Welcome back. As I mentioned our program our two part program today is really aimed at taking sort of a top down. Look at this changing energy landscape and how resonates here in the second part is the sort of more of a worm's eye view if you will at this intersection between the digital revolution and the energy revolution civically in the US and our site and and to look at a range of sort of policy as well as technical issues associated and to set up this discussion. We're very fortunate to have Dr Peter and Peter's currently the vice president of the Center for will win a prize but previously held positions as a key strategy in market intelligence analyst and officer of G.E. and clued in is director of G.'s corporate global strategy an analytics team. He also worked with Dan Yergin at the Cambridge Energy Research Research Associates and consultant for the U.S. Department of Energy the O.E.C.D. and the World Bank and for those of you in the non-school you'll be happy to know that he has a Ph D. in political science an international political economy from MIT as well. So Peter is going to give us an overview of this interface between the digital and the energy sectors to sort of set up some of those challenging issues policy dimensions that we'll look at more specifically in the panel discussion. Thanks Adam. It's a it's a great pleasure to be here in my career I've been tremendously fortunate actually to have worked for two of your keynote speakers and I in the form of two years ago. Dan you're going was here. I worked for ten years for Cambridge Energy and then now we had to Secretary monies I did my postdoc in any money says group when I was at MIT. So I had an opportunity to work with some of the the Giants in the energy field and I have been in energy for probably twenty twenty five years. So Mike I can say now that it is gets more interesting and I hope in the presentation I give you today you'll see the energy space in potentially in some new ways. You know every decade is defined in different ways by energy. If you go back to the one nine hundred seventy S. Obviously you had the oil shocks and that had a big impact on the decade and it was energy driven right. And then in the eighty's you had the Reagan factual revolution of deregulation and that deregulation wave had huge implications for the energy space and how companies competed the regulatory regimes and then in the two thousands and I would say ninety's to thousands tremendous attention to climate related issues and trying to figure out you know how much. C O two is generated by which sectors lots and lots of analysis and all sorts of efforts to try to create regulatory regimes that hasn't worked so well so the question then becomes what is going to be the defining element of this decade and I'm going to make an argument open it up for debate and I would argue that this decade is actually going to be a fusion of this age of gas that we've heard about in articulated so well by our previous panel but also the digital age and just one indicator of the importance of the digital is the fact that now both Apple and Google are bigger in market capitalization the next on in so it's hard to ignore the importance of digital technologies but a way think is really interesting exciting is the way that these two things can come together and those two innovations these engines of innovation are all happening here in the United States but they tend to be talked about in separate converse. Ations you hear about the Silicon Valley in. The social media and e-commerce discussions and then you hear about the gas and they tend to be separate conversations what I want to do is to show you that there's lots of inner linkages and we ought to be thinking about from a technology and a policy perspective about how to bring these two together more actively The secretary spoke a lot about infrastructure. I like to think about it more as networks in the United States is amazingly rich in networks and in fact I would make the case that we're a network superpower. We have an amazing network system. What's happening with the supply the surge and supply of gas. It's causing the market to think about these networks in new ways and the railroad network in the gas pipeline network had nothing to do each other. Really. But now there's lots of activity to figure out how we can connect these networks because the transportation industry is looking to tap into this lower cost fuel supply and so now they're looking about where these networks overlap in interlink with each other and lots of analysis is being do being done and the the railroad industry and the trucking industry in the inland shipping industry of all realized that actually if you co-locate micro L. and G. plants. You can get scale that brings down the costs efficiently that makes a lot of sense to convert in so over the next. Ten ten years or so if you were to invest about fifteen to twenty billion dollars in liquefaction facilities to help for that in this conversion you could back out thirty percent of the transport diesel fuel so big significant implications and that is to do it how you in are linked these networks. This is the the total number of power plants in the United States today and there are color coded in the center is blue which are they gas fire plants and then you've got the coal plants in the red. Are the nuclear plants and then you've got wind coming in there are about twenty three twenty four thousand major power plants in the United States. Now what's interesting in Tim moon mention this in that is you can harness. Information about these plants and this is just in the early early stages and so what you can do is that you can take every any one of these plants put sensors on them collect information and drive a whole new wave of benefits in terms of having better predictive analytics around. How do you manage understanding about the operations of those plants their maintenance patterns drive better utilization and therefore better fuel economy and overall systems coordination about how these plants interact with each other but we're at very early stages right now to produce sensor in is to mentioned there are monitoring stations that various vendors have stablished they only monitor about ten sensors on these gas turbines today and they don't monitor the entire planet typical combined cycle plant has one hundred and five pieces of rotating equipment. Very few of those pieces rotini equipment are systematically monitored and analyzed. So in the future we're going to see more and more of that happening. And as a consequence the fleet of our power plants in the United States that are under girder of our economic economy are going to be. I think have tremendous opportunities for further optimization. So that's one way the digital can have a big influence the other is in the transformation of work. Most people focus on the investment side you know it's very exciting when a new big project is being developed. But there are tons of assets out there already and all of those assets have to be maintained on a regular basis with guys like this. And they go out there and they take these power plants apart. And it takes them several weeks to do it. It's very. Expensive and the down times for the utilities are very expensive and so the question is is how do you better optimize and enable this work in so there's a whole wave of digital technologies that are coming in that are going to enable the work in so you have a narrative out there about how digital is going to remove jobs but actually when you peel it away. You really look at what's going to happen in many cases it's going to augment and make their lives easier. These guys hate going to a job site and not having the right tools because they actually want to get their jobs done in the worst thing is not to have the right tools if you can better plan and manage and have that. Also when they come across the problem and they know somewhere in the organization somebody has that answer. It's hard for them to find those people whole sorts of waves of technology are going to come in they're going to better allow this person to communicate with somebody else. We have a retirement is situation there can be older guys that have this knowledge they may be sitting on their porch get a call and say yeah I know how to fix that and it could be a very simple thing that they can do but with connectivity with wireless technologies mobile technologies. You can get expertise distributed where it's needed and drive a whole wave of productivity. You know Google Glass is often talked about in the consumer market. I think some of the first applications are actually going to be in this space in the industrial space because they need to be having their hands free so lots of interesting things on that front. Another thing that is really interesting and think the policy schools and others should look into this more carefully and that is how information is going to. Regulatory dynamics there are low cost sensors that are very very accurate and easy to to use in very mobile that is going to allow for a whole wave of sensing in and extracting information about things that we care about one of them is methane. This is a picture of a pipeline that shows the methane leaks along that pipeline and that can be useful for companies that. Trying to monitor the situation but it's also going to be available to N.G.O.s who want to extract in and get their own information in the old days the NGOs would go to the regulators and say we need more information in the regulators we try to get the information from the companies these days you can run that and get your own information and so it's going to be very interesting to see how these new monitoring capabilities are going