Electronomics: Why We Need Smart Grid Technology and Infrastructure Today

2/12/09

Here are seven key questions and answers about the electricity economy and smart-grid technology.

1. What is “electronomics” and where does it fit in today’s energy world?

One of the best ways to understand the new electric smart grid of the 21st century is by applying electronomics, which helps you analyze the rapidly emerging electricity economy. Electronomics means jobs, progress and prosperity; but it also spells huge financial opportunities and brand new companies and industries that will be created on a vast scale, a scale we haven’t seen in the United States for many decades or more.

Electronomics is also one of the key underpinnings for the stimulus package currently being shaped and fashioned in Washington DC. There are lots of stimulus ideas that create jobs for a year or two and that refurbish aging infrastructure. That’s really important. We need new bridges and roads and highways.

But the smart grid infrastructure that we’re talking about is much more lasting in its impact. It is the development of a new infrastructure that will permit new forms of commerce to take place. It is akin to the transcontinental railroad, the phone system, the interstate highway system and the Internet in the way that it will help enhance new fortunes and spawn new Googles and Microsofts.

Building out this grid will also allow us to remain competitive in a world that is rapidly moving from a petroleum economy to an electricity economy. Right now, we’re falling behind. Many of the most exciting and aggressive smart grid initiatives are coming from overseas. Much of the Middle East is using its oil money to create a state‐of‐the‐art smart grid along with sustainable cities. Europe spends 10x what we do on smart grid research. And China is leading the world in high‐voltage transmission and next‐generation grid efforts. If we want to keep pace, we have to master Electronomics and really dig in here.

2. What is the current state of the U.S. electric infrastructure?

The electric infrastructure in the United States has been called the most complex machine on earth, and with good reason. There are so many moving parts. For starters, the system has 14,000 transmission substations and 4,500 large substations for distribution. And, just as importantly, there are over 3,000 entities—each with a competing agenda—that own a piece of this national electric infrastructure. Actually, it’s not a truly cohesive infrastructure at all. Many countries around the world have one national electric grid. We don’t. Ours is fragmented, to say the least, and this makes it hard to implement technical and political “repairs.”

In addition to being fragmented, our electric infrastructure today is aging, outmoded, underfunded and overstressed. Basically, we’re talking about a 19th century system from the days of Edison and Westinghouse that uses 20th century equipment in an effort to keep up with a 21st century economy. This is the digital age and our electric grid is using electro‐mechanics from the 1960s and 70s rather than microprocessors. Approximately 70 percent of the transformers and transmission lines are 25 years old; and 60 percent of the circuit breakers are 30 or more years old.

We are paying the price for this. Congestion within our current electric infrastructure costs ratepayers $2 billion a year, and commercial ventures are losing more than $100 billion to outages. That’s not all, though. We’re simply not investing in our electric infrastructure. In fact, when it comes to our electric grid, we have an embarrassingly low R&D rate—about 1/20th the average of all U.S. industries.

No wonder that communities with decaying electric infrastructure lose jobs that shift to places with low‐cost, high‐quality power; and no wonder that our country is losing clean‐technology jobs to other nations around the world. The regulators are well intentioned, but they are out of touch. They are still rewarding utilities for installing instantly obsolete equipment, and they are still allowing utilities to sell more power at a time when we need to use less. This is a demand issue—not a supply issue.

The bottom line is that the electric system, as it’s currently configured, is out of sync. Wholesale power transactions jumped more than 300 percent between 2000 and 2005; near misses in terms of outages skyrocketed by 1,000 percent between 1997 and 2002; and there’s no way we can release the pressure by using alternative energy like solar and wind because they require intermittent bursts of power that today’s infrastructure just isn’t capable of providing.

3. What should / could the U.S. electric infrastructure look like if we really focused our energy and resources?

Infrastructure has always been the key to prosperity in the United States—whether it’s been the transcontinental railroad, the interstate highway system, rural electricity, or the telephone or Internet network. And building a smart electricity grid for the 21st century is no different. What we need to aim for is pretty clear. Our goal should be one vast, interconnected, intelligent system that is monitored and controlled end to end—all the way down to billions of individual devices.

A newly engineered smart electricity grid will give us much‐needed choices. Among them: interdependence not isolation; efficiency not waste; customization not one size fits all; sustainability not vulnerability; and a power system focused on the future not mired in the past.

This is a vision, but it can become a near‐term reality. Right now, our electric infrastructure in the U.S. revolves around about 130 control centers that are blind to each other. We want to establish an interoperable network where there is sharing of information, power and resources across long distances. There’s no reason that wind power in Texas and hydropower in Washington State can’t be balanced and mixed.

