charges represent utilities’ attempts to build capacity costs into their pricing models, and are supposed to discourage overdrawing of power by individual customers to guard against neighborhood and system-wide limits.

But in congested areas like New York City, demand charges can add up to as much as a quarter to a half of a big commercial customer’s utility bill on a month-by-month basis, Shao said. They’re also hard to prevent -- it’s a lot harder to catch a moment’s overdraw of power, compared to looking at a month’s bill and deciding to use less power next month.

Demand charges are particularly onerous for fast-charging systems for plug-in EVs and hybrids, Shao noted. That’s because they draw a lot more power than most buildings are allowed to draw. Upgrading the utility connections to support that extra power draw can add up to $100,000 per installation, he said -- a cost that a battery and grid-tied control system might help avoid.

Green Charge’s system consists of its GreenCharge battery units, which combine lithium-ion batteries from Saft, inverters from Princeton Power for on-site grid-tied energy storage, and its own software, called GridSynergy, that links them into the utility control system.

ConEd tested the system at a handful of 7-Eleven stores this summer, and found it could reduce the store’s individual peak load from about 55 kilowatts to about 41 kilowatts over about an hour’s time, Shao said. While that adds up to a small portion of the city's overall peak demand, Saft has said that it hopes to see its ConEd project grow to a total of one megawatt of batteries, which could be enough in aggregate to make a difference.

Green Charge has also built a 100-kilowatt GreenStation unit into the Avis car rental lot at La Guardia airport, which supports 20 EV charging stations that would otherwise have required about $500,000 in utility upgrades to energize, he said. The company is looking to expand its 7-Eleven relationship by putting in car chargers in Southern California via a $1 million state grant, and has also deployed truck-mounted battery-powered chargers for stranded plug-in vehicles.

It’s an admittedly high price to pay for grid stability and reduced demand charges -- the Avis installation cost about $250,000, and each 7-Eleven car charging spot in California will cost about $130,000, Shao said. Compared to a $500,000 upgrade fee, that’s not much money -- but many customers might choose to forego the plug-in car lot entirely, rather than foot any part of that bill.

Distributed energy storage is an interesting field, though one that has a long way to go before it’s economical against grid power prices. Shao estimated that about 5 percent to 10 percent of New York’s power customers might find a Green Charge system pencils out on an economic basis.

But the grid is only getting more congested and more unstable, and batteries are only getting cheaper, he noted. Properties that are up against their demand charge limits and want to grow might find such a system worthwhile earlier than most, he added.

In the meantime, Green Charge’s GridSynergy platform, developed in conjunction with ConEd, is testing its ability to manage all these battery-load control systems into blocks of grid-responsive load, he said.

“What we’re doing in NY is to connect the monitoring of data with action, at a localized level, and with feedback,” he said. Each GreenStation unit receives its load reduction signals from the utility via a cellular connection, takes action, and reports back its power load drop to the utility in near to real time, he said.

That’s important for two reasons, he said. For one, it can help ConEd up its demand response participation, he said -- according to a 2010 ConEd report, only two-thirds of the utility's demand response customers actually turned down power use when asked to. Automating demand response, as companies like Honeywell, EnerNOC, Viridity Energy and ConEd Solutions are working on, could help bring that rate up -- particularly when they’re tapping batteries that let customers keep using power as normal.

The second benefit comes from the specificity of Green Charge’s control, down to individual addresses, Shao said. Instead of asking an entire neighborhood to shed power to keep one congested line from overloading, ConEd could turn down power at a few key locations along one feeder line while keeping the rest of the local grid untouched, for example, he said.

Beyond that, ConEd has about 40,000 transformers giving 15-minute data via its SCADA system, but the utility only looks at that data about once a year for planning purposes, he said. Pulling all that data into an integrated demand response/grid management platform could yield additional benefits, he said -- another example of a utility-led technology integration project that could find a wider smart grid audience.

In the case of New York City, tamping down growth in power demand and pinpointing congested spots for demand response could, in the end, cut down on how much new grid capacity ConEd has to build, and thus replace high hardware costs with cheaper software costs, Shao said. At what point the utility industry at large feels comfortable entrusting new software with that task, on the other hand, is an open question.

Green Charge Networks, formerly known as The Prosser Group, is currently profitable in its utility consultancy business with a handful of utility customers including ConEd, Shao said. It's also working with big energy services giants like Boeing and Eaton, he said, though he declined to discuss details other than to say the projects were related to energy.

Tags: a123, batteries, california, coned, demand response, distribution, doe, electric cars, energy efficiency, energy storage, enernoc, green charge networks, grid storage, honeywell, princeton power