Lightning in the Cloud: How IT-Based Innovation Will Enable the Smart Grid

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Last week the Obama Administration released a report A Policy Framework for the 21st Century Grid: Enabling Our Secure Energy Future. The report lays out policy recommendations to extend existing efforts to develop the smart grid as part of a long-term strategy for job growth, innovation and consumer benefits. The framework also highlights the diverse nature of stakeholders, both private and public, who will be integral components in creating the smart grid. Like most of the critical infrastructure in our country, no one company, trade association, utility, or government agency will implement the smart grid: it will take collaboration among all stakeholders.

With this challenge in mind, I will be moderating a panel event today in Washington, DC on “The Role of the Cloud in the Smart Grid” sponsored by Microsoft and the Digital Energy Solutions Campaign (DESC). The event will explore energy information rights and the responsibilities of consumers, utilities, and the IT industry, with a special focus on consumer rights and privacy.

Connecting multiple stakeholders will be an important part of building the next-generation energy grid. Information is a critical part of the smart grid, just as information is critical to many other parts of the economy. Importantly, information will help drive efficiencies and cost-savings and allow us to reap the potential rewards of our investment in the smart grid.

Investments in IT and telecommunications systems will be the central component facilitating the smart grid by forming the actual logistical connection between utilities, consumers, and device makers. Tech companies have a deep source of expertise that has been largely untapped. For example, they have experience implementing large, multiuser systems and networks and have experience combatting cyber-security threats and creating privacy-enhancing technologies. Naturally, we should look to the IT industry to bring in lessons learned from other sectors to create new strategies for improving our energy transmission and distribution systems.

The potential to leverage the synergy from investments in smart grid and investments in cloud computing technology offers interesting opportunities. Many of the challenges from the smart grid are able to be uniquely met by cloud computing. For example, the smart grid will create a deluge of information from transmission operators and consumers which can be more easily managed by cheap, efficient, and scalable cloud-based data storage and processing. Moreover, all of this data will be a shared resource used by consumers, utilities, device makers and others. Housing all of this data in utilities’ local servers probably does not make sense. Instead, creating a cloud-based platform might offer more potential and encourage innovation. Finally, using the cloud for the smart grid offers more robustness and security for this resource. Much as the cloud allows online start-ups to quickly build and deploy new technologies, so too could the cloud allow the same rapid innovation for the smart grid.

In short, just as the Internet’s value comes from the services and devices that utilize the network and from users integrating those services into their daily lives, the smart grid too can become an ecosystem for innovation. The basic construction of the smart grid will require central participation of the private sector, particularly the IT community. The energy sector should draw on the deep expertise of the IT industry in creating complex, interconnected systems and learn about the related privacy and security issues from past experiences. Because of the fundamental role the IT industry will play in the smart grid, it should be actively helping to build the consensus, momentum, and solutions to achieve the new energy ecosystem.

Rob Atkinson, is president and founder of the Information Technology and Innovation Foundation, a Washington-based economic policy think tank.

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About the author

Dr. Robert D. Atkinson is one of the country’s foremost thinkers on innovation economics. With has an extensive background in technology policy, he has conducted ground-breaking research projects on technology and innovation, is a valued adviser to state and national policy makers, and a popular speaker on innovation policy nationally and internationally. He is the author of "Innovation Economics: The Race for Global Advantage" (Yale, forthcoming) and "The Past and Future of America’s Economy: Long Waves of Innovation That Power Cycles of Growth" (Edward Elgar, 2005). Before coming to ITIF, Atkinson was Vice President of the Progressive Policy Institute and Director of PPI’s Technology & New Economy Project. Ars Technica listed Atkinson as one of 2009’s Tech Policy People to Watch. He has testified before a number of committees in Congress and has appeared in various media outlets including CNN, Fox News, MSNBC, NPR, and NBC Nightly News. He received his Ph.D. in City and Regional Planning from the University of North Carolina at Chapel Hill in 1989.
  • gordonfeller

    this is an important set of insights.we’ve undertaken some research on this and have seen that the evidence, in the network and in the grid, does indeed substantiate Rob’s core conclusions.–gordon fellercisco systemssan jose, california