Why the Smart Grid?
The objectives for any project are often forgotten as the individuals / organizations involved focus on their individual objectives, and understandably so. Often it is not clear what are the most important objectives, what objectives are in conflict with each other, and who has the incentive and job to oversight. The reasons behind the deployment of the smart grid are multifold, so it’s no surprise there is a lot of confusion around why smart grid. When objectives are in conflict with each, typically the results that are easiest to measure win out. In the case of smart meters, it’s how fast are they deployed and at what cost. I’m most familiar with the deployment in California, so let’s let’s look at how complicated this is. I assure you, looking at the objectives is a lot more complicated than the technology.
State of California’s Perspective
California has always been an innovator in environmental activities. The genesis of the smart grid activity in California occurred over a decade ago when frequent brownouts highlighted the need to better manage power. These brownouts were caused by lack of peak capacity not lack of energy, but this also highlighted the need for more green energy as peak power plants are typically inefficient and create more greenhouse gases per unit of power (KWH). This lead to the desire, at the highest levels of State Government, to be more green though smart technologies by managing peak loads, allowing more green energy to be delivered to customers, and providing an infrastructure for electric vehicles. Policy around electric vehicles (EV’s) is particularly important and complex, because the deployment of electric vehicles could make the capacity issues worse as they consume a massive amount of energy. Government officials were smart enough to realize that EV’s in particular required a smart grid to load balance the power better, for example creating time-of-day pricing (which requires a smart meter) to ensure most people charge off-peak. However, it’s difficult in a public forum to think carefully through, and continuously manage the complexities of how this affects greenhouses gases, the impact of these time-of-day rates on non-EV activities, the need for advanced communications networks, cyber security, the importance of infrastructure, etc.
California Public Utility Commission (CPUC) Perspective
The CPUC was tasked by the State of California with a political activity. Fund smart meter deployment and ensure the meters are deployed on time and cost effectively (factors that are easy to measure). The more broad complex issues of ensuring effective EV policies, infrastructure, security, services, etc. were less important simply because they are difficult to stipulate and measure. The vast majority of people involved in any project truly want to do a good job and do what’s right, but when you’re in a situation where it’s easy to measure simple factors like deploying equipment on schedule and cost effectively, and difficult to measure the actual utility and security of such deployments, what do you think is going to happen?
The Utilitys’ primary objective is to do what the CPUC tells them to do to ensure funding and adherence to regulatory requirements. The primary objective is that which is easily measurable: deploying meters on schedule and as inexpensively as possible. This is also a great opportunity for them to layoff meter readers to save money. So let’s compare the original objectives from the State of California’s perspective with that of the Utility:
- Time-of-day pricing to promote off peak usage and EV charging
- Home solar initiatives such as special rates, feed-in tariffs (selling excess power back to the Grid)
- Demand response services to allow the utility to control usage in real time (for a discount or other benefits) to better manage load
- Promote green energy
- Encourage the deployment of EV infrastructure
- Ensure cyber security
- Deploying smart meters as quickly and efficiently as possible
- Laying off meter readers
- Using inexpensive (low bandwidth, high latency) networks
The result is that some of the objectives are met (#1, #2) reasonably well, but most of the others have been compromised due to the focus on quick and low cost deployment. For example the deployment of inexpensive networks makes Demand Response services largely infeasible. The focus on easily measurable cost factors compromises cyber security, and actually compromises the EV charging objectives because a home actually needs 2 meters to ensure that the peak pricing rates don’t increase the cost of non-EV use (e.g. Air conditioning) during peak. In addition, ironically, laying off the meter readers reduces security and safety because physical inspection was a critical component of those objectives.
The vendors are simply going to follow the Utility’s objectives. Let’s look at history: When electronic voting machine vendors deployed their equipment throughout the country, there was a major buzz about the lack of security. However, from the vendors perspective, they couldn’t deliver a more secure voting machine because the precincts wouldn’t pay for it. It’s not the precincts fault, measuring security and paying more for a more secure solution was not required by the regulators, and it’s a sufficiently complex subject matter where you could not reasonably expect them to take on this responsibility.
The customer largely doesn’t understand the reason for the smart grid, and are skeptical of anything the government or the utility does unless the benefits are clear and immediate.
The Federal government’s role is largely to set standards of common language and interoperability. They also provide funding for industry and research, for example the Sun Shot program to reduce the costs of solar energy generated by a Utility. However, it’s currently the States responsibility to provide mandates and incentives for enforcement of green objectives. For example, the Sun Shot program will reduce the cost of solar, but it will still be significantly more expensive than coal or natural gas. It’s up to the State to create mandates for green energy, and the Federal assistance will simply reduce the cost of doing so to a more feasible level.
The deployment of the smart grid is clearly less than efficient. We can’t blame the Utility, as they follow the lead of the PUC (Public Utility Commission). We can’t blame the PUC because they follow the lead of the State Government, all while being under funded. We can’t blame the State Government because they are struggling with funding issues, and they have to satisfy the voters who should not be expected to be experts in energy. Which leads to the next blog entry – “Regulatory Alternatives for solving complex problems like smart energy.”