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Energy & Sustainability

Grid Modernization: Will Startups or Policy Get There First?

Peter Lougee

Energy Columnist, 1776

Utility companies’ infrastructure is aging—that’s no secret. Meanwhile, the technology available to consumers and startups alike is advancing in leaps and bounds. And although some utility companies have begun to pilot small projects of new technologies – such as smart meters – in partnerships with startups, there is still a clamor for more widespread upgrades to traditional utilities that acknowledges current capabilities.

So what would an achievable smart grid even look like? Forbes writes that a shift to smart grid architecture would enable “powerful functions using various new sensing devices which intelligently identify…infrastructure equipment, employees and micro-environments.” Impressive jargon, yes, but what does it mean in plain English? Essentially, a smart grid would allow utilities to shift from their current metering system to an “Internet of Energy” in which power consumption is measured down to the watt, with automatic controls in place for individual usage patterns.

To put it simply, a smart grid would “computerize” the grid much in the same way a smartphone has become a pocket computer. This would allow third-party developers to design products and applications that could leverage the new capabilities inherent in such a grid design, to the benefit of the consumer and utility alike. Ideally, these would produce greener, more efficient energy output.

In addition, advocates of smart-grid design point to the “auto-recovery” capabilities of a revamped grid. By leveraging new “robust information architecture,” the grid itself could automatically determine where a power outage occurred—and then begin to fix it within moments. This would reduce or eliminate the century-old practice of utility companies sending “workers out to gather much of the data needed” to provide reliable electricity, according to the Department of Energy.

Technology that robust isn’t a pipe dream. Startups are already taking advantage of the nascent smart grid developments taking place in the United States. The smart grid has always been a priority for startup Nest, as Fast Company writes. From the beginning, Nest has deployed its smart thermostat on a home-by-home basis, and it has shown real energy and cost savings for consumers and utilities alike. Recently, however, Nest has begun to leverage not only the data from individual homes, but also the data from the grid that supplies energy to that home. The result is that by using a relatively inexpensive piece of equipment – the thermostat produced by Nest – a backbone of a smart grid begins to emerge without the need for infrastructure-wide upgrades.

To this end, Nest has begun marketing itself to utility companies, debuting the Nest Energy Services that allow consumers to hand over control of their energy usage to the Nest thermostat in exchange for a rebate on their bill. The thermostat will automatically and intelligently adjust the energy draw of a home to meet the current needs of the consumers. This also provides another key benefit to utility companies: management of peak-demand times when energy usage is at its height. The Nest thermostat will allow users to allow the smart thermostat to cool or heat their home outside of those peak windows, saving them and the utility companies’ money.

Another up-and-coming startup capitalizing on the push for smart grids is California-based Bridgely. As Xconomy reports, Bridgely is one of several startups that have “developed software designed to better inform consumers and businesses of how much energy” they are using. In the case of Bridgely, software leverages smart meter data to determine energy usage down to the appliance level in order to spur consumers to alter their consumption behavior and to help utilities to better grasp usage patterns throughout their customer bases.

Yet, startups aren’t the only ones moving the ball forward on smart grids. Morning Consult reports that both Republican and Democratic members of Congress have begun to take the initial steps that may usher in the era of the smart grid. Although partisanship remains an obstacle in the current Congress, Senators on the committee have previously expressed that grid modernization could be an area of cooperation.

Specifically, the Senate Energy and Natural Resources Committee has held initial hearings on 22 separate bills intended to address utility infrastructure. Of most interest to the burgeoning startup community interested in the grid, is S.1243, The Grid Modernization Act, which is sponsored by the committee’s ranking member. The aim of the Act, would be to “make it an official U.S. policy to modernize the grid; create demonstration programs for advanced distribution and microgrids combined with storage” as well as mandate the Department of Energy to develop tools and guidelines to assist the states in an implementation strategy. In addition, the Act would allocate $1 billion through 2021 to carry out the grid modernization, coupled with new resiliency standards for utility companies to meet.

In the end, startup companies seeking to enter the smart grid market should pay careful attention to what emerges from Congress with relation to energy utilities. The number of bills before the Senate Energy and Natural Resources Committee suggests that a will to do something about the state of the existing grid is there, even if the details are still in flux. Whatever may emerge as a final bill will almost assuredly present openings for entrepreneurs.

Peter Lougee

Energy Columnist, 1776

Peter is a Washington, D.C.-based freelance writer with a Master's Degree in Public Policy from American University. In addition to startups, Peter likes coffee, books and whiskey.