EET&D: We hear the term “Smart Grid” bandied about quite a bit these days, to say the least. Although it’s a relatively new term – not more than a few years old – it has quickly invaded our industry debates, our political dialog, and for many of us, our daily conversations on a regular basis. Although I’m quite sure that those of us in the power industry hear it more than the average person on the street, it’s fair to say that it is among the most widely used terms in both the consumer and industry press whenever the grid is a central theme. But the foregoing quote strongly suggests that when we use the term “Smart Grid” we’re actually inferring a whole lot more than just some newfangled stuff the power industry is doing, aren’t we?

Johnston: Yes, that’s certainly true. Indeed, the availability of power has been the underpinning of societal advances as far back as the earliest industrialized civilizations. Those with access to low cost, reliable power were able to advance their cultures in construction, technology and quality of life much faster than those without such access. Today we see a stark contrast in the standard of living between those with access to continuous electricity compared to those without. In the United States, we have had the luxury of available power whenever we want it; however, population growth, explosive industrial expansion and the proliferation of devices requiring electricity has pushed our nation’s electricity system to the brink.

Jones: To add to this escalating crisis, new generation resources are more difficult than ever to get provisioned – particularly coal-fired generation, which is of course, our most abundant fossil fuel – renewable portfolio standards are becoming more aggressive and we face a strong likelihood of a carbon cap within the next couple of years. By contrast, our current grid dates from the time when Frank Sinatra was in his prime, before a man walked on the moon, and long before cell phones were invented. And although – as many have correctly pointed out – our present grid is far from dumb, we’re still way behind the curve technologically.

EET&D: Clearly, you’re not the only one who holds that view, Henry. According to Suedeen G. Kelly, a member of the Federal Energy Regulatory Commission, “The grid today, according to experts, is a system conceived 100 years ago to let utilities prop each other up, reducing blackouts and sharing power in small regions. It resembles a network of streets, avenues and country roads. We need an interstate transmission superhighway system.” That being the case, how and when should we be expecting this transformation to take place, and what role do you feel regulators are playing – or will play – in this transition?

Johnston: Fortunately, it seems that tighter regulation – or as many characterize it: re-regulation – is going to create new sources of funding. One immediate example is the American Recovery and Reinvestment Act signed into law by President Obama on Feb. 17, 2009. This stimulus package provisions $4.3 billion for smart grid projects and close to $34 billion in related projects such as energy efficiency rebates and loans for renewable energy projects that will have a direct impact on the grid. This investment is key to modernizing the electrical grid, while other major infrastructures such as the telephone network, Internet, transcontinental railway and interstate highway system have moved into the digital age the one network upon which all the others rely is still in the dark ages. The good news in all of this is the incredible opportunity we have to benefit society by adding a layer of intelligence through a smart grid infrastructure.

EET&D: The national electricity grid is a critical infrastructure and at no other time is that more apparent than when we lose it, even for a few hours. For example, the August 2003 blackout in the Northeast United States and Canada caused an estimated $7 billion to $10 billion in economic losses, not to mention the societal stress resulting from days without power. What can be done to prevent the reoccurrence of catastrophic incidents like this in the future?

Johnston: What we need now to bring our electricity grid into the twenty-first century is a smart grid infrastructure that leverages the best parts of the critical infrastructure already in place. According to the Energy Information Administration, in 2008 the U.S. lost 720 million kilowatt-hours per day – enough to power nearly 23 million homes – due to “transmission and distribution losses, data collection time-frame differences, and estimation error.” And the Report Card for America’s Infrastructure, prepared by the American Society of Civil Engineers, gives the U.S. Electric Grid a rating of D. Clearly, we have a lot of work to do if we’re going to transform what we have into a Smart Grid Infrastructure that will sustain us for at least the next 100 years.

EET&D: We all know that’s a tall order, so let’s take a moment to define what you mean when you say we need to create a Smart Grid Infrastructure…

Johnston: A smart grid infrastructure is the sum of services, devices and software necessary to add a layer of intelligence onto today’s 20th century electricity grid such that every point on that grid can talk to every other point and decisions are made either by devices or human beings to fully optimize the process by which electricity is generated and delivered to customers. Henry, would you like to add something here?

Jones: Sure. Smart grid infrastructure can spot and stop energy “leaks,” optimize efficiency through better power factors and provide feedback loops that provide the right price signals to normalize energy loads during peak use. Any smart grid infrastructure by definition must be scalable, secure, strategic, simple and standards-based to overcome some of the key challenges to achieving a national smart grid.

EET&D: Okay, let’s talk about scale for a minute. In the United States alone, there are 338 million meters in operation. If we are to bring our electricity into the digital era, each and every one of those meters and the millions of devices that connect to them must be smart. Devices need to measure and transmit data, act on incoming information and handle any number of innovative applications we haven’t yet even dreamed of. This seems like a Herculean task, am I correct?

