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Broadband Breakfast Keynote

July 15th, 2010 by Admin User

[Energy and Environment Director Nick Sinai prepared this speech July 21, 2010 for delivery at the Broadband Breakfast Club in Washington, DC.]

Thank you for having me here at Broadband Breakfast.

As you know, I led the energy and environment team of the National Broadband Taskforce, which culminated in Chapter 12 of the National Broadband Plan.  I also sit on the Federal Smart Grid Task Force.

Prior to coming to Washington, I was a venture capitalist for five years in Boston, where I invested in a dozen early-stage IT and clean energy companies.

Before that, I was a management consultant to incumbent and competitive telecom companies – including a couple of small venture backed carriers that are now large public companies.
 
They created tremendous value for investors, customers, and employees.  These entrepreneurs are the true heroes of the telecom revolution, and we’ll need that private sector risk-taking and innovation to be successful in changing the energy paradigm.

So let’s talk energy:

U.S. prosperity and national security, as well as the health of the planet, require a national transition to a low-carbon economy and reduced dependence on foreign oil. Congress has demonstrated significant resolve in jump-starting this transition, devoting more than $80 billion in the Recovery Act to clean energy and efficiency investments.

Significant R&D and deployment investments in renewable energy, energy efficiency, and vehicle electrification are critically important to build the foundation for a 21st century clean energy economy.  But we also need a smart, strong, and secure electricity delivery system to bring it all together. We need a Smarter Grid, from turbine to toaster.  And that’s where broadband comes in.

Broadband and advanced communications will play an important role in achieving national goals of energy independence and efficiency.

Broadband-connected smart homes and businesses will be able to automatically manage lights, thermostats and appliances to simultaneously maximize comfort and minimize customer bills. New companies will emerge to help manage energy use and environmental impact over the Internet, creating industries and jobs.  A broadband-enabled smart grid will 1) benefit consumers, 2) encourage the growth of renewable energy, and 3) improve the reliability of the electricity system.

So let me be a bit more specific about how broadband is important in smarter grids and smarter homes.

To start, we need broadband and advanced communications to help manage the grid itself.  Advanced sensors, which sample the state of the transmission system 30 times per second, can help grid operators prevent the kind of blackout we had in 2003, when over 50 million people lost power.  Deployments of these sensors, which are being funded by the Recovery Act, require the high speed and low latency of broadband.

Utilities also don’t have much information about how the energy flows in the distribution grid.  They rely on customer calling to tell them the power is out, or for industrial customers to call and complain about voltage sags.  Putting more broadband connected sensors in substations and in transformers can improve the quality and reliability of the power.  It can also help grid operators more efficiently deliver power, which has real environmental benefits.  Making the grid just 5% more efficient is equivalent to taking 50 million cars off the road.

Broadband is also important in connecting smart meters.  Although many of the smart meters are being connected via advanced mesh networks that have modest throughput, most are being backhauled with 3G cellular connections.  And increasingly, utilities are looking at LTE and WiMax solutions for their wide area connectivity needs.  Advanced metering would be just one of many applications that a utility would run over a 4G network.

Broadband is also important to mobile workforces.  Utility crews need updated information about the state of the grid, especially with more and more consumers putting solar panels up, and eventually, with more electric cars being plugged in.  Electricity will flow both ways, and we need to make sure that utility workers are properly protected when they repair the grid, especially in times of emergency.

But I think the most profound impacts of broadband will be at the smart home and smart building level.  Customer connections to the Internet are an important element of the Smart Grid, because they are the foundation of Smart Homes.

At the simplest level, Broadband can empower consumers to make smarter energy choices.  A recent PEPCO trial here in Washington D.C. showed that, with networked thermostats and better online energy information, consumers of all income levels were able to save energy, reduce carbon pollution, and lower their utility bills.

Let me give you two more examples: a Texas utility recently announced they will deploy thermostats that consumers can mange from the convenience of their smartphone or from the Internet. A California utility is currently developing an application that lets you set your energy budget online.  When you get to 80% of your desired spend, you get a friendly email, and some actionable tips to help you get closer to your desired monthly spend.

These are promising developments.  But there is a problem here.  We don’t want utilities to be the sum total of energy innovation – to use a telecom analogy, IBM didn’t invent the personal computer, and AT&T didn’t invent the Internet.

If we’re really going to build a clean energy economy, and use the power of private investment capital, then we’re going need ferocious competition on the consumer side of the meter.  And broadband is the platform that allows innovative companies—from large telecom service providers and Internet companies to small startups to utilities themselves—to be able to compete on a level playing field to provide a wide variety of home and building energy information and management services.

In some respects, we’re stuck in the analog, or what I call the VCR stage of smart home innovation.  One place for this is thermostats, which control approximately half of the residential electricity load.  A ton of residences have programmable thermostats, but very few people actually use them.  Just like the average VCR was blinking 12:00, the majority of people go over and hit override.  The average thermostat is unconnected, doesn’t know your preferences, and you can’t use it remotely.  We need to move thermostats into the Tivo and Iphone world.

