To Market, To Market to Buy a Fat Watt

There is a strong tug of war, not only in the buildings to grid (B2G) arena, but in all others, about whether GridWise is about controlling gizmos or about interactions between economic agents. One is paving interstates along the old cow-paths, and one is laying out a city. When you lay out a city, you never know what markets and neighborhoods will actually develop.

Those who have worked long in utilities or in building systems have a deep impulse toward the perfecting old models of control rather than laying out the market rules for transacted energy. Like a dog to his vomit, even those that see the potential from new markets return instead to deep process interactions to better support the old model of hierarchical control. This is not a failure of morality or imagination, it just is. The effort today is to tug, often against great resistance, the traditional players in the power industry in the [to me] correct direction. And at that, many of the players in that industry don’t even show up to be tugged at events such as Grid-Interop.

This tendency lies in all sectors of energy use, including in buildings. One of the largest building shows (AHR) (Heating & Refrigeration) of the year is in Chicago the third week in January. Because so many of the installers and designers of this equipment make their annual purchasing decisions at the AHR show, the American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE) holds one of its semiannual meetings in conjunction with AHR each year. ASRAE is the designated domain expert for the promulgation of HVAC standards in the US, a mission that ranges from best practices in grounding equipment to ventilation standards for health to involvement in many green initiatives. As a point of reference, Legionnaire’s disease threw down a gauntlet to ASHRAE analogous to what the Cleveland Outage did to EPRI.

The problem, though, is that this show and these participants are similar in many ways, to those who show up at Utility events. Many of the absolute best are the best at the wrong thing, at the old way. This is the challenge and the opportunity. Some of them are looking for something new. Some of them are just hoping not to miss the next wave. Some will become conservative from the anticipated downturn in building starts. Some will be scared enough to try something new. There are side meetings during AHR that will wave the flag for show attendees.

Structurally, there is a problem in trying to build new markets through AHR. HVAC guys typically sell to the Facilities guys. These have support rather than strategic roles in their respective companies. It is hard for them to do anything other than minimize drag on ongoing business activities. I would like to reach further...perhaps to The Green Grid (Data Center guys) who understand a strong relationship between costs / reliability / capacity business environment....

We are currently looking at Wednesday afternoon, to pull in exhibitors whose responsibilities are done Wednesday morning. There are also a variety of talks during the week I will be at which touch on the same themes, but from the perspective of the building systems integrator...(http://www.ahrexpo.com/showinfo/)

But come March—it is not scheduled yet–and NIST will hold another meeting in Chicago. We hope that this meeting will bring in technical staff from the great commodities markets. I shut my eyes when I saw a careful list of “price and bidding models”—developed by EPRI and IEEE and ASHRAE and.... To me, we have a commodity whose price varies cyclically, and whose future cost is affected by anticipated weather. Sounds like soybeans or orange juice. Except the season is 24 hours. I want daily energy bidding to look more like a commodities exchange.

There are some attributes relevant to commodities. Soybeans are different from juice is different from pork bellies. I assume there is now a futures market in organic orange juice. Energy is a commodity, even though it has some attributes (quality, carbon, location). I began wondering, can we get advice from the CBOT (Chicago Board of Trade) or the Merc (Chicago Mercantile Exchange) about the data structures and interaction patterns they use? Or is NASDAQ, with its widely distributed network of dealers, a better model?

These groups areas certainly understand Demand / Response in a market. They understand bidding and futures markets. They understand every kind of hedge I can imagine and some others as well. In other words, if I have a personal agent sitting on my electric meter acting as my personal day trader, can I get him one of those nifty yellow coats....

So who might participate? People who understand big multi-party bidding systems, and the information standards they run on. Auditors who know what transaction information needs to be kept for instantly executing electronic bids. Anyone else who has an area of expertise near these rawest of markets. Their knowledge is what will unlock e-tech by creating the markets of transacted energy.

An Evolutionary Composite Services Framework for Energy

Future energy systems must not only support interoperability on operational, e-commerce, and security levels, but they must do so against a background of innovation. New technologies will arrive from innovators who are not traditional energy participants; it must be easy for these innovators to introduce their products and easy to integrate these products into the intelligent grid.

