INFRA US 5

www.americainfra.com • Q4 2010

THE EMPIREGOESGREENHow a 20th century icon is transforming itself into a beacon of energy effi ciency

Ticket to rideHouston Metro’s George Greanias on his plans to keep the city moving

Cutting riskTodd Keil reveals the importance of a national infrastructure protection mission

Return to railWill a cash injection return the railroad to its former glory days?

In focus: Smart cities

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FROM THE EDITOR4

For nearly 80 years, the Empire State Building has been an integral part of the New York skyline. Since the building opened in 1931, 110 million visitors have made the pilgrimage to

the observatory on the 86th fl oor, to gaze in awe at the cityscape laid out 1050 feet below. The total height of the 102 fl oors plus antenna is 1453 feet, enough to give the ESB the title of world’s tallest building for more than 40 years.

From a business point of view, however, this regal representative of a bygone era was in danger of sliding downward on the desirability scale. A new generation of buildings has sprung up, boasting the design, technology and energy effi ciency components demanded by today’s leading-edge companies.

But the ESB isn’t ready to give up its hard won place at the top that easily. A groundbreaking collaboration between the building’s owner Malkin Holdings, the Rocky Mountain Institute, Jones Lang LaSalle, the Clinton Climate Initiative and Johnson Controls looks set to transform the building into a modern, energy-conscious marvel.

It won’t be cheap – the cost of the refi t is estimated at $13.2 million – but it will be well worth it, according to Tony Malkin, President of the company that owns ESB, Malkin Holdings. “We were spending a tremendous amount of money on the building in any event,” he tells us in this issue’s cover story. “So we thought, why not incorporate the whole energy effi ciency piece? And the reason for that is very straightforward: it’s a tremendous economic reward for us to design our renovation and upgrade program with energy effi ciency in mind.”

Th e return of the king

How a 20th century icon is transforming itself into an environmental leader.

Huw Th omasEditor

The sheer scale of the project is breathtaking. To refi t the building’s 6514 windows – which involves splitting them, inserting a Mylar sheet with a spacer, resealing them, and fi lling them with krypton-argon gas – will cost $4.5 million and require the services of a specialist contractor from Boulder, Colorado.

And the benefi ts could be equally colossal. In addition to the environmental pluses, the refurbishment also makes economic sense: the project’s partners predict annual savings on energy of $4.4 million, which would pay back the cost of the retrofi t in less than four years.

Elsewhere in this issue, Joseph Szabo examines the proposed transformation of another of the nation’s historic institutions, the national railway network; Jeff Johnson looks at the smart grid’s potential to encourage energy effi ciency; and George Greanias outlines his efforts to bring a light rail system to the city of Houston.

While these projects may not have the scale or the star quality of the Empire State Building refi t, they all play a vital role in keeping our country at the forefront of the latest infrastructure developments. Like the ESB, we can’t afford to rest on our laurels; we need to ensure we’re looking to the future, rather than feeling smug about the past.

“If we consider that most of the buildings we have now are going to be around for a long time, it is immensely valuable for the real estate world to learn how to do this sort of sustainability repositioning”

Robert Hutchinson, Program Director for Research and Consulting, Rocky Mountain Institute

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CONTENTS6

30

104

110Ticket to rideHouston Metro’s George Greanias tells US Infrastructure about his plans to keep the city moving

Return to railWill the railroad be returned to its former glory days through the advent of high-speed technology and a cash injection?

42 Electric avenueCould the gas-guzzler’s days be numbered? Pacifi c Gas & Electric’s Saul Zambrano explains how the utility is paving the way for plug in vehicles

Altered StateRetrofi tting a 20th century icon to drastically improve its energy effi ciency is a huge challenge, as Huw Thomas discovers.

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CONTENTS8

38

38 Paving the waySmart cities are have been called the next generation of urban infrastructure, but what do they actually entail?

54 Encouraging effi cient consumptionJeff Johnson looks at the smart grid’s potential to ramp up energy effi ciency

68 Network fail?Is the smart grid the greatest innovation of the 21st century or a gaping security black hole? US Infrastructure speaks with Professor Ross Anderson to fi nd out

72 Turn on the powerThe National Grid’s Edward H. White on the potential of solar energy

74 Modernizing the energy gridHow T-Mobile is creatively partnering with utilities to improve smart grid systems

76 Come togetherMatt Jackson answers our questions on the latest trends in public safety collaboration

78 Protect and saveWelcome to the unsung heroes of emergency response

86 Fading fastWhy the US can no longer afford to forget about its water infrastructure

90 Every drop countsKim Stoll reveals the importance of advanced metering solutions for water conservation

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68

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CONTENTS10

100

Roundtables

48 Getting smarter60 Super grid

Ask Th e Expert

84 Dennis Smagac, Intelagard92 Dan Kroll, Hach Homeland Securities Europe

124Executive Interview

98 Connecting the anywhere, anytime enterpriseJeff Newman discusses how Enfora is focusing on a systems and solutions approach to connecting remote assets to the enterprise

118

94 Cutting riskWith Todd Keil, Assistant Secretary for Infrastructure Protection at the Department of Homeland Security

100 Connecting AmericaThe FCC’s bold roadmap for the future of broadband

116 How enterprise content management is making a diff erenceWith Philip Cleghorn

118 Deadly skiesIATA’s Gunther Matschnigg talks about the challenges for the aviation authority

124 Bay of plentyA look at the landmark mega-project, Bahrain Bay

130 Safety fi rstWhy offshore health and safety is becoming increasingly important

134 Country focus: Portugal

Details

138 36 hours in…Los Angeles140 Agenda142 Objects of desire143 Books144 Photofi nish



A Proven FormatThis inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning.

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A Controlled, Professional and Focused Environment

The CIO US Summit is a three-day critical information gathering of the most infl uential and important executives from across all sectors.

CIO US Summit 2011

To fi nd out more, call+44 117 915 4812

Chairman/Publisher Spencer GreenWorldwide Sales Director Oliver SmartFinance Director Jamie Cantillon

Editor Huw ThomasManaging Editor Ben ThompsonAssociate Editor Rebecca GoozeeContributors Ian Clover, Lucy Douglas, Nicholas Pryke, Julian Rogers, Stacey Sheppard, Marie Shields

Creative Director Andrew HobsonDesign Director Sarah WilmottAssociate Designers Daniel Clayton, Élise Gilbert, Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson

Online Director James WestOnline Editor Jana Grune

Project Director Brooke ThorpeSales Executives Melissa Luongo, Faro Levy Smith, Oliver Roe

Production Director Lauren HealProduction Coordinators Renata Okrajni, Aimee Whitehead

VP North America Jason GreenOperations Director Ben KellyIT Director Karen BoparoyMarketing Director John Funnell

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14 THE BRIEF

Five years ago, Katrina, a category four hur-ricane, took the Gulf Coast by storm and destroyed more than 90,000 square miles, forcing 800,000 people from their homes.

The storm was one of the most costly natural disasters – 1836 people lost their lives in the hurricane and its subsequent fl oods – as well as one of the fi ve deadliest in US history.

In New Orleans, the levee system catastrophically failed, with eventually 80 percent of the city and large tracts of the neighboring parishes fl ooded with water lingering for weeks. Two months after the hurricane, around 250 billion gallons of water had to be drained out of the city.

The initial response to the disaster was slow, exposing holes in the nation’s disaster preparedness plans, and through the Gulf Coast region, particularly in Louisiana, it was marred by a toxic combination of red tape, turf battles and mistrust between state and federal offi cials.

A June 2007 report released by the American Society of Civil Engineers states that the failures of the locally built and federally funded levees in New

Katrina: Five years on

Orleans were found to be primarily the result of system design fl aws. According to new modeling and fi eld observations by a team from Louisiana State University, the Mississippi River Gulf Outlet (MRGO), a 650 foot-wide canal designed to provide a shortcut from New Orleans to the Gulf of Mexico, helped to provide a funnel for the storm surge, making it 20 per-cent higher and 100-200 percent faster as it crashed into the city.

Five years later, and sadly little has changed, with thousands of displaced residents in Mississippi and Louisiana still living in temporary accommodation. ‘For Sale’ signs still litter the city as abandoned homes and schools line the streets next to those homes that were renovated. Much of the coastline remains bare where the storm surge washed away infrastructure, including homes and businesses. And while repairs have been made to roadways and bridges, little else has been done.

In the city itself, the residents are still working to restore what they can, but there is no doubt that it has altered the soul of the city – and its popula-tion – signifi cantly. But, while concerns remain about

“Th e devastating consequences of the levee failures in New Orleans serve as a stark reminder of how vitally important critical infrastructure systems are to the wellbeing of its people”

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15THE BRIEF

The sun sets on a gate protecting the levee on the city’s 17th Street Canal.

Mourners pray during a healing ceremony at the site of the Lower Ninth Ward levee breach on August 29, 2010 in New Orleans, marking the fi ve year anniversary of Hurricane Katrina.

A casket is fi lled with written notes and a fi re helmet in memory of Hurricane Katrina inside the church at Our Lady of Prompt Succor in Chalmette, Louisiana.

housing and coastal restoration, New Orleans and the surrounding region is undergoing a slow and fragile, yet positive transformation.

The government has so far spent $143 billion on the reconstruction of public buildings and private homes, roads and bridges, and the Army Corps of Engineers has spent $14 billion improving the system of pumps, barri-ers, gates and levees designed to protect New Orleans from future hurricane disasters. Now three-quarters complete, these will be fi nished next year.

A master plan has fi nally been adopted and the mayor of New Orleans recently announced a list of long-stalled recovery projects, unveiling a roster of 100 projects his administration is committed to launching. Yet, even with the 411 projects that are currently fi n-ished or under construction, the list still falls well short of the 655 projects laid out in the $1.5 billion recovery plan that was set immediately after the disaster.

Why the shortfall? Well the city currently only has $1.2 billion to spend, therefore the project list has been culled, leaving many projects in limbo. Indeed, the gap between the city’s infrastructure needs and its fi nancial resources is huge and it is unlikely the city will be able to fi x its many ills; New Orleans will not get enough money to properly build every section of town.

