GABA's Smart Grids Panel on June 28th

On June 28th, I moderated GABA's first panel on the evolving "global smart (electricity) grids: actors, trends and issues," kindly hosted by Mark Radcliff of DLA Piper in Palo Alto.

The panelists were Harold Glacier (Head of Technology Transfer and Partnering at Sacramento State University's Smart Grids Center), Mozhi Habibi (Strategy Manager at IBM's Utility and Energy Practice), Stefan Heuser (President of the Siemens Technology to Business Incubator) and Ullas Naik (Managing Director at Globespan Capital).

Acknowledging the tremendous complexity of integrating a system of systems (overlaying ICT with electricity infrastructure) and geographic diversity of the grid evolution approaches across the US and the globe, we laid out a number of high-level themes and questions to frame the conversation:

(1) Centralized versus decentralized approaches: Are we focused primarily on smart utilities or a much more distributed generation and command & control approach?

(2) Are smart grids a predominantly localized or an *integrated* regional, national or even international phenomenon? Compare US, EU and Chinese approaches.

(3) Can and should electricity markets be truly deregulated to play by market forces? Compare California v. Germany v. New Zealand v. Chilean experiences.

(4) Clash of cultures: Integrating the utility/electricity with the ICT paradigm -- stability v. connectivity mindsets. Can these two worlds co-exist and function well? Will ICT savvy independent service providers run interference with end users?

(5) Locus of innovation: Software v. hardware v. services.

(6) Can renewables become a trusted supplier of a grid's base load?

(7) Does demand response have a future or will the empowered end-user and smart appliances replace its uses?

The subsequent lively panel dialogue and active audience Q&A focused on a number of key insights:

-- The key attribute of the smart grid is to be "adaptive:" adaptive to new renewables supplies with their respective scheduling requirements, adaptive to demand swings, and adaptive to disturbances.

-- There is no "one size fits all" deployment schema for smart grids. By way of example, in the US alone, there are 3,000+ utilities with varying models, ownership and market structures; 7+ Independent Service Operators (ISOs) and Regional Transmission Organization (RTOs), across 3 large interoperability regions. Add to that Europe's electricity market diversity and various degrees of regulation/deregulation across other global markets, and a very complex, heterogeneous picture emerges.

-- There will be a smart grids investment bubble, but as previous bubbles before it, key technological capabilities, solutions and actors will survive and thrive.

-- Grids developments in the US are driven primarily by energy security concerns v. China where it's about ensuring industrial growth via efficient distributions and use v. Europe where emissions and energy independence from Russia are motivators.

-- Smart meters are the starting point in the US v. smart transmission in China v. renewables integration in Europe (for Europe, also see the combination of the Desertec and the Super Smart Grid concepts.)

-- Utilities will continue to be the most important gatekeepers to the grid for new solutions.

-- Startups attempting to sell "smart" capabilities or renewables into utilities should expect a 24-36 month sales cycle.

-- Automated demand response (ADR), such as that provided by the likes of EnerNOC, is a critical function in the evolving grids today on the enterprise side. It remains to be seen if it will take a hold on the consumer side.

-- The concept of a Virtual Power Plant (VPP) is an important one: it captures the ability to save relatively miniscule electricity usage on a per-user basis over longer periods of time that in aggregate can constitute the same electricity capacity as a brand new power plant that would need to be constructed.

-- Potential hot spots for investment: VPPs, ADR, fuel cells, storage, business intelligence applications related to energy, smart building technologies and REITs, etc.

-- Smart grids could yield useful learnings for the larger integration of ICT with bricks-and-mortar infrastructure toward the eventual "internet of things." Hence, certain smart grids approaches, solutions, products might be scalable beyond smart grids.

-- China will likely become a key trendsetter for smart grids innovation longer term. The age of looking at China as a cheap labor outsourcing hub that merely copies western solutions is over. The country's scale, it's comparatively quick and centralized decision making in renewables and grids, and its centuries' old technological and craft capabilities combined with a large and well trained diaspora community, are likely going to propel it to the pole position of innovation leadership.

-- Western innovators will do well establishing themselves in China as quasi-local players who are there to stay. They will be required to take the long view, adjusting to some degree of IP infringement as a way of life with business models that work regardless.

-- In that sense, smart grids could become part of a long term mega trend fraught with all of the usual throwbacks, obstacles, bubbles and busts, but also one rich with opportunity to solve problems and to put our shared transatlantic and transpacific ingenuity to work.

Moderator's recommendations for further reading:

Atlantic Council -- 2009 US-EU Smart Grid Cooperation  Detica -- Securing smart meters: getting it right first time  DOE -- Study of Security Attributes of Smart Grid Systems -- Current  Cyber Security Issues  Echelon -- Making the Grid Smarter  EPRI -- Report to NIST on the Smart Grid Interoperability Standards  Roadmap  Fox-Penner, Peter; Smart Power ? Climate Change, the Smart Grid, and  the Future of Electric Utilities FERC -- Report to Congress on Competition in Wholesale and Retail  Markets for Electric Energy  FERC -- States Clash as Congress Debates New Federal Cyber Authority  Greentech Media -- Smart Grids 101  IBIS -- 2009 Smart Grid Technology & Trends  ISRCS -- North American Bulk Power System: Need for Resilient & Secure  Control Designs  NETL -- Smart Grid Principal Characteristics: Operates Resiliently  Against Attack and Natural Disaster  NIST -- Framework and Roadmap for Smart Grid Interoperability  Standards, Release 1.0 NIST -- Smart Grid Cyber Security Strategy & Requirements  SAIC -- Smart Grid Security White Paper  SBI -- 2010 Electric Vehicle Infrastructure Manufacturing  www.gridwise.org www.smartgridnews.com