2013 smart grid policy outlook

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The term "smart grid" is constantly evolving, growing to encompass new technologies and a new way of thinking. The past year saw many developments, including expanded adoption of home networking and cloud devices, infrastructure improvements, and software and security upgrades.

Many of these changes were driven by industry policy and standards, which allowed vendors and utilities a clearer vision of the future of smart grid. It's impossible to know exactly what 2013 will bring, but standards and policy will continue to spur and shape smart grid development. Without public policy goals and direction, vendors and utilities will surely be left with a lot of unanswered questions. But here is what they might be able to expect in 2013.

Incentivizing distributed generation

Maintaining reliability in the face of increasing energy demand is an enormous and growing problem worldwide.It's especially concerning in the U.S., where the power grid is frail and aging.  Alleviating this problem will require policy incentives to encourage utilities and consumers to curb electricity use.  The industry-wide refrain is that working toward "negawatts" is much more efficient and environmentally friendly than constructing new generation.

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Without public policy goals and direction, vendors and utilities will surely be left with a lot of unanswered questions.
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Net metering is one form of distributed generation that continues to gain steam and is poised for big growth in 2013. Recent analysis from Crossborder Energy found net metering benefits such as reducing utility transmission and distribution spending could top $92 million.

The California Solar Initiative surpassed 1,000 MW of installed power in its effort to attract residential photovoltaic deployments in the state. The program has a goal of 1,940 MW by 2016, and 2013 is likely to be another strong growth year. California is leading the country in solar development, including securing nearly $10 billion in private investment.

But utilities are struggling to balance net metering generation with electric rates that remain fair to all ratepayers and do not overcompensate for customers who generate their own power while still relying on the transmission and distribution system. The next year will see policymakers and energy regulators work toward fair net metering capacities that both encourage participation and remain financially viable. In addition to net metering, distributed generation is likely to expand as adoption of plug-in electric vehicles as other sources of residential and on-site generation increases.

Cyber security remains a priority

Though the U.S. electrical grid avoided a major disruptive cyber attack in 2012, the risk remains acute. The financial services and IT industries are reeling from these sorts of attacks, and energy service providers must be prepared as well.

North American Reliability Corporation (NERC) President Gerry Cauly voiced his concerns this past summer.

"I am most concerned about coordinated physical and cyber attacks intended to disable elements of the power grid or deny electricity to specific targets, such as government or business centers, military installations, or other infrastructures," he said in a July testimony before the Senate Energy and Natural Resources Committee.

President Obama toyed in late 2012 with issuing an Executive Order addressing cyber security and the nation's critical infrastructure systems. But the White House has not released any such policy, and a federal cyber security policy remains elusive. The bipartisan Lieberman-Collins Cyber Security Act was rejected by Congress in November.

But cyber security might not be at crisis levels, according to Doug Houseman, Vice President of technology and innovations at Enernex. Houseman told FierceEnergy that drafting a successful national cyber security policy would likely take six to eight months, and the involvement of numerous federal agencies and other stakeholders.  

It's unclear what policy reforms 2013 will bring. Senate Judiciary Committee Chairman Patrick Leahy has included cyber security legislation on his 2013 agenda, and others may push for legislation even after an executive order is issued.

Advanced metering and analytics technologies blossom

Data analytics was by far the biggest smart grid trend that emerged in 2012. More than ever, utilities and grid operators can know what the grid is doing, where it's healthy and where it requires attention. This leads to increased revenue, reduced expenses and a more reliable grid. While much of this is attributed to sophisticated technology, policy is also going to play a role going forward.

But wherever data is involved, so are issues of privacy and ownership. Customers are wary that their data be may not be treated discreetly, or that it may be used to gain access to behaviors or lifestyles. As such, policy in 2013 will likely trend toward creating best practices and standards for dealing with energy use data in a way that satisfies the needs of both the customer and utility.

The Green Button initiative is one example of how the industry is trying to give customers control over their data in a way that is actionable. It's not a law or a mandate, but it has garnered solid participation in 2012. It's no stretch to project that many more utilities are likely to adopt Green Button in 2013. Privacy legislation may be bundled with cyber security, but utilities and third-party developers are continuing to take data use into their own hands.

The data influx is also driving the need for the standardization of wireless technologies such as Wifi, Zigbee and Bluetooth. These technologies are becoming smart grid necessities, as utility and consumer products are increasingly integrating two-way data communication to allow appliances and other devices to interact with the grid. The next 12 months should produce some new certifications in this area and result in even more integrated and advanced technologies, all of which should make energy use more transparent, visual and easier to manage.

It's impossible to be 100 percent certain about which policies will materialize in 2013, but utilities should pay close attention to these issues. As always, FierceSmartGrid and FierceEnergy will continue to bring regulatory and policy updates as they unfold across the country.