Interview with Avnaesh Jayantilal
Dr. Avnaesh Jayantilal, IEEE Smart Grid technical expert and Senior Member of IEEE, is the Global Activity Manager for the Integrated Distribution Management Systems (IDMS) product line at Alstom Grid.
In this interview, Dr. Avnaesh Jayantilal finds some bumps in the road in his update on Smart Grid deployment two years after the U.S. Department of Energy grants. But while some missteps have been made, electric utilities in general are making good progress.
Question: A year ago, Smart Grid deployment seemed to be on a fast track. In the U.S., billions of dollars in Department of Energy seed money were coming online. Europe and other parts of the world seemed, if anything, to be a little ahead of the game. Has anything changed?
The technology picture is still very bright but we have hit some bumps in the road. This is true practically across the board but let's look at Europe first. The ongoing crisis there has somewhat slowed down spending on new Smart Grid projects. There have also been slowdowns in other parts of the world, primarily due to economic uncertainty.
Brazil, for example, had ambitious smart meter plans but nothing has happened to date to mandate funding for this. This is unfortunate because in Brazil there is quite a bit of energy lost through technical and non-technical losses, and there is no doubt that Smart Grid technologies could reduce this substantially. The business case is there.
Question: What's the situation in the U.S.?
A number of factors have put the future of the Smart Grid into limbo, including continued regulatory and consumer pushback against more utility spending in hard economic times. The upcoming elections have also played a role in putting some plans on hold. The present administration placed a big emphasis on Smart Grid deployment and clean and renewable energies because it was the basis for creating "green jobs." There is some doubt on what the future will hold. For example, the wind production tax credits are about to expire, without a clear signal on its renewal. As a consequence many utilities and power producers have now put plans on hold, and it will take time for them to restart them. There have been a number of large failures in clean energy startups, including some funded by the Smart Grid Funding, leading to more scrutiny of future investments in our industry.
Question: How are U.S. utilities reacting to this uncertainty?
For the most part they are reacting with some caution – which is not unwarranted. While the Silicon Valley idea that "it's OK to fail," may yield the best results for technology companies, it's not OK for electric utilities.
I should add that ARRA (American Recovery and Investment Act of 2009) funding encouraged public-private partnerships. Utilities had to invest on average of 50% of the required project funding. We have always been concerned about what will happen to these programs after the initial funding ran out. Unfortunately what is happening is that that some utilities are saying "No more, thank you for now."
Question: Earlier you indicated there were some bright spots in the U.S. Smart Grid landscape. Where are they and why do you think they have succeeded?
I think the key success factors for utilities that are moving forward are "outreach" and "people" – putting the right team together, empowering them by removing internal obstacles and understanding the importance of educational outreach to consumers, regulators and other stakeholders.
It's not that the utilities who have achieved early Smart Grid success have not run into some rough patches. They have, but good internal planning allowed them to surmount those obstacles. Too often utilities think of Smart Grid deployments almost solely of technology. In fact, technology is the easy part. Organizing their people and teams is where the "rubber meets the road".
Among the companies that are moving forward is Duke Energy. Its distribution automation system for 1,926 out of 4,741 circuits in five states went live in April 2012. Duke Energy is also on track to install 765,961 smart meters by the end of 2013. It's a large utility, almost doubling in size with the recent Progress Energy merger, but it has surmounted those complications and for the most part its implementation has gone very well. It has experienced some regulatory pushback but is generally moving forward.
Question: What has Duke Energy done that others have not?
Duke's CEO Jim Rogers has positioned the utility to be an industry leader in innovation and Smart Grid. Duke is not just looking at Smart Grid from a technology standpoint, but it's also looking at it from a business standpoint. They are finding ways to build a business around Smart Grid for their customers — and beyond that how to commercially finance these programs, not just from a regulatory perspective. They are very good at educating their customers and regulators. The Smart Grid team has been composed from various internal organizations and given the tools and support needed to succeed. This approach is common theme among the utilities that are succeeding.
Question: What are a few of the other companies that are getting it right?
In October, the Pacific Northwest Smart Grid Demonstration Project went live and will evaluate how a smarter grid can help manage transmission congestion and integrate more wind energy. Maui Electric Company (MECO) Smart Grid demonstration project includes 200 customer volunteers testing demand response technology while also giving MECO insight into how the integration of renewables and plug-in vehicles will impact the grid. The project will help Maui transition to cleaner energy sources. Chattanooga-based EPB will have automated nearly 80% of its high and medium voltage lines when their project is fully deployed. In California, Pacific Gas and Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE) have all launched successful programs. So have Oklahoma Gas & Electric (OG&E), Con Edison in New York and Oncor in Texas. There are others as well.
Question: Why are other utilities having a more difficult time?
It's pretty clear that Smart Grid technology is a good investment but deploying new technology can be relatively expensive. Ultimately the ratepayers subsidize the cost and regulators have to approve the rate increases. The lesson learned could be to avoid the "big bang" approach in favor of a phased approach, which means that the promise of Smart Grid will take more time.
Larger utilities also tend to have more complex organizational challenges. A common situation is the existence of departmental "silos" that often operate with a great deal efficiency by today's standards. But when the Smart Grid concept comes along there's a problem. One of its organizational effects is that everyone has to pull together. By that I mean that departments have to share information and develop consensus as never before.
Question: What other problems are you seeing?
Some utilities have underestimated the need to manage expectations when deploying the Smart Grid. This applies to their customers and regulators. The Smart Grid is the biggest thing to happen in the utility world since deregulation. As such, it implies adopting new perspectives and accepting some risk. How does a utility manage to have its customers and regulators to fully understand that? The short answer is outreach – workshops, communications programs, customer education and regulator education. National Grid and Duke Energy are prime examples of this. Utilities that arranged outreach programs through local community groups were more successful than those who just mailed a brochure with the monthly bill.
Question: What general lessons have been learned in the past couple of years?
We can't continue on our current path because energy prices will rise as the general economy recovers. Our future is at risk if we do not change. New innovation in technology and business (financial) models will be required, and that is what Smart Grid is about. It is vitally important to focus on people – customers, regulators and utility employees. Internally, utilities must empower their people to manage this organizational change. Externally, outreach to customers and regulators are critical. As an industry we are breaking new ground which means taking some risk. Because utilities are generally risk averse, partners are required that are willing to manage and assume some of the risk. Public-private partnerships are necessary for innovation, and regulatory policies need to nurture these partnerships. Creating the Smart Grid workforce will require continued support from industry, utilities, academia and the government. And finally, paraphrasing Thomas Edison, "We now know a thousand ways not to build a light bulb." As engineers, it is in our genes to search diligently for the right solution.
Dr. Avnaesh Jayantilal, IEEE Smart Grid technical expert and Senior Member of IEEE, is the Global Activity Manager for the Integrated Distribution Management Systems (IDMS) product line at Alstom Grid. He participates on IEEE's PES Smart Distribution Working group and has hosted a number of industry panels on Distributed Energy Resources (DER) and its game changing impacts on the future of our industry. In addition to his numerous contributions to IEEE, Dr. Avnaesh Jayantilal leads a team of experts in developing innovative Smart Grid technologies to assist distribution utilities in enhancing grid operations, business processes and, ultimately, customer satisfaction.