Buildings use 40% of the nation’s energy.   From an energy efficiency perspective alone, the National Academy of Sciences noted in a study that the “full deployment of cost-effective energy efficiency technologies in buildings alone could eliminate the need to construct any new electricity-generating plants in the United States” until 2030.

But a building functioning as an electricity prosumer goes beyond energy efficiency programs and investments.  Energy efficiency is a passive tactic that delivers firm negawatts* through reduced electricity use on a consistent and reliable basis.  Automated Demand Response (ADR) is an active tactic that enables buildings (commercial, industrial, and residential) to produce negawatts on an as-needed basis and receive ongoing payments for it.

The most common manifestations of DR programs are voluntary reductions in energy use within buildings, often accomplished by modulating interior lighting, or HVAC temperatures.  But the advent of more embedded intelligence in the forms of sensors and actuators with remote communications can create more opportunities for participation from greater numbers of buildings.  The OpenADR initiative is focused on standardizing, automating, and simplifying Demand Response programs and technologies.   It’s the most comprehensive and widely used IP-based communications standard for electricity providers and system operators to exchange DR signals with buildings and equipment within buildings.

For building owners and managers, participation delivers payments for reductions in electricity use or lower rates throughout the year – nice impacts to their operating costs.  Another benefit currently in pilot is to offer LEED credits for participation in ADR, which means that buildings will receive sustainability recognition too.

That’s not to say that there aren’t challenges to OpenADR adoption.  And these challenges map the same three drivers that consistently frame the pace of Smart Grid deployment.  Those drivers are technology, policy, and finance.  For instance, regulatory policy is extremely balkanized across the states.  While 50 states may be a great laboratory for democracy, it’s not so great to develop national cost justifications of OpenADR investments.  It is difficult for vendors to quantify the benefits of ADR to a property management firm that operates in 20 different states, with 20 different regulatory directions, multiple tariffs, and various building codes.  Technologies are still lacking in multi-tenant solutions for both commercial and residential buildings.  And green leases, one interesting financial innovation that can accelerate Open ADR adoption rates, are still at the early stages of gaining industry acceptance.

Despite these challenges, OpenADR has good momentum in some utility territories in the USA, and there are interesting information exchanges occurring between Lawrence Berkeley National Lab resources and research counterparts at labs in the Netherlands that I wrote about here and here.

This topic will be discussed in greater depth at the upcoming IBcon event in Orlando, Florida on June 12.  I’m one of the panelists in the session titled Smart Grid and ADR – How Far Have We Come?  Join me there to hear about the intersections of innovations in technology, finance, and policy that are transforming buildings in the Smart Grid.

* Defined in the Smart Grid Dictionary as Watts of electricity saved through a reduction in electricity use or increase in energy efficiency.  It is the greenest form of energy.

However, the natural gas supply chain of drilling, production, processing, and distribution produces leaks of methane, which is 25 times more damaging to our atmosphere than carbon dioxide.  We don’t even have a good handle on how much methane is leaking into the atmosphere today from our drilling boom, but given the propensity of leaks, spills, and explosions in existing pipeline infrastructure, its safe to extrapolate that an unhealthy amount is already contributing to our atmospheric warming.   That’s not a good thing as we just crossed the boundary of 400 parts per million (ppm) of CO2.  Are we just jumping from the frying pan into the fire in considering natural gas the answer to all our energy problems?

There are a few other caveats for consideration as we make decisions about the future of the electricity fuel mix in the USA.  First, natural gas requires an interstate/intrastate pipeline infrastructure.  Just like electricity has transmission and distribution grids, natural gas requires pipelines for transport.  Many existing pipelines are already at full capacity – particularly during peak demand periods.  Pipelines are prone to congestion points, just like highways or transmission lines.  The current costs to construct a large diameter, 120 mile pipeline in the Marcellus Shale region average around $500M.  Pipelines don’t magically appear overnight.  It can take time to engineer, secure permits, and complete construction.  How much time and money should we invest in building natural gas pipelines versus investment in more energy storage and renewables like wind and solar?  It’s an important question that needs to be answered.