to enter into the regulatory process because they're very accurate low cost easy to deploy and very mobile. We also have a whole new wave of demands that I think are coming in as a result of shocks to the energy system due to natural disaster events this is Governor Cuomo responding to the impacts of Hurricane Sandy. He came out extremely critical of the utilities for what happened in there's probably ten over ten million people lost electric power during this event whole sections of the transportation industry were knocked out because they depend on electricity when the electricity went out we were unable to get fuel so. Lots of consternation around this event but this is just one of many events and in fact if you look at data from one nine hundred eighty to two thousand and twelve there were more than a trillion dollars worth of damage done in the United States as a result of natural disasters and those numbers continue to go up. So this calls out for a need for more resilient energy systems not just more sustainable energy systems so that leads to a question about how can information technologies enhanced the reasonably And so the energy system and I think there's very interesting ways in which you can merge digital technologies with for example a natural gas infrastructure to build both resilience and sustainability a lot of people talk about micro-grid since the budget that was are going to be embedded with the fuel issues but also how do you enhanced the information technologies that can join these Cape bill. These together to get you're more resilient energy systems. So let me just wrap up here to say that I guess the five points that I was making one is this idea of harnessing network synergies on in the United States. Again we have Richard denser networks than any other country in the world and how do we bring those together top demise across those range of goals policy goals both security growth in efficiency. Asset productivity. I mentioned on how do you drive that fleet we have a very large fleet of installed assets and how to use information technology to make that better work better and then augmenting work procedures and activities to make the work environment more productive and then finally the regulatory dynamics in terms of information and then finally building systems recently and so with that through the rest of our panel thinks things Peter thanks for teaming up there's a whole range of issues that we're now going to look at a little bit more depth with our different commentators and so our first commentator is Mr John Trawick who is a vice president commercial operations and services Southern Company and Mr Trollop is responsible for Southern wholesale energy fleet operations power trading financial and contracting services and Budget and reporting for the operations of the company and he's going to help us get away from our theoretical musings and have a grounded in an operator's perspective so thank you. Thank you very much. I'm honored to be here today and represent Southern Company in discussing this very vital issue as impacting all of us in the power industry and that is how the natural gas industry is driving changes within our business and so I want to start off a little bit with just talk about who Southern Company is if you don't know we were founded in one thousand twelve Real over one hundred years old now. Nearly forty six thousand megawatts of generation our business models focus around our customers ultimately in a day we're trying to serve our customers the best way we can we have four point four million customers twenty six thousand employees and just as the secretary speaking earlier about the all of the above strategy. We're a firm believer that as well we believe that you need to have all those possible outcomes in terms of resources available to you. So we look at new nuclear train first century coal natural gas renewables which include solar wind biomass hydro and energy efficiency we look at all of those in a critical piece of our energy future and we look at from the same point is what our customers expect us to deliver to them in the future. So you know I get asked a lot being a guy who deals with all the fuels and everything in our business you know what do we consume the most of these days. And when I talk to people out there not in that question. I really get the right answer and as you might imagine most people still look at Southern Company and they say I know you guys are big Kolber so I assume you burn a lot of coal or they ask a lot. The hydro plants that we. The reality is we're consuming a lot more gas these days than we consume coal. And just to give you a perspective on that if you go back since two thousand and seven in terms of our energy mix here you can see that we've gone from where we are generating around seventy percent of our electricity from coal to we're now our coal generations around forty percent. Meanwhile our gas generation is growing from a little less than twenty percent now up to around forty percent in so if you look at our overall capacity. We've added a lot of good. Yes generation over the last several years and so we're up to where we actually have more gashed capacity than we have coal capacity now. And part of the reason we look at Vogel in the Kemper County project Mississippi that's a new coal facility is being critical in the future as you can see that we don't have as much in our mix relatively speaking in terms of nuclear and coal going forward. So that's a critical piece of how we look at our business. But this is really an illustration of why diversity is such a critical piece of our business but having a diversity of having both coal and gas resources we can switch between these we saw gas prices run up this past January and February we switch we ran a lot more coal generation than we were in gas. So all in all diversity is really benefited our customers in terms of having this mix of resources. And if you look in terms of actual gas burn over time. So as we look forward into the future as was discussed earlier by Timothy I believe we're going to see less coal in our fleet as we tar some coal plants. We're going continue to see a significant amount of gas in our overall fleet and then you can see we're adding additional nuclear there with with the eagle. But if you look at it over the past several years you can see how much we've increased in terms of overall gas burn here. Were you know at the beginning of the decade here in two thousand we were below one hundred B.C.F. gas burn per year tour now we're over six hundred B.C.F. a gas burn per year. We're now roughly the third largest consumer of gas in the power industry. So we're a very big player in the gas business today. And then just in terms of how we run our generating units again as gas prices of change going back to two thousand and seven when we had gas prices or upwards of eight nine ten dollars and in B. to you. We run our combined cycle fully at about a thirty to forty percent capacity reliable to work today as gas prices have come down. You can see that we've run those combined cycles now upwards of sixty percent capacity factors. Meanwhile our coal facilities you can see they've declined in the by two minutes coal side where we run those less but we still have that flexibility to switch between the fuels to pay no actual fuel prices turn out. All in all when we look forward to two thousand and twenty we feel like we've got a very flexible fleet one in which we have a low gas prices will be consuming around fifty seven percent of our fleet from natural gas. If gas prices go up and we. Our gas prices will be around thirty four percent while we're remain pretty stable in nuclear hydro in renewable side you can see on the coal side it can fluctuate as well. So we balance it really between coal and gas and alone but I think we talked earlier today about what we saw back this patch in January. And it really has really I think risen a lot of awareness now of how dynamic the gas business is going to be on the power industry and so if you look at this is just give you a sense what gas prices were on January twenty second. So down here in the southeast. We didn't see near the volatility that we saw in the northeast we didn't have near the firm gas transportation issues in the southeast. We secure firm transportation of Southern Company for our fully but in the northeast where they did have pipeline constraints and such. You can see that prices are getting upwards of one hundred dollars from M.B.T. you. Meanwhile over here in some of the new fracking areas that you can see in the Pennsylvania area and such they just can get this low price gas into the areas into the major cities and such those that need to power prices so from a Power same point our prices remain relatively stable down here in the southeast but you can see they ran a pretty significantly upwards of four hundred dollars a megawatt hour in the northeast. So clearly Gas and Power correlated across this whole Eastern Interconnect here in terms of what gas prices do driving power prices back and I think about the relationship we now have between electricity and gas obviously we're very much tied together because of natural gas plant a much bigger place in our overall atrocity generation portfolio the Shell gas is driven lower prices which resulted in higher volumes for electric generation. We secure firm transportation which is help does keep our prices relatively stable to our consumers here but in the Northeast markets if you look at them. They've had more challenges. Some of these price spikes that they've seen of result in very high power prices to them so they have to they want to think more about how do they deal with that transportation issue how do they add