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Smart Grid – this train has left the station. Why some communities will be marooned in the 20th Century.
By Phillip Bane
Jan 30, 2008 - 5:00:00 AM

You read the Smart Grid^TM News because you know that we need to improve our 1950s-style grid. You also probably agree where we are on the implementation of the Smart Grid. Let’s lay out the situation:

Track is laid -- With the passage of the Energy Policy Act in 2005, (EPACT) and the Energy Independence and Security Act (EISA) this month, we now have federal policy laying the Smart Grid track.
Train can be built -- At Distributech in Tampa (January 22, 2008), it was clear that the technology for building the Smart Grid train is available.
Where’s the fuel? -- The problem is the states are not providing the regulatory environment required to fuel Smart Grid development.
Why it matters -- Your kids’ economic future will depend on whether there are economic opportunities. Those opportunities will only appear when your city and state have a Smart Grid. Some countries and regions are already planning to spend billions on developing the Smart Grid and they will have a competitive advantage in attracting opportunities.

Federal focus lays the track

The passage of the Smart Grid Facilitation Act as part of EISA 2007 this month will lead to the formation of the Smart Grid Advisory Committee, a federally authorized commission focused on the Smart Grid. EISA followed within 2 years EPACT 2005 where Congress required time based rate schedules and required utilities to follow standards adopted by the regulatory or governing body having jurisdiction over the utility. As Jeff Sterba, the CEO of PNM Resources pointed out in his keynote speech at Distributech, this is the first time in history where Congress has passed two major pieces of legislation about the grid within a two-year span, instead of decades apart.

The Smart Grid train can be built

Distributech is North America’s largest convention for the utility transmission and distribution industry. The January 2008 conference proved the technology is available. Numerous courses at Utility University, hosted by KEMA, or during the conference itself focused on ‘the utility of the future,’ ‘the Intelligent Grid,’ ‘automating the future,’ ‘the Smart Grid,’ and yes – even ‘California Dreaming,’ – a tip of the hat to the one and only state to decouple rates from generation and a true pioneer in building the Smart Grid.

Distributech vendors touted ‘interoperable,’ ‘standards-based,’ ‘open’ solutions. Looking like the big screen TV display room from a Best Buy store, visualization of transmission and distribution operations on massive screens was the norm. Command and control, service oriented architecture (standards based network architecture), Zigbee and HAN (see Erich W. Gunther’s Tech Take article [link below] explaining these concepts) were all there. The technology that builds the Smart Grid train is available.

States are not fueling the Smart Grid train (even where they need to)

We interview many utilities at SGN. Anecdotally, we hear of utilities advancing pilots where state regulators are receptive to ratemaking that pays for adoption of Smart Grid technologies. Where states do not mandate change, the utilities do nothing.

A recent grading of states on netmetering and interconnection (Freeing the Grid, see link below) found that most states had not adequately implemented either. Netmetering and interconnection are essential for demand response and decentralized generation.

· Rust belt -- Ohio, once the manufacturing center of this country is actively focused on Smart Grid development (scored ‘B’ on netmetering and ‘C’ on interconnection, Freeing the Grid report.) Other ‘rust-belt’ states such as Indiana and Michigan (scored ‘D’ on both netmetering and interconnection,) and Wisconsin (scoring ‘F’ and ‘D’ on netmetering and interconnection respectively) have done little. Indiana is rated as having the worst netmetering and interconnection standards in the country. Illinois does not have any policy on interconnection (though it is considering implementing one.) Improving the Michigan grid would do more to attract new businesses than all the TV ads the state is currently buying.

· Natural disasters -- States that are currently devastated from natural disasters ( Louisiana scored ‘C’ on netmetering and ‘F’ on interconnection) can accelerate a bright future if they would only focus on a Smart Grid. Reviewing the state database on interconnection and netmetering (seek link below) reveals that Mississippi does not have a policy on either.

Why it matters to your community

A Smart Grid will drive the 21^st Century economy with digital grade, reliable power. As the basis of competition increasingly becomes high-tech and service oriented, the ability to provide consistent power to companies will become increasingly important. Higher quality power will retain and recruit more businesses. In the past two years Intel, Microsoft, Google and Yahoo all built large server farms in the northwest near digitally reliable power. Why couldn’t they have been built in Michigan, Illinois, Louisiana or Mississippi?

Those cities, states and regions that build a Smart Grid will see in-migration of an educated workforce, providing digitally based services to the world. A Smart Grid will become a competitive advantage. Yet, it will not happen overnight. Given the time it takes to finance, design and build the Smart Grid, a state will only see the benefits five or more years after it changes its regulatory structure.

In some places, billions are being spent on the Smart Grid

Ontario has the most aggressive deployment of advanced meters in North America. British Columbia Hydro just announced that it will spend $C5.1B on developing a Smart Grid. Europe and China are planning exponentially greater expenditures. Arguably, they all see future economic growth based on digital grade, reliable power.

The federal government has built the track (the roadmap), vendors can build the train (the technology is here), but it still lacks fuel. State regulators need to provide the financial incentives for utilities to pay the vendors to build the train. The train is leaving the station in such places as British Columbia, Ontario and the E.U. ... if your state does not get on board, your kids will be marooned in the 20^th century.

Database of State Incentives for Renewables and Efficiency

Freeing the Grid (PDF)

Erich W. Gunther article on Tendril

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