By now, you've learned that smart
grid implementation can significantly reduce carbon emissions,
enhance energy independence, optimize renewable energy, create
green jobs, help you save money, and help everyone make smarter
energy choices. And most of these technologies are ready today.
So you’re probably wondering, “If this technology
is so great, why aren’t we using it yet?”
Utilities Are Currently Not Rewarded for Efficiency
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. California
has demonstrated this principle by breaking the link between
a utility’s sales and profits through decoupling policies.
Decoupling has led to relatively flat per capita energy usage
for 30 years, while the U.S. on average has increased per
capita energy usage by 50 percent.1 States can
also incent efficiency by establishing stand-alone Energy
Efficiency Resource Standards (EERS) and/or enabling utilities
to count “efficiency” in their Renewable Portfolio
Standards (RPS). Both aimto reduce demand growth by setting
energy savings targets that encourage more efficient generation,
transmission and end use. Currently, 18 states have included
efficiency in an EERS or as part of RPS.2
Other Incentives Can Help
For a smarter grid to become a reality, utilities will need
to upgrade systems to manage the complexities of our modern
society—enabling increased efficiencies, clean renewable
energy sources and consumer empowerment to become everyday
Tax incentives, such as accelerated depreciation for smart
grid-related property, will encourage infrastructure investments.
Accelerated depreciation essentially allows utilities to “reduce”
taxable income in a given year. This tactic is used in many
industries to encourage businesses to invest in new technologies.
Studies have shown that when consumers are informed and empowered
by time-of-use pricing information, they can reduce peak demand
by more than 15% and total demand by more than 10%. Unfortunately,
not all states have time-of-use
pricing in place.
National guidelines for real-time and time-of-use pricing
should help the 50 state public utility commissions (PUCs)
and 3,000+ electric utilities and co-ops in the U.S. more
rapidly adopt these important incentives for consumer action,
which will ultimately lead to quicker adoption of the smart
grid and other advanced energy saving technologies.
Smart Grid Technologies Based on Open Standards
A “smart” electricity grid requires the ability
to exchange information and data between the electrical infrastructure
and grid-enabled devices and technologies. Because the electrical
infrastructure interacts with a wide variety of products,
any new technology must be capable of being integrated across
several industries, such as heating and air conditioning,
home appliances, and plug-in
hybrid vehicles, among many others. Smart grid standards
will outline the best way to accomplish this interoperability.
Open standards are the hallmark of modern American industry
and commerce. By spurring innovation through the adoption
of open technology standards, we have built remarkably interoperable
foundations that drive our economy, ranging from the familiar
electricity socket to the transformative information superhighway
that is the Internet. The adoption of open internet-based
protocols and standards is necessary for technologies that
will support the smart grid build-out in the coming years.
The Good News
The federal government has already taken the first steps towards
the realization of a smarter grid. Through President Obama’s
2009 stimulus plan, $4.5 billion has been allocated to smart
grid development.3 Discussions have already begun
to develop smart grid technology standards.4 On
the regulatory front, decoupling policies have already been
put in place for electric companies in 9 states.5
What Can You Do to Make Smart Grid a Reality?
You’re already doing it. Learning about smart grid technologies
is the first step to implementation. The more people who are
educated about what the smart grid is and what it means for
our future, the better chance we’ll have of persuading
the government and utilities to move forward.
Want to do more? Share what you’ve learned with friends.
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