more pipes and was that mean for the overall business. And then the thing I want to focus on a little bit here today is around gas scheduling versus par scheduling the challenges that we're seeing as an industry right now is a gasket Julian business is not aligned with how we schedule power. And just to talk a little bit more about that the way the gas business works today they work on a twenty four hour cycle it starts at nine A.M. every day the gas is scheduled today before that. So you're scheduling gas eleven thirty the prior day and then you have some different periods we can adjust those gas schedules. Whereas in the power business everything's very dynamic. We have to manage resources and load on a real time basis every minute of the day we're main managing those resources to match up with our. We have these market inefficiencies then in the gasket Jools when we're talking about what we're scheduling for gas or power purposes. We're scheduling up to forty four hours before we're actually on need some of that gas to serve our winter peak demands. So you can think about this when we have winter peaks that are occurring at six am seven am the morning. The gas we're scheduling to meet those is actually almost two days ahead of that time period which means it's not very efficient in terms of getting the exact amount of gas. You're going to need for that period it leads to a lot of inefficiencies in terms of how it is scheduled you're oftentimes having to hold back some of the gas you might want to use otherwise to make sure it's available at the peak period. You also might be over scheduling some of the gas which also creates an efficiency. The first is responded this same issue to notice a proposed rule making where they want to make more coordination happen between electric and gas scheduling and by that what they want to do is they want to start to gas day earlier to should actually say four am to accommodate that morning loads that way when you're scheduling the gas for that next morning and actually with your keep demand in power. They also want to move to go. Schedule al little bit to match up better with these ne more it's that way when they're getting their power scheduled it's matching up with what they need for gas requirements and then give more opportunities that change your schedule within a day the last thing they want to do is provide more opportunity for people to do multi-party shipping arrangements. So right now if you schedule Daschle schedules that independent entity there's no opportunity collaborate with other shippers of gas. So I'd like to do something. L. OWS more optimization where you can have multiple users of gas schedule collaboratively and then optimize the gas or scheduling. And then they've asked all of us in this business both gas and electric spawn within one hundred eighty days so we're working actively with some of the regulatory bodies that are involved in this in the industry to try to solve this. But it really goes back to we saw this last winter the inefficiencies that we saw it led to some of these price increases that we could have help mitigate to some degree just by having better coordination there. And so I think that leads to some technology opportunities I think this is the piece to kind of highlight as far as come back to what Peter was talking about you know what can we do in terms of guess scheduling. Options of storage systems we might have in the future. How do we have more of an hourly realtime platform potentially be great. Someday to build a real time schedule natural gas just like we do power be able to match those up in a real time basis that might require some future platforms to do that. We also might see some cooling arrangements of all. So how do you set those cooling arrangements. How do you deal with the the risks that are associate with that. How do you track and settle those multi-party transactions. Credit issues that are associated that will also be something has to has to get resolved. And then lastly I think that the regional transmission organizations in the northeast. They will have to really step back and think about how to make this work as far as how they treat firm. Because today when they're looking at meeting their peak demands in the winter time in particular they're really run into issues as to whether they can trust of the gas can actually get there so they need to change their rules such that there is. Different obligation on those parties supplying the power that matches up with that farm gas obligation like we have here in the southeast. And I'll stop there in time to get a panelist. Thanks John. Our next commentator is Mr Don McConnell Don is the executive director of industry of industry strategy and can commercialization in the office of industry research here at Georgia Tech Don currently has responsibility for Georgia Tech's and Gage mint with industry via strategic research collaboration and as well as through the commercialization of a number of our entities here. Prior to do. Joining Georgia Tech Don worked for thirty years or so it to tell him he has worked on a number of issues relevant to our discussion today including zero emission hydrocarbon conversion sustainable energy power grid solutions and also nuclear fuel cycle solutions. Don is going to talk to us a little bit about a range of issues concerning the convergence of electrical natural gas and information systems. As Adam pointed out in the time that I spent the Patel There were points in time where I was responsible for the integration of energy research across all of the laboratories we operated that included the national labs. And so the first couple of times I ran into any monies was what I was running a strategy session for all of where energy was heading in this process part of what I'm going to give you today is the consequence of what we learned in that study and what it is subsequently turned into as we see realities beginning to play out against what before was mostly hypothesis that we're looking towards in the process and my fundamental premise that I'm going to advance in this one is that we're really approaching a point of convergence now. Where we're going to see the potential. For a change in the energy industry that probably outstrips anything that's happened since Edison first sent. Direct Current over wires and that convergence as has been hinted at in both of the preceding discussions really has to do with the fact that we now have ended up integrating in park the natural gas system with the electric system. And simultaneously. We are developing the capacity because of the ability of information systems now to function in real time and move data in a smart grid system that we can actually observe what's happening in our system so we have three systems converging at the moment the ability to know what's going on the ability to use natural gas more effectively and put it into the mix as John just described it and then thirdly in the process. Basically the ability to manage the grid. Underpinning all of this are some fundamental changes that as Dr Ronnie's pointed out have been a consequence of conscious policies at the federal level and increasingly policies at the state level. Because in addition to the discussion of for quick isn't it a critical element of all this state renewable portfolio standard and and other approaches to that the New England approach within the region all have an impact on. What is the economic order of dispatch because you're putting constraints on which power sources you're going to use. So for example we now have states in their plants that are moving towards Hoey is shooting for forty percent renewables California is currently at thirty three and is expected to go up Colorado in Maine or a thirty percent and we have a number of other states that are twenty percent or more. Over the last two years as was hinted at the solar capacity has increased at a rate of about forty percent a year with over one hundred forty thousand new installations just in the past year alone. So as a consequence we're seeing a lot more of this alternative forms of generation coming into the mix. And it varies as the map on top shows you quite a bit depending on where you live. And I think the one element to this that I will contrast is the southeast is radically different than the northeast is very different than the West because of both the power sources available but also because the regulatory structures are very different between them. They're not necessarily harmonized even at the local level in this case as I'll show you with the example of P.J.'s will go into more detail of what happened there but the one item I think that you can see in this is that there's been an increase overall if you look from two thousand two thousand and twelve the use of renewal bulls and natural gas which have continued to evolve which is changing the mix as John just described to you. In fact if you look at natural gas in this process. There's been a steady history now that if you look at the reported dry reserves we have for natural gas. Most of which is coming from fracking of formations in the Midwest and in the Far West in this particular case we have a steady increase now in the projected reserves that can be deployed in this case. At the same time as you look at the bottom in this the green circle the use of natural gas for generation has continued to increase in the mix. And so those are the consequent issue here is natural gas is likely to be a very strong player in this mix of energy for some time to come as was hinted at several times today. The real challenge is can we move the gas to where it needs to be use. One fundamental difference between natural gas and a coal fired plant that is you can locate natural