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4 Reasons Why The Smart Grid Has Failed To Take Off

Since performing research for my book, Climate Capitalism (written with Hunter Lovins) a few years ago, I have become increasingly convinced that the smart grid has the potential to be one of the "holy grails" in the clean tech revolution. I believe that the smart grid can be the enabling technology that allows all kinds of other low-carbon innovations to flourish.

The smart grid will give industrial, commercial, and residential consumers real-time access to energy consumption and costs, which will lead to demand side reductions (i.e. energy efficiency). It also promises to support distributed, renewable energies from rooftop solar panels to electric vehicles (EVs). Combined with smart homes, the latter could even be used to power a consumer's home for a few days in the case of power outages, which could be reduced in frequency, volume, and duration with help from smart grids.

With corporate behemoths like GE, Cisco, and IBM as well as hundreds (if not thousands) of tech startups already in this space, why hasn't the smart grid become more ubiquitous? Unsurprisingly, Europe seems further down the path with the potential to leverage wind power from the North Sea Grid and solar power from southern Europe in a continental supergrid. But why hasn't the U.S. made more progress towards smart grid connectivity?

  • I think one of the biggest challenges is the industry's lack of stakeholder engagement from consumers (corporate and residential) and politicians. When utilities have in the past held referendums regarding the investment in smart grid technologies, the vote does not always go in their favor. This is often because consumers believe that the costs outweigh the benefits. More needs to be done to clearly establish the business case for smart grid adoption. Of course, I am not alone in recognizing this issue. The Smart Grid Consumer Collaborative is focused squarely on the problem. And Katharine Brass, the Program Manager for GE's Ecoimagination program, recently argued that the biggest barrier to more widespread adoption is consumer perception.
  • Security Concerns. In today's world of heightened concerns over terrorism and increasingly sophisticated hackers, there is no wonder many worry about the vulnerability that our energy system could be exposed to if it truly were as IT-focused (and dependent) as we envision. This is a legitimate concern being addressed by the industry, as evidenced by the forthcoming Smart Grid Security Summit to be held next week in San Diego.
  • Standards. To Fast Company readers, this will sound like a familiar problem. Numerous technology providers are offering a range of technology solutions ,from smart meters to grid automation software—and many of them have a vested interest in using proprietary, closed standards. The smart grid will only succeed on a large scale if technology suppliers agree to work on an open standard.
  • Regulatory and Policy Support. The U.S. has a difficult landscape for bringing the energy industry into the 21st century. We have a mix of federal regulation and state legislation, as well as some level of autonomy at the municipal level. A great book that explains this issue is Smart Power: Climate Change, The Smart Grid, and the Future of Electric Utilities. Guido Bartels, IBM’s head of Global Energy and Utilities, Chairman of GridWise Alliance and an adviser to the Obama Administration, has also spoken up about the need for more regulatory action to provide the proper incentives for the adoption of smart grid technology.

I have no doubt that we will see continued progress towards the adoption of smart grid technology in the U.S. And yes, there has been progress. More than 20 million smart meters have already been installed in the country, with approximately 60 million planned for near-term installation. However, the barriers discussed above are legitimate challenges that the industry and its stakeholders need to overcome.  For example, in the past few months, BC Hydro encountered opposition from consumers and municipalities in British Columbia to its smart reader rollout because of fears about low-level radiation.  For now, BC Hydro has committed to moving forward with or without community support. Perhaps the utility should consider addressing barriers number one and four for their next phase of the smart grid deployment.

[Image: Flickr user pgegreenenergy]

Boyd Cohen, Ph.D., LEED AP, is a climate strategist helping to lead communities, cities and
companies on the journey towards the low carbon economy. Dr. Cohen is
the co-author of Climate Capitalism: Capitalism in the Age of Climate

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  • Steven Ryzner


    I do agree with Boyd on the security issue, as nothing if safer from cyber attack than "dumb" old power infrastructure, in the same way that a PC without any connections to the outside world is immune from attack as well. 

