1.  Support a national energy policy that encourages development of clean and domestically-produced renewable sources of energy.  The Smart Grid integrates renewable sources of energy and builds the foundation for wide adoption of electric vehicles (EVs).  The faster we upgrade and update our electrical infrastructure and revise our policies to support distributed generation from renewables and EVs, the sooner we end our reliance on oil.  And that means the sooner we can keep that $1 Billion daily transfer of wealth from going offshore into the bank accounts of petro nations like Iran that don’t like us. 
2. Revise the tax code to eliminate the permanent subsidies, royalty forgiveness, and other tax breaks that fossil energy companies enjoy.  If subsidies are bad for young solar and wind power developers, then they are insanely stupid for established oil companies that earn record-breaking profits.  We can’t afford corporate welfare to multinationals that pollute our atmosphere with CO2 emissions and foul our waterways with spills and pipeline leaks.  The Smart Grid helps make that transition from dirty energy sources to clean ones that are locally produced.
3. Invest in promising new Smart Grid technologies and businesses.  To make that happen, we need long-lasting tax and investment policies that create market certainty for private investors, not the piecemeal policy erraticism that seems so uniquely applied to anything that reduces our reliance on dirty fossil fuels.   There are opportunities for the USA to take technology leadership positions in energy storage, energy efficient materials, components, and technologies, advanced analytics, and cybersecurity applications.  All of these are vital to the establishment and ongoing operations of the Smart Grid.  While we’re generating lots of heat about Solyndra, there’s been little light shed on the fact that even very smart venture capitalists generally see a 10% success rate on their investments. Thomas Edison, an inventive genius, had more failures than successes too.
4. Stop doing stupid things like making the world safe for incandescent light bulbs.  Do we pay our elected officials exorbitant salaries with perks so they can cost us more money in our annual energy bills?  The incandescent bulb, so beloved of a vocal minority in Congress, hasn’t changed much since Edison invented it.  It is an extremely inefficient source of light, and an inconvenient source of heat (which is simply wasted energy).  The Smart Grid not only seeks to increase energy supplies from renewables, it aims to decrease demand for electricity through use of more efficient lighting.  The 100W bulb that has captured the adoration of some Congressional Republicans costs $25/year for 6 hours of operation a day.  It is a total operating cost that is higher than that of compact fluorescents or other new lighting technologies. Consumers have benefited from Energy Star appliances in the form of lowered electricity bills, and we deserve to enjoy the monetary benefits that elimination of wasteful incandescent bulbs will bring to our wallets too. 
5. Allocate more funding to microgrid R&D in the Departments of Defense (DOD) and Energy (DOE).  The US military is the largest consumer of petroleum fuels in the world, and has grim statistics on the human costs incurred in fuel transport.  In 2007 alone, 170 US soldiers or civilians were killed in Iraq and Afghanistan while moving fuel.  That’s an avoidable cost when locally-produced electricity can reduce fuel needs.  In fact, the DOD’s first issued Operational Energy Strategy defines its marching orders much as many US electric utilities document them:  reduce demand, find alternative sources of energy, and improve security.  Encourage microgrid research and give it more funding.  The knowledge the military builds will be disseminated into civilian microgrid applications that are part of the Smart Grid, and could end up lifting much of the world out of energy poverty.

Here are two examples of changes that are coming as a result of Smart Grid technologies and services.  And lest you think that change is a one-way street from utilities to consumers, be aware that consumers also trigger changes in utilities.

Here’s one change that can’t come soon enough for improved energy and economic security.  Electric vehicles will eliminate the price fluctuations that Americans have experienced at the gas pump since the 1970s.  We will never worry about lunatic dictators with oil revenues playing havoc with our economy.  We do need systemic change to build out a charging infrastructure, but that work is already underway in a number of cities, and enlightened companies are installing charging stations for employees and customers.  EV and charging infrastructure technologies are there, and rapidly improving.  Google is even adding charging stations to its maps. 

Many consumers have been reluctant to switch to EVs.  One reason is range anxiety – a perception that you’ll run out of charge before getting to your destination.  However, as gasoline soars in price, range anxiety will be replaced with financial anxiety, and that’s a powerful motivator for change.  There are other motivators that will accelerate changes in consumer attitudes, including tax incentives for purchase of EVs, increasing fuel efficiency standards, and corporate and local/state/federal government purchases of EV fleets.   

Not all Smart Grid-sparked changes happen to consumers – some happen because of consumers.  Technology introductions, especially those that are visible or disruptive to consumers, will challenge electric utilities to revise their operations, re-skill their employees, and change their cultures.  Utilities will need different communications practices and service orientations, as well as much better knowledge of their customers to educate them about Smart Grid initiatives such as new pricing or demand response programs.  That will require a series of changes in utilities that involve technology introductions, process re-engineering, and training workforces to think differently about ratepayers to improve their contact center and other interaction practices.  These are complex and time-consuming tasks, but utilities must complete them to successfully engage and enlighten their customers about Smart Grid-related initiatives.  I’ll be hosting a webinar on March 30 on the Smart Grid and the Customer Experience that explores the intersection of Smart Grid technologies and consumer challenges for utilities.  Join us to learn more about tools and tactics for utilities to build support for Smart Grid initiatives across all consumer constituencies.