The rebound effort so far as been a piecemeal effort from neighborhood to neighborhood, fueled by newly formed associations, energized residents and volunteers. And that patchwork recovery extends beyond housing to streets, water pipes, sewer lines and the drainage system. The current outcome refl ects the warnings originally given by urban planners and others who urged local leaders to reduce the footprint of the city to cater to its reduced population and eliminate the possibility of this very situation.

It’s too late to change that now. However, the lessons learned from the infrastructure and policy failures triggered by Hurricane Katrina have had and continue to have profound implications across America: the protection of safety, health and welfare must remain at the forefront of the nation’s priorities. The devastating consequences of the levee failures in New Orleans serve as a stark reminder of how vitally important critical infrastructure systems are to the wellbeing of its people. It also demonstrates what is at stake if we do nothing to improve them.

While there is still so much to be done to help New Orleans – among which is the $1.4 billion to replace streets and drainage infrastructure and another $40 million per year for maintenance of those facilities – and the surrounding region affected by Hurricane Katrina, residents remain resilient and positive that the city will eventually recover from the disaster.


16 UPFRONT

Investing in the future

Embracing the virtues and ethics of sustainable forestry, two businessmen are using one of the most valuable commodities in the world to make a profi table turnover, create capital in communities linked to the rainforest, broaden local social prospects and support the long-term viability of the ecosystem.

Five years ago, Andrew Skeene and Omari Bowers were busy making their for-tune in the UK, riding high on the wave of the property boom. However, when the market started to crumble they realized it was time to burn their boats and look for other opportunities. It was around this time that they stumbled upon the forestry investments, a market that has grown 20 percent per annum in the past few decades, overtaking the growing rate of the property market in 2007.

Several years on and Skeene and Bowers are the founders of Global Forestry Investments (www.globalforestryinvestments.com), a company that expects to turn over $6-10 million this year and acquire 10,000 hectares of rainforest. Skeene says, “Five years ago there was no way in a million years we could have imagined we’d be buying land to grow trees in Brazil. I suppose you could say for us trees are the houses of the future. It’s also given us an incredible opportunity to help improvised communities.”

One of the main issues for the two men is creating sustainable forestry that will help transform the lives of villagers living in the area. As part of the project, they also want to help provide education, water supply and a stable economy – something they are extremely passionate about. Inspired by the local people, the entrepreneurs plan to establish a local school, soccer academy and performing arts center within the next few years. They also recognize that Brazil is the main battle ground for climate change, and for every tree an investor purchases through their company, Skeene and Bowers will match it by planting a new tree that will remain completely protected – essentially helping to reforest the Amazon.

Bowers says, “For us, Brazil isn’t just a business venture. It has given us an op-portunity to genuinely make a big difference to many people’s lives and that is some-thing that drives both of us. The next 10 years are going to be a huge decade in the fi ght against climate change and it fi lls us with a great sense of pride that we are going to be part of that.”

Brazil is home to more tropical forest than any other nation, but since 1960, 232,000 square miles of rainforest have been destroyed. Between May 2000 and August 2006, Brazil lost nearly 58,000 square miles of forest, an area larger than Greece.


17INTERNATIONAL NEWS

Construction sufferingRomania’s construction industry suffered more than any other Central European country during 2009’s economic down-turn. Figures released by research fi rm PMR Consulting showed that the construc-tion industry contracted by 15.1 percent last year, following impressive growth of 33.6 percent and 26 percent in 2007 and 2008 respectively. USINF rating: ***

Climate changeAustria’s mountains could be more at risk from climate change than other, fl atter countries, according to a recent collabora-tive by the University of Exeter and Austrian researchers. Unpredictable hazards from landslides, rock falls, debris fl ows and melt-ing glaciers increases as climate change continues to play havoc with the country’s seasons.USINF rating: ****

Around the world in 80 days

Providing pointersThe so-called ‘Australian model’ for infra-structure development – strong government support and robust private-sector involve-ment and discipline – is being touted as a so-lution to New Zealand’s infrastructure woes. More than 50 PPP’s have been completed in Australia in the last decade, compared to New Zealand, which barely left the starting blocks.USINF rating: ****

Urban infrastructureThe Asian Development Bank (ADB) is ex-tending a 150 million multi-tranche fi nanc-ing facility to help India’s National Capital Region (NCR) accelerate plans to build urban infrastructure. The fi nancing facil-ity will allow the NCR to identify bankable projects, extend capacity-building and help attract private investors and public-private-partnerships into the sector.

USINF rating: ****

Urging spendingScotland’s economic fortunes are more likely to receive a boost from spending on infra-structure projects than on preserving exist-ing services, a new report shows. The report points to evidence from previous periods of public spending squeezes and suggests that “maintaining and developing Scotland’s in-frastructure spend” will be a key element in ensuring a brighter future for the nation. USINF rating: ***

Last placeThe poor quality of Brazil’s roads, ports, railroads and airports is nothing new but a new international poll has shed more light on it, showing that Brazil ranks bottom of the list despite investments launched four years ago. Indeed, the only sector that Brazil shines in is its energy offering , which is far above the average.USINF rating: ****

Our guide to the last quarter’s global events – and their impact on your business.


18 UPFRONT

Transportation solution keeps agencies on the right road

Intergraph’s Transportation Solutions enable trans-portation agencies to more clearly, effi ciently and cost-effectively manage and protect their road-way infrastructure. Working with more than 30

transportation departments across the US, Intergraph solutions help streamline operations, maintain compli-ance with federal regulations and improve safety and driving conditions for motorists by quickly addressing

potential issues through faster, more informed decision-making. The company’s open solutions integrate with commercial map providers, such as Microsoft Bing and Google, as well as commercial data sets, including NAVTEQ and TeleAtlas.

Intergraph’s Transportation Solutions include Automated Routing for Oversized and Overweight (OS/OW) Vehicles, which integrates information pertaining to bridg-es, construction projects, turn movements, or other roadway infrastructure data, with the network to safely and accurately route vehicles through the system. The Multilevel Linear Referencing System (MLRS) eliminates the need for multiple data models and manages data translation between linear referencing methods on the fl y. In addition, the Straight Line Diagram (SLD) web service enables users to control the portion of the road they want to analyze, and view data in a way that can be easily interpreted and analyzed.

Now, the company’s solutions enable transportation agencies to gain a real-world view of their network in 3D. With Intergraph’s GeoMedia 3D, it is possible to better visualize and evaluate conditions, which supports improved decision-making.

Intergraph’s 3D-enabled transportation solutions can help users more effectively assess the visual impact of new projects, present data trends more intuitively, and pro-vide an effective communication method for informing authorities and the public. They also equip users to make more confi dent, informed decisions about your transportation infrastructure. With a 3D perspective of the network, road planning and design can be improved via dynamic fl y-throughs of a route. Agencies can also provide the public with a realistic perspective of project impacts and visualize statistical trends. For more infor-mation on GeoMedia 3D, visit www.intergraph.com/geomedia3d.

A new report, released by the American Public Transportation Association, which surveys current research has found that people who live in communities with high-quality public

transportation drive less, exercise more, live longer, and are generally healthier than residents of communities that lack quality public transit.

Evaluating Public Transportation Health Benefi ts, a study conducted for APTA by Todd Litman of the Victoria Transport Policy Institute aggregates the fi ndings of several recent studies and concludes that people living in transit-oriented “smart growth” communities enjoy several health benefi ts, not seen in other communities, including that residents drive less, exposing them to a lower risk of fatal vehicle accidents.

Such communities also have less pollution, because public transportation produces far less emissions per passenger mile than private automobiles. In addition, people who live near quality public transit are more likely to undertake regular physical activity than residents of automobile-dependent communities.

“Public transportation enhances the overall qual-ity of life of an individual and a community,” says APTA

President William Millar. “Use of public transit simply means that you walk more which increases fi tness levels and leads to healthier citizens. More importantly, increasing use of public transit may be the most effective traffi c safety counter measure a community can employ.”

The APTA report notes, transportation activity also plays a role in lessening an individual’s risk in fi ve of the 10 leading causes of reduced lifespan, as identifi ed by the Centers for Disease Control and Prevention (CDC). A recent CDC study evaluated causes of potential years of life lost, including cancer, heart disease, motor vehicle crashes, and other causes. For example, “Pollution contributes to cancer and congeni-tal anomalies [birth defects], and sedentary living ... contributes to heart disease and strokes,” Litman wrote.

One solution is smart growth communities, according to Litman, who cited a 2003 study fi nding that urban residents had signifi cantly lower violent death rates, whether from vehicle accidents or other causes.

Litman also noted that the 10 US counties with the “smartest,” most transit-orient-ed growth have approximately one-fourth the traffi c fatality rates as those counties with the most sprawling development. For example, the traffi c fatality rate for the Bronx, NY was approximately four per 100,000 residents. However, for Miami, KS, the rate was almost 40 per 100,000.

Moreover, other recent studies have found that users of public transportation walk more than those who do not use public transit, regardless of income. The health ben-efi ts of public transportation should be given greater consideration in transportation planning, Litman concluded.

Benefi ts of public transportation



20 TOP 10

10. Ryugyong Hotel, North KoreaSucking up nearly two percent of North Korea’s GDP over the past two decades, construction started on the Ryugyong Hotel in 1987 and fi nished in 1992 and yet it still remains unopened, unoccupied and uncompleted. The 1083-feet giant, even in its uncompleted state re-mains the twenty second largest skyscraper in the world.

9. Mets Citi Field, New York, USThis fi eld has countless problems from shorting elec-tricity to water leaks and mould. $850 million was spent on the replacement for Shea Stadium, yet money keeps pouring in to mitigate the mountain of problems. Hunt-Bovis, the contractor that built the fi eld, is being investigated by prosecutors over whether the company over-billed for work on the stadium.

8. Kangbashi District of Ordos City, ChinaIn an effort to increase its GDP, the Chinese govern-ment decided to build the Kangbashi District of Ordos about 18 miles away from the original city. Built in just fi ve years and completed in 2004, $352 million was spent on roads alone. While a majority of the homes have been sold, most were bought as investment and as such the town intended for one million residents remains empty and deserted.

