Tuesday, May 24, 2011

Lessons from Japan and elsewhere

Interesting comment at Connectivity Week by Osamu Onodera from NEDO (Japan's energy research body) on the opening panel about finding the business case / value-add / why should we do this?

He noted that Japan's tsunami/earthquake event pointed out to the Japanese power industry the weakness of centralized power generation.  Even where the power infrastructure wasn't severely damaged, the nation continues to deal with rolling blackouts, which would have been far more limited, or even eliminated, by a more distributed generation design.

Following up was Heart Akerson, who is behind the Heart Transverter, an $11K device that he hopes will revolutionize the grid, one end-user location at a time.  His point: Deal with the endpoint first, then the grid.  Of course, that's his device's strong suit, but he made some good points about moving the logic to the endpoint, and reducing how much information needs to be transmitted, improving both security and reliability (the system isn't as dependent on good communications.)

Is the future of critical infrastructure protection minimizing the criticality of the (common) infrastructure?

Tuesday, May 17, 2011

PEVs and fuel taxes, Part II

Way back on Valentine's Day, I wrote about the problem of declining fuel-use taxes associated with PEVs, in the context of a discussion about the right and wrong ways to handle "roaming" (recharging away from your primary home / business location.)

Back then, I indicated that states were going to be looking to replace that lost revenue.  Well, it looks as though I wasn't the only one to see that hand writing on the wall.1  A scant nine days after I wrote that entry:
  • a Texas legislator introduced a Bill that would require the Texas DOT to initiate a pilot project to charge a per mile driven tax on electric vehicles, through either a periodic reading of the odometer, or an electronic device installed on the vehicle to report mileage.
  • a Bill was read into the Washington Senate that would impose a $100 / year tax on electric vehicles (the link is to the latest version.)
What I had missed was that an Oregon legislator had already introduced a Bill about a month earlier to establish a per-mile vehicle use tax (based on either electronic reporting of mileage or location tracking), which you can bypass if you're willing to pay a flat $300 / year fee.  For PHEV (Plugin Hybrid Electric Vehicles, that can either use an engine or an outlet to recharge) owners, the bill apparently allows one to petition the state for a refund of fuel-based road use taxes.

At this point, none of these measures has been passed, though none of them has died yet, either.

Sometimes, I hate to be right.

But the question is raised, which is the more appropriate measure?  There seems to be movement in the direction of both really invasive (mileage reporting) to ridiculously invasive (location tracking) and non-invasive KISS-principle (annual fee tacked on to vehicle registration.)

It seems to me that the cost of more invasive methods outweighs any advantage there may be in equitable allocation of tax burden, though I imagine that the DOT planning gurus would love to have the vehicle transit data. The hitch is that you have to pay to collect and secure a lot of personally identifiable information, and then there's the problems (real or imagined) that may arise from one government agency (the DOT) having information that another government agency (law enforcement) may want, whether there are protections on that information or not.

It seems to me that a not-unreasonable compromise would be a flat fee that factors in vehicle weight, but I'm not a Civil Engineer, so I don't know how well that compares to the wear and tear a given vehicle puts on roads.

UPDATE: Had a really useful and thought-stimulating conversation with Robert Burke of ISO New England who made a very good point about the "gas station model."  In many states there is legislation (or administrative rules) prohibiting the resale of electricity.  It's a good point.  (Thanks, Rob!)

It seems to me that there are a few possibilities to deal with that:
  1. Have the utilities own the recharge facilities, which leaves them dealing with fuel use taxes, possibly for differing jurisdictions, which they may not want to deal with, as I discussed back in February.
  2. Use existing legislation or rules that allow for various kinds of market aggregation, which may need to be tweaked to deal wit PEVs.
  3. Put explicit exceptions to a prohibition against resale of electricity for transportation in the legislation that deals with fuel taxes (perhaps just transferring the collection of those taxes to public recharge facilities.)

The easiest solutions, involving maximum re-use of existing structures and systems, should not be bypassed in favor of different models, just because this thing is called "new."   Particularly where there are already robust systems that deal with the questions at hand.

