GridWeek puts spotlight on the smart grid and its challenges

The smart grid's movers and shakers will gather next week in the nation's capitol for GridWeek whose speaker list includes such luminaries as DOE secretary Sam Chu and Commerce secretary Gary Locke. Workload permitting, I hope to be there.

The Smart Grid has the attention of vendors, utilities and policy makers but speaking as a consumer, I'm still waiting for it to trickle down to me. I have the same dumb mechanical electric meter that was installed when our  house was built 17 years ago (I went down and checked to see if National Grid surreptitiously swapped the mechanical clunker out for a smart meter. No such luck).

What is GridWeek all about? Here it is in a nutshell: "A realization is emerging that a new view of energy, beyond oil, coal and other fossil based fuels, will result in decentralized components of the electricity grid, a far cry from the central generation and structured system of the past." The folks gathering there will try to make this vision happen.

It sounds great and the commitment to build it is strong, but the usual obstacles stand in the way, some unique to the utilities and the energy industry and others commonplace such as enough funds to make it happen with the urgency everyone wants. To discuss these issues, I caught up by phone with Mark Hura, GE's smart grid commercial leader with the company's Energy Transmission and Distribution division.

GE is unique because its product and service portfolio runs across the electricity value chain from start to finish. It either makes or develops transformers, smart appliances, entire generation systems for power plants, smart meters, batteries, grid control software and energy automation products. Siemens is the only other company I can think of with similar depth and breadth in energy, but I am sure there are others.

As a result, GE's products touch a lot of customer types. But at the end of day, the utilities and its customers are GE's primary constituency, according to Hura.

"Our customer is the utility that owns and operates that grid," he says. One GE goal is to use technology that lowers cost so the savings can be passed onto consumers. He estimates the smart grid can lower today's energy bills by between 10 and 15 per cent. What's more, the smart grid will be essential to handle renewable energy and power smart appliances such as electric cars and those in the home. Also, the old grid happens to be crumbling under today's loads and would collapse under tomorrow's.

One major disconnect is that smart grid savings is mostly on the generation and transmission sides where the cost is born by the energy distribution to homes and businesses. Distribution is where the smart grid network will be built and will use smart meters.

Years ago, utilities owned all the pieces, but they have split themselves up over the years as the result of deregulation.

"A lot of investment is incurred on the distribution side, but the benefits are experienced in generation and transmission," says Hura, adding there's has to be "critical incentives to invest."

Utilities are facing revenue reduction from the decreased demand which compounds the problem (I am trying to reconcile decreased demand with projections that electricity consumption will double, triple and even quadruple in the future). No doubt, utilities for now are being encouraged to get their customers to use less, hence generating lower revenues. And the recession has taken a toll.

That's why the $43 billion in Stimulus money for energy and the smart grid is so important. Hura thinks  money from the feds is not coming fast enough, though.

"The government is doing a lot in terms of raising awareness, but it needs to act with speed and not on trials but on scalable deployments [that can be grown and replicated]. How can the government reward utilities for efficiency?" he asks.

Policy also needs to encourage decoupling where electricity production is separated from revenue generation so output can be aligned with what's needed. Decoupling helps utilities invest in smart grids and renewable energy sources and at the same time assures "the utility will have a steady revenue stream," says Hura. (Think about it: what other industries besides those in energy work so hard to get customers to use less of their product?)

Another thing he helped clear up for me is relationship of the smart grid to the Internet and whether it will be a "1,000 times the size of the Internet" as some claim.

"The smart grid is synonymous with the Internet and has similarities in terms of information and IP [addresses]. That's why it's like the Internet, but it's not the Internet. If you want to think of it in that way, it's really an energy Internet," he said.

He declined to comment on how big it could become, but revealed it could eventually be used for non-energy purposes such as delivering broadband-like Internet access to the home. Wouldn't more competition in that space be nice?

The video below is an excellent overview of the smart grid from the IEEE, the electrical engineering association.

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This post was originally published on Smartplanet.com