In a poll of attendees at last week's National Town Meeting on Demand Response and Smart Grid organized by the Demand Response Coordinating Committee (DRCC) in Washington D.C., 49 percent of the audience voted "Yes," the Smart Grid is being "over-hyped."

Given that the crowd consisted of an alphabet soup of smart grid professionals -- demand response (DR) and smart grid vendors, electric utilities, regional transmission organizations (RTOs) and independent systems operators (ISOs), state public utility/service commissions (PUCs/PSCs), and federal policy makers -- it could be perceived that even insiders think the benefits of the smart grid are being oversold. But attendees were nonetheless enthusiastic about the hype around the power industry and the investment and innovation driving the evolution of the power grid.

The feeling of hype is not without foundation, as it feels like significant events and decisions develop around the smart grid every day. Some of the recent events at the forefront of discussion included:

• The rejection of Baltimore Gas & Electric's (BG&E) Smart Meter plan by Maryland's PSC just before the conference opened;
• The release of the Federal Energy Regulatory Commission's (FERC) National Action Plan on Demand Response report;
• The expected results of FERC's Notice of Proposed Rulemaking (NOPR) on Demand Response Compensation; and
• The passage of the Waxman-Markey climate and energy bill. 

The Maryland PSC decision highlights several problems facing the greater adoption of Demand Response. BG&E had received a federal smart grid grant subsidizing the proposed deployment, but the state commission still rejected the project based on no clear improvement to the grid and lack of customer educational material to modify customer behavior.

First and foremost, this news seems to reflect a general lack of a shared mission among federal and state regulators in implementing a smart grid. Second, it demonstrates a lack of clearly stated benefits and tangible economic results obtainable with a smart grid. This example is indicative of the general sense of frustration among various consituents in attendance.

On one side we have a group that contends that once we build the smart grid infrastucture the benefits will appear. This group shares a sense of "pilot[project]-fatigue," wanting large-scale deployments, and greater acceptance and correspondingly less explanation of the rationale behind these projects.

On the other side you have those who ask to see the benefits prior to deploying resources to develop a smart grid. While it's easy to categorize this latter group as a barrier to adoption, it should not be faulted for the failure of previous deployments to produce metrics to demonstrate project succcess.

FERC's National Action Plan is a report that identifies strategies and activities to achieve the objectives of EISA (Energy Independence and Security Act of 2007). This call to arms more specifically identifies the requirements for states to maximize the amount of demand response to be developed and deployed, designs a communications program, and develops supporting tools.

Soon to follow will be FERC's implementation plan to be presented to Congress later this year. Nick Sinai, Energy and Environmental Director of the Federal Communications Commission (FCC), also commented that working in favor Demand Response adoption is the FCC's National Broadband plan which has the 5-10 year vision to bring broadband to all Americans. Chapter 12 of this plan relates to implementing communications on the smart grid.

Of great interest to many power suppliers in attendence will be the results FERC's NOPR on DR compensation which attempts to standardize DR compensation to be equivalent to the price of incremental supply, thereby increasing competitiveness and lowering prices. While the regulation is necessary to drive adoption, infrastructure remains a bottleneck in many instances to wider adoption. It has become a chicken or egg issue whether the policy drives investment in infrastructure, or whether implementing the infrastructure will hasten policy development. The consensus seems to be to work on both simultaneously.

The Waxman-Markey Bill, which was passed by the House of Representatives as the American Clean Energy and Security Act, remains in limbo in the Senate. According to John Jimison, Sr. Counsel of the House Energy and Commerce Committee, the Bill's provisions concerning Demand Response and Smart Grid have bipartisan support, but issues regarding Climate Change and Energy Security continue to be contested. While the demand response community awaits the regulatory stimulus that would be provided by an Energy Bill, Pat Hoffman, Assistant Secretary of the Office of Electricity Delivery and Energy Reliability in the DOE, disappointed the audiance with her announcement that there will not be a further economic stimulus plan, or "stimulus part II."

Those in attendance, while unsatisfied about the pace of adoption, remain optimistic about the future of Demand Response and Smart Grid, and hope that their efforts justify the hype. We'll see what the survey says next year.

Sid Singh is currently focused on advancing energy efficiency and renewable energy initiatives leveraging his deal making experience, industry knowledge, and network of contacts. Other articles by Sid can be found at EnviroSynthesis.blogspot.com.