gas generation much closer to the end user. Same thing is true with some of the wind technologies and the others. And so what has happened particularly in the northeast. Is natural gas generation capacity is moved closer to population areas and they're dependent on the pipeline system. If you look at the pipeline system it was designed to move natural gas and petroleum products from the Gulf Coast to the rest of the country. The reserves are in the West and in the Midwest. We never designed a pipeline system to move those elements and there really. Yet is not really a practical way to move it by any other means other than through pipelines. There is storage in the Midwest which can be used and that is a buffer that's important but the challenge right now and I think the issue I'm going to highlight on this is the just the ability to move gas where it's needed when it's needed and the fact that regulating state by state what it is the portfolio standard has to be has a consequence then in terms of how it is that you can plan for pipeline use in this case. And so if you are a pipeline operating company the question is what is my future going to look like how firm is that going to be where do I sit in the mix. So as we continue down the path the this connectivity on the gas side has become real What's also becoming real at this point is the complexity of the operating system of the grid is increasing dramatically at the same time. Because of her and arable portfolio standards because of some of the other things have taken place. We now have the capacity to have distributed resources online. Providing power and it doesn't match our traditional model of central power plants dispatching power to the outer ends just doing the state estimation of what that system's doing when you have other sources sitting on the line presses the capabilities the existing system. So whereas the smart grid gives a tremendous amount of capability in terms of the ability to use information and where. Yes With the advent of the Internet and the fiber optic system we have we can move data very quickly now between these we don't yet fully have the capacity to use that data to effectively manage our system's. Best and we're just having up stairs with Secretary Boney's was what's the next generation of management control systems for a grid where you have not thousands but potentially millions of devices talking to one another. Could be fuel cells it could be solar on the roof it could be solar on the roof like we have here at Georgia Tech of major buildings all of which have to fit into the mix and all of which for the grid operators becomes a challenge. So it why we're seeing this occur at this point we have to really evolve how we manage a system that has this kind of complexity in this kind of mix of resources and I would add regulatory constraints of what that mix has to be so the economic dispatch order is influence not only by price but it's also influenced by regulations at the state levels well. Let's take a look at one in particular. You've seen hints of this at this point you've heard the words regional transmission operator organization in this case chose P J M. Because we have been working with them on a number of the issues I just raised in this process here at Georgia Tech. What's the purpose of a regional transmission organization well here in the southeast we Szilard centrally vertically integrated so that we have companies able to control all of their elements. When you look at Northeast. It is partially deregulated and so as a consequence it's an open market in terms of bidding power into the marketplace. So in any given day the R.T.O. in this case. P.J. M. is looking at its district and you can see on a map where they sit and trying to determine what is my expectation if they had power Carmel's. They then have to run an option to see who's willing to provide power at what price into that system. And clearly one of the things that you can do in that system is if you're an independent power producers you can decide to withhold your power until you see the bidding go up to the point where you think that'll give you a reasonable return. There are people operating peaking plants that only operate them about ten percent of the year because they only operate them as an absolute demand in the process. He J.M. has the capacity to resolve that what it doesn't have a capacity to do is to interact with the day ahead gas system in any kind of of Common Clearing House. And in fact they don't currently have tools that allow them to estimate what that power gas demand would be. So there's a whole void. That's emerging in the system we're moving more towards this particularly in the northeast we're seeing a lot more distributed gas being installed closer to the cities and then we have the challenge of trying to get the gas that we need on any given day. So all highlight again this time. Let's look from the north to the south in this particular instance what happened in January of two thousand and fourteen. One of the key things that true in most of the P.G.A. operating area as well is in the New England I saw in The New York I So is that the dispatch order for gas says residential comes first commercial comes second power generation comes third and industrial comes forth in terms of priorities for gas. The reason that that's true is because natural gas is used for heating in the winter time so in January of this past year in particular they had simultaneously a record demand for an all time hundred forty million megawatts. And P.J. am throughout entire territory all the generators available to them had only for. Four hundred megawatts of power reserves left which is substantially below where you want to operate your system for reliability. Because they were competing with these other uses for natural gas the price of natural gas shot up to four hundred dollars So four hundred seventeen on the last chart for a million B.T.U. the consequence was those last increments of power taking you up to the final Reserve were over one thousand dollars and our. Clearly there's a disconnect and inefficiency in that marketplace as you heard John described in this process. What we have now demonstrated is it is no longer theoretical that the gas and electric markets are integrated the gas electric markets are integrated we just haven't figured out how to operate them yet. Or how do you regulate that took a first step. Now to at least put them on the same cycle in the process but that inability to actively plant for that process plant lends to substantial concerns in the process. That's going to become more complicated just in the P.G.A. Tour territory I took a look at a couple of other items over the next five years as a consequence of the E.P.A. requirements on emissions within their dispatchable system twenty eight million megawatts of coal fired power are coming off line. Those are all operating on the day I just described to you in January of this year. The question that they're facing is where is this coming from. The other interesting thing that has transpired is the northeast is a transmission constrained area because of congestion. And as a consequence in that process. Historically it's been hard to port power around as it's needed. Particularly when you have pieces places like New York and Philadelphia in your system. In that in that particular activity as we go forward the gas has moved closer. To the cities and interesting Li enough last summer for the first time instead of porting power up from the southeast which they historically that willing power up coming from some of those nuclear plants and some of the others they were actually exporting power in the summertime. And so at the moment. P.J. M. has canceled all of their transmission line investments because they're no longer certain which passageways are going forward. So the need for an ability to plan a system with this level of complexity is critical as a consequence P G M is putting in an additional twenty nine megawatts of storage This year they already have added seventy eight in it in the prior year so they could buffer some of these. Now you have the problem dispatching that as well. So I think as you go through this you can see that there are fundamental differences on the challenges and in each region of the country. Peter talked very briefly before about some of the impacts of weather on the system if you talk with the Rural Electric companies and reckon you'll find that one of their biggest issues is restoration of transmission capacity following severe storms thunderstorms or the rest. They are looking to smart grid as a way of rerouting power the way that Florida Power and Light has redistricted their system so they can get to any point by two different feeder lines. That's a major undertaking in the Midwest. In the Northeast we have issues with transmission congestion. But we also have these other problems now of the mix of power in the process. So in addition to everything else that's going on. We have all of these impacts now that are coming from what is now determined to be a changing weather system that we have to deal with and this. The consequences of that weather system differ by region in the East and in the south. It has tended to show up as propensity to larger storms because we have more energy in the oceans to drive them. Sandy was. The sixty eight million dollar insurable lost in the northeast. It's second only to Katrina that was a seventy two million dollars loss in the south billion excuse me in the process. So as a consequence. We've had fundamental changes in that regard that are costing us a great deal but there are a major challenge to maintaining the operating system being time as predicted about a decade and a half ago