With the Federal Energy Regulatory Commission set to make a decision on cost allocation this week, the way utilities pay for transmission could change the renewable energy game. During today's OnPoint, Dan Delurey, executive director of the Demand Response Coordinating Committee, discusses a national action plan on smart grid and addresses some of the key challenges to expanding and implementing the technology. He also explains the impact smart grid expansion could have on job growth.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Dan Delurey, executive director of the Demand Response Coordinating Committee, the trade association for the smart grid industry. Dan, thanks for coming on the show.
Dan Delurey: Thank you for having me, Monica.
Monica Trauzzi: Dan, next week you'll be heading up the National Town Meeting on Demand Response and Smart Grid here in Washington and the focus will be on how to implement the FERC national action plan on demand response and FERC is sending that plan to Congress next week, the final plan. What are some of the key challenges to implementation that you're hoping to sort of iron out at next week's meeting?
Dan Delurey: Well, one of the things in the FERC plan that I think is the biggest challenge of all when it comes to smart grid and demand response is that of communications and, in particular, communications with the customer. That's a major issue. We've seen some problems out in the field as utilities have tried to deploy smart meters and this will be something that we'll be focusing on then.
Monica Trauzzi: So, how are you hoping that this meeting will help sort of foster growth in the smart grid industry?
Dan Delurey: Well, the National Town Meeting is something that we started up several years ago to bring the entire demand response and smart grid community together in one place for a couple of days. So, you have all sorts of stakeholders, you have state and federal policymakers, you have CEOs of all the smart grid companies, you have utilities and they're all getting together to talk about this.
Monica Trauzzi: The hurdles for utilities in implementing smart grid are pretty widespread. Each utility could potentially take a different path at what technologies they're implementing, how they're doing it, and also the timeline that they're using. So, could we ever get to a point where we have a national standard fully implementable on a national scale?
Dan Delurey: Well, there are standards on our development by NIST, by the federal agency at the Department of Commerce. So we do need technical standards, but it's important that policymakers not pick a winning technology. That's not really necessary. What we need to do is look at the functional capability and what they want people to be able to do and then let all the technologies compete against one another.
Monica Trauzzi: So then are there certain things that need to be defined just in the nomenclature to make it easier for utilities?
Dan Delurey: Well, it is important, particularly in policy, to have definitions for smart meters and those have been put in place at the federal level and the state level.
Monica Trauzzi: Where does the biggest learning curve exists when it comes to smart grid? I mean when you talk to people on the Hill or people in DC, what are the biggest questions and the biggest unknowns at this point?
Dan Delurey: Well, I think some of the biggest questions are what is the smart grid or what is demand response? I like to tell people that smart grid, think of an industry and think of factories in that industry that haven't been updated in terms of technology for, in some cases, decades. They don't have the monitoring and control and feedback information loops and so on. That's what needs to be put into the electric utility industry.
Monica Trauzzi: So, as the government continues to deal with the response and fall out from the Gulf oil spill, what do you think that means for smart grid? Does it make something like that more palatable? Does it make it a little bit easier to sell because you're sort of talking about new technologies that will help push forward renewable energy?
Dan Delurey: Yeah, I think so. It is true that not a lot of oil gets used to generate electricity in the U.S., but certainly when you look at the big picture and you look at the picture of energy security, it's important that we do something to try and get ourselves into a different energy future.
Monica Trauzzi: Are there solid numbers at this point about what smart grid development could do for jobs growth?
Dan Delurey: There are. I'm not prepared to quote any of those today. There have been several different studies that have been done, but the fact is that when you have automation you have some job change and job transition, but you do have the creation of a lot of jobs, particularly in the IT sector. Plus, you get a momentary temporary bump from all the construction. We are talking about infrastructure in the large picture here and so there will be those kinds of jobs.
Monica Trauzzi: And it's very costly to revamp this entire infrastructure.
Dan Delurey: Yeah, there's no question about that.
Monica Trauzzi: Do we get to a point where the costs will outweigh the benefits of doing this?
Dan Delurey: Well, yes and one reason that will always be true is that much of this investment is subject to regulatory oversight. So, especially at the state level, the utilities and other companies have to prove to their state regulator that this is a cost beneficial exercise.
Monica Trauzzi: Do we have success stories in the U.S.?
Dan Delurey: Well, we do actually. At this point there are roughly 17 million smart meters, to give you an example, that are in the process of being deployed. So this is actually happening, but the smart grid will not happen in one big bang. It's going to take a number of years for it to happen.
Monica Trauzzi: OK, we'll end it there. Thanks for coming on the show.
Dan Delurey: All right, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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