Reef Industries

Learn from the Past

It’s better than repeating it

By Ralph Masiello

The articles in this issue of IEEE Power & Energy Magazine present a contrast in the outlook for the grid of the future. On one hand, serious efforts are underway to define the distribution system operator (DSO) and plan the transition from today’s distribution utility to tomorrow’s distribution market operator. On the other hand, a grim assessment of the cyber insecurity of the grid operating-system infrastructure is, if anything, understating the risks and challenges in addressing them.

The 1965 blackouts in North America, in particular, drove a number of changes in the industry: EPRI was formed in time; money was allocated to R&D in grid operations, economics, and reliability; and the industry rushed to take advantage of the promise of ever more and cheaper computer power. Real advances in network analytics, such as load flow, state estimation, contingency analysis, optimal power flow, stability analysis, were made and in operations economics, particularly unit commitment.

The 1970s and early 1980s were a golden era in power systems planning, operations, and control. Utilities and vendors recruited and applied the best and brightest and were as proud of their new control centers as they were of a new power plant, even more so, as the control center represented the new age of high technology.

But then the financial impacts of nuclear plant overruns hit, and many utilities were unable to continue ­financing investments in modern control centers or even the staff to keep up the new and sophisticated tools. That era took over a decade to work itself out, and no sooner was that behind us than deregulation and restructuring hit. The more ambitious experiments in restructuring and market design occasionally became lessons in the law of unintended consequences.

Today, we seem on an inflection point—where there is opportunity, there is danger. The transactive energy crowd sees a smartphone-like future for the energy industry. A grumpy old man might also see the real possibility of repeating the history of passenger rail—unable to compete with new modes of trans­portation, tied down by fixed infrastructure and rigid regulation, doomed to nationalization.

Two problems from the past are still with us and pose the danger in this opportunity. One is lack of will and/or ability to adequately finance the development and ongoing upkeep of the information technology (IT) infrastructure required. Operational technology (OT) has always lagged behind back-office IT in spending because it was not part of the revenue chain and was seen as process control/engineering. A utility DSO that is a “utility” function and not a profit center in itself will easily fall into the same pattern. Just as the wholesale market infrastructure ended up more complex and costing more than originally envisioned, so will the distribution counterpart.

The second problem is regulatory risk. Regulators need to embrace the new world and allow utilities to invest in it. The evolution to the DSO model poses challenges to regulators (and utilities) that they have never had to face before: the customer has a say. Customer investment decisions and operational decisions will be what dictates the success or failure of the utility of the ­future, especially in a fully restructured and market-oriented environment. On one hand, the industry really needs customers to buy in, invest in distributed energy resources, and participate. On the other hand, forcing customers to participate will result in push back and political loss of will. The difficulties that smart metering encountered, such as fear of exploding meters, “cancer-causing” radio waves, and resistance to time of use or dynamic pricing, are just the tip of the iceberg.

The fear of customer resistance and political push back, plus the very long OT life cycles in the industry, lead to compromise decisions that attempt to carry forward legacy tariffs, business models, and technologies in parallel with the newest developments. On the technology side, this greatly increases costs and can make robust, secure solutions impossible to achieve. On the regulatory side, it makes it difficult to avoid cross-subsidies and unexpected outcomes.

What can we expect? We won’t have a quick, easy transition to a Pollyannaish future; nor (fingers crossed) will we see technology disasters and large scale market experiments run amuck. But we will find interesting times.