in the Northwest snow pack is lower as a consequence the flow of water in the Columbia River which is the source of most of the generation has changed. We're getting more rain rather than snow so in the northwest the challenge that we have there is we get water but not at the time year we need the power. And there's only so much you can do with the dams because you're also constrained by fisheries and other issues that nature so virtually every part of the country has a problem and in fact as most of you who have been around here know this winter we had our own problems here in Atlanta which were significant as we take a look at it. So overall I think the argument could be made and hopefully you understand why I would say this that we're seeing some very important vulnerabilities in our energy systems. They're taxing our ability to regulate those systems they're taxing our ability to make an efficient market an economical market in that particular case and the last point that I make in this process is the third bullet on this chart. And this comes out of the current studies that deal is doing as part of the quadrennial energy review in the period from October two thousand and twelve to May two thousand and thirteen fifty three percent of all cyber attacks were on energy systems. That includes pipelines utilities. Refineries and the rest. The whole sense of how we operate the system and maintain a security now is of is an issue for us and the last one is only beginning to be seen as we go forward in the process. Thank you. Thank you thank you. Thanks Don. Our next speaker is Dr Valerie Thomas Valerie is an associate professor with joint appointments in the School of Public Policy here in the ivy now in college as well as that the industrial systems engineering school her research focuses on and on environmental impacts and costs of energy systems environmental impacts of products and services and the effects of policies and technologies on the development of energy systems. Prior to coming to Georgia Tech. Valerie was an American Physical Society congressional science fellow and she worked on the Energy Policy Act in two thousand and five that was here to talk to us today about transitions and couple digital gas systems in both residential and commercial building context. Now if you will. So we've heard a lot today about natural gas use for making a lot tricity and to some extent we've also heard about natural gas use in industry for manufacturing and chemical feedstocks. That your gas as it turns out is also used for heating and residential and commercial buildings that in fact is a very substantial use of natural gas. So the picture you're looking at here. This is our energy system. And in fact this is what a new bill looks like today in the United States of America and what we have here have can figure out how to use this. But yes we have a typically natural gas for us we have. A natural gas water heater both a decades old technology and then they are there. Joined together in this funky do all chimney system which works by if you have a lot of waste heat then the waste heat can draw up the combustion gases out of the house. So the technology used here it's old and. New requirements for efficiency are coming along at a glacial speed but really what's even worse is the entire building of this or other mass people deral holes in their ceiling to put in the recessed lighting like we have here and all the air comes out here pretty much everywhere else out the windows in the windows over in the crawl space and so on. The implications of this you might think in today's America where we have plenty of natural gas prices are not going to go up so the fact that we're blowing it out the ceiling in the Windows doesn't really matter. We're figuring out how to use really advanced technology to bring this stuff and of the ground bring it to our homes and in fact make it into electricity for those who want to use it that way I'd like to argue that did this has substantial implications However for certainly energy efficiency and America and not just America but other countries also substantial implications for the load on consumers on the people who are living in an owning these buildings and in a number of countries there are substantial national security implications for how this for for using natural gas in this way. The other thing I want to say is as you can immediately begin to see not only are there substantial. Drawbacks to using natural gas in this way but there are tremendous opportunities. For improving the situation not only to do the obvious things like plug a hole in the ceiling but some things that are really innovative and people are just beginning to think through just a little overview here you can see that residential and commercial use of natural gas are a very substantial portion of natural gas consumption in the United States. I've shown vehicles there but it actually doesn't show because it's still so small. And looking over at the right hand chart here you can see that in that residential energy use a substantial fraction of that total including all the electricity to run the equipment and so on is still space heating and water heating which is mostly natural gas is very substantial and if we had time to look the numbers over this for a while you would see that there is actually some progress that has been made over the past number of years in becoming more energy efficient in the residential sector So consumption is going up somewhat but the relative share of natural gas or the heating sort of thing is coming down somewhat. So it is possible and we're beginning to make slow progress. However although there's been a lot of discussion about the tremendous economic opportunity you see in gas production more efficient production of electricity and so on which are in fact very large it's everybody I've ever seen of ways to reduce greenhouse gas emissions point out that increasing building. Efficiency is the best bet for your money other countries have a rather similar situation and for a while for us we may be focusing merely on the economic opportunities of being more efficient with our natural gas or. Or are interested in reducing greenhouse gas emissions in other countries not just Ukraine of course but it's been in the news recently many countries in Europe and elsewhere for a substantial national security and for many people personal own personal security consequences of using natural gas in such an inefficient way so for instance in Ukraine. They have a somewhat similar utilization pattern to the United States for natural gas about a third of the use per capita that we have in the U.S. They use a substantial amount in industry. But look half of their use is a residential and communal communal is a combination of commercial and residential So that's half of what they need is. I think an area that we need to begin to think about in the building space is what comes after natural gas. It's verily well been thought through in the electricity sector how we could get to a rogue greenhouse gas or even to zero greenhouse gas electricity production system over time with combinations to renew our laws nuclear and carbon capture and storage from the fossil fuels. Similarly for the vehicle sacked or it's been discussed here and is well thought out that we can move to a combination of biofuels electric vehicles with clean electricity. And of course more efficient vehicles but there's been much less soon about what we're actually going to do with the buildings. So if we look at heat use in building. I just listed some of the obvious options well we could stop using natural gas to heat the building. So if we just heated it with electricity. And then made the electricity system be cleaner either with home based photovoltaics or the grid passive solar. Would need which is rarely seriously discussed in this country. Or very highly efficient buildings which bring the cost down the energy requirements down substantially. Hot water is is a little more challenging. You can't create hot water from efficiency actually have to heat the water somehow. So again we could just pass it off to the electricity sector since they're being so innovative just make an electric and then have that be a low carbon electricity. Again wood is actually a possibility or we're going to have solar hot water. Or there are other options that could be listed here which are more innovative ideas that again are not yet really on the radar. I do want to mention something about wood pallets the south east is becoming a strong supplier of wood pallets for the European market and I would say that almost every time that I hear it discussed yesterday I know with my energy colleagues and so on. There's almost some derision that Europeans who have Bonnie they were bombing our pilots we're going to ship pallets over there. Somehow the idea that they are somewhat overhyped in their green policies and that one of these mornings they're going to wake up and realize how silly it is to buy our wood pellets and our markets kind of collapse that maybe but I'd like to point out that by using wood pallets of these products are used to some extent in power plants in Europe particularly in the U.K. My understanding is also in the Netherlands but in a number of the countries there is a primary use of wood pellets for inside of residential and. Marshall buildings particularly Denmark Sweden France Italy and Germany use of these wood pellets does provide a lower carbon source of heat and it also supports energy security by displacing either diesel fuel or natural gas. So I think some broader consideration potentially of the contribution that's even being made from this production in the southeast should be appreciated here. And perhaps