Knowledge Problem

Lynne Kiesling

[UPDATED to add live link to NPR story}

NPR just ran a story on yesterday's clean energy summit in Washington DC. The event was organized by Senator Harry Reid and included such luminaries as Boone Pickens, Bill Clinton, and Al Gore, in addition to political representatives such as Rep. Nancy Pelosi and Secretary of Energy Steven Chu. The Pickens Plan blog has a good post summarizing the event, including a link to a video of the event. I'd like to highlight two ideas that came up yesterday, and that the NPR story also discussed -- the connection of smart grid technologies, invesments, and rhetoric to the construction of long-distance transmission, and the way that the state's rights/eminent domain issues were discussed. This discussion focused on a narrow and unrepresentative set of issues in electricity policy, and even within smart grid policy.

Pelosi picked up on a point that Boone Pickens has been reiterating for months -- they both contend that the US can be the "Saudi Arabia of wind", but that transmission construction is crucial to get wind-generated power from where the wind blows to where people live, work, and consume electricity in the course of their daily activities. She stated explicitly that this transmission must be built, and that it must be a "smart grid". According to the Pickens blog, Secretary Chu picked up that theme and "talked about the technical issues which attend to building a 21st Century Grid". [Ugh, would authors please, please stop capitalizing "21st century grid" and "smart grid"? They are not proper names, and do not have the monolithic homogeneity associated with such nomenclature. Stop it. Please. -ed.]

Not having attended the event or watched the video, I infer that Secretary Chu talked about the technical challenges associated with the interconnection of distributed renewable generation — their production is intermittent, co-location with storage helps, but having clear technical rules by which these sources can and cannot place electricity on the network is crucial for system balance. That is a serious and important issue, one that we’ve been working on for nearly a decade, and will continue to tackle as the electric power network becomes increasingly populated with distributed active agents, be they generators or consumers.

However … I think Rep. Pelosi overstates the case when she makes the blanket statement that long-distance transmission must be a smart grid. I would amend her rhetoric to say that if we are going to build new long-distance transmission it should have the two-way communication overlay that is the hallmark of a smart grid, but that the most important area to focus digital intelligence in the long-distance transmission network is in the interconnection function that Secretary Chu discussed. I can envision, indeed I have argued for, a future in which long-distance transmission includes remote devices for the dynamic injection of reactive power to balance power flows autonomously (and ideally in response to price signals in a market for reactive power) when needed, and not in the static “dumb” way that existing capacitors do.

But she misses the point that the most important, most relevant, and potentially most value-creating place where the digital intelligence-creating capabilities of a smart grid are the greatest is in the consumer-facing portion of the network — in the distribution network, and in the end uses to which consumers put the electricity they consume. That’s where smart grid technologies, and the complementary policies that enable retail choice and dynamic pricing, are the most valuable. But that’s outside of her jurisdiction …

Which brings us to the second issue. Constructing long-distance transmission to transport wind-generated electricity from South Dakota to Deleware will mean crossing many states. States have siting jurisdiction for all infrastructure, as discussed in this Houston Chronicle article on the summit. The NPR story quotes Fred Butler of the New Jersey Public Utilities Commission, who is also the current president of the National Association of Regulatory Utility Commissioners, articulating this point, and stating that state regulators would work with federal regulators in siting new wires, but would not relinquish that authority.

Appallingly, Sen. Reid said that Commissioner Butler “represents 253 regulators” and not the interests of the American people (implying, naturally, that Sen. Reid does represent the interests of the American people). In fact, as noted in the Chronicle story,

Senate Majority Leader Harry Reid, D-Nev., said he would propose giving the Federal Energy Regulatory Commission the authority to trump states in deciding where to place new power lines as part of a bid to boost electrical transmission capacity nationwide.

Current rules require approval from local, state and federal agencies before new transmission systems are installed. States generally have the final say about where new transmission lines go, an authority that state utility regulators have been reluctant to relinquish.

Under Reid’s proposal, states in regions with huge renewable energy potential would have time to come up with their own plans for building new transmission capacity, but if they moved too slowly, FERC could get involved.

That way of putting it sounds more like Butler’s partnership than Reid’s heavy-handed use of eminent domain that is indifferent to both the Constitution and to the idea that Congressional representatives do not actually have the knowledge, capability, or incentives to represent the interests of the American people. Still, Reid’s language and tone, and willingness to invoke such a strong stance, bears watching if you are concerned about the concentration of government authority in ways that contravene the Constitution.

Instead of focusing so much attention on building wind farms in South Dakota and threatening federal legislation and the exercise of eminent domain, I encourage these policymakers who are invoking smart grid rhetoric and ideas to work together to focus on ways to use this intelligence capability to send information and price signals to consumers. If state and federal policymakers work together to change state regulations to allow dynamic pricing and retail choice in energy products and services, we may see conservation and changing demand patterns that reduce the need for new wind farms and new long-distance transmission lines. Take advantage of the transactive capabilities of a smart grid!

Put another way: how can these luminaries know what the true value is of new wind farm and transmission investment when they don’t even know what the true value of electricity is to end-use consumers?