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Report: Government Smart Grid Standards Process Slowing Down the Market

As “SNL”‘s Seth and Amy used to say: Really?! That was my reaction when I first read the findings from a report issued by NanoMarkets this morning; it claims that U.S. government’s policies and regulations are slowing down the smart grid market. Specifically the report says that the National Institute of Standards and Technology’s (NIST) efforts to set standards for the smart grid is acting as a drag on the market.

While governments setting standards for a market isn’t ideal, there’s a couple clear reasons why NIST has stepped in when it comes to the smart grid. First and foremost is that the U.S. government is providing the domestic smart grid market the largest injection of capital in the industry’s history — over $4 billion — in order to kick-start it. Without those funds, which are just starting to trickle down to projects, the smart grid industry would be moving much more slowly, if at all (and a lot more slowly than I think NIST interference would cause).

When I interviewed Steve Widergren, the smart grid interoperabilty & standards coordinator for the Department of Energy, for an article last summer (How to Hammer Out Smart Grid Standards In 30 Days or Less, Or Your Money Back) he said that NIST started the standards process and went to work at a breakneck pace in order to meet the deadline of the allocation of the stimulus funds. The concern was that if standards weren’t agreed to in a timely manner (which can take many years to form naturally in the private markets) before the funds were allocated, there could be a lot of infrastructure funded that didn’t fit together.

Well, the NIST standards came out (a draft in September, and the final version this month) and almost everyone I’ve talked to in the industry seems to approve of NIST’s work. NIST has placed an emphasis on open, interoperable networks and Internet Protocol. The Federal Communications Commission, meanwhile, has come out in support of open smart grid networks and real-time energy data.

For once, the government processes have seemed to listen to the smart grid industry and the IT industry that came before it, and have done a pretty good job of laying out these standards. And without the massive injections of funds, and the NIST standards that are intertwined with the stimulus allocation, the market would not be moving at all in 2010.

Image courtesy of martcatnoc’s photostream Creative Commons.

4 Responses to “Report: Government Smart Grid Standards Process Slowing Down the Market”

  1. Standardization has always been an issue when it comes to energy distribution. Unfortunately, this process in not avoidable because laying out industry guides is necessary to increase efficiency. The same thing happened in the wind industry in the early 1990s when there was a slowdown that was largely due to the lack of government funds and the establishment of regulations. Luckily, the smart grid and the wind industry now have access to funds that speed up the process of standardization.