increased. There is increasing discussion and design and implementation in some places of net zero energy buildings or even passive buildings in which there is no net use of depending on the definition fossil fuels in the buildings and there's a tendency to think that we would achieve that by for example putting P.V. on the roof then we'd get a net zero fossil fuel building. But again and now Aussies of strategies for getting to Zero Carbon Buildings always emphasize that the least calm asked most benefit kind of actions are not not to just jump on over there and get some renewable energy system on the roof but rather to really reducing the roads and developing passive systems. So looking at our entire building infrastructure as in fact part of our energy infrastructure and seeking to bring up the level of technology and the level of investment to some level that is corresponding to the level of emphasis that we're having on energy production. In thinking about what we might do in the space of rethinking our natural gas use in buildings and overall energy use in buildings there is the obvious which I tried to indicate in the first slide plugging the hole and having relatively sensible energy systems but there are a lot of other ideas being developed which I'm kind of indicating by this line and one area is thinking about the gap between the temperature at which heating is turned on and the temperature at which cooling is turned on in buildings and ways to broaden that gaffe by other kinds of technology and behavior innovation so this can include things like well more clever ventilation to make people more comfortable in a broader range of temperatures and person based rather than building based energy systems to supplement the larger building system and if there can be a larger range of temperatures within which you're not having large scale building heating and cooling you can make substantial savings on the energy used in the voting. So to close to indicate that this is a substantial challenge and it takes challenge at a number of scales. And speaking about sort of the digital revolution. One might think immediately that what we need are controls we need better thermostats some of which are being developed by the problem still with thermostats even the newest ones is that their actual energy savings need to be validated. But it's both controls with automation but also activities that occupy. It's irresponsible for operators owners and then building designers. A concern here is that the time frame for new bill. Is very long. Once you've built a building it is our infrastructure it's there for at least fifty years. It's expensive to change it. Once you've built it. If the timescale of beginning to deal with greenhouse gas emissions is within fifty years the implication is that the cost effective approach would be to begin with these areas particularly rather some. Thank you thank you for finally batting cleanup here is Sajjan Brinson Jaan is a managing director of Global Energy practice leader at Navigant he advises utilities executives on developing operationalizing their strategies and achieving sustainable solutions is a long career in analyzing trends in the market and potential strategies and alternative business operations in multiple global energy contexts and today John is going to pick up the ball of what has been laid out here a little bit and talk about the emergence of energy clouds and emerging trends in distributed energy systems. Thanks Adam and good and bad news and the bad news is that I'm in between and and you all right now the good news is they're not off topic to talk about anymore after all this so I'm trying to still maneuver in terms of you know what's what's left there I will I will give it a I will give it a shot. We spoke today about. The changing natural gas landscape. I agree with the secretary that. We need multiple fuel to solve our you know our energy challenges going forward but I also agree with Don that. Renewables are here to stay and. Was a very recent reports from the National Renewable Energy Lab And again it's a Renewable Energy Lab so you can expect that from these guys but they actually looked at renewable scenarios from thirty percent renewable North us to up to ninety percent renewable they believe that eighty percent renewable in two thousand and fifty is it's viable and we're going to we might debate it here but. They're here to stay will go easy there thirty three percent target as well as Colorado about thirty percent New Jersey which is an interesting one twenty two and a half percent easy by two thousand and twenty with a significant solar component as well as for things that are driving. Some of these things One is cost cost of energy. We spoke about that second is carbon footprint gas a lot about that as well. Disruptive technologies is the third one. Not only on the generation so we spoke a lot about generation today but this drop of technologies on the on the transmission the distribution side and also as Valerie just spoke about you know in buildings fifty percent energy use transportation and industry each twenty five percent of energy use and in the last one and then I will get to two My point is around the changing infrastructure and what was what we called distributed energy resources. And what that means for you know utility business models for regulatory models and the changes that are needed there. So this is the this is our current Gritz decentralized grid. With centrally located generation facilities whether it's nuclear whether it's gas where it is coal. It's originally designed for one way energy flow controlled by the utilities whether it's invest or utilities will probably get filled use. It's from a technologically perspective it's completely inflexible and it has a relatively simple market structure and transactions and. Obviously it's highly regulated with some with some exceptions. Energy cloud is a concept that we've developed where you know we draw parallels between cloud computing. And what's going on around you know the energy infrastructure the energy cloud has a series of distributed energy resources in it. It has multiple inputs and multiple users. And it has to support a two way energy flow. It's highly digital ICE so to do. Peter's point. Digital pieces on the infrastructure and then and data coming from down and doing something with it in terms of managing the grid is a key component of the energy cloud is flexible dynamic and resilient. It's kind of you know cloud computing you reserve a certain space if you need more you get more and you pay more if you need less you get less and you pay less and that's kind of the concept of the energy cloud. It will require very very complex markets structures and transactions and that will be probably one of the key things that have to has to be resolved and regulation around this is changing rapidly. California throwing out now you know regulation around storage and implementing storage into into the grid this is an example of that. This is a visualization of that won't go into too much detail but it will change drastically. The old pieces will still be there. The centralized power generation plans will still be there but there will be a lot of add on to it and it will go from generation to transmission distribution all the way into into your home and spoke about that. As well. These on the key technologies. Again I won't bother you with many of the definitions here about. There's a lot going on around you know distribution general Gen distributed generation Gen micro goods and I think are taking off from. By that stage two actual implementations storage will be a big game changer and the ability of storage to help with some of the weaknesses of the other pieces of the distribute generation. Landscape if you will are tremendous. Building energy management systems spoke about that and then the whole digitalisation of the grid. You know smart with smart meters to advance center of sensors on the distribution and transmission networks and then you know the data coming from that and you know how we will use to manage to grit more effectively. Balance supply and demand of power that close to the grid menace energy efficiency on the. On the user side. Impact of the energy cloud for utilities they will transform from a our sales base business model to address an actual model and they will have to make significant investments. Well they have to deal with stranded generation assets coal plants that they're retiring and they will and this is probably the most important one and it's probably the most underestimated one they will have to change their entire operations and their culture. Because the complexities of the energy cloud are much different then you know the complexity of the current grid. I'm from Florida. I live in I live in Miami our utilities Florida Power and Light and they it's a regulated state and you know I I buy relatively cheap power by the way from them. I can buy from anybody else they have developed a whole new business around you know when you of course it's the biggest solar and wind producer in the country to go into this to be generation whether it's residential solar whether it's you know. See a nice solar. And they've build a new business a complete new business. So they have. One organization they have a second organization and they call the next engine resource. And it has a different culture and. It has a culture of commercializing you know opportunities in the marketplace throughout North America not only limited to Florida and there's really different people working in an organization in ten years' time they've built it up to and five billion dollar business. So it's now over one third of their business and it's all around renewables