Genius is one percent inspiration and ninety-nine percent perspiration. Accordingly, a 'genius' is often merely a talented person who has done all of his or her homework.
- Thomas Edison
Beware the Smart Grid Cliff!

By Jon T. Brock, President, Desert Sky Group, LLC

Reprinted with permission from Electric Energy T&D Magazine, January 29, 2010

To set the stage for what follows, you’ll need to travel back a decade with me to December of 1999. I’m busy doing last minute shopping for Christmas presents and preparing to stay up all night on December 31st, ready to go into work if the “big blackout” comes as a result of Y2K (the date switching from 1999 to 2000 in countless systems). I’m working at one of North America’s largest electric utilities, and no blackout occurs. My thoughts quickly turn to the analysts who in January of 2000 proclaim that bricks-and-mortar have once again outsold the “dot-coms” for the 1999 Christmas buying season. Then, March 10, 2000 brings the peak of dot-coms being over-valued, and the NASDAQ hits 5132.52 – just before the collapse. So is the Smart Grid following the same path as the dot coms? Considering the way it’s being characterized at the moment, I believe so…

Just as the dot-coms were over-hyped in the late nineties and eventually came to fulfill their promise in the mid-2000s, I’m of the opinion that like the dot-coms, grid transformation will very likely fall short of expectations for the near term, but will probably be better equipped to deliver on those promises over the longer term, the latter being several years – certainly not one or two.

According to IT analysts at renowned Gartner Group, Smart Grid technologies serving the utility industry are nearing the peak of their “hype cycle.” The hype cycle is a process that Gartner says every technology goes through. Developed in 1995, the hype cycle consists of five areas: On the Rise; At the Peak; Sliding into the Trough; Climbing the Slope; and Entering the Plateau.

As Gartner sees it, technology hype cycles provide a snapshot of core technologies, software and infrastructure. Examples include topics in wireless, security, productivity tools, hardware infrastructure and networking. Gartner’s “Emerging Trends & Technologies Hype Cycle” provides a view of highly hyped and high-impact trends and technologies from across the information technology landscape. Smart Grid technologies for the utility industry are nearing the peak, preparing to “slide into the trough,” according to Gartner.

To illustrate the point, for the past three months I’ve posted a single question on my website, asking: “Is the Smart Grid over-hyped?” Although by no means is this poll scientific, 87% of respondents answered “yes.” Would a more scientific approach yield different results? Perhaps, but I think not.

Joining the previously mentioned dot-com collapse are other examples including broadband fiber in the telecommunications markets; utility deregulated retail markets in North America; and even renewable technologies, to an extent. So, if we have history as a teacher on our side and we know that a specific segment of the market (in this case the Smart Grid) is over-hyped, then why are we running like lemmings toward a cliff we know exists? Or DO we know it exists?

I would agree that it’s patently unfair to lump multiple technologies into a single basket called “Smart Grid,” so let’s take a closer look at them at the very highest level for starters. The United States Department of Energy provides a good definitional overview of the electrical grid. DOE states that the electric grid delivers electricity from points of generation to consumers, and the electricity delivery network functions via two primary systems: the transmission system and the distribution system.

The transmission system delivers electricity from power plants to distribution substations, while the distribution system delivers electricity from distribution substations to consumers. The grid also encompasses myriad local area networks that use distributed energy resources to serve local loads and/or to meet specific application requirements for remote power, village or district power, premium power, and critical loads protection. But when we start talking more specifically about the Smart Grid, many more definitions exist. Moreover, to call it “smart” assumes that the existing grid is “dumb.”

An analogy that I have adopted from the DOE is the comparison of the forefathers of telecommunications and electricity markets. The story goes like this:

If Alexander Graham Bell were somehow transported to the 21st century, he would not begin to recognize the components of modern telephony – cell phones, texting, cell towers, PDAs, etc. But by contrast, Thomas Edison – one of the grid’s original architects – would be totally familiar with the grid. In that respect, the legacy grid we have today is “dumb.”

Going back to my Y2K example, the reason that we had little to no blackouts when the date switched from ‘99 to ‘00 is not only due to all the hard work put in to prepare, but also to the fact that many of the distribution and transmission networks in 1999 did not care about a date – again, “dumb.”

Obviously, the Smart Grid has many definitions, often depending on who’s doing the defining and/or the composition of the intended audience. I will not attempt to define it yet again here, but instead, let’s examine its components.

Despite all the “hype” around smart metering and the fact that someday I can watch my car charge from a smart phone; electric grid stakeholders representing utilities, technology providers, researchers, policymakers, and consumers have worked together to define the functions of a Smart Grid. Through regional meetings convened under the Modern Grid
Strategy project of the National Energy Technology Laboratory (NETL), these stakeholders have identified the following charac­teristics or performance features of a Smart Grid:

•    Self-healing from power disturbance events
•    Enabling active participation by consumers in demand response
•    Operating resiliently against physical and cyber attack
•    Providing power quality for 21st century needs
•    Accommodating all generation and storage options
•    Enabling new products, services, and markets
•    Optimizing assets and operating efficiently

Not to disparage the efforts of the utilities winning stimulus funds – which, as most of us in the industry know, have been split into categories such as investment, demonstration, and innovative research – but I fear that the business cases of the awarded stimulus put too much emphasis on benefits that are heavily dependent on smart metering and time-differentiated rates. Granted, that was the intent of the DOE. However, getting an infrastructure in place, stabilized, and working well with proven standards and interoperability targets is crucial before moving to end-use consumers. As I stated at the beginning of this article, I fear a “cliff” or market correction is coming, given the way Smart Grid is characterized
at the moment.

As defined by NETL, there are several functions that the Smart Grid can address and not all of them are focused on real-time rates for residential consumers. For instance, recently I have been researching various T&D technologies such as Volt/VAR control & optimization, load balancing, and self-healing solutions that do not necessarily require a touch-point at every consumer and can deliver benefits in a rapid fashion as it relates to digitizing the electric grid. However, these technologies are not as prevalent in the current investment or demonstration awards as smart metering. The innovation research funds will go towards electro-fuels, advanced car­bon capture technologies, and transportation battery storage.

I am not saying that smart metering and time-differentiated rates for end-use consumers are not important or that they do not have benefits. To the contrary, they are vital priorities that will eventually change the way we live (remember rotary phones?). What I am saying is that regulators, utilities, ratepayers, and investors alike will have to be patient when expecting the benefits of the Smart Grid to be realized. This is much easier said than done. Are we about to enter the trough after the hype? You bet… but this time, we know it.

Jon Brock is President of utility and energy advisor Desert Sky Group, LLC.  He can be reached at


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