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.

SCADA Security, Building Systems, and First Response

The security of the "internet of Things" and the security of the wider internet are about to collide. The Systems that have been hidden or off line will be on-line. Embedded systems, building systems, power supply and distribution must all change their security model. Eggshell security, the hard shell on the outside and no internal security, will be torn apart not only by the Smart Grid, and all its participants and influencers, but by new models for energy interaction as microgrids, pocket generation, and on-site storage increase the number of participants.

It is hard enough to define security for systems that are always on, always connected, always in a web of trust. Federated Identity Management is difficult, but relatively well understood. Outsourcing of system operation, cannot outsource the location of these systems; cloud computing is still grounded in the physical locations of the systems in the building, and as part of the grid . Crises in power and building systems are often interrelated, and failure of one may cut off access to the federation of security providers.

In a system of systems, in which the systems are expected to respond best when the challenges are greatest and the actors are least known. The ventilation system for space holding hazardous materials must communicate its import and explain its mission precisely when the unknown fire fighter logs in and connections to other systems are lost. The microgrid generating enough power for net outflow must accept commands from a stranger precisely when and because the ice storm has ended outside network connectivity.

Take a theoretical mixed use neighborhood and its substation, filled with zero-net energy buildings (internal storage, generation, conversion of energy), its microgrid generation on the parking deck, its demand/response ready buildings, and its electric cars. Consider the linesman, properly, as yet another class of first responder. Is the power line up or down. Is the downstream connection hot or not? If my office is powering my house, who has the authority to interrupt the flow, and what is the liability for damage upstream? What does the firemen know about whether the self generating, power-storing building is on the grid or not?

We will need new architectures for building system security, ones that share information freely with emergency responders, but know which information is pertinent the enough SCADA, ones performant enough for power, but with federated security at each junction. We will need new definitions for security, ones that understand external identities and roles, but that also understand how to interact when the same event that compromised power integrity has cut off access to external identity and role providers.

We will need now architectures for SCADA, ones performant enough for power, but with federated security at each junction. We will need new definitions for security, ones that understand external identities and roles, but that also understand how to interact when the same event that compromised power integrity has cut off access to external identity and role providers.

We need ways to express the variety of security decisions that these interactions will require, ways that degrade gracefully with communications, and ways that can be pre-cached for almost-as-good decisions.

These security must be able to interact with local business systems. For the first responder, they must provide access to the right information and to the right control systems. They must have access to the local business agreements for the provision of power, and for the liabilities for non-performance. They must be able to distinguish between what is show by necessity, what can be shown for curiosity, and what will be shared only with a warrant.

Security is fundamentally a problem of situation awareness. The situation involve multiple systems and multiple contexts. It requires federated identity management across the multiple organizational participants that will fail gracefully to temporary local "good enough" security. It requires business policy aware forward-caching of decision making frameworks on a building by building basis.

Divvying Up Grid Interoperability

The NIST Grid Interoperability Workgroups began by splitting into work groups along traditional market segments. I think the initial cuts (I2G, B2G, H2G&V, T&D) (Industry, Building, Home (and vehicle) to Grid, and Transmission & Distribution) were necessary, I think keeping them makes it far too easy to pave the cow paths, to streamline existing market models while allowing minimal room for new markets to develop.

As I look across the groups, they feel to me as if they are split up incorrectly. The home deserves the same DR possibilities as does the office. A hospital may want the same grid information as does the data center. The privacy liability incurred by the utility developing intimate knowledge of the home operations may be as great as they would incur in a bank.

Background

I was talking to representatives from The Green Grid yesterday. The Green Grid is about Grid Computing, not the Power Grid. Grid Computing is the most efficient process ever defined for converting electricity to raw business process, with a hundred % waste as heat.

The Green Grid concerns are the immediate supply chain issues for its raw materials and support requirements, primarily energy and cooling. The Green Grid questions, which it wants to ask to each battery, each power strip, each switch panel, each transformer in each substation, and even the grid as a whole:

• How much more capacity can you give me?
• How reliable do you feel ? Any risk you will fail in the near future? (same question whether battery or empty diesel fuel tank or overheating transformer or extreme DR event on the power grid)
• What price is the current power? What about the additional capacity? (This should arguably factor cost of diesel, or natural gas, or even inefficiency of battery, but that is another question.)