Customer service orientation.  When was the last time your utility asked you to complete a customer survey rating their service?  There was a time when telecommunications companies didn’t forge much of a relationship with customers, but competition has changed that situation.  There is nothing that prevents utilities from developing more outreach to ratepayers to obtain feedback.  Telecom companies learned to do it through advisory boards, customer satisfaction metrics, and communication plans that deliver news in multitude of channels to effectively push information.  Today’s ratepayer may be tomorrow’s customer with a selection of vendors who buy and sell electricity.  Smart utilities should develop Consumer Enlightenment Models now in anticipation of a future with more retail choices.   

Mobility.  Once upon a time, phones were tethered to physical locations. Today, phones roam around, and telecom companies produce billing records that identify date, time, place, and length of calls as well as text messages, internet use, and manage price schedules based on time, geography, and other factors.  The advent of electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) mean that electric meters will be roaming around in large numbers.  Utilities can take a few lessons from telecom companies about billing systems that track roaming charges and required changes to internal operations to support mobile meters. 

Technology adoption at the network edge.   The telecom industry and the electric utility industry share a common and ingrained fear – the fear of unproven technologies.  There’s a sound basis for this fear – given the vital services provided by electric utilities and the phone companies, it would be unthinkable to introduce a new product or application that could bring down a network delivering either electricity or dial tone.  It would also be a career-killer.  Therefore, any new technology undergoes rigorous testing in internal labs, and this testing is duplicated in each utility because each utility network is unique.  This testing process means that technologies are adopted at a slower pace than is commonly seen in some industries, and discourages innovation. 

The “edge” of today’s electrical grid is where the meter hangs on the wall.  The Smart Grid pushes the edge into residences and businesses, and this is the area of great innovation potential.  Smart meters, whether new or retrofitted electromechanicals, are similar to smart phones – there are many applications that can be enabled by them.  This means opportunities to identify external test labs and develop certification programs that do not endorse any edge products but do provide assurances that they won’t “break” the network either.   Utilities should study how the mobile telecom carriers accommodate innovations at the edge of their networks – smart phone applications – and take some notes about setting up simulation programs and testing environments. 

There are other similarities between telecom and electric utilities as well, but these listed here, plus the deeply embedded sense of mission and monopoly skills noted in last week’s blog make the case that forward-thinking utilities should learn from history instead of re-living it.

It’s a tough job – and the Commissioners are asking good questions such as “What should they do to encourage utilities to deploy Smart Grid solutions in absence of firm standards for interoperability and security?”  “What are the benefits that new technologies bring to consumers, and what are the costs to consumers?”  How do they prioritize all the many efforts that can be deployed in the Smart Grid arena to maximize beneficial impacts?  Here are three topics that are getting lots of time in their sessions. 

Smart meters – interoperability

Everyone is concerned about standards for interoperability for meters – ensuring that meters from different manufacturers deliver common data that can be managed by Home Energy Management Systems (HEMS).  Consider the implications of interoperability decisions.  The right decisions mean that consumers get more information and control of their energy consumption at the right price points.  The wrong decisions can mean increased consumer costs for energy and services that are not as information-rich as they could be.  No commission wants to structure regulatory policies that influence utility choices of technologies that are proprietary and unable to connect to the larger regional grid.  Commissioners are careful to want to avoid picking winners and losers in technology solutions, but understand that they need to help utilities make smart decisions that reflect not only the regional interests but national grid interests as well. 

Smart Grid – security

Critical infrastructure – ranging from transmission lines and distribution substations to the internal computer networks and software that manages customer information and billing – is the focus of many discussions about secure protection.  As the Smart Grid will use more networked applications for demand response and energy efficiency programs as well as more automation and optimization of transmission and distribution systems on a greater interconnected scale, it is vitally important that networks are secure and architected to provide layers of authorized access to private virtual networks.  There are a lot of potential threats to overall grid reliability and stability out there, and the public utility commissions and staff are well aware that their policies can have national security implications.

Smart energy devices – registration

The Smart Grid will have smart energy devices – specifically meters and energy storage devices, such as electric vehicles or home batteries.  Some Commission staff members are talking about numbering plans for these devices, because whether these are IP addresses or phone numbers, it entails literally millions of new addresses or numbers to be allocated for their use.  In addition to fixed devices like meters, electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) will also require addresses or phone numbers to support roaming charges – so no matter where your electric car is charging or discharging, the debit or credit is posted to your utility account. 

Fascinating stuff, and there are no easy answers out there.  What are the implications for you, dear readers?  You need to be aware of the decisions that your Public Utility Commissions are making since they can impact your energy bills, and give you a bigger role  and better tools in consuming energy in smart and sustainable ways.  The Commissioners and their staffs want your educated feedback to help them ensure that your regulated utilities are effective and active participants in building the Smart Grid and giving you the energy services you want and need.