7. Olympic Stadia, Athens, GreeceAthens spent $11 billion – about double the country’s budget – on more than a dozen sports venues for the 2004 Olympics, including a baseball diamond, a man-made kayak course and a Tae Kwon Do and Handball Olympic stadium. Today, more than half the sites are vacant and have to be patrolled by private security guards.

6. Burj Khalifa, Dubai, UAEThe tallest building in the world was completed in January 2010. However, while itc cost $1.5 billion to build, just one month after its grand opening, the build-ing closed to the public due to electrical problems on the observation deck on the 124th fl oor. It was even forced to change name from the Burj Dubai to the Burj Khalifa after the emirate’s debt problems meant it forced to take bailouts from neighboring Abu Dhabi – part of the loan agreement was that they re-name the tower after the UAE President, Khalifa bin Zayed Al Nahyan.

Top 10 design fails

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10

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21TOP 10

5. The Millennium Dome, London, UKDesigned to house the Millennium Experience, the Millennium Dome cost $1.25 billion to build and $41 million was spent closing it down in December 2000. With only half the number of visitors that were expected actually visiting, the press largely reported it a fl op, despite visitor feedback being extremely positive. The dome was publicly renamed The O2 on 31 May, 2005 after a radical revamp and is now an entertain-ment district with indoor arena, music club, cinema and exhibition space.

4. Experience Music Project, Seattle, USIntended to showcase rock memorabilia and offer interactive music exhibitions, The Seattle Music Project was founded in 2000 by Microsoft co-founder Paul Allen and designed by Frank Gehry. New York Times architecture critic Herbert Muschamp described it as: “Something that crawled out of the sea, rolled over and died.”

3. Dubai Aquarium, Dubai, UAEPart of the $20 million Downtown Burj Dubai development project, the Dubai Aquarium is located in the world’s largest shopping mall, the Dubai Mall. 60,000 tickets were sold in the fi rst fi ve days, but two years in disaster struck when on February 22, 2010, the central part of the mall had to be evacuated after water was found gush-ing out of a crack in the aquarium’s glass. It took six divers to stop the leak.

2. Chelsea Waterside Park, New York, USChelsea Waterside Park caused quite a stir when it was renovated in 2000 and Manhattan parents got their fi rst look at the phallic shapes. While some have called for the park to be remodelled, the children still enjoy frolicking here.

1. The Lotus Riverside Complex, Shanghai, China Rushed and poor construction meant that one of the buildings at the Lotus Riverside complex in Shanghai collapsed on June 27, 2009, killing one worker. The 13-storey apartment building was one of 11 in the complex and was near completion when it toppled. Nine offi cials, including the real estate developer, contractor and the supervisor for the project were detained by authorities and put under the spotlight for being connected to the massive disaster.

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22 IN MY VIEW

Rethinking the Bilbao eff ect

Now that the summer vacation season is upon us, ask yourself: Where would you like to be going this year? To see I.M. Pei’s Rock & Roll Hall of Fame in Cleveland? Calatrava’s Art Museum in Milwaukee? How about the Daniel Liebeskind ‘Crystal’ addition to the Royal Ontario Museum in

Toronto? Jean Nouvel’s KKL in Luzern, Switzerland?Unless you’re one of the rather small breed of ‘architourists’, you’re probably

going to none of these places. Instead you’re probably going to a Caribbean island with ramshackle houses dotting the hillsides, a hand-built family cottage by the lake, or some old city with charmingly weathered downtowns.

For most, the architecture isn’t the attraction but merely the backdrop. And yet for the last 15 years, cities the world over have been tripping over each other in a misguided effort to recruit the latest ‘starchitect’ in pursuit of the much valued Bilbao Effect.

Named for the Spanish city of Bilbao where architect Frank Gehry built the Guggenheim Museum in 1997, the Bilbao Effect states that one or two iconic build-ings can transform run-down, industrial cities into wealth-generating, tourist-attracting meccas of prestige and cultural envy.

It’s also an effect that probably doesn’t exist. Two years ago Gehry himself called the concept “bullshit”.

The success in Bilbao was a product of too many community-building initiatives to boil ‘the Effect’ down to a museum. Not the least of these initiatives was the suspension of hostilities between the Spanish government and separatist terrorists headquartered in Bilbao.

Bilbao also isn’t – and never was – Milwaukee or Cleveland. The downtown had never been hollowed out due to mass suburbanization and the city center is a con-clave of stunning gothic buildings and narrow, crooked alleys. It was always just the prototypical European city you’d never heard of.

Bilbao also benefi ted from being an overnight train ride from Barcelona; a 45 minute drive from the glorious beach resort city of San Sebastian and a 90 minute drive from Pamplona and its annual Running of the Bulls.

Yet none of those things are ever mentioned when city councilors and boards of directors invoke The Bilbao Effect.

Instead, they use Bilbao as an expensive shortcut to prosperity when proper city building and originality of vision would’ve done the job better. With a blind eye for irony, they believe that by doing what everyone else is doing, they’re going to craft something unique and remarkable and the world will land on their doorsteps.

Problem is, when everyone has a Frank Gehry, what’s a Frank Gehry really worth? It’s great business for the architects who collect tens of millions of dollars in fees, but a lousy investment for the city and its taxpayers.

Likely the only starchitect to ever have a clear and lasting impact on a city and its fortunes was Antoni Gaudi and his work in Barcelona in the late 1800s. There, Gaudi built dozens of iconic masterpieces and designed a revolutionary plan for the city’s eventual suburban expansion.

The thing about Gaudi is this: virtually every single one of his commissions oc-curred in Barcelona. And so, if you want to see Gaudi, there’s only one place you can

Steve Dale, the founder of Creative Urban Projects, discusses the much-valued ‘Bilbao Eff ect’ – how a couple of iconic build-ings can transform a single city.

do it. You can’t fi nd Gaudi in Pittsburgh.In the practice of tourist-hunting, what draws

people to Barcelona or New York or Paris or Rome is uniqueness of place, not ‘starchitecture’.

Consider Greece, one of the most popular tourist destinations in the world. Greece is blessed with three major attributes for tourists: The Parthenon; being the birthplace of western culture; and the image of white-washed homes overlooking the Mediterranean. Not a single one of them can be had any place else on earth.

In fact, those whitewashed homes are so specifi c, they can barely be considered Greek and are instead Cycladic. That is, they’re specifi c to the Cyclades, a small Greek island group. More specifi cally, they’re from Santorini, the black volcanic sand jewel of the Mediterranean that some archaeologists speculate is the location of the lost city of Atlantis. Unique, indeed.

There isn’t a single piece of starchitecture in all of Santorini, just some small white homes with blue roofs. But because the city understands that small white homes with blue roofs are unique, they preserve them through some of the most restrictive building codes and regulations around.

Is it any surprise then that Santorini is one of the most popular destinations in all of Greece?

Architects may not like to admit it, but these small, vernacular bungalows are worth more to Santorini than anything Frank Gehry, Moshe Safdie or Renzo Piano could ever provide.

Steven Dale is the founder of Creative Urban Projects (CUP Projects) in Toronto, Canada. He is an expert on Cable-Propelled Transit with several years experience researching and consulting on the matter. Dale recently launched The Gondola Project, an information campaign in support of CPT. For more information, visit www.gondolaproject.com or www.creativeurbanprojects.com.


23PROJECT FOCUS

Bank of America Tower, One Bryant Park, NYC

Completed earlier this year, Bank of America’s 1200-foot new corporate head-quarters is now the second

tallest structure in New York City. However, that’s not the only area in which it stands out at. Thanks to in-novative construction and the latest environmental technologies it is also the greenest building of its type in the world. We take a look at the key ingredients of the globe’s fi rst LEED Platinum-rated hi-rise commercial building.

WaterWaterless urinals and systems that capture and re-use rain and wastewa-ter, enable savings of 7.7 million gal-lons per year

GlassFloor to ceiling windows are made of insulating glass to maintain heat and maximize natural light

ConcreteBuilt with a mix of 55 percent cement and 45 percent slag, a by-product of blast furnaces

IceUsing low-cost off-peak power, ice is made overnight and used to cool the building during the day

ElectricityA 4.6 megawatt cogeneration plant provides base load energy require-ments and reduces transmission losses, lowering energy use by two thirds

AirPurifying air as it both enters and leaves the building, the tower effec-tively acts as a giant fi lter for midtown Manhattan


24 UPFRONT

Planes, trains and automobilesOn Labor Day 2010, President Obama announced a fresh round of funding for vital transportation infra-structure. We break down the key points.

Th e speech

Over the next six years, we are going to rebuild 150,000 miles of our roads – enough to circle the world six times. We’re going to lay and maintain 4000 miles of our railways – enough to stretch coast-to-coast. We’re going to restore 150 miles of runways and

advance a next generation air-traffi c control system to reduce travel time and delays for American travelers – something I think folks across the politi-cal spectrum could agree on.

This is a plan that will be fully paid for and will not add to the defi cit over time – we’re going to work with Congress to see to that. It sets up an Infrastructure Bank to leverage federal dollars and focus on the smartest investments. It will continue our strategy to build a national high-speed rail network that reduces congestion, travel times, and harmful emissions. It will cut waste and bureaucracy by consolidating and collapsing more than 100 different, often duplicative pro-grams. And it will change the way Washington spends your tax dollars; reforming the haphazard and patchwork way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and more on competi-tion and innovation that gives us the best bang for the buck.

All of this will not only create jobs now, but will make our economy run better over the long haul. It’s a plan that history tells us can and should attract bipartisan support. It’s a plan that says even in the still-smoldering aftermath of the worst recession in our lifetimes, America can act to shape our own destiny, to move this country forward, to leave our children something better – something lasting.

Money talks

The President intends to work with Congress to enact a new up-front invest-ment in the nation’s infrastructure that would help jump-start additional job cre-

ation, while also laying the foundation for future growth. This initial investment would fund im-provements in the nation’s surface transportation, as well as airports and air traffi c control systems.

