The GridWise Expo is sharing space with BuilConn 2006, and the relationship between the two -- smart buildings and smart grids -- is not self-explanatory. There is a strong synergy, even interdependence, that deserves clarity.

Today we think of the meter as the division between the utility's grid and the ratepayer's infrastructure. The grid extends from the generating station to the interface, and the building's automation systems cover the equipment from there to the endpoints of the networks.

In a converged world envisioned by participants in DOE's GridWise program, the smart grid connects everything, from the largest power plant, through the meter, into a building's network and down to wireless sensors the size of a fleck of glitter.

Reliability for commercial and industrial customers

The key benefit of GridWise for utilities and their facility-owner customers will be power reliability.

Every business depends on electricity. One cumulative second of power failure in a year doesn't sound like much. But, if experienced as flickers lasting 1/100th of a second, it means 100 events serious enough to crash a room full of servers.

The ongoing cost of standby power for facilities like these is considerable, but GridWise does not exactly see it going away. Instead, DOE and their National Laboratory network are researching technologies that will prevent blackouts by tapping into this and other kinds of distributed generation. To do that, the grid needs to connect with in-house systems.

I believe GridWise will spawn the next generation of killer apps... I expect interoperability applications to utilize automation to shift load, integrate combined heat and power, leverage merchant power, and even change the way that a company does business.
--Jack McGowan, President, Energy Controls.

Some companies have relied for years on distributed generation -- not the grid -- for stable, high-quality power. Computers can suffer expensive damage when the voltage or frequency changes suddenly. Data centers are not the only place digital equipment is found -- in fact, it's hard to find a piece of industrial equipment that doesn't rely on a computer.

GridWise envisions ensuring power quality for those who need it, another potential benefit for the digital enterprise. Selective delivery of services, verifying them, and billing for them, will depend on a smart grid.

More importantly, utilities will need a smart grid that allows them to stabilize troublesome quality situations by sequencing distributed generation or directly managing loads in multiple facilities.

Conservation as an energy resource for utilities

GridWise technologies will tap into another source of reserve energy: demand response. These programs primarily benefit utilities by reducing peak demand. The incentive payments or reduced rates can benefit a company that is ready to shed loads.

In effect, an advance bidding program for demand response creates an energy market role reversal. Timothy Sutherland, CEO of Pace Global, describes it as a program that "will provide customers with the opportunity to compete with generators to provide real-time load balancing services."

Automated demand response is being tested in controlled experiments. Smart buildings respond to XML-based price signals from the utility, without human intervention. One member of the GridWise Architecture Council sees ADR as just the beginning.

"I believe GridWise will spawn the next generation of killer apps," said Energy Controls president Jack McGowan. "I expect interoperability applications to utilize automation to shift load, integrate combined heat and power, leverage merchant power, and even change the way that a company does business."

All of these benefits -- reliability, power quality, and financial incentives -- roll to the bottom line for commercial and industrial customers.

The same benefits roll onto the balance sheets of utilities. They avoid the capital cost of building power plants, which corresponds to environmental benefits both for utilities and for the communities they serve.

How soon?

GridWise is planning the future of an industry that has hardly moved forward in a century. Roles are being hammered out now. Some candidate technologies will be on display at the GridWise Expo. Significant field trials will take several years.

Building automation is here today, and exists in an environment of rapid technological progress. Harbor Research advises building control system manufacturers to get ready:

"Although it will take several years before truly competitive markets emerge, now is the time for suppliers to position themselves and secure first-mover advantage by adopting business models and new technologies."

And they are. Case in point: BACnet, a standard communications protocol for building automation and control systems supported by most major manufacturers. The standard's Utilities Integration group is working to tie these systems to public utility providers for real-time price negotiation, managing peak loads, and accessing meter data. They already have added a GridWise Object to the standard.

Smart grids are farther along their adoption trajectory in Europe and Asia. Three factors are accelerating smart grids in the United States: changes in policy, particularly deregulation, and the cost of energy.

Accelerator #1: Deregulation

Deregulation may have hit a major speed bump, but it has not left the road. Two significant steps were included in last year's Energy Policy Act: the repeals of PUHCA and PURPA.

Each would warrant lengthy discussion on its own; the laws had deep roots, and regulators are still digesting the changes eight months later. The only foreseeable outcome of repealing laws from another era (PUHCA was enacted in 1935) is that there will be unforeseen consequences.

One outcome of deregulation is certain: It will bring market forces where there once were none. The energy business will never be the same.

Acting as market participants, utilities will be free to branch into new businesses and offer new services to their customers, from Web services to HVAC sales and building maintenance. With those freedoms will come the loss of guaranteed returns and other protections for utilities. That exposes the utility to the volatility of wholesale energy costs, which could beget flexible real-time energy tariffs.

Accelerator #2: Energy Policy Act 2005

The new energy policy directs utilities and commissioners to evaluate methods for implementing demand response. This includes methods of managing peak loads, as well as techniques for verification, such as interval data from intelligent meters.

The policy requires utilities to offer customers time-based rates, which will help to drive the technologies and billing software that make time-of-day tariffs practical.

For customers with on-site generation, utilities are required to provide a way to interconnect with the distribution grid and to deploy net metering to account for excess energy contributed to the grid by the customer.

Accelerator #3: Cost of energy

Energy prices are only going to get more volatile, and the cost of energy for large customers is giving new technologies a boost.

"Increasingly volatile prices are catching both consumers and energy providers unprepared," observes Harbor Research. "This volatility will accelerate the adoption of energy information and distributed resource technology systems."

The alternative, in the meantime, is to be more energy-efficient. Efficiency mandates made cars smarter than most home computers. Enterprises, striving for efficiency, work smarter and deploy software to support their efforts. The same goal will make buildings smarter.

How to prepare for change

Efficiency has the most immediate payback, will be a key element behind many of the GridWise technologies, and can be deployed unilaterally.

"The buzzword of this decade is efficiency," says Anto Budiardjo, who heads the BuilConn building automation conference and expo. He sees buildings not as overhead, but as business tools that can be better utilized in corporate efficiency initiatives.

"It won't take long for organizations to look at their buildings as an asset that can contribute to the success of their organization," he says. "Such a view of buildings requires IT-based systems."

Taking advantage of new services from utilities -- and avoiding the downside of price exposures in a deregulated marketplace for energy -- will require companies to take a sophisticated approach to energy management.

Harbor Research suggests that "energy czars" will emerge in large enterprises, while others will outsource the expertise necessary to take control of energy use. "The balance of power will shift from the producer to the consumer," the firm predicts.

As for the Energy Policy Act: Don't let that standby generator lease expire just yet. The first Energy Policy Act in 13 years is merely giving a gentle nudge to converged technologies. In many cases, the utility or regulating body is required simply to "evaluate" or "study" the issue, not to take any particular action.