Bloomberg Businessweek
Go To Businessweek.com
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.
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, 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.