The President proposes to pair this with a long-term framework to reform and expand American investment in transportation infrastructure. Since the end of last year, when the last long-term surface transportation legislation expired, these invest-ments have been continued on a temporary basis, even as the trust fund to fi nance them has fallen into insolvency. The administration argues that, if the US is to continue to benefi t from a world-class transportation system, Congress must enact a long-term reauthorization that expands and re-forms infrastructure investments and returns the transportation trust fund to solvency. To jumpstart job creation, this policy is front-loaded with a $50 billion up-front investment, constituting a signifi -cant share of the new infrastructure resources. As with other long-run policies, the Administration is has signalled its intention to work with Congress in order to fully pay for the plan.


25UPFRONT

Key spokes

Rebuild 150,000 miles of roads The nation’s highways serve as the back-bone of America’s transportation system. Many roads and bridges are in need of repair and expansion and many of the Americans who want to do this work face high unem-ployment right now. These investments would be focused on modernizing the high-way system’s critical assets while providing much-needed jobs.

Construct and maintain 4000 miles of railThe President’s plan would help address the dilapidated state of much of America’s transit system, by making a major new investment in it. The Administration is also committed to expanding public transit sys-tems and wants to dedicate signifi cant new funding to the New Starts program – which supports locally planned, implemented, and operated major transit projects. In ad-dition, there is commitment to build on investments made so far in high-speed rail. The aim is to construct a system that will in-crease convenience and productivity, while also reducing the nation’s dependence on oil and cutting down on pollution. The plan would also invest in a long-overdue overhaul of Amtrak’s fl eet.

Rehabilitate or reconstruct 150 miles of runway The Administration proposes to invest in the nation’s airports by improving their runways and other equipment and facilities. It also proposes a robust investment in efforts to modernize the nation’s air traffi c control system as part of the ongoing NextGen initiative. This investment will help both the FAA and airlines to install new technologies and, among other improvements, move from a national ground-based radar surveil-lance system to a more accurate satellite-based surveillance system. This will provide the backbone of a broader effort to reduce delays for passengers, increase fuel effi cien-cy for carriers, and cut airport noise for those who live and work near airports.

“Th e President’s plan would help address the dilapidated state of much of America’s transit system”

This bank would leverage private and state and local capital to invest in projects that are most critical to economic progress. It marks an important departure from the

federal government’s traditional way of spending on infrastructure through earmarks and formula-based grants that are allocated more by geography and politics than demonstrated value. Instead, the bank will base its investment decisions on clear analyti-cal measures of performance, competing projects against each other to determine which will produce the greatest return for American taxpayers.

The integration of high-speed rail on an equal footing into the surface transportation program to ensure a sustained and effective commitment to a national high speed rail system over the next generation.

Streamlining, modernizing, and prioritizing surface transportation invest-ments, consolidating more than 100 different programs and focusing on using performance measurement and ‘race-to-the-top’ style competitive pressures to drive investment toward better policy outcomes.

Expanding investments in areas like safety, environmental sustainabil-ity, economic competitiveness, and livability – helping to build communities where people have choices about how to travel, including options that reduce oil consumption, lower greenhouse gas emissions, and expand access to job opportunities and housing that’s affordable.

Major reforms: establishment of an Infrastructure Bank


26 UPFRONT

With the help of specialists from around the world, IJ and KPMG compiled the Infrastructure 100 through months of research and debate. The end result

is a subjective refl ection of culture, politics, economics and insight from some of the best minds in architecture, engineering, construction, fi nance, law, public policy and academia.

In 10 sections ranging from education to health, roads and rail projects, the Infrastructure 100 covers it all. Looking at renewables in particular KPMG’s Adrian Scholtz believes that deal-making and transactions will continue to dominate the outlook for the sector. However, there still remains a signifi cant gap between the valuation expectations of sellers and acquirers.

The top 10 leaders in the renewables sector according to the Infrastructure 100 are:

Infrastructure 100

Estimated fi ve-year funding requirements for US rail:

In 2010, the US construction industry is forecast to emerge from a fi ve-year decline, which reached its trough in 2009 at -9.9 percent year-on-year (y-o-y). Bolstered by the stimulus package, which is due to focus on projects in its second year, the industry is forecast to grow by 1.6 percent in 2010.

Although this indicates only minimal growth, this is due to the infl uence of the still stagnant residential construction sector on the construction industry value. In turn, infrastructure, as a component of construction industry value, is forecast to outperform the sector as a whole, with 2.8 percent y-o-y growth anticipated for 2010.

• Construction industry value growth is to peak in 2011, as the majority of stimulus funding for projects is due to be disbursed in late 2010 and early 2011

• Infrastructure is to outperform construction industry over the forecast period• Increasing private sector participation presents upside potential beyond 2011

Growth in 2010

Total investment needs $63 billion

Estimated spending $51.3 billion

Projected shortfall $11.7 billion

1

Incheon Tidal Power ProjectSouth Korea

2

Arcosol TermesolSpain

3

Cape WindUS

4

Dunhuang 10 MW PV ProjectChina

5

Hidromaule LircayChile

6

KenGen 20 MW Geothermal ProjectKenya

7

London Array Offshore WindUK

8

Ontario Wind and Solar ClustersCanada

9

Parc Eolien Taiba NdiayeSenegal

10

Parque Eolico TalinayChile


27UPFRONT

• 22 percent of Texas’ bridges are structurally defi cient or functionally obsolete

• There are 88 high hazard dams in Texas• Texas’ drinking water infrastructure needs an investment

of $28.l7 billion over the next 20 years• 32 percent of Texas’ major roads are in poor or mediocre

condition• Vehicle travel on Texas’ highways increased 50 percent

from 1990 to 2007• Texan ports handled 487 million tons of waterborne traffi c

in 2005, ranking fi rst in the nation

State focus: Texas

According to the 2009 Report Card for America’s Infrastructure there is a fi ve-year investment shortfall of $1.176 trillion

Texas ranked second in the quality of hazardous waste produced and fourth in the total number of hazardous waste producers

47 percent of Texas’ major urban highways are congested

Texas has $5.64 billion in wastewater infrastructure needs

103 of Texas’ 7478 dams are in need of rehabilitation to meet applicable state dam safety standards


UPFRONT

If you thought your daily drive to the offi ce in New York, LA, Chicago or any other congestion hotspot was a chore, spare a thought for unlucky commut-ers in China, where some Beijing-bound travellers

were held up in a traffi c jam that lasted for over 10 days last month.

Thousands of motorists were caught up in a 60-mile tailback that took several weeks to clear. While many motorists took detours, some ended up trapped for up to fi ve days, sleeping in their cars and taking shifts behind the wheel.

The gridlock resulted from a combination of peak seasonal travel, increased freight traffi c and road construction. But it was made worse by a lack of information about traffi c conditions available to some motorists, according to analysis from US-based research group the Texas Transportation Institute. As the traffi c jam grew, many continued to drive into it – probably not knowing what they were in for, because while traffi c reports in China’s major cities are thorough, they aren’t as good or as easy to get in outlying areas.

In recent years, China has embarked on a huge expansion of its national road system but traffi c periodically over-whelms the grid. According to govern-ment data, Beijing is on track to have fi ve million cars on its roads by year’s end, with the four million mark passed last December. And the bad news for frazzled Chinese commuters is that the situation could get worse before it gets better: estimates suggest that with around 1900 vehicles added to Beijing’s street each day, it could take years to get traffi c under control.

“If there’s no traffi c jam in the city, that would be news,” said Niu Fengrui, Director of the Institute for Urban and Environmental Studies at the Chinese Academy of Social Sciences, while the head of the Beijing Transportation Research Centre, Guo Jifu, warned that traffi c in the capital could slow to under 15 kilometers an hour on average if further measures were not taken to limit the number of cars.

Private cars are currently kept off Beijing’s roads for one day per week depending on licence plate num-bers, but an alternative solution could be the launch of a so-called ‘super bus’ aimed at improving public transport while minimising the impact on road traffi c.

“Estimates suggest that with around 1900 vehicles added to Beijing’s street each day, it could take years to get traffi c under control”

28

Due to be tested in the coming months in the western part of Beijing, the bus will travel on rails and straddle two lanes of traffi c, allowing cars to drive under its pas-senger compartment, which holds up to 1400 people. “We’re going to start laying down test tracks along a six-kilometer stretch towards the end of the year,” Song Youzhou, Chief Executive of design fi rm Shenzhen Hashi Future Parking Equipment, told AFP in August.

“From the second half of 2011, we’re planning to test the bus with passengers on board,” he added, noting that after a full year of trial runs, authorities would make a decision on whether to use the bus on a wider scale. Authorities hope to install 180 kilometers

of such bus lines eventually, including a route to the capital’s international airport.

If successful, the scheme could provide a blueprint for traffi c-easing solutions around the world, includ-ing the Middle East – which, in common with China, has a relatively immature highway network. According to Shawn Turner, a senior researcher with the Texas Transportation Institute, while the major traffi c arteries in fast-growing economies tend to be pretty well devel-oped, the lack of well maintained smaller, alternative routes causes a problem when traffi c congestion kicks in. Taking the back roads just isn’t an option in many cases. “There isn’t the redundancy we take for granted here [in the US],” he told the Wall Street Journal.

Great Crawl Of China


29UPFRONT

Much like the baby boom generation, transportation infrastructure is heading for its 50th birthday and retirement. Estimates vary on just how much it would take to fi x the nation’s roadway and transit systems, but most experts have predicted about $200 billion a year,

ongoing well in to the future. All very well, but there is less than one-third of that funding available. In

Minnesota, the state Department of Transportation projects a $50 billion shortfall between now and 2028. However, while the future is in doubt, there is currently $1.2 billion earmarked for roadway and bridge projects during the current fi scal year in the state.

It is hoped that spending in the recession will allow the department to get more for their dollars, plus improve unemployment rates: for every $1 million spent on road construction, 27 people are employed full-time for a year. And as the state emerges from the downturn, the long-term impacts are more important, as it is proven that states with updated transportation systems enjoy a competitive advantage.

Signs of progress

Companies in this issue are indexed to the fi rst page of the article in which each is mentioned.