A cornerstone of the new smart electricity grid will be efficiency that is optimized by computers. We need to digitize the current analog system. Or, to put it another way, we need to Google the grid and create massive interconnections that permit intelligent self‐healing and utilization adjustments when supply and demand conditions warrant. Another new foundation as we build out the electric infrastructure is customer choice. Utilities today sell power one way—their way; this will change so that, like the phone companies, there are a number of tailored purchase plans for energy consumption.

The ultimate result stemming from a new digitized electricity grid will be a move away from petroleum‐based fuels. Once the new electric infrastructure is up and running, we will be able to deploy a host of fuel sources—renewable and non‐renewable—for the first time on a large-scale basis. That’s why I believe the petroleum economy will gradually be transformed into the electricity economy.

4. What will it take to achieve these kinds of results?

There are three essential technology components that are critical for the new smart electric grid’s success. First, two‐way communication. Communication between utilities has to happen in order to develop and deploy a seamless and interactive network. Second, smart devices that talk and listen on an end‐to‐end basis. And third, advanced control systems that engage in real‐time throughout the sprawling network.

There are also three essential “rules” that will enhance the new electric infrastructure long after it is engineered. First, as with the Internet, open and interoperable standards. Second, correct pricing models. We have to get this right because peak electricity can be 100 times more costly to produce. And third, the correct policies from the public sector that will make it easier for a century of regulation to be relaxed and reshaped in the name of progress and public interest.

5. What role will the Obama Administration and Congress have in this much needed transformation?

We must change the mindset—first and foremost. For too long, infrastructure has been associated with drudgery; now it must be seen as an opportunity to create jobs and prosperity. And new electric infrastructure must be viewed as an economic priority by Washington DC.

If a new smart grid doesn’t get the attention and funding it deserves, the downside consequences will be significant. We will see more dirty coal plants. We will have to cope with obsolete and over‐taxed electric infrastructure that has no role in the 21st century. We will witness the continuation of a regulated 19th century monopoly that desperately needs to change. Our electric infrastructure will remain vulnerable to natural disaster and terrorist attacks. And our global rivals—countries like China, which recently allocated $170 billion to upgrade its electric grid—will surge past us.

The upside opportunities are, without question, in the national interest. If Washington invests in smart grid infrastructure, we can seriously lessen our dependence on foreign oil because a new electric network will make it easier to use renewable energy sources. The efficiencies are promising as well; some analysts believe we will be able to reduce our energy consumption by up to 30 percent when all is said and done. For consumers, a smart grid promises lower energy costs and more good jobs. For the private sector, new electric infrastructure offers commercial opportunities on the same scale as the Internet Revolution. And for the environment, the proliferation of smart grid technology means the chance to completely transform our transportation sector from petroleum to electricity.

6. What other institutions and companies will have a transformative impact on the U.S. electric infrastructure?

Several states are already having a major impact on the growth and development of the smart grid. California, for example, has had a larger budget for this technology innovation than the United States government; and Texas recently installed major smart grid components. It’s hard to pinpoint the utilities of the future today, but several are aggressively pushing toward new and intelligent electric infrastructure. Some examples: Southern California Edison, Xcel Energy, Austin Energy and Sempra.

Top‐tier financial investors like Goldman Sachs, Kleiner Perkins and the Global Environment Fund have joined platinum companies such as GE, IBM and Google in committing capital to smart grid technology research, development and deployment.

And a number of emerging and fast‐growth companies are already staking claim to this potentially lucrative market space. In the demand response sector, Comverge and EnerNOC are setting the pace; in distributed resources, Grid Point is showing the way; in smart meters, Itron is breaking new ground; and in advanced controls, Areva T&D is moving forward.

7. What effect will the smart grid of the 21st century have on the economy and our lives?

There are six sweeping trends that smart grid implementation will help usher in: a brand new interstate and inter‐country highway system for electricity; a transformed transportation sector based on electric power; community‐scale micro‐electricity grids versus the centralized command‐and‐control electricity distribution we’ve known for a century; customized choice for consumers when it comes to electric consumption; smart infrastructure based on the digital revolution; the dawn of the electronomics era, which will generate jobs, opportunity and sustainable prosperity on an unprecedented scale that hasn’t been seen in decades.

Jesse Berst is Managing Director of GlobalSmartEnergy and one of the private-sector leaders of America’s transition to clean, smart energy. Follow @

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  • Sherry

    There could be no better investment in America than to invest in America becoming energy independent! We need to utilize everything in out power to reduce our dependence on foreign oil including using our own natural resources. Create cheap clean energy, new badly needed green jobs, and reduce our dependence on foreign oil. The high cost of fuel this past year seriously damaged our economy and society. The cost of fuel effects every facet of consumer goods from production to shipping costs. After a brief reprieve gas is inching back up. OPEC will continue to cut production until they achieve their desired 80-100. per barrel. If all gasoline cars, trucks, and SUV’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. There is a really good new book out by Jeff Wilson called The Manhattan Project of 2009 Energy Independence Now.

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