Smart Grid Requires Smart People

The "Smart Grid" is an enormously popular topic these days. I just ran a Google News search on the term "smart grid" and it returned almost 2000 hits (roughly the same number as a search on "ted kennedy"). The Obama administration has pledged at least $4 billion to funding the "smart grid."

What exactly is the smart grid? Well, it's one of those terms that's pretty broad and includes a lot of concepts. . .and can mean different things to different people. Basically, as I understand it, it's the combination of technologies and data management that will allow operators and users of our electrical grid to have better information about what is happening to the electricity that is passing through the grid or that they are using. That can include everything from simple home-based meters to multi-million dollar software for utilities to manage second-by-second transmission and distribution of electricity. Lots of companies are working hard to put the technologies and other tools out there that will make the "smart grid" work.

The rhetoric we hear often attributes significant environmental efficiencies to the smart grid. What's important to realize is that making the grid smart does not automatically make it more efficient. You need smart people and smart policies to combine with the smart grid to achieve any transformation. Better information by itself is not a goal, but merely a means to help achieve our goals.

Here's a real-life example. About 10 years ago I had a friend who signed up for time-of-use rates through his local utility (time-of-use rates do not require a smart grid, but many of the stories I read in the media suggest that the smart grid will make these more common). He paid much lower rates at night and in the winter and higher rates during the day and in the summer. What he found was that his off-peak rates were so low that it made sense for him to leave his lights on all night to help warm the house. Since his utility primarily burned coal as its baseload fuel, he was fuel switching from natural gas to coal by being "smart." In the process he was actually increasing pollution.

Without policies that send the right pricing signals to utilities, they could easily design "smart" rates that actually move generation away from higher priced peaking natural gas plants (and even higher priced renewables) to lower priced coal and nuclear.

I'm all for the smart grid, but not without smart people and smart policies to make sure that the information that it provides actually serves the purpose of reducing emissions and encouraging efficiency and cleaner generation.

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