April 6, 2009

EXCLUSIVE: NIST picks

EPRI for interop roadmap

Chipmakers expect to

cash in on developments

The biggest roadblock to the adoption of smart grid technology by the electric industry for years has been the absence of interoperability standards.  The gleaming array of snazzy proprietary technologies are a veritable minefield for firms looking to make multi-million dollar investment decisions on technology that could become obsolete, nearly impossible to service or replace and treacherous to operate if the manufacturer goes out of business suddenly.

          Most smart grid stakeholders are well aware of this dilemma and have looked for hope in the various standards efforts at international bodies such as the IEEE's BPL, WiFi and WiMax processes (we found an IEEE smart grid interoperability slide presentation with more on that) as well as industry-led efforts such as the ZigBee Alliance, Europe's OPERA and the HomePlug Powerline Alliance.

          But that's not enough.  The whole smart grid needs to be fused with IP, high-level security and iron-clad interoperability standards -- and a new champion has come on the scene and is taking steps to get it done.  His name is President Barack Obama.

          Obama's predecessor was in favor of the smart grid but never seemed to show much awareness of the problems in the industry or much interest in getting them fixed.  George Bush signed the Energy Independence & Security Act of 2007 (EISA) that included the first-ever smart grid language including setting money and efforts aside at DOE to get the smart grid done.  Title 13 of that law sets out efforts to get interoperability standards created (more on that later in this story).

          But the Obama administration looks like it's becoming an active player in getting the job done after it chose to hang a portion of its stimulus hopes on the smart grid industry to the tune of $4.5 billion in the American Recovery & Reinvestment Act of 2009 (ARRA).  His team apparently put its chief's reputation for being well-informed into action -- and studied the problems our industry is facing and came up with a plan that includes letting utilities recoup smart grid investments from ratepayers until standards are set.

          Meanwhile, EISA gave the National Institute for Standards & Technology (NIST) the job of getting interoperability standards happening and while Obama can't take credit for that, the pace of progress under his watch is remarkable.

          EPRI picked for roadmap

EXCLUSIVE: Over the weekend, the National Institute of Standards & Technology (NIST) picked EPRI as the winner of its RFP for to create an “interim roadmap” to smart grid interoperability standards, we were told by Frances Cleveland of Xanthus Consulting.  EPRI signed up three main utility consultancy contractors to help with the work of getting the roadmap handed in by May 28 -- Xanthus, Enernex and HyperTek, she added.

The interim roadmap is “an enormous deal,” noted Cleveland, though “it's not going to solve the actual challenges, of which there are many, by any stretch of the imagination.  But at least it's going to set a framework” for what needs to happen next.

The partners are starting their work today, she added, and a number of open conferences or workshops are planned.  The only one with an announced date will be May 19-20 at EEI headquarters in Washington, DC.  “It'll work to get all of the stakeholders involved.

“This is the first government-funded effort to getting the smart grid to become a reality,” Cleveland reported, adding that it's a precursor to the distribution of smart-grid-related stimulus money going out.

          Title 13 of EISA set NIST -- an office of the Commerce Dept -- as a key player in setting interoperability standards.  NIST published a version of that title with the NIST parts highlighted on its website for free download.

          The interim roadmap is to be a document that describes the issues and priorities in creating interoperability standards plus an action plan that addresses the issues.

          NIST was founded in 1901, is a non-regulatory federal agency at Commerce and its mission is to promote US “innovation and industrial competitiveness by advancing measurement science, standards and technology in ways that enhance economic security and improve our quality of life,” said the institute's website.

          The institute “has been working with the smart grid community of stakeholders to develop a plan and begin to do the work of addressing standards interoperability,” said NIST's smart grid web page.  Much of the effort happens within NIST's six Domain Expert Working Groups: T&D, Building to Grid for commercial building integration to the grid (B2G), Home to Grid for residential (H2G), Industrial to Grid (I2G), Business & Policy (B&P) to help connect the technical work to higher level business and political issues and Cyber Security (CS) that addresses the cross-cutting security issues.

          FERC lets utilities recoup

          FERC issued late last month a proposed policy statement and action plan for the smart grid called simply “Smart Grid Policy.” The 40-page document “provides guidance to inform the development of a smarter grid for the nation's electric transmission system, focusing on the development of key standards to achieve interoperability of smart grid devices and systems,” said the summary.

          What does that mean?

          The commission is proposing to establish rate rules to let utilities recoup their smart grid investments from ratepayers until interoperability standards are set.

          The commission regulates interstate elements of the electric industry -- mostly transmission and not so much the distribution infrastructure that usually falls within state boundaries.  And that's why FERC took a background role when the FCC created the famed BPL rules in October 2004, handing off regulatory authority to the Federal Communications Commission while hinting at the time that FERC might find a role later on.

          We expected the commission to get involved as the regulator of interstate grid operators -- the ISOs and RTOs -- that could start to see big efficiencies and other benefits in the markets they operate thanks to smart grid deployment.  But while state utility commissions regulate rates, FERC can implement policy that affects those rate-setting authorities and was directed in the EISA to “adopt interoperability standards and protocols necessary to ensure smart-grid functionality and interoperability in the interstate transmission of electric power and in regional and wholesale electricity markets,” the policy proposal explained.

          “The commission's interest and responsibilities in this area derive from its authority over the rates, terms and conditions of transmission and wholesale sales in interstate commerce, its responsibility for approving and enforcing mandatory reliability standards for the bulk-power system,” and EISA.

          “The development and implementation of these interoperability standards is a challenging task,” that requires “the efforts of industry, the states and other federal agencies, in addition to the commission,” said the proposal.

          “The commission intends to use its authority, in coordination and cooperation with other governmental entities, to help achieve interoperability in a timely manner.  Achievement of interoperability will not only increase the efficiency of the bulk-power system, with the goal of achieving long-term consumer savings, but will also enable demand response and other consumer transactions and activities that give consumers the tools to better control their electric energy costs.

          Chipmakers to cash in

The stimulus package is expected to be a boon for chipmakers, though it's not clear how much longer they will have to wait.

          The business impact for chipmakers “will be sizable,” chip analyst Stephen Ohr of Gartner told the Wall Street Journal.  “And it will take time.” 

Gartner reportedly expects more than 150 million smart meters to be installed worldwide within five years, half in North America.  Gartner estimated that between 2007 and 2012, semiconducter manufacturers will see $2 billion worth of business, with others anticipating as much as $7.5 billion.