[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE 21ST CENTURY ELECTRICITY CHALLENGE:
ENSURING A SECURE, RELIABLE, AND MODERN
ELECTRICITY SYSTEM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 4, 2015
__________
Serial No. 114-18
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California7
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania PAUL TONKO, New York
ROBERT E. LATTA, Ohio ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia LOIS CAPPS, California
MIKE POMPEO, Kansas MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio PETER WELCH, Vermont
BILLY LONG, Missouri JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina DAVID LOEBSACK, Iowa
BILL FLORES, Texas FRANK PALLONE, Jr., New Jersey (ex
MARKWAYNE MULLIN, Oklahoma officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 2
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 3
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 103
Witnesses
Thomas Siebel, Chairman and Chief Executive Officer, C3 Energy... 7
Prepared statement........................................... 10
Additional material submitted for the record \1\
Dean Kamen, Founder and President, DEKA Research and Development
Corporation.................................................... 27
Prepared statement........................................... 30
Additional material submitted for the record \2\
Answers to submitted questions............................... 105
Michael Atkinson, President, Alstom Grid, Inc., on Behalf of
GridWise Alliance.............................................. 34
Prepared statement........................................... 36
Christopher Christiansen, Co-Founder and Executive Vice
President, Alevo Energy, Inc................................... 48
Prepared statement........................................... 50
Joel Ivy, General Manager, Lakeland Electric, on Behalf of
American Public Power Association.............................. 54
Prepared statement........................................... 56
Paul Nahi, Chief Executive Officer, Enphase Energy............... 65
Prepared statement........................................... 67
Answers to submitted questions............................... 107
Naimish Patel, Chief Executive Officer, Gridco Systems........... 72
Prepared statement........................................... 75
Answers to submitted questions............................... 111
----------
\1\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/
20150304/103072/HHRG-114-IF03-Wstate-SiebelT-20150304-
SD001.pdf.
\2\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/
20150304/103072/HHRG-114-IF03-Wstate-KamenD-20150304-SD002.pdf.
THE 21ST CENTURY ELECTRICITY CHALLENGE: ENSURING A SECURE, RELIABLE,
AND MODERN ELECTRICITY SYSTEM
----------
WEDNESDAY, MARCH 4, 2015
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:17 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Olson, Shimkus,
Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger, Griffith,
Johnson, Ellmers, Mullin, Hudson, McNerney, Tonko, Green,
Welch, Loebsack, and Pallone (ex officio).
Staff present: Nick Abraham, Legislative Clerk; Charlotte
Baker, Deputy Communications Director; Leighton Brown, Press
Assistant; Allison Busbee, Policy Coordinator, Energy and
Power; Patrick Currier, Counsel, Energy and Power; Tom
Hassenboehler, Chief Counsel, Energy and Power; Tim Pataki,
Professional Staff Member; Chris Sarley, Policy Coordinator,
Environment and the Economy; Christine Brennan, Democratic
Press Secretary; Michael Goo, Democratic Senior Counsel, Energy
and Environment; Caitlin Haberman, Democratic Professional
Staff Member; and Rick Kessler, Democratic Senior Advisor and
Staff Director, Energy and Environment.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. I would like to call the hearing to order
this morning, and certainly want to thank our panel of
distinguished witnesses. I am not going to introduce them at
this time, but when you--right before your opening statements,
I will introduce each one of you, and each one of you will be
given 5 minutes to make your opening statement, and then we
will have an opportunity to ask questions.
Today's hearing is entitled ``The 21st Century Electricity
Challenge: Ensuring a Secure, Reliable, and Modern Electricity
System.'' And I recognize myself for 5 minutes, I see I am
already started on the clock.
As we all know, the U.S. was the first nation to electrify,
and our system of generation, transmission, distribution, and
related communication remains the best in the world.
Nonetheless, new challenges are emerging, as are opportunities
to modernize and improve the electric grid. The challenges are
significant. Much of our grid is outdated. In fact, I have
heard--I think I remember in someone's statement, 70 percent of
our grid is over 25 years old. Coal-fired generation facilities
are shutting down at an alarming rate, reserve margins are
inadequate in several regions, intermittent and remote
renewable capacity is coming online, and cyber threats pose a
growing concern. Those are some of the challenges, but the--we
have many opportunities also. Utilities are planning to invest
more than $60 billion in transmission infrastructure through
2024 to modernize the Nation's electric grid, while abundant
fuel resources and advanced generation, storage, and
distribution management technologies can help modernize and
diversify the Nation's power portfolio. Further, big data
energy analytics and new information technologies offer a
diverse suite of novel products and services that can identify
and mitigate inefficiencies in the electricity supply chain,
while helping utilities meet changing consumer expectations.
So we have many opportunities, and that is why we want you
distinguished gentlemen here today to give us some insights on
opportunities for the future.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
Ensuring a secure, reliable, and affordable electricity
system that meets the needs of the American people may very
well be the most important task within this subcommittee's
jurisdiction. Indeed, the National Academy of Engineering cited
electrification as the greatest achievement affecting the
quality of life in the 20th century. This morning's hearing is
focused on improving our electricity system in the 21st
century.
The U.S. was the first nation to electrify, and our system
of generation, transmission, distribution and related
communications remains the best in the world. Nonetheless, new
challenges are emerging, as are opportunities to modernize and
improve the electric grid.
The challenges are significant--much of our grid is
outdated, coal-fired generation facilities are shutting down at
an alarming rate, reserve margins are inadequate in several
regions, intermittent and remote renewable capacity is coming
online, and cyber threats pose a growing concern.
But there are opportunities, as well. Utilities plan to
invest more than $60 billion in transmission infrastructure
through 2024 to modernize the Nation's electric grid, while
abundant fuel resources and advanced generation, storage, and
distribution management technologies can help modernize and
diversify the Nation's power portfolio.
Further, ``big data'' energy analytics and new information
technologies offer a diverse suite of novel products and
services that can identify and mitigate inefficiencies in the
electricity supply chain while helping utilities meet changing
consumer expectations.
The availability of advanced, user-friendly communications
technologies has disrupted the traditional business model for
nearly every consumer sector from home entertainment to taxis.
The electricity sector is witnessing a similar shift. New
innovative products and technologies in the electricity space
hold the potential to empower consumers to make smarter
decisions in energy usage, while providing new, more efficient
and responsive ways to generate and distribute power. As
consumer expectations and technology evolve, new business and
regulatory models within the electricity sector also may be
necessary to better reflect changing market conditions.
A more modern and resilient grid will be better positioned
to withstand and minimize any impacts resulting from severe
weather, cyber attacks or any other threats to the grid.
However, as the grid becomes increasingly reliant on
information technology and digital communications devices,
thousands of potential new grid access points are being
created. While encouraging technology and innovation in the
electricity sector should be a priority, policies must ensure
that new grid-related products do no leave the grid more
exposed or compromise customer information and privacy.
Given the shift taking place in the electricity sector, it
is paramount that policymakers and regulators at the Federal,
State, and local level carefully weigh policies that can adapt
to these new challenges and opportunities to build a market-
driven, modern, and flexible system while ensuring the
continued safe, reliable and affordable delivery of electricity
to consumers.
Mr. Whitfield. So with that, I will yield back the balance
of my time. And, Mr. McNerney, I will recognize you for a 5-
minute opening statement.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. Well, thank you, Mr. Chairman.
Hey, this is a really exciting hearing. It is an area I
care a lot about. You know, the American grid is one of the
great engineering challenges of the--great engineering
achievements of the 20th century. It has provided us reliable
electric power, it has helped our industry grow, and yet at
today's hearing we are going to get a look at what the 21st
century grid might look like, but also what the transition
between where we are today and what the 21st century grid is
going to look like. It is going to be an opportunity and some
very big challenges.
Some of the factors that I want to bring to our attention
are, coal is still our number one energy producer. Produces
about 38 percent of our power. And to the chagrin of some of
our colleagues, that number is decreasing over time. New--
natural gas is our number two energy--electric energy supplier,
and that is growing rapidly. There are some challenges with
natural gas. We have the distribution challenge, especially in
New England States, and--but the price of natural gas is going
down, or is low now because of all the abundance of natural
gas. So it is a real opportunity for us. Nuclear is number
three, and I think nuclear is kind of stagnant right now. That
may change over time. And fourth, renewable energies. It is
growing rapidly, but it is only 13 percent of our capacity, and
that includes hydro. So we have--with renewable energy, there
is cost competitiveness. We can produce renewable energy pretty
cheaply now, but we can't dispatch it. It is not going to be
there necessarily when we need it, so there needs to be some
account taken to that and--when we integrate renewables into
the grid. But if you look at what is happening, California is
going to require 33 percent nuclear power by 2020, so we have
to rise up for this challenge.
We also have the specter of climate change sitting there in
front of us. It is going to require us to reduce fossil fuels,
but it is also going to require us to increase efficiency. We
have a need to make our grid more resilient. We are seeing that
with our bigger storms now. We also have physical and
cybersecurity. We want to make sure that our grid is strong, is
safe. If there are physical attacks, if there are cyber
attacks, if there are storms, if there are earthquakes,
whatever the--nature throws at us or whatever our fellow human
beings throw at us, we have to be able to maintain our grid, so
this is a pretty big challenge.
There are big opportunities. I just want to tick off some
technology. Some of these I don't even understand myself. We
have the automated circuit breakers and feeder switches. That
is going to allow us to switch problems, we can--it is just
like a transistor in a radio. I mean it is going to allow us to
switch back and forth, and that gives us quite a bit of
flexibility. There are mapping systems that will allow us to
stop grid problems from spreading from one part of the Nation,
and one sector to another. We have load management tools like
megawatts that are being adopted in San Francisco. We also have
smart meter technology, which I helped develop for a period of
years in California.
So there is a lot of technology out there, but a big
opportunity is if we can provide cheap power for our customers,
then manufacturing is going to be able to continue to grow and
thrive in this country, and without it, we are going to be
hamstrung. So this is a big challenge for Congress. It is going
to require continued investment and commitment in Congress and
in industry. We need to understand the big picture challenge
before we do anything drastic here in Congress. We need to
understand the engineering challenges. We need to put money out
there so that the engineering challenges can be met. We need to
incentivize that. We need to make the investment, and that
means investment here in Washington, but it means also
investment in our States, and it means investment by private
investors. And how are we going to invest--incentivize private
investors in grid innovation and grid technology, and
development and grid infrastructure development if they are not
sure they are going to get their money back? So we have to be
able to figure that out. So this is part of the big picture
challenge.
But my colleague, Renee Ellmers, and I have started the
Grid Innovation Caucus. That is giving us here in Congress
several members that are interested in this area an opportunity
to talk about some of these issues. So--and think about the big
picture.
I do have a story from my past when I developed wind energy
technology, I started in the business in about 1980 when the
industry was just at the beginning. And, you know, we went out
there and we got an investment from some folks out there. We
designed a wind turbine from a plain piece of paper. It was a
wonderful experience. We put it up in the hills of New
Hampshire, turned it on, had all the investors come out, turned
it on, and then things started turning, the blades all flew off
and everyone had to run for cover. But, you know, the investors
stuck with us, and year after year we put a little bit more
understanding in the blade roots, in the foundations, and the
transmission, and in all engineering parts of that machine, and
how, because of that kind of work, wind energy is very cost-
effective, it is growing very rapidly. So you have to make the
investment, you have to stick with it, and if you do, you get
rewarded.
So that will be my opening statement. Mr. Chairman, I yield
back.
Mr. Whitfield. Mr. McNerney, I am glad to see you so
enthusiastic this morning. So, you know, I want to also give a
warm welcome to our former Secretary of Energy, Spencer
Abraham. Appreciate you joining us today, very much. And Mr.
Charlie Bass, a former member of this committee, we appreciate
him being here as well.
Our chairman, Fred Upton, is going to be a little late
arriving today, so at this time, I would like to recognize Mr.
Pallone for his 5-minute opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman, for holding this
hearing on the future of the grid. I don't know if I can be as
energized as Mr. McNerney, but I did notice how energized you
were and I was happy to see it.
The National Academy of Sciences has referred to the U.S.
electricity grid as the greatest engineering achievement of the
20th century because it delivers critical energy services to
consumers in an instantaneous, affordable and dependable
manner. In fact, as a society, we have come to expect that
every time we flip the switch in a dark room, light will
appear. But our grid is changing as we speak. There are ever-
growing demands on the grid to power our new technologies, to
accept new forms of generation, while at the same time
conventional attacks, cyber attacks, climate change, and other
new threats require the grid to become more resilient. And the
grid is now the subject of almost constant innovation and
entrepreneurship as well as--as many of our witnesses are going
to attest. How we unleash that innovative spirit and at the
same time ensure overall system reliability is the challenge
for the grid of the future.
Fortunately, advanced technologies exist to address these
challenges, with substantial benefits for both the electricity
sector and, in most cases, consumers. These new technologies
are working smarter and promise electricity generation and
delivery that is more efficient, economic and environmentally
responsive. And while this transition will not be quick or
easy, our witnesses today make clear that the move towards
smart grid technology is already here.
Today, you can already find this technology deployed around
the Nation. You can see it in the deployment of smart meters
and other technologies that facilitate greater energy
efficiency and cost savings, as well as in the deployment of
solar and other distributed generation. These technologies will
also help us move forward in the fight against climate change,
providing new ways to reduce greenhouse gases emissions, while
at the same time enhancing overall system resiliency and
reliability.
In my home State of New Jersey, you can also see the
deployment of smart grid technologies in the work DOE has done
to set up a microgrid to prevent transit service outages in
northern New Jersey, like the one we experienced during Super
Storm Sandy. And while the movement to these new technologies
is important in many cases, its near-turn adoption is not
inevitable, nor is it necessarily a panacea for all the
problems we face. And we will need to work with our State and
local counterparts, including State regulators, to develop
workable solutions. For instances, while a microgrid may help
preserve power for a portion of a community during an extreme
weather event, policymakers will be the ones tasked with
deciding who gets the benefits of that power, and who pays for
establishing the infrastructure. Similarly, the rate of
adoption for many of these new technologies often depends on
the incentives put in place by policymakers. For example, real
time smart metering can provide consumers with critical
information about their energy use during hours of peak demand,
yet without the proper structures in place to encourage
residential or commercial customers to use energy during off-
peak hours, there is little motivation for someone to charge
their electric vehicle at night instead of in the morning, or
to alter their business plans to ensure others can consume
electricity during the day.
And so policy questions still exist, but there is little
doubt that adopting these new technologies to move us towards a
smarter grid could spur benefits for consumers, our economy and
the environment, and the witnesses before us today can help us
navigate these obstacles to quickly realize the benefits of
these technologies in a cost-effective manner. So I look
forward to hearing your views.
I would like to yield the remainder of my time to the
gentleman from Texas, Mr. Green.
Mr. Green. Thank my colleague for yielding to me--our
ranking member colleague. I want to thank all our panelists for
being here today, and I look forward to discussing this
critical component of our economy.
The electrical system and grid are technological wonders,
and the--it is the bedrock of our industrial and commercial and
domestic way of life. When folks turn on the switch, they never
question whether America's power sector will perform.
