Mattias Ganslandt (MG): We’re here in the Smart Grid City, Boulder Colorado, to discuss the future of electricity markets and more specifically the role of standards for US Smart Grids. I’m here with George Arnold, the National Coordinator for Smart Grids – who has been given the task to coordinate the effort to achieve standardization and standards for interoperability and other instrumental issues for the development of the Smart Grid. Also with me is Ajit Jaokar from the UK, who is the founder of Futuretext and is also the co-editor at Talkstandards.com, and Kevin Doran who is a senior research fellow at the Centre for Energy and Environmental Security at the University of Colorado, a researcher and scholar in the field of Smart Grids. Welcome.
MG: I thought I would start with a question for you George. Why do we need a Smart Grid?
George Arnold (GA): The short answer is to deal with climate change and to meet our energy needs for the future. Specifically, in the US we have a need to increase our use of renewable energy and deal with the variability that this production is causing. The level of automation in the today’s grid is about where the telephone industry was 30 years ago. As consumers have no data on their energy usage, and it’s very difficult for them to be incentivized to reduce energy usage. So providing IT to make that possible is a key need. Further reasons include: preparing the grid to deal with electric vehicles, which is part of our strategy to reduce our dependency on oil, and to increase the reliability, security and efficiency of the grid.
MG: Some would actually argue that the costs of the Smart Grid are greater than the benefits. What is your opinion?
GA: If you look at the big picture, it’s estimated that over the next 20 years in the US, between $1.5 billion to $2 billion will be spent on modernizing our electric grid. A large part of that is replacing aging and dirty coal production with cleaner sources. But if you’re going to make that kind of investment you might as well make it with the latest proven and robust technology. If we’re going to spend the money we might as well do it in a way that gives us the greatest bang for the buck.
MG: Ajit, would you say that the European motives for deploying Smart Grid are the same as in the US?
Ajit Jaokar (AJ): The general consensus is that somehow Europe is ahead. In my view, I don’t see that. Yes, there is a perception of reducing fuel consumption, greater use of clean energy and also interdependence on outside fuels to Europe. But what I don’t see is that equal to the “American Recovery and Reinvestment Act of 2009,” with top-down federal funding, and a serious motivation to change as you see in the US, which we don’t see so much in Europe.
MG: Kevin, what about the utilities’ incentive at the state level, do they have the right motives to do this? What is the Colorado experience of Smart Grid deployment?
Kevin Doran (KD): I think the candid answer is that it has been a mixed bag from the utility’s perspective. If the question is: do the utilities have the right motive to do this? I think certainly the utilities have motivation to design a system that enables them to do peak load shaving and load optimization on their end. That’s certainly true and you’ve seen a lot of utilities take that direction. But the truth is that there’s a huge X-factor when it comes to the Smart Grid and that’s on the consumer side. Utilities I think have understandably fumbled around the edges when it comes to understanding the consumer.
Smart Grid is itself a very nascent idea and it is the consumers that are a great uncertainty when it comes to understanding the extent that consumers are going to respond to feedback signals over time. There isn’t a whole lot of direct social science literature that addresses that question. I think to some extent, utilities understand the value proposition of Smart Grid and they are rolling out – especially with federal support – AMI and other kinds of Smart Grid deployments. But nobody fully quite understands the value proposition of Smart Grid because we’re all figuring it out as we go.
MG: The Obama administration has clearly made the Smart Grid a political priority. Was that based on some sort of exaggerated hopes of what the Smart Grid can deliver?
GA: While it is a key priority of the Obama administration’s energy plan, the Smart Grid initiative was started under the Bush administration, so it has always had very strong bi-partisan support. It’s recognized that this is one of the key ways that we can become more efficient, use less energy and moving away from carbon producing fuel sources to renewables. We currently use way more energy than we should and our system is very inefficient with huge capacity devoted to a small number of peak hours around the year. These are goals that everybody is behind.
MG: Why wasn’t this left to the private sector and markets?
GA: In the US we have about 3200 different utilities of various types. Some are investor owned utilities and others are municipal utilities. In fact most of the land area in the United States is covered by rural cooperatives with privately owned systems. To get these 3200 systems to move away from this patchwork of proprietary things to a more interoperable system based on standards, really requires a strong degree of coordination and with an infrastructure this large and distributed, coordination can only be done by the government.
MG: In terms of the role given to NIST in this process, what are the key priorities? What would you like to see happening in the near future?
GA: NIST’s role is not to write the standards – which is done by a collection of standards development organizations like IEEE, etc. – but to bring all the stakeholders together to define what requirements need to be met to achieve our future vision of the Smart Grid. And to further get standards bodies producing standards to meet those needs.
Our goals are to deal with a set of six priorities which are laid out in our framework document we released in January. They include proving standards to support wide-area situational awareness in the grid, standards to improve storage in the grid, distributed resources standards to deal with automation in the distribution environment (to again increase efficiency and reliability), and standards for the customer interface with the grid both in terms of information customers would get in terms of their energy usage. And as resources become more distributed, the grid is going to need information about what distributed resources are available on the grid.
In addition to that we have some cross cutting issues which are top priority. One is cyber-security. We need to make sure the IT systems we introduce and the communications structure to support all of this are secure. Today, most of the communications is done with proprietary systems, and we want to move that to systems based on open standards.
MG: Ajit, does Europe need a player that corresponds to NIST here in the US?
AJ: Yes, I think what we must realize is that we can’t build 21st century systems on 20th century technology. Essentially this is an unprecedented challenge in many ways, especially as we have many different domains that are not used to talking to each other. As such you need somebody to coordinate this work.
Take telecoms as an example. You have Near Field Communication technology, driven by the transportation industry. But putting that on a phone requires a whole different set of standardization bodies which need to talk to each other. You have the same issue with RFID, driven primarily by supply-chain people.
My question is really to what extent should the standardization go through, driven by this coordinating body? Secondary, do we need a system like the WiFi alliance? A body of organizations and people that work together as a sub-set designed to make it work on a small scale. There is such a standardization issue and a more LITE version require for practicalities. We need both and we need that flexibility.
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The discussion is continued in Part 2 which can be found here:
www.talkstandards.com/the-us-smart-grid-future-part-2/
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For the video of the discussion and profiles of discussants see here:
www.talkstandards.com/interview-with-george-arnold/
