Here is a little bit of an early airport report here as I know there was a lot of excitement surrounding U.S. Energy Secretary Steven Chu visiting GridWeek in Washington, D.C. Heck, there was a lot of excitement about GridWeek in general. Chu was like icing on the cake, so I am sharing some of my airport report recipe a little bit earlier. The whole enchilada (in terms of an airport report (I think I must be a little bit hungry)) will come a little bit later this week. Chu’s talk was certainly interesting, but there was nothing truly earth-shattering. Ultimately, it did leave me yearning for some good old capitalism.
First of all, though, Chu has a great capability to make you feel like you are taking a university electrical engineering course and not only can understand it—but enjoy it. PowerPoint slides, charts and graphs are flying everywhere. You are nodding in agreement with charts demonstrating the how phases getting out of synch can mess up the grid (I am not an electrical engineer, okay).
It is also refreshing to see a government official have so much technical knowledge about a topic. Some of his more interesting points included the fact that when you have 20 percent renewables, load balancing becomes critical. When you have 35 percent renewables, you can get into an inefficient production of energy and some serious action has to be taken to make renewables really work. And, while Chu takes his vacations to figure out how he can save more energy at his home, he realizes that other people probably won’t do the same. He said that engaging the consumer will really come down to providing simple buttons on the sides of appliances—from an energy saver button to a I am living my life my way button. Essentially, it has to be as easy as possible for consumers to save energy, otherwise many of them won’t participate in conservation efforts.
Chu is a great speaker, but it was all federal government. At the conferences I have been to recently, no one is able to effectively argue the clear cut need or needs for the smart grid. People seem to skirt the issue and talk about it in more generalities instead of specific benefits. So, with Chu, you have someone from the federal government pushing it, but he was not convincing of the benefit of a smart grid. It just kind of made me yearn for a state representative or two there. To say, “hey, we can do this on our own. We don’t need the federal government driving this because we understand the benefit of a smart grid” or even perhaps a utility stepping up and saying “no, we already see the value or the potential value. We are going to pursue it on our own.” It would make me feel a little bit better about smart grid investments. To know that there is some clear business value driving utilities to invest in these technologies.
But perhaps that is what the rest of the conference will be about. There are many utility speakers to come over the next few days. I will let you know what I find out soon.
Thanks for reading!
H.
It would be very gratifying for someone at these conferences to clarify the monetary value in investing in smart grid applications because utility companies face a big dilemma investing in it "on their own".
Only some smart grid applications have a business value to a utility company, like the ones that can automate their asset management to get the most lifetime out of assets, or improve power outage management to get customers back in service faster, or properly handle larger numbers of small intermittent renewable source generators in future. The savings these applications bring to utility companies can be used to justify business cases for utilities to invest in them.
Utilities are not however going to readily invest in applications beyond pilot projects that primarily benefit their customers financially, like for example residential in-home energy monitors, or demand response devices, or the smart grid communications to home-area-networks that enable the smart appliances you mention. These investments would require unpalatable rate increases to all customers to pay for widely deploying them unless big government gives them large handouts, or alternatively utilities are enabled through regulatory reforms to raise money in other ways.
Can you just imagine the consumer and state political backlash if your local utility companies tried raising rates on all their customers by 50% or more just to pay for implementing a smart grid applications that benefit only SOME customers financially. Those customers that benefit would be the ones that can afford the home-area-network goodies and new smart appliances, while the poorer or disinterested customers would likely freak out at having to subsidize the rest through higher rates.
My point is utility regulatory reform is badly needed in order for utilities to make money in other ways besides uniform rate increases. Otherwise utilities must depend on large government handouts to pay for implementing customer applications of smart grid, which are not so palatable either these days in light of America's government debt load spiraling into outer space.