At the AHR show last month, buildings integrators and control system makers seemed at a loss to describe where they fit into the smart grid. The perception was that the smart grid is a funding opportunity for utilities, but has little to do with buildings. They may be right about federal funding checks this year, but they could not be more wrong about smart grids. Smart grids will succeed or fail based upon innovation and investments in buildings. This innovation will be built upon the market-oriented interfaces of smart grids.

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The grid will never be as good as it was. The old grid had reliable surplus energy based on predictable energy sources, and adequate safety margins. The smart grid will have none of these. We are replacing predictable coal, nuclear, and hydro with intermittent energy sources. We cannot build the consensus to build transmission capacity to bring energy from far away. The grid’s reduced safety margins make even moderate adoption of intermittent energy sources risky. By every measure, the quality of the North American grid will get worse. That’s the plan.

So why make the grid smart?

The smart grid will be filled with improved sensing so we know up to the minute how bad it is. These sensors are the most important part of the initial smart grid investments, even more important than most of the AMI investments. These sensors will enable grid operators to track operations closely. One of the early power companies to install smart grid sensors distributes power on either side of FirstEnergy. FirstEnergy is the utility whose slow response led to the great Northeastern Blackout of 2003. FirstEnergy was pushing too much power over transmission lines causing them to overheat. Overheated wires stretch, in this case stretching all the way to hit untrimmed trees. The adjacent power company could see this coming, and even called the FirstEnergy control room to urge action before a crisis came. We want smart grids so the grid will be less like the one in Cleveland in 2003, and more like its neighbor.

Most general public reports gloss over what response FirstEnergy could have made. In essence, FirstEnergy could have prevented the great blackout by voluntarily unplugging half of Cleveland. That is what smart grids will do; they will turn off half of Cleveland to keep problems from spreading. With the quality of the grid getting worse by design, smart grids will turn off their customers regularly. Turning off customers to protect their own infrastructure will become a regular activity of power companies that operate smart grids. As the saying goes “Fun for the boys, but hard on the frogs”. The power companies are the boys; in this model, most of us, in homes, buildings, and industry, accept the role of “frog”.

Buildings, and their owner/occupants, have four choices. They can stay dumb and fail regularly. They can get a little smart to turn off by request, whenever the grid needs them to. They can accept that the grid is an unreliable partner, and try to isolate themselves from the grid. They can collaborate with the grid and make intelligent cost-based dynamic decisions about whether to use the grid, shed load, or rely on internal energy sources.

Being a little smart is what the more advanced buildings do today. Homes have just enough smarts to obey some simple commands—they are as smart as a well-trained puppy. Some commercial buildings are the same—let’s call them the trained killer whales, larger and more impressive, but still doing just what they are told. We call these pet tricks “managed energy”.

If we fail to establish business models and standard communications between smart grids and smart buildings, more and more people will opt out of the grid. Last year, 135,000 buildings with utility electric meters on-site had opted to be off the grid; that number has grown at a compounded 30% each of the last five years. Less reliable power will accelerate this trend.

[an error occurred while processing this directive] There is a growing public distrust over letting utilities have access to building operational data. This is fueled in part by government over-reach on access to cellular “operations data” (see my blog and search for privacy, or see my December 2009, column here). Utilities look to government more than to their customers; their most strategic thinking and best spoken employees have a title similar to “VP for Government Relations”. They have a long conditioned reflex to roll over for government requests even before they are asked.

OpenADE is an effort of the Open Smart Grid to standardize the collection and exchange of energy usage information. The OpenADE business requirements document prioritizes “Law Enforcement Interface” as a higher priority than sharing live information with a buildings own systems and occupants. This tendency, and a lack of respect for privacy, will encourage even more of those who can afford it to get off the grid.

This model will keep site-based energy expensive and development slow.

The final model, collaborating with the grid, requires clean, lightweight communications of electricity scarcity and abundance. These signals must be limited to market signals and no more; the universal abstraction for scarcity and value is price. Standards build markets, and national standards for economic signals will create national markets for every sort of system that uses, stores, or manages energy use. National standards will reduce integration costs, speeding the adoption of new approaches in existing buildings. I call these signals the market-oriented interfaces of the smart grid.

In smart grids, the only question is will we manage energy use in our own end nodes, or will we let our electricity suppliers do it for us. Will we marshal energy storage and energy generation internally, or will we turn over all operations to utilities and suppliers? Will we build environments with dynamic, diverse technology and innovation, or will we be limited only to the solutions that can be managed centrally, chosen by organizations that play not to fail, rather than playing to win?

If we put our suppliers in charge, smart grid efforts will be slower and more expensive, and less effective. If we put our suppliers in charge, we will accept the complete loss of privacy in our homes and offices. If we do it ourselves, the transition will be quicker and less expensive. If we do it ourselves, we maintain autonomy over our lives and preserve our essential rights.

We have a choice. Either we choose for ourselves or someone else chooses for us. Readers of automated buildings have the ability, and the opportunity, to support choice—and in that choice is opportunity

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