In the 20th century, we expanded rapidly, constructing
lines and establishing functioning markets. The complexity and
vastness of the U.S. utility transmission and distribution
system is unmatched across the globe.
In the 21st century, we face challenges and opportunities
from a changing marketplace. Traditional utilities face new
challenge because the integration of renewable resources,
implementing the new environmental regulations built on the
rapid expansion of cheap natural gas. Transmission and
distribution companies are looking at new dynamics of
distributor generation.
Finally, consumers are increasingly savvy and informed
about consumption management and household efficiencies. As
legislatures, we must provide these constituents the tools
required to meet the challenges and capitalize on the
opportunities of the new marketplace. Today, it is my hope we
can elicit some information that would help us better
understand the rapidly changing atmosphere, and assist us in
crafting solutions so as to remain innovative, flexible, but
100 percent reliable.
And I yield back my time.
Mr. Whitfield. The gentleman yields back. And that
concludes the opening statements.
So now I would like to introduce our panel. And once again,
we thank all of you for joining us today, and we look forward
to your testimony.
Our first witness this morning is Mr. Tom Siebel who is
chairman and CEO of C3 Energy, also one of the founders of
Oracle.
Each one of you will be given 5 minutes, then the little
red light will come on when 5 minutes is up, but we won't go
strictly by that red light. But, Mr. Siebel, thanks for being
with us, and you are recognized for 5 minutes.
STATEMENTS OF THOMAS M. SIEBEL, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, C3 ENERGY; DEAN KAMEN, FOUNDER AND PRESIDENT, DEKA
RESEARCH AND DEVELOPMENT CORPORATION; MICHAEL ATKINSON,
PRESIDENT, ALSTOM GRID, INC., ON BEHALF OF GRIDWISE ALLIANCE;
CHRISTOPHER CHRISTIANSEN, CO-FOUNDER AND EXECUTIVE VICE
PRESIDENT, ALEVO ENERGY, INC.; JOEL IVY, GENERAL MANAGER,
LAKELAND ELECTRIC, ON BEHALF OF AMERICAN PUBLIC POWER
ASSOCIATION; PAUL NAHI, CHIEF EXECUTIVE OFFICER, ENPHASE
ENERGY; AND NAIMISH PATEL, CHIEF EXECUTIVE OFFICER, GRIDCO
SYSTEMS
STATEMENT OF THOMAS M. SIEBEL
Mr. Siebel. Good morning. Mr. Chairman, thank you for the
opportunity.
I am here from Silicon Valley, and I have spent the last 4
decades in the information technology business, and we have
been working for the better part of the last decade to think
about the problem of applying the state-of-the-art of
information technology and communication technology to the
value chain associated with power generation, transmission,
distribution, metering, and consumption. And if we are to look
at this value chain, it would be--today, it would be largely
recognizable by Thomas Edison, because we are dealing with late
19th century and early 20th century technologies, where at one
end of the value chain we are boiling water and spinning a
turbine, OK, we are rotating a magnet within a coil, creating a
voltage, stepping up the voltage to, you know, higher voltage,
transmitting it over long distances at high voltage, medium
distances at medium voltage. It goes to a meter and then to the
consumer. This is pretty much what it looks like. And it works
great until it breaks. OK, and then when it breaks, whoever,
Baltimore Gas and Electric or Constellation Energy or Pacific
Gas and Electric, sends trucks out with people with volt meters
to climb telephone poles and go down manhole covers, to find
boxes that don't conduct electricity, and they keep replacing
boxes until the lights go back on. And this is pretty much how
it works.
Now, this infrastructure--these--the way that utilities are
operated is then tend to run these businesses of generation,
transmission, distribution, metering, customer care and
billing, as separate business units, and as separate business
units they have these separate enterprise information systems
that have been supplied over the years by companies like Oracle
and General Electric and Siemens and others. There are lots of
reasons we can get into some other time why these enterprise
information systems don't want to communicate with one another.
It makes it very difficult to share information, but let it be
said that, you know, this has all been kind of driven by
Moore's law. Now, this decade, worldwide, this infrastructure
is being upgraded so that all the devices are becoming remotely
machine-addressable, so we can remotely sense their state. The
most common being the smart meter. So we don't have to send a
truck out to read it once a month, we can read it once a minute
or once every 15 minutes. But what is significant is not the
smart meter, the entire value chain is being sensored, from the
vibration sensor on the nuclear reactor to the thermostat, the
variable speed fan at Wal-Mart, OK, the single phasers, the
step transformers, the stepdown transformers, and the
substations. So as this becomes sensored, this begins to look
like a fully sensored--basically, a fully connected sensor
network. A guy named Bob Metcalfe out of Xerox PARC, he
invented something called Ethernet, OK, and he coined something
called Metcalfe's law. So the power of that network is the
function of the square of the number of nodes that are
connected.
So when this is--the amount that is being invested, I don't
know if I mentioned this, in upgrading this network worldwide
this decade is $2 trillion. So this is the largest and most
complex machine every built. The amount being invested in the
U.S. this decade upgrading this infrastructure is $1 trillion.
So as we do this, if we read a meter every 15 minutes, it is
being read 32,000 signals a year. If we read it once a month,
it is 12 signals a year. That is four orders of magnitude.
Actually, we are increasing the amount of data by six orders of
magnitude. So we have massive amounts of data that is being
collected, and so what we can do now is we can apply the
sciences of big data, cloud-scale computing, analytics, machine
learning, and these new social human-computer interaction
models to dramatically, you know, to optimize the entire value
chain to, you know, if we balance--it reduces the amount of
fuel that we need to generate by a percent. OK, if we use these
technologies for predictive maintenance, we can replace devices
before they fail, dramatically increasing safety, increasing
reliability, we can, you know, increase the security
infrastructure, and by the way, we can reduce the environmental
consequences of the value chain by, say, order of 50 percent.
So this is what we are doing today all over the world. I
would say that Europe is probably ahead of the U.S. as it
relates to this today. We are doing this now, and now putting
this in the perspective of a company based in Rome, they have
67 million meters in 40 countries, and so they are a 100-
billion-euro company. It is a utility roughly the size of the
U.S. market. And there, we are aggregating I think 7 trillion
rows of data into an 800 terabyte cloud image. We process these
data at the rate of 800,000 transactions per second, OK. Apply
machine learning to optimize the value chain and the economic
benefit to do this across the world is 6.3 billion euros a
year. We are doing this at Exelon. The economic benefit to
them, $2.7 billion. This is the economic benefit to their
consumers. Baltimore Gas and Electric, Pacific Gas and
Electric, Socal Edison, Commonwealth Edison, we are doing--GDF
Suez, so we are doing this all around the world today. This is
what will make the smart grids smart, is the information
technology, the ability to apply big data, analytics machine
learning, and new human-computer interaction models. And the
economic, social and environmental benefits are significant. So
this is the exercise upon which we have been engaged, and it is
fascinatingly difficult and fascinatingly exciting.
Thank you.
[The prepared statement of Mr. Siebel follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Well, thank you very much.
And our next witness is Mr. Dean Kamen, who is the Founder
and President, inventor and--also, but he is the Founder and
President of DEKA Research and Development Corporation. And,
Mr. Kamen, thank you very much for joining us, and you are
recognized for 5 minutes.
STATEMENT OF DEAN KAMEN
Mr. Kamen. Thank you, Mr. Chairman, and I think everybody
here knows we are not here to talk about whether there will be
disruptive change in the grid, but how it is going to happen
and hopefully how to make it happen in the best possible way.
Though we are here to talk about energy, I am a technology
guy and I thought a very quick review, and it will be a very
quick review, of a few other industries that were dramatically
transformed at the intersection of new technologies that were
properly embraced to take over from old systems that suddenly
seemed inefficient and terrible. So as an example, I will give
you computing. We all grew up, I think, with big computers that
sat some place and, you know, the average kid today doesn't
know about what Mr. Watson and his company were about, they
have tablets and cell phones, and they changed an industry and
they wiped out an old infrastructure. There were interestingly
three major infrastructures that were built in the 1880s--were
established in the 1880s; photography, communications, and
energy.
So quickly, looking at this one, Alexander Bell in the
1880s decided we can let everybody talk to everybody, all you
needed was a wire from your ear to anybody else's ear. And it
took about 100 years to build up that massive infrastructure.
Then the technology came along, and that was really neat. Most
kids don't know that a house has a phone. You have a phone. And
technology like wireless and cellular and fiber optics have
just transformed the communication industry, I think we would
all agree, for the better.
Photograph, again, in the 1880s it was a wonderful thing.
We all remember our Kodak moments. We remember we could get
that stuff to actually develop in only one day. You ask the
average kid for a selfie today, they don't know what film is,
and the Kodak moment is--Kodak is history, it is a memory. So
it is because technologies came along that were just
breathtakingly better.
What about energy. That is what we are here to talk about.
Well, in the 1880s there was this guy Edison and Tesla, and
they gave us big centralized plans, like Ma Bell, photography,
what do we know about that great model that we have already
heard is from virtually everybody out there and the first
speaker, it is 150-year-old architecture. What do we know about
it? Is it ready for disruption? Well, it is old, it is
inefficient, it is unreliable, it is expensive, and it is
dirty.
Quick facts about what the grid is today. We have about 1
terawatt, 1,000 gigawatts, of production capacity at an average
of $1 a watt to produce that. That is $1 trillion in generation
assets. Well, more than 50 percent of that stuff is 30 years
old, and if you only replace the stuff that is that old at $1 a
watt, it is $500 billion. Once you make that energy, you have
to move it. And you just heard, at high voltage, transmission
lines, they cost about $1 million a mile, and oops, sometimes
they are not quite what we would like them to be. And 70
percent of those things are 25 years old or more, and there are
280,000 miles of that high voltage stuff, so if you replace the
really old stuff, it is another $200 billion. Then you have the
low voltage stuff in all your neighborhoods. Wires hanging on
wooden poles. What could possibly go wrong? So those things are
a real deal, they are only $140,000 a mile, and there are 2.2
million miles of that stuff and 50 percent of that is at least
30 years old. And if you just replace the stuff that old, it is
another $150 billion. And then, of course, you have the annual
capital cost of that infrastructure. Now, that is $90 billion
is what we are spending in this country right now to keep that
architecture operating, and we have all heard how critical it
is, but by the way, that $90 billion, that is not one drop of
oil or one pound of coal, that is just to keep that system up.
So is there a better, more efficient way to do to this
industry what has happened to communications, for instance? I
think so. Everybody loves solar panels, and I think you will
hear from this whole panel, between solar panels, battery
technology, wind technology, controls technology, megawatts,
all of these things are going to change. The question is how do
we catalyze them to work together instead of frustrate each
other, both technically and in a regulatory environment.
Well, everybody I know loves solar panels. Very few people
I know have put up enough solar panels that they have
disconnected themselves from that grid that we all complain
about. It is our lifeline. So how do you catalyze more people
to do this? Well, the more you put those up without doing
something else, you are actually hurting the grid because they
add instability, unless you add good technology, and they lower
the amount of power coming through the grid, but the models by
which the grids are funded is by selling electricity. The more
of this stuff you put up, it is a competitive perverse
alternative to the grid. You have to do something that can
catalyze this stuff to happen in a way that helps everybody,
including the people supplying the power. So we said, why don't
we make an appliance, like all the other appliances in a house,
that might help. This appliance makes 10,000 watts of
electricity. We call--it is a sterling thermal technology. It
is about as quiet literally as your hot water heater or your
furnace, and the ones that we have made now 20 of, and placed
them with a great visionary partner, David Crane, the chairman
of NRG, have already produced 300 million watt hours of power
directly where it is needed in places where we can also use the
waste heat because after all, it brings the same fuel as your
hot water heater. 100 million of those things could produce as
much power as the whole grid. I don't think we need to go that
far, but is 100 million a lot? No. Americans have 140 million
appliances bigger than this. Much more relevant, they have 117
million hot water heaters and 182 million furnaces, together
that is 200 million appliances that use exactly the same
infrastructure as us, except we will make your electricity and
your heat. Where else could you put these things? This is why I
think it can work to make the grid a great new future. Don't
put them in the houses, put them out on those transformer pads.
By the way, there were 40 million of those transformer pads
sitting there now between the grid at that last stop and the
user, and it is close enough to the user that we can still
recover the heat, so we said put them out there, you lower the
installation cost, you will make them easier to service, you
will get higher efficiency, higher reliability, because houses
can share them. Neighborhoods can start putting these things in
under an intelligent control plan, and as you put a bunch of
them near a set of houses, you don't need another one of those
wooden poles with the wires draped through your trees. You put
enough of those neighborhoods together, you don't need that
substation. Over the next few years you, in a controlled way,
get rid of enough substations, you start eliminating
transmission lines, and finally you eliminate the power plants
that aren't the efficient ones, and then America has a bright
future.
[The prepared statement of Mr. Kamen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Marvelous. Thank you, Mr. Kamen. We
appreciate that.
Our next witness is Mr. Michael Atkinson, who is the
President of Alstom Grid, Incorporated, who is testifying on
behalf of GridWise Alliance. So you are recognized for 5
minutes, Mr. Atkinson.
STATEMENT OF MICHAEL ATKINSON
Mr. Atkinson. Good morning, Chairman Whitfield, Ranking
Member Rush, full committee Chairman Upton, and Ranking Member
Pallone, Congressman McNerney, and distinguished members of
this subcommittee. I am Michael Atkinson, President of Alstom
Grid, Incorporated, and also I am here on behalf of the
GridWise Alliance. I appreciate the opportunity to testify at
today's hearing.
The U.S. electric system is undergoing a transformation
unlike anything we have experienced in the past 100 years. This
transformation will create opportunities to enhance
reliability, efficiency, resiliency and security of the grid.
The grid will continue to serve as the backbone of the Nation's
electric infrastructure. It will enable innovation to flourish,
and the supply and demand of electricity across the
transmission and distribution networks, all while continuing to
provide safe, affordable, reliable power.
The future grid will optimize the management and operations
of the entire electric system value chain, which includes power
generation, delivery and consumption. For example, new smart
grid technologies help to enhance situational awareness,
prevent outages, accelerate restoration, and--in the case of
extreme events, and also integrate distributed energy
resources. In addition, other technologies--other related
technologies and capabilities such as energy storage, power
electronics, and microgrids will also improve the performance
of the grid.
The Electric Power Research Institute has estimated that
the total benefit of smart grid is in the trillions of dollars.
More importantly, for every dollar invested, $2.80 to $6 in
benefits are realized.
GridWise and DOE's Office of Electricity work with hundreds
of public and private stakeholders to develop a shared vision
for the grid, which includes the following. The grid will be
the key component of the future electric system. This system
will include both central and distributed generation sources.
Powering communications will flow in multiple directions.
Residential, commercial and industrial customers will use the
grid in different ways, becoming both consumers and producers
of electricity. This will help achieve the following three
outcomes to accelerate the transformation to the 21st century
electricity system. First, building on this shared vision,
enable policies to ensure the markets, regulations, and new
technologies are all aligned. Congress can exercise its
leadership to facilitate ongoing and new public-private
collaboration to achieve the grid of the future. Second, the
pursuit of this future grid will continue to spur innovation
and attract ideas, talent and resources from a range of
industries. And I think you only need to look to my right to
see that. Third, create additional highly skilled jobs. The
transformation of the grid will necessitate advanced skills to
implement these technologies.