A second caveat is that any fuel that is transportable is also exportable.  The funny thing about capitalism is that the laws of supply and demand dictate that where demand (price) is highest, that’s where natural gas supply will flow.  Utility executives surveyed in a recent study provided some insights into industry concerns about the stability of natural gas prices.  While a majority of them expect that their utilities will increase their use of natural gas by 2020, they are worried about its inherent price volatility.  Natural gas experiences peaks in price that correspond to demand – just like electricity.  Utilities in the Northeast learned that lesson this past winter when a winter cold snap increased increased demand for natural gas.  The outcome?  Utilities were forced to purchase at peak prices.  That’s an unwelcome risk factor for utilities planning long term energy portfolios.

Finally, consider energy security.  Natural gas pipeline infrastructure mirrors the existing electricity supply chain of centralized production, transmission and distribution.  It has the same brittle characteristics of today’s electricity grid.  Break it close to a production source or along a transmission pipeline, and potentially millions of people can be impacted at a cost of billions to the economy.  Does a focus on natural gas really deliver energy security are we merely investing in big fat targets for physical or cyber destruction?

Contrast this to domestic renewables like wind and solar.  They are intermittent sources, but energy storage technologies are advancing, and the latest round of innovations could start a trend of increasing value coupled with decreasing prices like we’ve seen with the solar industry.  Renewables will always be free, and from a price volatility perspective, you can’t find lower risk strategy for energy than that.  Renewables are also conducive to highly distributed generation – most of the 44M rooftops in the USA could hold a solar panel to produce at least some electricity.  More distributed generation offers some resiliency to the electric grid, because widely distributed sources of generation reduce the risks of catastrophic outages.

Natural gas is a fuel for electricity generation that serves as a bridge to a Smart Grid that fully integrates renewables and energy storage into the energy portfolio.  It is better (in some ways) than coal.  But keep in mind that simply transitioning from coal to natural gas is like going from heroin to methadone.  Better yes, but not by much.  You’re still using a fossil fuel that isn’t healthy for the planet, needs its own costly infrastructure buildout, exhibits significant price volatility, and is not guaranteed to remain onshore in the future.

Any aggregated reductions in electricity ease the stresses on our aging electricity infrastructure and give us a little breathing room to evolve to a Smart Grid.  The electric utility industry has put significant focus on reducing peak electricity needs through demand response or load management programs.  These programs are beneficial, but they have temporary impacts on electricity use.

Every electricity-consuming device wastes energy – whether we’re talking about idling vampire loads or every day use of them.  That heat you feel from your smart phone, laptop, or PC is wasted energy.  That vibration you feel or motor hum in a refrigerator or dryer is wasted energy.  If we can identify the right materials to harvest the energy lost to heat, vibration, sound, movement, and light into electricity, we can really embed energy efficiency where it counts – in the basic building blocks of microelectronics found in equipment and devices across the entire Smart Grid value chain of generation, transmission, distribution and consumption.

When it comes to electronics, better energy efficiency through harvesting technologies can also reduce the need for batteries.  Perhaps future smart phones will be powered by light and movement and won’t need batteries at all.  Energy harvesting also has profound implications for M2M applications – particularly those that are not economically feasible now due to remoteness, inaccessibility, or hazardous conditions for periodic replacement of batteries that power sensors.  A sensor that can power itself will have a far better operating lifetime and interesting impacts cost/benefit considerations.

The market projections for energy harvesting are currently assessed at $3B, but this number seems too conservative.  Given the range of applications – essentially embedded technology in every device used in the Smart Grid value chain as well as enabling many new M2M applications – it seems that this number could easily double.  There’s a growing number of companies, mostly small players, that are developing and delivering solutions for civilian and military applications.  However big Smart Grid players like ABB and General Electric are putting more investment into energy harvesting technologies.

So how do we accelerate the pace of innovation and deployment in this promising field?  It takes R&D investment in physics to expand knowledge and experience about piezoelectric, thermoelectric, and pyroelectric materials.  Nanotechnologies can also play important roles in innovations in materials and manufacturing processes.  Advanced crystalline and ceramic materials are already capturing and converting wasted energy.  Thermoelectric R&D and product releases are on the uptick, particularly in technologies to increase energy efficiency in industrial processes and automotive applications.