Johnston: Yes, this level of scale will require a network that can accommodate the sum of information that will be generated by the Smart Grid. For example, if the 338 million meters already deployed in the United States digitally reported the most basic electricity use information every fifteen minutes, they would generate anywhere from 274 to 548 Gigabytes of information every day, enough to house five library floors wall to wall and floor to ceiling of academic journals.

EET&D: Is it realistic to think we can somehow manage such a high degree of magnitude and complexity?

Jones: Many of the companies claiming to provide Smart Grid solutions today are deploying on the order of thousands of nodes. It’s unclear, however, if these networks can scale to support smart grid applications and data when deployments reach the hundreds of thousands or millions in numbers. Based on our experience, only the nation’s largest networks can handle the amount of data that will be generated from a fully functioning Smart Grid with millions of nodes.

EET&D: Wouldn’t something of this enormous scale also create some pretty dicey security issues as well?

Johnston: As a critical part of our extensive public infrastructure, the nation’s energy grid must also be secured, of course. Any failure in the electricity grid can have dire consequences for health and human safety and cause serious economic losses.

The North American Electric Reliability Company (NERC) and the U.S. Federal Energy Regulatory Commission (FERC) can levy substantial punitive fines on utilities for non-compliance with their strict security standards. Moreover, as we start waking up the electricity grid, each access node becomes a communications device, making the entire system more vulnerable to hackers and cyber terrorists who can invade these systems in a variety of ways.

Jones: This all means that any Smart Grid infrastructure has to have the highest possible level of security such as IPSec at every point to create a hardened security covering around the entire infrastructure. If the IP backbone is broken in any part of the network – as in some mesh network and proprietary solutions – the entire system is vulnerable to attack, which could leave utilities exposed to severe regulatory action in addition to the direct consequences of a security breach.

EET&D: Conventional wisdom tells us that Smart Grid deployments are implicitly blanket deployments; is that really true?

Johnston: No, that is simply not the case. Blanket deployments pose myriad problems including backlash from residents due to rising rates, inexperience with a particular geography or prohibitive cost. While there is a time and place for broad deployments the initial stages of Smart Grid infrastructure will more likely be strategic in nature. For example, many people who have solar panels installed on their roofs have no way to accurately measure the power their systems are producing or when electricity is fed back into the grid.

There is also a large rural population where a blanket deployment doesn’t make sense. Cities might want to strategically deploy Smart Grid infrastructure where health and safety are at risk, such as in the case for steam monitoring beneath city streets. Smart Grid deployments mandated for government buildings and schools call for concentrated spot deployments. Businesses are generally hungrier than individuals for Smart Grid solutions because they stand to gain more from reducing energy use and managing back up generation more effectively. And from a utility point of view, commercial and industrial customers present high return-on-investment opportunities because they consume much more energy versus residential customers.

EET&D:: Can you offer our readers an example of what you mean when you say that high ROI doesn’t necessarily mean widespread deployments?

Johnston: Yes, here’s a good one: Southern California Edison previously deployed smart meters over a public wireless network that represent just a quarter of one percent of the utility’s total meters; yet that small percentage of their total meters accounts for approximately 50 percent of its total revenues. This underscores how the smart grid will start taking shape where it is most needed and spread out from there, not unlike the way that the Internet evolved.

Jones: And another way utilities can be strategic with Smart Grid infrastructure is to leverage the country’s largest data networks. These public networks provide a conduit for communicating information from virtually any device to any other device on the network. At today’s rates, utilities pay an order of magnitude less than individuals for the same data network used by every person with a cell phone, so the cost of those data transfers are far less than one might otherwise expect.

EET&D: We’ve been saying over and over that the problems we’re facing are big and complicated. How are we going to overcome such huge impediments?

Johnston: True, the electricity grid is complex enough already, so adding Smart Grid infrastructure should be made as simple and seamless as possible. A simple standards-based infrastructure will reduce the risk of developing a work force that is backed into a proprietary system or otherwise inflexible way of doing things. It also minimizes training and retention costs for employees to manage networks that need to last for at least 20 years.

EET&D: What about the work force? We’re constantly being told that we may be facing a worker deficit in the years ahead as the huge mass of Baby-Boomers reach retirement age and leave the workforce.

Johnston: It’s becoming more evident with each passing year that increasing numbers of utilities are facing skilled worker shortages as Baby-Boomers reach retirement. Compounded by a dearth of R&D investment, utilities haven’t had the luxury of attracting the younger generation away from other career options such as Internet or technology companies with big salaries. However, the prospect of building out the nation’s Smart Grid infrastructure will offer an attractive career goal for young, inquisitive minds seeking new challenges and problems to solve.

EET&D: But given these declines in the current workforce combined with smaller numbers of graduate engineers and computer scientists, do you think there will be sufficient staff to get the job done?