distribute generation and it has a completely different culture so if I meet with somebody from the regulated utility the issues and the challenge in the discussions are completely different versus meeting with somebody from you know next their energy resources. They're all about you know where's the next new opportunity for me to invest in and make and make money off it. This is some very recent research where clearly new business models models this is top of mind for many utility executives India in the industry as well and I'm going to go through this. We don't have time but. Going from. Going from energy efficiency. As a customer to energy cloud is a big step and not many people realize now but energy efficiency is relatively easy I look at my usage. I buy some more energy efficient equipment. I do stuff in my house to make it more energy efficient. That's all manageable go into energy cloud where I can become a producer of energy and a seller of energy is a whole different story in the complexity of that is I think is many many people don't don't realize how big that step will be for US business models. Can spend a lot of time on it but there are multiple new business models appearing right now where utilities either act as developer owner operator. Or stand alone or in partnerships with you know other companies like Google search and Amazon and you know these are some of the examples. Some of the examples on the. On the soul of our side and. It will come to it will come to Georgia after California Arizona New Jersey. Maybe Massachusetts and then I think Carolina is first but then right after that it's Georgia and Florida. It's a matter of time cost will go down and it might take two three four years but it will come to the southeast US No no question about it. In closing a lot of changes needed around market rules regulation and the complexity of the energy cloud significant investments are required and you know who's going to pay for it. It's interesting to look at the local industry going from landlines to a full almost full now mobile cellular network. Something similar could happen with you know the utilities electric utilities industry. Southeast for now is a follower. But it will come here and then you know we spoke a lot about you know merging off of networks and I think there's actually a bigger thing going on in this merging of you till of industries. You took with oil and gas companies with transportation companies with construction companies and at the technology company I think you see at least four five six industries coming to get around the as you cloud as we move forward. And with that. And so. So with your indulgence I'd like to ask that we open the floor for questions. There's one in the but there's one right. Don't please great questions for Dr Thomas and I'll set this up by saying Mr but Dr McConnell mentioned harmonization and local regulation. Out of the Georgia Public Service Commission and I'm one of the five commissioners. That regulate energy here in the state of Georgia and I really think our model is is in. Working in worthy of emulation we have no arc yet here in Georgia and we have no subsidies for our renewable energy yet. Thanks to Commissioner McDonald's leadership by two thousand and sixteen. We will have increased our solar from two thousand and eleven to two thousand and sixteen by a factor of one hundred. Which is extremely significant. And that doesn't count the large arrays that we haven't announced going on the military bases in Georgia yet nor the two hundred fifty megawatts of wind that we're going to wheel in here from Oklahoma upon the approval of the Georgia Public Service Commission. So my question to you Dr Thomas is is in regard to your graph about this about thermal and hot water heating which you had is a seventeen percent. Energy usage. Should our universities like Georgia Tech like the University of Georgia where I have three degrees from and other institutions would dormitories. Should they be required to begin to bring those dormitories own one with solar thermal. And by five years or ten years have every dormitory every dormitories hot water heated by so forth. Normal or do you think something like that. Thomas is too aggressive and that we should start in other places. Thank you. Great thank you. I'm glad that you brought out this issue of solar hot water. Recently you know I was looking at the this issues of how are you how we're going to transform our buildings and so I started looking at different studies have transforming the economy to zero carbon low carbon this and that. And of course there's P. There's wind and so on. There's efficiency and solar hot water has dropped off the map. You look even at. The E.P.A.'s Energy Star website you have to have a really aggressive search to find any place you can buy solar hot water. So. No I think it's a little early to require we cause of that to require that from today we start installing solar hot water but I do think that we there's not. I think part of even you know been to California you think there with there they would certainly be supporting the solar hot water. It's dropped off the radar. I think it really does need a. Careful How are we going to do this. There are some who say no actually what we should do is we should go to solar P.V. and heat the water that way you don't have to store there all those issues but you put your finger on a gaping hole in our national attention to renewable So thank you and I would look forward to discussing that more. Just to add to that we do a lot of research roans building and building energy as you see it in buildings combined heat and power and solar is one of them because you can do it through gas as well is going to be is going to be a big play for hospitals for hotels look at so you know the Florida for example hotels. And those type of building facilities we think it's the city the single one. Most of phone things to to look at I don't have the numbers here but we believe this is going to this is going to be very important technology to look at now I'm talking about combined heat and power to could be solar could be other sources of things as usual. But combining that makes sense of the rule for don't stifle build around you having the data you know. If you look at all the numbers of the least expensive ways to get efficiencies as being passive things like insulation it's over the overall it's in the payback so it's quite good longer term. There are a couple. Of particular installations that were made stalking horses for the US in New York our building does co-gen in the building our and heating cooling but also that have been very positive even in price markets that we've been describing here. And so I think particularly for institutions like universities. They're a long term place like that that would actually help with their budgets in the long term as well. And so I think giving them flexibility as to which system make their application I think is critical and as we've pointed out it could be that it's a natural gas a sort of could be it's a so nomination of things that you've done that overall represents one of the areas where I think there is opportunity and potentially could happen to help universities deal with what is going to be a question for we're starting to look now at this market cap this here looking at what are the opportunities for us to have chilled water systems we have steam systems we have all the legacy of the past part of the question is how do we do this more efficiently. If we where we have laboratory buildings which are real energy hogs on campus. Next question I have two short questions. The first one is Why do we have the day ahead mechanism in the natural gas market. It seems kind of crazy given what was said but it still endures not like understand why the second more important question is in your opinions. What would be the most important policy choices in policy implementations to improve energy efficiencies in our consumption to improve how power producers make use of the best sources of their power and how to integrate or better integrate information technologies into our use in distribution of energy. John Q one thing first. And I'll take the first thought. So you know the in terms of the legacy issues with the natural gas. I think really has to go back to what were the primary uses of natural gas up until really the last ten twelve years or so. So when largely it was this or local distribution companies those systems were set based on the idea that they could schedule that yes at a very predictable amount of gas that they would be using from for most cases and I think also from the standpoint of how they manage their business. They had to do it with much more of a manual process. So they had that literally have people go out turn these wells and everything to make you know valves may come off right. And so I think there was more of a while it was called mechanical process versus automated process and I think it's just a matter of time now that we've gotten to a world we can do these things on an automated basis and that the gas industry has an opportunity now to really catch up with what we need and more the power sector and I think the local distribution company supply agree with this to own their business to get more you know optimization they are in in terms of how we use our natural gas. I would add to that that part of what we're dealing with is a legacy issue. When I owned a house in Lexington Massachusetts we had no natural gas because there was an embargo on new pipelines because it was a belief and states had the natural gas to sell to New England that time. Now we bring it in from Canada very for the places but the pipeline system really hasn't evolved. I think one of