In the not too distant future, kinetic energy – such as people walking on a floor – could be converted to electricity by piezoelectric technologies.  Just think how schools could harness the pitterpatter of little feet to power some of their building needs. But it’s going to take investment in basic R&D to realize the full potentials of energy harvesting.  That means government intervention, because venture capital and corporate funds typically shy away from investments in basic R&D.  The Advanced Research Projects Agency for Energy (ARPA-E) within the Department of Energy programs funded BEEST (Batteries for Electrical Energy Storage in Transportation) to develop innovative rechargeable battery technologies.  A similar program called BEETIT (Building Energy Efficiency Through Innovative Thermodevices) is focused on developing energy efficient cooling technologies and air conditioners (AC) for buildings – and particularly for retrofitting existing technologies.  This model should be applied to energy harvesting innovations, just like European consortiums have already focused in this area.

The bottom line is that in an “all of the above” energy strategy as defined by the Obama administration, we need to look at new energy sources, optimize existing infrastructure and operations, and deploy innovative technologies that support intelligent production and consumption of electricity.  Energy harvesting technologies can produce electricity, and reduce loads across the grid.  Those are two great reasons that energy harvesting technologies could and should be applied across the entire Smart Grid value chain.

In developing countries, electricity is first allocated to light.  Lighting extends hours of productive work or study, and it provides safety.  The second priority is for charging mobile phones.  Developing economies are highly reliant on mobile communications, and mobile banking, which allows small businesses to flourish without requiring a financial services infrastructure complete with branch banks in remote villages.  Providing the power to keep mobile devices running helps keep their virtual finance systems running.  After these two needs are met, electricity is then used for entertainment – powering radios and TVs.  And finally, electricity is allocated to power agricultural equipment – running pumps for irrigation.

The entrepreneurs who spoke at this event are stimulating incremental changes that add up to economic, social, and political empowerment – not just in providing electricity, but providing new livelihoods and career options for underserved regions and populations.  What is happening would not fit the classic definition of a Smart Grid, but it is slowly building a grid, and doing it in very smart ways.  Contrast that to the level of activities to upgrade today’s grid, the greatest machine of the 20^th century into a Smart Grid.  In our developed economy, our focus is much more on financial and regulatory innovation as opposed to technology and business model innovations for developing economies.   And while developing economies would be happy with reliable electricity, their highly distributed, small scale electrical generation deployments deliver inherent resiliency that our grid is lacking.  This is where our Smart Grid investments need to be focused.

The financial innovations are ongoing.  The Master Limited Partnerships Parity Act was re-introduced for consideration this year in the US Congress on April 24, with bipartisan support from Democratic and Republican senators and house representatives.  As noted in last week’s article, Master Limited Partnerships or MLPs are traded on public stock exchanges, offering cheaper access to capital than bank loans.  Making this financial mechanism available to renewable energy and energy storage projects would be a wonderful market-based stimulus for these types of projects, and accelerate deployment of distributed energy resources (DERs) into the grid.

Last week Solar Mosaic announced its latest investment opportunity for California-based investors.  As this and other models of crowd-funding proliferate, utilities will have to more rapidly adapt their own operations to support integration of these DERs into the grid.

It’s the evolution of regulations to allow for grids to become more resilient as well as reliable that is the area of greatest need in developed economies.  The real challenges are in creating regulatory roadmaps that allow for a graceful evolution of utilities from managers of assets that deliver electricity to managers of services that oversee electricity delivery and much more.  This will be one of the topics of discussion at this week’s webinar hosted by The Energy Collective on May 1.  Get more information about the event and register to attend by clicking here.  We need ongoing discussions about how to change our existing business models to accommodate DER.  Without an evolution of business models, we could be left contemplating which devices in our homes and businesses get highest priority for electricity delivered from a grid that lacks resiliency and results in reduced reliability.

