How One Industry Association Would Transform the Grid

Published: Mon 21 Jul 2014
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

Back in January 2014 when we were still packing up holiday decorations, the Obama administration initiated a Quadrennial Energy Review (QER), a comprehensive survey of energy production, infrastructure, and transport in the USA. The Department of Energy (DOE) is supporting the interagency taskforce working on this initiative. The first of three reports, which should be completed within the year, focuses on energy transmission, storage and distribution, and covers electricity (and its multiple sources of generation) plus transport of natural gas and oil.

Each installment of the QER contributes to a comprehensive set of recommendations on transformation of US energy production, delivery, and consumption systems to meet 21st century challenges such as climate change. The QER identifies opportunities to “modernize, expand, replace, or transform our energy infrastructure system so that it better accommodates changes in energy supply, integrates cutting-edge information and security technologies, and meets increasing demand for new consumer services” according to a White House blog authored by John Holdren (director of the White House Office of Science and Technology Policy), Cecilia Munoz (director of the White House Domestic Policy Council) and Ernest Moniz (secretary of the DOE).

One important stakeholder, the National Electrical Manufacturers Association (NEMA) recently released their public comments.  This industry association represents vendors who sell equipment to utilities and large commercial and industrial (C&I) energy users, as well as medical imaging vendors. It’s fair to say that as vendors they are close to utilities and large C&I users and understand their challenges.   But they also have a foot in the customer camp - they are businesses relying on a predictable and economic energy supply to maintain their own cost effective, safe and reliable operations.

Their comments include a number of specific recommendations that are grouped around the three traditional Smart Grid drivers – technology, policy, and money or finance.  The first set of recommendations covers the strategic role technologies like distributed energy resources (DER) and microgrids can play in strengthening the grid and delivering improved reliability as well as resiliency. The recommendations acknowledge that the other Smart Grid drivers – policy and money – must be modified to provide more incentives, both to utilities and to end users – to deploy microgrids and other DER assets.

Resolving weaknesses in cyber and physical security get the attention of another set of practical recommendations. The document emphasizes the need for standards – sorely lacking in cybersecurity to make it easier to evaluate the security attributes of a technology or an organization that interconnects with the grid.

When it comes to financial recommendations, the NEMA document notes that the balkanized US regulatory structure creates unique challenges in establishing financial mechanisms that encourage nationwide investments to improve grid reliability and resiliency.  Their National Infrastructure Bank recommendation could accelerate some of the progress being made at individual state levels through their Green Bank initiatives.   It would also be considerably broader in scope with a focus on all infrastructure and not specifically electricity generation through renewables as well as funding energy efficiency initiatives.

NEMA also tackles policy recommendations.  Acknowledging the real concerns about the current regulatory model leading to the dreaded utility death spiral, one intriguing recommendation discusses the use of a performance-based regulatory model akin to one deployed in the United Kingdom called Revenue = Incentives + Innovation + Outputs or RIIO.   NEMA notes that we need a new regulatory model for utilities, and we need new metrics to measure success.

The traditional metrics that identify system and customer averages for outage duration are inadequate, and NEMA suggests that the National Institute of Standards and Technology (NIST) should be tasked with developing better reliability standards.  Unfortunately, the NEMA recommendation focuses on transmission when most outages occur in the distribution grid.  Their discussion focuses on developing complicated and complex formulas that also account for the costs of outages.  While accounting for the true costs of outages or downtime is helpful, here’s a metric that wasn’t mentioned, and it’s a baffling omission.  That metric is uptime. Mission critical equipment manufactured by NEMA members is designed to meet the classic five nine’s (99.999%) of reliability – equivalent to approximately 5 minutes of downtime in a year.

The NEMA recommendations certainly contribute good information to the national discussion about what should be done to improve infrastructure that is vitally important to our economic, energy, and environmental surety.  But we’re all stakeholders in the transformation of our traditional electrical grid into a Smart Grid, and their comments should serve as an inspiration for you to submit your comments here as part of the public record.