1 For those inclined to correct me to "handwriting on the wall," I refer you to the origin of the idiom, the Biblical Book of Daniel, Chapter 5.

Monday, May 2, 2011

Why we need to do this...

The following is an early draft of an intended first entry in this blog.  I never posted it, but recent events, both in the industry and in my own life have made it more relevant than when I first wrote it.

This blog is supposed to be about realities, here are some realities about why we need to do Smart Grid, as I understand them:
  • The economy tanking when it did actually did the electric power industry a huge favour. It bought us all a little bit of time. When the economy is really cranking, demand for electricity grows. 
  • Despite the economy diving faster than an SR-71 with both engines flamed out, the demand for power still grew. However, it's been doing it a lot more slowly. 
  • As the economy recovers, electric demand will rise faster than it has been of late, possibly faster than it was rising before. 
  • We have two choices from here. Either do what we've always done; build additional (expensive, fossil-fuel consuming, environmentally difficult) powerplants, or learn to use the grid, different resources, and the powerplants we already have in place, more efficiently. 
That's a lot of what SmartGrid is about, making the most of that second option. A lot of very bright people are trying to make that possible, along with a few "Average Joes" like me. Will it be expensive? Probably. Will it be more expensive than building those powerplants? That depends on how you do the math.

You see, for far to long, we've treated our environment like resources are limitless. By "environment" I don't mean strictly the pure air/tree hugging/save the whales variety, though that's certainly a part of it.  What I mean is the whole socioeconomic engine that's driven in large part by fossil fuels as a source of energy.

We've been treating fossil fuels like like they're infinite, but they aren't. We have a closed system here, and eventually, we're going out run out of stuff to pull out of the ground to do energy conversion with.  That reality is a future cost that hasn't really been factored in historically, so we're starting to pay the price now for having ignored it.

Yes, nuclear power is a possibility, and there are some really intriguing designs out there.  However, getting from intriguing designs to practical application takes time.  Sometimes lots of it.

The longer we keep whistling in the dark about this, the worse things are going to get before they get any better.

I'm no tree-hugger (well, maybe a little bit.) Still, I like to go fast in my car, be comfortable, and have all the power I need whenever I want it at cheap rates as much as the next person, and maybe more than some of you.  However I do know when something is a threat to my children's future, and this is one.

Now we could do this Smart Grid thing very wrong, and end up with a terrible, limited, energy constrained, privacy invaded, society. 

We could also do it very right, and hand our kids and grandkids a better, freer, cleaner and less limited world than we started with.

The difference between the two is likely to be telling each other the truth about what we're doing and why.  Deal with the realities, even when they're ugly, and every once in a while look further ahead than next quarter's (or next year's) financial statements.

Smart Grid lessons from distance running...

A long time ago, I was a competitive distance runner.  Well, I was competitive in the sense that I was in Junior Varsity and Varsity cross-country races in High School, but my competition was pretty much the guys bumping, huffing and puffing in the middle of the pack.

Bill Cosby was a High School Cross Country runner, too.  He defined Cross Country as a sport where you run 10 miles to throw up.  Funny to a non-runner, too true to be all that funny for me.

I never became a great distance runner, but I learned how to stay in the race, endure the tough parts, and finish respectably.  Some of those lessons have analogous lessons in the evolving Smart Grid world.

Lesson 1: Don't be in a hurry.
In every race, there were some who would take off like rabbits.  A few (very few) could pull ahead and stay there for the whole race.  Most of them faded into the middle of the pack, or worse yet, got shelled off the back.

Those who could stay out front had already learned Lesson 2.

Lesson 2: Plan to run the whole race.
A good runner knows what to expect from the course, when and where to push, and when to take it easier and recover a bit.  You only have so much energy to expend, and knowing where and how to expend it, and always keeping some for the end makes the difference between a good run and 10 miles of sheer freaking torture.