Financial innovations for Smart Grid investments have not kept pace with technologies or even regulatory policies, which move slower than a pre-global warming glacier.  But there’s reason to be optimistic that one unlevel playing field could become leveled, and therefore provide renewable energy generation and energy storage projects with the same access to low-cost capital currently enjoyed by the fossil fuel industries.  The innovation?  The Master Limited Partnerships Parity Act.  It is currently under consideration by the House Ways and Means Committee, the first step to getting to a full vote from both the House and Senate in 2013.

A Master Limited Partnership or MLP is a publicly traded partnership for an energy asset.  First launched in 1981, today’s MLPs are traded on public stock exchanges, offering average Main Street investors as well as institutional investors the necessary structures to buy and sell shares in gas/oil/coal extraction and pipeline projects.  There are two primary benefits of MLPs – they operate on a pass-through tax structure, which lowers the cost of capital.  Note:  A pass-through means that the MLP does not pay tax, just the shareholders (typically called unit holders).  Second, they allow companies to build and operate energy-producing assets and offer a sufficient rate of return that is appealing to investors.

If something similar were available for renewable energy and energy storage projects, it would give motivated investors opportunities to be green with their money and make a steady income return on their investments.  For example, an innovative financing structure from Solar Mosaic leverages crowd-funding to enable average investors in selected states to participate in solar project investments for as little as $25.  Their last round of funding for three projects was fully funded in 24 hours.  Investors were thrilled to chip in a total of just over $300K to make anticipated profits on solar generation projects.  MLPs are a more formalized version that could be a game changer for utilities and corporations seeking sources of capital for renewables and energy storage projects.

REITs (Real Estate Investment Trusts) operate under similar structures (in fact, most converted from MLPs), and there’s plenty of discussion encouraging us to think about renewable energy projects like real estate instead of a sale of goods or commodity transaction.  Sales of goods like energy are transacted as Power Purchase Agreements or PPAs, which can be complicated contracts that add performance contingencies, clauses, and caveats that also add risks to projects organized this way.

In 2012, traditional MLPs attracted $23B for projects, for a total of about $325B in market capital.  In 2008, Congress expanded the definitions of MLP projects to include ethanol, biodiesel, and other alternative fuels projects.  Imagine what a similar pool of money could do for investments in clean generation from solar, wind, and geothermal as well as energy storage.  This sort of capital dwarfs the $4B spent on the Smart Grid in the American Recovery and Reinvestment Act (ARRA) or stimulus fund of 2009.  It creates local jobs, reduces carbon emissions, and helps states achieve their RPS objectives.  You can help make all of these worthy goals happen.  For starters, read more about the MLP Parity Act and see if your Congressional representatives are listed there as sponsoring this legislation.  If they aren’t listed, ask them to get on board.  It’s one incredibly important green step that can have significant positive ramifications for decades to come.

Private Branch Exchanges (PBXs) disrupted and disintermediated the phone company from commercial and industrial consumers. PBXs duplicated the most relevant functions of the large and remote (and centralized) Central Office switches supplied by the phone company. Today’s telecommunications networks contain vastly more distributed intelligence and autonomy than the network of 25 years ago, and there are many more players delivering innovations in technologies, services, and business models.

What will be the disruptive technology that starts the slow erosion of commercial businesses away from traditional electric utilities? What technology will dramatically reshape today’s power grids and service providers? Microgrids. The Smart Grid Dictionary defines a microgrid as “A small power system that integrates self-contained generation, distribution, sensors, energy storage, and energy management software with a seamless and synchronized connection to a utility power system, and can operate independently as an island from that system.  Generation includes renewable energy sources and the ability to sell back excess capacity to a utility. On-site microgrid management software includes controls for the power generation, utility connect/disconnect, distribution, and energy storage equipment along with building energy management applications for industrial, commercial, or home use. “

Microgrids, like PBXs, reduce the reliance on a regulated supplier to deliver a commodity like electricity.  Industry research firms are optimistic about microgrid market potential, with projections ranging from $6B in 2020 to $17B by 2017.  Commercial microgrid solution providers are acting on the market opportunity.

