Smart Grid Futures: Why Failing to Create a Shared Long-Term Vision Is Already Costing Us
May 25, 2010
In my keynotes recently, I've been asking audiences to give more attention to the long-term future of the Smart Grid. I strongly believe we need to craft a shared vision of the world we want to create. Our failure to paint a clear picture is costing us time, money, and support.
If I had to choose one phrase to describe that future, I would say "end-to-end network." The grid of 2030 will be a machine-to-machine (M2M) world, extending from generation to transmission to distribution and all the way down to the devices in homes, offices and factories.
To what purpose are we building out an end-to-end network? That's the important question that we are failing to address. We are not spending enough time to envision the game-changing applications we could build on top of a transformed infrastructure. Because of this lack of imagination, we are undoubtedly:
·Making mistakes in our first-generation Smart Grid architecture through our failure to understand our final destination. As Yogi Berra said “If you don't know where you're going, chances are you will end up somewhere else.”
·Leaving money on the table in terms of new applications and new businesses we could be building right now. Imagine if Apple had come out with the iPhone, but it never bothered to create a platform on which others could innovate.
·Failing to inspire the support we need from regulators, ratepayers and policymakers. On those rare occasions we even bother to tell them why they should care about the Smart Grid, we wave around a lot of sticks (fear of blackouts, emissions, higher rates) but offer few carrots (wonderful new applications, lifestyle benefits, energy security).
Perhaps we can learn to do a better job of imagining and then articulating a compelling future if we study good examples. One idea would be to visit Silicon Valley. Camp yourself in one of the hot-spot cafes or visit one of the cleantech events which take place every month or so. I typically hear more exciting Smart Grid ideas in a day in Silicon Valley than in a month visiting other venues. The Valley crowd combines imagination with a real sense of urgency.
Other examples:
Masdar City has to be the planet’s most thorough and comprehensive vision of a new energy future. Not surprisingly, smart infrastructure is at the very heart, including Smart Grid, smart transport, smart generation, complete connectivity and much more.
Duke Energy’s Envision Center, which I recently toured, is the best thing I've seen so far in the U.S. Yet even this admirable example (pictured below) only looks about five years ahead.
Microsoft's Home of the Future makes only a few token nods towards home energy management, but at least it stretches the imagination and creates a sense of the world we could move into.
I’ve also seen encouraging signs at Centerpoint Energy and Austin Energy, both in Texas. In Malta’s Smart Island initiative. And in Amsterdam’s Smart City project, which I am scheduled to see in person shortly.
We can’t compel policymakers and the public to support the Smart Grid. But we can impel them toward it by painting a picture of a future in which the Smart Grid enables a world of cleaner, cheaper, greener power plus a world of exciting new energy applications with lifestyle benefits.
In part two of this series, I'll be back to suggest a few of the ultra-cool applications we might build on top of that future grid. For now I’d like to hear your thoughts on this futures thing.Use the Talk Back form below to tell us what we should be putting in our long-term vision of the Smart Grid.
Because There is a Lack of an Effective Architecture
Hi Jesse,
That is a very sharp question to try to get everyone on the same page. This is my first response:
The highest leverage of a holistic and emergent Smart Power Service (avoiding Smart Grid on purpose) comes from an effective power industry architecture that may not be a shot, but a transitioning architecture.
Architecting evidence on the urgent need to simplify the power industry is based on the serious flaws of an ineffective and highly complex system-of-systems interoperability approach that keeps in place anticompetitive “Walled Gardens.” Unless there are smart markets with efficient and effective pricing, together with real customer choice, customers will not be able to be empowered with innovative technologies to be smart. Retailers will participate in retail and wholesale markets, developing business models to help balance the resources of the supply side and the demand side as much as it is viable, feasible, and desirable. Competitors do not need to wait for a homogeneous infrastructure to be in place. As the demand side risk management tool, demand response is here to stay. The killer application on the residential retail market will emerge as a one stop integrated service.
