November 3, 2009

Given the considerable smart grid investments already underway in the U.S. and Europe, the U.S., the EU Commission and the EU’s 27 member states should engage with each other in this promising field.  This report recommends the establishment of an appropriate transatlantic liaison with these existing efforts to ensure compatible standards and regulations based on international standards wherever possible.
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The United States government already has a number of mechanisms in place to facilitate this cooperation, including a multi-agency smart grid task force and the National Institute of Standards and Technology’s (NIST) smart grid interoperability panel.

A one-day workshop hosted by the Atlantic Council and the Department of Commerce was held on September 11, 2009, to identify key areas where U.S.-EU cooperation could prove instrumental in ensuring the successful, timely deployment of smart grid technologies on a large scale.  The results are similar to those suggested in the Council's February 2009 joint report with CSIS, entitled Transatlantic Cooperation for Sustainable Energy Security, and in the Council's recent U.S.-EU Workshop on a Shared Vision for Energy and Climate Change, which recommends a government-to-government council with additional representation at the working group level of industry representatives.

The following concrete recommendations were discussed throughout the September 11 workshop:

Architecture and Standards:

1.  Interoperability

  • Build on the progress made by both the USG Smart Grid Task Force and NIST’s Interoperability Panel by incorporating a transatlantic dimension that will foster common/compatible interoperability standards based on international standards wherever possible.
  • Current USG forums, the EU Commission, relevant Member States, and the transatlantic business community should cooperate in efforts to:
  • Identify existing standards that can be applied.
  • Identify gaps in existing standards. (Sharing of experience and knowledge could generate a more robust set of standards.)
  • Foster common measurements and tests that could be applied worldwide.

2.  Cyber Security

  • The European Commission and relevant Member States are invited to participate in NIST’s Smart Grid Interoperability Panel and the NIST cyber security coordination task group, in order to facilitate the development of common security standards;

3.  Regulatory Issues

  • Incorporate smart grids as a topic for consideration in present U.S.-EU regulatory cooperation efforts, including the U.S.-EU High-Level Regulatory Cooperation Forum. Within this context, U.S. and EU regulators and policy makers should:
  • Share experiences from establishing feed-in tariffs and other policies for renewable power.
  • Review pros and cons of various rate designs for:  net metering; uneconomic feed-in tariffs; utility cost recovery for infrastructure and backup for net zero homes; calculating net present value of future benefits.
  • Review and recommend effective approaches to phasing out subsidies.
  • Assess experience with setting rates when infrastructure investments and smart grid technology investments are being made simultaneously.
  • Develop methods for recognizing financing costs in rates to encourage investments
  • Share experiences and approaches to addressing political pressures slowing progress in deployment

4.  Private Sector Focus

  • Work with transatlantic business and consumers to develop a better understanding of private sector acceptance of technology and developing best practices.
  • Assess private sector reaction to:
  • Demand management, mandatory or voluntary
  • Costs for smart meters
  • Remote connects and disconnects
  • Costs for automatic devices in appliances, heating, cooling etc.
  • Providing storage for the grid
  • Investment for Net-zero home
  • Utility control of time of day pricing
  • Net billing
  • Current investments for future savings
  • Concern over privacy
  • Concern over cyber security
  • Benefits of energy efficiency

Additional Recommendations:

  1. Develop a clear quantitative and qualitative case for undertaking the deployment of smart grid
  2. Share experiences on demand management programs, lowering consumption and lowering capital requirements
  3. Provide assessments of customer demand elasticity in different markets
  4. Undertake joint studies on the short- and long-term cost impacts and potential for lower customer bills
  5. Share experiences with different business models
  6. Undertake cost analyses of employing various smart grid technologies to provide more accurate data that will assist the insurance industry in determining appropriate rates
  7. Evaluate the impact of:  (a) greater reliability on reducing consumer losses and (b) integrating renewables and slower growth in electric power consumption on lowering GHG emissions
  8. Assess potential for new jobs and growth in GDP
  9. Evaluate issues related to technical obsolescence
  10. Develop approaches to ensuring privacy of consumers’ data including: procedures, controls and monitoring of data miners, and standards for controlling access to customer data for both individual and industry
  11. Expand international cooperation by establishing links to smart grid alliances in other countries, namely Korea, China, India, Brazil, Australia, Canada and the EU.

It is understood that such an extensive list of recommendations would have to be undertaken over a period of years. Hence, these recommendations should be undertaken gradually within the current smart grid frameworks already in place on both sides of the Atlantic. Initial discussions on U.S.-EU Cooperation should focus on the issues raised under Architecture and Standards and under Cyber Security.