Smart Grid 101: The Barriers to a Smart Grid

Despite the many forces pushing the world towards grid modernization, barriers remain.

Costs. Although it typically pays for itself in a few years, grid modernization certainly costs more than doing nothing at all. Many developed nations are struggling to pay for renewal of all of their major infrastructure, whether roads, bridges, airports, water systems or grids. Many developing nations have financial challenges. And virtually all nations were severely hampered by the global recession that came to a head in 2008.

Regulatory Barriers. Many parts of the world regulate electric power through policies originally developed during the Great Depression of the 1930s. Although appropriate for those times, many of those regulations are now outmoded. Unlike the airline and phone industries, electric power has not deregulated in a consistent way, which has limited competition and stifled innovation.

What’s worse, Europe and the United States are both patchworks of inconsistent regulatory policy. In the U.S., each state and territory has its own public utility commission that sets rates and policies, creating enormous variation from region to region. Utilities whose territories go across jurisdictional boundaries often have to gain rate approvals from multiple utility commissions and regulatory bodies. And to do so, they often have to adopt completely different rate approaches and program structures, which can slow projects by months or even years.

Lack of Open Standards. The Internet could not have arisen without HTML, Internet Protocol and other open standards. Likewise, the Smart Grid needs consistent standards worldwide. Many of those standards are in development now in various places around the world. Completing them, stabilizing them and normalizing them planet-wide is a process that will take years of additional development, testing and negotiation.

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