In conclusion, we have an important opportunity to
accelerate the modernization of our Nation's electric grid.
This will drive economic growth, strengthen our global
competitiveness, and create highly skilled jobs. Action is
needed now because this is a complex issue, and the technology
and policy changes required could take years to implement. I
want to underscore that access to a reliable, efficient,
resilient and secure grid is a major source of our Nation's
competitive advantage. Congress can play a key leadership role
in facilitating the acceleration of grid modernization, and
ensuring that we maintain this competitive advantage into the
future.
Mr. Chairman, thank you for the opportunity to testify. I
look forward to any questions.
[The prepared statement of Mr. Atkinson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Atkinson.
And our next witness is Mr. Christopher Christiansen, who
is Executive Vice President, Alevo Energy. And you are
recognized for 5 minutes, Mr. Christiansen.
STATEMENT OF CHRISTOPHER CHRISTIANSEN
Mr. Christiansen. Thank you. And, Chairman Whitfield,
Ranking Member Rush, and members of the committee, thank you
for inviting me to testify on behalf of Alevo, Inc. You will
hear from me today how Alevo believes that energy storage will
play a crucial role in ensuring a secure, reliable and modern
electricity system.
I will also discuss how Federal policymakers can help to
accomplish this goal by reducing regulatory barriers to the
development of energy storage to benefit electricity ratepayers
and consumers.
My name is Christopher Christiansen, and I am the co-
founder of Alevo, and I serve as the executive vice president
of the Energy Division, which means I am responsible for all
the energy daily activities, which include production design,
business development, and sales strategies. I am also
overseeing the development of over 200 megawatts of battery
energy storage projects, which we are implementing in the next
12 months.
Alevo is a leading provider of energy storage systems
designed to deliver grid-scale electricity on demand. Alevo
couples grid analytics with our innovative battery technology,
the Alevo GridBank. Alevo GridBank features a nonflammable,
long life inorganic battery that enables a new source-agnostic
architecture for electrical grids that reduce waste, greenhouse
gases, create efficiencies and lower costs for the world's
energy producers and their consumers. Our mission is to
maximize the value, availability, usability and cleanliness of
electricity to better serve mankind and the environment.
Alevo's manufacturing plant is located in a former
cigarette plant in North Carolina in Concord, in the district
of Congressman Hudson. We are on track to employ 500 people in
2015, and we expect to employ over 2,500 by the end of next
year. We are also set up for significant growth, as Congressman
Hudson knows, because we have a 3 \1/2\ million-square-foot
facility that can, at full capacity, produce 16 gigawatt hours
a year. Within the next 12 months, we are manufacturing and
commissioning more than 200 megawatts of energy storage
batteries.
Alevo is building a vertically integrated manufacturing and
deployment organization, creating a global energy storage
business to work with the world's leading and largest energy
companies.
The electric grid is the only system of production that has
not had a way to store its product efficiently. Energy storage
changes that equation, allowing us to store that electric
production and then use it when we need it, where we need it,
and at the best price. Energy storage technologies, like the
battery Alevo is manufacturing, will change the way our
electric grid works, to enable greater efficiency of our
existing generation fleet by optimizing heat rates, reduce
ramping, to allow for increased resilience and reliability of
the system, and to lower the cost of electricity for every
consumer. Additionally, the increased efficiency provided by
storage lowers emission and water usage, 2 important and
environmental benefits realized without adding cost to
ratepayers.
According to market research firm, IHS, energy storage
growth will explode from 340 megawatts in 2012 to 2013, to 6
gigawatts by 2017, and over 40 gigawatts by 2022. To put that
in perspective, 40 gigawatts is equivalent to 40 new coal or
gas fire power plants, and it is enough power to power a home--
over 32 million homes for 1 hour. This explosion would create
jobs in manufacturing, as with Alevo, right here in the U.S.,
allowing us to put our innovation to use to the benefit of the
electric grid and consumers.
As the theme of this hearing suggests, energy storage
technologies like Alevo's GridBank will secure a reliable and
modern electric grid. The 21st century grid will be exposed to
increased generation from variable sources, and also increased
fluctuations in load. States hit by Hurricane Sandy, like New
Jersey and New York, are already building these technologies
into their resilience plans to ensure that emergency services
are kept functional during catastrophic events. Even during
ordinary power blips or outages, energy storage can help a
system and its consumers ride through those events seamlessly.
Southern California Edison recently issued a series of awards
to accommodate local capacity requirements for their electric
customers. They were required to consider 50 megawatts of
storage; instead, they awarded 50--sorry, they awarded 260
megawatts of storage, since it was competitive and provided the
flexibility the utility needed for the system. As utilities and
system operators consider their needs both now and in the
future, and with the right policies in place, more and more
energy storage is being deployed, decreasing the perceived risk
inherent in new technologies, and reducing the cost of those
technologies through increased scale. Alevo is positioned to
drive down those scales--those costs even further with the
manufacturing of hundreds of megawatts of energy storage
capacity in the first year alone. One key policy that this
committee can change is to reduce regulatory barriers for
energy storage facilities, including exemption for Federal and
State regulations in the same way those barriers are currently
used for qualifying coal generation facilities. Congress could
also ask FERC to valuate the value generated by energy storage,
and ensure that FERC's current policies recognize and award
those values.
I look forward to addressing any questions the committee
has about Alevo and our innovation, or about energy storage
technologies more generally. And I thank you for the
opportunity to present this testimony.
[The prepared statement of Mr. Christiansen follows:]
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Mr. Whitfield. Thank you, Mr. Christiansen.
At this time, I would like to recognize Mr. Joel Ivy, who
is General Manager of Lakeland Electric, who is testifying on
behalf of the American Public Power Association. You are
recognized for 5 minutes.
STATEMENT OF JOEL IVY
Mr. Ivy. Thank you, Mr. Chairman. Good morning, everyone. I
bring you warm greetings from sunny Florida.
The American Public Power Association, based in Washington,
DC, is the national service organization for the more than
2,000 not-for-profit community-owned electric utilities in the
United States. Lakeland Electric in Lakeland, Florida, is an
APPA member, serving approximately 122,000 customer accounts in
central Florida for the past 110 years. Like other public power
utilities represented by APPA, Lakeland Electric was created to
serve the needs of its local community by providing low-cost,
reliable electric service on a not-for-profit basis.
Public power utilities have been improving our grid-based
technologies for some time now. As fiber optic systems started
to become more prolific, the application of smarter tools and
equipment became truly viable. Together with newer wireless
technologies, we have been able to greatly expand access to
information, perhaps like never before.
I will discuss initiatives being, excuse me, under--I will
discuss initiatives being undertaken nationwide by public power
utilities related to grid innovation, but focus the bulk on my
testimony on what Lakeland Electric has done and why. I am
defining grid innovation as including deployment of smart meter
technologies and communication systems to support those and
other technologies, deployment of distributed generation, or
DER, distributed energy resources, including storage. Increased
real- and near-time real-time monitoring of power systems,
which enhances situational awareness, and management of the big
data being accumulated through the use of smart grid
technologies. In addition, I want to discuss briefly some of
the challenges to deploying these technologies, including
cybersecurity.
So the deployment of AMI, or automated metering
infrastructure, is significantly more mainstream than a decade
ago. It has become almost the default choice for upgrades to
meters, leaving on the question of using fiber or wireless, or
in Lakeland's case, both. This effort was kick-started with
Federal grants and loans, of which my organization was a proud
recipient. In fact, we completed our deployment in 2013, and
are now offering customer access to their information via our
Web portal, and have some creative alternative rate programs
for earlier adopters to use to save money and energy in their
homes and businesses.
The APPA and Lakeland are generally supportive of
distributed energy resource technologies, such as rooftop
solar, but the concepts of rate programs that will continue to
spur this investment, while allowing utilities recovery of our
fixed cost, is among the fastest growing issues in our
industry. Excuse me. Net metering in some locations such as
Lakeland provides a customer credit based on the full retail
rate, which may allow customers to reach a net-zero bill on an
annual basis. Changes to our rates must not punish the early
adopters who invested in older, more expensive solar
technologies. At the same time, we must ensure utilities have
proper revenue to recover the cost of our poles, wires and
generators. This rate design issue is going on appropriately at
local and State levels across the country, including in
Lakeland.
Regarding distributed energy resources, utilities are also
concerned about customers having access to good information
that allows them to make sound decisions without future
regrets. Business practices that may be leading to the
provision of erroneous information to customers, including
information provided by certain solar leasing companies related
to the payback of the leases, which are in turn being tied to
unrealistically high assessments of annual electricity price
increases, are at the heart of our concern.
The future construct of the smart grid is full of unknowns
as we look out longer into the future, and continued Federal
support for funding innovative projects will be very important
as our Nation's entrepreneurs provide the newest and best
support equipment and processes.
Finally, Lakeland--Federal, State, and local collaboration
is essential to maintaining physical and cybersecurity. While
Lakeland has adopted cybersecurity as an essential business
practice, the collaboration with governments at all levels
remains a critical component, particularly related to
information sharing.
In summary, public power utilities like Lakeland Electric
are deploying a variety of technologies to optimize a grid for
more efficient and reliable service. In so doing, we worked
very collaboratively with our customers, our policymakers, and
our communities to determine what is most appropriate at the
local level. The Federal Government can help in terms of
targeted grants, and research and development, as well as in
the area of cybersecurity, by sharing actionable and timely
information with the industry.
Mr. Chairman, thank you for allowing me to be here.
[The prepared statement of Mr. Ivy follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Well, thank you, Mr. Ivy.
And at this time, I would like to recognize Mr. Paul Nahi,
who is CEO of Enphase Energy. And you are recognized for 5
minutes.
STATEMENT OF PAUL NAHI
Mr. Nahi. Thank you, Mr. Chairman. Chairman Whitfield and
fellow subcommittee members, than you for the opportunity to
testify at the Subcommittee on Energy and Power's 21st century
electricity challenge hearing.
Enphase Energy provides solar energy solutions for the
residential and commercial market, as well as energy services
for utilities. Through the most sophisticated power electronics
and communications technology in the world, we are able to
bring a level of visibility, intelligence and control to our
solar systems, which are deployed in over 80 countries. This
has enabled us to leverage our solar assets to help strengthen
and increase the resilience of the grid, while providing clean,
affordable energy for our customers in the U.S. and all over
the world. A public utility company located in the San
Francisco Bay area, Enphase has grown to over 600 employees
since 2006, and plans to employ over 750 employees by the end
of 2015. Our products are now installed by tens of thousands of
workers across the United States each day. We have a profitable
business, and continue to invest in new technologies and new
markets to enable more consumers to enjoy the benefits of
clean, affordable energy, while helping our utility partners
strengthen and stabilize the grid. In doing so, we are creating
both blue- and white-collared jobs in our country, and creating
competitively priced products that make the United States a
global leader in our technology class.
Our advanced technology solutions turns solar systems into
assets on the grid, and our energy management system addresses
the grid's needs via our intelligent communications technology.
In fact, we just completed an upgrade with a utility partner to
remotely modify the operating characteristics of thousands of
solar systems to substantially strengthen their distribution
and feeder networks. In essence, we enable solar systems to
observe and then respond to the potential grid issues, thus
increasing its reliability. By optimizing the grid in this
manner, we can either delay or eliminate significant capital
costs, thereby reducing cost for consumers.
As is implied by our product offering, it is clear that our
number one job at Enphase is to help provide clean, affordable
energy, while increasing grid stability. At the same time, we
recognize the urgent need to increase the security of our
energy supply. Energy security is fundamental to the health of
our country. It is also a specific focus of this Congress. It
must be recognized that new, clean energy resources can play a
significant role in enhancing our energy security. Solar and
wind are abundant and limitless, and it is our responsibility
to harness these resources responsibly. That said, Enphase and
others in this new energy economy will play a fundamental role
in ensuring the energy security of our country. The
technologies we develop leverage years of innovation in the
semiconductor and information technology markets, and include
many of our own advances. Because of this, each system we ship
is embedded with the most advanced security protocols, and can
be remotely updated as necessary to prevent new cyber threats.
We take our role as a though leader in the energy security
seriously, and believe this arena will become increasingly
critical over time.
In order to ensure that our efforts to provide clean energy
to consumers, while strengthening the resiliency and security
of the grid, continue unabated, we must also maintain our
relentless pursuit of more cost-effective solutions. Providing
clean, secure energy is not enough. We must make it affordable
for everyone. We have been able to dramatically lower the cost
of our solar solutions, and are now applying the same
technology to storage, where we also expect to see a dramatic
decrease in costs. The same processes and semiconductor
technologies used for developing and scaling the consumer
electronics market are now being applied by Enphase to the
renewable energy market. Technologies like the Enphase energy
management system have the ability to realize significant cost
reductions through economies of scale and continued innovation.
It is my opinion that solar and other energy technologies will
play a fundamental role in the new energy economy as a result
of our ability to innovate and scale, resulting in highly cost-
competitive, reliable and secure energy generation.
Enphase Energy is built on a foundation of collaboration.
We believe that a health industry lifts all market
participants. We have no doubt that the creation of a new
energy economy will result in hundreds of thousands of new jobs
for Americans, and we are looking forward to enabling those
interested in participating in this industry to make a smooth
and successful transition. The result will be a strong and
vibrant industry, abundant access to clean, affordable energy,
a large, well-paid workforce, and a prosperous future for all
Americans. The success of our company and other new energy
participants is a testament to the increasing demand for
affordable, clean energy, and we do not expect this to subside.
That said, I believe our role as job creators now and in
the future cannot be underestimated. With this role comes the
responsibility to help others transition to this new and
growing industry. We must recognize the amazing accomplishments
of those in the industry who carved the path before us, and
provide the support necessary to enable them to participate in
this new energy paradigm.
Lastly, we aim to remain competitive internationally to
ensure the United States retains a position of leadership in
the world's energy ecosystem.
I appreciate the opportunity to testify before this
committee, and look forward to working with Congress as we
continue to add jobs, increase grid stability, protect our
citizens against cyber threats, and ensure the United States
maintains its position as a global technology leader. Thank
you.
[The prepared statement of Mr. Nahi follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you.
Our next witness is Mr. Naimish Patel, who is the CEO of
Gridco Systems. And you are recognized for 5 minutes.
STATEMENT OF NAIMISH PATEL
Mr. Patel. Thank you, Mr. Chairman, and the other
distinguished guests or congressional members of this
committee.
This is an important topic we will be speaking about today.
My name is Naimish Patel. I am the CEO of Gridco Systems, a
leading provider of agile grid infrastructure, that is
consisting of advanced control and power flow technologies for
the electric grid.
Since the Pearl Street Power Station first went online in
Manhattan in 1882, the electric grid in the U.S. has become
pervasive in its reach, essential to the sustainable growth of
our economy and national security, and a services platform that
we have become intimately reliant upon, yet often take for
granted; all testament to the work of the numerous utilities
that maintain and operate our grid.
