Summary:

What makes a smart grid pilot a success — even when it’s a failure? General Electric and Accenture spent an hour Wednesday with some energy industry big shots at the World Economic Forum in Atlanta and explained it all to us.

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How do you make sure a smart grid pilot project succeeds? General Electric and Accenture presented written a report on the subject (PDF) on Wednesday at the World Economic Forum in AtlantaBeijing.

Poorly executed pilot projects are over-budget, lack in clear goals, and fail to make key connections to stakeholders such as regulators and customers. For example, Xcel Energy’s SmartGridCity project in Boulder, Colo. shows some potential pitfalls that await utilities trying something new and complicated.

But sometimes it’s better to learn from the success stories rather than failures. Here are five key points for utilities both planning smart grid pilots and those with them underway. The U.S. has put $4.5 billion in stimulus funding into the smart grid sector, and China spent an estimated $7.3 billion last year, so there’s a lot of money at stake in coming up with the right answers.

1). Clarity and Ambition in Design: The first step in making a pilot that does what it’s supposed to do is to know what it’s supposed to do in the first place, explained Mark Spelman of Accenture. Clearly defined hypotheses linked to clear goals — and a plan for collecting and analyzing data to yield tangible answers to those hypotheses — makes a successful pilot like a science experiment. Even if a hypothesis is false, at least you can take that failure and inform others who may be thinking of doing the same thing, he noted.

2) Learn From Others: Don’t reinvent the wheel for every pilot project, and no single smart grid pilot project can test everything. Spelman said he’s seen too many smart grid pilots done in isolation from one another, and not enough focus on creating an integrated view of what they’re all telling us. More “end-to-end” pilots could help, he said. Participants in the event pointed to isolation as a problem that Pacific Gas & Electric faced with irate smart meter customers and regulators. The utility has been faulted both for not doing more customer outreach and not using more of the meters’ functionality to collect more accurate data and make better decisions.

3) Grid vs. Consumer Pilots: Stuff that goes on the grid itself — distribution grid sensors, substation automation equipment, some larger-scale distributed renewable power systems — are within utilities’ control. But much of the technology going into customers’ homes and businesses is supposed to be in the customers’ control. Pilots that don’t take that into account can poison the well for future deployments, Spelman warned. Lack of utility-customer communication could also sour regulators on the idea of more real-time power pricing for customers — particularly low-income or elderly customers that can’t access the data they need to react to changing prices.

4) Matching Regulations with Innovation: Pilot projects shouldn’t just be a test of the hottest new technology, Spelman noted — they should also test out new business models and commercial partnerships. But to do that, they may sometimes have to push the envelope on state and federal policies that dictate how utilities interact with their customers. In fact, successful and well-documented pilots — such as the data-rich PowerCents project in Washington D.C. — could be used as templates for regulators and policy-makers to know what works and what doesn’t, at what price.

5) Be Honest About the Pain-Gain Calculation: What happens if we don’t build the smart grid? Jim Rogers, CEO of Duke Energy, noted that replacement costs for aging power plants, combined with mandates on renewable power and expectations of carbon pricing to come, could drive up his utility’s price of power by 20 to 40 percent in the coming decades. In that light, spending on smart grid — as well as on energy efficiency projects — should be seen as avoiding even greater costs in the future, he said.

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Image courtesy of World Economic Forum.

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