The deployment of Smart Grid technology is vitally important to America’s energy future, but limitations in existing commercial and private electric utility networks threaten to delay Smart Grid implementation. The Plan proposes to remedy this situation by recommending that commercial broadband networks be enhanced for greater reliability and that electric utilities be permitted and encouraged to use these networks, or to use the proposed public safety network or construct their own broadband networks where appropriate, to deploy Smart Grid applications. The Plan further recommends that States (or Congress in the absence of state action within 18 months) should require electric utilities to provide consumers with access to, and control of, their own energy use information. The Plan also proposes that the FCC start a proceeding to improve the energy efficiency and environmental impact of the communications industry.

Background

“Smart Grid” refers to the application of computer intelligence and networking abilities to the electricity distribution system. The National Institute of Standards and Technology defines “Smart Grid” as the “two-way flow of electricity and information to create an automated, widely distributed energy delivery network.” The objective of the Smart Grid is to automate and improve operations, maintenance, and usage of the electric power distribution system by enabling each component of that system to communicate with the other components.

Congress has already established the Smart Grid as a national priority, both in the Energy Independence and Security Act of 2007 and last year’s Recovery Act, which devoted $4.5 billion to accelerating standardization and deployment of the Smart Grid. The Smart Grid will increase the reliability and efficiency of the electricity distribution system as it reduces peak and overall demand for electricity. Greater intelligence in the grid is also critically important to efforts to meaningfully displace fossil fuel generation of power with solar, wind, and other renewable energy sources, both on the grid and in vehicles on the road.

Analysis:

Broadband and the Smart Grid

The FCC found multiple challenges in the deployment of Smart Grid technologies, including lack of broadband to the Smart Grid. Electric utilities use a variety of networks for communications purposes, but traditionally they build private networks to support applications with a high level of reliability, such as those for grid control and protection. These private networks, however, are generally narrowband and cannot support the growing numbers of endpoints requiring connectivity in the modern electric grid.

Commercial data networks, on the other hand, are not available in all areas where electric utilities provide service and generally are not constructed or used for mission-critical control applications. The FCC observed that commercial wireless data networks in particular can become congested or may fail completely because of a lack of power backup or path redundancy. The FCC concluded, “the lack of a mission-critical wide-area broadband network capable of meeting the requirements of the Smart Grid threatens to delay its implementation.

The Plan proposes pursuit of three parallel paths: (1) enhance existing commercial networks for the reliability required for Smart Grid applications; (2) permit electric utilities to share the FCC’s proposed public safety mobile broadband network for mission-critical communications; and (3) empower utilities to construct their own broadband networks. The FCC recognizes that there is no one-size-fits-all solution and thus recommends pursuing multiple alternatives simultaneously to permit stakeholders to develop the path that works best for their particular circumstances.

The Plan includes the following recommendations to pursue these three alternative paths:

  1. The FCC should initiate a proceeding to explore the reliability and resiliency of commercial broadband communications networks. More reliable networks not only will enable their use for Smart Grid applications but will benefit homeland security, public security, and consumers in general, who are increasingly dependent on broadband communications.
  2. States should reduce impediments and financial disincentives to using commercial service providers for Smart Grid communications. In particular, state regulators in the rate-setting process should evaluate a utility’s network requirements and the available commercial network alternatives before authorizing a rate of return on private communications systems. States should also work to reorient electric utility incentives toward energy conservation and efficiency and away from historic practices of deploying assets and selling more power as the way to generate revenues.
  3. The North American Electric Reliability Corporation should revise its security requirements to provide utilities with more explicit guidance about the use of commercial and other shared networks for critical communications.
  4. Congress should authorize utilities to use the public safety wireless broadband network the FCC is proposing. The FCC found that public safety and Smart Grid applications have similar reliability requirements, and constructing a network that can be used for both functions will have mutual benefits.
  5. The FCC and the National Telecommunications and Information Administration should continue their joint efforts to identify new uses for federal wireless spectrum, including identifying a nationwide wireless spectrum band in which Smart Grid networks could operate.
  6. The Department of Energy, in collaboration with the FCC, should study the communications requirements of electric utilities, including Smart Grid requirements.

Unleashing innovation in smart homes and buildings

Energy efficiency in homes and businesses is a critical aspect of national energy policy, but consumers lack sufficient information to maximize energy and cost savings. Electricity users now know only what they are billed after the usage has occurred. They need access to real time data on the price and amount of electricity they are using when they are using it, as well as historical usage data. The FCC cited studies demonstrating reductions in both peak demand and total energy consumption when users have ready access to such information.

The FCC concluded that broadband is essential to realizing the full potential of smart homes and buildings, but broadband alone is insufficient. Standards are also critical to the Smart Grid, helping to ensure it is “plug and play,” encouraging innovation, and protecting security and consumer privacy.

The Plan, therefore, recommends that states require electric utilities to provide consumers with access to, and control of, their own digital energy information in as close to real time as possible, including information from smart meters and historical consumption, price, and bill data. Regulators should also require regulated utilities to establish the methods by which consumers may authorize third parties to access this data. Congress should monitor the states’ activities and step in with its own requirements if states fail to act within 18 months.

The Plan also recommends federal government action. The Federal Energy Regulatory Commission should adopt standards for consumer data access and control that states can use in their own rulemaking. The Department of Energy should consider consumer data accessibility policies when evaluating Smart Grid grant applications under the Recovery Act, as well as develop recommended best practices as guidance for the states and report on states’ progress toward enacting appropriate standards. The Department of Agriculture’s Rural Utilities Service also should make Smart Grid loans to rural electric cooperatives a priority, including integrated Smart Grid-broadband projects, and should favor projects from states and utilities with strong consumer data accessibility policies.

Sustainable information and communications technology

The communications industry, including individual consumer devices, is a large power consumer, and the FCC believes it should be a leader in developing and implementing energy efficiencies. The Plan recommends that the FCC start a Notice of Inquiry to study how the industry could improve its energy efficiency and environmental impact. The Plan also recommends that the federal government seek opportunities to lead in data center and server energy efficiency and should set a goal of earning the government’s ENERGY STAR for all eligible data centers it operates.

The FCC will be releasing a series of notices to launch this proceeding and others in rapid succession.