Johnston: It’s important to keep in mind that it’s not all about the numbers. Technological advancements have allowed the industry to realize huge advances in productivity, not just in the power industry, but in nearly all industries. These new generations of workers are already accustomed to ubiquitous Internet and networking standards – even before graduating from college – and are comfortable using tools like SMS and Web interfaces as part of their every day existence. A simple Smart Grid infrastructure built on standards will greatly simplify training and deployment for the next generation of workers required to replace what the American Public Power Association estimated will be 45 percent of the utility workforce set to retire in the next seven years.

EET&D: We also hear a lot about standards lately – considerably more than usual, I’d say – now that the National Institute of Standards & Technology (NIST) has begun to weigh in on standards compliance for those companies and individuals trying to qualify for Stimulus funding. Where can we expect to see standards – and the standardization process – go from here?

Johnston: A smart grid infrastructure can only be scalable, secure, strategic and simple if it’s built on true open standards. IP-based solutions that utilize public wireless networks and deliver grid intelligence to and from any device can easily scale to any size with minimal capital expenditures and be remotely upgraded to interface with new technologies as they are invented and introduced into the market. Anything less than a complete end-to-end IP solution will have limited application and unclear – and potentially unpredictable – long-term costs. Moreover, to do otherwise is becoming an increasingly risky investment, especially given the Obama Administration’s emphasis on the use of solutions that use Internet-based protocols and standards as a condition for access to funds from the ARRA, as you just pointed out.

EET&D: Are there specific standards that you can cite as examples that offer tangible benefits?

Jones: Yes, by using public wireless networks in conjunction with industry standards like IP, IPsec, SNMP, IPv6, C12.22 and others, utilities will have better access to government funds, less risk of being left behind from a technology standpoint and can completely avoid the risk of tying themselves to a particular supplier for the next 20 to 30 years.

EET&D: How does one go about choosing a company – or a set of companies – to point the way?

Johnston: SmartSynch has developed a platform and laid the foundations for what we refer to as a “Smart Grid Ecosystem” to provide the most effective solution for utilities, commercial and industrial customers and renewable energy companies. That platform is built on open industry standards that are understood and accepted—while leveraging the public wireless network, which has already been built to a massive scale with billions of users around the world. This allows multiple companies to provide innovation and value to the utility. SmartSynch solutions are interoperable with multiple vendors and networks – which removes limitations of being tied to one partner and fear of a technology or network becoming outdated. An IP-based smart grid communications infrastructure encourages application innovation and delivery of new functionality from the broadest spectrum of participants – akin to how applications are developed and deployed for Apple’s iPhone.

EET&D: Assuming that is the direction the Smart Grid build out eventually takes, what are some of the things that utilities and users could reasonably expect to see as a result?

Johnston: There are many, many examples of how such a platform could be mobilized, but let me offer just a few to put all of this in context…

Mapping energy use trends to optimize power consumption is one of the most immediate benefits that require very little additional effort to accomplish. Demand response programs offering incentives for business owners who curtail their facility’s energy use during times of peak demand to help them capture tax incentives by reducing their carbon footprint would also be supported. Supporting large-scale intermittent renewable generation initiatives (e.g.; solar panels, etc.) and real-time notifications of power outages so dispatch teams can ensure on-site power quality would also be much easier to facilitate than they are today.

EET&D: What about the outage issues we talked about at the start of our discussion? What can the Smart Grid do for us there?

Johnston: Remotely controlling commercial and industrial customers’ back-up generators during the summer, when load becomes critical, to shave peaks in real-time can help avert outages as well as avoid physical visits to each generator site – a costly and time-consuming task that often simply doesn’t get done at all. We saw specific evidence of that when we tried to restore power after the 2003 blackout. A lot of folks didn’t know where the generators were, how to gain access to them, how to start them up, and when they finally achieved access – found them out of fuel.

EET&D: What happens if we don’t embrace some type of Smart Grid Ecosystem, like the one you envision being needed?

Johnston: Among the most serious pitfalls is that we risk building a Smart Grid “patchwork” rather than a Smart Grid infrastructure, which in the end, isn’t very smart. The standards-based ecosystem enables the world’s best purpose-built companies to provide their specific expertise in building the various components of the Smart Grid so that each investment dollar spent is amplified. That is, the more experience a company has, the less investment is required from the utility customer.

Jones: Also, keep in mind that as the smart grid unfolds, new applications not possible – or even thought of today – will further transform how we generate and distribute electricity. One can imagine a world dominated by renewable energy where generation varies from day to night and the Smart Grid infrastructure can optimize day time (solar) and nighttime (wind) resources across large geographies.

EET&D: Is there a silver lining in all of this for everyone or do the main benefits primarily accrue to utilities?

Johnston: Users and generators alike will have more autonomy to gauge and manage their own piece of the Smart Grid and a new generation of technology innovators including hardware and software developers will add new functionality and applications yet to be created. SmartSynch believes that this level of innovation will only be possible at the enormous scale required if we make smart decisions today.