Highlighting Interoperability


A decision-maker’s checklist provide a starting point—but not an end-point.

Fortnightly Magazine - June 2007

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, use resources more efficiently, and create more value for their users. Such systems consistently prove that interoperability and standards enhance users’ choices, because those requirements create a framework within which vendors and competitors can innovate—as long as the finished products perform the needed functions and exchange data with other, related products.

Once interoperability has been established and implemented, users can choose between features and vendors rather than technologies because they know the devices will communicate and work together in predictable ways. Such devices often can be updated and upgraded (as through remote reprogramming of firmware and software to increase functionality or modify instructions) without becoming obsolete.

Group of Three

There are three types of interoperability. Technical interoperability covers the physical and communications connections between and among devices or systems. Informational interoperability covers the content, semantics, and format for data or instructions flows. Organizational interoperability covers the relationships between organizations and individuals and their parts of the system, including business relationships and legal relationships. All three types must be addressed to achieve effective interoperability in any system.

Creation of an interoperability platform for the grid will liberate and enable innovations and services that leverage today’s electric system and add value while driving down the costs of electricity use in the decades ahead.

What are some of the forms that interoperability could take in the electric power value chain? What are the benefits of interoperability, and the costs of achieving it? This article answers those questions, and presents a decision-maker’s interoperability checklist devised to help regulatory and utility managers incorporate interoperability concepts into their evaluations of utility capital and operations projects.

Interoperability and The Electric System

What can interoperability do for the electric system? Advanced communication and information technology can connect together the whole power system, better integrating the parties in the network and improving energy flows. These richer information connections will produce a more efficient, resilient, and reliable grid, and more robust competitive markets, enabled in part by better interaction and collaboration between power users and power suppliers.

Interoperability will improve grid reliability by collecting more useful information and transferring it to operators and equipment to improve and protect grid operations. Interoperability and better data flows between transmission and generation devices—complemented by better monitoring, communications and control systems, and power management devices—can provide timely, automatic, and seamless ways to operate the grid to deliver more energy more efficiently under both normal and adverse conditions. This capability will reduce the need for drastic actions like involuntary load shedding and will lower the risk of blackouts. It also will enable more surgical load shedding of lower-value uses in response to price signals during adverse conditions.

Within the power system, achieving and exploiting the benefits of interoperability from the end-user to the power plant to the grid operator’s control room will require collecting and using information better, expanding interconnectivity (the flow of information and instructions between participants and their devices), and more automation (building more capability for electronic analysis, operations, and control into the transmission and distribution system). The greatest impact from interoperability will occur when these communications and automation flow down from the grid to energy users and their buildings and equipment, enabling automatic interaction between energy-using devices and the electric grid.

Interoperability down to the consumer and energy-using buildings and equipment—facilitated by making real-time electricity prices accessible to users—will improve market operations by letting users react to electricity prices and grid conditions, reducing energy use when prices are highest or supply is tightest. When users and their equipment can receive and respond to dynamic electricity prices automatically, this will lower consumers’ electricity costs and improve service reliability and quality while lowering costs and risks to wholesale power purchasers. It also will enable easier integration of renewable resources and distributed generation and storage, and simplify potential transformations such as those possible from widespread use of plug-in hybrid vehicles.

Over time, interoperability and integration will lower grid capital costs by using information to leverage and fine-tune capital investments. Utilities and grid operators will be able to use the information richness from advanced metering, customer data management systems, demand response, and transmission and distribution automation to better size a new distribution or transmission line; precisely manage customer loads on hot days to protect heavily loaded distribution or transmission transformers; displace costly reliability-must-run generation for voltage support; and identify pre-blackout conditions and prevent a grid failure. All of these functions exploit information and information technology to use conventional grid assets more effectively. Grid operational costs will fall as smart devices leveraging information technology and advanced electronics perform the same tasks at lower costs and higher speeds than electromechanical devices, and they will be more easily integrated without costly rework when they are all designed to be interoperable.

But interoperability doesn’t just happen, it takes work. Underlying every interoperable system is hard work by many people over many years to converge around a common vision of the value of an interoperable system—to develop common principles and architecture for the bones of the system and some early applications goals, agree to common information protocols and device identification, and eventually to converge around the detailed standards that express and implement all of these things.

Cost and Value

Building in interoperability doesn’t cost more at the end. A system that is designed from the start to be integrated and interoperable is economical from the start. But the electric system, like the early days of computing or banking, clearly is not interoperable yet, and attempts to modernize or improve it will require grafting or overlaying new technologies onto existing physical, operational, informational and institutional infrastructures. If each change or upgrade is done in isolation, ad hoc changes will require costly “one-off” integrations to make each work. In contrast, if utilities approach their smart grid projects with a broad goal and vision, using systematic planning and creativity with a commitment to broad system reengineering and investment for interoperability, they will achieve significant long-term benefit and drive costs down as value rises.

Building carefully planned interoperability and integration into project-specific upgrades might raise initial costs by 20 percent (based on the authors’ experience with other industrial systems), but it should lower considerably the costs for subsequent, related upgrades and expansions. In particular, the capital costs of building or upgrading a system represent the tip of the iceberg compared to the overall costs of owning, operating, and maintaining it over the long term. As long as interoperability and integration principles are implemented steadily across grid investments—in advanced metering, transmission and distribution automation, and capacity planning and system operations, or to better integrate energy efficiency, demand response, renewables and distributed generation—they will lower the costs of owning and operating the system over time while increasing the value that results for customers, utility owners and society.

Interoperability is a proactive investment. Look again at the Internet, banking, and telecommunications industries, and try to imagine each system without fully integrated interoperability. If interoperability had not been built in, it would be difficult, costly or nearly impossible to expand or update the system given the long life cycles of many of their critical underlying physical infrastructure assets. Even worse, patching and pasting fixes into a complex system usually introduces weaknesses that often lead to costly, damaging system failures. With deliberate interoperability, assets can be made to evolve in function, capability, and purpose, creating new functionality and value over time in old capital assets. It also becomes easier to assess the relative value and desirability of new assets with new capabilities and value creation, which may economically justify the abandonment of old assets that have become functionally obsolete.

Decision-Maker’s Interoperability Checklist

The checklist (see p. 80) is a tool to help regulatory and utility decision-makers evaluate options such as capital asset investments or new information technology opportunities to determine whether they have the characteristics and attributes that contribute to interoperability. Do they facilitate and enhance the transactions and flows of energy, information, and money across the electric grid, from electricity use through delivery to production?

Decision-makers can use the checklist to review electricity-related policy or asset investment proposals, including the purchase of new distribution and transmission equipment, the specification of advanced meters, the design of a new demand-response or distributed generation program, grid automation and SCADA (Supervisory Control and Data Acquisition system), the adoption of new energy end-use devices, system software, or the adoption of new market protocols.

In every question on the checklist, an answer of “Yes” means that the project advances interoperability along the dimension outlined in that question. An answer of “No” or “I Don’t Know” means it may be possible to improve the proposal by modifying it to better address that interoperability criterion.

This checklist is a starting point for interoperability, not an end-point. Regulators and utility managers are encouraged to learn more about inter-operability and to scrutinize investment proposals more deeply after reviewing them against the points below.

The smart grid vision cannot succeed without interoperability, which will create tremendous savings and value for customers, the U.S. economy, and our society as a whole. A growing number of utility business cases for advanced metering infrastructure and transmission and distribution automation are proving that while the cost of changing infrastructure and operations to be more interoperable are significant, the multi-dimensional benefits far outweigh the costs. The interoperability checklist is a simple tool that will help utility and regulatory decision-makers identify and advance this transformation.



1. Dingell, Congressman John D., “Statement to the Subcommittee on Energy and Air Quality Hearing Entitled, ‘Facilitating the Transition to a Smart Electric Grid,’” (May 3, 2007).

2. EICTA, “EICTA Interoperability White Paper,” 2005.

3. EICTA, “EICTA White Paper on Standardisation and Interoperability (November 2006).

4. EnerNex Corporation, “Advanced Metering and Demand Responsive Infrastructure: A Summary of the PIER/CEC Reference Design, Related Research and Key Findings,” Draft Report prepared for the California Energy Commission, (June 1, 2005).

5. GridWise Architecture Council Web site, http://www.gridwiseac.org/.

6. GridWise Architecture Council Interoperability Constitution White Paper (November 2005).

7. GridWise Architecture Council, Interoperability Path Forward White Paper (November 2005).

8. GridWise Architecture Council Interoperability Context-Setting Framework Draft (January 2007).

9. Zibelman, Audrey, Testimony to U.S. House of Representatives, Committee on Energy and Commerce, Subcommittee on Energy and Air Quality, “Facilitating the Transition to a Smart Electric Grid,” (May 3, 2007).