[Part one, two, three.]

During this series, I've had one refrain: in comparing the electricity grid to the water distribution system, I've said that there is no reservoir. What that means is: in the water distribution system, water is stored in reservoirs and lakes. When it rains, these fill up. When you turn on the faucet or the shower, they drain out. Because there is storage capacity, you don't need to have your faucet or shower turned at the exact moment that it is raining.

In the electric grid, there is no reservoir. When you turn on your electrical device, somebody, somewhere, has to provide power at that exact moment. When you turn your device off, somebody turns off the supply. That's a simple concept, but doesn't address the underlying question: why isn't there a reservoir? Haven't utility companies ever heard of a battery?

Of course they have. They've heard of your batteries, and they've heard of things you never even thought of, like ice storage and gravity storage. There are all kinds of ways to build the electricity reservoir that could reduce the need for the less-clean burning peaking generators. So why hasn't it happened?

Two reasons. The first is that this reservoir isn't like a lake reservoir. There would not be a central location where all the electricity was stored. Instead, there would be hundreds or thousands of smaller locations where electricity was stored. And each storage location would pose the same problem to regulators that distributed generation like solar power poses. Basically, storage devices would be a load on the grid at times when they were charging, and a supply to the grid when they discharged. And this charging and discharging would still need to be managed with the same limited information that loads and supplies are managed now.

The second reason is that, in many places, there is no incentive to build a reservoir. Think of the storage device not as a reservoir, but as a power generation asset. Like any generation asset, you are converting fuel into electricity. You make money by selling the electricity for more than you purchased your fuel. Except with a storage device, the fuel IS electricity. How are you supposed to make money that way? The only way is if the electricity you purchase costs less than the electricity you sell.

This is possible today in some places. Because supply and demand changes throughout the day, wholesale electricity rates can vary throughout the day as well. Purchasing a unit of electricity during the afternoon costs more than purchasing it at night. Depending on where you live, your agreement with your utility company might be structured like this. You may pay a different rate on-peak and off-peak, or a different rate on weekends, or any combination. But in Texas, at least, this is not the way it works. The retail customer (that's you in your house) pays a single rate to their utility company. The utility company is then either making their own power, or purchasing power from an independent power producer at wholesale prices. And these wholesale prices are what vary over the course of a day.

But this information does not make it all the way down to the end user. And remember, the smart grid is all about the data. If end users were able to make money through the difference in on-peak and off-peak costs by buying cheap electricity, holding onto it, and then selling it when the cost was higher, then the grid would have its reservoir.

Imagine this. You are home from work for the day with your electric vehicle plugged in in the garage. You've programmed your smart meter to charge the vehicle when electricity is cheap, and then discharge the vehicle back into the grid when electricity gets expensive. Your car battery has become the reservoir, and you make money while it sits there.  The demand for dirty-burning peaking generation is reduced and the cost of electricity drops. Smart grid technology makes this possible.