New business models, especially support for distributed generation and the hybrid technologies such as the zero net energy building, will demand new interfaces. These business models require symmetry, with each participant both a buyer and a seller of energy. Cost effective local energy storage will create new interaction patterns that we cannot know until we create the incentives that encourage market adoption. One thing is certain, the interface between the intelligent grid and buildings and industry will be different tomorrow, than it is today, and different still in another year.

Electric cars will have a significant position in our society far before we have worked out the market mechanics. The market mechanisms will extend beyond the simplistic “all cars will charge only in the middle of the night” to support on-demand rapid charging and selling stored energy back to the local home, business, or utility. The final market must support social scenarios such as holiday travel and new businesses such as the renewable energy parking deck. Again, we will face rapidly evolving interfaces for the near future.

We can most easily meet these challenges by creating a composite framework that supports diversity. These services will support the different types of business interactions surrounding the intelligent grid. These include but are not limited to:

• E-Commerce services to define the two-way buying and selling of power
• Capability and Capacity services to negotiate how much power is available at what quality irrespective of the underlying technology.
• Weather and similar services provide situation awareness to buildings and grid operators. Weather is critical to predicting energy consumption as well as to predicting renewable energy generation capacity. Situation is awareness is just as important to building and industry participants in new energy as it is to central generation and transmission facilities.
• Tariff and Regulatory interfaces, whether for long transmission, or for carbon negotiations, will guide energy markets beyond mere electrons.
• Security Services to control operations and protect privacy.
• Safety Services to provide situation awareness to linesman responding in emergency and other scenarios.
• Operations Services, supporting either third party operation of site-based generation capacity, or site-generation as a forward deployed utility asset.

Each of these seven interfaces will evolve over time. A user of one service may care little about another. As services become the basis for system-to-system interactions, keeping each service separate simplifies interaction patterns so each can evolve rapidly.

Rapid evolution and deployment are critical to new energy plans, particularly if we are to meet ambitious goals for more renewable energy, more distributed generation, and more electric cars. E-commerce and Security services can be based upon existing IT standards. Operational Services, where appropriate, can be based upon existing standards for substation operations. Weather services can be developed in different venues through the work, perhaps, of NOAA (the National Oceanic and Atmospheric Administration). Composite services will speed the development and deployment of the smart grid.

Composite services will also disconnect the different business processes from changes in other areas. Each business process is concerned with only a single service on its partners. As that service definition evolves over time, newer system will need to interoperate with version-based diversity within domain, rather than in all domains.

Energy systems are big infrastructure. Big infrastructure lasts for a long time and touches many things. Scale introduces diversity if installation. Innovation introduces diversity of interaction. Long life introduces diversity of versions. An Evolutionary Composite Services Framework provides the best platform for providing function and performance despite these three sources of diversity.

Thomas Friedman and "The End of Green"

In a recent blog post titled "The End of Green", Thomas Friedman ponders whether the current troubles in the financial markets will end investments in sustainable technology, particularly in energy. In his conclusion, he writes:

What we are seeing in this crisis is the need for a whole new financial architecture-and people are recognizing that some problems are just too big to solve unless we approach them systematically. As it is with our economy, so it is with our ecosystem: we need a new system, and we are going to have to think things through very carefully and make some hard choices to get it right.

Although Friedman describes the risks and the opportunities better than anyone, in this point I think while his aim is true, his target selection is off. What we need is new market structures.

Many of the most eco-aware individuals are rightfully humble about are abilities to manage an ecosystem. Ecosystems are tough manage. We have bad results in managing them. We have a long record of unimagined and unforeseen interactions and consequences.

Human activities and more importantly the human innovations are just as tough to manage. Only rarely does direct government action lead to sustained innovation. Central control, whether by mandate or by target financial incentives, can only select winners. It can optimize an existing system at the cost of eliminating diversity; that's how we got the power grid we have today. New central systems for finance and will do little better. Central directives do no reward and sustain innovation; innovation is what we need most right now.

The current financial crisis come from three big picture issues. Direct interference with markets, a thumb on the scale to drive home ownership down the economic scale, increased borrowing amongst those that could not afford it and amongst those willing to game the new rules. Rent-seeking by regulation and lobbying created financial forces that were untouchable. Persistent deflationary policy drove investments seeking better return into the few areas with rising prices. These forces led to the whole arbitrage via derivatives and widespread financial exposure that we have been watching as it breaks up.

