California's venture into electricity deregulation a decade ago led to what the children's author Lemony Snicket might refer to as a "series of unfortunate events."
What had been intended as the crowning achievement of U.S. utility deregulation flopped. California's failure led to a bankruptcy reorganization by the (then) largest U.S. utility Pacific Gas & Electric, predatory market manipulation by evil-doers at Enron and widespread retail market failure triggered largely by the inability of price signals to be communicated to customers.
But from California's deregulatory rubble sprouted at least one good idea: the notion that two-way communication plays an essential role in the business relationship between customer and utility. The state's deregulation scheme failed largely because price signals could not be communicated from the wholesale market through the utility to the end user. Energy consumers had no real-time information on which to base their consumption decisions. Price signals from wholesale markets hit the utility and stopped dead.
The result of this market failure? To name just three, PG&E ended up in Chapter 11, Jeff Skilling ended up in federal prison and Paul De Martini became one of many to start on a personal technology development journey whose cumulative effect could turn out even bigger than the Internet.
De Martini's journey started with the recognition during deregulation's post-mortem that fatal communication flaws could be resolved by adopting a number of functionalities that today are seen as basic to the modern smart meter. Those functionalities helped the smart meter emerge as a fundamental technology driving smart grid and its promise to open markets to everything from small-scale distributed renewables to mass-market plug-in electric vehicles.
Cisco CEO John Chambers has said the smart grid has the potential to be 100 to 1,000 times larger than the Internet. One member of the team now responsible for leading Cisco's Smart Grid venture is its Vice President of Strategy and Chief Technology Officer for Smart Grid, De Martini.
Using the language of a technologist, De Martini (who joined Cisco earlier this year from Southern California Edison, where he was vice president of advanced technology) said the idea is to look at the physical configuration of circuits, communication networks and operating systems to deploy a "system of systems" that uses the grid as its foundation. "The totality is potent," he said. Bigger, perhaps, than the Internet.
De Martini is a native Californian who grew up in San Francisco's Sunset neighborhood. He recalls riding his bike through Golden Gate Park as a Fifth Grader during the 1967 Summer of Love. Early on he considered becoming an architect like his grandfather. In the end, he attended the University of San Francisco and earned a degree in Applied Economics. An MBA from USC followed along with a technology certificate from CalTech. He is currently a Fellow of the Wharton School at the University of Pennsylvania and focuses his professional efforts on smart grid technology and strategy (under the leadership of Cisco Senior Vice President Laura Ipsen) to build the company's business line.
De Martini's first utility job came in late 1977 when he joined Pacific Gas & Electric as an apprentice system operator. He later became a journeyman and for a decade worked at the utility's transmission and distribution levels. He migrated to engineering project management, including large substation projects, then left in 1995 to join Coastal Oil & Gas to work in wholesale markets. At the time wholesale markets were a go-go field that rocketed to prominence as deregulation fever swept out of the airline, telephone and natural gas industries to embrace (unevenly and, in some cases, with unfortunate events) the electric power industry.
Deregulation California-style included a mandate for investor-owned utilities to divest themselves of generating assets. So when De Martini joined Southern California Edison in 2002 he went to work in its information technologies organization setting up systems to enable the utility to procure power. By 2003 he was working on problems related to demand response and a state-backed effort to deploy first-generation smart meters to industrial customers, which made up 60 percent of SCE's demand load.
"After the energy crisis in California, it was recognized that providing energy use and pricing information to customers would allow them to make informed decisions about energy consumption that could mitigate wholesale market constraints," De Martini said in July 2009 testimony to a U.S. House of Representatives subcommittee on Energy and Environment. With state backing, SCE deployed smart meters to all of its largest commercial and industrial customers to provide timely energy information and online energy analysis tools to help them manage their energy costs.
Smart meters were a step in the right direction, but De Martini and his team at SCE found it hard to make a positive business case for the technology. The meter's one-way functionality was one stumbling block. Among other drawbacks, he said, were the meters' limited memory, inability to accommodate remote software upgrades and lack of adequate security.