The above paragraph is the summary of the EWPC article "Power Industry State of the Art that Emerged from The Network Grid (TNG) Conference" which can be read at the link http://bit.ly/bqg4Jr
José Antonio Vanderhorst-Silverio, Ph.D. - 05/26/2010 - 06:29
Essential to An Independent, Clean Energy Futu
Jesse -
Smart grid, done right, is the necessary infrastructure to achieve an energy independent, clean energy future. Would consumers be more excited about smart grid deployment if they knew that this was the infrastructure that gave them access to 75 cent per gallon gasoline (EPRI/NRDC PHEV report) and could help cut our addiction to foreign oil (or dirty domestic oil, for that matter)? Would PUC's be more accepting of smart-grid related capital costs if it were more clearly understood that robust demand side resources (EE, DG, DR, Storage) enabled by smart grid deployment, are critical to cost-effective deployment of grid scale renewables, as recent NREL reports suggest? Would low income communities be less suspicious of smart grid deployment, if it could be shown that the efficiency and demand response the technology facilitates is key to eliminating the old, inefficient, and polluting peaking plants that are located in and near their communities? Would utilities run into less public blow back on snart grid deployment if their public relations plans were underpinned by clearly articulated design criteria and metrics for measuring their achievement? No one likes paying for technology that has no apparent purpose or value, but there is ample evidence that consumers of all stripes will gladly pay more for things that add value to their lives. Framing smart grid in terms of increasing energy independence and reducing pollution is a start.
Mark S. Brownstein, Environmental Defense Fund - 05/26/2010 - 07:25
Smart Grid needs to Energize Utilties and Engineers
I listened to a speech last week where it was pointed out that the greatest engineering achievement of the last century was the Power Grid. The speech was made by an individual from the White House Staff. As he was speaking, I kept thinking, did we forget who built it? It was the utilities and their engineers working in concert with the vendor community.
What is missing from the smart grid effort today is that the IOU's have no incentive to build it, and they have limited numbers of engineering resources assigned to the task of designing and building it.
A simple incentive could be enacted that would cost nothing. The distribution grid could be operated at improved efficiencies of from 1% to 5% improvement. This will require more than compensation control. It can be done with existing technology that can focus resources on projects that will reduce losses and enable efficient operation for most of the 8760 hours of the year. It will require the implementation of detailed network modeling tools used by engineers to analyze the grid for design, operation and maintenance. The savings from these improvements are in the billions of dollars annually. The costs are already baked into the rates. Shift policy to allow the IOU's to keep some or all of the savings, but have them reinvest what they save in renewable generation that they own and operate. One thing utilities do really well is maintain and operate assets. Sometimes it comes back to haunt us, as our facilities are useful long after their economic life passes. Instead of only sticks, let's give the utilities some carrots. We might be surprised by what they can do, and actually get a smart grid out of it.
When the investor owned utilities were building the greatest engineering achievement of the 20th Century, they were run by engineers and they were factories for producing engineering talent. As we move forward with building the smart grid, we need to consider who will be the designers, builders and stewards of the smart grid. I am a free market guy, but we need policy to focus our efforts. What is missing in the policy is incentives for the IOU's to get into the game; and, as a result the engineering talent that is needed to build the grid is not there working on it.
John Federowicz - 05/26/2010 - 10:24
Shared long-term vision
Instead of grandiose visions and plans, why not accomplish the simple things first? In most cases, the power company still does not know if your power is out unless you make a phone call. It can spend days looking for a downed line in a rural area.
The power companies provided some of the first chinks in the Ma Bell armor when they were allowed to set up their own communications systems on their rights-of-way. Then many put in broadband about a decade ago, hoping to capitalize on the wholesale broadband market... which collapsed due to oversupply and Enron's shenanigans.
But they still don't have the grid lit up so that they can tell when their equipment malfunctions or gets knocked out in a storm. Doing this does not require new rate mechanisms, new metering, or anything beyond their capabilities. It seems that the perfect is the enemy of the good here. Light up the grid now and do the razzle-dazzle later.
