Sweden’s Energy Policy – Could the USA Find Inspiration Here?

The USA could learn a number of valuable lessons from Sweden about energy policy.  The Swedish Trade delegation recently sponsored a Smart Grid roundtable in San Francisco with Anna-Karin Hatt, Minister for Information Technology and Energy in the government of Sweden’s Ministry of Enterprise, Energy and Communications.  Several Silicon Valley Smart Grid organizations, including resources from Oracle, Silver Springs Networks, EPRI, and the Smart Grid Library participated with moderation by Lars Friberg, the Swedish attaché for Climate and Energy.

Ms. Hatt set the knowledge foundation for the roundtable by describing Sweden’s energy policy targets for 2020:

  1. Achieve 50% renewables.  This is the highest target in the European Union, and they are on track to achieve it as they were at 48.9% in 2010.
  2. Deliver 20% more savings through energy efficiency measures than today – and Sweden already scores well here too
  3.  Reduce emissions 40% from 1990 levels, and by 2030, eliminate fossil fuels from their vehicle fleets.

By 2050, the country aims to be carbon neutral.  These are serious energy policy goals that starkly contrast to the conflicted USA energy policy.  The Swedish government understands that 80% of the world’s current energy consumption is fossil fuels, and that’s a significant problem for energy security, environmental balance, and economic competitiveness.  The leadership concluded that they don’t need to remain part of the problem.  With the support of their citizens, Sweden intends to become part of the solution – which is to achieve independence from fossil fuels.  Sweden plans to be in the forefront of the energy market evolution – and indeed they already have been.

There are three cornerstones for their policy objectives that cover economic competitiveness, economic sustainability, and security of energy supplies.  To do that will require increasing renewables at utility-scale and through distributed generation with renewables in the distribution grid.  The Minister acknowledged that renewables create a challenge for grid operations insofar as their variabilities need to be managed, but that isn’t impeding their planning.  They are careful to structure policy goals and conditions for actions, but not dictate how the transitions to more renewables should occur.  As Ms. Hatt noted, “we’re only at the beginning of a truly transformative period world wide, in which there will be enormous investments in energy efficiency and renewables technologies and services.”

The government in Sweden recently established a Smart Grid Council and charged its appointees with establishing a national knowledge platform for its citizens that would raise awareness of Smart Grid benefits for all stakeholders and create an action plan that identified evolving business models and research gaps.   The minister indicated that there is much to learn about consumer reactions to electricity price variations and detailed consumption data.

Sweden is making significant advances to modernize their electrical grid and integrate clean energy sources into it and transportation infrastructures.  So why did this forward-thinking government ministry convene with Silicon Valley Smart Grid players?  To collaborate on technology development, business and financial model innovations, and consumer/prosumer transformations.  This roundtable was just the first step to exchange ideas and information, such as the Property Assessed Clean Energy (PACE) programs and other creative approaches to finance renewables in the distribution grid for residential and commercial customers.  One key takeaway for us American participants – we shouldn’t limit our thinking in terms of the ambitious goals we could and should set for an energy policy that promotes energy independence from fossil fuels, and therefore delivers energy, economic, and environmental security.

The Swedish Trade delegation is planning a seminar in the San Francisco Bay Area in the first half of 2013 to continue this discussion, so stay tuned for more information and inspiration.

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Smart Grid Technologies Present Challenges to Regulatory Policy

State regulatory commissions have significant impacts on their local economies through oversight of privately-owned electric, natural gas, water, telecommunications, and various transportation entities.  The National Association of Regulatory Utility Commissioners (NARUC) organizes regular Committee meetings that help commissioners develop public policy and share best practices.  Their recent Summer Committee meetings in Portland, Oregon focused on energy, water, and telecom plus consumer affairs and critical infrastructure.  Each state regulatory commission faces unique challenges and opportunities based on infrastructure status, economic conditions, energy mix, and other factors.  However, the Smart Grid presents one common set of issues to regulators – first in electricity, but also appearing in natural gas distribution grids and water/wastewater systems.

The convergences of Smart Grid technologies coupled with innovations in programs, markets, and business models are challenging existing regulatory policy frameworks for electricity.   For instance, consider policies for connecting residential and commercial-scale solar generation to local distribution grids.  The very helpful Freeing the Grid annual report identifies and evaluates state net metering and interconnection policies.  These policies can serve as early indicators of how aggressively each state is encouraging power generation in distribution grids and embracing the full set of opportunities that Smart Grid technologies deliver.  As has been pointed out in previous articles Smart Grid technologies that deliver and support distributed generation (DG) help improve grid resiliency and reliability.

