By Kathleen Davis, senior editor
Technologies to be most impacted by smart grid fall into two specific areas: information and operations. Those areas of a utility or power organization are most often overseen by a chief information officer or a chief technology officer. So, POWERGRID International magazine sought out a handful of those people to discuss intelligent grid developments. We didn’t expect to hear that smart grid developments are creating such a time crunch for power executives. Still, we were able to interview four executives about what’s going on in their worlds today: Andres Carvallo, former Austin Energy CIO, Wanyonyi Kendrick, Jacksonville Electric Authority (JEA) CIO, Richard Dewey, New York Independent System Operator (NYISO) CIO and David Mohler, Duke Energy CTO.
PGI: How important is the smart grid for utilities today?
Carvallo: Extremely important. Utilities need to continue to improve on how they manage reliability (substation automation and distribution automation), more renewable energy, demand response programs and new capabilities around distributed generation and electric vehicles.
Kendrick: “Important” is such a relative term. Utilities are currently focused on workforce planning, current (as well as potential future) climate change legislation and rising commodity costs, especially fuel. Therefore, anything and everything that can impact these priorities is important to utilities. In the short-term, the smart grid cannot clearly and directly impact these utility priorities. Nevertheless, with over $4 billion dollars flooding into this area through smart grid Department of Energy (DOE) grants, I would characterize the smart grid as a present utility priority driven by government funding, consumer curiosity and state (potential) mandates. In terms of importance based on purely short-term return, the smart grid falls rapidly down the list of present priorities for most utilities, but time and again history has shown that today’s discussions become tomorrow’s priorities.
Mohler: In my view, smart grid will be increasingly important going forward. Today, it remains just potential. However, we need to build on the technology we have in play today to get to a functioning smart grid that will be extremely important in managing demand and input in the future.
PGI (exclusive to Dewey): How important is the smart grid for ISOs today?
Dewey: Developing a smarter, more responsive power grid in the 21st century is essential for New York and the nation to achieve a number of vital energy, economic and environmental priorities.
For example, New York has established ambitious energy policy goals with regard to increasing electricity supplied by green power. New York’s renewable portfolio standard aims for 30 percent of the state’s electricity from renewable resources by 2015. New York has also established energy efficiency goals that involve reducing annual electric usage by 15 percent from 2007 levels, to a level below 157,000 GWh, by 2015. Similar policy goals are proposed at the federal level for the entire nation.
Achieving those goals will require the public and private sector to invest in more advanced grid technologies. It will also require building public understanding of how this technology will change the way consumers interact with the power system.
Making the grid smarter can empower customers by giving them greater access to detailed pricing information. For system operators such as the NYISO, it means that we will have more and better tools to manage an increasingly sophisticated power system.
Additionally, development of more intelligent tools will enable ISOs and system operators to improve the grid’s overall reliability and allow these organizations to achieve those higher reliability standards more cost effectively. Improved power system monitoring capabilities and better integration between the power grid system and operational control systems will provide for greater situational awareness and improved response time for operational events.
If you are looking for a way to judge the importance of smart grid, you only have to take a look at the federal stimulus program approved by Congress and the president to revitalize the nation’s economy. Smart grid investment is a part of that program.
In fact, the NYISO and the investor-owned utilities and public power authorities that own New York’s transmission lines were awarded federal stimulus funds for smart grid investments in 2009. We will use those funds for a three-year project that will create a statewide phasor measurement network and install capacitor banks in key locations throughout our state. These investments will enhance the reliability and efficiency of the bulk electricity grid and provide the foundation for further development of smart grid infrastructure.
PGI: From a CIO/CTO point of view, how does the smart grid impact your companies’ day-to-day operations?
Carvallo: The smart grid is a program that drives many projects that require care and feeding. My role is to maintain the overall strategy and architecture of the program and support the teams that deliver the pieces on-time and on-budget.
Kendrick: The smart grid impacts a CIO’s point-of-view based on a purely operational focus and, possibly, a diametrically opposed, less-than-clear long-term strategy. Today, it is difficult to predict the inventory of software, hardware, security protocols, integration points and overall system standards that will drive a successful smart grid technology portfolio. However, I believe Apple’s iPhone or iPad could provide a great correlation for our potential future vision. With the former view in mind, the technology of the smart grid is envisioned as a closed system of highly organized applications. These applications are company specific where necessary and best of bred where applicable. The applications are governed by system and security global standards, but, ultimately, by customers’ needs for real-time information presented in an engaging manner. The present day-to-day operations beyond strategy formulation is focused on repeatable processes and information flows that ensure accurate billing and limited daily consumption views that are oftentimes less that real-time. Daily operations are all about the accuracy and reliability of present information flows for billing.