Company index Q4 2010

American Cable Association (ACA)American Society of Engineers (ASME)American Water Works Association (AWWA)Badger MeterBaltimore Gas & ElectricBMWBPBPL Global (BPLG)Cambridge University Center for Strategic and International StudiesChevronCiscoClick SoftwareClinton Climate InitiativeComvergeConstellation EnergyeMeterEnforaEnvironmental Protection Agency (EPA)Federal Communication Commission (FCC)Federal Railroad AdministrationFrost & SullivanGeneral MotorsGoogleHach Homeland Security TechnologiesHilson MoranHondaHouston METROIATAIntelagard

1008686

90, 915442

13011, 60, 67

6894

130IFC, 48

109306054

60, 63, OBC59, 98, 99

86100104

424242

7, 92, 9312442

110118

84, 85

IntergraphItronJohnson ControlsJones Lang LaSalleLiving PlanITMalkin HoldingsMcAfeeMeettheboss.comNational GridNissanOpen TextOSISoftPacifi c Gas & ElectricPolycomRocky Mountain InstituteSan Diego County Water AuthoritySan Francisco Fire DepartmentSandia National LaboratorySmartGridCitySouthern California EdisonSt Louis Area Regional Response SystemT-MobileTransoceanTwitterUniversity of BoulderUS Department of Homeland SecurityUS Minerals Management Service (MMS)VerizonXcel EnergyYouTube

18, 192, 48, 1325, 60, 65

30383094

1297242

9, 115, 11648, 51

4213, 76, 77

30867886384278

74, 75130100

3894

13048, 53, IBC

38100


Retrofi tting a 20th century icon to drastically improve

its energy effi ciency is a huge challenge, as

Huw Thomas discovers.

Retrofi tting a 20th century icon to drastically improve

its energy effi ciency is a huge challenge, as

Huw Thomas discovers.

Altered State

COVER STORY30

Empire cover story.indd 30Empire cover story.indd 30 29/09/2010 14:0629/09/2010 14:06

In fi lms, it’s been scaled by a giant ape, vaporized by invading aliens and, most terrifyingly of all, wit-nessed a romantic clinch between Meg Ryan and Tom Hanks. In reality, it was the tallest structure in the world for over 40 years and is an unmistakable feature of New York City’s skyline. Th e Empire State Building is a true American icon: completed in 1931,

it is still the third tallest building in the US and the 15th tallest in the world, a continuing reminder of the nation’s towering ambition and ingenuity.

With all that said, building construction has moved on signifi cantly in the last 80 years or so, and the Empire State Building risks being left behind. A new generation of skyscrapers is springing up in cities across the globe, which employ cutting edge techniques and technologies to make them more ecologically friendly and sustainable than their predecessors. But as befi ts a building of its loft y status, the ESB is strongly resisting a slide into obsolescence.

Th e former king of the 20th century is currently ce-menting its position in the 21st with a massive $13.2 mil-lion retrofi t program that will cut energy consumption by 38 percent and reaffi rm its position as one of New York City’s prime pieces of real estate. A groundbreaking col-laboration between the building’s owner Malkin Holdings, the Rocky Mountain Institute, Jones Lang LaSalle, the Clinton Climate Initiative and Johnson Controls is trans-forming the venerable property from the inside out. One of the world’s most recognizable buildings is now becoming one of its most effi cient.

For Tony Malkin, President of Malkin Holdings, the decision to pursue energy effi ciency was a natural consequence of a major initiative called the Empire State Rebuilding Program. “We were actually in a position from the start that required us to reposition the building,” he tells me from his offi ce in New York. “We were spending a tremendous amount of money on the building in any

COVER STORY 31


COVER STORY32

to drop. Th e key consideration was how each element would interact with others in the precise environment in which they were being deployed.

“We call it integrated design,” Hutchinson explains. “Of course not everything aff ects everything but you have to get a pretty decent handle on how things work within the context of a particular building, taking into account things like the physics of the weather and the usage. So we ended up with eight out of all those hundreds of options that had a net positive eff ect, meaning that if you didn’t do one of those eight it would make the other seven less valuable.”

Th is holistic approach led to a process that could be accurately quantifi ed on both an environmental and eco-nomic level. “We have the ability to model the expenditure required for any variety of aspects of the program and to model the payback alone and in combination,” says Malkin. “Th e biggest thing that we’re doing compared to what other people have done historically is that we are approaching it from a quantitative rather than a qualitative perspective. We’ve established a system that allows economic modeling, so that we’ve been able to show the return on investment.”

In practice, this means that those behind the renova-tion can confi dently predict annual savings of $4.4 million,

paying back the retrofi t costs in full in less than four years. Environmental and sustainability concerns aside, it’s this kind of data that is likely to be the clincher for many build-ing owners considering sustainability retrofi ts.

“A company of any size and value recognizes the im-portance of minimizing their carbon footprint, minimiz-ing their cost,” Malkin confi rms. “It’s not just a carbon thing. It’s also the fact that they’re looking for maximum return on their investments and minimizing their costs of occupancy in general. Th e neat thing about what we’re doing is that it’s not really built around carbon, it’s built around saving energy and therefore money. Th e carbon comes along for free. Th is is not an additional expense, it’s an investment, where once you conclude your payback, it’s perennial savings. It’s money in your pocket.”

Along with the fi nancial rewards, the ESB’s retrofi t has also resulted in some indirect benefi ts. Before the work, the building was, in Hutchinson’s words, “a per-fectly nice building but arguably not the one that top door fi rms wanted to be in”. Th e upgrade has made it much

event; there was going to be no alternative to that. So we thought, why not incorporate the whole energy effi ciency piece? And the reason for that is very straightforward: it’s a tremendous economic reward for us to design our renova-tion and upgrade program with energy effi ciency in mind. Our payback period is very short. Th e lasting competitive advantage that we create for our tenants and the way we compete in the marketplace is very real. Ultimately, it was a question of not, ‘Why should we?’ but, ‘Why should we not?’ and we could come up with no reason not to.”

In this age of increased eco-consciousness, it is not that unusual for building owners to want to make their prop-erties more effi cient. What sets the ESB refi t apart is the manner in which it was approached. Rather than looking at the project as a one-off job, it was viewed from the outset as an opportunity to create predictable and repeatable pro-cesses that can be applied time and again. “Th e entire idea behind our work was that it should be replicable,” Malkin continues. “No question. If we did it only at the Empire State Building, it would be a failure. Th e signifi cant com-mitment of the team members came from the conclusion that if we set up something which was open-source, free and easily repeated it could really have an impact.”

Th at this project was undertaken on a property like the Empire State Building is also signifi cant. “When we originally started work with the Clinton Climate Initiative on this, I had suggested that we work with another build-ing we were renovating called 1333 Broadway,” Malkin explains. “However the CCI were very insistent on working with the Empire State Building, in spite of the vast com-plexity of systems and operations of the building. Th ey felt that if we did it at the Empire State Building, we’d get the attention of the world, and if we did it at 1333 Broadway, no one would notice and no one would care, even if we had a tremendous success.”

Unique challengeTh e bigger the challenge, the bigger the potential re-

wards. However, a retrofi t on this scale with so many dif-ferent aspects was unprecedented. Getting it right would require some specialized expertise. “We had an interesting role because in essence the owner needed support to help rethink the design ideas in order to emphasize the energy effi ciency of the delivered product,” says Robert ‘Hutch’ Hutchinson, Program Director for Research and Consult-ing at the Rocky Mountain Institute.

“We focused on a long list of energy relevant pieces of the project and ended up working with the project team to reframe what was done and what wasn’t done, actually adding a bunch of things that were not in the original list. It was a major overhaul project that may have hundreds of particular pieces of the building that are being worked on or adapted in some way. So we started with a pretty long list.”

Th is list originally ran to hundreds of items, many of which had zero impact on energy effi ciency. Th ese were swift ly discarded, with the remaining options being closely examined in order to decide which ones to keep and which

“Th e signifi cant commitment of the team members came from the conclusion that if we set up something which was open-source, free and easily repeated it could really have an impact”


COVER STORY 33

Break it up

The component parts of the Empire State Building refi t

Source: esbsustainability.com

Radiative barriersInsulation behind more than 6500 radiators keeps heat inside the building, almost half of which was being lost prior to renovation.

Annual savings:480 tons CO2$190K

Remanufactured windowsExisting windows are re-engineered on site. Thin fi lm and gas are inserted between the panes cutting down on heat loss and gains.


Lighting and power outletsMaximizing daylight, installing more effi cient lights and controls and providing load energy use monitors on power outlets signifi cantly reduces energy needs.


Air handling unitsReplacing more than 300 air handling units with a smaller number of new more effi cient units.


Chiller plant retrofi tReplacing components on existing chiller plants, making them more effi cient and controllable.


Demand control ventilationUses measured CO2 concentration to determine the appropriate amount of air to bring into the building.


Direct digital controlsUpgrading existing building controls and installing new ones helps to optimize HVAC system operation and provide more detailed sub-metering of energy use.


Tenant energy managementEngages tenants in the building’s sustainability efforts to realize energy savings over the next several years.



COVER STORY34

to match this demand, resulting in more expensive, less reliable supplies. Building new power generation facilities is a slow and costly business, and doesn’t really address the issue of carbon emissions. By viewing energy effi ciency almost as a power source in its own right, the rewards can be tremendous.

“Th e math goes like this,” Malkin explains. “In New York City, 80 percent of the energy used is consumed by buildings. Th e Mayor’s Offi ce of Long-Term Planning has determined that 20 percent of the buildings in New York City consume 80 percent of that 80 percent. In other words, 64 percent of all energy consumed in New York City is consumed by 20 percent of the buildings. Our energy sav-ings, in watts and BTUs, come to approximately 40 per-cent. Th erefore, if you were to have the 20 percent of the buildings that consume 64 percent of the energy deploy our system, you would reduce total energy consumption in New York City by 25 percent.”

Put another way, an energy saving of that size would be the equivalent of dropping a carbon-free alternative generation facility into the heart of New York, a facility

“As people look through their inventories of assets, they’ll start to fi gure how to better target where a deep energy retrofi t would be a terrifi c investment right now”

more attractive to high-profi le fi rms keen to be associ-ated with such a forward-looking project, resulting in the potential for the owners to receive higher rents as tenants change over.

