Smart Grid's Long Road Ahead

Smart Grid’s Long Road Ahead

Oct 29, 2010
By: Amy Hsuan

The nation’s electric power industry, dating back to the 19th century, is in the early phases of an unprecedented change. With new, renewable resources coming online and commercial users searching for new modes of efficiency, the underlying infrastructure that has served the power needs of the United States for the better part of the last 150 years is about to undergo a historic transformation.

Borrowing from the lessons learned in telecommunications and information technology, the “Smart Grid” will one day be an agile, responsive and “intelligent” network — nearly the exact opposite of what it is today. It will have new hardware and software and stand to become the innovation of the 21st century.

The question is when and at what cost? To get there, political boundaries need to be redefined at the federal and state levels, old infrastructure needs to be replaced and a new system needs to go from a mere vision to reality.

That’s where Katherine Hamilton, president of the GridWise Alliance, comes in. Hamilton, a moderator at the Wharton Energy Conference in Philadelphia this Friday, is no oracle when it comes to foretelling the future of Smart Grid, but she has spearheaded legislative and policy efforts, developed language for the energy and climate bills and secured critical funding for the grid.

I caught up with Hamilton to hear her perspective on what’s in store for Smart Grid as it emerges as one of the hot topics at Wharton Business School’s conference in Philadelphia.

In your view, how will the evolution of the Grid unfold over the coming years? Where to begin and what does the roll-out look like?

This is an evolution that will take place over time and in very different ways depending on the nature of the utility and the community it serves. For example, rural cooperatives have been installing remote meter-reading technology so that they can cut back on long truck trips over miles of territory. Urban utilities are focusing on demand management since their stressors are meeting peak loads during the hottest days of the year. Municipalities have to consider interoperation of all systems—gas, water, transportation, electricity—and are planning projects that consider these holistically.

What do you personally define as success in the Smart Grid arena? What will it take to get there?

The stimulus funding has really uncorked a bottleneck of projects which will prove the value of Smart Grid to consumers and regulators. We will learn a great deal from these 100+ projects that will help us quantify benefits and make the case for an additional roll-out—without stimulus. We hope to see tax incentives, such as accelerated depreciation for meters and credits for energy storage, to encourage Smart Grid development. We want sustained research to spur innovation and creative financing mechanisms to promote investment.

Is there any country, municipality or town that you feel could serve as a model for the U.S.?

Many municipalities — Austin, TX and Boulder and Fort Collins, CO — are a few early adopters, but there are many more in the works. They are forging ahead with Smart Grid and designing their roll-outs to include all of the stakeholders impacted by the energy system. Vermont even developed their project as a state initiative, bringing dozens of utilities into the mix to apply for stimulus funding. We are also watching communities all over the world in their implementation strategies so that we can learn from global Smart Grid programs.

There are some skeptics who say that even with Smart Grid and growing energy efficiency, energy usage will continue to grow because of the digital nature of our society. Do you believe energy efficiency means reduced energy usage?

It is absolutely true that we are moving to an ever more electrified existence. This promises to grow even more with plug in electric vehicles. If you believe that energy efficiency means using energy smarter, Smart Grid can greatly enhance efficiency by providing measurable data and feedback to track energy and carbon savings. ACEEE recently issued a report that found that Smart Grid significantly strengthened energy efficiency if implemented with consumer engagement. The Pacific Northwest National Laboratory calculated that Smart Grid could enable efficiency and renewable and reduce carbon emissions directly by 12%, indirectly by up to 18%. A more efficient economy is a more prosperous one; all of our forecasts and experiences to date have shown that Smart Grid will grow the economy and create higher paying, sustainable jobs.

What do you see as the biggest obstacles to what the GridWise Alliance is trying to achieve?

Some of our barriers are in the rules we have put into place. I think we will see an evolution not only of technology over the next decade but of our regulatory policies as well. Once we get the rules right—whether that means a cost on carbon or standards for renewables or simply internalizing externalities into the process—the development of Smart Grid and all that it enables will follow. Remember, Smart Grid is simply a means to an end; the end goals are what we will set to determine our energy future. The GridWise Alliance takes our collective knowledge to inform our policymakers so we can begin to see some of those rules evolve.

Author Amy Hsuan is an MBA candidate at the Wharton Business School and marketing coordinator for the school’s 2010 energy conference “Bridging the Gap”. Prior to attending Wharton, Hsuan was an energy reporter based in Portland, Ore.