Dewey: At the NYISO, we like to think we have been making the grid smarter since we were created a decade ago. The NYISO began operations in 1999—right on the verge of the Y2K transition. Our focus on state-of-the-art information technology began right at the start and continues—on a daily basis—to this very day.
The NYISO’s system involves the co-optimization of several electricity market products—energy, reserves and regulation. It required smart technology to begin with. Our technology and market design continue to evolve. In 2005, we performed a comprehensive system overhaul, our Standard Market Design 2, which has been identified as best-in-class. We’ve continued to advance our technology with deployments relating to our innovative demand response programs and pioneering wind power management.
In support of our technological advances to make the grid smarter, we have also worked at making our technology more efficient. Our data center “virtualization” initiatives have cut the number of servers—about in half—and saved both capital and operating expenses, including enhancing our data center’s energy efficiency.
Mohler: I spend a fair amount of time on smart grid technology development and architecture. No one has a complete answer to the smart grid yet. Here at Duke, we’re not focused with exclusivity in any one smart grid area, like meters. Instead, we’re building a smart network with better functionality across the board. So, we spend a lot of time looking at costs, at options and at optimal use of the future smart grid network, including how it could be adapted for transportation issues.
PGI: Does the smart grid have great potential that is yet unrealized? If so, in what areas? If not, are people expecting too much from smart grid technology?
Carvallo: Absolutely. Check out Austin’s Pecan Street Project for more details on what can be realized: www.pecanstreetproject.com. (Editor’s note: The Pecan Street Project is Austin Energy’s community-wide collaboration to fully reinvent the energy delivery system. According to the company, it’s more than just a smart grid project. Pecan Street is “an ambitious effort to empower customers and innovators to use the energy system in new ways while making energy cleaner, water usage more efficient and the economy stronger.”)
Kendrick: The smart grid will be part of the movement that drives revolutionary changes in the utility business similar to the changes we’ve seen in the telecommunication industry since the 1970s. Although the final outcome is unclear, at the end of the day, the consumer will be king with either perceived or real service choices driven by friendly, highly-automated and highly-interactive real time information systems.
Dewey: As someone once observed, the capacity for technological innovation is a bottomless well. The smart grid can be seen more as a continual process of modernizing the nation’s power system.
Those of us who work for ISOs and RTOs in organized wholesale electricity markets believe that the competitive marketplace for electricity provides strong incentives for innovation and investment. Thomas Edison, who was certainly one of the world’s most prolific inventors, once said, “I can only invent under powerful incentive. No competition means no invention.”
Mohler: It has a number of areas unrealized, including building processes and transportation—what’s beyond where the wire ends today. That’s where the future lies for utilities. Additionally, the smart grid will allow us to harvest and utilize data in ways not currently possible. Also, that information could be distributed from inside the house to a feeder to a substation and beyond, using that information to fine-tune the entire system. This tuning process will pave the way for demand, solar, electric vehicle batteries and other items to be used for full impact.
On the concept of expecting too much, I feel that inside this industry we often expect too little from the smart grid. We like to, as a group, figure out why things won’t work, which is a detriment. On the other hand, I sometimes feel that regulators may expect too much—more from customers than from the smart grid itself. Consumers may not be willing to change consumption patterns.
PGI: Is there one technology area that you cover where you see smart grid technology changing?
Carvallo: Data management, network management, business intelligence for operations and customer service will all change with the smart grid.
Kendrick: Yes, all areas. All systems must become standardized and interoperable so that information can be sliced and diced for our customers’ present and desired real-time information needs and desires. Technology will be designed to be similar where necessary and different where demanded by the company’s customer retention strategy.
Dewey: One of the areas we’re examining is the impact of plug-in electric vehicles or PEVs. As more of the vehicles on our nation’s roads are fueled by electricity, smart grid tools can enable grid operators to identify potential grid reliability concerns created by PEVs’ demand for power, especially if large numbers are charging during peak demand periods. In the future, smart grid tools could allow not only reliable integration of that demand, it could potentially turn electric vehicles into useful, alternative energy sources by allowing operators to use power stored in PEV batteries when needed.
Mohler: Specifically, I’m thinking of that glass bubble on the side of your house—the meter. Going forward, the meter will see the most change with smart grid. People will want electricity to be more fun, as the modern evolution of telephones has become more fun for the user. Right now, the glass bubble isn’t much fun. In the future, as the smart grid evolves, the meter will be more distributed. It will measure how much energy efficiency is being created in the home and how much carbon is being used.