In developed economies, microgrids provide energy surety for their owners.  Even if the surrounding grid is experiencing an outage, a microgrid theoretically can provide at least a modicum of power to the most important electricity consumers within its confines.  The term theoretically is emphasized here, because current operational and safety standards require that any grid-tied generation has to shut down if the larger grid experiences an outage.  There are standards bodies working to change this without compromising worker safety, which is of paramount concern for everyone.

Conceptually, a microgrid can put into practice the concept of graceful degradation, which has been a hallmark of computing design for a couple of decades.  PBXs of old (now evolved into IP communications servers) were and are designed to be fault-tolerant, but graceful degradation embodies the intentional design of a system to maintain limited functionality even when parts of it are inoperable.

Unless a microgrid has 100% self-generation capacity and energy storage that won’t be depleted, a graceful degradation scheme might determine that like Animal Farm, “All animals are equal, but some animals are more equal than others.”  On a college campus that operates as a microgrid, unoccupied classroom buildings may be less equal than occupied dormitories, unless there is critical research ongoing in a laboratory worth millions of dollars or human hours of time.

In developing countries, microgrids eliminate the traditional electricity supply chain of large, remote and centralized generation, long distance transmission, and low voltage distribution to consumers.  Microgrids hold significant promise to eliminate energy poverty that afflicts over 1 billion humans, according to the International Energy Agency (IEA).  Unless the utility itself is supplying the microgrid in these situations, it’s unlikely that these new consumers will ever have the same sort of buyer/seller relationship that we’re accustomed to in our developed economy and civil structure.

Microgrids will lure the customers with the highest utility bills, who have the most motivation, to seek opportunities to reduce their operating costs and gain more control over their energy security in developed economies.  Will regulators and utilities react in time to ensure that ratepayer bases are not too severely hollowed out, and that overall grid resiliency is realized from the incorporation of microgrids and other distributed energy resources?

For instance, the transformations that occurred in the telecommunications sector within the past 25 years offer cautionary and instructive lessons.  In the past, everyone received universal service or phone dialtone from a monopoly called American Telephone and Telegraph (AT&T).  You leased your phone and phone number from them.  Then Private Branch Exchanges (PBXs) became commercially available and created dialtone for their owners.  Businesses could buy their own equipment.  Calls that occurred within their four walls never left the premises and never used the AT&T phone system, reducing their revenues.   Calls that occurred to the outside world used AT&T’s system.

AT&T’s monopolistic business model was disrupted and disintermediated by new technologies and entities that enabled consumers become prosumers.  This term, invented by Alvin Toffler in his 1970 book Future Shock, defined a new dynamic relationship for producers and consumers*.

But while you could be a dialtone prosumer within a building, it wasn’t feasible to sell excess dialtone back to the phone company.   That’s not the case with electricity.  It is feasible to sell excess electricity back to a local utility when regulations such as Feed-in Tariffs (FiTs) create the mechanism for it.  Grid modernization offers tempting prosumer opportunities for commercial and residential consumers to enable at least some degree of self-sufficiency and reduce their payments to local electric utilities.

The electric grid could evolve to be a patchwork of areas with privately owned distributed energy resources (DER) and local distribution grids upgraded to allow a two-way or bidirectional flow of electricity.  Under existing cost recovery mechanisms, all ratepayers would have helped to pay for the upgrades to these parts of the grid.  But would all ratepayers benefit?

We need to ensure that the sum total of ratepayers enjoy shared benefits for grid upgrades through business models that support grid resiliency. How can this be done?   Here is one suggestion.  Utilities could be allowed to manage privately-owned DER assets with agreements that identify emergency scenarios where DER-originated electricity would flow back to the grid rather than remain onsite.  DER asset owners would not pay fees to tie their equipment to the grid, and would enjoy all the monetary benefits of a transactive energy market on blue-sky days.  But when an emergency occurs, be it natural or human-caused, those assets would be managed to benefit the greatest number of beneficiaries.  Scenario definitions should be modeled on the coordinated inter-agency planning activities that identify disaster events and responses by utilities, police, fire, and other emergency services.  The utility becomes the arbiter of a social DER compact that leverages grid resiliency to deliver energy and economic security for all.