“We’re never going to claim that an energy oriented intervention alone will do that for a building,” cautions Hutchinson, “but if we consider that most of the buildings we have now are going to be around for a long time, this sort of sustainability repositioning is immensely valuable for the real estate world to learn how to do because it makes all the diff erence.”

Good for tenantsTenants in retrofi tted buildings have not been left

out of the benefi t equation, as Malkin points out. “What typically happens when a building is built is you take a look at all the systems and make sure they are properly com-missioned, that they’re running correctly, that all the air distribution is balanced, that sort of thing. It’s a bit like roasting a turkey, you set it and forget it. But uses change, and motors don’t function the same way over time, and things fall out of balance.

“With the ESB project, the entire network is tied together: every fan has a variable-frequency drive. Every motor has a variable-frequency drive; every radiator is tied in to a digital control; so it’s all linked to one master control system. Th is means that whenever one of those units mal-functions, it’s immediately picked up by the system, which gives you actual, real-time, 24/7 commissioning. You’re not in a position of having to recommission your building manually every year because it’s done automatically.”

Tenants, particularly the larger ones, are increasingly recognizing that their three biggest expenses are salary, rent and utilities. And the cost of utilities is one of the big-gest variables, because the cost of energy varies so much, so a system that gives them more control is a major plus.

Th e ESB project contains a suite of tenant measures to be taken in steps, and Malkin says there is a general agree-ment with tenants that if the owners can show them that any energy effi ciency investments they can make as they’re building out their spaces will give them a fi ve-year payback or less, they will put that work into their build-outs.

“Almost every single tenant is taking us up on that,” Malkin says proudly. “We’ve done some very major installations that way. We’re reducing our energy con-sumption per square foot, including air conditioning, to down around the three-watt range. We have tenants fully installed, where their electric, including lights, air condi-tioning and computers, are all around the three-watt-per-square-foot range, which is shocking because the typical industry standard when concluding a lease is to demand six to eight watts.”

Th ere are wider implications than just savings – or increased earnings – for building owners and for tenants. Concerns about America’s ability to keep the lights on have grown increasingly prominent in recent years. A growing population demands the power to fuel its 21st century life-style. Without new sources of energy, capacity will struggle


COVER STORY 35

Why is the Empire State Building project such an impor-tant one for the Clinton Climate Initiative? Arah Schuur. CCI works with large-scale building owners – cities, institutional and private building owners to do large building retrofi t projects – and we were very interested in doing the Empire State Building because it’s an iconic building. It’s known around the world.

It infl uences building owners around the world and represents many of the challenges they face in terms of buildings that are older and have lots of different tenants. The fact that Tony Malkin could do this kind of innovative energy effi ciency project in the Empire State Building, we knew would resonate with similar owners around the world.

The project broke new ground and addressed a lot of the barriers that similar projects face. It was a unique team that came together to design and plan this program and it’s a team of organizations that worked together in a new and innovative way that has never been done before. A lot of what happened at the Empire State Building was happening for the fi rst time anywhere.

In addition, the kind of natural tension between environmental impact and economic return was played out in the course of the Empire State Building project. Over 60 energy conservation measures were assessed and different packages of these measures that had different energy effi ciency profi les and cost and savings profi les were analyzed.

It was a very iterative process to fi nd the balance that was right between the environmental and the economic impact. That again was a very innovative way for the owner to approach the project.

So you’ve learned some useful things in terms of that balance between business and environmental sustain-ability?AS. Absolutely. CCI’s work, and this program specifi cally, are based on the fact that reducing your energy use is good economically as well as being good for the environment. This is a solution that proves it’s possible to meet both of these criteria, and the owner has been very upfront about those two goals through the Empire State Building project.

How important is it that a business case can be made for these kind of retrofits if they are to be more common-place? Do they have to pay for themselves?AS. You have to show that they can offer a real return on investment. By and large, these are low-risk projects.

They have all kinds of other ancillary positive impacts to buildings. Equipment is refurbished. Buildings can be repositioned. Landlords can attract tenants that are interested in the environment and sustainability.

These kinds of projects have a lot of different benefi ts for building owners. I agree they do have to be proven and we work with owners with all kinds of motivations to do environmental work.

The ESB project was approached almost as a blueprinting exercise to create a set of methods that can be applied elsewhere. How does that tie in with the CCI’s own objec-tives?AS. It fi ts very well with our mission and our mode of operation. Our goal is replicability and scale and so CCI also works on templates and tool kits that can be used by building owners over and over.

What Tony Malkin set out to do is show that a businessman and an owner could use this set of tools and that this wasn’t a one-time, one-of-a-kind project. Other owners in other buildings could use these tools to do the project and have the same results that he did.

This is obviously a major undertaking. Could some of the lessons that have been learned here be scaled down for owners who are dealing with much smaller properties?AS. This type of process and thinking can be used on all kinds of different properties. The technologies involved and the energy modeling is probably most applicable to large buildings or large groups of buildings and that’s the ownership group that CCI is working with; people who have either large buildings or large portfolios of buildings that need to address energy effi ciency.

Have you got any other projects like this in the works?AS. We don’t have any that are ready to be mentioned by name, but since the Empire State Building project has gone public, we’ve had owners from around the world as far away as India and Australia come to CCI and say, ‘We want help doing what the Empire State Building did.’ It’s exactly the impact we wanted.

On a more technical level, is this kind of job principally a technological challenge or is it more of a question of how you think about going after these objectives? AS. Absolutely the latter. As I’m sure everyone on the project will tell you, none of the technologies being used at the Empire State Building are exotic or untested products. They are all products that are known in the industry, have been used and are well tested.

Director of the Clinton Climate Initiative Energy Effi ciency Building Retrofi t Program Arah Schuur explains how the ESB renovation is capturing the imagination.

Empire State of mind


COVER STORY36

capable of providing a quarter of the city’s energy needs. It creates huge additional capacity without the need for new power stations or transmission lines, freeing up resources that can in turn enable quicker economic growth.

Knowledge neededGiven the obvious benefi ts for both businesses

and the environment, why aren’t these kinds of retrofi ts happening everywhere? In part it is due to a lack of knowledge and expertise in the market. “Th ere’s still a fairly signifi cant element of learning by doing,” says Hutchinson. “You have those proj-ects where you have to mix the newbies in with folks that have done it a few times so that they learn and can go off and do it themselves. You have to feed the pipeline that way.

It’s more of the approach to looking at energy effi ciency holistically and looking at it, again, from both an environmental result and economic result perspective. It’s the process that the team went through to model the energy use and model the different packages of technologies to fi nd the best fi t for the building.

Then it’s the multi-system holistic design and implementation that Johnson Controls is doing. It’s not just looking system by system, but looking at how the systems work together to create energy effi ciency and greater savings. It’s more about the thought process and the project development process than it is about the technologies themselves.

I think that what this and projects like it show is that a building is essentially an organism and if you approach energy effi ciency and sustainability looking at all aspects of the building, you will wind up with a project that has greater impact.

Do you believe that more building owners are going to push ahead with these kinds of initiatives based on the example you’re providing? AS. I think that these case studies need to be shared and proven with hard numbers. Obviously commercial building owners are business people and the more evidence that comes along about the direct energy savings and cost savings returns and also the positive impacts that energy effi ciency has on the building and recruiting tenants and occupancy, the more people will be looking to do these kinds of projects.

There are great examples of buildings and campuses that are doing great sustainability work. I think that the more hard numbers that are shared, the better things will be. One of the things that I commend Tony Malkin for doing is sharing all of his numbers, sharing all of the results and putting everything out there for the public to absorb. That’s the kind of impact and infl uence that we need, because it’s really those hard numbers and those concrete results that will start to infl uence people to change.

Are we reaching a tipping point when it comes to sus-tainable construction? Is the idea in the mainstream now?AS. We are focused on existing buildings because we believe it’s already happened in new construction. In many parts of the world you don’t build a Class A offi ce building unless it’s green, but that point still has to come with existing buildings.

Obviously changing what you have is harder than if you’re starting from scratch. We’re certainly getting there and the focus in the United States that has been placed on energy effi ciency as a way to provide jobs and revive the economy is helping, but I think globally more and more owners are seeing that this is a low risk way to improve their buildings and make a good investment. I think we’re getting there.


how to do this sort of sustainability repositioning because it makes all the diff erence.”

Theory and realityMalkin believes that another reason more retrofi ts

are not being done is that people got too hung up on theory. He tells the story of a representative from an en-vironmental group coming to his offi ce during the period when the initial groundwork for the ESB project had al-ready started, but hadn’t been made public yet.

“He sat down with me and gave me a presentation that was very much along the lines of what we were doing with the ESB project. I was taken aback, and I asked him how they had done it and what it had cost. He told me they had a consultant do it for $10,000.

“Th en I said, ‘Does any of this exist?’ And the guy said, ‘No.’ It was all theory. And I realized that there hasn’t been anything out there to support this theory and to give us something to work with. Th ere was a only a lot of consultative stuff .”

In Malkin’s view, now is the time to go beyond theory and get down to the hard facts, to the dollars and cents. He stresses that in the case of ESB, because the quantita-tive analysis has been so rigorous, the building’s savings on energy costs have been guaranteed by Johnson Con-trols’ balance sheet. If the get the savings promised in the contract fail to materialize, the owners will be paid back proportionately. “Th ere’s nothing else out there like this,” Malkin says, “and we’re very hopeful that more people will take it on.”

According to Hutchinson, the current slightly tenu-ous position of the real-estate world has helped stir up interest in refi tting buildings for energy effi ciency. “We do see a lot of service providers very interested in learn-ing these things once they realize there’s value there. We see investors saying they would like to be aware of it, although they also say they don’t have much in the way of funding for new projects. A lot of folks are in learning mode, but it’s because the commercial real estate world is in a tenuous situation.

“On the positive side, given that we have such a scar-city of skilled resources it does give us a bit of a window for training. We recently put together some training packages that were presented at the big building model-ing conference, and we were absolutely overrun with folks who want to get on board, learn the tools and start practicing. Th ere was an executive order from the govern-ment last year that set some very hard targets for federal buildings to meet, and that is going to start driving some activity as people learn the art of the possible. As people look through their inventories of assets, they’ll start to fi gure how to better target where a deep energy retrofi t would be a terrifi c investment right now.”