    But I have a slightly different view than Boyd when it comes to the US overall approach .  For some time
    smart grid cheerleaders and unquestioning journalists have been stating that
    residential smart meters will lower electricity consumption and free up
    capacity on the grid. That "business case" argument was always nonsense to anyone with the
    ability to perform simple arithmetic and possessing common sense.


    The arithmetic starts with the fact that residential
    demand is 35% of total US demand, while commercial and industrial (business)
    demand is 65%. In 2009 the Obama administration’s stated goal was to replace
    33% of the US’s 124 million residential meters. Assuming all these meters are
    installed, and every user with a new meter dutifully reduces their electricity
    usage by 10%, simple math (0.35 x 0.33 x 0.10) shows a 1.17% reduction in total
    US demand. Big deal, as just achieving this miniscule 1.17% reduction required unrealistically
    optimistic behavior assumptions.


    Common sense stems from convenience. Even with a smart
    meter and variable rate incentives, is it worth the inconvenience to load your
    washing machine, and wait to press the start button until rates are lower after midnight? Smart meter cheerleaders say
    that consumers need to change their behaviors, while realists wonder whether
    consumers want someone else telling them how to live their busy lives.


    If one of the goals of smart grid is to level out the
    peaks and valleys and reduce total electricity consumption, then the current
    emphasis on residential users is misplaced. With businesses accounting for 65%
    of the US total demand, therein lies the real opportunity to meaningfully change demand.
    Admittedly the financial incentives and older equipment within businesses are
    challenges to such increased “demand response” efforts.


    It is important to understand the difference between the
    information technology (IT) infrastructure (meters, servers) and the power
    infrastructure (transformers, switchgear, cables.) Realizing many of the
    benefits that advocates routinely claim (self-healing networks, connection to
    renewable generation) will be impossible without massive spending on the power
    infrastructure. While some power infrastructure smart technology is already
    installed on a limited basis, hundreds of billions of dollars are required to
    make the US power infrastructure smart. Unfortunately the federal government’s
    subsidies have mostly focused on IT infrastructure (smart meters), rather than
    power infrastructure.


    End users can lower their electricity demand (and bills) today
    without a smart meter and without action from politicians, by
    changing their behavior when it makes sense for them.

    Steven Ryzner

  • Ed

    We are sure Mr. Brock and Mr. Edelbrock their earned their stripes. Nice to have such loyal soldiers in the industry ranks. But these two are political babes in the woods. The British Columbia government has recently suffered a crushing public defeat as a result of bringing in a Harmonized Sales Tax without adequate information or debate. They have ordered BC Hydro to invest nearly a billion dollars on the smart meter infrastructure rollout without a full discussion of its merits in the legislature or before the BC Utilities Commission. Consumers are already in full fight mode because of the HST. To ask the industry to secretly rollout this technology using the same methods that sank the HST was frankly idiotic. BC Hydro's "don't worry, be happy" spin campaign is just pissing people off even more than they already are. Those of us who work in the wireless internet service business could have suggested ways of avoiding some of these problems, but nobody asked us. Hydro could have applied to Industry Canada for a dedicated frequency. As the consultative licensing process proceeded before interested and rational experts, solutions to the many technical problems of the smart meter grid could have been identified. Hydro squandered its chances for a successful rollout and now will face a costly battle in the courts and in the press.

  • Benjamin_edelbrock

    Thanks Boyd for the great article. The thought that "smart grid" will revolutionize the way consumers and businesses consume power is a tired mantra for consumers looking warily for benefits. For most utilities supplying power, the initial rollout of smart meters was a subsidized boon to achieve automated meter reading. As a result they received a digital endpoint that supplies granularity of data and in the end consumption patterns, outage information and two-way communication. As we move to the next stage of distribution automation and the integration of renewables, it is important to again focus on consumer education. As an industry we failed miserably with the original AMR (eventual AMI) initiatives. It is important that we not only re-educate consumers but also educate consumers of the tangible benefits of this "revolutionary" future. In each of these next steps, you have hit on the primary failures, but the largest failure is properly framing perception and communicating with consumers in terms of monetary value and true environmental impact. For more thoughts, please visit my blog at Ben Edelbrock, Infosys