So for all those policy wonks in the room, let’s talk about the specific recommendations in National Broadband Plan:

To start, we had a series of recommendations about integrating broadband into the smart grid.

The vision of a Smart Grid will not just use one type of communications network—there is not a single solution or a representative network for the Smart Grid.  There are over 3,000 electric utilities across the country, with different topographies, regulatory regimes, and legacy communications systems.  In that respect, the utility industry is similar to the diversity of the telecommunications industry, where service providers ranging from large national wireless carriers to small rural telephone cooperatives.

Today, the electric utilities in the United States use a variety of communications networks, including wired and wireless, licensed and unlicensed, private and commercial, fixed and mobile, narrowband and broadband.

But two things were clear from our discussions with utilities – 1) utilities will need broadband, and 2) there is no single answer to provide it.

That’s why we promoted a multiple path approach in the plan.  We need to remove barriers to using commercial broadband networks, both wired and wireless, and work with industry to ensure they are reliable and resilient.  Private utility networks will continue to play an important role in the Smart Grid, and the federal government should continue to promote standards through NIST, DOE, and FERC.  And we need to be thinking creatively about joint ventures between public safety and critical infrastructure – there is definitely opportunity for win-win solutions here.

As you may know, the plan calls for unlocking 500 Mhz of spectrum over the next 10 years, including 300 Mhz over the next 5 years.  This spectrum policy is important for the smart grid in a number of ways.

First, as we improve secondary markets for spectrum, this will help make spectrum more available for utilities.  We recently updated and clarified the WCS 2.3 Ghz rules, and already I know of utilities looking to buy or lease this spectrum for WiMax deployments.

Our 3.6 Ghz rules are also bearing fruit – the other day there was an announcement of a Recovery Act utility in Oklahoma that is building a WiMax system in this lightly licensed band.

Second, the Smart Grid will benefit from broadband providers buying more spectrum at auction.  The net result will be higher performance and lower-cost broadband – important for the smart grid as well as for health, education, and so much more.

Finally, we did suggest that the FCC and NTIA continue to look at the issue of spectrum for the smart grid.  This could take a range of possibilities, including commercial and non-commercial arrangements.  One idea to consider is the sharing of a small amount of federal spectrum.  We should also consider new ideas and new technologies, including lightly licensed and unlicensed uses of newly available spectrum.

The other main thrust of chapter 12 was focused on energy innovation, and on unleashing private sector capital.  One of the most important ways to do this is to unlock energy information.  Consumers, and their authorized third parties, must be able to get secure, non-discriminatory access to energy data in standardized, machine-readable formats. Customers should have access to their data in the same granular form in which it is collected, and in as close to real-time as possible.  The plan has a series of recommendations to FERC, DOE, Congress, and the States about promoting consumer access to digital energy information, with the proper cybersecruity and privacy protections.

I’m humbled to see that NARUC has a supportive resolution, and several states are looking at the issue of consumer access to digital energy data.  FERC Chairman Wellinghoff publicly endorsed our recommendations at our recent FCC-DOE-FERC clean technology showcase.  Scott Harris and his team at DOE have been doing an amazing job diving into this issue. We’ve seen bills entered in both the House and the Senate – Markey’s and Udall’s e-KNOW bills -- to help ensure consumers can get the full benefit of the smart grid.  And it’s great to see that the White House has launched a NSTC sub-committee to coordinate smart grid policy, which includes an explicit focus on how consumers will benefit from the smart grid.

Promoting consumer access to energy data, as a public policy objective, has an important parallel to the FCC carterfone decision.  For those non-policy wonks in the room, the carterfone decision was what opened up the telephone market in the late sixties.  Rather than being forced to rent an AT&T phone, you could connect any phone to the network, as long as it did no harm to the network.  This led to innovations in phones, the invention of the modem, and should get some small credit in paving the way in the development of the Internet.

Allowing consumers to connect any thermostat, any appliance, and any new device to their new smart meter -- as long as it doesn’t do harm to the smart grid -- is a vision for the future.  The first step, in promoting this vision, is to enable consumer access to their smart meter data.  In fact, one of the six long-term goals in the entire plan is for every American to be able to use broadband to understand and manage their real-time energy consumption.

To be fair, there are differences between now and carterfone though.  For one, the FCC has important but limited jurisdiction here.  As you probably know, our broadest jurisdiction over the smart grid is related to non-federal spectrum, spectrum users, and commercial service providers.

But we have a bully pulpit for broadband and the energy innovation that is possible with it, and you’ll continue to see our Chairman talking about the intersection of broadband and energy. As a former venture investor, I see all the possibilities and potential of smart homes. And it all starts with ubiquitous and affordable broadband.

The path to reliable, affordable and clean energy will require ingenuity and hard work from legions of scientists, entrepreneurs and green-collar workers, as well as the participation of every American.

Broadband alone cannot solve the country’s energy and environmental challenges, but it will be an important part of the solution.  Thank you.

 



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