If things go to plan, the Empire State Building’s cellu-loid fame could soon be eclipsed by its renown as a leader in environmental conversions. Which can only be a good thing for building owners, tenants, and the environment as a whole.

“Th e US government has made some very serious commitments in terms of building effi ciency, so they’re a very obvious market for people to try these new skills. Our friends in Washington tell us that a lot of people are coming to them and saying they can do these kinds of projects, but on the other hand it’s still pretty hard to fi nd a building they’ve actually done this way. Th ere are a lot of people hoping to practice these techniques and frankly we’re all for it. Th e guys in Washington call up and say, ‘Th ese people are sounding like they’re as good as you are.’ We say, ‘Great. Th at’s the point.’”

Another potential roadblock can be the sheer logis-tics of getting the work done. Th is becomes particularly clear when Malkin describes the ESB window re-fi t. “No one has ever done anything like it before,” he un-derlines. “We have set up a facility in the building, and we’re taking the windows, splitting them apart, install-ing a Mylar sheet in the middle with a spacer, resealing them, and fi lling them with krypton-argon gas. We’re reusing 96 percent of the glass and the window frames.

“We are taking every single one of the building’s 6514 windows and taking them from an R2 rating to an R8 rating. Th at will cost $4.5 million. To get the equivalent benefi ts would have cost something more in the range of $3300 a window if we did them new. Th ey’re being done in the building, not transported off -site, with 96 percent reuse – so my point is that this is all about the economic argument. And hopefully it will result in a lot of people mimicking it, because it is about the replicability.”

Th e good news for would-be ‘replicators’ is that technology is developing at lightning speed, and as the technology gets more sophisticated, doing large-scale retrofi ts on older buildings can only get easier. “Control systems are getting better and the proprietary systems that have been in place for years are starting to develop cracks, which means that things become much cheaper,” says Hutchinson. “You can put sensors in and wireless communication from that sensor at a fraction of the cost that it used to require.’

He points out that lighting technology has devel-oped signifi cantly, along with the understanding of the conditions required for human comfort and appropri-ate lighting levels. Computers and high-tech equip-ment, which are a major source of energy use in offi ce buildings, are also much more effi cient then they were fi ve years ago, capable of giving the same performance at one-third of the energy use of previous models.

Th e ESB’s retrofi t has also resulted in some indirect benefi ts. Th e upgrade has made it much more attractive to high-profi le fi rms keen to be associated with such a forward-looking project, resulting in the potential for the owners to receive higher rents as tenants change over.

“We’re never going to claim that an energy-oriented intervention alone will do that for a building,” cautions Hutchinson, “but if we consider that most of the build-ings we have now are going to be around for a long time, it is immensely valuable for the real estate world to learn

The retrofi t program will

cut energy consumption

by 38%

COVER STORY 37


SMART TECHNOLOGY38

Paving waythe

Smart Cities ed.indd 38Smart Cities ed.indd 38 29/09/2010 14:0429/09/2010 14:04

Hitting the ‘off ’ button on your solar-charged alarm clock aft er cursing your ability to ‘snooze’ for the third time this week, you walk over to take your morning shower in recycled waste water – heated throughout the night with a reserve store of clean energy – before heading downstairs to program the house for the day and reverse your minimalist, electrically-

charged car out of its docking bay. Your toaster knows you’ve left , so off it goes, along with your foe-turned-friend alarm clock. Th e dull hum of stand-by elec-tronics winds itself down throughout the house just in time for you to hear as the magnetic deadlock on your door clicks shut. Th e smile on your face, is accrued from another carbon-saving day, as you arrive at work and walk into your double-platinum, LEED-certifi ed offi ce building, surrounded by a depth of luscious fl ora, of course.

But this isn’t some utopian crossover of Minority Report meets Spielberg’s A.I. – this is real-world, next generation smart thinking – and it’s on its way to a city near you in the not-so-distant future. With the nation’s, indeed the world’s, population growing at an infective and worrying rate, the large majority of the world’s inhabitants have resided in cities since 2007, forcing an overloading amount of reliance on out-of-date power grids that were designed back in the ‘good old days’, sat alongside energy-hungry buildings and infrastructure.

Fortunately, with a rise in population levels has come a rise in technologi-cal advances, in turn provoking a deepening of creativity and environmental awareness. Th e theoretical smart cities of 10 years ago were nothing more than talk of using smart meters in homes and businesses to measure effi ciency. Today, with the accumulation of electronic data, smartphones – and of course the omniscient internet inextricably linked to everything we do – smart grid and city rationale has evolved to encompass the hope for a complete change of social scaff old and lifestyle choices.

Indeed, Michael Carlson, Executive Vice President of GridPoint and former CIO for Xcel Energy (the brains behind Boulder, Colorado’s $100 mil-lion SmartGridCity), certainly has his fi nger on the pulse when it comes to understanding the shift in smart grid innovation. “Th e meter is a secondary component of today’s smart grid,” explains Carlson. “If we’ll allow ourselves to look into the future, I think we should be questioning whether a meter is part of the puzzle at all. Th at’s not to say that you don’t have to measure your electric consumption in some way, shape or form. But do you need a meter to do it?

“A meter is an archaic device that at the end of the day only serves to mea-sure. It can’t control. It can provide information, albeit not by itself. We need to ask ourselves, are there other, more effi cient, eff ective and less expensive ways to accomplish those tasks?” And with that one question, Carlson manages to exem-plify the attitudes of smart grid movers and shakers nationwide – pushing the envelope of technological creativity certainly seems to be the name of the game here, just as it was when formulating the world’s fi rst completely ‘smart city’.

According to SmartGridCity, there are four main components to the suc-cess of Boulder’s pioneer grid. First up, the smart grid infrastructure “creates the ‘backbone’ of the entire smart system. Xcel Energy has layered digital capa-bilities across the grid, including two-way, high-speed communications. Th is has added new automation capabilities and, because the utility can now sense and predict grid conditions, it can proactively monitor the grid’s health and detect outages before they occur.”

As urban populations continue to grow at an unstable speed in ineffi cient contexts, smart cities are being looked up to as the saviour of next generation infrastructure – but what do they actually entail?

SMART TECHNOLOGY 39


In fact, there’s so little incentive to integrate and become more productive that a recent Harvard Business School case study revealed that while non-farming indus-tries have made productivity gains averaging 80 percent since the 1960s, the construction industry has actually regressed, becoming 20 percent less productive in the same time period. Where buildings “accounted for nearly 40 percent of the total energy consumption in the US, includ-ing 70 percent of the country’s electricity and 38 percent of carbon emissions,” construction materials accounted for a phenomenal 60 percent of solid, non-industrial waste. “Most of it ends up in landfi lls. Th ey either broke it or over-ordered it.”

According to Lewis, the solution is simple. First, streamline the process by applying the same lean manu-facturing techniques and supply chain integration that’s been commonplace in the automotive industry for years. “How do you get the aesthetics and variability right while at the same time keep consistent quality?” he asks. Well, ac-cording to Living PlanIT, the idea would be to realign con-struction fi rms to look more like the computer industry’s original design manufacturers (ODMs), building modular, plug-and-play components ordered from a catalogue and slotted into a city’s Urban Operating System, both of which would be owned by Living PlanIT.

Secondly, smart meters actually remain an essential link in hooking up homes to the smart grid within the city, collecting household electricity data in 15-minute incre-ments to allow consumers unparalleled visibility into their energy usage. Th ey also act as sensors that help the utility gauge what’s happening on the system at any given time. When outages do occur, smart meters allow the relevant powers that be to pinpoint specifi c problems and get them fi xed faster.

Th ird on the success charts is a unique website spun into the system called MyAccount, which provides ‘cus-tomers’ with detailed information about their energy usage so they can have more choice about how and when they use electricity. When coupled with a smart meter, MyAc-count generates an in-depth snapshot of a house’s energy use, identifying times when consumption is highest and even which systems in a home contribute to the bulk of its electricity bill.

Finally, SmartGridCity cites “in-home smart devices” as the icing on their metaphorical cake to implementation. “Wireless systems, thermostats and smart plugs connect your home to the smart grid. Th is taps you into the smart grid network and allows your home’s systems and electrical outlets to ‘talk’ to the MyAccount website. You can then monitor your consumption and adjust your energy usage according to your personal needs and preferences”. Pretty simple when you think of it like that, but the reality of the situation is anything but.

For starters, any fi rst generation smart grid will need to be placed on top of an existing power grid. Aft er all, the idea behind smart grid induction is more to do with actuating a change in consumer behavior by providing the necessary technology to do so – not merely dumping an excessive amount of decade-redundant tools on top of Edison’s 1880 grid in the hope that someone might use them; the sentiment of which was epitomized by former Sony Chairman, Nobuyuki Idei, who said in a recent smart thinking tweet: “Copying 20th century cities in Dubai and Shanghai is crazy. We need…a city OS”.

And so it is, with the motivation and expertise of an ex-Microsoft guru and a start-up wizard, that the city operating system Idei talks of is fi nally becoming a real-ity – through a potentially global project known as Living PlanIT. Th e ambition? To build a prototype smart, green city in Portugal that can then be rolled out worldwide while dragging the construction industry into the 21st century. Perhaps surprisingly, it’s the latter part of this ambition that holds the most diffi culty, as Steve Lewis, the former Microsoft veteran turned CEO of Living PlanIT, explains.

“It’s a bit of a bloodbath really. Th ey’re [the construc-tion industry] using techniques older than God. All of the technology is being used on the design end. No one can look into the future and ask ‘if I put better glass into this building, what does that do for energy effi ciency down the road?’ You have developers building to do a quick fl ip, and eventually the building becomes too ineffi cient and so ex-pensive to fi x that they have to knock it down. Th ere’s no process and no lifecycle management.”

SMART TECHNOLOGY40

“Th e greatest shortcoming of the human race is our inability to understand the exponential function”

Al Bartlett

Th e second tier of the plan would involve creating an “ecosystem” of partners to fi ll in the blanks in Living PlanIT’s plan to code cities like soft ware – in which build-ings, sensors and traffi c apps alike are connected through the cloud. All the company will own is the Urban OS (the glue in its urban fabric) and the process, from draft ing blueprints to “decommissioning” an obsolete building like you would a junk server. Full build-out of the Portuguese project is projected for 2015, by which time PlanIT valley should have a population of around 150,000 – with almost everyone working in and as R&D for the project.

