Raleigh's Smart Grid Bid

Alex Huang keeps busy as a full-time electrical engineering professor at North Carolina State University, but outside the classroom he has his hands in a really big project. He wants to help the U.S. update its energy infrastructure and make the transition to the so-called smart grid—a digitized power grid that would allow users and power companies to communicate better, boosting efficiency and reliability. With a team of power electronics experts at the FREEDM Center, a multiuniversity initiative headquartered at North Carolina State’s Centennial Campus in Raleigh, Huang is helping to develop a digital “smart transformer” that will allow electricity to flow throughout the grid, rather than solely from generators to users as it now does.

The FREEDM (for Future Renewable Electric Energy, Delivery, and Management) Center is funded by the National Science Foundation. It has gained nearly 50 industry partners, including ABB, Siemens, Eaton, and Intel. The smart transformer Huang and others have been working on has attracted much praise, even making the MIT Technology Review‘s 2011 list of the world’s 10 most important emerging technologies.

Although promising, this technology is just one element in a comprehensive smart grid that still faces serious challenges, including the storage, analysis, and security of data, according to a report by PricewaterhouseCoopers. There are also concerns about the hundreds of billions of investment dollars it would take to implement a smart grid. Other issues include low utility participation rates and consumer resistance (such as recent opposition to new meters in California, Texas, and Maine due to worries about radio frequency exposure, privacy, and other issues). Still, for a cluster of tech companies in the triangle area, the smart grid has become a focal point.

“Smart Grid Valley”

In recent years the federal government has allocated billions of dollars in funding for smart grid projects in hopes of fostering a more reliable and efficient grid, reducing energy use and emissions, and lowering energy costs for consumers as electricity use rises.

So far the most common innovation in the U.S. has been “smart meters,” data-heavy meters that allow residential and business users to track the price and usage of electricity. That’s only one element. In theory, the smart grid could eventually allow consumers not only to generate energy, but to sell it to utilities, and support widespread use of electric vehicles, for instance. This would require a slew of new devices, software, controls, communications, and services.

Market research firm SBI Energy estimates that the global market value of smart grid-related products grew to $69 billion in 2009, from $26 billion in 2005, and will reach $186 billion by 2015. This appeals to a number of companies, including ABB, GE, and Siemens, as well as AT&T, Cisco, Honeywell International, Johnson Controls, Red Hat, and Verizon, which all have operations in the research triangle area, according to Duke University’s Center on Globalization, Governance & Competitiveness (CGGC), a group that studies the effects of globalization, including environmental issues.

Huang compares the triangle to California’s Silicon Valley, calling it the East Coast’s “Smart Grid Valley.”

ABB’s Longtime Presence

ABB, a power- and automation-technologies company based in Zurich, has been operating in the Raleigh area for about two decades, initially to develop metering technology. (ABB later sold its metering business, which became Elster Metering.) The area’s technology and software companies, consulting firms, and research universities eventually “created an atmosphere for pushing forward with smart grid technologies,” says Gary Rackliffe, ABB’s vice-president of Smart Grids North America. Last year, ABB announced a $10 million investment in a Smart Grid Center of Excellence, a testing and development laboratory and demonstration center at NC State’s Centennial Campus.

Although Raleigh-Durham competes with such other tech hubs such as those in California, Austin, Washington, and Boston for smart grid business, it managed to assemble more than 60 companies that span “the entire smart grid value chain,” according to Duke University’s CGGC. An estimated 3,000 people in the triangle already work directly on smart grid issues, and the region serves as the U.S. headquarters to about 20 companies working on smart grid technologies. These include Elster, as well as Sensus USA and Tantalus Solutions, according to a CGGC study.

Regional hopes are thus high. Yet the industry’s contribution to the research triangle’s potential growth is unclear because smart grid products straddle so many different industry categories—power equipment, communications, control systems, software, and many kinds of services—says Marcy Lowe, senior research analyst at CGGC.

For all the triangle’s focus on developing smart grid technology, it doesn’t lead in implementation: Only five government- and utility-funded smart grid projects have proceeded in North Carolina, according to the Smart Grid Information Clearinghouse. Massachusetts has twice as many. Lowe says the area and its utilities have yet to embrace the smart grid.

Trying to Lure More Players

Wake County’s economic development agency recently identified smart grid as a target industry separate from the software and electric vehicles sectors. Though state, county, and municipal governments do provide incentives for general technology development, the Raleigh area lacks specific lures for smart grid companies, says Kenneth Atkins, executive director of Wake County Economic Development.

To attract smart grid enterprises, Wake County Economic Development is plugging such triangle advantages as NC State’s strong engineering school and the area’s established network of companies. The agency is also bringing in related conventions, such as an electric vehicle conference held in Raleigh in June.

Rival tech hubs are aggressively building smart grid industries, too. Consert, which originated in Raleigh, recently moved most of its operations to San Antonio, whose “city leaders share our vision and are committed to a new energy economy, so this move was a perfect fit for us,” Consert President and CEO Jack Roberts said in a release.

“This is a basket we’re putting a lot of our future eggs in,” says Atkins of Wake County Economic Development. Building a smart grid will take years, he says, but with the industry worth a potential $186 billion, emerging tech hubs stand to gain handsomely from one.

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