Today, however, utilities are operating in a changing
environment that poses a wide variety of challenges, but also
opportunities for innovation. Much as our telephone system
experienced a transformation in the 1990s, catalyzed by
customer adoption of computing and demand for information
services, so too are we seeing the beginning of a customer-
driven evolution of the electric grid. Consumers of power are
increasingly also becoming producers, through adoption of
rooftop solar or small-scale wind power, requiring the
distribution grid to accommodate two-way power flow for the
first time, counter to the assumptions underlying its original
architecture. Customer adoption of electric vehicles is
creating new demand for power, each vehicle equivalent to
entire home while charging, requiring new utility demand
control measures to avert overloading existing infrastructure.
Customer adoption of energy efficiency measures and home
automation offer new resources that utilities can potentially
harness for systemic benefit, blurring the nature of the
relationship between utility and customer. Finally, increasing
diversification of customer demand is creating stress on
regulatory frameworks that have traditionally been oriented
towards one-size-fits-all power delivery. All of these changes
are compounded by the fact that centralized base-load
generation and transmission capacity are growing tighter, and
increasing volatility in global weather patterns is driving the
need for higher levels of grid resiliency. In the face of these
challenges, utilities must continue to deliver on their
fundamental mission of supplying safe, reliable, and affordable
power, while also introducing system flexibility in order to be
adaptive to a more dynamic and diverse demand/supply
environment. Emerging at this intersection of requirements is a
historic opportunity for regulators, utilities and technology
suppliers to jointly innovate.
Not surprisingly, given the aforementioned trends are
occurring at the edge of the grid where customers connect, the
electric grid's distribution system is on the forefront of
change. Historically, investment in the distribution system has
targeted upgrades of wires, poles and transformers; what is
typically referred to as grid reinforcement. While these
investments in grid capacity are indeed necessary, the
flexibility to accommodate a more dynamic demand/supply
environment relies on investment in infrastructure that can
efficiently utilize existing capacity in order to curb costly
grid reinforcement and, thus, electricity rates, while assuring
reliable delivery of power under rapidly changing conditions.
Much as the Internet is based on devices that actively and
dynamically manage the flow of information across fiber optic
or copper wires, the electric grid will increasingly require
devices that actively and dynamically manage the flow of power,
all under the control of a reliable, secure and scalable grid
operating system. Fortunately, the technology building blocks
needed to provide these functions are available, and at the
cost, efficiency, and reliability metrics expected of electric
utilities. Advancements in power electronics technology
borrowed from hybrid and electric vehicles, wind convertors and
solar inverters, can now be leveraged to provide dynamic
regulation and routing of power flows at utility scale. While
ruggedized distributed controllers, coupled with advanced
networking techniques borrowed from the telephone sector,
enable an emerging grid operating system to manage both utility
and customer-owned assets, including power regulators,
distributed energy resources, and home automation gateways,
amongst many others. These core functions make the grid not
just smart, but agile. It is brains and brawn in combination,
or smarts in conjunction with action, that underlies agility,
and most importantly, provides for a strong, standalone
business case.
We at Gridco Systems are singularly focused on providing
these essential building blocks of the agile grid. We are
working with utilities throughout the Nation in deploying our
empower solution to address the challenges of today, while
providing the foundation to adapt to the challenges of
tomorrow. Strong economics drives our customer engagement
process. Gridco's focus is on delivering solutions that are
more cost-effective, and delivering more compelling benefits to
cost ratio than business-as-usual approaches, avoiding the need
for subsidies and rate increases. As such, many utilities are
able to leverage existing budgets to implement our solutions to
address DER integration, increase asset and capacity
utilization, improved energy efficiency, and deliver higher
power quality, all justified on the fundamental economic
benefits rendered.
Technology availability is currently not the limiting
factor in driving modernization of the electric grid. Missing
are the financial incentives for utilities to invest in new
technologies to address diversification of customer demand. And
to be clear, I am not suggesting that use of subsidies. The
cost of service-based regulatory compact that has guided the
evolution of the distribution system since the Public Utility
Holding Company Act of 1935, has proved highly effective during
times of simultaneous load growth, relatively uniform customer
demand, and increasing economies of scale and supply. Such
macroeconomic conditions generally present from the 1930's to
the 1980's, maintained low electricity rates and reliable
service for end customers, while strong predictable returns for
investors. Over the last 2 decades, however, average load
growth in the U.S. has slowed, becoming less coupled to GDP
growth, owing in part to the adoption of energy efficiency
measures, and also to an increase in the service orientation of
the U.S. economy. Nevertheless, the reliable operation of the
electric grid is as critical as ever to those customers--to our
growth of our economy, and as such, continued investment is
essential, but without rate increases for those customers whose
use of the grid has not changed. After all, changes in customer
use of the electric grid are by no means universal, at least at
present. Customer adoption of rooftop solar, energy efficiency
measures, and electric vehicles tend to be highly
demographically correlated. As such, a minority of end
customers, albeit a rapidly growing minority, is demanding
something new of the grid, yet, the cost to accommodate them
are socialized across the entire customer base under currently
regulatory structure. Further compounding this is the fact that
such customers may even pay less into the system, owing to
their lower consumption of energy. Let us be clear; we want the
grid to accommodate such customers. Their behind-the-meter
investments are driven by basic economics that are only getting
stronger. However, the revenue a utility realizes from these
customers must reflect the actual cost of service to
accommodate them. Fundamentally, not all customers are alike,
and electricity rates structures must not only start to account
for diversification of customer demand, but indeed, incentive--
incentivize utilities to supply such demand.
Conversations among State regulators, utilities, suppliers
and other stakeholders are occurring throughout the Nation on
how to evolve rate design to better align utility revenues with
their underlying costs.
Mr. Whitfield. Mr. Patel, I have let you go over almost 3
minutes, so would you conclude?
Mr. Patel. Yes, sure.
Let us not forget that modernizing the electric grid is not
only good for our national security and economic growth here at
home, but also represents an opportunity for the U.S. to lead a
global renaissance in energy services and grid infrastructure.
Thank you for the opportunity to speak at this forum.
[The prepared statement of Mr. Patel follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much for your testimony. And
thank all of you.
And at this time we will open it up for questions, and I
will recognize myself for 5 minutes.
Mr. Siebel, you had mentioned that the smart grid analytics
technology, the savings are so great over cost that you really
don't need incentives or subsidies from the Government for some
of this, but anytime we go through transformation of any
sector, certainly in the electricity sector, there are always
impediments, and you do refer to some State regulations and
accounting rules. I was wondering if you would elaborate a
little bit on that for us?
Mr. Siebel. Thank you. Thank you, Mr. Chairman.
We retained McKinsey and Company to do a study on the
economic benefit of a smart grid analytics platform, and you
think of this as the operating system for the smart grid, so it
is the economic benefit to the U.S. consumer. And the study,
which we will be happy to provide the committee if they are
interested, concludes that the economic benefit is $300 per
meter, per year. So it is pretty significant. So this is like
$50 billion a year in economic and social benefit across the
United States.
Now, we have the adoption of these new technologies. If we
look at all the new technologies that are being developed in
Silicon Valley, Boston, Jerusalem, anywhere today, these are
all Cloud-based Saas systems, you read about it every day,
Google, Facebook, Twitter, whatever, so this is where
innovation is happening.
Now, the way that utilities make money is they spend money,
and they spend money on capital and they get a guaranteed
return on the capital by their regulator. Now, if they spend
money on technology that was developed in the last decade, what
we call enterprise information systems that you install behind
a firewall, they will get a guaranteed return on that
investment. It is capital expenditure and they get a return on
that investment. If they invest money on this new generation of
Cloud-based, what we call software as a service and platform as
a service-type technologies, that is not deemed to be a capital
investment, it is deemed to be an operating expense. So there
is a disincentive to invest in innovation. If they invest in
innovation, it results in reduced profitability and reduced
cash flow for the utility. If they invest in obsolete
technology, you get a 9 percent return on the investment.
So I think the regulatory incentives at the State level
need to change, and if they don't change, we are depriving the
American consumer of innovation.
Mr. Whitfield. Yes. I would ask any of you, in America, we
have this pretty well balkanized system. We have some
independent systems like California, Texas, we have RTOs, we
have regulated States, deregulated States. Does that balkanized
system impede the growth of technology in the electricity
sector?
Mr. Siebel. I would comment briefly. I think it does. I
mean if we are dealing with a company like GDF Suez, or a
company like Anel, Anel is--both of these companies are roughly
the size of the U.S. market.
Mr. Whitfield. Yes.
Mr. Siebel. They operate in 40 countries, they might be
100-billion-euro businesses, and they have in the order of 70
to 80 million meters. So this is roughly the size of the U.S.
This is one decision process addressing----
Mr. Whitfield. Yes.
Mr. Siebel [continuing]. 25 to 40 countries. In the U.S.,
you have 3,250 utilities servicing 100 million meters.
Mr. Whitfield. All right.
Mr. Siebel. So it is highly, highly, as you would say,
balkanized.
Mr. Whitfield. You know, Mr. Kamen, in your testimony, we
go through these transformations, there are always unintended
consequences, and you do refer to the distributed energy
resource death spiral of Germany. Would you elaborate on that a
little bit?
Mr. Kamen. Well, as I said, new technologies bring new
opportunities. They also sometimes bring problems, especially
to stranded infrastructure. And I am not a policy guy, but as I
said, there are some perverse incentives out there. From a
practical point of view, if the entire system that has ran for
150 years premised on the generating company only making money
by selling more power, there is not an encouragement to save.
If they have to run it through a whole system that they already
own, and somebody puts a solar panel at the other end, instead
of supporting the overall system, it hurts the guys that are
losing some of that. But from a technology point of view, there
is a subtlety that I don't think maybe the regulators
understand as well as the technology people which is, those big
power plants are very good at producing a constant amount of
power. It takes, in many cases, hours and hours and hours to
bring those big boilers up. When you start putting transient
capability online without enough battery, for instance, or
other kinds of new technologies, what happens when that cloud
goes by and suddenly a couple of hundred megawatts that was
there goes away, or when that wind stops, you are asking that
big tired grid that you were trying to avoid paying their bill
an hour ago, suddenly you are desperate for more power. They
have a tougher time reacting and keeping a stable grid with
these other systems online than they had before, and they are
making less money.
In the case of Germany, the instability from a pure
technology point of view, not an economic or financial point of
view, but the instability induced in their large systems by all
these new transient systems is making life difficult from a
technology----
Mr. Whitfield. Right.
Mr. Kamen [continuing]. Point of view, therefore, making a
reliability issue and a security issue. And I think we should
avoid that in this country.
Mr. Whitfield. Yes. Yes. My time is out, but I did want to
just convey one thing. I was talking to a CEO of a big utility
company in California, and they were building some additional
transmission lines underground, and he said that the cost for
them per mile was $100 million, which--that is a lot.
At this time, recognize the gentleman from California, Mr.
McNerney, 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman. I want to thank the
witnesses for all your testimonies. Very good this morning.
Mr. Kamen, I just want to ask you a question here. What do
you think the microgenerators that you discussed, I forget what
you called them, what do you think they would do to the grid
system, to the transmission system, to the traditional utility
company?
Mr. Kamen. So one of the things I particularly think should
be attractive about it, again, as I said before, almost all of
the systems out there are presented, some--it is true, some it
is by perception, as a somebody wins, somebody loses
alternative, as we move forward.
I think if you can make, for instance, these generators,
which is what they are, that use the--a lot of the
infrastructure, for instance, the largest buried infrastructure
in the country that we don't need $100 million a mile for is
natural gas, and many, many buildings have buried tanks with
oil, propane. If our device could be moved so close to where it
is needed, but still on the energy producer's side of that
equation, still just outside the meter, then the energy
producers could have millions of these small devices that they
own and operate, because most buildings and, certainly, grandma
doesn't want to become her own utility company because she has
a solar panel, but if the utility companies and energy
providers could compete with each other to have small units
that are so close to the loads, they still get the full
advantage of being a supplier of energy with just millions of
little plants, but they get to avoid needing those transmission
lines, distribution lines, substations, et cetera, that
everybody is talking about being expensive, unreliable, and
subject to issues.
Mr. McNerney. Right. Thank you. Nice answer.
Mr. Atkinson, you said that the future will spur innovation
and investment. How do you see it spurring investment in
transmission systems, the future technology?
Mr. Atkinson. Today, it is spurring investment. As we get a
framework, you are aligning our market, our policy, our
technology, everything, you know, lines up for companies to
come in, you know, drive solutions forward and invest. Again,
as I point to the gentlemen on my right, came from different
places, have come into the grid, and now are investing based on
what exists today, based on the, you know, again, the policy
and the technology that is available today and looking forward
into the future.
Mr. McNerney. OK. Mr. Christiansen, just sort of an
estimate, if someone puts a solar system on their house, how
much will the storage devices that you are talking about add to
the capital cost? Will it add 20 percent to the capital cost in
order to serve the--a good purpose for the homeowner?
Mr. Christiansen. To direct cost, I mean on our unit we
really do not approach the distributed solar household market,
we see greater benefit of the grid connected bigger units.
Mr. McNerney. So you are not talking about a residential--
--
Mr. Christiansen. We are talking megawatts scale, that is
what we produce.
Mr. McNerney. OK.
Mr. Christiansen. We produce--yes, and then multi-mega--our
standard building block is 1 megawatt hour, 2 megawatt units.
Mr. McNerney. OK. So you don't want to answer that question
for the residential----
Mr. Christiansen. I mean I could estimate based on
competing--competitors' price estimates, but----
Mr. McNerney. OK, I will give you a chance to answer that
off-line later.
Mr. Atkinson, do you think there is a role for the Federal
Government, then, with respect to grid modernization?
Mr. Atkinson. Absolutely. I--again, I think you are helping
drive that shared vision forward, aligning, you know, the
public and creating new public-private partnerships. You know,
today, companies like myself, you know, we are working with the
national labs, we are working with our customers, and creating,
you know, a more defined framework for that I think is a great
job for the Federal Government to do, and that then allows the
public and the private sectors to get together, you know, and
fill out the space. Again, there is significant investment
going on in the grid today, and it needs to continue. It is--it
will exist in the future. It is the backbone of, you know, what
we do, and it needs to be utilized in different ways.
Mr. McNerney. So you see a significant role for the
national labs then in creating this future?
Mr. Atkinson. Absolutely. I think the national labs, you
know, we are out--our technology center, Global Center of
Excellence for Grid Technologies in Redmond, Washington, we
have a very close relationship with VNNL. We work with several
of the others as well. They have a different timescale that
they look at, and it is great getting together with them and a
customer. A customer who is doing things today, national lab is
looking out 3, 5, 10 years, us looking out 1 to 3 years, and
merging that together and figuring out what is going to work,
and then figuring out how to commercialize that.
Mr. McNerney. Thank you.
Mr. Chairman, I yield back.
Mr. Whitfield. At this time, recognize the gentleman from
Illinois, Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you. Sorry for bouncing back and forth.
I have another hearing upstairs, and met with the funeral home
directors, and so we are trying to do multiple things at once.
