Part 3: Developing a Smart Market
MG: What do you see as the potential for the development of renewables and the interaction between renewable resources and the Smart Grid?
KD: I think that the basic point is a simple. By having a smarter grid you can hopefully predict to a greater extent when load from renewables is going to come on or come off and integrate that in a more optimized fashion into the grid. That isn’t to say that renewables are necessarily part of the Smart Grid. Smart Grid is something that I would think of as discrete from renewable generation, but done right it can enhance the deployment of renewable within the electricity system.
MG: But to what extent is the Smart Grid and Smart Grid standardization instrumental for say the development of bi-directional flows of electricity so that you have roof-top solar, and residential as well as commercial and industrial consumers also become supplies to the grid? Is that a critical issue?
GA: It’s absolutely critical because you have both metering and billing that must be bi-directional to support that, but just having the information available on the resources, so that you can keep the grid in balance is absolutely critical.
MG: Do you see prospects for the development of true market place here? Not only where you have the classical generation of electricity being provided but also alternative sources of supply?
AJ: Well that is going to be the real innovator for the Smart Grid because the Smart Grid technology will work, for better or for worse, it’s just a matter of time. The business model innovation will be the real investment driver and therefore the market places will develop as we discussed yesterday during the event.
MG: What do you see in terms of development of this kind of market place where you have this distributed generation and distributed allocation of consumption as well as supply? Are the conditions there for customers to also become suppliers?
KD: I think the conditions are potentially there, but I don’t think they’re there yet.
MG: Do the utilities have the incentive to put in bi-directional meters?
KD: Well, again under the existing federal support that’s been done in recent years there’s plenty of current financial incentive to do that. But there is an inherent tension between deploying a system that enables you to see less of you product to your customers and not get return on that investment or some sort of compensation for the energy efficiency that you have embedded into the system. There are ways of dealing with that issue. There are enhanced rate of returns which some public utility commission provide to demand-side management programs. There’s the concept called de-coupling which is used in some areas.
It’s important to understand that the traditional business paradigm which the utilities have deployed in this country for a long time will need to change and nobody is quite sure what that change will look like or how it’s going to happen. But we can all see the writing on the wall, which is if Smart Grid and demand-side management and distributed resources are going to scale and play a significant role in electricity profile on the United States, we’re going to need to change how we do business at the utility level.
MG: Moving to the question on standardization and interoperability in somewhat more detail. NIST recently came out with the finding that you have identified five families of standards; can you describe in somewhat more detail what these families are and how you identified them?
GA: Those five standards are a small subset of a larger set that was in the release 1.0 framework we published in January. In that framework many additional standards are still under development and so they are not at a point where regulators, who may want to adopt standards and regulations, are really ready to be considered. We see this as an ongoing process where NIST, working with the regulators in the US, will identify the subset of standards and the regulators need to be concerned with. There are many standards that regulators don’t need to worry about because they are just purely technical and dealt with by industry, but some are really fundamental and need some encouragement.
The five standards we identified are really akin to a data dictionary and grammar that allows different entities in the core of the gird itself to communicate. One of the standards deals with the description of entities in the transmission system, another deals with the distribution system, one deals with entities in sub-stations which need to be enacted upon, there is an inter-control centre standard and finally cyber-security standard to ensure that the communications supported by these other four standards are done in a secure fashion.
MG: What is your comment to this Ajit, are there any parallels to internet standards here? How should we understand this list of standards?
AJ: I think the key here is the observation that these standards, especially the cyber-security and the lower level and device level standards, are building blocks as we said. I think that’s a positive step and needed for the next levels of things. I’m curious to see how what happens in subsequent iterations of this process.
MG: Is this an efficient level of standardization or would you see a further role in terms of coordinated standardization?
AJ: The operative word here is “coordinated standardization”. NIST is not a standardization body and it is not concerned with standardization per se. So this is coordinated standardization and there will most definitely be more to come, it is the beginning as I see it.
MG: George, what are the biggest missing pieces in the standardization puzzle for the Smart Grid?
GA: There are many missing pieces but they’re going to work. The gap we need to fill urgently is the definition of the customer interface both in terms of the data the customers have available to manage their own energy usage and the standards that the appliance industry can use to manufacture appliances which can be marketed anywhere. We can’t have an electric dryer that works in New York State but not in Colorado, because they have different standards. There has to be uniformity. So getting agreement on those standards is critical to enabling the marketplace to develop.
However it’s tricky because we don’t want to pick winners and losers and find we picked Betamax as opposed to VHS. So we’re trying to get the industry to gather around a sufficiently small set of standards to allow the marketplace to quickly develop but in timeframe that’s less than the five to ten years it would normally take.
The discussion is continued in Part 4 which can be found here:
For the video of the discussion and profiles of discussants see here:
Part 1 of the discussion can be found here: