As a utilities analyst, I encounter a number of buzzwords – terms that seek to broadly and catchily define the multivariate technologies and approaches that have been developed to modernize the electric grid. The most common are “smart grid,” “grid 2.0,” and “utility 2.0.” In this post, I’d like to assist myself, and any interested reader, in better understanding these terms and how they differ.
Supposedly, the term smart grid was coined in 2003 by Andres Carvallo, then the CIO of Austin Energy, to explain the Electric Power Research Institute’s (EPRI’s) Intelligrid – an electric grid that was monitored and managed remotely and incorporated data analytics into processes. The term didn’t really stick until 2009, when the U.S. Department of Energy (DOE) awarded 99 American utilities a total of $3.4 billion dollars as part of the American Recovery and Reinvestment Act of 2009 (ARRA)-funded Smart Grid Investment Grant.
So what does smart grid mean? According to the DOE, it means “computer based remote control and automation … made possible by 2-way communication technology and computer processing.” Let’s just call it the foundational definition for all of the technological innovation that exists to modernize the electric grid.
One for the Shredder
As for the second, newer term, grid 2.0, it turns out that this buzzword didn’t really pick up that much, and as far as I could ascertain, it’s used synonymously with smart grid. So we can just throw that one out right now and stop confusing people.
Utility 2.0, on the other hand, is an important conceptual extension from smart grid. I’m pretty certain I first saw this word last year in reference to microgrids, in a Public Utilities Fortnightly article that explained how different technologies can enable grid resiliency and lessen the impacts of outages. The term has also been used to describe the concept of utilities revising their decades-old business plans to take advantage of increased renewables generation, distributed energy penetration, advanced demand-side management, and customer engagement. Last spring, the state of New York introduced its Utility 2.0 plan, which seeks to introduce regulatory incentives for utilities to fundamentally upgrade their business models, operations, and infrastructure.
The problem with the term utility 2.0 is that, in most cases, it’s used only in reference to how utilities do business, not to the technological and infrastructure considerations that enable this business. In that sense, it indicates that utilities and regulators and customers are all going to work together, take some financial hits, and pay for and install a smart grid, and it’s all going to be great. That simple definition ignores the most difficult parts of the process.
We’ve moved past the simple understanding of the smart grid. We need to better understand the complexity of enabling different systems within the electric grid to function as a cohesive architecture. This will be a different process for each utility because each system is uniquely configured to adapt to different constraints, and because there are so many different types of offerings out there that are targeted at similar issues.
So, to me, the term utility 2.0 is not just about reshaping business practices and integrating new technologies, such as distributed generation and demand response; it’s the systematic integration of diverse systems that allow for each utility to realize its own transformative goals. This concept, also called interoperability, might be the single most enabling aspect of updating our electric infrastructure.