the things which would help is if we get clear. Dr Monet's made a statement today about when that it was our just single installation of renewables and twenty. Well that fell off the face of the map on twenty thirteen. Biggest single issue I think in trying to optimize that system is getting clear what are the regulatory structures under which we're going to operate these systems. Because the lessons about utilities is they are ways of making long term investments that require socialization of the cost over a long period of time. That's the historic view of what a utility is but when you get to a pipeline you still have the issues of having an average to rise the cost of putting a new pipe on. And so I think the regulatory activities and how we go about managing it was just as much a problem for electric transmission as it is now we just move the problem. It's a pipe now rather than. Transmission lines. The only good news about the pipe is in some respects it's easier to site the pipe than it is to cite the overhead transmission because you can't see it once it's installed but you also would just say that on the efficiency side there's a lot of buildings that are black boxes. You don't know what the energy efficiency problem is there are lots of vendors out there that have technologies that would like to do work in upgrading those buildings but there's not a matching process to get them together but I think we seeing an evolution now in which you're seeing small companies develop platforms that extract data they get the building management company to go through they do an audit and then they get a real time feed from the utility on what that information is and then they put a platform they create a platform that gives vendors access to that information and then they know how to bid on those opportunities right now it's a. There's a market failure there's a dysfunctional market and so I think there's ways in which we're going to see kind of the Eby is ation of the building efficiency space if I can put it in those terms that are very exciting because it solves that information problem that wall allow some of the leaks to be plugged. As well or pointed out you know you got to the second question it's a very complex question and the answer is not easy but what I will say is. I think that the regulators need to see how do you till these can be faught of the solution and what I mean by that is that you have no interest in eroding their own you know revenue. If you if you. Well that just goes against you know on the sands and good business but there are opportunities out there to look for it on different streams or on all of the things that we spoke about today and I think if you leave that to you know new entrants and believe it wide open to you and utility it will have it will have a hard time being part of that. Then I think that process will further delay I think where we where we want to want to go if it regulators and utilities can come together and see how utilities can be fought of the solution and you know some of these new net revenue streams some decent you know this will be a generation opportunity and I think that will help. That's that's all I want to say but it's a very complex answer but I think that's OK with your indulgence we have time for one last question. Thank you so I'm a Ph D. student here at I actually work on a project in decentralized distributed grid roles. So with regard to the energy cloud. You know one of the main points that that you made was that utilities need new operational frameworks for controlling distributor resources and not only that but they need to develop new business models now to meet developing a new business model that is very different question from changing operational paradigms. And it seems like it's what it is that actually in my experience talking to people from utilities co-ops. I suppose it's you know there's almost kind of a chicken and egg problem in in changing operational paradigms where the demonstration on a real system needs to occur before the operation is going to change. So what seems to you to be like a transitional approach to changing operational paradigms and this demand response which is something that is kind of accepted in that is do you think that might be an example of how distributing resources can be more brought into the fold of traditional utility operations. Dumbell want to comment on that as well. Yes business model changes have nothing to do well in our different and operational changes and by the way when when when I talk about operational changes it's operation operations of the grid. And in the greatest transmission distribution and generation and as well as in the home behind the meter and that's a that's a bar that has not have has a lot of attention in from a distribute generation perspective. Net metering and things like that and then to also operators in terms of how they go about managing their clients and a customer that will change significantly as well so that two elements of operations. Yeah I think what some of the utilities are doing now is pulling some of the distribution aeration pilots out of a pilot face and actually looking at you know how can they integrate them into into the grid and we do grid operations. I think we're early stage there. I don't think there is hard. Data or you know enough experience yet in terms of how easy or hard. It will be if you look at the potential number of components in the future that the energy cloud will have I think it will be very complex and. And then I spoke about that yesterday. You know there's a believe that I believe it is forty percent on it goes up to forty percent renewable it's manageable if it goes above that you know it will be it will if it's if it's up to forty percent distribute generation it's manageable if it's about that it will be really hard. So I think we early stages of the you know California utilities we're doing projects for them right now that they get from pilot into actual you know operations and but I think it's early to tell in terms of you know the experience in the data to come down. Do you want to I think there's one other issue we really haven't touched on very much. Valerie touched on it just a tad. One ink. In a place like California you can see what consistent. Able regulatory environment does to create opportunities for people to make changes that nature and we see that drive the system and be seen people change the models C.E.O. of energy is announce that we have to move as utilities from being commodity suppliers to providing particular services that consumers want and that could be higher quality power could be distributed power could be power that's less interrupted ball and so forth and so on the one key piece and it just came up in a discussion we had upstairs which is a bit of a black box right now. It was intended to be part of the smart grid demonstration projects that rolled out on the they are a funding is how will consumers on and how flexible adaptable are consumers to changes in the way that they consume power and moderated We have very little information from the trials we've done so far of how consumers behave. Except that we can demonstrate that if we aren't very careful about it they'll reject the change. The biggest single thing I think that has cropped up out of the experimentation we've done so far in these so-called pilots is unless you actually are recognizing the real time cost of power to residential consumers are effectively isolated from most of the market dynamics that we're talking about in this process. And so Bill it becomes a buffer there the middleman that absorbs that thousand dollars a megawatt hour and sells it back off at nine cents a kilowatt hour. To residential users so. The human factor in this process really isn't. Well understood. I've watched in Ohio as also until it came out of utility regulation business on the basis of a backlash against going. And towards higher efficiency and smart grid type operations and it was largely because people didn't see any benefit accruing to them from that activity so converting that into a value proposition for the ultimate consumer I think is the other half. So as young points out it's a changing world for utilities. We haven't really confronted yet the user in terms of it's a changing world for them as well. And then one last comment to that is that this whole distribute generation. Development will actually lead to the fact that the rich can afford those type of generation capabilities and they will benefit from it and they will sell it back to low income customers are going to pay for still keeping you know the grid on standby. If you know my myself generation capability is not working that day. So it's kind of it's that's one of the major issues that still needs to be resolved and that that has to be resolved between you know the regulators and the utilities because that will that will create a complete imbalance in terms of who pays for the cost of you know the shared infrastructure but one of the under resolve questions is utilities have an obligation to serve right. Who inherits the obligation to serve well on that note I think we've covered a range of topics but seemingly only scratched the surface and so I hope that for those who are ranging from experienced utility operators to students who are just getting excited about the ROI energy interfaces with global issues be sustainability security competitiveness you'll appreciate some of these fascinating connections but please join me on behalf of Senator Nunn Sam Nunn School of International Affairs at Georgia Tech and thanking our panelist both sessions and our keynote address PRESENTER For a very stimulating dialogue today and I hope it's the beginning of something here.