|
Last week, approximately 1,400 leaders from utilities, business, government
and academia gathered in Washington, D.C. for the third annual GridWeek
Conference, a four-day convention organized around the business issues,
technical challenges and policy requirements of a "smarter grid."
Since 2007, we've not only seen a four-fold increase in attendance, but a significant
change in the underlying smart grid conversation -- moving from "how do we begin?"
to "here's what we're doing to make it happen." With the $4.5 billion in government
stimulus funding acting as a catalyst, we’ve moved the discussion from planning
to delivery, and we're seeing growing excitement around significant progress.
At one time the subject of debate, a smarter grid is now accepted by most nations
around the globe as a key enabler of energy independence and economic vitality.
Specifically, a smarter grid will help:
- > Integrate cleaner energy resources and plug in vehicles
- > Empower consumers to manage energy usage and save money
- > Increase productivity and efficiency in how our power is delivered
- > Improve power reliability
While at GridWeek, it became overwhelmingly clear that we’ve moved the needle
on three critical fronts:
- > The commitment and engagement of government
- > The utility’s approach to smart grid projects
- > The business community’s approach to delivering an ecosystem of solutions
Commitment from government
Smart grid has been the buzz since the government’s February announcement of
smart grid stimulus funds. In fact, the topic has become so mainstream that
President Obama discussed smart grid on the September 21st David Letterman show,
which happened to coincide with the opening day of GridWeek. The government’s
commitment became even clearer in the days that followed, with the attendance
of two Cabinet-level officials.
U.S. Department of Energy Secretary Steven Chu opened the conference, announcing
$144 million for state public utility commissions and smart grid workforce training.
And the conference closed with Commerce Secretary Gary Locke announcing the
completion of the first phase of the smart grid standards
roadmap, a laborious process which was delivered in a matter of months.
Utility engagement
With greater certainty around the government’s position on smart energy policy,
utilities have moved with unprecedented speed to organize their business operations
in preparation to deliver smart grid deployments. With more
than 500 stimulus applications pouring in from utilities all over the country,
utility conversations have turned from theory to deployment in less than a year.
The proposals show an industry that’s broadening its traditional focus on safety,
reliability and supply to include environmental sustainability, consumer empowerment,
and energy efficiency. With stimulus funding, we have a true opportunity as
an industry to demonstrate large-scale projects that prove out the efficiency,
consumer, and reliability benefits of a smarter grid.
Business collaboration, commitment and interest
Over the past year, we’ve not only seen a greater maturity in how businesses
are collaborating to deliver an ecosystem of smart grid products and solutions,
but we’re also seeing new players in this space – from Cisco and Microsoft to
AT&T.
The industry has come to realize that no single company can deliver a panacea
of smart grid solutions, and with that we saw a flurry of announcements about
companies coming together to deliver more holistic offerings. As examples, GE
and NURI Telecom, Ltd. of Korea announced a collaboration to explore opportunities
to further progress of smart grid, and Silver
Spring Network announced its purchase of Greenbox Technology, a software
developer that measures home energy consumption.
Where do we go from here?
While we have come a long way, consumer education and engagement, new business
models, and smart regulation and policy were the top challenges discussed at
GridWeek.
Consumer education and engagement – a must
Without consumer buy-in, the full promise of smart grid benefits will not be
realized. And because many utility programs will be "opt-in," consumers will
need to understand the benefits a smarter grid can deliver. Not only do consumers
have a real opportunity to save
money on their power bill (10 percent or more), but utility and environmental
benefits will also correlate with consumer participation.
At GE, we’ve conducted analyses demonstrating that moving consumer participation
in demand-response programs from five percent to 20 percent could increase utility
savings by $15 million annually and improve CO2 reduction equivalent to taking
an additional 9,000 cars off the road, for utilities with 1 million customers*.
Education will also need to be "two way," and utilities will have to begin
educating themselves about consumer preferences – segmentation will be key.
New business models
As an industry, we’ll also need to move away from business models that rely
solely on selling kilowatt/hours to business models based on services. As we
gain understanding of consumer segments, the industry will need to provide a
variety of options, much in the same way cell phone companies offer different
plans for different lifestyles.
Smart regulation and policy
While stimulus funds will jump-start the smart grid movement, smart regulation
and policy will help keep the industry moving forward. Under utility regulation
in most states, power companies make more money by selling more electricity.
This linkage creates a disincentive for energy-efficiency programs and technologies,
as decreasing energy sales would cut into utility profits. Ultimately, policy
will be needed to encourage and reward utilities for driving efficiency and
conservation.
While we’ve accelerated the industry in many critical ways, we need to continue
pursuing more innovative ways of thinking. We need to be creative in how we
educate consumers and regulators to ensure we do not lose the momentum we’ve
gained toward a smarter energy future. This smarter future is the only way we
can free ourselves from our dependence on foreign oil, meet our environmental
targets and further economic vitality going forward.
Bob Gilligan is the vice president of GE Energy’s transmission and distribution
business. His team is responsible for delivering reliable power delivery and
integrated smart grid solutions to the electric utilities. He can be reached
at Bob.Gilligan@ge.com.
*Based on GE's analysis using a McKinsey model.
|