In a similar way, we have energy markets that are regulated achieve minimal risk for all and to protect current market participants. All innovations must come to market by way of the existing large utilities, and promise guaranteed results along the way. Even new technologies must promise 20 years warranties. Anything that threatens current market players must first come through utilities commission hearings or legislative mandate. This creates markets that are un-innovative, risk-adverse, and hostile to new entrants.

Two factors are critical to creating the era of E-Tech that Friedman envisions. We must have clean market structures that allow new players and new technologies to enter energy markets and succeed or fail. We must have the technical infrastructure in place to allow a much more heterogeneous market of generation, storage, conversion, recycling, and resale to develop.

Interoperability and the smart grid are at the heart of this new market design. Interoperability is necessary for consumers to swap technologies without rebuilding their entire infrastructure. High barriers to change stifle innovation. This interoperability must include interoperability with the people and business systems; without information behavior and process will not tolerate agile energy decisions. The smart grid is the core locus of interoperability, where changes in energy use and market prices in energy interact.

It's a problem of energy market rules, not financial systems.

Buildings, Emergency Response, and Situation Awareness

This week twenty of us met at NIST to discuss situation awareness during emergencies. The centerpiece of the conversation was the NG911 system, or Next Generation 911. NG911 supports better interaction between call centers, and uses policy-based security to let other local call centers, or even centers in other regions take calls as circumstances and policy require. Private call centers, run by alarm services, can be full peers if local policy allows. Even buildings, and building systems, might act as 911 operators. The conveners asked me to lead an effort to develop a security model for these systems.

Interoperability at this level requires standardization of security, of policy management, and even of building semantics. 911 centers will accept even the most basic calls, the narrative that includes the confused description of flames from a building from the confused homeless person without a proper address. Such calls require further guess work and human attention before they can be dispatched. Without standards, other calls are no better once they hit the system.

During a major disaster, the local 911 center may be swamped, or even destroyed. The communication lines to the 911 center may be cut off. When NG911 is deployed, calls to 911 can be automatically re-routed to nearby call centers, which will be able to dispatch calls to first responders just as does the local center. If the operator captures all information accurately, and the local policy permits, the NG911 can dispatch the call irrespective of the originating operator's location. Key elements include the type of emergency, the full address of the emergency, and the geo-location of the emergency.

Private alarm monitoring companies originate many 911 calls. Alarms go off, monitoring systems are checked, owners and tenants are contacted, and, if appropriate, 911 is called. If local policy allows it, this call can go directly from the Private alarm monitoring company's dispatch system into the NG911 network, perhaps even into automatic dispatch; no critical time would be lost in re-entering data. With proper standards, this extra information can be shared through the NG911 system.

Intelligent buildings, in concept, can initiate their own 911 calls. They have the advantage over the indigent of knowing their own address and geo-location. They may know what type of emergency is underway, and where in the building the problem occurred. With standards, they can supply the supporting detail very well; they may have to strain to provide the basic narrative.

911 centers want to be able to call back the initiator, to get more detail. Buildings do not always answer the phone. Call operators could access the building systems directly, but only if the information is made more useful and accessible than we find in the typical building control system. The requirements for creating those semantic standards are similar to those needed for transactive energy management. These standards will rely on descriptive information found in building information models (BIMs) such as NBIMS and buildingSmart.

We want standards for whoever comes to the site wants the same sort of access. This access may be a simple as floor plans or intimate as access to video surveillance. The responder may want to understand what the building systems are telling him and use them to clear smoke from the 4th floor or to shut off additional air. The responder may want to find where hazardous material is stored, or even the last known location of building occupants. Making this information and control simple and easy to access, no matter what brand of system in the building, will require abstraction, standards, and service oriented architectures in the building.

These interactions require careful service definitions, security interactions, and policy. In normal times, the building owner cannot accept passers-by able to see and interact within the building. Access to the video surveillance network for the third floor during an incident does not warrant access on other floors or to archives from the day before.

Good security is always about situation awareness. In an emergency, the situation awareness of the emergency includes awareness of its context within the building, and awareness of the informational context of the building. Awareness of the person accessing these systems will include federated identity management, as it might include the 911 operator, the local police, and even the fire department from the next town over.

I am heading up a group tasked by NIST with defining a security framework for this context in January. We have a good group working on this, but this type of work needs many different perspectives. Drop me a line, or comment here, and let me know what you think.