Mr. Kamen, it is great to see you. Charlie Bass, it is good
to see you. Secretary, good to see you back in the crowd.
FIRST Robotics. I will do the plug, right? We talked
earlier, so the actual--the championship is in St. Louis,
Missouri, which is right across the river from where I live. We
follow it very, very closely. Thank you for that because now,
it has gone not just into high school, but in the middle
schools and in the grade schools with the Lego thing. And our
Christian Dade School that I graduated from, my wife teaches
at, they are all in it, and it is a great thing that you have
started and I want to give that plug here.
Also, I would like to go on just the issue, I know you have
a great diverse background as an inventor in the medical field,
insulin pumps, dialysis, why are you interested in this energy
debate?
Mr. Kamen. First of all, thanks for the plug for FIRST. You
are all invited to our----
Mr. Shimkus. It is the--and you have to use it when you get
it, right?
Mr. Kamen. Well, we have events in every congressional
district. Schools from every district. I hope all of you will
get involved, but thank you for that. And also thank you for
asking because, honestly, we did not start building a small
power generation systems for the U.S. After all is said and
done, we still have a world class energy system. We have heard
about that. I am a member of the National Academies. We did
determine a few years ago it was one of the great achievements
of the last century.
I started building these small boxes because there are 2
billion people around the world that have never used
electricity. And I made a box of a similar size that would make
clean water without a lot of other stuff. It didn't need
filters or membranes or chemicals, but it needs a little
electricity to run. And I thought the two most basic human
needs around the world, water and power, ought to be available
to everybody, and the rest of the world they are going to skip
over ever building a power grid, just the way they skipped over
landlines for cell phones--for phones, and now most of the
developing world has this productivity called a cell phone, but
they don't have a grid. Our little boxes can operate remotely
to make true microgrids, and in fact, we ran two villages in
Bangladesh for 6 months off two of these boxes, and the only
fuel that went into them was the methane coming off a pit full
of cow dung. If we bring these things into production here, the
U.S. could start supplying electricity to a couple of billion
friends around the world.
Mr. Shimkus. And I think the last time you really testified
was on that technology also, as I remember.
Mr. Christiansen, I was interested in your testimony, and
of course, I am from a cold part of the country, that is a big
debate here, but you--this--as I understand it, the provisions
of getting--we want to create efficiencies by our major
generators, the base load folks, and sometimes that goes up and
down, and then--and peekers come in, so just briefly, how do we
segue your technology, and what is it again, and then how do
you think it is being reviewed and accepted by our friends down
the street at the Environmental Protection Agency?
Mr. Christiansen. Well, we actually have sent this idea to
the EPA as well. We did that last April. And the concept is
essentially coupled with base load. You can optimize heat
grades, basically have a unit that operates at constant output,
almost like your car going down the highway at highway speeds
where your battery system handles the flexible components, and
that is what batteries are good at. They excel at responding
quickly, fast and accurately, and that is what batteries should
do. And then you have a unit that generates--that gets to be a
generator and generates constant. And we have done a study
that--on the whole west end connector, we sent it to the EPA on
that, and you can essentially incorporate storage and have the
efficiency pay for the storage units.
Mr. Shimkus. Great, thank you.
And I want to end up with Mr. Siebel. What do you see the
primary regulatory burdens preventing utilities from grading
adoption of new information technologies?
Mr. Siebel. Great question. The barrier is very simple. OK.
Utilities get a return on things that are deemed to be capital
expense. Information technologies developed in the 20th century
are deemed to be capital expense. You buy a piece of iron, a
computer, disks, you put it behind your firewall, you get a
disk from Oracle and you install it, that is a capital expense.
The new--and you get a guaranteed return on those investments
through your rate case, so you can pass it on to the rate case.
Investments in the new generations of technologies that
they never see and touch, these softwares of service
technologies like using Google or Facebook or Twitter, where
nothing is ever installed, they get--that is not a capital
expense for accounting treatment, so they--not deemed to be
capital, so they cannot pass the cost on to the ratepayer. So
it is deemed an operating expense, lowers profitability, lowers
cash flow, major disincentive to invest in innovation.
Consumers--U.S. consumers deprived of all the innovation going
on today.
Mr. Shimkus. And I thank you.
Thank you, Mr. Chairman. Sorry for going past.
Mr. Whitfield. At this time, recognize the gentleman from
New Jersey, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask two things of Mr. Atkinson. First, you
talked a lot about--and I wasn't here so I have to apologize, I
had to go to the other hearing, but you talked a lot about
increasing reliability. What has industry been doing since the
blackout in August 2003 that, you know, went from Ohio to New
York, to improve the reliability of the grid, and where are
there technology gaps at this point?
Mr. Atkinson. There has been a lot of activity since 2003.
It was a bit of a wakeup call. You know, one of the things it
spurred, honestly, was the creation of the GridWise Alliance.
That is what--the reason it was formed was to, you know, move
forward and address these things.
Another thing this, you know, people started paying a lot
of attention to--as you looked at the root cause of why it
happened, was situational awareness. We as a company came out
with a product around situational awareness, letting people
understand what is happening with the bigger picture and not
just in the specific numbers and charts and graphs they are
used to looking at.
Since that point, us and, you know, frankly, our
competition as well, has driven that, you know, situational
awareness through all of the technologies that they have,
making sure, again, that there is a bigger picture look at what
is happening in the grid, not just right in front of me, but
the potential ripple effects as it extends out from just my
system.
Mr. Pallone. And then I wanted to ask you with regard to
Super Storm Sandy, my constituents and I personally endured
Super Storm Sandy, and could you explain--could you please
explain whether and how we might avoid such severe and long-
lasting power outages in future extreme events? It think it was
about 2 weeks or so that we were out of power. What is being
done now to prepare for future extreme events like that?
Mr. Atkinson. An awful lot is being done. You know, the--as
the grid is being, you know, rebuilt and revamped, it is being
hardened. New technologies are coming into play. There was a
microgrid that was--you discussed yourself with the trains,
making sure that they can continue to flow. Also I believe
around Princeton there is a microgrid that has been put in
place as well to maintain power.
The--at the same time, there is a lot we could learn from
each other. The GridWise Alliance, you know, joined together a
bunch of people to discuss best practices. And just, you know,
some people came back differently, better or worse than others.
What are the best practices and how can utilities leverage that
for the next event. We know these events are going to continue
to happen, and it is minimizing their impact that we need to,
you know, focus on.
And then additionally, just the grid technologies continue
to advance. You know, distribution systems that are being put
in place today, the advanced systems, you know, they
automatically identify a fault. You no longer have people out
in a dicey situation, you know, looking for where the fault may
be along miles of lines. You can identify very closely where a
fault is. You can also do some automatic reconfiguration of the
system to bring some people back automatically, thus minimizing
the number of people that are, you know, experiencing the
outage. And all this is helping things come back faster from
the inevitable events.
Mr. Pallone. All right, thanks.
I wanted to move to Mr. Nahi, if I am pronouncing it right.
There was an earlier question, again, I wasn't here, raised by
one of my colleagues about issues relating to integration of
solar and wind to the grid, but to the extent there are truly
issues there, aren't they easily dealt with? Could you just
respond to that?
Mr. Nahi. Sure. So I think we have to acknowledge that the
dynamics that are making solar as powerful as it is today are
doing nothing but getting better. The cost of solar energy
continues to decrease exponentially year on year, while at the
same time grid electricity, utility electricity, is continuing
to increase in price. So the--it is less a question of how we
do it, if we do it, it is a question of how we do it, and the
reality is that the integration, the technologies that are
available today at the--at--for distributed generation are so
sophisticated that not only does it make the integration
relatively straightforward, it actually acts to strengthen the
grid. The fact is that the old hub and spoke model that we
currently have is inherently flawed. What we want is more
generation of all kinds, more distributed generation, and
associated with that brings about greater visibility, greater
control, there is more and more we can do to leverage solar as
an asset on the grid and increase stability if we have the
will. The technology is here. We don't need any more. And I
would say that it has become so sophisticated that it is
relatively straightforward to integrate right now. With the
appropriate policy and regulatory issues, with the right--the
will to support it, we can easily integrate more and more
distributed generation.
Mr. Pallone. All right, thanks a lot.
Thank you, Chairman.
Mr. Whitfield. At this time, recognize the gentleman from
Pennsylvania, Mr. Pitts, for 5 minutes.
Mr. Pitts. Thank you, Mr. Chairman. Thank you for your
testimony. Good to see you. Charlie Bass, the Secretary,
welcome.
Mr. Atkinson, please tell us a bit about your R and D
process, how does Alstom Grid go about bringing R and D to the
market?
Mr. Atkinson. First and foremost, we listen to our
customers. The--and we work on solutions that are solving, you
know, business problems. We are constantly, and I believe all
technology providers are constantly working towards a more
cost-effective delivery of electricity. You know, as we look
longer out again, I thought that we have, you know, we discuss
a lot with the national labs and we, you know, taking a step
back, looking even further out as to what may be happening and,
you know, begin planning ahead, but a lot of our efforts are
focused in the now-to-3 years, you know, things that can, you
know, be commercial pretty quickly.
Our R and D center is located, you know, for the globe, is
located here in the U.S. We have, you know, we hired, you know,
in the last 8 years we have more than doubled the number of
advanced engineers, power system engineers, and computer
scientists. We work mostly with Masters in PhD, you know,
people. It is a high-end workforce, and they are sitting around
working with customers, working to solve their problems, and
then working to adapt what was a specific customer problem to a
larger set of, you know, use cases across the industry, and
that is when you come up with a full commercial product.
We are focused on single code base and, you know, we
created here and again for use cases in the U.S. and globally
but, you know, making sure we have a single product pack that
we can leverage globally.
Mr. Pitts. Thank you.
Mr. Christiansen, you stated that your technology is source
agnostic architecture that helps balance the grid. What is the
importance of being source agnostic?
Mr. Christiansen. I think the key point is that we are a
flexible resource that is not purely a renewable integration,
it is an optimizer for all assets. You look at the grid itself,
the grid needs flexibility, it needs a dynamic resource that
can adjust to changing load, change in generation, and can do
it quickly, and that is unrelated to the source reflected. We
have done studies where collocated with coal, we are collocated
with natural gas, we have been working with cases where we
collocated with nuclear. And the value proposition for storage
is unique that it fits into all generation resources.
Mr. Pitts. Mr. Ivy, how do the advanced grid technologies
being deployed by Lakeland Electric better empower consumers to
save energy and reduce their electricity bills?
Mr. Ivy. So we have enabled the customer information to be
available on a customer account basis by anybody that is
willing to get in there and look at what their consumption
patterns are. We have also deployed shift-to-save rates. Our
shift-to-save rate is a three-tiered rate. It is intended to
incentivize people to go to a lower cost rate that is in an
off-peak period of the day. We have a winter peak, oddly
enough, in Florida, but we have a lot of northern visitors. So
the tendency of wanting to get people to shift their
consumption patterns from like 7 o'clock in the morning,
everybody takes a shower, everybody turns on their heater, a
cold morning, or two or three cold mornings in a row, and all
of a sudden we have a winter peak that looks like this. That is
what we have to build our system to.
So we are actively engaged with the consumers in outreach
groups and civic organizations, and whatnot, trying to get them
to get a good feel for how they can use that data to their
advantage.
Mr. Pitts. OK. Mr. Kamen, in your testimony you noted the
need to promote renewable energy technology while ensuring
continued viability of the utility-based model, siting Germany
as a cautionary tale. How do you think these 2 seemingly
opposing objectives can be achieved?
Mr. Kamen. Well, I think if you include all the energy
producers and the people that handle transmission, distribution
and retail, and included them in making these transitions to
modern, clean, efficient technologies, first of all, a lot of
people in the public don't want to own and operate their own
photovoltaic farms, et cetera. They are used to having somebody
from whom they get a bill once a month and they have reliable
power. So if you could make small distributed generators, but
make them compatible, for instance, with solar panels, and as
you have heard, the technology to make instant power
electronically is pretty good, but the big old plants can't
respond as quickly when suddenly there is a cloud or the wind
dies, but if those utility companies had access to distributed,
very quick response ways to make energy so if the wind went
away, if the cloud came by, if those batteries, even those
great batteries go down a little, if those utilities and those
energy suppliers are part of an integrated--that could say I am
going to put clean, efficient, small, new stuff out there, it
still helps them as the old guard get rid of some of their
problems with these aging systems, right back to those big
plants, those old transmission lines, those unreliable
distribution, the switch gears, the transmission that the
substations that we are hearing about being a problem during
Sandy. So I think creating a piece of technology that could be
put behind the meter, could be put in front of the meter, but
giving all of the stakeholders the capability to find
competitive ways to optimize producing energy, doing it
cleanly, doing it effectively, everybody wins.
Mr. Pitts. My time has expired. Thank you.
Mr. Whitfield. At this time, recognize the gentleman from
New York, Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair. And welcome to our
panelists.
A number of you have mentioned in your testimony the
increased role of customer involvement in the current operation
of the grid, and the prospects for much more involvement in the
future. Of course, this represents a significant departure from
the mostly passive role that the average consumer plays now.
They receive a bill and they pay it. If the power goes out,
they call their local utility and report it. Now, consumers are
also producing energy, and their ability to refine and manage
their appliances and sources of energy are expanding. This is
certainly part of what the smart grid is all about.
You all mentioned the need for better information to go to
consumers about their choices, and to educate them about how
all this is going to work. How are utilities approaching this
given phenomenon? Anyone? Yes, Mr. Siebel?
Mr. Siebel. If we look at the utility engagement model,
customer engagement model, it is firmly entrenched in, say,
1950. OK, so where the primary communication is through direct
mail and the call center. So if any of you remember Publisher's
Clearinghouse when we grew up, that is kind of what it is like.
Now, it is clear that consumer expectations are
dramatically changing. You know, with Uber and Amazon and
Google, we can do anything in 30 seconds and two clicks. And
fundamentally, there are very few transactions that we want to
engage in with a--with our utility. Pay a bill, question a
bill, establish service, change service, hook up our PV array,
whatever it may--that is about it. All of those things are very
time-consuming and painful transactions for a consumer to
engage with. So we are working today with Northeast Utilities,
Exelon, Commonwealth Edison, Pacific Gas and Electric, Socal
Edison, Anel in Italy, GDF Suez and Europe, and basically what
is going on is applying the learnings that we have learned from
Uber and Google and Amazon, and applying that level of
interaction to the customer engagement problem, so a consumer
can get--basically do anything they want to do, you know,
within a minute and say 5 clicks.
Mr. Tonko. Um-hum.
Mr. Siebel. And so there is major investment going on in
this. Much of it was driven initially by the State-mandated
energy efficiency mandates that are coming out, I think 39
States where they have almost $10 billion a year allocated for
energy efficiency programs, but with, you know, fuel prices
diminishing, those efforts are now being put to, you know,
reinvent the customer engagement model, and we are working with
utilities all over the world to do that.
Mr. Tonko. Well, I agree we need to provide sufficient
engagement of consumers early enough in the process to get good
input from them on the frontend of program design.
