Do you think Americans are going to be okay with that? Do you think they are going to be willing to have the utilities getting involved in those decisions?
Well, it is a matter of the consumers having a choice. Whether they are happy or not is for the consumer to decide. If I don't want my refrigerator controlled, I don't have to get paid. You know whatever money gets paid, a buck or two a day. If I don't want my car, my electric car controlled, I don't have to get paid what these cars now getting paid in Delaware: $7 to $10 a day per car. They are getting paid over $3,000 a year to use these cars to simply control regulation service on the grid when they are charged at night. So it is up to the consumer to decide. You don't want that to happen, say, "Fine, don't do it to me." You want to control your cost, you want to lower cost by getting paid to use some of your appliances to be grid stability systems as well, [then] do it. It is up to you. So, ultimately this is going to be a consumer choice, and there are going to be companies like the IBMs and the Googles and others who will get behind it and put the equipment in the cars, in refrigerators. I know Whirlpool right now is installing into their refrigerators these types of smart chips that will allow these types of controls to happen, but again it will all be at the consumers' choice. It is not like Big Brother is going to come in and say, "We are going to control your refrigerator. I am sorry, you don't have a choice." This is not that type of a country. This is a country where people will have choices, will have free markets, and those markets will allow consumers to do this if it's their economic benefit.
A common refrain in this country is that as long as you keep increasing wind and solar, we are going to need storage, otherwise there are never going to be major factors in our energy portfolio. Does this smarter grid change that?
Well, it helps, because we have to think what storage really is. There is more storage in the water heaters in this country than there is in all the pumped [water] storage in the entire United States. So all you have to do is be able to control those water heaters and you have storage just like that. So, there is storage in the buildings. Think about all of the wholesale refrigeration warehouses that are in this country. All you have to do is vary the temperature in there by a very small amount and you have huge amounts of potential storage that would not affect the stored commodities in those warehouses but yet allow that system to functionally act as storage. All we have to do is control it. We have to put in the controls and the communication equipment, and we have effectively huge amounts of storage that is available to us in this country, which we just have to go and get it. … It is called demand response, and you can use it in ways that will ultimately make the grid work better and put more and more wind and solar and other renewables onto the grid at the same time.
What role does distributed generation play in this vision that you are outlining, like the Million Solar Roofs initiative in California?
I think distributed generation has a large role to play. It plays a role certainly to the extent that it can relieve congestion at the local distribution level and allow then better deliverability of these remote resources like wind and also remote solar. But to the extent that local distributed generation can also provide support into the grid and also sell into the grid, it has to role to play as well. There may be services that distributed generation can provide just like an electric car battery can provide. I think it needs to be a total part of the mix but ultimately what we need to look at in this country is how many clean resources we can gather from both areas—both location constrained remote resources like wind and also distributed generation like rooftop solar. I think we need to do both, we need to look at both and certainly to the extent we can put on more smart communication technology at the local distribution level, we will make those distributor resources work even better and more efficiently.