The economic argument for investments in the smart grid is clear: the payback from those technologies in the U.S. is likely three to six times greater than the money invested, and grows with each...
A decision-maker’s checklist provide a starting point—but not an end-point.
Recent predictions suggest that the U.S. electric industry will invest $300 billion in new transmission and distribution (T&D) facilities (including advanced meters) over the next decade, and $400 billion in new power plants over the next 25 years to meet forecasted demand growth. If we start now, we can build interoperability principles and capabilities into those investments and hasten the improvements in reliability, costs, innovation and value that interoperability can deliver. If we do not, more resources will be wasted, more assets stranded, and reliability threatened by our failure to move ahead with grid modernization and interoperability.
What We Talk About When We Talk About the Grid
When people talk about the “modern” or “smart” grid, interoperability is a necessary foundation of that concept. Within the electricity system, interoperability means the seamless, end-to-end connectivity of hardware and software from the customers’ appliances all the way through the transmission and distribution (T&D) system to the power source, enhancing the coordination of energy flows with real-time flows of information and analysis.
The growth of the telecommunications and banking industries illustrate how interoperability is a necessary platform for innovation of services and technologies that create new value for users. Consider telecommunications as an interoperable system. Once upon a time, there was the black rotary phone and one telephone company. Today, 75 percent of American adults have a cell phone and use such devices to take pictures, listen to music, handle e-mail, watch a video, surf the Web, play games, vote for an “American Idol”—and even to talk on the phone. Data traffic dwarfs voice traffic over the world’s telecommunications systems, and 73 percent of adult Americans use the Internet.
These dramatic changes occurred not because some early visionaries preached “convergence,” but because the telephone companies needed common information protocols and architectures to exchange information more effectively across the phone network. Decades later, consumers worldwide have benefited from that need through a myriad of new, innovative products and services.
Interoperability has important economic consequences. Systems with high interoperability have lower equipment costs and lower transactions costs; higher productivity through automation; more conversion of data and information into insight; higher competition between equipment suppliers; and more innovation of both technology and applications. Those systems grow faster,