Lesson 3: Get better at the hardest stuff.
I am not built like a distance runner.  I had a distance runner's upper body, but a football lineman's legs.  On the flat, any decent runner could outstrip me after a few miles.  My one advantage was hills.  The steeper, and the later in the race, the better.  Nothing takes the heart out of a distance runner like someone hammering smoothly past, up a steep hill, late in the race.  The problem was, there were never enough hills for me to place well, and I never got really good on the flats, but I got better.

Okay, enough of me reliving my gory days (no that isn't a typo, I left the "l" out on purpose), how does this relate to Smart Grid?

Lesson 1: Don't be in a hurry.
I hate to say it, but the ARRA funding wasn't necessarily the best thing for Smart Grid.  Having to get a plan together, be "shovel ready", and spend all the money in a short time frame seems to have given folks a bad case of "starting line fever."  Taking off and getting the lead early isn't necessarily how to do well in a market place that is going to take at least a decade to develop.  Probably closer to 20 years.

I hear the cries of "Sacrilege!", with fingers pointing to the fast-track standards development, and the massive rollouts of Smart Meters in many places.  Well, I'm not the only one saying that the Emperor's naughty bits are showing.

Let's be real.  Where we're talking about changing how we produce, distribute and use energy, we aren't talking a technological change.  In reality, we're talking about a societal change.  Changing a society takes time.  You can hammer through hardware implementations in the grid as fast as you like, and design model tariffs for every scenario, but until the ones making energy usage decisions (i.e. the folks buying appliances, homes and cars, flipping light switches and making decisions about their businesses and commercial buildings) are accustomed to the new paradigm, the new system doesn't exist.

Look at internet services.  The generation of people who dreamed up the technology isn't the generation that built a marketplace around it.  Our kids are more fluent with, and have a more intuitive sense of, the paradigm than most of us old geeks.  The same thing will happen with Smart Grid.  We can theorize, but the market won't really be in play until a generation has grown up with it as normal.

That means my daughter may not really "grok" it, but her kids will.

It's going to be a long run, and being out in front now may mean that you will learn (or maybe are already learning) Lessons 2 and 3 the hard way.

Lesson 2: Plan to run the whole race.
This is really an extension of Lesson 1.  The fact is, we don't know the course yet, and early lock-in of a race plan is a risky idea.  Whether you're a systems vendor, a utility, or a consumer, be careful.  Plan for change.  If the profitability of a decision is dependent on a kickback, rebate, tax break or other incentive that doesn't naturally occur in the marketplace, don't bet the race on it.  It may not be there later.

Some companies are learning this the hard way right now.  They put a pile of money into systems that support (or mostly support) what has already been deemed a "legacy" standard, and isn't able to do what is being asked of it today, let alone tomorrow.

If you're one of those companies, you know what I'm talking about.  That next hill is going to hurt...

Lesson 3: Get better at the hardest stuff.
Lets face it, folks.  Utilities are good at engineering.  Really good.  They have had to be for a long time.  Many (though not all) of them have gotten pretty good at dealing with regulators as well.

What they aren't good at (for the most part) is dealing with customers as "customers" instead of "ratepayers."

What's the difference?
  • A ratepayer is someone who pays a tariffed rate for something that you (and only you) provide, on terms that are set in the tariff.  
  • A customer is someone who you have to convince should spend their hard earned dollars on your service.
Even if a utility doesn't face competition per se it needs to start treating customers like customers and not ratepayers.

Making good on the promise of Smart Grid over the long haul will require both honesty and trust.  Utility service is moving away from "We provide it, you pay for it" towards a collaboration.  In a smart-grid world, customer-owned devices will be providing energy services, and customers will expect fair compensation for that.  Utilities will command and control less, and act more as a conductor in an orchestra than a drill sergeant.  That requires a greater degree of trust.

Utilities with "ratepayers" don't trust, and are rarely trusted.  Utilities with "customers" are actively engaged in the process of earning their customer's trust.

One other thing I learned.  There are lots of ways to "play dirty" in the middle of the pack to get an advantage.  The advantage is temporary.  The pack remembers, and a runner who uses those tricks will end up paying the price, maybe not today's race, maybe not tomorrow's, but soon and for the rest of the season.*

* With apologies to Casablanca fans everywhere...