It's been 18 months since former Austin Energy colleagues John Cooper and Andres Carvallo published "The Advanced Smart Grid: Edge Power Driving Sustainability" (June 2011) and, given changes in how the power industry views grid modernization, I thought it'd be interesting to see how Cooper's vision has changed.
Intelligent Utility: In "The Advanced Smart Grid" you discussed your notion of "Smart Grid 2.0" and even "Smart Grid 3.0." The book's title uses the term "edge power." Would you briefly define each term?
John Cooper: It's pretty straight forward: 1.0 is the advanced metering infrastructure (AMI)-oriented smart grid, 2.0 is the "advanced" smart grid, expanding beyond AMI and demand response (DR) to include distribution and substation automation and the integration of distributed energy resources (DER)—what we called "edge power." Smart Grid 3.0 is a fully advanced network where energy becomes more abundant based on maturing technology, innovation and business models.
Intelligent Utility: How has the smart grid landscape changed and how has your thinking evolved in the two years since you sent your book to the publisher?
Cooper: Let's consider three challenges associated with smart grid. Customer engagement means communicating the smart grid value proposition, in light of rate increases in a tight economy. Security means that, besides ramping up cyber security as digitization progresses, we address the issue of physical protection of key grid assets. Grid vulnerability and resiliency need attention. Smart grid solutions are a definite improvement on awareness and restoration after outages, but the grid remains vulnerable to disruption.
I'm more focused now on what we called "the Edge," including building-based energy systems. I've been thinking about a concept I now call "critical secure energy self-sufficiency," which I see as our route to a hybrid energy economy and the answer to the Hurricane Sandy problem. It's the logical conclusion to the DER trend. As these technologies become cheaper and more capable, they offer more and more compelling value. As adoption picks up, we begin to see the type of grid impacts we talked about back in 2009 in early Pecan Street Project meetings—an array of mutually supporting, interactive components that actively participate in maintaining supply-load equilibrium.
Intelligent Utility: How do you slice and dice "smart grid," then?
Cooper: I've divided my definition of "smart grid" into an infrastructure side, which covers most industry discussions about grid optimization and resiliency, and an energy services side where we start to look at DER and energy as a service, including a building owner perspective. I've found that reorientation of "smart grid" helps in discussions and opens up many new exciting possibilities.
Intelligent Utility: You've recently written in our forum about an "ecosystem of energy" that includes DER, microgrids and end-user strategies, essentially in partnership with utilities responsible for the centralized grid. What are the pros and cons of a centralized grid and the pros and cons of an "energy ecosystem" that involves perhaps more nimble steps by other players?
Cooper: You use the term "centralized grid." I use the term "grid paradigm" to recognize the implicit assumptions we all use about the way things work, which favor incremental change and a supply-side orientation, keeping the grid in the center of our thinking. Consider the relationship that developed between railroads and automobiles. Railroads led transportation for a time. They barely recognized the Model T as competition. With steady improvements to cars and roads, perspectives on the railroad shifted. The grid is today's railroad. It will always have a role, but in the context of many alternatives. We need to start thinking about an emerging hybrid period, with new sources of energy, new participants and new sources of capital funding.
In contrast to a tightly regulated and managed grid, an ecosystem more closely resembles what we see in nature, where infinite complexity is managed without top down control. Rather, individuals constantly adjust their behavior incrementally, and emergent relationships gradually nudge the system into harmony, which benefits a diverse variety of participants.
I like telecom and IT analogies. We didn't jettison the wired telecom network, we augmented it with cell towers. And we didn't flush mainframes when the PC came out, we moved to an increasingly robust information ecosystem, including server farms and the Internet. Now we can begin to imagine moving beyond what I call "dial-tone" electricity—affordable power from the utility coming out of the wall with the promise of high reliability, but also the risk of outages—to a more robust, dynamic and inclusive energy ecosystem.
With multiple sources of power, diverse technologies, new business models and diverse stakeholders we also get greater redundancy and greater resiliency. We'll still need the centralized grid and its affordable, high-voltage power for a long time—steel mills are not going to run on solar power anytime soon. But we can work in lots of new players and lots of new solutions that will improve on and augment grid power, even as we continue to count on the grid to give us the reliability and affordability we need.
Intelligent Utility: Between a regulated rate of return that seems to discourage research and development and innovation and the inertia of organizations that deal in high-voltage electricity with safety, reliability and affordability governing their mandate, utilities are slow moving, apt to follow, almost wary of innovation. I see that changing, but not fast enough for the changes in the world around it. What's your view on the utility organization/culture side and what will change there?
Cooper: As the rate of change increases planning becomes increasingly difficult. And with a more dynamic environment, risk management needs to change as well. The current grid business model has its origins in Chicago over 100 years ago, as Samuel Insull recognized the connections between scale and cost efficiencies and universal power access. He had a stump speech encouraging utility executives to embrace regulation in exchange for a monopoly grant, and now monopoly perspectives have become par for the course.
We needed that kind of stability back then to allow utilities to raise money to finance the construction of the grid. But now that the grid is built, we have more expansive challenges that require new approaches. Our current regulatory model is slow to adapt—there are just too many moving parts now—and the rest of the world is running laps around the utility world. I think it's inevitable that our top-down regulatory approach has to give way to a market approach as conditions become ever more dynamic. Look at what happened to telecom deregulation—we don't see too many telecom folks at utility commissions anymore and telecom executives avoid re-regulation at all costs.
I can see fewer players on the infrastructure side in the next decade. The costs to harden and modernize the grid and downward revenue pressure from grid alternatives will drive less robust utilities to consolidate. But an expansion on the services side to drive more revenue and enhance competitiveness will open up new opportunities, and create jobs. Meanwhile, utilities will expand their marketing capabilities and diversify their offerings based on segmentation of their customer base. Utilities will become less bureaucratic and more innovative over time, just as with large, successful enterprises in other areas of the economy.
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