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By Doug Peeples
SGN News Editor
The Smart Grid RoadShow, a traveling variety act of presentations and breakout sessions featuring utility execs, regulators and vendors, hit Portland, Oregon, last week. While the discussions and presentations touched on all things smart grid, three
solid business case, 2) that stakeholders expect too much of the smart grid too soon (as in it's over-hyped), and 3) the equally critical need to educate consumers and bring them into the fold. EV challenges and opportunities and energy efficiency also were a big part of the discussions.
Business case: Should we try to save the planet or the bottom line?
"The number one thing to moving the smart grid forward is building a really strong business case," said Stephen Wright, administrator and CEO of the Bonneville Power Administration (BPA). In differentiating between wants and needs, Wright summed it up with the comment "I do want to save the planet, but that's a want. What I need is a business needs assessment." Wright bluntly assessed the current situation with the comment that while we're making good progress on standards development, we can do better. He also remarked that his agency needs to look closely at the creditworthiness of the companies BPA does business with.
And picking up on the standards thread, CURRENT Group CEO Tom Casey had his own take as it relates to a business case. He's against government-led standards initiatives, he said, because the National Institute of Science and Technology (NIST) standards development process involves vendors arguing over standards that will affect them — which is, he said — not a pure process. "Standards are going to evolve because utilities will insist on it," Casey said. He also commented that utilities generally are reluctant to dive into the smart grid pool because they don't want to buy equipment that won't be interoperable with equipment they may choose to buy later.
The business case issue, according to RoadShow participants and others, is pretty simple. How can we expect a utility that's providing needed services, but not growing, to take the leap of faith required to indulge in smart grid initiatives when ROI is uncertain?
Smart grid over-hyped? Do we expect too much too soon?
That's a resounding 'yes' from the RoadShow participants. Rick LeFaivre of OVP Venture Partners said that from an investment prospective, we'll be seeing new business models over the next 20 to 30 years. He described the path to a mature smart grid as an evolution, not a matter of following a blueprint. As he put it, the smart grid is now in the conceptualization phase and has a long stretch to go before it reaches a validation phase and, finally, a maturation phase. And there will be casualties along the way. CURRENT Group's Casey commented "Anything with a 20-year conceptualization phase is going to see a lot of dead companies." And the timeline will be further hampered by the time lag between the creation of innovations and their implementation. BPA's Wright described the smart grid as "pieces building through time," and that utilities will decide where the next big investments will be. Successes and failures will help regulators and utilities find the way.
Mike Davis, associate laboratory director for the Energy and Environment Directorate at Pacific Northwest National Laboratory (PNNL), offered a different take on why getting to a mature smart grid isn't going to be a walk in the park. Those who appreciate the potential for the smart grid want it to do, well, everything: cut carbon emissions, integrate renewables, support light-duty transportation, supply and demand and more. Davis said he's hoping for more durable, consistent policies as well as new business models and new human capital to overcome challenges and meet expectations.
The bottom line(s) from the discussions? The smart grid is going to take a lot longer to build than we think; the government doesn't have nearly enough money to pay for the envisioned new electricity infrastructure which means private sources will have to pick up the tab; and under any circumstances, it won't be easy.
What does it all mean for consumers, and how do you explain it to them?
Bruce Carpenter, VP for Distribution Services for Oregon's Portland General Electric, framed the issue of consumer education about as plainly as you possibly can. "Customers won't change behavior if they don't know why they should." He described customer education as a component of rapid market penetration as immature at best. Federal Energy Commission (FERC) Chairman Jon Wellinghoff summed the issue up equally succinctly, referring specifically to some of the smart grid's customer-oriented components like energy efficiency and demand response. "We need to do this in ways that are effortless for consumers. Make it painless and save them money and they'll do it." Other discussions focused on the need to educate consumers on the almost limitless variety of home energy management products and technologies packing the market, and the best ways to find out what they want in terms of pricing schedules like time of use and peak pricing.
A fairly intense two-day smart grid conference covers a lot of ground, much more than we can cover here. For instance, BPA's Wright said he expects 85% of anticipated load growth to be met with energy efficiency measures. And how EVs figure into the smart grid are still a hot topic for debate: are they just cars or can they also be appliances for storage and load management?
We've come a long way, but in terms of the smart grid's evolution it appears we're just getting started.
You might also be interested in…
Video replay: Making the business case for smart meters
How to make consumers sit up and beg for a smart grid
Societal and environmental benefits in the smart meter and smart grid business case
Video: Demystifying and de-jargoning the smart grid
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