Net metering is defined in the Smart Grid Dictionary as “the capability for residential and C&I (Commercial and Industrial) customers to generate electricity and sell back excess power to the utility.”  California recently revised its cap on net metering to allow an increase of solar deployments to about 5.2 GW of DG on the distribution grid.

Interconnection refers to the policies and procedures that govern how bulk or retail generation connects to the power grid.  Since these arrangements have traditionally been established for bulk power and handled at the transmission grid level, policies for interconnection at the distribution grid are far less common.  One of the gotchas often inserted into legislation and regulatory policy in some states concerns a requirement for solar panel owners to purchase insurance, driving up installation costs and lengthening ROI timeframes.  Use the Freeing the Grid guide to see how your state stacks up in pioneering policies that can be used to fully enjoy the benefits of a DG-based Smart Grid.

How should we define future regulatory policies in the advent of Smart Grid technologies that deliver clean, renewable and localized generation, energy storage, and vastly expanded remote monitor and control of assets?  Let history to be our guide.  Business sectors like telecom and computing both evolved from extremely centralized models to decentralized and distributed models.  New technologies triggered new business models and new markets.  How different would our world work today if laws had been enacted to protect mainframe computers from upstart technologies like PCs?  What if we were required to include expensive insurance to protect against fires occurring in lithium-ion batteries in smart phones and laptops when we purchased these devices?

Regulators should consider that trendlines in telecom and computing show an evolution from centralized to decentralized, and from consolidated intelligence to distributed intelligence.  Could electricity generation be modeled and managed as a cloud-based resource in the future?  Smart Grid technologies can make that a reality, but regulatory policy will play a critical role in determining state roadmaps and speed to grid modernization.

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Standards and standard thinking

The developing Smart Grid portends opportunity and risk on both sides of the meter.  I spend enough time rhapsodizing about Smart Grid opportunities, so its time to look at some of the risks.  For customers, which could be utilities or end users, there are risks in selecting solutions that lack interoperability.  Will the smart meters a utility selects for a territory today work with the HAN solutions their customers will be buying tomorrow?  Another risk lies in cybersecurity.  A dumb grid does have  at least one advantage – it reduces the overall points of unauthorized entry.   Smart meters with their 2 way communication capabilities offer millions (literally) of points of entry unless comprehensive security standards are deployed in all solutions across the grid. 

Fortunately, there are very smart and dedicated people working with great speed and purpose on establishing standards for interoperability and cybersecurity.  The National Institute of Standards and Technology (NIST) has a leading role in developing national Smart Grid interoperability standards for the USA.  Working in close coordination with major stakeholders like utilities and industry vendors, NIST has a 3 phase plan to build consensus on existing standards for interoperability and cybersecurity and an interim roadmap; facilitate public/private panels to drive harmonization of standards and evolution of technologies to those standards; and then develop a plan for a test and certification framework.    The interim roadmap was published late last week and is available for public view at http://www.nist.gov/smartgrid/InterimSmartGridRoadmapNISTRestructure.pdf.  It’s an interesting read!

Now on to standard thinking.  We all have great expectations of the technological advances that the Smart Grid can deliver.  It appears that at least some technology vendors and utilities have great expectations of consumers too.  At a recent conference, an oft-cited example of demand response and how price changes will drive consumer behavior concerned laundry.  In this example, it was predicted that consumers will choose to do their laundry at midnight when rates are lowest rather than another time of day (or night).  Hello???? Here are three reasons why this is a really great example of bad standard thinking:  1)  who is getting up at 1AM to move clothes from the washer to the dryer?  Or is that what the live-in maid is supposed to do?  2)  many multi-tenant communities (like my condo association) don’t allow laundry after 9pm because of noise.  3)  Midnight is not the best time to line-dry clothes – especially for consumers who are fortunate to have outdoor lines.  I don’t know about you, but I like to hang laundry outside in daylight hours when I can see what I’m doing. 

So here’s my plea to the technology vendors – get past the standard thinking.  Its not about what the technology can do, its about what people can and will do with the technology.

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