I would point out an issue we had in New York with rolling
out smart meters. There were a significant number of consumers
that strongly opposed having them installed because of a
variety of concerns, including privacy. I would also point out
that opening up the utility and the grid to a broader two-way
conversation with customers presents both opportunities and
problems in terms of computer security. I think with a much
more dynamic and two-way role for the consumer and grid
operations, we are going to need a more inclusive process to
engage our consumers. Have any of you thoughts about what that
might be in terms of engagement? Yes, Mr. Ivy?
Mr. Ivy. We are actually going through the throws of that
in Florida. The Sunshine State has sunshine laws that allows
everything be done in the sunshine. So if you are a public
agency like we are, for example, we are kind of beholding to
public records requests and we are to be providing what the
requestor is asking for. At the heart of kind of what you are
saying with us is, there is also information that we are
keeping hourly information on metering data, things that can
indicate whether or not people are home or not, closer to a
real-time basis than just the monthly consumption information
perhaps that they could get before. So we are wanting to push
the notion in Tallahassee that perhaps we want to close that
down just a little bit without getting rid of peoples' ability
to still get access to historical-type information.
Those conversations are important. They need to be had
because we need to make sure that we are protecting the
consumers' information.
Mr. Tonko. Thank you very much.
And, Mr. Christiansen, as an advocate for renewable energy,
I am very interested in the work your firm is doing with energy
storage. You seem very encouraging. I feel encouraged about the
possibilities. But the other day I heard a bit more skepticism
about how fast this technology could evolve to make a
significant contribution to the grid. What are the biggest
challenges, and how quickly down the road will we see a
meaningful energy storage outcome?
Mr. Christiansen. So we are in the process now of deploying
over 200 megawatts, which we will do in 2015, and that is in
markets that have been opened by, you know, FERC Order 755,
opened the way to some of these markets. We also have
tremendous interest now from utilities and also international.
I think we can do some work on the policy part and ensuring
that storage gets cheated for the value of the--and the
flexibility, and the speed and accuracy it provides, and that
will help more installations come up.
Mr. Tonko. Thank you very much.
With that, Mr. Chair, I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, recognize the gentleman from West Virginia,
Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
I thought that when we came here, the hearing was the
ensuring a secure, reliable and modern electric system, and I
thought by extension, we were going to be talking a lot more
about the grid, and I have got more confused as I have heard
all this discussion. It is much like, you know, I am an
engineer by training and, by virtue of that, I suppose I can
take on the lawyers in the room, because you ask 100 lawyers an
opinion on something, you are going to get 100 different
opinions. So I am curious, I have heard very professorial
comments, very in-depth, your white papers that you have all
developed about this topic, but I wonder whether or not we have
been able to reach America with the story, because we have been
talking about source agnostic architecture. We have even heard
about balkanizing. We have heard about platforms, we have
talked about polar vortexes. Mr. Kamen, you were about as close
to talking to the American public as I have seen in this panel.
One thing I have learned in Congress in my 4 years here, that
we have trouble when we are confronted with more than one
option, and I haven't heard the option. I have heard seven or
eight different themes of where we should go, and I am really
trying to get to a point with the grid of what is--and the
folks on the other side, they all keep talking about consensus,
so I will take their word. Is there a consensus of where we
should go to develop grid reliability, because what we have not
talked about is the public's resistance, the public doesn't
want--``don't put that high-tension line over my property, not
in my back yard''. We haven't talked about electromagnetic
pulse, the threat to our grid reliability with that, because we
know that is a serious challenge. We have talked about the fact
that we have had briefings, I don't think I am breaching
protocol here, but we can shut off someone else's grid in
another country, and they can shut off our grid, because we
have that capability. There was just some mention slightly
about the EPA regulations and shutting down some of our
powerhouses that when we had this polar vortex, that we are now
leading to a point that we came within, what I was told, 700
megawatts of having a brown-out last winter. That is really
threatening. I don't know whether people across American
understand, that is really just one powerhouse, 700 megawatts.
And then the option of the age issue, I would like for you
to just explain in terms that we don't use here in the beltway
for Mildred Schmidt to understand, what does that have to do
with what--tell me a little bit more about the age because we
have waterlines and sewer lines, and buildings and roads and
bridges that are far older than 25 years. Why should I be
worried about electric grid--why should I be worried about the
electric power lines being 25 years old? So with that, I would
like to hear, is there a consensus of where we should go, where
Congress should be putting its first priority in getting
greater reliance or dependability, or are we just kind of
talking abstract again? Is there a consensus? Mr. Kamen.
Mr. Kamen. First of all, thanks for being an engineer in
Congress.
Mr. McKinley. It is lonely.
Mr. Kamen. Secondly, I would continue, you know, in our
FIRST competitions we call it coopertition. We believe that if
you apply technologies properly, everybody can win as they
compete because the public gets the best that way. And I think
what you have heard from everybody is the grid is getting
older, it is getting, for various reasons, the environment,
terrorism, cyber attacks, and it is more fragile, and you are
hearing a lot of people adding a lot of new technologies, but I
would think where there is a consensus should be that you have
to get all the people that provide the net result to the
public, as you point out, working together so that you don't
create an if-I-win-you-lose situation. And the energy
providers, the transmission or the generation--for instance,
our partner for our little box is a major generator, NRG, yet
they are now becoming one of the biggest suppliers of solar
panels, and working with us on these small distributed boxes.
In one perverse way, you could say they are undermining their
core business, but, you know, like they always say, the
railroads went away because they thought they were in the train
business, not the transportation business.
And to your point, the public doesn't care about CDMA and
TDMA and Time Division--they care about a cell phone being more
convenience than a landline. So the public--if the public could
have a simple appliance put into their home that already used
infrastructure that we have great confidence in, because it is
buried under the ground, like gas lines, like their oil, like
their propane, and it could be made to work in parallel with
solar and wind and the grid, because it sits at the
intersection of all those things, somebody with an appliance
like that would say, my costs went down because the waste heat
from this thing is now my water system and my furnace, and I
have more security and reliability because it is distributed,
it is sort of like getting a back-up generator free, the people
that run the grid and all the other systems win with it because
it deals with transient problems, it is compatible with solar
panels, it is compatible with batteries, it is compatible with
the big producers.
Mr. McKinley. My time has expired, but I just--so thank you
for your comments. I am going to ask if you could please--I
don't have time, we are limited to 5 minutes here, so if you
could please each of you could--would you mind, I would like to
hear from you what is the number one thing we should do. If you
could write that to me, I would like----
Mr. Kamen. Yes.
Mr. McKinley. So that it is more direct. Instead of this
abstract idea, let us get down to concrete where we can----
Mr. Whitfield. And did anyone else want to briefly respond
to that? You looked like you wanted to say something, Mr.
Siebel.
Mr. Siebel. Yes, sir. You have an 800-pound gorilla in the
room here, is the cybersecurity problem. OK, now, every now and
then, I mean and this is an opportunity where the Federal
Government can play a role. All right, so every year or so, we
get the word out of Washington that this is a priority. The
fact of the matter is any hostile government, OK, any 10 smart
engineers from UC Berkeley, OK, could bring down the grid from
Boston to New York, you know, in 4 days. And this system is
entirely exposed. And if you bring in the leadership from
Homeland Security, DHS, in here to talk what they--I think what
they will say, and what I believe, before we really do
something about this, we are going to have the equivalent of 9/
11. There is going to be some disaster, and it is not going to
be good, and it will come from just some bad actor or some
kids. And then we will get serious and spend, you know, $100
billion a year on it for, you know, 10 years and declare a war
on whatever it is. OK, but this system is so vulnerable and so
fragile, and there is going to be a problem and we are not
going to be happy. And it is fixable.
Mr. McKinley. So if you--again, when you----
Mr. Siebel. I will personally send you a letter, sir.
Mr. McKinley [continuing]. See it, you have that--tell me
what is----
Mr. Whitfield. And Mr. Patel wanted to make a comment.
Mr. Patel. Yes. On a basic level, customers care about the
cost of electricity and it being on when they want it. And for
the variety of reasons we have discussed, we are at a point in
the evolution of the grid where there are fundamentally two
paths that utilities can go. One is to do what they have done
in the past, which his to invest in wires and transformers, and
poles and grid hardening, another option is to actually take a
different path where the cost of upgrading the infrastructure
can be lower. See, the challenge with the first path is costs
are going to go up. That means your rates are going to go up.
Investing in wires and poles is expensive.
Now, with the technologies that we have all been discussing
today, there is an opportunity for a much lower-cost path. Now,
the question is why isn't that happening? Why are utilities not
pursuing the lower-cost path? And from my perspective, it comes
down to incentives. You know, the regulatory compact that has
driven decision making at distribution utilities is not
directly incentivizing them to take the lower-cost path. Why?
Because it is a little bit more risky, because of, you know,
adoption of new technology is always somewhat risky, but also
because there isn't the direct financial incentive for them to
adopt something lower cost. And so in my view, there needs to
be a change on a State-by-State basis to the regulatory compact
insomuch as it relates to how utilities invest in a capitally
efficient way, rather than just investing in capital----
Mr. Whitfield. Yes.
Mr. Patel [continuing]. As has been referred to multiple
times. And I think those incentives, once in place, the market
and efficiency will naturally drive to an outcome that
addresses reliability in a cost-effective way.
Mr. Whitfield. Thank you, Mr. Patel.
At this time, I would like to recognize the gentleman from
Iowa, Mr. Loebsack, for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chair. Thank you for having
this very, very critical hearing today, and thanks to all of
you for being here. I really appreciate this very much.
I am new on this committee, on the larger committee. I am
new on the subcommittee, but I have been dealing with these
issues, especially in rural Iowa, since I have been in office
since 2007. Trying to get my head around all of this. It isn't
all that easy, as you might imagine as well, because all of you
are kind of coming at this from different angles and what have
you. But, you know, clearly, the idea of the smart grid makes a
lot of sense. The whole idea of the--of an individual sort of
having more control over how they use energy, the amount of
energy they use and all, I mean I get my, you know, monthly
utility bill, it tells you sort of in a macro-sense how much I
have used, but that is not nearly the same as being able to
control, you know, time of day and all kinds of things much
better than I am able to do now, so I really appreciate that.
And I do believe in individuals taking their own responsibility
for their decisions.
And we see in Iowa, for example, we do see a lot of wind
turbines, you know, at farms, and solar panels powering, you
know, hog farms, for example. I mean there is all kinds of
stuff like that going on around this country, and around the 24
counties in my congressional district. It is really quite
fascinating to see how this is all going. And the local RECs
are kind of coming onboard more on solar, and some of these
alternative energies as well. So it is really pretty exciting,
and I am glad that Mr. McNerney was excited because--I am not
quite as excited, but I am excited about all this, and sort of
where we can go from here.
You know, Iowa, traditionally, we were a coal State, not
unlike parts of Illinois where Congressman Shimkus is from.
John L. Lewis, actually, is from Iowa, long ago. But we have
made this transition in many ways. I like to remind people that
27.3 percent of our energy in Iowa is wind-generated. We have a
heck of a lot of wind energy in Iowa. Now there is big
controversy about building a transmission line across the State
carrying, you know, energy that is not necessarily generated in
Iowa, but in other places, over to other markets to the east of
us. But we are really making tremendous progress when it comes
to renewables, there is no doubt about that.
But I do want to ask kind of a general question. Anybody
wants to answer this. And keeping in mind that if I get--if
that takes my time--I want to come back to you, Mr. Kamen,
especially the German issue and some things you were talking
about, and if I don't get to that then we will do it for the
record, if that is OK. Thank you.
So, you know, I am from a rural area. We have a lot of
challenges. We have natural disasters. Aligned Energy said they
lost 6,000 poles in February of 2007 when we had this massive
ice storm. And I guess if you could be as specific as possible,
how do we look at making sure that we get sufficient energy--
continue to get sufficient energy to the more rural areas in
places like Iowa and other places? I know it is a general
question, and it is a big challenge to answer that question,
but I want to open that up to anyone. You are nodding, Mr.
Kamen. I don't want to be preferential here, but you are
nodding like you do want to answer that question.
Mr. Kamen. Well, as I said before, the actual stimulus to
make our little box was for the parts of the world that have no
grid at all----
Mr. Loebsack. Right.
Mr. Kamen [continuing]. Because it is very compatible with
microgrids and can be networked, especially when you put smart
technology around to connect them, and you make them compatible
with solar, so you reduce your fuel needs, which could be hog
waste or other things, but I think the more you have an
unstructured area that doesn't have a big grid already in
place, transmission, distribution, substations, the more the
21st century is going to start from the other end of this
equation and start integrating local solar, local wind----
Mr. Loebsack. Right.
Mr. Kamen [continuing]. But you need a system to make sure
it is there all the time. And so since most places have some
sources of fuel, natural gas or propane or----
Mr. Loebsack. Um-hum.
Mr. Kamen [continuing]. Number two, and, you know, we build
a technology that is agnostic to that, if you have a hot water
heater or a furnace, well you have--you can make electricity.
So I think, again, it is also a piece of hardware that the
competitive environment will say any forward-thinking utility
or energy generator, or transmission company or any other
provider would say it is compatible with what they are doing,
and it should be made part of the equation for the future.
Mr. Loebsack. If I could just skip--I know I kind of opened
that up to everybody, but now I am thinking in terms of
regulatory framework, making sure that we integrate some of
these things into, you know, the generation and provision of
power to folks, because it was mentioned, you know, we have to
have the right regulatory framework, right policy, right
regulatory approach. What is that approach? I think you were
saying--talking about that, Mr. Nahi.
Mr. Nahi. Exactly. So I completely agree with Mr. Kamen
that the right answer is distributor generation.
Mr. Loebsack. Um-hum.
Mr. Nahi. It can't be done at the expense of the grid, this
is done in concert with the grid, but really what we need is
more and more of all kinds of distributor generation.
Mr. Loebsack. OK.
Mr. Nahi. In terms of the regulatory and policy changes
that need to be adopted for that, we have to recognize that the
potential for an adverse relationship between the renewable
energy companies and the utilities exist. It doesn't have to
be.
Mr. Loebsack. Right.
Mr. Nahi. There are ways these companies can work together,
there are ways that we can help the utilities adopt to a
business model that would provide for more distributed
generation. Right now, most of the distributed generation, not
all but most, is done by third-party companies.
Mr. Loebsack. Right.
Mr. Nahi. There is no reason why the utilities themselves
can't take a greater ownership and greater responsibility for
putting on more of that distributed generation.
Mr. Whitfield. Thank you.
Mr. Loebsack. Thank you. And, Mr. Chair, thank you. And I
am going to pursue this with you, Mr. Nahi, more after this,
and also Mr. Kamen on the German issue, if I may. Thank you.
Thank you.
Mr. Latta [presiding]. Well, thank you very much. The
gentleman yields back. And the Chair recognizes himself for 5
minutes. And I apologize, there is another subcommittee of the
full committee running at the same time as this, but I tell
you, this is a very, very important issue and I really
appreciate the testimony that you all submitted today, and also
being here today.
And, Mr. Siebel, if I could start with you, how do the
kinds of energy analytics you have described help us with
energy security and reliability?
