Smart Grid: Scalable Interoperability or Bridge to Nowhere?

SmartGrid is one of those transformation technology advances that offer both the promise and the threat of change—big change in the way we make, deliver, use and pay for energy. But smart grid is about more than energy.  To make it work, smart grid technology also requires communications equipment, computing hardware, peripherals, sensors and appliances, and the software to run them, gather the data from them, store it, analyze it, protect it and visualize it in meaningful, actionable, secure ways.

Even if the convergence of these communications, hardware, software and energy industries can come together to deliver on the SmartGrid promise, the whole thing could end up being a bridge to nowhere if utilities are unprepared to embrace it, if politicians drive up the costs by added mandates and requirements that are not supportable without deep and unsustainable subsidies, or regulators fail to adopt utility rate structures—dynamic pricing it is called—to expose customers to the real-time price consequence of energy consumption to encourage us to change our behaviors and thus create a market for SmartGrid technology and services.

Oh, and there is one more pothole to consider on the road to SmartGrid.  There are hundred of vendors each with their own proprietary software, equipment, protocols and requirements little of which works together—that’s the interoperability worry Energy Secretary Chu is rightfully obsessing over today.  He’s right.  As consumers we refused to learn to program our VCRs, we depend upon technicians to “calibrate” our HD TVs, and program our set-back thermostats.  All this SmartGrid stuff must be plug or play or else—we won’t use it.

I’m learning there are many obstacles to taking a simple idea—make all this stuff work together, and do it now.  These are just some of the smart grid pain points we’re facing:

  1. What is Smart Grid anyway? The answer is it depends upon who you ask. When most of us hear about smart grid what comes to mind is the idea of “smart” meters that work both ways to give us feedback about our energy use as well as tell the utility how much to bill us.  Turns out that smart grid is about more than just meters.  Behind the scenes are communications networks, data centers, computing and storage hardware, sensors and devices that gather and transmit data, software that interprets data and feeds it to various users in ways that are actionable, secure and timely.  Feel the pain yet?  Smart grid is way more than just a meter telling my utility how much energy we use—and everyone along that energy, metering, networking, communications, hardware, software, marketing, energy generation, transmission, delivery and services value chain want a piece of the action.
  2. Who’s in Charge of Building the Smart Grid? Not only are there many vendors in the smart grid value chain, there are state and federal regulators, investors, manufacturers, power grid operators, politicians, environmental and industry special interest groups and many others who want to shape and influence the design of a smart grid, the rules it uses to operate, the investment required and returns earned, stimulus and other tax money invested, ratepayer funds involved and how they are used.  For the most part, the only ones NOT involved (yet) today are end use customers for whom the smart grid is intended.
  3. How much will all of this cost? You had better sit down for this!  While the Federal Government allocated $3.5 billion of the stimulus money for smart grid improvements, industry estimates are that building out the full smart grid may cost from $100 billion to $400 billion.  Count on the higher number!
  4. Interoperability or Will All This Stuff Work Together?[1] The US Department of Commerce released a draft report on September 24th that includes 80 initial standards intended to make the vast array of interconnected systems and devices that comprise the Smart Grid work together to provide a secure, efficient, sustainable and environmentally friendly national electric grid as part of the National Institute of Standards (NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 1.0).  In fairness, this is a very big task and more than 1500 industry participants are involved in drafting a set of protocols, best practices and technical standards so we don’t have to endure the same ‘and the winner is BluRay’ market competition among all the manufacturers.
  5. Who Owns the SmartGrid? Well, today the IT solutions for Smart Grid communications are proprietary and vertically integrated—that is one of the driving reasons for the interoperability standards in Pain Point 4 above.  The goal is to replace all of this with an open, standards-based architecture for SmartGrid communication to assure acceptance and rapid deployment. Between government standards and utility integration of these new technologies into the energy delivery system from which we get our electricity the objectives is to create that smart grid interstate highway system with as few toll booths and trolls as possible.  The telecom industry went through a very similar transition when its requirements for wireless and fiber optics and expanding networks forced it to do so. What emerged in telecom was the Session Initiation Protocol (SIP) as a solution for these needs. SIP was used usher in the widespread use of multimedia, unified communication and other devices we use today.  Many of the same approaches are now being considered or adapted as the energy, information technology and communications industries converge.
  6. Why Are We Building the SmartGrid Anyway? That too, depends upon whom you ask.  But the goals have been to digitize the power grid to enable the use of new technology to improve energy efficiency, reduce greenhouse gas emissions, enable demand response, facilitate access to renewable energy resources, and allow new energy rate structures called “dynamic pricing” to encourage conservation.  These goals are fraught with potential conflicts at the federal, state, regional and consumer level—but keep asking that question.
  7. Smart Meters Work Both Ways. Often when we heard about smart grid it is often in the context of smart meters replacing the old one-way utility meter that for generations has measured how much energy or water we use so the utility can send us a bill.  Smart meters enable two-way communication so that the data about our energy use can be gathered, analyzed, storage, and fed back to use in useful ways to achieve the goals outlined in smart grid pain point #6.  What will we do with that information? That is the big question.
  8. Petabytes of Meter Data Management. Think about it, today the utility meter reader comes by our house once a month to read the meter and a week or so later we get a bill.  With Smart Grid the meter is read automatically not monthly, not weekly but perhaps as often as every 15 minutes.  But some standards call for equipment to be able to gather use data ever 2 seconds to “optimize” the performance and security of the grid.  Dealing with all this data is the elephant in the room of Smart Grid implementation.  So much information that it can easily overwhelm today’s utility information systems.  Solving this problem will require a massive new investment in information technology hardware and software—and time.
  9. Scalability is the Elephant in the SmartGrid Control Room. When you add up all these pain points it creates another, even bigger problem.  Solving the smart grid is tough enough for one utility.  What happens when you combine the vendors, equipment, standards, policies, dynamic pricing rules, communications, data and all the rest for more than 200 investor-owned utilities and several thousand smaller publicly owned municipals and co-ops.  This is the ‘Manhattan Project’ equivalent for the Smart Grid—Scalability.  It is safe to assume that there is no computer system or network capable of managing the Smart Grid in real-time, 24/7 across even one of the three grid interconnects let alone do this for the entire North American Electric Reliability Corporation area.  Building the Smart Grid is the functional equivalent of going to Mars.
  10. If They Build the SmartGrid will we Use it? You had to ask didn’t you! That is like asking why anyone would ever need a personal computer—as the CEO of IBM once did.  Why would anyone need a wireless telephone?  TV?  The advance of technology is relentless, permanent, and unstoppable.  And we all benefit from it and are betting that we can leave the planet cleaner, safer, and more user-friendly for our kids than we found it.  But some technologies win and others are rejected based upon ease of use sufficient to make them indispensable tools for living our lives.

Smart Grid technology promises to transform the way our power grids work and how we use energy—and $400 billion seemed like a lot of money before we got to know the Stimulus program.  But if we could truly realize these policy and commercial goals through SmartGrid IT investments it would be a far better use of our tax money than building Bridges to Nowhere.


[1] http://www.nist.gov/public_affairs/releases/smartgrid_interoperability.pdf