"In the US, we manage to throw away 83% of power that is produced every day before it gets to somebody that can use it. That’s revolting, if you think about it. You have to communicate that information to somebody who cares, who can deal with the perturbations of the power grid."
(John Reynolds, Managing Director at Agile Fractal Grid, Inc.)
‘Necessity is the mother of invention’ — an old proverb but one which might have been made for the original founders of the power grid that now finds itself reaching into every corner of the United States. Back in the 1930s and in the absence of other choices, the authorities relinquished control to a series of electric co-operatives, whose remit was to enable power distribution in harder to reach locations, any which way. Today, 47 out of 50 states have such co-ops, which are not subject to federal regulations but that can literally create their own rules.
Fast forward to the present day and a request [from Intel] about protecting the electrical grid, notably from external attack but from any kind of disaster. Surely with all this modern technology, it could be made smarter and more resilient? Of course the answer was yes; the challenge was that nobody — not the authorities, nor the co-operatives, nor individual power users - wanted to pay for the additional security.
‘It seemed an impossible problem to solve,’ said John Reynolds, managing director of the resulting initiative, as he ran through its history at a recent BearingPoint event. The good news was that, in a highly prescient move, the 1930s deregulation was not limited to the distribution of electrical power. Co-operatives could, and can still, deliver a range of services including telecommunications, public safety, telehealth. In other words, any effort to secure the grid could be cost-justified by taking into account the ability of a ‘smarter’ grid to serve as the basis for additional service delivery.
This factor was the key to unlock the delivery of what has become called the Agile Fractal Grid, a combination of electrical and communications services, based on BearingPoint’s Infonova platform. Why the name Agile Fractal Grid? The grid itself is a self-healing set of replicated, co-operating cells: if one fails, others take over. ‘It’s like chopping a jellyfish, you can’t kill them,’ explains John. ‘If you chop them anywhere, in this case, the lights don’t go off.’ Not only is the result more resilient and with military-grade security; it also now costs less to deliver electricity and allows for more decentralised management via its own, high-speed broadband network.
As well as the 40-plus services now available on Infonova for the management of the grid, a digital marketplace has been created offering services that are targeted at the needs of end-customers. ‘Public safety, precision agriculture… there’s lots we can do, but we have to decide place by place,’ says John. This local decision making, taking into account the needs of all stakeholders, is a crucial element of the Agile Fractal Grid’s overall success. ‘The vast majority of good ideas come from the small companies,’ he explains. ‘You ask people on a community by community basis as they have different needs, different definitions of what happiness is according to what is going on.’
So, can other utilities learn from this experience, given that they are in different situations with different drivers? By their nature, they are both blessed and saddled with highly centralised, massive-scale generation capabilities, and they are subject to far greater regulation. All the same, they can gain from two specific insights drawn from the Agile Fractal Grid experience. First, there is the benefit of building upon an open platform (in this case, Infonova) to deliver services according to local requirements and, second, the strategic importance of engaging at a local level, creating services based on request rather than hypothetical need.
If there is an action, for any utility, it would be to review how well it is engaging with local and regional communities, and how much of the resulting information is being used to drive strategy and service development. We know from our studies of the utilities sector that companies are fearful of being left behind by digital organisations (not least Google). A counter-strategy is to engage with user groups, and to deliver the services they request faster than such organisations can.
No, this is not an easy path. But if North America’s regional co-operatives can re-configure how they deliver services to their 42 million-strong user base, perhaps more traditionally structured utilities can as well. The alternative is to leave such opportunities on the table, for any competitor (old or new) to take.