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Smart Grid: Top Down or Bottom Up?

April 17, 2009

The term “Smart Grid” is losing meaning.  With the stimulus package, highly funded startups, government pilot projects and renewed national energy awareness, the term is used everywhere and used to justify almost everything energy-related.

What is a “Smart Grid?” Or nationally speaking, what is THE “Smart Grid?”  What is smart about it?  I am not going to survey the smart grid, but rather hope to point to and contrast two fundamental ideas behind the smart grid.

To start, I propose drawing a distinction between two concepts behind the Smart Grid :

(1) information access and transparency
(2) centralized control structures

Behind idea (1), people know more about energy consumption, load, demand, pricing and they know it faster and cheaper.

The idea underlying (2) is a bit more abstract.  The concept here is that only a central player has knowledge of the effects of the collective behavior of separate energy consumers and that this central player can make decisions about individual behaviors to make the system more efficient. This is often the illusion of centralized planning and control of complex systems. It usually results in systems that are optimized until they become brittle.

Our experience is pretty consistent that sufficiently complex systems are rarely understood and managed successfully in terms of what engineers think of as (linear) feed back and control.  We like to think that free markets are the proven answer to centralized and planned economies and that the history of the last 100 years has proven our side.  I think of these systems as “top-down.”

I propose that what we want from our national power grid is a system that is efficient enough and resilient.  And that that resilience will come from a bottom-up smart grid. A key attribute of resilient systems is that at various scales of the system, decisions contribute to the survival of the local and global system at the same time.

Notice that we violated this idea with a mortgage system in which mortgage brokers provided mortgages to consumers and sold them to investors on the same day, assuming no risk of default. Not surprisingly, mortgage brokers stopped being concerned with default, putting the entire system in peril.

These two ideas regarding information access and central control should be seen as entire Worlds apart.  The repeated conflation of the two ideas in the current thinking on energy distribution and consumption is dangerous. It seems clear from a systems engineering perspective that central control ought to be based on adequate information.  Adequate information coming in the form of appropriate models of system behavior and relevant access to real-world data.  From repeated experience, it is also clear that people and companies will hide information to maintain control and power as defined by success outside the system the information is about (e.g. Enron).

Robust, emergent, adaptive systems, on the other hand, may rely on the similar looking “information access and transparency” structures to the top-down systems, but have none of the centralized, coordinated control structures of the top-down system. Instead, these bottom-up systems rely on essentially local (in both proximity and meaning) decisions, where the resilient structure of the system emerges from the behavior of individual agents.

The “smarts” in the Smart Grid will come from agents acting on readily accessible (cheap, timely, relevant) information (#1 above) and not centralized, top-down control (#2 above).  Mixing the two ideas is confusing us, distracting us and slowing us down. A smart grid will emerge as a robust system relying on alignment between local and global objectives of the energy consumers and produces.

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