Mr. Siebel. Great question. So what we do when we look at
this as a big data problem is we aggregate all the data from
all of the operating systems in the utility, generation
information, meter data management, customer care and billing,
outage management, Volt/VAR, all of it into a unified data
image in the Cloud. These can be like petabyte-sized data
images, which are, in engineering speak, bigger than a
breadbox. OK, and then we can correlate so that we get these,
say, for predictive maintenance or grid reliability, or energy
efficiency or whatever it may be, we can see in real time
across the entire value chain from when somebody is moving a
thermostat, to making a decision on whether we are going to
bring on a peaker plant or change capacitates to balance Volt/
VAR. Now, over in another building, OK, in a subbasement, there
are 13 people looking at computer screens, and they are looking
at utilities that are provided by companies like Symantec and
like Hewlett Packard, and whatnot, looking for virus detection
and malware detection that are penetrating the network. And
basically, this is a pattern recognition problem, where they
are looking for strings that look similar to malware that they
have seen come out of China or Syria or Korea, or whatever it
may be. And then this person, almost like an accountant with
green iron shade, is kind of looking at this gibberish coming
across the screen that says this is the type of malware that is
trying to come in from this point. The question is what do you
do with it.
By being on a core like that as just another data source
with the entire grid infrastructure, you can say, what does
this mean, what portion of the grid is impacted, what critical
infrastructure is impacted, what is the single point of
failure, so you can then prioritize, and so you can both
prevent them at the perimeter and you can do something about it
right away. And so this is where cybersecurity comes together
with kind of big data analytics. And we have done a lot of work
with this at the University of Illinois with--and UC Berkeley,
The Trust Group, and it is a well-understood problem. The fact
is there are no budgets at the utility level to deal with it,
and this is where I think the Federal Government can do
something to encourage investment in hardening the system.
Mr. Latta. Well, thank you very much.
Mr. Atkinson, and how do advanced grid technologies help
prevent the outages and enable the grid to better withstand
outages when they do occur, and how can the technologies
facilitate faster outage restorations and provide utility crews
with greater situational awareness?
Mr. Atkinson. It comes down to situational awareness.
Allowing people to understand what is going on with the grid at
all levels, pushing that information out from a centralized
room into the hands of the people in the field that are there,
and giving them more accurate information. And the technologies
that exist today, you can identify the location of faults to,
you know, a very close geographic proximity, rather than it is
somewhere in, you know, in this, you know, series of seven
blocks. You can send people directly out to a--the fault. They
have a knowledge of what is happening because, you know, one of
the things we discussed is things are, you know, more
distributed energy resources are in play, you have to be
careful, and you have multidirectional flow of electricity that
changes the safety environment for the line worker pretty
dramatically, and he needs to understand what is going on, and
there needs to be, you know, that communication about what is
going on. The technology that exists today is allowing that,
and it continues to get better and better.
As far as preventing outages, you know, as you see things
happening, you know, from the transmission system down into the
distribution systems, you see harmonics building, you get a
chance to adapt quickly where, you know, the faster, you know,
talking system today. The phasor measurement units are
providing data 100 times a second, versus once every 6 seconds.
You are able to get an accurate dynamic picture of what is
happening, and it gives you a chance actually to, in some
cases, you know, and there is proof this, eliminate when an
outage was about to happen. If an outage does happen, you are
now working on coming back faster, and eliminating as many
people from that outage as you can. And again, that is where
the fault identification, automatic restoration through
switching on the rest of the grid, brings back a portion of the
people, leaving a subset that is still out, and again, you have
identified it very closely where it is, giving you a better
chance to come back quickly.
Mr. Latta. Well, thank you very much.
My time has expired, and the Chair recognizes the gentleman
from Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Kamen, you testified that advanced grid technologies
offer a promising future for U.S. electric systems, but the
immediate challenge is to develop the appropriate business
models and regulatory structures to effectively manage the
integration of modern technologies. Do you have any
recommendations as to what these business models and regulatory
structures might look like?
Mr. Kamen. So with the caveat that I think thermodynamics
is way easier than Government, way easier, I----
Mr. Johnson. I would agree with that.
Mr. Kamen [continuing]. I would give you an example from my
practical life experience. I spent 30 years building medical
equipment. We built some very advanced medical equipment, life
support equipment, and as tough as the standard is to get an
FDA approval, once you get it, you have it, and every hospital,
whether it is Harvard or UCLA or--you know what the standard
is, you build stuff, it gets approved and you are done.
We just built 20 of these model systems that our partner,
NRG, has put around the country, but pretty much not only every
State but almost every city and every town has a different set
of rules about how you put these in, what you are required to
do, and how do you make them become legally part of the grid. I
think if there was some standard that the feds could put out so
what the FDA does for medical products, if you guys could do
for energy products, you could encourage innovators to start
making stuff because they know what they have to do----
Mr. Johnson. OK.
Mr. Kamen [continuing]. They know if they did it, it could
be used everywhere.
Mr. Johnson. OK. Good.
Mr. Atkinson, your testimony suggests that the grid of the
future will enable electrons to flow into or even multiple
directions. Why is having flexibility in power flows
significant, and how can advanced grid technologies facilitate
this?
Mr. Atkinson. In the traditional hub and spoke that was
mentioned before, you have an outage upstream, everybody
downstream is out. When you have multiple directional flow, you
get a chance to re-switch your system, reconfigure your grid on
the fly, thus allowing, you know, all or some of the people to
be brought back up immediately and not suffer that outage.
The technologies today, you know, they exist to do this and
they continue to get better, and the algorithms that are
written, you know, continue to improve and, you know, it
continues to move forward. Again, it exists today, getting
better into the future.
Mr. Johnson. OK. Mr. Christiansen, how can energy storage
help utilities and consumers ride through outages and other
power interruptions seamlessly? I understand it, but for the
American people I would like----
Mr. Christiansen. I think, first of all----
Mr. Johnson [continuing]. For them to hear from you.
Mr. Christiansen. Yes. First of all, to piggyback on
everybody's comments here on having a distributed network and
really, in my creative environment but almost local balancing
authorities, adds a lot of reliability to the system. You have
this capacitance in the grid that is able to soak up capacity
and quickly deliver it back when it is needed really helps you
ride through any peak, you know, that nature. Also as a good
blank start----
Mr. Johnson. Sure.
Mr. Christiansen [continuing]. Get--helps us just to get
back up to speed again after an outage, and this is a huge
benefit by energy storage.
Mr. Johnson. Yes. I--as a chief information officer for a
global publicly traded manufacturing company, I had to be
concerned about the data center and UPSs and those kinds of
things, to make sure that we had that steady power.
A lot of folks don't realize in today's high-tech arena
what a power outage, a power surge, and what those constantly
changing power parameters do to solid state circuitry and those
kinds of things. It wreaks havoc.
Mr. Ivy, you state in your testimony that greater adoption
of advance grid technologies may help create self-healing
grids. Can you expand on this concept of a self-healing grid a
little bit?
Mr. Ivy. We have actually touched on this quite a bit, and
Mr. Atkinson did a fair job of describing that I think. So if
there is an outage somewhere in the field, like he said, in the
original hub and spoke method, you are just out if you are
downstream of that, or even in some area around it you are
still out.
We are installing in our company, and other municipalities
and investment utilities around the country are pretty advanced
already in the tactics of installing these high-speed switches
that are sensing where these short-circuits are in the system,
and they are talking to each other to try to figure out how to
isolate it----
Mr. Johnson. Um-hum.
Mr. Ivy [continuing]. And then the goal is to have it just
isolated to the smallest area that you can possibly have it in.
So then that allows us then also to dispatch somebody straight
to what the problem is, because normally it is lightning, it is
trees, it is an animal, something that can be cleared up very
quickly, we can get the lights back on very, very quickly.
Mr. Johnson. OK, very good.
Well, thank you, Mr. Chairman, and I yield back. Thank you,
gentlemen.
Mr. Whitfield. Gentleman yields back.
At this time, recognize Mr. Mullin, the gentleman from
Oklahoma, for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman.
I want to start with Mr. Ivy, and I know these two may not
actually go together, but in practical and legal terms, which
those are the two I am talking about, is it better for the
development of advanced grid technology to be managed at the
local or State levels?
Mr. Ivy. Our preference is certainly at the local level
because all of our systems have these unique nuances to them. I
think somebody had brought up in Iowa, for example, their
system is pretty sparse. They don't serve a lot of customers.
Their needs are going to be decidedly different from mine. I am
like a 258 square mile service area, very dense, pretty good
population base. So the kinds of things that we need to do in
my area are going to be decidedly different from what other
people would want to do. And then you have the State rules that
go along with the implementation, or not, incentives or not,
that exist, so it can get pretty much--well, I am just going to
say, there is no one-size-fits-all for us, and so our
preference is to keep it as local as possible.
Mr. Mullin. Thank you.
Mr. Kamen, you made a point in your written testimony that
more than 50 percent of the generating capacity in the U.S. is
30 years old, and at 70 percent of the 280,000 miles of
transmission line is more than 25 years old. What do you feel
your company, as well as other companies like yours bring to
the table in addressing this issue?
Mr. Kamen. I think that, you know, like with a used car,
you reach a point where it is cheaper to buy a new one than to
keep fixing the old one. I think if you could----
Mr. Mullin. Unless it is antique. You have to hold onto
those.
Mr. Kamen. OK. Agreed. I have a 1913 Model T and it is not
for sale.
Mr. Mullin. Wow.
Mr. Kamen. I would tell you if the proper incentives were
put before the people that produce the energy, transmit the
energy, distribute the energy, supply it to the end user, if
they had a clean piece of paper and could invest their money in
alternatives to just fixing these things that are, as you have
heard, more--when it is a big central power plant,
cybersecurity is a real issue. There are only a few of them to
take down, you heard that there are only a few plants that are
hub and spoke, it is very hard to make them self-healing. If
you could have thousands and thousands of small, locally
operated and controlled units that, by the way, when there are
thousands or for--hundreds of thousands of them, you can put
them so close to where you need the electricity that you can
also take their waste heat, because all of these systems make
mostly waste heat of whatever energy they burn, but you can't
transmit heat very far, but if you made lots of small
distributed plants, you would sort of get as a bonus, you could
use the waste heat in most places so it is no longer waste, it
is what people need for their furnace, not water, you would be
much safer against anybody taking one system down. It might
require more sophisticated controls and interaction, but as we
have heard, that is becoming easier and easier. So if you could
create a system instead of taking these very, very old systems,
which they sort of have no other choice but to keep them up and
operating, and allow them to transition to a new alternative
technology, they would do better.
Mr. Mullin. What is keeping it down? What is keeping the
companies from being able to do this? Are we the hindrance?
Mr. Kamen. From my understanding, when I have talked to
people that do generation, that do transmission, it is a--it
boggles my mind, as I--I wasn't kidding when I said
thermodynamics and engineering is easier than regulation, I
have heard CEOs of major energy-related companies say I am not
allowed to do transmission, I generate, or I am not allowed to
generate, I do transmission. I can't put your box somewhere
there. And I get a headache thinking, I think I just spoke to
my power company who said I can do this but not do that. Well,
my lights only come on when all of that stuff is done.
Mr. Mullin. Does anybody else on the panel want to address
that? What is holding the industry back?
Voice. I sense they do, but----
Mr. Mullin. Yes. I am the good guy, I am not going to hurt
you, but I need. Look, I come from a business, and the only
reason why I am here is because the biggest problem I had with
running our company was rules that were being made up here.
Mr. Ivy. Um-hum.
Mr. Mullin. And so I understand it, but I need to know what
it is that is holding you back so we can help.
Mr. Ivy. Let us look a little bit at the macroeconomic
piece of it. And, you know, the answer or the solution for the
future is, and I will tell you is a combination of all the
stuff that we have been talking about. So you have a great
panel here.
We--when we build a $300 million natural gas combined cycle
generating unit, we spread the cost of that out over 25 to 40
years maybe, and whoever is on the system at the time gets to
help--not only do they get the benefit of it, but they get to
help pay their share of the cost for that facility.
I have been challenged with being a little stodgy, little
narrow-minded in my thinking, but we are that way be design and
I accept that almost as a pat on the back because we are that
way by design. We don't change quickly. I am leveraged right
now about 60 percent debt to my assets, and that is fairly
typical for the utility business. So we still have to look at
the long-term payout before we start looking at a rapid and
widespread integration of these different types of technologies
that we are hearing. That is one of my main concerns. And I
will tell you, that is a local issue, and we are talking about
it. We are talking about it with our city commission, about the
need to start changing our minds about how long we should be
amortizing that debt out like that. So it is going on but
unfortunately, it is not going to happen really quick.
Mr. Mullin. Thank you.
My time is out.
Mr. Whitfield. At this time recognize the gentleman from
Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you very much. Wow, what a great panel
you have put together, Mr. Chairman. It has really been a very
educational morning. I have been here since the beginning, so I
can say that you all have been very helpful in educating me. I
happen to be one of the few members of this committee that is
one of those evil lawyers everybody talks about, so I need lots
of help in understanding these things. But I am concerned about
privacy issues, and, Mr. Ivy, your company has some smart
meters, as I understand it, and you all have an opt-out
provision. Can you tell me what that is important to your
customers?
Mr. Ivy. The opt-out provision is as much not wanting to
have a smart meter on the side of their house as it is anything
else, frankly. So they have a standard digital meter that we
read manually once a month. That is not very many that are
left, and less than \1/2\ a percent of our consumers went that
direction. I am more concerned about the hourly information
that we can collect and maintain in our large database that we
have. That is the part that I am looking to try to conceal, and
if people can still get access to more historical-type
information that they can get already before smart meters were
available, fine. I don't have an issue with that.
Mr. Griffith. OK. I do appreciate that. I am concerned
about all the collection of this data and being able to predict
with the new smart grids and so forth what the usage is going
to be is very important, but when it comes to an individual
house, sometimes, you know, just because we can doesn't mean we
should. So I appreciate that perspective. I am excited--
although I am having some kind of a technical glitch here, I
don't know whether my phone is too close or whether I am just
electric today or something--but, Mr. Kamen, I am excited about
the technology you are talking about with these small
generators. So how small a facility can they be used at, and
how big can you go?
Mr. Kamen. Sadly, I think again, the thermodynamics limits
this kind of technology from getting very, very big, but it can
get pretty small. We built a few small ones for DARPA a number
of years ago that a man could carry around base, and run it on
any liquid fuel. The ones that we build now at NRG produce 10
kilowatts, that is enough for a small neighborhood of houses or
a small business----
Mr. Griffith. All right, let us----
Mr. Kamen [continuing]. The size of a typical home
appliance. I----
Mr. Griffith. Let us define that small neighborhood. I live
on a cul-de-sac with 13 houses, do I need to be bigger?
Mr. Kamen. OK. The average American home consumes less than
2 kilowatts. So a 10 kilowatt unit, and I would probably put a
cluster of three or four of them on a pad, and then they, at
that last pad at the bottom of what used to come from all those
things we have been talking about, distribution, switch--half--
let us say four of these on a pad would handle your
neighborhood and would have the advantage that if one of them
went down, with the redundancy, you have the other three would
keep everybody happy, and at their convenience, somebody would
fix the one that went down.
