Risky Business – Removing barriers to Free Energy

It is no secret to readers that I think we can best balance energy supply and demand using pure economic transactions. Whatever you feel about flash trading, those markets with millions of 14 millisecond transactions prove that we know how to run markets fast enough to manage even the most demanding decision making on smart grids. Free energy, that is energy markets unencumbered price and reliability arbitrage, is certainly the fastest path to the technologies we need to balance supply with the increasingly volatile supple we foresee. But today’s utilities serve a social justice purpose that I have been unable to reconcile in my mind with free energy until now.

We need free energy because we need to unbundle two of the most significant services provided alongside today’s energy delivery; availability risk arbitrage and price risk arbitrage. These services create a moral hazard we can no longer afford. Availability risk arbitrage removes performance incentives for end nodes to install systems for energy storage and generation. Price risk arbitrage reserves all economic incentives for energy storage and generation to the grid, where it is too expensive and innovation adoption is, of necessity, to slow to support the type of venture creation we have seen in high tech.

The basic problem is that our electric grid operates with lower margins for error than it ever has before, and current policy is to reduce them further. No community is clamoring for more power lines in its back yard even as our houses are filled with ever more energy consuming equipment for computing, telecommunications, and entertainment. It is becoming too expensive, in generation costs, infrastructure capacity, and social will to maintain constant oversupply of traditional energy. We wish to use new energy sources that are unpredictable and episodic. Attempts to smooth out supply volatility at the grid re too expensive or too few. (Ask me some time why natural gas sales went up when gas generation was replaced by wind in Colorado.) The ability of the grid to supply availability arbitrage is failing.

With fixed prices, the economic incentives for end nodes to participate in energy generation and storage are non-existent. The most basic market rule is buy low and sell high. Without dynamic pricing, the rule for homes and commercial buildings is sell low (wholesale) and buy high (retail). Efforts by local regulators to repeal that rule are as artificial as efforts to repeal gravity.

Dynamic pricing changes all that. With the volatility of energy supply fully exposed, end nodes will buy technologies to manage their risk. With the volatility of energy prices fully exposed, end nodes will find the business case to manage their power purchases. Bottlenecks in the power grid will result in local congestion pricing, letting the true costs neighborhood infrastructure decisions to be seen by the public.

Utilities today must play not to lose rather than to win. They cannot adapt new technologies quickly because they must always be reliable. Market actors that cannot accept risk, cannot afford to innovate. End nodes can voluntarily accept risk, and so can afford to adopt new technology. If Denver, where we met this month to form the Smart Grid Interoperability Panel (SGIP), is plunged into darkness for a week, it is a dire outcome; if my home fails for a week, is provides entertainment to my neighbors. The difference between grid-level innovation and end-node innovation is the difference between tragedy and comedy.

Smart grids will transfer risk to their end nodes. Economic agents which assume risk will expect to be paid for it. These payments will be the fertilizer for an untold number of new technologies. The best way to transfer risk and payments together is self-balancing, self organizing free markets in energy. Systems that can participate in these markets for us as well as systems that can store or generate energy on-site, will be the reward.

Energy Privacy

Energy Privacy was the hottest topic of Grid-Interop in Denver. Perhaps it was the Google Energy demos, which show people discussing each little recurring burst of energy use, whether refrigerator or Jacuzzi, that alerted the public to the issues. Perhaps it was when people read the UCAIug plan for OpenADE, which lists a "Law Enforcement Interface" for energy use as a higher priority than sharing information with the building occupants. Perhaps it was a late-night comedian commenting slyly that at least battery-operated devices could not be tracked, yet. Perhaps it was heightened awareness flowing over from health care debate. However it happened, privacy issues and privacy concerns became front and center at the Grid-Interop and the SGIP.

