I was rather surprised to find out that, despite the current perception in the media and among most of the people who lost power during the Halloween snow storms on the East coast, the US electrical grid is not broken.
In fact, if you account for urban density and some of the challenges arising from the size of the US, it is one of the more reliable and efficient systems in the developed world. Despite the fact that we have 6 million miles of transmission and distribution lines, 143 million residential and industrial customers to serve, and more than 3,000 public, private, and government-run electricity providers, we’re doing OK -- for now.
A comprehensive study put out by MIT shows that there are challenges to face in the next 20 years that will almost assuredly lead to changes in the grid and to national policy and regulations. Changes in the economy, technology, security, and creation and distribution of power will lead to a series of new challenges for the enterprise. It is important that CIOs be on top of some of the major recommendations now, because many could change the way your enterprise deals with power. Let’s look at some of these changes:
Variable energy resources. Many states are mandating that a percentage of power generation be from a renewable source. California, for instance, is requiring power companies to supply at least 33 percent of their power from renewable energy resources by 2020. For the most part, this means wind and solar. Both wind and solar are variable energy resources. Weather conditions affect their output, requiring the grid to successfully plan for failover or for a “cushion” in the amount of energy they produce.
CIOs, especially in highly energy-dependent fields -- like manufacturing and healthcare -- may find that on high energy-use days they are relying more on their backup power supplies than they would like to, while the power grid learns to compensate. Now is the time to review your backup plans; and possibly consider getting into the energy production business, since many enterprises have invested in solar, wind, and fuel cells to supplement power or drive down costs.
A more talkative grid. We all know the grid is getting smarter. More companies are using LAN and WAN to help the grid talk to itself to become more efficient. Smart meters are being installed to help customers get a handle on cost. But just as important is that solar and wind generation are making customers a part of the grid. Home owners and enterprises that install solar panels can sell excess production back to power companies. This blurs the line between customer and vendor, and it changes the type of communications required among all the people on the grid.
No one is certain precisely what this will look like in the end, but if you produce any electricity at all to lower your costs or help protect from grid loss, you might find yourself having to administer some sort of communication among the vendor, other customers, wholesale electricity markets, transmission and distribution points, and your on-premises assets for energy production -- and even your thermostat and appliances. And don’t forget that you’ll have to secure all that.
Security. Securing the network you’re using between you and your vendor isn't your only security concern. The report cites that one of the biggest vulnerabilities for the US right now is the power grid. Some of the strength of the system from a reliability point of view is also its weakness when it comes to potential threats. The thousands of providers dealing with hundreds of local, state, and federal regulators means there is no central authority monitoring the power system. For quite some time, the government has considered passing off security and regulation of the power to a single government agency -- but no one can decide whether it should be the Department of Energy, the Department of Homeland Security, or another agency.
Even if the federal government doesn’t assume greater control of the power grid, companies need to build relationships with the myriad local providers and regulators in order to be a part of the planning process. In the meantime, Russia and China have mapped the entire US power grid, and who knows who else has that map? The power grid is considered one of the prime potential terrorist threats that has not been secured. CIOs can’t prevent an attack, but they can make sure their enterprise is prepared in case of a long-term regional outage.
Regardless of what precisely happens, the MIT report highlights that the next 20 years will require significant changes in the power regulations. Whether the recommendations of the report are followed or not, the changing technological and economic environments show that some sort of change is inevitable. Smart CIOs will monitor this carefully in the coming decades and prepare accordingly. At the very least, they should read the full report, and stay tuned to E2, where we'll cover the details as the government addresses these challenges in the coming years.