Fast Company

Lessons From a Failing Smart Grid

Smart grids are supposed to be the future of our aging electric system. And XCel Energy's SmartGridCity project was supposed to turn Boulder, Colorado into the ultimate smart grid hub. According to a 2008 press release from XCel, Boulder would become a city that could "support easily dispatched distributed generation technologies (such as plug-in hybrid electric vehicles with vehicle-to-grid technology; battery systems; wind turbines; and solar panels)" through a "robust, dynamic electric system communications network, providing real-time, high-speed, two-way communication throughout the distribution grid".

But that's not what happened. Now, while the project is almost finished, only 43% of Boulder residents have smart meters. That's not bad for an average American city, but pretty dismal for a supposed smart grid leader. Meanwhile, project costs ballooned from $15 million to $42 million (not counting operation and maintenance costs) thanks to unforseen obstacles with permits, software, tree trimming, and rock drilled through to install fiber optic line, according to Earth2Tech.

It's hard to say what caused the failure. Smart Grid News points the finger at bad project management. For example, it says, XCel failed to perform a simple cost-benefit analysis before beginning the initiative. And since the company never filed something called a Certificate of Public Convenience and Necessity (CPCN), the Colorado Public Utilities Commission couldn't cap costs on the project.

Nevertheless, SmartGridCity's website remains upbeat, with assurances that we "can expect to hear more news on several trial programs in 2010, including in-home technology tests, pilot pricing rates, plug-in hybrid electric vehicle road tests, added Web tools and special MyAccount features designed for Boulder residents."

We're not holding our breath. A word of advice for future smart grid cities: take it slow and don't promise too much. Otherwise, residents might grow wary of the smart grid concept--which, considering our aging electric network, would be a dangerous development.

 

Ariel Schwartz can be reached on Twitter or by email.

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3 Comments

  • José Vanderhorst-Silverio

    I have added comment # 27, under the commentary SmartGridCity Meltdown: How Bad Is It? ( http://bit.ly/aleti4 ), by Jesse Berst, on Smart Grid News

    3. This is a Market Failure

    The lack of a vibrant retail market, in which customers are able to select among alternative propositions, is what have let Xcel Energy and other utilities to forget the customer. That market failure is the responsibility of the power industry as a whole, which has been unable to organize the initiation of the transformation.

    As a reminder, please take a look at the three part EWPC article Initiating the Smart Grid Transformation Part 1 ( http://bit.ly/EWPC10 ), Part 2 ( http://bit.ly/EWPC11 ) and Part 3 ( http://bit.ly/EWPC12 ), whose summary says:

    By following John Kotter’s suggestions about why transformations efforts fail, it becomes crystal clear that the smart grid undergoing process lacks a clear vision as it was not designed as transformation effort, but to make use of the financial opportunities given by the stimulus package. A vision that puts customer first is urgently needed to initiate a transformation process. The emerging vision leads to two systems that mutually reinforce each other: the regulated Smart T&D Grid and the competitive Smart Enterprise that put customers first. The vision integrates the two systems into a smart grid only at real-time operation.

  • José Vanderhorst-Silverio

    Under the commentary SmartGridCity Meltdown: How Bad Is It? ( http://bit.ly/aleti4 ), by Jesse Berst, on Smart Grid News, I have added the following two (now out of 26) comments:

    1: YES! I Saw This Coming…

    In response to Jesse’s request “…who should have seen this coming – if anyone...,” I am glad to refer everyone to the 2007 EWPC article “Solving Smart Grid Cost Recovery ( http://bit.ly/EWPC37 ),” whose summary says: “To solve the Smart Grid cost recovery dilemma requires a restructuring of the electric industry in such a way that the regulator gets the right signals. A shift from The Anti-System Utility to EWPC solves the problem, as cost recovery of AMI technologies are sent to the market with an international standard interface, that will restrict business model innovations by Second Generation Retailer - 2GR.”

    That article was in response to the [E]nergyPulse article New Trends Emerging For AMI Cost Recovery, where Will McNamara, Principal Consultant, KEMA, Inc. had written that “The unfortunate result is that state regulators may be reluctant to approve cost recovery or even the implementation of AMI / Smart Grid technologies without specific guarantees that benefits of the technologies will exceed the costs in the long-term.”

    That generalization that applies to all utilities, necessarily applied to the Smart Grid City Meltdown. My take is that Xcel management actually though they could monopolize the smart grid by being first to market.

    2. Lack of Leadership of the Power Industry.

    The SmartGridCity Meltdown is about the lack of leadership of the power industry. Everything else is secondary.

    Jesse's Berst SmartGridCity Retrospective and Post-Mortem on the SMART GRID NEWSLETTER distributed by eMail on August 6th, 2010, cover lessons about management and most importantly about leadership. While Lesson #1: "Don't set unrealistic expectations" is clearly about leadership, and Lesson #2: "Employ proven planning and project management practices" is without a doubt about management, Lesson #3: "Work with regulators early," seems to be about management, but when we look at the supporting evidence it is essentially about leadership.

    José Antonio Vanderhorst-Silverio, Ph.D. - LinkedIn ( http://bit.ly/d38itj )
    Creator of the Electricity Without Price Controls Architecture Framework (EWPC-AF)

  • Jo Bo

    I'm part of the 57% who haven't signed up because of structural issues with the project. There are inadequate privacy guarantees(and no force of law behind them) on collected data, the user interface is limited/lacking, and there is little to no ability to get actual real time info - the smallest granularity is 15 minutes.

    I'd also have to let them replace my specialized programmable thermostat (specifically for 2 stage furnaces) with one that has more limited functionality but is "internet accessible" - but evidently doesn't work with Google PowerMeter or Microsoft Hohm.

    I have had many a conversation with others town that are less than impressed with Xcel's approach and have opted to "wait and see" if the program weakness will ever be fixed.