How will the clean energy standard and transmission cost allocation discussions affect smart grid development? During today's OnPoint, Bob Shapard, the new chairman of the GridWise Alliance, discusses the challenges posed to modernizing the grid as Congress debates transmission cost allocation and renewables mandates.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Bob Shapard, the new chairman of the GridWise Alliance. Bob, thanks for coming on the show.
Bob Shapard: Hi, Monica. How are you?
Monica Trauzzi: Good, thank you. Bob, a recent change in the leadership over at the GridWise Alliance. Why the change? Does this signal a new direction for you folks?
Bob Shapard: No, I think it's more a focus on what the critical time this is for advancement of the grid. And the view was bringing in someone like myself who comes from the utility industry and has experience deploying this type of technology would bring a perspective we need right now.
Monica Trauzzi: What are some of the main hurdles that you feel that you're facing when it comes to smart grid policy?
Bob Shapard: You're seeing a lot of focus now on advancing the grid. The administration's policy focuses on it. A lot of people in Congress are focused on it. I think we share a vision for advancing the grid. We need to cross some thresholds and really define some of the parameters to make investment. There are a lot of people that want to invest in the grid. We need to define what we want and set the parameters and get some clarity around regulation.
Monica Trauzzi: And this issue that's coming up between FERC and Congress in terms of transmission cost allocation is going to be pretty key because, obviously, you need to solve some of the transmission issues -
Bob Shapard: Right.
Monica Trauzzi: In order to get renewables online. So how closely are you watching that and where do you see that going?
Bob Shapard: It's a challenge. Expanding the transmission grid in this country is critical in allowing us to get better utilization in existing generating capacity and connect renewables. But the challenge always is, with transmission, who has siting authority and how do you allocate the cost? And those are two issues that still have not been solved.
Monica Trauzzi: How should the cost be allocated and who should have siting authority?
Bob Shapard: I'll give you an example of what we've done in Texas. We've been very successful in Texas in building out transmission to renewable sources of energy. We have the largest wind portfolio in the country. We have taken a postage stamp approach where we socialize the cost of that transmission across the grid on the assumption that the renewables will benefit all participants and that's how we've solved the cost problem. In terms of siting authority, it resides within one body within the state of Texas. So I think you have to centralize the siting authority and be willing to share in the cost.
Monica Trauzzi: And you're assuming that it's benefitting all of your consumers. That's not an assumption that everyone in the U.S. wants to make though.
Bob Shapard: It is not and when you cross multiple jurisdictions, it becomes a bigger challenge and this is more of a state-by-state issue. It even comes down to county by county in some cases with these things. Is not as much an issue that GridWise is focused on, a smart grid issue, this is a different issue. Smart grid is more focused on advancing the grid and technologies on the grid, as opposed to the expansion of the transmission system itself.
Monica Trauzzi: There's been some frustration also relating to the coordination of a comprehensive plan on smart grid, defining some key terms, defining how to move forward on it. Where do you see that going? Is there movement on that front?
Bob Shapard: I think there is movement and the issue primarily is setting a standard instead of frameworks that will satisfy all in terms of standards, interoperability standards and cybersecurity. We want to make sure we define this such that the equipment can be designed and installed that fits within this framework, but does not inhibit developments.
Monica Trauzzi: How would the smart grid play into the clean energy standard?
Bob Shapard: I think we can achieve a lot. You know, we spent many years in this country focused on the generation end of electricity and we've accomplished a lot there. Not much has been done on the grid to advance the grid. We can improve the reliability of the grid. We can lower costs for consumers and significantly reduce our carbon footprint.
Monica Trauzzi: Do rising oil and gas prices have any impact on the success of smart grid or the discussion surrounding smart grid?
Bob Shapard: I think rising costs generally of an energy component like that raise our awareness. One area, for example, of rising oil prices, electric vehicles is getting more and more attention. You need advances on the electric grid to support electric vehicles and that's one area that we'll be focused on.
Monica Trauzzi: What are the key policy initiatives that you're going to be going after this year?
Bob Shapard: In the near-term, at the national level, it's standards, its cybersecurity and it's more clarity around the investment opportunities in the recovery.
Monica Trauzzi: OK, we're going to end right there. Thank you for coming on the show.
Bob Shapard: Nice, thanks, Monica.
Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.
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