Needing Regulatory and Policy Support
President Barack Obama also recently announced that he will pursue significant investments in our nation’s electric grid using smart metering, distributed storage, and other advanced technologies to accommodate 21st-century energy requirements. His goals are to greatly improve electric grid reliability and security and increase our use of renewable generation.
In order to accomplish his goals, utilities will need to make considerable investments in modernizing their systems. This will require regulatory support that will not only endorse adjusting rates to recover investments in a smart grid but, perhaps more importantly, also will create incentives for utilities to support customers who wish to reduce energy consumption and promote energy efficiencies.
The policy discussion regarding how to transform the nation’s existing electric grid into a smart grid is usually focused on energy efficiency, renewable energies, storage, and plug-in electric cars. However, emphasis also must be placed on the technology needed to create a foundation for a smart grid, because all of these solutions require a modern, intelligent electrical system to achieve proper scale and cost effectiveness.
The Backbone of a Real Smart Grid
The smart grid will not be truly smart until it connects every customer, residence, commercial space, and industrial building — absolutely anything connected to a power source. The grid needs to be able to offer energy efficiency services everywhere as well as obtain information and extend intelligence into every device that is powered by the electrical network.
The solution that should be supported and used to modernize the electrical grid is an advanced metering infrastructure (AMI) system. AMI systems provide the architecture to allow utilities to establish two-way communications with their customers’ meters as well as with in-home devices and can provide the foundation necessary to establish a true smart grid.
There has been talk about implementing time-of-use or real-time pricing rates to reduce energy consumption. The assumption is that customers would adjust their energy usage according to what they saw on a display in their homes. Unfortunately, this approach is not practical. Consumers can’t be expected to stare at the display constantly, nor run around the house to turn off appliances and lights during every higher-priced period.
In order to keep the smart grid user-friendly, it must be designed to include smart devices inside homes, where devices are networked together to operate and respond to different pricing conditions autonomously.
The Best News Yet
The technology is already available to enable these services and programs that can address the electric system problems. Now, more than ever, it is imperative that legislation and regulation be adjusted to support and reward utilities promoting energy efficiency and for the investment in implementation of a modern smart grid for the 21st century.
As we consider our next steps, we must ensure that we maintain a competitive market that encourages innovation, new methods of using existing technologies, and new ways of thinking about how, when, and why we use energy.
--Jeff Lund (jeffl@echelon.com) is vice president of business development at Echelon Corp.
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