Nicholas Eisenberger: Signs of intelligent life on the smart grid

Today’s guest post comes from Nicholas Eisenberger, a senior strategist at Green Order, who joined us as a moderator at FORTUNE’s Brainstorm Green conference about business and the environment earlier this week. Here, he reports on a discussion he led about the smart grid.

A Harvard-educated lawyer, Nick, who is 40,  has been an Internet and clean tech entrepreneur, an investor and a managing principal at Green Order, a consulting firm that advises big companies including General Electric, General Motors and HP. Sustainability issues are in his DNA: Nick works closely with his father, Dr. Peter Eisenberger, a professor of Earth and Planetary Sciences at Columbia University, and the former Director of the Columbia Earth Institute, on the development of a venture to capture carbon directly from air, called Global Thermostat LLC.

In recent years, the vision for a smarter electricity grid has been painted vividly by a broad spectrum of academics, entrepreneurs and utility company executives. By now, the story’s familiar: Improving the grid with intelligent infrastructure – in turbines, transmission lines, toasters and everything in between – promises to greatly reduce the nation’s energy consumption and carbon emissions, spur the growth of renewables, enable the broad use of electric cars, and save Americans billions.

The vision is compelling…but the job of making it real is enormous.

The grid is an immensely complex (if still technologically primitive) ecosystem populated and shaped by hundreds of utilities and regulatory agencies with widely varying priorities, thousands of suppliers offering non-standard approaches, and millions of customers with vastly different needs. Can we evolve the current power infrastructure into a far more advanced state?  Is it mostly still hype, or is there evidence that the smart grid has already been born?

This was the topic of a panel I moderated earlier this at Fortune’s Brainstorm Green conference about business and the environment.  With representatives from GE, Cisco, Google, and a leading cleantech venture firm on the panel and executives from major utilities, automakers, IT companies, smart grid start-ups, and other players around the table, I wanted to tease out what’s happening now, not more talk about tomorrow.

What did we learn?  The full realization of the smart grid – from turbines to toasters, as GE’s Kate Brass said – remains decades away.  But progress has been encouraging in the last year. The federal government has allocated over $4 billion of stimulus funds to smart grid projects.  This is expected to lead to the deployment of an additional 18 million “smart meters” – digitized metering devices that are one of the core building blocks of the smart grid – on top of the 10 million already in place. Likewise, there are now over 40 gigawatts of power use that can be turned down remotely when demand peaks, helping to reduce the need for costly (and still largely dirty) new power plants nationally.

But the best examples of the smart grid in action were at a smaller, more human scale, highlighting that when tackling such a complex challenge, simplicity is key.

Michael Terrell of Google, whose web-based and smartphone-ready Power Meter is designed to give consumers more insight into their energy consumption, told us how he discovered, to his surprise, that he was paying for his neighbors’ use of the laundry room in his apartment building. The typical consumer, he said, has about of 500 watts of their own hidden, “always on” power– from outdoor lights, to little-used appliances, to poorly wired applications.

One participant objected that many smart meter consumers have been forced to pay for the new devices, but haven’t seen their bills go down yet – which led to a small smart grid backlash amongst utility customers in Bakersfield, California last year.  Another noted that the typical energy bill is too small and consumers too busy for most to bother with any of the advanced analytics and power management options that smart meters will eventually make possible.

Good points. But James Connaughton of Constellation Energy, the former Chair of the White House Council on Environmental Quality under Bush, had a good answer – a simple orb they’ve developed that you plug in over your kitchen counter that glows red when power is expensive and green when it’s cheaper.  Smart, yes, but most importantly, simple.

There were many more examples of how the rise of the smart grid doesn’t have to wait for the entire grid to be transformed.

Tony Posawatz, who’s leading the development of the soon-to-be-released Chevy Volt (with the perfect name) told of GM’s plans to use its On-Star system to help manage power demand for users charging the car.  Lew Hay, the CEO of Florida Power and Light, spoke of using real-time lightning-strike satellite data to better predict where power outages are likely to have occurred.

And there were plenty of reminders of how far we still have to go.   As Jeff Taft, Cisco’s chief architect of smart grid solutions noted, “In the past, a successful career for a utility engineer was if they didn’t break the equipment they found when they started.”  Wholesale transformation is certainly difficult in the face of that kind of culture.

Yes, the smart grid will require common communication standards, billions and billions of dollars, and fundamentally new ways of thinking on the part of us all.  But the overwhelming impression I took away is that there is a tremendous amount of low hanging fruit for early players to pluck. The market is evolving. There are signs of intelligent life on the grid.