Monday, July 5, 2010

Opinion: Industry, not Utilities, Needs to Make and Better Articulate Business Case for Smart Grid Changes

Have you noticed there are rich veins of knowledge and experience in certain parts of the Web that aren't visible to Google? Well, if like me you dedicate some small part of your life to reviewing the reader comments that follow online articles on grid security and privacy, you'll feel like we ought to just throw in the towel on this whole Smart Grid thing right now. Actually, I've got my fingers crossed that those doom-spouting commenters are not representative of the general population.

However, you'll find a few places of real value for would-be Smart Grid implementors and advocates, similarly obscure to most search engines. Here are a few Linked-in groups, notably: SmartGrids - Energy & Water, and Smart Grid Security (you'll have to sign up for LinkedIn to participate but that's not hard). There's some marketing going on, but also substantive discussions and debates on the present and future of the grid, led by folks who know the space first hand.

One of these nuggets was posted in the Energy & Water group by Paul Duncan of GSD Energy Consultants, a former Navy Chief Petty Officer whose career also includes several years building demand response solutions for GridPoint customers. On a thread posing the question of whether utilities personnel need to do a better job articulating ROI for Smart Grid projects, here's his response, from a sympathetic and pointedly self-critical perspective:
Therein lies the problem.
With rare exception, it is nearly impossible for personnel at a utility to keep up with the repeated shotgun blasts of information and technologies that are coming their way day after day. Not only are utility personnel generally ill-equipped to understand all of this new hardware and software, we, as an industry, have been evolving at a high rate of development speed, resulting in rapid transformation of capabilities and further confusion on the utility-side of the table. Industry folks love to talk about advanced power electronics, advanced software systems to aggregate distributed energy resources, real-time decision processes, and more.
Yet I see utilities struggling with the value propositions and implementations of AMI networks, let alone anything downstream (and technologically more advanced) of those platforms. This is because (although many of us hesitate to admit it) AMI does represent a large change within a utility -- a change in billing processes, a change in work flow, and a change in data management.
When the utilities' "do-nothing/zero change" model of risk avoidance yields a non-zero, positive fixed rate of return on deployed assets, we end up competing against the legacy knowledge level with technology and business processes that have higher perceived risk than the "do-nothing" alternative. In my opinion, we in the industry have done an extremely poor job at helping the sponsor within the utility get their hands around risk mitigation issues, resulting in limited pilots, limited results, and a failure to show convincing scalability.
I am a firm believer that until we, not utilities, can further quantify the ROI of our products and services, and do so at a risk-differential level that is not too far from the normal business risk-level of the utility, that we will be stuck with limited pilots as well as slow adoption by our utility clients. We must do a better job in our product architecture to quantify the ROI of our products and services, so that the utility manager can reduce their learning curve, compare and contrast alternatives, and in the end, have a greater understanding of the technologies available from industry. Until then, I feel that "Smart Grid" will remain largely external to the utility, resulting in slow adoption.
I immediately responded to this piece because it speaks to what I have seen in the field as well. Basically, that there is no place in a utility for technology for technology's sake. And that risk tolerance compared to other sectors is super low ... and thank goodness for that. It's industry's job to formulate and clearly articulate low risk solutions that improve the lives of utilities personnel and their clients, and to arm their champions with the compelling evidence they'll need to get their projects prioritized.

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