Business Case for the SG is About Automation and Control

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Dom Geraghty


A Final "Pivot" in the Definition of SG 2.0

We’ve come some way in defining what the SG is, and what it is not, but we are not quite there yet  - it is time for a (hopefully) final “pivot”, the purpose of which is to propose a definition of the SG that provides a solid and clear foundation upon which to develop our SG 2.0 business cases.

DSC_1310-150x150Here, we’ll first summarize our key conclusions derived from the series of previous dialogs about the “State of the Smart Grid”. Then we’ll propose a new (narrower) definition of SG 2.0 applications. Please click on the Smart Grid 2.0 "Category" to the right if you would like to see all of the previous SG dialogs.


Some Key Conclusions So Far About the SG, Based on Our Previous Dialogs

SG Costs/Deployment Duration

(1)    It will cost about $400 billion to implement the SG nationally

(2)    Required power system infrastructure replacement will cost about $1.6 trillion over the same period

(3)    Full implementation of the SG will take about 30 years, and will evolve as a hybrid of legacy and new systems, with increasing interoperability being supported by a combination of custom APIs and the development and promulgation of new standards

(4)    The total cost estimate above likely includes everything but the kitchen sink, and we might expect that the costs, while very substantial, will not be quite as high, based on a more thorough, and more granular, evaluation of a practical and economically viable deployment plan. We will suggest such an approach in what we are calling “A Managed Deployment Strategy for the SG” in our next dialog

SG Definition

(5)    In everyday conversations, the definition of the SG is plastic – the SG is viewed as including many elements that are only peripherally, at best, “smart”. For example, depending on the individual, the SG connotes or includes renewable energy, sustainability, CleanTech, electric vehicles, distributed generation, AMI, energy storage, distribution automation, and/or demand response

(6)    We’ve pointed out that AMI is not the SG – it is infrastructure – see the previous presentation of our new definition of SG 2.0

Power System Control

(7)    Power systems have used closed loop control for decades for generation and transmission in the form of the AGC software application on an EMS. ISO dispatch decisions are based on load forecasts (every 5 minutes, hour, day) and tight, reactive, management of Area Control Error (ACE) and system frequency. The electric distribution system does not use closed loop control.

(8)    Demand forecasts have become increasingly uncertain and volatile as customers begin to self-optimize their power usage


(9)    Policy changes necessary to enable the realization of SG benefits have lagged the deployment of the SG, thus negatively impacting its ability to achieve its own fundamental policy goals

Policy and the SG

(10) The SG and CleanTech policies are symbiotic – while the SG is not CleanTech, some CleanTech elements, e.g., RPS mandates, end-use customer choice, require that the electricity grid be “smarter” if we are to maintain our present service level reliability

(11) SG capability is also needed because of other policy-created changes in the power system, e.g.,  increasingly dynamic loads, increased intermittency of distributed power production, charging of EVs, penetration of ADR, smart appliances and HANs, and the increased potential for electricity distribution system instabilities -- we will discuss this latter concern in an upcoming dialog


As we’ve shown, the SG is not infrastructure, or CleanTech, or AMI.

The real business of the SG consists of automation and control systems:

  1. Sensors with embedded smart control firmware for local control
  2. Communications to enable systems control for a variety of time domains
  3. Control software with embedded algorithms for operations management
  4. M2M (fast response) and hybrid M2M/human control loops (slower response)
  5. “Big data” mining for critical control loop information
  6. Power system and sub-system control loop simulations and analysis (including customer response to market prices -- market response is one of the control loops and it interacts with, and affects, physical system control loops)

Trans-15-almost-purple-New-Image-150x150Thus, SG 2.0 provides the requisite control systems to support and integrate the operations of (a) CleanTech power installations, (b) the traditional power system infrastructure, and (c) power markets.

SG 2.0 automation sits on top of these three operations. It is a prerequisite to the success of the Smart Grid and power-related CleanTech policy, broadly defined.

Ironically, if we consider AMI to be a system of sensors, then it can be viewed as falling under the rubric of “automation” since AMI provides data that can be used for control systems with slower required response times. That is, under our new “stripped-down” definition of SG 2.0 as automation and control -- if the SG is really a smart control system, AMI is part of the SG’s system control infrastructure.

SG 2.0 As “Automation and Control”: Business Opportunities and Cases

Defining SG 2.0 as automation and control disentangles the evaluation of SG 2.0 applications businesses from investments in traditional power infrastructure, AMI, and CleanTech.

It provides us with a logical connection between SG 2.0 and existing AMI systems that provide some of the necessary inputs for SG 2.0 automation applications.

It clarifies and focuses the context within which we must develop and evaluate business cases for SG 2.0 applications.

There are numerous automation and control business opportunities across the entire SG value chain. We will present the more interesting of these in subsequent dialogs.

As always, comments are appreciated, in the box below.

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