Smart Grid requires clearing mental gridlock

In mid-2006, a Google search of the term “Smart Grid” generated around 2,000 responses. The same search this past month yielded more than 500,000 hits from a wide variety of sources. The explosiveness of the concept is especially interesting because there is no universal agreement on what constitutes a smart grid—much less agreement on what value a smart grid will provide to the industry and its customers.


The challenges we face in defining and constructing a smart grid are deciding if we are designing a comprehensive smart grid and determining what about our design makes it smart.

Companies pursuing smart grid strategies have defined them as everything from smart meter/advanced meter infrastructure solutions to automated distribution management or integrated SCADA systems. The components being used to build various parts of the smart grid appear to be existing technologies that could be defined as vertical solutions for any number of challenges and opportunities facing our industry. But if we are truly building a smart grid, we need to explore the entire grid, from generation through transmission and distribution—all the way to consumption. Further, though creating additional data and information to supplement our operating models will no doubt improve industry performance, does that really make our grid smart?

When you consider other industries and the “smartness” of their products, you look to a cell phone. It identifies where it’s located, selects its signal from multiple options to maximize connectivity performance, and can repeat that process continuously while changing its location in a vehicle moving at 60 miles per hour. Though we now take this capability for granted, you’ve got to consider the cell phone “smart,” especially when you look at the size of the package that performs this feat and the lack of human intervention required to accomplish it.

Smart along all dimensions

The electric grid can’t be considered smart until the entire system is integrated and we automate everything from generation dispatch to consumption response. Shouldn’t a truly smart grid:

  • Increase reliability by automatically adjusting the system to avoid device stress and failure?
  • Extend asset life and performance by protecting the asset from wide fluctuations in operating demand?
  • Automatically adjust demand to match available supply?
  • Integrate environmental, cost, and reliability impacts with consumer demand decisions?
  • Horizontally integrate the grid with real-time data that constantly adjusts the entire system to optimize its performance and our consumption of its output?

Consider how a fully integrated and truly smart grid could impact the challenges we face in the next 25 years. The benefit of providing consumers with a device that automatically adjusts their consumption based on the availability of renewable generation would mean the 12,000 MW of wind generation currently available in the U.S. wouldn’t require an additional 12,000 MW of available fossil-based generation to exist on the system.

Consider how the automated integration of supply and demand, coupled with automated, real-time demand response, could allow the industry to adjust its spinning reserves model. By integrating real-time system monitoring and signaling with customer preferences, we should be able to adjust operation of the system to immediately respond to shifts in demand load. Rather than have system spinning reserves respond to expected consumer demand, let’s consider the possibility that consumer demand responds to system capacity based on any number of inputs, including environmental, cost, or reliability data.

Consider how technology integrated into the devices that consume our product would enable consumers to preselect desired consumption levels based on cost and/or environmental impact preferences. While all indicators suggest that consumers are increasingly aware of and want to participate in the efficient management of the environment and the cost of electricity, the lack of automated real-time response capabilities and appropriate rate structures significantly compromises their ability to do so.

Smart regulation

The development, deployment, and adoption of the smart grid will also require effective regulatory structures and policies. First we need to address how to support an effective R&D model. While consumers need to be protected from nonaccountable R&D expenditures, we also need to establish effective financial models that support innovation that benefits our industry and, ultimately, our customers.

Second, implementation of the smart grid will shift investment dollars from steel and physical infrastructure to technology and software. Effective cost-recovery models need to be established that recognize the difference between traditional infrastructure and technology investment—but first the industry needs to demonstrate that technology investment can be effective and beneficial to our customers.

Third, regulatory models need to incent participation in effective utilization and demand-response programs. Rate structures need to reflect the costs and benefits of responsible consumption and pass those benefits and responsibilities on to consumers.

A change of mind required

Leaders across our industry are addressing its many challenges by actively embracing the concept of a smart grid, and solution partners are investing in technology to achieve that vision. Let’s not squander the opportunities of the smart grid by remaining stuck in the mental gridlock of how we operate today. Realizing those opportunities requires collaboration and exploration of how we can operate tomorrow.

—Mike Carlson, vice president and chief information officer of Xcel Energy, oversees the utility’s smart grid initiatives, includingits first Smart Grid City—Boulder, Colo.

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