These same questions are essentially the same as they ask the building’s cooling systems.

These questions are also the questions I might want to ask the thermal storage in the basement, or the PE power on the roof. If I am using waste heat from the Data Center for re-heat in my AC, I may want to ask the same questions. These are the generic questions to ask an energy resource within or without the building, whether in the off-grid home or in the site generating neighborhood, or in the office.

My memory stick is an instance of a USB storage device, and so has a user interface on my computer that presents the same as an internal disk drive. In the same way, these are all attributes of sources of energy, and make no pre-suppositions about the devices or process behind them. This kind of interface enables interoperability while not preventing future innovations, even radical new technologies.

I think we should incorporate the The Green Grid abstractions into the DEWG interoperability suite. But where?

My Proposal

I have proposes that we consider the interactions into a few business/semantic groupings. Grid interoperability should consist of surface interactions; deep interactions are a barrier to scalability and to innovation. The semantic grouping I propose are:

Capability & Reliability: (The Green Grid interactions, to be used in building system domains as well) Capacity / Capability / Availability (including time windows) / Anticipated Reliability / Marginal Price

Market Operations: Power Use curves, Negotiation & Contracts, Offer and Acceptance, Scheduling options, Periodic price curves. Settlement. Contracted Curtailment? DR

Multi-party & Mobile transactions: PHEV, Non-Utility vendors, identity, transactional charge override

Operational Information: does not need to flow across domains, primarily T&D for this discussion. Allied domains, say, inside building systems aligned on results rather than procedures.

Security: borrow compositional security from other domains.

Billing & Charge Processing: borrow from other domains

Attributes & Amenities: Carbon, Wildlife, Location…Optional attributed for later definition and market building.

Do I have them all?

Free markets are Live Markets

The Wall Street Journal looked at Texas Energy price increases this year and got nearly everything wrong.

The big changes in electrical prices in Texas this year mirror the price changes in all energy markets. It is unclear to me how people think that *any* industry, no matter how regulated, can repeal supply and demand for its primary supplies. Some are arguing that these price changes argue for extended market regulation. The regulated energy market is not the natural order; we have a regulated market structure only because nothing else made sense in 1908 when the current model was created in Chicago..

Renewable energy will not work until we break the dependency on the perfect grid. The current grid requires spun up power plants, always ready, to achieve reliability. This spin reserve is an effective tax on every renewable energy source because unfortunately renewable ==> unreliable

You can gain reliability by combining a number of unreliable sources, as long as the reliability profiles for the different sources are different. This requires scheduling and wide area service choreography, and perhaps even architectures with full ontologies, as some laughed about yesterday on another thread. Those interested should just google Kombikraftwerk.

There is an interesting combined power generation scheme currently underway in the inland empire area of California, that combines remote web control of household systems, including homeowner intervention (Don’t regulate anything today – my wife’s parents are in town and I do not want to listen to my mother in law complain!). What is unique about the system is that it is only installed in house that also have solar panels, and the excess output is sold back to the grid at prices as if it was one large distributed solar PV generator, a virtual power plant. This business model, and many others, only works with the extra incentives of live time-of-day pricing.

Many observe that live pricing does not work very well with the home and office infrastructure we have. Well, the internet did not work very well with the phone infrastructure we had 20 years ago. Live prices will be what creates the infrastructure of tomorrow that will work differently.

One difference will be home storage of energy. Energy storage need not be limited to batteries or lakes in the mountains. A tank of icy slush in the basement is a fine energy store if your major energy use is daytime cooling; cool it at night and use it for Air Conditioning during the day. Your heat pump to make the slush is also working more efficiently when it is cooler outside. At a 20% price difference between 2AM and 2PM, that slush might start looking pretty good. At a 50% difference, everyone might have one. We do not know what folks will come up with, and without market information on value and scarcity, we won’t.

It is these new markets that make live pricing important. New business models will change technology decisions.

Local storage becomes an additional use for any locally generated power. This increases the benefits for both generation and storage. This continues to make folks less sensitive to grid fluctuations. This ecology of local energy requires live pricing to thrive.