Henry E. "Buddy" Kilpatrick, Jr. - 05/26/2010 - 11:28
EWPC-AF to Replace the IOUs-AF
Hi John,
I am glad that you are "a free market guy." The problem is that the Investor Owned Utilities (IOUs) Architecture Framework (IOUs-AF) is based on a business model of winning rates cases to the regulator that run out of steam a long time ago. We need to open the power industry to business model innovations, with the Electricity Without Price Controls Architecture Framework (EWPC-AF) that is designed to replace it.
In addition to reading the EWPC article "Power Industry State of the Art that Emerged from The Network Grid (TNG) Conference," mentioned above, please take a look at the article "State Governments Need to Unleash the Benefits of the Next Big Thing" in the link http://bit.ly/ckolZe , whose summary says "As the utility business model has outlived by many years its useful economic life, state legislatures need to produce as soon as possible emergent regulations that enable the Next Big Thing - business model innovations - under a market-based approach."
José Antonio Vanderhorst-Silverio, Ph.D. - 05/26/2010 - 11:33
imagining the smart grid
From purely a pragmatic, non-engineering viewpoint;
1. I've been told many of the engineers that built and operated the electric grid as it stands today are very close to retiring. Smart grid is a daunting task and demands a very real paradigm shift from "25-year life cycle" of substation design to something closer to 5 network operation and management as technology has taught us. I suspect this influences the speed with which smart grid is embraced.
2. I've been told utility maintenance departments are strectched thin already with the work that is known. Having a smart grid in place that exposes every flaw in the network will add an additional level of stress, not the carrot needed as an incentive to design and deploy.
3. As in broadband deployment worldwide, the level of acceptance by the populace is directly related to their perceptions, understanding and belief that there is real, understandable, measurable value to subscribing. One "secure, robust and resilient" network does not need to be privately constructed and owned by and for the exclusive use of the IOS or other electric utility.
For smart grid ultimately to be successful every home and business will need a network connection. A hybrid fiber-wireless broadband network that meets the needs of the electric grid and national defense (GRID_Act)can ceratinly meet the needs of all community stakeholders. That one network can provide connectivity and backhaul for public safety, homeland security, DOD, distance learning, telemedicine, intelligent transportation, natural gas and water, and more. Collaboration between stakeholders is the key, will save tax dollars, and drive development of applications, products and services optimized for use on the smart grid.
Jim Nice - 05/26/2010 - 17:15
A vision for energy and smart grid
Jesse - Thank you so much for asking this question! I couldn't agree more that we need a compelling vision to support this investment. It is NOT a vision of doing what we (utilities, regulators, energy users) do today a little more efficiently. It IS a vision in which, by the end of this century, we have designed our tangible and intangible infrastructure to enable us to convert and apply energy at rates no faster than nature provides the primary energy, through means that create no more waste than nature can absorb or render harmless and in ways that strengthen our connection to place and to each other. Achieving this vision will require a willingness to question everything, including our current definitions of energy utility service (where it starts, where it stops). Telephone companies used to think the service definition was all in where the call terminated (local or long distance). In energy, the service definition is in even more pieces, none of them particularly useful to customers on their own. We tend to leave it to busy families and business people to figure out how to put everything together, an cling to the unsupportable belief that if we just get the prices "right," magically these busy people will make the best (more utile) societal decision. How's that working so far? Smart Grid technologies can be transformative but will NOT be transformative if we have no idea what the transformation looks like. The intangible infrastructure -- and I include in that our own minds, our mental models -- needs to change as much if not significantly MORE than the physical infrastructure through deployment of these technologies. Who will lead? Who will tell us the hard truth that by the end of this century, if not before, we need to be in balance with the earth? Who will tell us the equally hard truth that the United States must be at the forefront of this activity if it hopes to have goods and serivies to offer a world market that desperately needs to reach this goal as well?