But this can’t happen under current investor-owned utility (IOU) operations, organized to satisfy dual stakeholders – regulators and Wall Street.  State regulatory commissions would do well to ask utilities to design distribution grid upgrades for shared benefits of resiliency in addition to reliability.   Regulators would also serve their constituents best by thinking how utilities should be re-organized to continue to deliver the broadest service coverage for customers.  Otherwise, we might end up with a grid patchwork that resembles nationwide wireless networks or broadband service coverage that doesn’t come close to the universal service ideal.

*  The Smart Grid Dictionary definition  of a prosumer is:  A term coined by Alvin Toffler to describe a producing consumer.  From a Smart Grid perspective, it would apply to distributed energy resource situations in which the owner of electricity production or storage assets may also have a consumer relationship with a utility, aggregator, or other energy services provider.

I’m all for microgrids, distributed energy resources (DER), and the concept of Transactive Energy to improve grid resiliency.   We can become prosumers of electricity rather than simply remaining consumers.  This ebook advises utilities how to position themselves to avoid disintermediation.  But the Smart Grid and its enabling technologies do not mean the end of electric or gas utilities.

What consumers don’t need (or necessarily want) is today’s power industry structure.  This is not rejection of the utility industry so much as recognition that a sole supplier reduces consumer choice and discourages innovation.  Competition can be a very healthy thing.  That was one of the critical motivations for the deregulation and divestiture of the Bell Telephone System.  Many utility leaders would agree that their organizations are slow to innovate.  Regulatory processes and organizational culture predispositions make utilities risk-averse in selecting new technologies or services.

But there is a very important role that utilities can play, if given the regulatory incentives to make changes.  Utilities could be the manager of customer-owned DER for self-sufficiency or participation in demand response (DR) programs, or the lessee of rooftops for solar panel placement and energy harvesting.    Managing these assets as aggregated entities would reduce overall costs and help deliver more resiliency for the entire grid, which in turn has significant economic and societal benefits.

Today’s wireless carriers have significant chunks of white space in their coverage maps for the USA – its not profitable to serve sparsely populated areas.  That’s why the US government had to step in with the Rural Electrification Administration to get electricity and telephony to some parts of rural America via government loan programs.

We need to consider the regulatory and legislative policies that must be crafted to allow or motivate utilities to offer more services and build more revenue streams to offset losses caused by customers going off grid and ensure that society in general can depend on a reliable and resilient grid.   Regulated utilities can play a critical role in management of all DER that is tied to the grid.   An “every man for himself” approach defeats the self-healing capabilities that grid resiliency must provide.

Smart meters are an important component in the Smart Grid, particularly to enable greater participation for prosumers in electricity markets.  If there’s a concern about health impacts, it deserves attention and resolution.  So let’s review the science of electromagnetic frequencies (EMF) and the subset known as RF.  EMF is a continuum of frequencies (or wavelengths) for electricity, AM and FM radio, broadcast TV, microwave cooking and communications, infrared, the light waves human eyes can detect, all the rays in what we call sunlight, and x-ray and gamma rays.

Every electric-consuming device emits some EMF, as does electrical wiring in buildings. Depending on where you live, your laptops, tablets or smart phones probably detect multiple residential and commercial wireless LANs around you. There’s a steady barrage of RF hitting all of us as our smart phones receive calls, emails, and texts.

EMF, and particularly RF technologies are pervasive in modern society.  RF technologies are essentially inescapable.  Any establishment that offers free WiFi is pushing RF at us.  RF technology is the magic that makes garage doors open remotely.   Department stores make you pass through RF scanners seeking those inventory tags that discourage theft.  We are surrounded by RF signals.  We marinate in EMF when we step into sunshine.

The event protesters expressed concerns about the RF technology used in smart meters, one of a number of devices that uses 900 MHz spectrum.  If this spectrum is found to be harmful to our health, then by all means lets ban every device using it.  Information from the Federal Communications Commission (FCC) in their Table of Spectrum Use identifies the applications for this spectrum.  Baby monitors often use the 900 MHz spectrum, as do many cordless phones and microwave ovens.  It is also commonly found in industrial, scientific, and medical (ISM) equipment, so it is fairly ubiquitous in deployment for a number of applications for a number of years above and beyond smart meters.

