Oil guru: smart grid hoopla outpaced reality

IT likely to play ever-larger role in running grid

Phil Carson | Dec 19, 2011


Oil industry expert—some would say cheerleader—and acclaimed author Daniel Yergin spoke last week with my colleague Marty Rosenberg, editor of EnergyBiz magazine. Because Yergin touched on grid modernization and placed the power industry in a larger energy context, I offer coverage of that conversation here. It's a two-part column, so tune in tomorrow as well.

Replay the webcast by clicking on "Harnessing Disruption: A Conversation with Daniel Yergin."

"Harnessing Disruption" is also the theme of the 2012 EnergyBiz Leadership Forum set for March 19-21 in Washington, D.C.

One hallmark of Yergin's work—he authored The Prize: The Epic Quest for  Oil, Money and Power (1991), which won a Pulitzer Prize, and The Quest: Energy, Security and the Remaking of the Modern World (2011)—is his use of key statistics to tell a story.

Rosenberg noted one such statistic from The Quest—that global consumption of electricity has doubled since 1980—and that Yergin endorses projections that consumption will double again by 2030. The latter expansion of demand will be enabled globally by about $14 trillion in investment. In fact, electricity consumption will grow much more rapidly than oil consumption, Yergin said.

"The world is becoming more electrified," Yergin told Rosenberg.

Readers, do the math. In the past 30 years, global consumption has doubled. The forecast is that doubling will happen again (quadruple 1980 levels) in only 20 years, despite being tempered by efficiencies. While much of that growth will occur in the developing world, the current sluggish U.S. demand probably will rise as well. That means that bringing all parties to the interactive grid will be a generational opportunity won or lost.

Yergin's prediction that IT's role in the grid specifically and technology innovation around carbon emissions in general are major factors shaping the future. This translates directly to increased influence—technologically, economically and politically—to whichever country leads in sustainable energy innovation.

What impact does Yergin see a smarter grid having on investment and consumption patterns? Rosenberg asked.

"The whole notion of integrating the homeowner with the utility has proved to be more difficult than anticipated," Yergin responded. "Nevertheless, a lot of information technology capacity increasingly will be integrated into running the whole electric power system, from smart meters back to generation. But the hoopla got ahead of the rollout."

Would it be possible for the global economy to cut greenhouse gas emissions by 2050? Rosenberg asked. (Remember, believe it not, greenhouse gas emissions as driver of global warming continues to be a major factor guiding utility investments. You don't have to like it, but money talks. See: renewable energy portfolios, consumers' environmental motivation, etc.)

"It's hard to see how that can be achieved," Yergin said. "People are going to have to go back to the drawing board and find a bigger role for natural gas as a bridge fuel, as a growth fuel. You see countries like China, like India, very interested in more natural gas, which would balance out coal in their systems. I say in The Quest, looking to the future, based on what we know today—and we always have to be prepared to be surprised—is that the energy mix in 2030 may not be very different from what it is today. Meeting CO2 objectives in the future looks very challenging. The answer, inevitably, will have to come not from regulation, but from heavy duty technological innovation."

That means scrubbing coal-fired emissions, for example, is an interim if necessary step. Integrating renewables is a solution. Thus Yergin sets the stage for a forward-looking, clean energy approach. I'd suggest that the U.S. is uniquely poised to do that, unless fatally hobbled by the media-enabled noise that precludes honest discussions and the development of solutions.

In the power industry, the lack of clear direction on a price on carbon emissions is making investment a dart-throwing exercise driven by a jumble of competing factors. Consumers, used to a lifetime of cheap electricity, partly due to the invisibility of externalized costs to human health and the environment, must understand the cost of inertia. Politically, as a nation, we have to pursue common goals or perish. It's that simple.

In short, building a "smarter" grid is a laudable exercise in the near-term. In my view, consumers will seek energy management at home and in the enterprise when cost or reliability becomes a challenge. But if alternatives to the utility relationship present themselves—either in energy management or distributed generation, for instance—consumers will grab it.

Tune in tomorrow for Part II.

Phil Carson
Intelligent Utility Daily

Related Topics


Natural Gas replaces Oil as Energy Fuel

The USA does not have a cogent energy policy or plan i.e. fossil and renewable are funded via cost-sharing, R&D investments, tax credits etc. The free market determines the energy mix – Dr. Yergin acknowledged the economic impact of non-conventional natural gas (and related hydrocarbons e.g. Ethane, Pentane) to motivate electric utilities to fuel based loaded plants with Natural Gas and for chemical firms (Dow, Dupont) to build new facilities in the USA.

