Obama Administration pushes for Smart Grid, but is industry ready?

By lmorris
Smart Grid is abuzz recently. The Obama Administration outlined a nine-point Smart Grid plan on June 13 that includes funding Smart Grid projects in rural areas and making Smart Grid successes and failures publically available. As a result of the American Recovery and Reinvestment Act, the Obama Administration has already invested $4.5 billion in recovery investments into Smart Grid projects, which has resulted in the installation of over five million smart meters and more.

The new plan includes a commitment to invest a minimum of $250 million in loans for Smart Grid projects in the rural U.S. and the creation of a non-profit called Grid 21 focused on consumer tools. In addition, the Administration has launched an initiative that will seek to share the lessons learned from the Smart Grid stimulus investments, and a “Renewable Energy Rapid Response Team” has also been created that will review clean power and transmission line projects and improve federal coordination for getting clean power projects deployed.

Cameron Brooks, senior director of market development and policy strategy at Tendril, a Smart Grid software developer, said the loan for rural Smart Grid development should be viewed like a down payment that rural utilities can choose to build upon. “There’s an element of establishing the foundation upon which others can innovate.”

The investment into rural areas will help aid transmission in parts of the country that are lacking adequate transmission, said John Christens, vice president of Smart Energy Services for the consulting company Capgemini. But more importantly, Christens said, the government will be making Smart Grid information more readily available through the new plan. “The government is saying it will serve as an ombudsman, publishing the results of pilot programs and smart meter programs. This is a statement of further commitment by the government to establish better standards of grid interoperability.”

Brooks said the Grid 21 campaign, which will grant customers more detailed and faster access to information on their own meter, is a great step forward for Smart Grid. “Very few meters have any information that goes directly into the home, but this plan is looking at ways that can nudge industry and regulators about this issue.”

But while Smart Grid developments are seemingly welcomed and spurred on by the White House and renewable energy advocates, are they embraced by the power industry as a whole? Or is Smart Grid still perceived as a dark, ominous path with potential pitfalls along the way?

Smart Grid “Undefined”
According to a recent Black & Veatch survey of 700 U.S. electric utility employees, almost half of respondents stated that the term Smart Grid is still “undefined” or “somewhat undefined” across the industry. Additionally, 58 percent of respondents indicated a negative impression of how well utilities have made their business cases for Smart Grid initiatives. So according to utility employees, it seems that Smart Grid is still a mystery, and one that isn’t being developed sufficiently.

Part of the solution, according to the Black & Veatch report, could be the cultivation of an industry-wide definition of “Smart Grid.” Black & Veatch suggests that individual utilities could answer the question: “How can we create a common, working definition of the term within our stakeholder community that can be used to ensure a basis of understanding for discussions?”

But does Smart Grid really need to be defined? Not everyone thinks so. Christens said a standard definition isn’t needed because every utility has a different definition of what their Smart Grid innovations look like, ranging from smart meter implementation to incentivizing customers to install rooftop solar or windmills in their backyards.

Brooks said a clear definition of Smart Grid is not hindering developments, but lack of access to customer tools is. “But that’s what the Administration is working on,” he said.

Understanding the Perks
Christens said it’s more important for the industry to understand the benefits of Smart Grid rather than grapple for a definition. “In general, the benefits will be to help utilities avoid outages and to tailor prices to demand.”

According to a report released in April by the Electric Power Research Institute, it will cost between $338 billion to $476 billion to implement a fully functional Smart Grid. However, benefits associated with the Smart Grid would range between $1.3 trillion and $2 trillion.

In the end, Christens said it is up to the industry or the government to help teach the lessons learned through Smart Grid initiatives, such as San Diego Gas & Electric’s (SDG&E’s) new $3.6 billion Smart Grid plan . SDG&E’s plan aims for a smarter grid driven by customers. Many of the utility’s customers are installing rooftop solar systems on their homes, and San Diego has one of the highest numbers of electric vehicles in any U.S. city.

Learning from Smart Grid initiatives such as SDG&E’s could be the greatest lessons for the power industry as it continues to form a 21st Century grid. And the way the new Smart Grid plan is designed, access to information could be the key to Smart Grid developments.

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