Is it technology? Policy? Standards? Economics?
According to Cisco senior vice president Laura Ipsen, it takes a combination of all three, all at once, to help roll out a digitized infrastructure that can help track and save energy across the entire electrical grid.
Ipsen, who manages the company's Smart Grid team, calls that confluence "gridonomics" -- and according to her, it's not a question of "if," but "when."
I spoke to her from her office in northern California.
SmartPlanet: Cisco recently made a big splash in the smart grid space,of energy management tools. You're not the only player in the space, but you're a big one. What's the game plan?
LI: We're very excited broadly about the energy space. We think it's right for both transformation and innovation that should open up new opportunities, whether it's jobs or new technologies.
The business of utilities...we weave in technologies to create a more robust system.
For us, we see a lot of parallels to the Internet. It's about transformation. The Internet was a 30-year progression; I think there's a similar parallel. It's not going to happen overnight.
[Cisco chairman and CEO] John [Chambers] is hugely committed to this space. My business unit is growing, and we've attached to the whole superstructure of Cisco, including Connected Buildings.
I believe we're the one company that has the end-to-end approach to this experience. We also have the staying power to work with utilities to understand things from inside out of what's required to make this happen.
It's really an exciting time, and I think the challenge is to move this infrastructure ahead at one time and not pin all of our hopes to metering. It's important, but there are some challenges that need to be worked through. We need to move on with technology across the grid, and not just [at] one point.
SmartPlanet: What does Cisco bring that others do not?
LI: The utilities purpose-built the grid and their technologies to create a robust infrastructure for the generation and distribution of electricity. Their solutions are by and large proprietary. Much of that grid infrastructure will continue to be proprietary. It's the communications piece in how that infrastructure will be able to communicate -- we're translating those protocols in to an IP language. It's really about a migration and conversion so that all the infrastructure communicates in the same language.
We'll build boxes in the substation and across the grid, but for us what's most interesting is this end-to-end platform. It's about an industry that has been a mostly analog-oriented one moving into a digital world.
You can understand the culture -- you don't take a lot of risk. You have to make sure the grid is secure. You have to make sure the lights go on. Opening things up is somehow a challenging position.
One really smart thing that we've done is really understand what we don't know. We're not experts in utility operations, transmission and distribution. I don't think anybody can get it right until they learn. I hired a chief [smart grid] architect [Jeffrey Taft] with a Ph.D. To get this right, we have to mix the DNA of the IT world and the ET world -- "energy technology."
We have to understand the business models and issues, the pain points of utilities.
Part of it is having the credibility -- we have that on the IT side of the house. It's a completely different business model on the transmission and distribution side.
SmartPlanet: The average consumer is reading this interview and asking, "Why should I care about the smart grid?" How do you reach and convince them?
LI: If we take our eyes off of engaging and gaining the trust of the consumer about the future of energy management...consumer engagement is really important. I wouldn't for a minute discount the role of the consumer as being important in education. Likewise, the ability for the utilities to change their operational model to make the grid more observable and create new opportunities for their workforce.
We may as a country digitize meters -- that seems like a no-brainer, a catalyst -- but I think it is all of the above. Areas like demand response are very important to tying into the investments that are being made.
The products we built first were based on the substation. It won't necessarily be the biggest part of the smart grid, but they're important. Our strategy is to create that entire platform and have strategic control points with communications infrastructure at all points, from generation to consumption. Cradle to grave.
We believe smart grid is services-led. Working with our customers to get the architecture right, to enable the implementation [of it]. We're preparing to work with our customers in a space where, quite frankly, we have a lot of trust.
We, as an industry -- not just utilities but vendors -- we need to focus time and energy on an education campaign and use fact-based business use cases and clearly articulate the benefits to the average consumer.
When I told my Mom that I was taking this job for smart grid, she started reading me the riot act. There's always concern when an industry begins some level of a transition. None of them are ever perfect. I think we need to be more clear to say listen, the value of digitizing and giving consumers and businesses better access to information about their needs -- education or healthcare or online business or energy -- is where we get more value. It's simply to say [that] the information about energy, our ability maximize the use of our solar panels, to control what we do at home and at least know how many watts the hair dryer uses, is useful to everyone.
Let's face it, the physical infrastructure alone in this country is 50 or 60 years old. It's getting worn down. Let's be smarter about where the failures occur. We've got to be smarter about how we use it.
When we think of the world, it's this migration to digital energy that will create jobs and manage costs. This will not happen overnight.
