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Smart Grid Progress: DOE Announces First Standards, Raises Cap on Stimulus Funds

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As we’ve pointed out in the past, policy makers and companies building out the smart grid are under the gun to produce a working set of standards by September in order to quickly and effectively allocate the over $4 billion in stimulus funds. Department of Energy Secretary Steven Chu sees the need to move quickly, and this morning he held a meeting with 60 or so smart-grid industry leaders to kick-start the standards process for industry workshops coming up later this week. At the meeting, the DOE announced the first 16 sets of standards that will make up the more than 100 standards for the Interim SmartGrid Roadmap that will be published by the National Institute of Standards in September.

Of note is the fact that these first sets of standards are largely from the leading standards bodies and have been established for years, like ZigBee and HomePlug for home area networks, ANSI for smart metering, standards from the IEEE (Institute of Electrical and Electronics Engineers), including the 1547 standard connecting distributed resources with the power grid, as well as standards from the International Electrotechnical Commission. (For the list of 16, see here.) The CEO of energy management startup Tendril, Adrian Tuck, who attended the event this morning, said he breathed a sigh of relief that these first standards are already the dominant ones being used by the industry. He said this first list of standards alleviates the fears that the government would slow down the standards process.

Choosing the initial list of industry standards that are already in place could help the industry and standards bodies meet that tight deadline. Guido Bartels, the chairman of the GridWise Alliance, the trade group of technology companies, said it gave them a “great deal of confidence that smart-grid standards will be completed by September. This is a major step forward for the commercial implementation of America’s smart grid.”

Chu must have been reading all the articles about the security concerns of the smart grid, because out of the 16 standards he announced, five focus on security. That includes: the AMI-SEC’s System Security Requirements, the IEC’s standard for “Information security for power system control operations,” the IEEE’s “Security for intelligent electronic devices,” the North American Electric Reliability Corp.’s “Cyber security standards for the bulk power system,” and NIST’s “Cyber security standards and guidelines for federal information systems, including those for the bulk power system.” Given security is such a controversial issue, it’s smart to release some of these at the very start.

Compared with standards for the Internet or mobile communications, developing standards for the smart grid is much more complex because there are so many different industries and technologies involved. As Steve Widergren, the Smart Grid Interoperabilty and Standards Coordinator for the DOE, explained to us recently: “The smart grid is very heterogenous, and anyone acting like it’s homogeneous is vastly oversimplifying it.” To meet the needs of that complexity, the DOE is expected to name at least 100 more standards that will make up the smart grid over the coming weeks and months.

At the same time that the DOE announced these standards, it informed the group that it would be raising the maximum cap on the stimulus funds for both smart-grid grants and demo projects. This is something that utilities, and tech companies like Google (s GOOG), have been calling for across the board. The DOE is raising the max cap for the Smart Grid Investment Grant Program from $20 million to $200 million, and for the Smart Grid Demonstration Projects from $40 million to $100 million. The GridWise Alliance responded by saying it welcomed that decision.

While these decisions are just the first steps in developing standards, allocating funds, and rolling out smart-grid technology, these early choices will have a big impact on the future of the industry. As Cisco said this morning, the smart grid will be the biggest network build-out of the decade, and standards are the building blocks that will determine which companies will make money and which ones could be left out in the cold.