Look to Software Not Hardware to Fix India's Grid

Audience viewing is up for the Olympics, setting records. But not so much in India of course where whatever share of the 600 million in the dark might otherwise have watched India’s hockey team – field hockey, guys, it’s the summer – lose to New Zealand, and thus lose a berth in the semifinals.

The 2012 Olympics will doubtless be memorable for India’s citizens, indelibly marked not by medals, but by a permanent association with the world’s biggest ever blackout.

We don’t have to wait to know what India’s already-appointed blackout commission will learn. To avoid future outages of this scale or any other on a lesser scale, the single most important thing India can do – should do – is add information to their grid. More data, more communications, and software.

Of course India needs more power plants and transmission lines which doubtless will be part of the forthcoming recommendations too. Unsurprisingly, Prime Minister Singh got ahead of that, breaking from a dismal record on supporting infrastructure projects to announce he’ll support major energy reforms.
 Rather than having at least 15 percent more electric generating capacity then peak demand – the global gold standard — India has something like 15 percent less supply than demand.

But building more power plants and transmission lines won’t solve the reliability problem. India needs more software.

Bill Gates would agree. When asked recently what’s really different about energy in the 21st century, Mr. Gates didn’t say solar or wind (if he’d said the latter, one suspects that would have been headlines). He said: "The one thing that is different today is software, which changes the game."

Software has changed the game in nearly every other part of the economy. It comes last to the massive electric grids, not because the operators are troglodytes, but because the task is so daunting.

Supplying whole nations with kilowatt-hours is fundamentally different from every other commodity constituting one of the most bizarre engineering and business challenges we face. We take it for granted. Until there’s a blackout.

The one way kilowatt-hours are the same as barrels of oil or tons of wheat is in economies of scale. Big operations are the cheapest way to make big quantities. India, and the world, needs truly gargantuan quantities of power. Like most of society’s commodities, whether wheat, oil, coal or electrons, production is generally sited a long way from where most people live.

Oil and natural gas move from source to market in pipelines or ships at around 10 to 20 mph. Ironically, coal can move faster when on 60 mph unit trains. And these commodities are stored – in tanks, barrels, bins, pipes, ships – to ensure price stability in part, but most importantly to ensure a reliable supply. Thus it has been for commodities since biblical times. On average, there are about two to three months of demand in storage at any given time in the supply chain of coal, oil, natural gas, grains and most minerals, etc. Kilowatt-hours are the exception.

If you count up all the batteries everywhere, you can’t store enough electricity to meet even a few minutes of society’s annual needs. Electricity is devilishly difficult to store, especially at scale. It’s hard enough to store a few watt-hours for your iPad. Individual buildings, factories, hospitals, and trains require tens of thousands to millions of times more energy than an iPad. All tech-hype aside, there’s just nothing useful at this scale on the horizon.

It gets worse. Electricity not only has to be produced the instant it is demanded, but it moves from source to market at light speed — an incomprehensible 670 million mph. Instantly. It’s an understatement to say this doesn’t leave margin for error, or time for human-scale intervention when things go awry.

Millions of India’s citizens were being delivered, at the speed of light, the energy equivalent to a supertanker on any ordinary day. When a glitch happens in a system with that much energy flowing, the powerful cascading effects move faster than human reaction can accommodate. That grids work as well as they do is a real feat of engineering. But it’s not enough.

So what to do? Add sensors, communications and software that can react faster, plan and predict, and even prevent catastrophe. That’s what technology now permits. That’s what grid operators in the U.S. have been doing of late, motivated in large part by our own August 2003 east-coast blackout that took down 50 million Americans.

Consider the example of the PJM Interconnect (which I wrote about earlier this year) with 56,000 miles of transmission, the operator of America’s biggest single grid stretching from Chicago to New York City and Washington D.C. That system carries the energy equivalent of two Keystone pipelines.

The PJM now has dual-redundant underground control centers that look like something dreamed up in Hollywood. They continuously gather terabytes of data from some 100,000 controls points, with dedicated enterprise-class data centers. Elaborate algorithms perform analyses and modeling to allow real-time optimal control, efficiency, and reliability.

The PJM spent $200 million to build their big data system. It brings more than peace of mind; it’s also generating operational savings of $2 billion a year, and has doubled the capability of its network of long-distance wires to move energy. That’s why Gates said software is a big deal.

Electric markets have crossed a Rubicon: information about energy is now more valuable than the energy itself – meeting demands, peaks and growth without laying much more ’pipe’. In developed nations, utility-scale spending on communications, software, and automation controls is a bigger market than for wires and poles. This will soon be the case in emerging nations too.

If it wants to improve its grid, India needs to unleash its own private sector – and I recommend they call Terry Boston, the CEO of PJM, or one or all of his compatriots at other grid operations here in America. This is a capability we can, will and should export. It will generate business for American firms and it will improve the lives of India’s citizens.

If you’re an investor, you can expect that companies with scale to match the challenge will likely become key players in helping India, and others, build a 21st century grid. The list should be familiar by now: Siemens [NYSE:SI], SAIC [NYSE:SAIC], Accenture [NYSE:ACN], IBM [NYSE: IBM], Microsoft [NASDAQ:MSFT], Oracle [NASDAQ:ORCL] and Teradata Corporation [NYSE:TDC] (the latter a big data favorite; see my earlier column), GE [NYSE: GE], Eaton [NYSE:ETN], Emerson [NYSE: EMR], ABB [NYSE: ABB], Honeywell [NYSE: HON], Johnson Controls [NYSE: JCI], and Schneider [FR: SU-FR].

With global demand for electricity forecast to grow over the next 20 years by an amount greater than adding two United States of Americas, you have to be bullish about this domain. And with the rise of the information economy, and its surprising demand for electricity (see my earlier column, and my Commentary on the Internet’s kWh appetite), the trend towards adding reliability is not isolated just to the emerging nations. We need much more reliabili

ty too.

Look at the names of companies in this game and you see a grand convergence going on between the old economy’s electrical infrastructure, and the new economy’s digital infrastructure.

India can outsource its next generation grid tech to American firms, where we lead the world. India can keep its call centers. We’ll help keep them lit — like their air conditioners and TVs — and well before the next Olympics.

This piece originally appeared in Forbes

This piece originally appeared in Forbes