Pamela Morgan - 05/27/2010 - 10:15
Practical Solutions
Hello Jose,
I am not advocating turning back the clock. What I am saying is that the IOU's are the largest stakeholder, they own the grid, and they are best positioned to make smart grid a reality; yet they are not as engaged as they need to be. I believe there are ways to provide incentives to the IOU's that will open up avenues for the market to innovate. But, you've got to give them a reason to get serious about playing. Free market should not mean that the grid owners get shut out of growing their businesses into new and innovative domains. The "markets" we created in the G&T sector have not led to innovation and they have not led to improved services and pricing for the customers. We primarily moved the deck chairs around, added a few new players, put the IOU's in a box, and ultimately raised costs for most consumers. The IOU's brought a lot of what happened upon themselves, but that is in the past. In my opinion there are no strong technical reasons why we can't have a smart grid. The reason we don't have it is because it is not in the best interests of the IOU's to have a lot of customer owned distributed resource and storage attached to the grid. Give them an incentive, and we will have smart grid sooner than you can imagine.
John Federowicz - 05/27/2010 - 11:45
We Maximum Social Welfare
John and Pamela,
Thank you for what I see as complementary posts. I am advocating for changing the obsolete business IOUs business model to open the power industry to business model innovations. In line with what Pamela wrote, those innovations will be based on Donald Norman's quote that says: "... technology is the easy part to change. The difficult aspects are social, organizational, and cultural."
In the Spring 2010 issue of "The Bridge," of the National Academy of Engineering, is the paper "The Smart Grid: A Bridge between Emerging Technologies, Society, and the Environment," by Richard E. Schuler, Ph.D., P.E., Graduate School Professor of Economics and of Civil and Environmental Engineering at Cornell University and a board member of the New York Independent System Operator. In his paper, Dr, Schuler describes:
"... a bridging mechanism that will link technology, engineered support networks, the biosphere, and human society. The energy network, which starts with the smart grid, will be dynamic and will continue to evolve. Whether it will eventually work through large-scale centralized or small decentralized loosely coupled systems will depend on future developments and the paths that are chosen. Whatever those paths may be, they will reflect human creativity in ways that were not possible before."
The only objection I have on Dr. Schuler's paper is that the process needs to start restructuring the power industry, not with the smart grid to be able to follow the purpose of maximum social welfare. Just as the investors of the railroads were not the owners of the transport industry, the IOUs are not the owners of the power industry either.
Pamela is right, when she wrote "Achieving this vision will require a willingness to question everything, including our current definitions of energy utility service (where it starts, where it stops)."
José Antonio Vanderhorst-Silverio, Ph.D. - 05/27/2010 - 13:19
For who's benefit is the grid is it anyway?
Jesse is spot on. There is a political problem. To get OPEN SOURCE standards that lower the barriers for entry into the Smart Grid marketplace, we must settle one question, who is the grid going to benefit? Big companies like Siemens, GE, Nippon, and whomever are going to support 'lock out' specs. Semi-proprietary specs that give them exclusivity to certain ares. We, as the people who pay for everything, want to be able to plug and play. There are hundreds of possibilities that an Open Source Smart Grid would allow.
This is not a trivial issue. Somehow, we are going to have to assemble a BIG voice to push back the influence of lobbyists at NIST and in congress that would prefer to keep the Smart Grid to themselves. That is the safe way to retain market share.
Get ready for misinformation. They are going to say an Open Source Smart Grid (OSSG) is not as secure. BUNK!
I'm glad I found smartgridnews.com, and I surely hope we can develop a vision and broadcast that vision that an OSSG is the way to go if the smart grid is to live up to anything near its potential as the basis for a new energy economy.
There are going to be fears and mis-information, but I've looked at a number of these fears, and the reality is that an OSSG has so much potential to make the overall pie bigger, that there is no way anyone should fear the future.
Does this group have a political action committee? If the group can at least decide that the Smart Grid should be Open Source, and that the grid should benefit the 'general good', then it is time to form a PAC.
We're getting mixed signals about the vitality of the smart grid market. On the one hand, the recent DistribuTECH conference was one of the most successful ever. On the other, a well-known Wall Street analyst recently told his clients that the smart metering sector is "facing several headwinds," including weak regulatory support in the U.S. and delays in European adoption. Taking the pulse of the smart grid industry is this week's Tuesday Topic.
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