We need to make the investments in a smart way, including with stimulus money.
Quite frankly, I don't blame people for being a little anxious about it.
SmartPlanet: There's a lot of heavy lifting to be done. How will you overcome these hurdles?
LI: As we see in other sectors -- look at healthcare, education, telecommunications -- there are value propositions for creating this new, digital world.
I think the utility sector and energy is a little tougher move to make because it's such a critical infrastructure. Yeah, it's going to happen, and the worst thing is if everyone makes these investments and...you hit the ball, and there's gotta be someone out there to catch it, and utilities are the catchers.
Whether by force or regulation or marketers, it's going to happen. How do you do it in a structured way that it can grow and become a living grid and not hobble it in the meantime? Low latency is important to utilities.
If you look at the whole market, it's this concept of gridonomics -- you have to get the technology right, the policy and standards right, and the economics right. If we don't get those three moving forward at the same time, done together, I think we could have a perfect technological solution -- [but] utilities won't be able to put innovation into their rate cases and create a regulatory framework. For me, it's this magical combination that will create this acceleration. It's just a matter of how soon this happens.
SmartPlanet: What keeps you up at night?
LI: What keeps me up at night is really the excitement and ideas and that the range of things you can do in this space is immense. Kicking off this business unit and growing it...we're going to prioritize what we do and what investments we make, and I have to mesh this with what the utilities need today. We need to understand where the pain points are -- we need to address those. But it's also the opportunity for Cisco to lead, and how immense that is, because we led in the development, deployment and creation of the Internet and there are so many parallels.
I think there's a high expectation that we will be both a major thought leader and that we have the experience to achieve this to execute. We've done this before, and we work in some of the most sophisticated environments.
My 14 years prior was running [Cisco's] Global Policy and Government Affairs [division]. I lead our EcoBoard. I'm running our whole sustainability strategy. It's critical -- my former team runs those activities and they're highly focused to support what we need to do to influence things globally.
A utility may or may not be popular with their regulator. If we have a vision and a strategy, there's more opportunity to influence the direction of regulation and policies. Many utilities come to us because they don't have the resources to work all the standards bodies. We're putting a lot of investment to get the standards right -- to the best extent possible, that they're global standards. That's a great opportunity for collaboration.
SmartPlanet: Let's talk about sustainability for a moment. What is Cisco doing?
LI: The good news is that we have a huge focus. Corporate social responsibility, sustainability and environment has always been important to Cisco, from our supply chain to our resources.
There was an opportunity to be much more connected, so we created an EcoBoard. We cut transportation 10 percent, we used [Cisco's] Telepresence [virtual collaboration product] more. Our green engineering task force ensures that our products are energy efficient and that we remove hazardous materials. Our board is reportable up to our operating committee.
One of the most important things is that we make a volunteering commitment to reducing our carbon. At our last board meeting, we're now exploring what our 2020 vision is and how to up the ante on our carbon reduction goals.
Green is the right thing to do and it's good for business. We're also saying, [information technology] is two percent of greenhouse gas emissions. We can give back more than we emit.
If it's connected, it can be more green. Embedded in our strategy is this ruthless focus on operations.
Connected Urban Development -- sustainable cities -- was handed to the climate group. There's also Connected Transportation and Telepresence for communications, which also has a carbon calculator to figure out how much you're saving by using it.
For Cisco, it's about operations, products and solutions. The other element is our employees and advocacy -- for example through our Virtual Earth Day -- and being tied into the public policy arena.
We were the IT sponsor for the COP15 -- we connected people over Telepresence so they didn't have to travel. The efficiency gains of the United Nations...to utilize that technology is really important. The ability to bring together heads of state and ministers on a dime is nearly impossible. The ability to accelerate a dialogue between parties that may not be able to travel is a great development.
In all of these areas, it would be easy to just build [computer] boxes. We're really focused on -- whether it's a smart community or transportation or energy infrastructure -- a scalable architecture that delivers solutions for our customers. For us, that's through an innovative platform.
You can throw a box into the mix -- a router, or a switch -- but we've got to align the architecture around the grid to the architecture of cities around the world. Ultimately, all of our cities are smart. For us, it's all about architecture leading to platform and solutions.
I've said from day one: there's no one company that can deliver it all. Our ecosystem and technical advisory board and strategy to collaborate is really critical to our success.
How do we partner with companies to create the future?
This post was originally published on Smartplanet.com