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Four Gaps the Smart Grid Can Bridge

<p>The smart grid is about multi-decade utility industry transformation. It&rsquo;s a process that will ultimately encompass everything from &quot;source to socket,&rdquo; and all that happens from generation to consumer. Just how will it affect the environment?</p>

First, let’s talk big picture: The smart grid is about multi-decade utility industry transformation. It’s a process that will ultimately encompass everything from "source to socket,” and all that happens from generation to consumer. How will it affect the environment?

In 2006 I framed my policy perspective on this and it’s unchanged today: We need a smart grid to complement traditional investments in generation while addressing supply, demand, efficiency, and environmental impact as mutually critical components of utility industry and national energy strategy.

To assert its full potential -- and prevent smart grid from becoming a utility “bridge to nowhere,” we in the utility industry need to lay hold of the inherent “gap bridging” power of the smart grid itself.

1. Smart Grid Bridges Utilities to the Environmental Community

It seems surprising to think that traditionalists in the generally conservative supply-side oriented utility industry and the liberal environmental community could agree on much of anything. But on nuclear power and the issue of smart grid and the modernization of our utility industry infrastructure, utilities see strong long-term benefits to their core mission of ensuring reliable, cost-effective electric service and environmental and consumer advocates are slowly awakening to the fact that new base load nuclear combined with a smart grid approach will unleash significant reductions in CO2 and system wide efficiency that will help mitigate the effect of electric power on our environment while also helping integrate distributed renewable energy resources.

2. Smart Grid Bridges Utilities to Their Consumers

Utilities of all types are considering additional ways to engage consumers based on their individual needs and preferences. From smart thermostats to home energy efficiency programs, to solar power integration and even tests of home energy storage systems, utilities are engaging with consumers in ways never seen before. In IOUs the notion of “ratepayer” is giving way to true consumer-driven electric power service. Yes there are bumps as you would expect, but these developments overall are very positive.

3. Smart Grid Bridges Departments within Utilities to Each Other

Our research indicates that utility companies recognize that their perspectives on utility assets is too siloed by departments that include among others generation, transmission, distribution operations, engineering planning, and customer service. But a funny thing happened on the way to the smart grid committee meeting. Utility department leaders have started collaborating and working together in ways unheard of a few years back and they have recognized the need to build bridges between individual departments. In fact, in a proprietary benchmarking research study we just completed, over 70 percent of the members of our utility research sample agreed or strongly agreed that departmental views on utility assets were siloed.  An even greater number (85 percent) agreed or strongly agreed that a more holistic view of assets was needed between departments in the next two to three years.

Smart grid programs, carefully tailored to reflect the needs and individual circumstances of each utility and its customers, help bridge these silos between utility departments and connect utilities to their consumers for a smarter energy future.

4. Smart Grid Bridges Democrats and Republicans

The other day I attended an address by our local congressman, Tom Price (R-GA).  I asked him how members of Congress balance the need to advance capitalist, free-market growth oriented energy policies with the need to be good stewards of our environment. Price cited Teddy Roosevelt and the historical conservative commitment to the environment and he indicated that balancing the two was in fact possible.

Bringing intelligence to the nation’s electric grid may provide a bridge over which politicians can move beyond rancor and find common ground in a cogent/streamlined national energy policy built around a national smart grid approach. As a practical program that supports U.S. energy needs while reducing dependence on foreign oil, ensures reliable, efficient and affordable electric service, and ensures that we move to provide global leadership on environmental stewardship, smart grid is a bridge we can all stand on.

Energy drives every facet of our economy, but it also comes at a tremendous environmental cost. These externalized costs must be reckoned with and internalized sooner rather than later. Wall Street traders should not be the beneficiaries of this. As the environmental cost of carbon-based energy supply is internalized into the market, the proceeds must be spent on utility industry transformation and infrastructure renewal. It affects every single American who needs power to run their business and wants to enjoy clean air and a swim in our ponds and rivers.

Don McDonnell is managing director of The McDonnell Group. This post originally appeared on The McDonnell Group's Smart Grid Blog and is reprinted with permission.

Image CC licensed by Flickr user

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