Please reference “America’s New Energy Security” [Daneil Yergin, Wall Street Journal page A19 Dec. 12, 2011] “shale gas now accounts for 34% of total U.S. natural gas output”. On the same page please see “Global Warming and Adaptability [Bjorn Lomborg], who states “Even if we were to cut emissions by 50% below 1990-levels by 2050 the difference in temperature would be less than 0.2 degree F in 2050.” Burning Natural Gas would lower Carbon footprint, reduce electricity costs and create jobs [per webinar: 600,000 jobs have been created in last 5-6 years due to Natural Gas].

The Energy Market has identified Natural Gas as its Fuel of Choice for the next few years, at least.

Richard W. Goodwin West Palm Beach FL

Two Comments

Every Day, New Ironic Events

There are many arguments on what and how we should proceed with quote, "The Smart Grid".  I find it ironic that almost every day new signs of the "Shifting Sands" under the industry becomes more evident.  Even last night during America's national pass time, there was an interruption of not one, but two power outages that, according to the announcers, only occurred in the stadium.  Unless you are reading this comment from outside the US, I do not even have to mention the name of the city, or electric company involved and most Americans will know what I'm talking about.  Infrastructure issues seemed to be at the root of the outage problems at the stadium and is a precursor to what is happening across the US and other industrialized nations. I've been in that stadium and much of its electrical feeds come in via underground.  I state this to point out that simply putting in underground wires will not fix all the problems.


One only has to stop, look, and think about all the things you see the average citizen using each day and you quickly notice that all these things need to eventually be plugged into an electrical power source.  If you have done any global traveling lately, you see this same phenomena playing out around the world.  Even in the financially challenged countries of Africa, we're seeing an exponential increase in cell phone usage.  All of that technology requires access to a reliable source of electricity to operate.  In many of these 3rd world nations they do not have reliable power but the consumers there improvise, in ways we in the US would not find acceptable, to charge and use these devices.


As far as if global warming is true or not, you simply have to look where the major power plants (coal, nuclear, wind, or natural gas) are located.   If they are not harming the environment or not a problem for the public, then "Not In My Back Yard" should be easily dismissed.  Yet, you do not see them in affluent neighborhoods of the US or other such neighborhoods around the globe. 


The importance of affordable electricity is at the very basis of our economy and our present quality of life.  We could all change our beliefs and become Amish, but even they use interesting energy sources to maintain their chosen life style.  The economy which masters the production of affordable and environmentally friendly electricity will become the next economic engine for the world.  Everyone wants it and everyone is looking hard for solutions.


Richard G. Pate

Pate & Associates, Principal




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Your Premise is skewed

If you guys would just let go... Global Warming is a hoax...

or haven't you heard about East Anglia?  and now East Angia Part Duex?

Cooking the books, lying and whore-grant scientists have done you in..

Yergin got one thing right... you should get your innovation groove on cuz you ain't gonna win the political battle...

Powerco's just got lazy, or tired of getting beat up by the Greens, getting out-lawyered and thought it would be easier instead of creating more power to try to change the customer's habits with Tiered Pricing.. "Yeah, instead of us meeting the demand with more supply we'll just be happy to remain stagnant and use Tiered Pricing to jack up their rates so they just want use any more power, duuaaahh, they won't catch on..."

ummm, not so much... we know... and when you can actually make alternative fuels actually cheap as coal or nuclear THEN and ONLY then will conumers go for our Smart-by-half Meters.


Your loopy rhetoric has  the effect of self-marginalization, undercutting any influence  your "argument" might have had.

A "hoax" would require a coordinated, secret conspiracy among tens of thousands of scientists around the globe and systemic manipulation of data. Anyone familiar with the East Anglia imbroglio knows that the trashy emails and slipshod attitude they reflect do not materially affect the conclusions drawn from the vast bulk of data.

We're all glad that weak links in the process have been identified. Thinking people are able to see that for what it was.  

It's clear that as the noise and anger and paranoia you promote subsides, most people understand that the science is solid enough to take the issue seriously and consider whether economically viable counter-actions are warranted. That's the discussion today. Your position is old news.

If you're ever able to mount a cogent argument using the facts, rather than pure jibes, be sure to let us know where you've published your findings.

Regards, Phil Carson

You're getting better....

at looking down your nose...

Can you explain why the past 10 years the earth has cooled?

Can you explain why the name was changed from Global Warming to Climate Change?

Can you explain how "consensus" is now considered science?

Do I need to go on?  cuz I really angry and I might blow a gasket...

You just don't like the fact that someone disagrees with the elitist attitude that is losing ground with common sense folks...

By the way, where are your "Published Findings"?  last time I checked ANYONE can start a blog and call themselves an expert... but if it makes you feel important...

Thanks for making my point

Not much to add here.

Regards, Phil Carson