Mr. Griffith. And as a part of that, because I was thinking
about it when the testimony was going on earlier about the
storms and the neighborhoods being wiped out----
Mr. Kamen. The big advantage we have is, of course, we run
on any fuel, and typically your neighborhood has buried lines
in it that are bringing natural gas. You probably have buried
tanks with heating oil or propane. Those things are way less
susceptible to problems than wires running through all the
trees that get taken down by ice or wind or hurricanes, and
these boxes then are so close to where you need them that the
rest of the system going down hundreds of miles away isn't
going to affect you, and again, they are so close to your loads
that you can also take their ``waste heat'' and turn it into
your heat and hot water. It is no longer waste.
Mr. Griffith. Well, I am hoping I have time to get back to
waste heat, but you said it could use any fuel at--on a couple
of occasions, but then once you said liquid fuel----
Mr. Kamen. Or gaseous. We right now run on natural gas,
propane, diesel fuel, gasoline. The device is actually running
on something that looks like a burner in your hot water heater,
which is why it doesn't make lots of noise. An engine, diesel
cycle, Rankine cycle, auto cycle, typical--an engine has a very
specific kind of fuel because it touches every part of the
inside of your engine. It gets atomized, a spark comes in,
compression come--an engine typically has a very, very
selective appetite for fuel, but your hot water heater will
keep water hot if there is a flame under it, and it doesn't
really care what the fuel is. We are running a system that
looks much more similar to your hot water heater, but we turn
some of that energy into electricity instead of heat.
Mr. Griffith. So if I had a big storm, and for some reason
I lost--let us say I have natural gas, which my neighborhood
doesn't, but let us say that we had natural gas, and some--for
some reason we lost our natural gas, would I be able to drive
down to the local gas station and----
Mr. Kamen. Absolutely.
Mr. Griffith [continuing]. Get my tank filled up?
Mr. Kamen. Absolutely. When we were asked to fire these
little ones up for the Department of Defense, the original deal
they said was you have to be able to switch from one fuel to
another with only a 2-hour cool down, shutdown and refit it. We
said to them we don't need 2 hours, we will add a little
gasoline to the diesel fuel, throw in a little beer and let it
keep running, and we never even shut the engines off as we
changed fuel.
Mr. Griffith. I think this is exciting, and I would love to
get to waste heat but my time is up, but I find it exciting
from another perspective because one of the fears that some
folks have, and I am--probably share some of that, is that if
you get a smart grid that covers everything, and you have just
a few big providers, that gives a lot of power to a few folks
in the switch room. This gives power back to smaller
communities and so forth, and I think it is very exciting
technology.
Thank you all so much for being here, all of you. I had
other questions for others but I don't have time, but what a
great panel. Thank you.
Mr. Whitfield. Gentleman yields back.
At this time, recognize the gentleman from Texas, Mr.
Green, 5 minutes.
Mr. Green. Thank you, Mr. Chairman. And I want to thank our
panel.
You know, we draft legislation and if it becomes law, it
may be 30 years before we go back and visit it. And back
yesterday, we had a hearing on oil exports, it is from the
1970s. I know you all have a lot of good suggestions in your
remarks about what is going to happen in the electricity market
over the next few years in alternative fuels. I just am glad to
hear that, you know, my generator I bought when Hurricane Ike
was hitting Houston, Texas, in September 2008, that I may have
another fuel source from going down and, you know, buying
gasoline. And the problem is we haven't needed that generator
for 7 years, but--so I have to start it up every 30 days to
make sure it doesn't foul up when we need it.
I know that sometimes you are all over the board though on
envisioning what may happen with industrial and consumer
demand. I know the testimony, and we have seen it,
efficiencies, that is part of--should be part of what we do,
but at least in my area, and I have east Harris County, we have
refineries and chemical plants, they are always looking for
ways that they can efficiently run those plants and, you know,
as cheap as they can. And some of them probably have cut their
fuel requirements over the years because the cogeneration and
lots of things, in fact, I don't think we have a chemical plant
that doesn't have a cogen facility, but do you expect
industrial and consumer demand to increase over the new few
years? We can't save our way out of the power.
Mr. Ivy. If I can jump in. I assume you are talking about
retail customer consumption, industrial consumer demand. What
we are seeing all across our industry is kind of a suppression
of demand increase on us. So on a per unit basis, let us say,
households, for example, they are not consuming even though
they have as many appliances as they have ever had. They have
much more energy-efficient appliances. And we are seeing a
little bit of that on the industrial sector as well. We are
going to see a--I will caveat this, based on the cost of
energy, we could see an increase in industrial demand based on
industrial growth, able to add new processes to their
facilities and whatnot, and I think that is very important
while we continue to keep our eye on what the price that we are
giving them is, because that signals what they are going to be
doing. That is going to be probably where the main amount of
growth in electricity consumption comes from, in my opinion.
Mr. Green. Anyone else?
Mr. Patel. Well, I think there are certain parts of the
country that are seeing load growth because of electric
vehicles. That is obviously very small as a percentage of load
growth right now, but that is occurring, and I think that
depending on the price evolution of electric vehicles, we could
see a rapid adoption of that. But I would also say there is
something that is actually keeping or containing the growth on
the electrical demand side, and that is the fact that, it goes
back again to our regulatory compact since 1935 which, in
effect, utilities are constrained to operate at one point in
the customer's demand curve. And it is actually multiple points
depending on whether you are a, you know, industrial or
commercial customer, but there are relatively few points on the
customer's demand curve that utilities are constrained to
operate on. If we were imagined to say allow the utility to
address different customer demands, but also at different price
points, now the total opportunity to the electrical--to the
electric delivery ecosystem as a whole actually can increase.
And there are some prime examples of where there is a need to
do this. In storm--particularly storm-prone areas, there are
cases where there is a demographic living in those areas that
are actually willing to pay more for electrical service should
it be recovered more quickly. Now, the utilities are currently
constrained to offer a price of electricity in that area and
other areas in their service territory that is the same, yet
there is demand that goes unfulfilled because of this fact. And
so if you were to enable utilities to operate at multiple
points and address--diversify demand from the customer, you can
actually now increase the total size----
Mr. Green. I only have 5 minutes, so appreciate it.
One of the issues though, and I understand where you are
coming from on that, but--is infrastructure. For example, we
have--Texas has grown--wind power--predominantly in west Texas,
but also on the Gulf Coast. Gulf Coast it is much easier to do
transmission to the urban areas, San Antonio, Austin, Dallas,
Fort Worth, whereas west Texas, the ratepayers in Texas to get
that spending $5 billion for the transmission. And we are--of
course, we have a competitive market in ERCOT that--and we are
very proud of that. In fact, whether you are democrat or
republican for Texas, we barred our ability--although ERCOT has
gone through some tough times, but I think they are back on
their feet now, they are much better.
Mr. Ivy, in the sector--the new transmission lines, we--
should we be concerned with building more of these intrastate
in eastern Texas or interstate?
Mr. Ivy. As renewable energy gets to be much more prolific
in our industry, our ability to offload the variability is a
way to help manage the system reliability. If any one of us
believes that we are going to get up to 30, 40, 50 percent
penetration and manage it all on our own, we are not drinking
the right Kool-Aid. So I think it is very important that we
start looking at--in Texas' case, that is almost blasphemy to
say that you are going to build transmission outside the State
like that, but you may well get to the point where that needs
to be the thing that you do just to be able to help manage the
variability, but still facilitate----
Mr. Green. Mr. Chairman, I appreciate it, and I know I am
out of time, but in Texas we don't mind selling it to you, we
just don't want you to take it from us.
Mr. Whitfield. Thank you.
And at this time, I recognize the gentlelady from North
Carolina, Mrs. Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you so much to my colleague, and thank
you for this panel. This is awesome. And, Ranking Member
McNerney, I don't know if he had mentioned, because I had to
step out, that we co-chair the Grid Innovation Caucus together,
and we are very, very excited and energized, no pun intended,
on this issue and all of the significance of it.
And, Mr. Kamen, I can't agree with you more, when it comes
to thermodynamics and then when you are talking about what we
do here, it makes absolutely no sense. You are talking about
logic and facts, and unfortunately, many times those things do
not fit into what we do here, unfortunately. So, you know, it
is so funny, I have my list of questions and I have changed up,
you know, as I am listening to the conversation because I want
to ask everything and, obviously, I can't.
I do want to get to the question of the hurdles that are in
place, that are standing in the way of us moving forward with
more of the grid innovation, and how do we pay for this, what
do we do, how can we do a better job as legislators just being
able to tell your story and the advancements that can happen.
You know, I just believe that when we are talking about energy,
and long-term energy policy for our future of this country, we
have the grid technology as a part of that conversation. It is
just so vital to our future.
You know, Mr. Atkinson, I just want to go back to the
conversation we have been having about the, you know, how we
incorporate analytics into everything that we are doing, and
obviously, that is a big part. As far as your ability to
improve the way you forecast how energy will be used into the
future, and the supply that is needed, are your companies
incorporating these things, do you have that capability, and
are there metrics in place now where we can start measuring the
efficiencies and the improvements?
Mr. Atkinson. Yes, we do those things. The--we do, you
know, multiple levels of load forecasting----
Mrs. Ellmers. Um-hum.
Mr. Atkinson [continuing]. Or help utilities do multiple
levels of load forecasting. We have the technology that allows
them, you know, short-term, medium-term, long-term, based on
lots of factors, lots of variability, historical patterns,
weather patterns, existing weather, you know, in the near-term,
you know, projected weather in the far-term. That is, of
course, only a small piece of data analytics.
Mrs. Ellmers. Um-hum.
Mr. Atkinson [continuing]. But it, you know, it is a pretty
major piece for the utilities because, you know, as we have
talked about here today, you know, there is a lot of assets on
the grid and they are incredible assets. A lot of them are very
big and move slowly.
Mrs. Ellmers. Um-hum.
Mr. Atkinson. You know, what Mr. Kamen is talking about----
Mrs. Ellmers. Um-hum.
Mr. Atkinson [continuing]. Are some smaller and more nimble
assets.
Mrs. Ellmers. Um-hum.
Mr. Atkinson. And, you know, again, you need kind of an
all-the-above though. Everything needs to be considered,
everything needs to be integrated, and the more accurate you
are in what you do, you can balance those different assets and,
you know, the intermittency with the other renewable assets as
well, you know, be it wind, solar, storage.
Mrs. Ellmers. Um-hum.
Mr. Atkinson. Storage----
Mrs. Ellmers. Um-hum.
Mr. Atkinson [continuing]. Is a big piece of what we are
also talking about as well. So again, it is a little bit of an
all-the-above. We have the analytics today to do this kind of
forecasting. We have the technology that also integrates, you
know, the control systems, as it were, of all the different
types of technologies, understands what they are doing, and is
able to present a simple view of that to the operators in the
control room, to the utilities who are on the frontlines----
Mrs. Ellmers. Um-hum.
Mr. Atkinson [continuing]. Of, you know, making sure that
we all have electricity at the flip of a switch. That is what
we want.
Mrs. Ellmers. Yes. And, Mr. Christiansen, you--I can see
that you want to comment on that as well.
Mr. Christiansen. Yes, and I guess the--my comment goes out
to the type of data that we use----
Mrs. Ellmers. Um-hum.
Mr. Christiansen [continuing]. When we typically use these
analyses, something that Alevo does as well. We try to--we do
base systems to evaluate the proposition of what storage
brings. And it goes back to Mr. Siebel's comment that, you
know, the amount of data that we need to really optimize the
grid is tremendous, and when we look at average data of just
typically what is available today as an average heat grid for
the year----
Mrs. Ellmers. Um-hum.
Mr. Christiansen [continuing]. It really--when we look at
the variability and the granulidity we need for the grid today,
it is just not enough data to make the----
Mrs. Ellmers. Um-hum.
Mr. Christiansen [continuing]. Choices or to look at the
value proposition.
Mrs. Ellmers. Um-hum.
Mr. Christiansen. So really, it goes down to collecting,
you know, down to sub-hourly data----
Mrs. Ellmers. Um-hum.
Mr. Christiansen [continuing]. Regarding automation--
Mrs. Ellmers. Um-hum.
Mr. Christiansen [continuing]. That type of data.
Mrs. Ellmers. One of the things that I have learned over
time is for my rural electric co-ops, the importance of the
smart meters for consumers and how they have been able to
really have that dynamic relationship with their providers, so
that they can actually control cost. So I would just like to
add to that in my 5 seconds left. Thank you on behalf of the
customers of our rural electric co-ops because you are
providing for them the--this vital piece so that they can
actually be doing a better job in their costs every day. So
thank you. And thank you to the panel. You guys are awesome.
Mr. Whitfield. Well, thank you.
That concludes today's hearing, and I want to thank each
and every one of you for joining us today, for your testimony,
for responding to our questions. And we look forward to working
with you as we move forward, and it is going to take the
efforts of all of us, of course, to be successful.
And I will keep the record open for 10 days for any
additional materials.
And with that, the hearing is concluded.
[Whereupon, at 12:38 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
America is currently enjoying an energy renaissance, and we
are all better for it. But this resurgence is not limited to
just oil and natural gas. In fact, the nation that created the
modern electricity system is poised to reinvent it, bringing
with it the potential benefits to both electricity producers
and consumers all the while helping to keep the American
economy competitive in the decades ahead.
Utilities are spending billions of dollars each year
modernizing the grid and making it smarter. These jobcreating
technology and infrastructure projects are an integral part of
our architecture of abundance, and will give us an electricity
system that can better serve the current and future needs of
users--from homeowners to small businesses to major
manufacturers.
Our potential is exciting. The same information technology
revolution we have seen in our smart phones and in many new
business models can be applied to create an electricity system
that is more secure, reliable, efficient, integrated, and
responsive to user needs.
Old problems like power outages will be addressed as a
smarter grid can substantially reduce the number and duration
of blackouts. At the same time, new opportunities are emerging,
such as electricity storage breakthroughs that can improve
efficiency and allow for greater diversity of supply, and
better communications between each link in the electricity
chain to further drive efficiencies.
And greater transparency and new technologies increasingly
allow consumers and businesses to have more control over their
electricity use. For homeowners in Michigan and across the
country, that means help where it matters most--the bottom line
with lower electric bills. And for businesses, that means less
spending on energy and more available for hiring. Lower bills
and more jobs--the future is certainly bright.
But with new technologies come new challenges. Just as data
theft is a crime that previous generations didn't have to worry
about, a digitally connected grid is subject to new forms of
manipulation by bad actors. We need to protect both the grid
and consumers from cyber threats and other risks. The good news
is that the same advances that make these threats possible are
also capable of addressing them.
Of course, Congress must decide the proper role of
Government in these changes to the electricity system. New
mandates and subsidies are not the answer. But we do need to
identify and address regulatory barriers to entry, market-
distorting incentives, and artificial constraints on
competition that will be critical to further innovation.
Although the age of electricity is well into its second
century, the pace of innovation is as rapid as ever. Federal
energy policy needs to adapt in order to ensure that these
advances can continue.
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