SAN JOSE, Calif. The move to so-called smart electric grids will open new opportunities for communications companies in the energy sector, but it will require new standards, according to Jake MacLeod, chief technology officer with Bechtel Communications.
The new business potential is welcome given network operators are cutting capital expenses from ten to thirty percent, according to MacLeod. "Every service provider is slowing down capital spending to get through this downturn--if they didn't, they wouldn't be responsible," he said.
Bechtel started trimming expenses and reallocating staff in April 2008, foreseeing declines in capital spending impact its business in building comms networks. The company is bidding on a number of smart grid projects that could help pick up the slack.
In the long term, smart grids represent a huge opportunity, said MacLeod. He quoted a report that said worldwide consumption of 14 terawatts of electricity today could double in 15 years.
"That means we would need to build a 100 megawatt power plant every day for 40 years," he said. "We're not going to do that, so we have to use what we have a lot smarter, less wastefully and with fewer failures," he added.
One recent study estimated the U.S. alone will need to spend more than a trillion dollars by 2030 just on its energy transmission and distribution networks. By contrast, even the $4.3 billion for smart grids in the recent stimulus package "is a drop in the bucket," he said.
Comms companies have expertise in routing and traffic management that energy utilities will need, MacLeod said. "We are beginning to meld these two industries together to make smart grids work," he said.
The lack of standards is one bugaboo for smart grids. MacLeod said there are more than 14,000 transmission substations and 4,500 switching centers currently installed in the U.S., operated by as many as 3,000 independent companies regulated by public utility commissions in every state and region.
Those systems need to connect to each other and to new kinds of networking and power-generating gear. For example, the best locations in the U.S. for solar and wind power, in the Southwest and Dakotas, respectively, are far away not only from the big urban centers where that power is most needed but even from transmission grids to capture and send the energy.
"We need to come together as an industry and issues standards, then we will be off to the races because companies can build products to the standards and component prices will come down," he said. "If you have one standard in California and another in Wyoming and Texas, it won't be effective," he added.
How much the new stimulus package will help spur work in this area is still unclear. Macleod said he suspects most of the $4.3 billion for smart grids will go into big demonstration projects.
The Department of Energy is just one of many government arms scrambling to come up with procedures for how to spend the new funds. Other groups, for example, are trying to figure out how to spend stimulus money allocated for health IT and broadband access.
"A ton of questions remain unanswered," said MacLeod who sits on one industry group that recently sent some of those questions off to regulators working on how to spend an estimated $7 billion in stimulus funds directed to broadband access.
"It's all new and the existing authorization procedures won't work, so they are writing new authorization procedures because you have to have some procedures otherwise the money goes to some guy's vacation in the Bahamas," he said. "They have a very hard job and I don't want to minimize that all."