PGI: How do you see your role as CIO/CTO developing over the next five years? The next decade?
Carvallo: [CIOs/CTOs] will become chief architects and master integrators who focus in unleashing business value and customer satisfaction.
Kendrick: In the next five years, CIOs will continue to define their roles and responsibilities related to the overall industry and company smart grid strategy. CIOs will continue to focus on collaborating with the business and having a seat at the decision making table. It will be important during this transition that we withstand the desire to lead the utility under an “innovate and they will come” philosophy.
In the next decade, utilities will meet the information age and the two opposing industries (utilities and information) will form a lifelong bond driven by the need to retain present and attract future customers as well as meet various legislative mandates.
Dewey: Across all industries, the pace of technological change has increased significantly in recent years. With the recent advances in communication technologies and automation in the energy sector, that rate of evolution has become even more pronounced. The CIO’s role is to provide technology, data and communication solutions that meet the needs of the industry in the most cost-effective manner. As energy sector customers’ technology needs continue to accelerate, the CIO will be taxed with developing solutions more rapidly and economically, and that can operate at a higher technical performance. To achieve these objectives, CIOs will need an ever-increasing awareness and knowledge of the energy business and power technology industry.
Additionally, because the electrical power grid is a critical piece of our nation’s infrastructure, cyber security has been raised to an unprecedented level of prominence in the CIO’s agenda. This trend will continue and will become an integral part of application design, infrastructure planning, data management and process control.
Mohler: The CTO’s role is evolutionary, it needs to continuously change, although there will be common threads through the years. However, we must look ahead to future needs, which will be a bit of a rollercoaster ride. In a role like mine, one needs to look at tech strategies overall—a portfolio approach, making small bets across the board and working those forward to satisfy the needs of customers, shareholders and the environment.
PGI: How will your departments change over the next decade?
Carvallo: IT will blend more and more with the lines of businesses and export more and more its own employees to the business.
Kendrick: Our portfolio of applications will be driven by customers’ increasing demands for real-time decision making information. Technology professionals will start to design applications and business intelligence solutions based on customer profit margins and customer differentiation similar to the telecom model of today. Technology developers will shift into designing and building differentiating systems and business intelligence engines, outsourcing hardware and operational systems where applicable.
Dewey: Information technology professionals will need to work even more closely with energy system technology experts and engineers to design and produce solutions that more closely match the need of the rapidly evolving energy sector. Integration technologies will become more important than ever, and automation capabilities for power grid management functions must continue to evolve as a more seamless extension of many manual power system management activities. Information security capabilities and skill sets will need to be embedded within all aspects of the IT department’s operations and classic organizational functions.
Mohler: We need new skills, including new tech communications skills, in our departments and our industry as the smart grid develops. Additionally, there needs to be a culture change in the works. We need a higher level of creative and innovative thinking. In this industry, we’re usually a cautious bunch, which has served us well in the past. In the future, however, we need a new mindset, one that looks at the possibilities before the risks rather than looking at the risks and ignoring the possibilities.
About the Panelists
Carvallo, former Austin Energy CIO is now executive vice president and chief strategy officer with Grid Net. He made the transition during the process of this interview. When asked why he made the shift from utility to vendor, Carvallo told POWERGRID International: “Grid Net has the only real-time all-IP smart grid and smart home platforms to deliver my vision of smart grid 1.0 and smart grid 2.0. My goal is to take Grid Net to new heights and deliver secure, reliable and scalable smart grids for any power device and any broadband technology.”
Kendrick is the CIO of Jacksonville Electric Authority (JEA) in Jacksonville, Fla. She came to JEA in 2000. Prior to joining JEA’s management team, Ms. Kendrick was a consultant focusing on effectively marrying the right technology solutions to improved process performance. She has won five national and international awards for system integration and innovation.
Dewey is senior vice president and CIO of the New York Independent System Operator (NYISO). The NYISO Information Technology Group is responsible for delivering IT products and services to evolve the wholesale electricity markets; development, deployment, support and maintenance of all NYISO software. He was promoted to his current position in April 2010, having served as vice president and CIO since 2008.
Mohler is senior vice president and chief technology officer for Duke Energy. He is responsible for the development and application of technologies in support of Duke Energy’s strategic objectives. He was named to his current position in October 2006. Previously, Mohler served as vice president of strategic planning for Duke Energy. Prior to the merger between Duke Energy and Cinergy, he served in the same role for Cinergy.
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