FERC policy proposal could have far-reaching impact. An intricate new policy proposal from the Federal Energy Regulatory Commission (FERC) could usher in a new era for the Smart Grid – or a monumental tug-of-war between the federal government and states. The proposal is too complex for full discussion here, so please be sure to spend some time at the links below.  One element is a push to accelerate key standards. Another is allowing interim rate recovery for anyone who can show that its Smart Grid systems are (1) secure and (2) upgradable. Another is prioritizing cutting-edge applications such as demand response, storage, and electric transportation. According to FERC’s Acting Chairman John Wellinghoff, the proposed policies are intended to “accelerate development of key interoperability standards that are needed to unlock the potential benefits of the Smart Grid.”

   Quick Take: Who said FERC was behind the times? Suddenly, this agency is looking like a national leader. But will states push back? Comments are due within 45 days, but we’ll know much sooner. Pay attention to this debate -- though FERC policies apply only at the transmission level, if adopted these standards will quickly trickle down to the distribution level and affect every utility and every vendor.

   Acting Chairman Wellinghoff’s official statement

   Discussion by DC law firm Van Ness Feldman 

Finally! AT&T jumps on Smart Grid bandwagon. The telecom giant just announced it is working with SmartSynch, maker of communications modules and networks for smart meters. Until recently, AT&T had been willing to take utilities’ money if they wanted to use its cellular system for communications; but it could never be bothered to work out special technology or special pricing for residential metering. By teaming with SmartSynch, AT&T gets access to some of the electric power industry’s top communications talent. For its part, SmartSynch gets access to a much larger, more robust and less expensive network than the paging and satellite systems it had often used in the past.

   Quick Take: This is very good news for the industry and for utilities. It is absolutely essential that we learn safe, secure ways to share communications infrastructure.  As a country and as an industry, we cannot afford to build out a separate, high-bandwidth communications system dedicated solely to the smart grid. With AT&T taking Smart Grid seriously, we can hope for some competition from other big carriers – and that could ultimately save many tens of millions in network infrastructure and maintenance costs.

   Earth2tech’s report on the new partnership

   VentureBeat’s story on AT&T’s announcement

Smart Grid critical to the U.S., say 91% of utility managers. Database company Oracle recently surveyed 200 utility managers and 604 American consumers on Smart Grid issues, unearthing some mostly unsurprising facts. For example, of those utilities (58%) that offer some form of net metering program in which customers can generate their own renewable power and even sell it back to the utility, only 11% of customers spring for it.  In addition, utility managers blame initial consumer costs (42%) and a lack of “consistent industry technology standards” (30%)  as the biggest obstacles to maximizing Smart Grid benefits.

   Quick Take: One disconnect that the study revealed: Although an overwhelming (91%) number of utility managers think adoption of the Smart Grid is critical, only 41% of utilities have actually assessed the opportunities for Smart Grid technology.  An even smaller number (16%) have begun to implement Smart Grid upgrades.  One hopes that the current attention to and stimulus funds available for the Smart Grid will help those managers convince their utilities that the time for “wait and see” is over.

   Oracle press release on the survey

   InformationWeek report of the survey

Renewables maintain blistering growth in 2008; Smart Grid not far behind? Clean Edge has released a report the recent growth in renewable energy sources and market projections expected by 2018. The document, titled Clean Energy Trends 2009, that solar photovoltaic, wind power, and biofuels grew a dramatic 52% last year despite a slowing economy. These three sectors expanded from $75.8 billion in revenues in 2007 to $115.9 billion in 2008. The report projects revenues of $325.1 billion in the next nine years.  The report acknowledges the slowing effect of the current credit crunch, but also factors in the money from the recently passed U.S. stimulus package.

   Quick Take:  Intermittent energy sources like wind and solar can destabilize distribution systems unless they are outfitted with the proper Smart Grid technology.  Consequently, with renewables experiencing such solid growth, grid expansion and modernization can’t be far behind.

   Clean Energy Trends 2009 full report (PDF)

   Newnet’s report on the Clean Energy Trends report

Model smart grid development launches in Germany. Integrating a region’s power grid into a system designed to lower energy consumption and drastically reduce CO₂ emissions is the goal of a pilot project to be built in a densely populated manufacturing region in Germany, Karlsruhe-Stuttgart. The Minimum Emissions Region, or MEREGIO, will combine clean energy such as solar, wind, fuel cells, and other forms of distributed generation with Smart Grid technology to provide real-time information to the grid operator and pricing information to consumers. The pilot program is being conducted under the auspices of the German Federal Ministry of Economics and Technology and will involve roughly 1,000 home and industrial consumers, generating units, and power storage systems. Network control systems are being provided by ABB, who is  a partner in the project.

   Quick Take: Past pilot programs have tested different pieces of the Smart Grid. But combining Smart Grid techniques with renewable in a single effort is an ambitiously comprehensive approach that is worth keeping an eye on.

   PlantServices’s report on the German pilot program

   ABB home page

Report raises spectre of Smart Grid security holes. Invoking images of massive blackouts, Seattle-based security services firm IOActive warns in a just-released report that the Smart Grid system being developed today is neglecting much-needed security issues. The CNN summary states that “$500 of equipment and materials and a background in electronics and software engineering” would be all that’s required to seize control of service to homes and businesses. Authors of the IOActive study say they want to be sure security measures are “baked into” Smart Grid technologies rather than treating them as an afterthought as appears to be happening now.  The security company presented its findings to the U.S. House Committee of Homeland Security last week.

   Quick Take: As this report shows, slapping on a few security measures at the last minute will not do.  Vendors and utilities need to be building need to treat the issue as seriously as if they were a creating an online bank, embedding protections right at the microchip level.  Indeed, security is an issue the entire industry is going to have to get on top of very quickly.

   CNN story on SmartGrid security

   SC Magazine story on IOActive’s report

   TechNewsWord’s story on the IOActive report

VCs face tough choices in Smart Grid investments. A report in Greentech Media details the chicken-and-egg problem faced by venture capitalists:  Do you cast your lot with slow-moving, regulation-bound utilities, hoping for an eventual return on your investment?  Or go with vendors and products aimed at empowering customers to save money with their own smart energy tools?  In the first case, you may have to wait a long time for utilities to get the regulatory go-ahead to implement some aspect of Smart Grid, such as smart meters.  In the latter case, you risk casting your lot in a market that  hasn’t excited many consumers and may require utility involvement anyway.

   Quick Take: Home energy-saving devices need to show clear savings to customers if they’re ever to succeed as a mass-market product.  Until that happens, utilities are the most likely ones to make the level of investment needed to get those devices into customer homes.  With the federal stimulus package making more funds available for Smart Grid projects, we expect to see an acceleration of programs and products that will provide a meaningful incentive for investment.

   Greentech story on VCs and the Smart Grid