Yeager: Smart grid job growth holds big potential

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Next week, the nascent Smart Grid Oregon organization will hold an all-day event to discuss the potential of smart grid development in Oregon and determine the policies that should be put in place to enable smart grid development.

As part of the program, the group is bringing in Kurt Yeager, the retired CEO of the Electric Power Research Institute and executive director of the Galvin Electricity Initiative, which is focused on transforming U.S. electricity service. Earlier this year, Greentech Media named Yeager among the 100 "movers and shakers" of the smart grid.

Sustainable Business Oregon got in touch with Yeager to pick his brain on the basics of smart grid technology and policy.

SBO: How do you describe the concept of the smart grid and its benefits to the uninitiated?

Electricity is the lifeblood of our economy. As both political parties emphasized before the 2008 National election, transformation of the nation’s electricity system is essential to achieving a sustainable economic, environmental and energy future for our country.

In the most basic terms, the so-called smart grid is simply transforming the electricity delivery system from obsolete analog, electromechanical control to continuously self-correcting and optimizing digital electronic control and monitoring. In effect, this will create the electricity-equivalent of the Internet.

Lacking this transformation, the power delivery grid network is the equivalent of a railroad that takes 10 days to open or close a switch – the height of inefficiency and operational stupidity. As a result, today’s grid system is totally incompatible with the demands of our digital economy and society, which operates at the speed of light. The smart grid will also change the electricity business model from simply delivering dumb energy to providing consumer-focused and individualized quality electricity services.

The smart grid is ultimately only as valuable as what it enables delighted consumers to achieve. To meet this challenge, the electronically controlled smart grid provides the seamless connection of electricity supply and demand under all conditions. This enables the instantaneous flow of both information and energy in both directions at all times. In the absence of this transformation, retail electricity consumers will remain captive prisoners rather than contributing partners of the grid. Above all, the smart grid must empower consumers and give them access to their specific electricity data.

SBO: In your opinion, what are the largest business opportunities that will be ushered in with a smarter grid? Are they mostly for large companies (such as Cisco and IBM)?

The business and job creation opportunities resulting from the smart grid transformation are only limited by our imagination.

The greatest resulting business opportunities will be created by entrepreneurial innovators, large and small, operating in a competitive free consumer service market. This will ensure that all consumers have access to the most user-friendly and exciting tools and services for managing their energy usage. These tools will also enable customers to become electricity suppliers through distributed generation, as well as be much more efficient electricity consumers.

Just as the Internet has opened up an amazing array of consumer tools and services, the smart grid equivalent promises to be even more productive and profitable for all stakeholders – including utilities. The Ciscos and IBMs are certainly well-positioned to provide many of these smart services, but so are many other emerging smaller firms who can offer their specific products and services through retail providers such as Best Buy, for example, who strongly encourage this open retail market transformation.

SBO: What can consumers and businesses expect to learn from the results of the Pacific Northwest Smart Grid Demonstration Project and similar research projects around the country?

The Pacific Northwest Grid Demonstration and similar comprehensive grid modernization demonstrations around the country will be successful if they incent and incorporate the necessary economic development and service innovations by establishing a level business playing field for the new entrepreneurial businesses without being constrained by monopoly utility control.

Regrettably, many of the so-called national smart grid stimulus projects have failed to do this and have left the impression with the public that the smart grid is just another rip-off, taking money out of their pockets without compensating benefits. So-called smart meters are not smart grids.

SBO: Oregon business and policy leaders recently formed Smart Grid Oregon to address policy issues and facilitate smart grid advances. What advice do you offer the group?

I would strongly recommend that Smart Grid Oregon review the state and federal electricity regulatory policy experience summary and assessment in the Smart Grid Policy Issues report by Ashley Brown of the Harvard Kennedy School of Government.

This report focuses on the policy lessons learned relevant to the smart grid transformation. Specifically, Smart Grid Oregon should ensure a policy framework that reflects the following basic performance-quality principles as discussed in the report:

• Establish electricity service reliability and quality standards that protect consumer life and safety at all times, and meet 21^st Century digital service needs.

• Hold utilities accountable to a publically open set of comprehensive performance standards.

• Tie utility profits to the reliability, efficiency, and quality of the service they provide, not simply the quantity of electricity they sell. These incentives will also encourage utilities to innovate.

• Require universal interoperability of all electricity delivery service and communication systems as recommended by the National Institute of Standards and Technology.

• All customer-specific electricity data must belong to the customer for use as he or she determines.

• Assure that all customers have access at all times to transparent, dynamic electricity pricing, and the tools and incentives to use that information to their best advantage – e.g., “prices to devices.”

• All customers must have free competitive market access to choose their electricity management services, and be able to sell any excess distributed electricity they produce to the grid at fair market prices.

• Smart grid investments before the meter should be recovered as fixed costs, and the consumer side equipment costs should be recovered on a variable basis, either as a variable cost or as part of an energy charge.

• All communities must have the right to improve their electricity distribution system with the full cooperation of their utility to best serve their citizens’ needs.

christinawilliams@bizjournals.com | 503.219.3438