There are studies that have examined the effects of 900 MHz – and to my bemusement, one study found that this frequency caused weight gain in female rats.  Should we worry about smart meters making us fat?  Since they are so new in deployment in the USA, that couldn’t possibly explain the slow and inexorable spread of American bottoms over the past 40 years.  Perhaps it’s the baby monitors or the medical devices in hospitals that should be blamed for that instead of sugary soft drinks and overly generous food portions.

So why single out smart meters for excision from modern society?  If we are truly concerned about a particular spectrum’s effects on health, then wouldn’t all the devices that use that spectrum put us at risk?  If the concern is about RF in general, then shouldn’t we do away with all wireless devices, particularly smart phones, which deliver more RF exposure in close proximity to our bodies than what is produced by a smart meter?

We should understand the impacts of EMF on environmental health, and if there’s something bad out there, mitigate those risks.  But we shouldn’t discriminate against one device in the entire universe of gadgets that use RF technologies.  Otherwise, we’re letting beliefs control our receptivity to both scientific knowledge and common sense.

I spoke with Raiford Smith, Director, Smart Grid Emerging Technology, at Duke Energy to learn how one of the most forward-thinking utilities in the USA plans to manage the increasing complexity of distribution power grids and communication networks.  Smith explained, “We established a vision to utilize a common platform – just like a smart phone houses many apps – to improve utility operations, reduce costs, provide inter-operability, and offer additional value-added customer products and services.”

That common platform includes a network management solution from GridMaven, which was also recently selected by National Grid as part of their Smart Grid “dream team.”  This common platform is critical because like almost all utilities, Duke has siloed views of grids and networks – or one screen per system.  The result of these data silos leads to a serious lack of situational awareness about operations within networks and power grids.

For instance, the Duke Energy test bed in Charlotte, NC includes five different systems used to transport data about communications networks or power grids.  Two systems reside in grid operations and one is provided by a cellular carrier.  The communications network managers work in different locations than grid operations, so there is limited visibility into systems status and device performance between these two groups. If there’s a problem collecting meter data, is that due to a problem with a meter malfunction or a communications node connection?  Perhaps the node is sending alarms about a carrier network fault – but there’s no easy way to correlate that alarm with status information from the carrier’s network management system.   Pity the network operators scanning 5-8 different monitors stacked in front of them and trying to synthesize that cacophony of data into realtime decisions.

Consolidating data about the operational status of devices and networks via a network management solution can expedite root cause analysis and determine the best response for problem resolution for Duke. Smith projects that their Mean Time To Repair (MTTR) metrics will improve the times for fault identification and repairs.  And as their repair times improve, services outage durations and frequencies for customers should decrease.

Duke will evaluate the GridMaven solution to move from reactive to proactive troubleshooting with the benefit of operational costs reductions.    Smith said, “Like most utilities, we run our assets to failure.  That’s not the best way to run a system, particularly when customers depend on uninterruptible service to power their homes and businesses.” Correlating data from disparate systems provides the ability to identify patterns and anticipate trends to failure before they occur.  Utilities like Centerpoint Energy have seen cost savings for proactive, planned equipment replacement due to elimination of overtime costs since maintenance is scheduled during regular work hours.  This is exactly what telecommunications companies have been doing for years with network manager solutions.

There are other specific benefits that Duke Energy expects with deployment of this network management solution, but in the end, all of the reasons come down to reducing costs and downtime and improving operational efficiencies.  The telecom sector has been using network management systems that handle petabytes of information on a daily basis to deliver situational awareness.  It’s a promising sign that electric utilities like Duke recognize the value of infusing situational awareness in their distribution grid to make it a truly Smart Grid.

Note:  The writer manages a consulting firm with clients in the Smart Grid and M2M sectors.  The views and opinions expressed on this blog are purely the writer’s own.  Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question.