The Future of the Power Grid & How That Future Affects CIOs

David Wagner, Managing Editor | 12/5/2011 | 9 comments

David Wagner
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.

View Comments: Newest First | Oldest First | Threaded View
DBK   The Future of the Power Grid & How That Future Affects CIOs   12/7/2011 11:26:07 AM
Re: Well now that's an interesting idea...

David – To get solar going the government offered some incentives, which have diminished.  The cost has come down but the reality is that you need to have a strong motive to adopt.  That motive can be a strong moral driver or maybe fear.  The reality is that we as a country are being held at hostage and for ransom.  That ransom is for oil, and we created this condition and volunteered to be held hostage.

If we do not find energy alternatives the single greatest threat to out countries freedom and way of life is to simply cut off that oil supply, period.  

Our government and private sector should be heavily invested in alternative energy research.  That alternative energy should be the next New New Thing for technology and the financial shot in the arm this country needs.  Without it we are leaving ourselves vulnerable and not just to hackers.

That is a scary and very real set of conditions.

David Wagner   The Future of the Power Grid & How That Future Affects CIOs   12/6/2011 6:46:43 PM
Re: Well now that's an interesting idea...
@DBK- Yes, if I were in a large enterprise, I would make the production of a percentage of my power a high priority. I know it seems a frightful expense but solar is getting cheaper and more efficient.

It has to be a really hard sell though.
DBK   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 11:47:43 PM
Re: Well now that's an interesting idea...

Clearly there are several objectives that need to be addressed.  Increased renewable energy by the primary methods of solar and wind.  In addition conversation will also be relevant and the coop thing is very intriguing.   My big take away from this is the need to be as self sufficient as possible.  The ability to generate some of your own electricity and store it.    This is a big challenge since we typically have limited generation and limited storage capacity.  But as these technologies  evolve they will develop and refine.  The grid itself is a difficult challenge since it is owned and managed by so many disparate entities yet we are all dependent on it.

CurtisFranklin   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 10:31:18 PM
Re: Well now that's an interesting idea...
@Dave Sasson wrote:

utilities with advanced metering technology should begin a transition to pricing regimes in which customers pay rates that reflect the time-varying costs of supplying power.

Back in the mid-1990s the electric co-op we belonged to in Georgia was doing this. They offered a deal to customers: If we would agree to pay 3x the standard rate for power from 10:00 AM - 6:00 PM between Memorial Day and Labor Day, our rate for all the rest of the time was 1/2 the standard rate. It helped them load balance and it gave us great rates on power. Win-win solutions are wonderful, you know? And this one didn't require incredibly complex meters or intricate models, so it was very popular.

I really loved that co-op: Every June there was a co-op meeting for all the members with free barbeque, a country band, and a door prize of the co-op's pickup truck with the highest mileage. It always made me smile...
Dave Sasson   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 8:55:54 PM
Re: Well now that's an interesting idea...
@David - Well perhaps one day we will all have “smart” houses where every room can be metered independently with their own rules and controls.
David Wagner   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 8:35:02 PM
Re: Well now that's an interesting idea...
@Dave Sasson- My energy provider has already enacted this as an opt-in program. You can save money on your energy bill year round if you'll let them use your smart meter to throttle your energy usage on peak days. they throttle your AC first and go from there.

I like this idea, but it was hard with children to accept the concept. I can roast if they lower my AC, but I wouldn't want my kids, too. But i think you'll see this spread throughout the country as smart meters get installed. And obviously, it will take slightly different forms.
Dave Sasson   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 8:10:42 PM
Re: Well now that's an interesting idea...

A main recommendation from the report that I found very interesting to provide better rates for consumers was this one in particular:

To improve the grid’s efficiency and lower rates, utilities with advanced metering technology should begin a transition to pricing regimes in which customers pay rates that reflect the time-varying costs of supplying power.

David Wagner   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 6:11:58 PM
Re: Well now that's an interesting idea...
I find solar panels to be very pretty. But they can actually be a traffic hazzard if they are in the wrong place at the wrong angle. I currently don't know of a company making surplus power, but there are plenty who are making enough power to subsist in the case of a long outage.

At current rates of efficiency, solar panels can produce the entire electricity a house needs if they use 40% of the average roof size. Obviously, this is depending on number of floors, usage patterns, etc. Houses covering their entire roof have plenty of power to sell back to the system.

I don't believe datacenters could currently produce enough electricity using only panels on their roofs to power themselves at 100% of current useage, but we're still getting more efficient, and they could very well provide the kind of power that would make a noticeable change to the bottom line.

We are definitely headed toward a more distributed power system with "make your own" part of the system. i'm not advocating it for everyone, but it is worth considering depending on your location and usage.
Sara Peters   The Future of the Power Grid & How That Future Affects CIOs   12/5/2011 5:09:57 PM
Well now that's an interesting idea...
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.  Everyone's always looking for a new revenue stream, aren't they? However in order to make any real money off of selling back surplus power to the power company, you've got to making plenty of it. This isn't realistic for ever business, but I can certainly see manufacturers benefiting from this. Solar panels are rather ugly, but well, so are most factories -- so putting solar panels all over a factory building is hardly an insult to architectural elegance.

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