April 15, 2008

Economies of connection

By John A. Moore

Self-balancing Smart Grid

The real-time flow of information from the Smart Grid will transform our electrical system into a self-balancing network, because the Smart Grid will put information in the hands of consumers. If we engage consumers, we can count on them to actively help manage the grid. We know they will react to price signals and modify their behavior if they are given access to real-time information.

A Smart Grid will help in other ways as well. Real-time condition monitoring of transmission and distribution assets such as transformers can extend the life of aging infrastructure by allowing dynamic rating and de-bottlenecking during periods of congestion. And we can’t count all the new opportunities we haven’t even thought of yet. No one imagined eBay before the Internet.

The fed as a catalyst for change

The Energy Independence and Security Act of 2007 will accelerate the Smart Grid, just as the Department of Defense incubated the Internet by creating Arpanet. The act appropriates $100 million per year from 2008 through 2012 to support development of the Smart Grid. Under this act, the government pays up to 50% of any utility’s demonstration project for the Smart Grid and provides federal matching funds of 20% for any Smart Grid implementation. The act also mandates that Smart Grid investment by utilities be included in their rate base. Perhaps most importantly, the legislation created the Smart Grid Advisory Committee to report on a regular basis to the secretary of energy on progress and challenges.

Our industry can benefit from this federal support for the Smart Grid. It is also imperative that Smart Grid appliance and software suppliers collaborate to create standards to accelerate the adoption of new technologies.

The time is now to embrace the Smart Grid and unleash the economies of connection. Not tapping grid information is tantamount to using rotary-dial, party-line telephones when the Internet and cell phones are available. Samuel Insull, the original architect of the grid, drew graphs of demand with pencil and paper. If he could see the tools we now have to process and exploit masses of data, he might remind us that the information hiding within the grid is the means to our own salvation.

—John A. Moore is the CEO of Acorn Energy, a publicly traded holding company for emerging energy ventures. Acorn created Comverge through the acquisition of Lucent and Scientific Atlanta’s energy intelligence assets.