Without clear standards, and with little sense of architectural boundaries, utilities have been slowly extending control directly into the home. ZigBee Smart Energy, OpenHAN, and SEP all are premised on treating the home as an extension of the substation, another asset to serve the operational needs of the central utility. This model does more than infer energy use, as does the Google Energy model; it includes direct registration and recording of the use of each system in the home.

The NIST Smart Grid Interoperability Report reported that "distributed energy resources and smart meters will reveal information about residential consumers and activities within the house." The panel went on to cite "a lack of formal privacy policies, standards or procedures about information gathered and collected by entities involved in the smart grid." Today, there are no consistent definitions of personally identifiable information in the utility industry. In the week before Grid-Interop, there were numerous privacy meetings, expanding the conversation to include the large internet privacy advocates and public policy think tanks.

During the same week, some of the bloom went off the rose of AMI (Automated Metering Infrastructure). AMI infrastructure, or automated meter reading plus, has been touted as critical to smart grid efforts. In an effort to justify the expense of AMI deployment plans to regulators, utilities have packed more and more functions into AMI, including those described above. This has, in turn, increased the expense of the systems and opened the door to potential security holes.

The message that the public heard about AMI was that “smart meters will reduce your bill”. The message they should have heard was “smart meters will reduce your bill if you take advantage of their information and respond to dynamic prices.” Pacific Gas & Electric meters came under fire by customers whose bills went up dramatically. As far as I know, the meters were accurate, but the public is now paying closer attention—and asking questions. Some of those questions are about direct management of home systems using AMI.

The controversy went mainstream on Tuesday when a report jointly released by the Ontario Information and Privacy Commissioner and the Future of Privacy Forum (FPF). According to the report, “information may be gleaned from ongoing monitoring of electricity consumption such as the approximate number of occupants, when they are present, as well as when they are awake or asleep.”

My daughter summed it up; "if they can see all that stuff, it is time to tell them to take the equipment out." At Grid-Interop, several expressed a contrary view, that they needed to know more. PGE representatives believe that sharing information with the occupants is a privacy issue. If the utilities don’t understand privacy soon in a way that makes sense to their customers, they will find that instead of more control, they will get less.

And drop me a line if you want to get involved in privacy standards for new energy.

Sharing Energy Information within the End Node

Customers and/or their energy management systems require live energy usage information to help make decisions in response to grid-centric events such as DR, curtailment, and energy market events. Energy sales and purchases are the basic elements of transactional energy; a common shared understanding of each energy use proximate to the operating decisions that influence energy use is essential to collaborative energy on the smart grid.

The target of smart grid communications, particularly in collaborative energy space, should always be the microgrid. Some microgrids may contain a single home, or commercial building, or and industrial site—those are irrelevant details. Microgrids have a number of systems inside them that must work within the economic environment of that microgrid—and I am thinking of old economics, before the distinction of economics and ecosystem arose. Some microgrids may have a single entity inside, say a traditional siloed BAS (Building Automation System), but the unitary microgrid is merely an artifact of the way we have always done it. The energy services interface is the gateway to a microgrid.

Shared responsibility for balancing energy production and consumption requires shared access to information about energy markets and actual use. Shared information on energy use, especially live energy use, is essential to cooperation between the grid and its end nodes. Each end node may have multiple systems. Those systems may have multiple strategies and approaches to managing energy. Each strategy may have unanticipated effects on the other systems. These effects can occur quickly. Unambiguous feedback and continuous monitoring are essential to deliver results while providing services to the building occupants. The official recorder of market transactions is the electrical meter.

Energy use is more than net use for a period. Load shape matters. Multiple systems may each be operating efficiently, but in ways that their aggregate effect requires more energy use than anticipated. Systems within a building should be able to share their energy use, and their anticipated energy us with each other. Load shaping within a building is a critical pre-adaptation for site-based generation and energy storage. Load shaping is necessary for multiple systems to coexist within a minimal fixed energy budgets. The ability to function within a fixed energy budget reduces the risk and thereby increases the value of site based energy sources.

