Q&A with IEEE's Erich Gunther

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Erich Gunther, IEEE Smart Grid Task Force Member, chairman of the IEEE Power & Energy Society's (PES) Intelligent Grid Coordinating Committee, an IEEE PES Governing Board Member and chairman and Chief Technology Officer of EnerNex.

In this interview, Erich Gunther discusses the challenges of communicating to consumers the value and necessity of modernizing the electricity grid, as well as how utilities can build on the Smart Grid's momentum. Gunther is a member of the IEEE Smart Grid Task Force, chairman of the IEEE Power & Energy Society's (PES) Intelligent Grid Coordinating Committee, an IEEE PES Governing Board Member and chairman and Chief Technology Officer of EnerNex.

What is the most important message that utilities should communicate about the smart grid today?

EG: If I had to pick just one topic, it would be the value of grid modernization for consumers. If we don't have consumers believing in the value, it's unlikely that their representatives in the regulatory side are going to authorize the expenses that the smart grid is going to require-regardless of the application.

What is that value to the end consumer?

EG: The answer to that question depends on which application area that you want to focus on. To pick just one-consumer empowerment for managing their energy usage and cost-we can demonstrate the inherent value for empowering consumers to understand what they are doing in terms of their electricity consumption and what it costs. Many demand-response projects, both manual and automated, have been executed, showing the direct impact of the ability to manage usage on how much consumers spend. If you don't measure it, you can't manage it. But there is clear value to consumers in having an infrastructure in which you can see and manage your energy use on a granular basis.

I compare it to shopping at a grocery store. When we go to grocery stores, we're used to walking down the aisles and seeing what everything costs and deciding whether to buy things. Every once in a while, there's a sale that we might choose to take advantage of. Now, imagine if we bought groceries in the way we buy energy. We don't get to see the prices, and, while we know there are sales going on from time to time, we don't get to know when. We simply grab a bunch of stuff that we think we're going to need, and we find out how much it all costs long after we've left the store. No other industry works this way. Building the smart grid to empower consumers to manage their energy usage and costs is an extremely valuable application.

Is that the primary benefit of the smart grid that the utility industry should be communicating?

EG: Not necessarily. The primary value of grid modernization will vary from locality to locality. If you are in an area of the country where energy prices are very high and you're seeing transmission and generation constraints, consumer empowerment for managing usage and cost may very well be the highest-value application. California would be an example.

If you're in the Pacific Northwest, however, where electricity costs less than 7 cents a kilowatt hour vs. 15 cents or more, your energy bill may be third or fourth down the list of your highest monthly bills. In those parts of the country, a ratepayer might be much more inclined to approve of a distribution improvement program so that an electric vehicle could be plugged in or outages could be avoided. Those more utility-side applications may have much more value.

But, for a moment, let's forget about all the new applications. Forget EVs (electric vehicles) and PHEVs (plug-in hybrid electric vehicles) and empowering consumers. There is also the issue of aging infrastructure. Stuff is going to start to break, and, beyond that, we also have increasing demand in terms of just basic, plain-old energy demand. Even if we don't add any more applications, we must begin replacing aging equipment with larger-capacity upgrades or deploying enough automation technologies to allow us to defer those capital investments as long as we can simply so we can manage the increasing demand.

The point is that spending no money is really not an option. The do-nothing scenario means more brownouts, more blackouts and, ultimately, rotating outages.

How do we move forward in terms of getting consumers to buy into the Smart Grid's value?

EG: It's important for utilities to use a disciplined process to discover the requirements they have and the technologies they should deploy. Are we trying to flatten our investment by deploying advanced metering with a demand-responsive infrastructure, or is the higher priority to do something else? We've got to get utilities to capture those requirements-business, social, regulatory--so that we make appropriate choices.

The difficulty of this is that we as an industry are more accustomed to telling consumers what they're going to get as opposed to asking them what they'd like to have. We need to be asking, "What are the consumers' reliability and power requirements? What kind of rate flexibility do they want that takes advantage of time value of energy?" We really haven't done a good job of doing that.

Of course, one of the obstacles that we have is that it's hard to pull what some of these requirements are going to be from the end consumer. Who would've thought to ask for the capabilities of an iPhone, for example? We need a way to get people thinking, "If I could do this, I would do this and this, too." We're still not communicating the idea book to consumers so that they can say, "I want to get one of those."

We've got some historical examples that we can draw from in this area.

When the rural electrification program was being executed, utilities did community co-op model homes or model kitchens so that people could see the value of moving to electricity instead of continuing to wring the wash by hand. We've seen a few utilities putting together smart grid innovation centers that provide a publicly accessible tool to be able to show people what's possible and make the high-tech stuff simple. Another historical equivalent that we can look to is central air conditioning. When we started bringing on air conditioning, the grid was not sized for that new load and lights would figure flicker in areas when the air conditioners were turned on.

Luckily, at that time, the grid was still being built out, and we were able to keep ahead of that huge, new load. Now, we have a fully built-out system, and so we're going to have to manage the rising demand in other ways. But I think there are probably some lessons we can learn from looking back at how we as an industry dealt with similar challenges.

What are some of the other challenges in increasing the smart grid's momentum?

EG: Utilities have been running their business the same way for a very long time. Utilities make money on capital projects and selling energy using that infrastructure. In the regulated environment, there's not a lot of incentive to get more out of what you've already built and sell less energy. Part of the problem is the fragmented, state-by-state regulatory system. The incentives are not market or business driven-they are based on a fixed rate of return.

On the next level, utilities are just not that aware of the amount of work that's been done in terms of pilots and demonstration projects and the amount of information at their disposal. There are huge numbers of resources available to them, but they have not been exposed to it yet.

Also, they're just not used to having to solve these kinds of problems. Utilities have spent the last 50 years devising really effective ways to make deploying a complex system relatively easy to do through well-defined operating practices, and they've been doing that over and over again. We've taken what was a complex engineering process and codified it to such a point that a utility can add new feeders and build new loads without doing a lot of analysis. The problem is, on the other hand, that culture doesn't allow for a lot of innovation.