Microgrids contain collections of systems that may not share common technology. Some of these systems are small, self contained, and serve special purposes, such as appliances. Some are large and complex and span significant space, such as HVAC or an industrial line. Some look alike, are built from the same components, but have different missions; the laboratory fume hood and the air conditioning system are run for different purposes and have different constraints. Some may rely on different energy markets to do the same work; heat may come from electricity, gas, or solar thermal in the same building. Some systems may store generate energy used by other systems. All of these coexist in the ecosystem of the microgrid.

Shared energy usage information is essential to interactions between:

• Distribution and the industrial, commercial, and home premise.
• The service provider and the industrial, commercial, and home premise.
• Distributed energy resources and all other domains
• Plug-in electric vehicles and premises and the grid

Any other interactions that will cause, use, or track energy transactions on smart grids.

Building revenue meters and intelligent systems in buildings should share their energy usage information in real time within the end node in a clear, accessible standard.

Small standards for small things

We were discussing standards upon which to build standards today. Before systems can communicate, there is a lot of work building the platform they communicate from. So much of the small work that will be needed for the internet of things is based upon constrained communications between resource-constrained devices. I found myself spitting out acronyms right and left – a veritable techno-glossolalia

There is a whole set of standards needed by the utilities to share billing information with a third party, such as Google Energy or Microsoft Hohm. The utilities are constrained by their mandate to make all services universally available. This means they are trying to accomplish the goals they call OpenADE (Automated Data Exchange) using only the equipment they already have in homes.

http://www.smartgridipedia.org/index.php/OpenADE_Charter

oBIX is a low level (the the extent REST or SOAP is ever low level) protocol for talking to control systems. oBIX was designed as an object-oriented model from which higher level objects could be created (a process that oBIX call defining contracts). Today, all contracts are proprietary, but the work plan has always anticipated standard contracts…standard contracts currently anticipated include include WS-Calendar scheduling, Energy Interoperation, and energy profiles. Non-energy related plans include binding for RSS and ATOM.

http://www.oasis-open.org/committees/tc_home.php?wg_abbrev=obix

There is a suite of low-level pre-standards efforts to develop applications extremely constrained in resources and communications. They all seem to have names that are one-offs of 6LoWPAN (IPv6 over Low power Wireless Area Networks). Note: ZigBee pre-dates 6LoWPAN and is not entirely compatible with IPv6.

There is the compressed HTTP over PANs (CHOWPAN) recently submitted to the IETF.

http://ftp2.kr.vim.org/internet-drafts/draft-frank-6lowpan-chopan-00.txt

There is the Applications for 6LoWPAN work in the IETF, submitted by the Utilities

http://zachshelby.org/2009/07/07/6lowapp-embedded-application-protocols/

There is the new Service Discovery for 6LowApp submitted to the IETF by PGE.

http://tools.ietf.org/html/draft-sturek-6lowapp-servicediscovery-00

There is also considerable work done on discovery and profiles this summer in the OASIS Web Services Discovery and Web Services Devices Profile (WS-DD) TC. This work is subtitled “Enabling secure Web service messaging, discovery, description, and eventing on resource-constrained endpoints” Note: while WS-DP defines how to communicate a profile, it does not actually define any particular profiles—for example, an energy profile could be communicated if we knew what an energy profile looked like.

http://www.oasis-open.org/committees/tc_home.php?wg_abbrev=ws-dd

One of the interesting aspects of this committee which had the major OS companies, the major enterprise management software companies, and the major printer companies represented, was that Schneider Electric was on board. Schneider representatives have stated that all of their switch-gear will support WS-DD and WS-DP eventually. Schneider contracted with a 3rd party to develop WS-DD and WS-DP for very small devices as an open source project. They used this project to assert (as all OASIS TC’s must) that they had successfully implemented WS-DD and WS-DP. This site can be found at the address below and downloaded under the BSD license.

https://forge.soa4d.org/

Hope this helps everyone keep caught up!