“Th ey don’t want a campus, they want a city,” explains Lewis. “Th ey need to send their kids to school; they need to be entertained. You end up with a brilliant R&D platform – you live in it, you improve it, you market it. If [a cus-tomer] says, ‘I want a medical clinic,’ we already have one. We backed into building PlanIT valley based on customer demands.” Of course, it goes without saying that Lewis and his team at Living PlanIT are using Portugal as a prototype for the instant cities PlanIT hopes to sell in developing countries such as India and China, which need new ones by the hundreds – built faster, greener and smarter than any city that has come before. But before that happens, further

The US population increases

7%

every year


can spend them. On top of this lies the real crux of the argument for comprehending the true identity of a ‘smart city’: it means a lot more than just creating and develop-ing a smart grid. As pivotal as that will be, the US-based National Resources Defense Council cites a host of other sustainable factors that smart city planners will need to take into consideration. Transportation, waste prevention, food security, air quality, green space, environmental jus-tice and green buildings cannot be swept under the carpet if a truly smart city is to prevail.

Confl ating this, Al Bartlett, an emeritus Professor of Physics at the University of Boulder, has highlighted in his award-winning seminar, ‘Arithmetic, Energy and Popula-tion’, that “the greatest shortcoming of the human race is our inability to understand the exponential function”. Essentially, Bartlett’s belief that sustainable growth is, in fact, a “contradiction” and is based on the understanding that a relatively modest percentage growth in population can equate to huge escalations over short periods of time, does much to detail both the need for smart cities and the challenges faced in getting them to where they can begin to handle the exponential population growth problem the world is already witnessing, yet fails to grasp.

According to Bartlett, if the US receives a seven per-cent population growth every year, it’s ‘doubling time’ – the time taken for the population to double – is 10 years. In other words, every 10 years, the population of the nation will be greater than the total sum of its previous years. And with that, there will come a time where cities will not only need to be smart, but so too will their people. Aft er all, having the most effi cient, innovative and green systems in the world are useless if they’re crippled by the weight of a fatally over-populated city. As Bartlett openly admits, that’s “Th e Greatest Challenge”.■

projects are planned in the US and Europe to iron out any potential creases.

To ensure that the US continues to entice these kinds of pilot projects, as well as exponentially evolve its own cities and utility attitudes, President Obama recently scribed off on a $787 billion stimulus bill for clean energy and renewed infrastructure. Off the back of this, one of the biggest wins for clean energy now comes in the form of grants for up to 30 percent of the cost of projects started in the next two years. As Oerlikon Solar CEO Jeanine Sargent explained in a release backing the move, the industry expects these grants to “loosen gridlock in the capital markets with funding for shovel-ready solar projects that have been on hold due to a lack of available fi nancing.”

Th e stimulus also includes $2 billion for transmission grid improvements, with the President himself addressing the need for a “nationwide transmission superhighway”, declaring: “Today, the electricity we use is carried along a grid of lines and wires that dates back to Th omas Edison – a grid that can’t support the demands of clean energy. Th is means we’re using 19th and 20th century technolo-gies to battle 21st century problems like climate change and energy security. It also means that places like North Dakota can produce a lot of wind energy, but can’t deliver it to communities that want it, leading to a gap between how much clean energy we are using and how much we could be using. Th e investment we are making today will create a newer, smarter electric grid that will allow for the broader use of alternative energy.”

Inherent with achieving this is the obvious need for smart grid thinking, which Obama has also allocated suf-fi cient funds for – $4.4 billion to be exact. If things stick within budget, and they usually don’t, the stimulus alloca-tion should allow for the installation of various hardware and soft ware to make the power grid an intelligent two-way digital network: the embryo of smart city beginnings. It is expected that these funds will become a blessing for all those in the world of smart grid and smart city intelligence, enabling more effi cient management of future smart cities.

With everything seemingly moving off the horizon and towards a new era controlled by the elusive and in-defi nable smart grid, those in high places must realize that changes need to be made on both sides of the fence: consumers need just as much incentive to change as util-ity companies do. Th ankfully, the seemingly infallible Obama has even included that in the stimulus, expand-ing tax credits for more energy-effi cient appliances and insulation improvements, to the tune of two billion dol-lars over the next 10 years. Th e stimulus also provides $300 million in matching funds for state rebates on energy effi cient appliances and increases government spending on weatherization for low- and middle-income homes to fi ve billion dollars, up from the previous $500 million per year, with public housing projects getting $250 million for energy-saving upgrades.

However, while the stimulus paints a rosy picture, many remain concerned about the speed that government can distribute the funds and how eff ectively the industry

Smart functionsIt’s all good throwing around ideas of smart grids and cities, but unless it can sustain its difference with today’s technologies, it’s doing nothing new. According to the US Department of Energy’s Modern Grid Initiative Report, a modern smart grid must:

• Be able to heal itself• Motivate consumers to actively participate in operations of the grid• Resist attack• Provide higher quality power that will save

money wasted from outages• Accommodate all generation and storage

options• Enable electricity markets to fl ourish• Run more effi ciently• Enable higher penetration of intermittent

power generation source

SMART TECHNOLOGY 41


DRIVING REVOLUTION42

Could the gas-guzzler’s days be numbered? Pacifi c Gas & Electric’s Saul Zambrano explains how the utility is paving the way for plug in vehicles.

If there’s a single sound that sums up the American dream, there is a strong case to be made that it is the roar of the internal combustion engine. It conjures up the sense of freedom only felt when blasting towards an endless horizon in a growling pickup or shark-fi nned convertible. It’s a powerful image and the lure of the open road has been immortalized countless times in popular culture, spawning the

road movie as a legitimate cinematic genre and inspiring musicians from Chuck Berry to Bruce Springsteen.

Nowadays though, the average driving experience bears little resem-blance to that portrayed in the Smokey and the Bandit fi lms or songs like Born To Run. Rather than hurtling through America with the wind in his hair, today’s driver is more likely snarled in traffi c, going nowhere fast. From a potent symbol of personal freedom, for many the car is slowly morphing into a prison. Compounding this is the growing realization that our love aff air with the automobile comes at a cost, whether it is exces-sive dependence on foreign oil or the undeniable environmental impact caused by exhaust emissions from the millions of vehicles clogging the nation’s freeways.

Th ese realities are central to the rebirth of the electric car. Following an abortive attempt to encourage drivers to go electric back in the 1990s, plug in vehicles are currently experiencing a resurgence. Nissan’s Leaf will be available to American consumers within the next few months and already has some 20,000 pre-orders, enough to sell out its entire initial production run. Th at may not seem like a huge number compared to sales of conventional gas-fueled cars, but the fact that so many people are pre-pared to spend around $30,000 on such a vehicle is a clear indicator that interest in electric is on the rise.

Naturally, if Americans are going to forsake the gas pump for the power outlet, there are going to be implications for utilities. Th ere are around 250 million cars on the road in the US. While no one is expecting the entire nation to switch to plug in overnight, if even a small fraction of that number go electric it will place a massive strain on already strained generation and transmission infrastructure.

Saul Zambrano.indd 42Saul Zambrano.indd 42 29/09/2010 14:1429/09/2010 14:14

DRIVING REVOLUTION 43

Th at amount of investment and development is just driving the cost curve down much faster than anyone anticipated

Th d st

one


One utility tackling this issue head on is California’s Pacifi c Gas & Electric. With the stated ambition of servic-ing 45,000 electric vehicles by 2020, PG&E has placed itself in the driving seat for what could be the 21st century’s most important race. One of those steering the utility on its route to a greener motoring future is Saul Zambrano, PG&E’s Director of Clean Air Transportation. When we catch up with him to talk about the scale of the challenge, he is steadfast in the belief that organizations like PG&E will be instrumental if electric vehicles are going to suc-ceed. “You know the famous saying, that it takes a village? What we discovered with this initiative is that, in this case, it takes a utility,” he says. “We’ve created a market readi-ness team to specifi cally focus all aspects of our operations to welcome the introduction of these vehicles into our service territory. When you build these types of teams you basically have to do education outreach. You have to look at your service planning practices and you have to look at your rates, so that you don’t create any dis-incentives relative to charging tariff s for these vehicles. It’s quite an involved eff ort but within North America, California, generally considers itself ground zero for the introduction of these vehicles. You look at all of the investor-owned utilities and the municipal utilities, they’ve eff ectively cre-ated market readiness teams within the utilities to support electric vehicle introduction.”

Zambrano is encouraged in his eff orts by what he sees as a genuine consumer interest in EVs, an interest that is fueled by improvements in technology and evolving social attitudes. “A lot of things have changed,” he confi rms. “People are focused on sustainability. People are focused on energy security and the automobile manufacturers are bringing a stable of cars to market that consumers can either buy or lease and what we do know is the initial in-troduction of these vehicles is going be supply constrained. So the choke point is going be at the OEM of these vehicles.

“Th e other thing is that the technology itself has ma-tured quite dramatically from the 1990s. Th e production capacity of the lithium ion packs that go into these vehicles has exploded. Th e capacity was always there in Asia but the stimulus funding that came out of the federal government eff ectively created manufacturing capacity within North

America. Th at amount of investment and development is just driving the cost curve down much faster than anyone anticipated.”

As well as manufacturing capacity, actual battery ef-fi cacy is also improving. “Th is time it’s lithium ion which is fundamentally a better chemistry,” Zambrano continues. “Th e battery management pack soft ware has really moved quantum leaps forward. Th e other thing is the maturity of the internet really creates these network-centric informa-tion models on how people can and will charge.”

But perhaps most signifi cant development is the fact that the auto business seems to be genuinely behind the move towards electric. While the stalled attempt to push EVs in the 1990s was a largely top-down aff air, driven more by federal mandates than real market forces. Today, the situation looks far more organic. “Th e car manufacturers are driving this to a larger extent than they were the fi rst iteration,” Zambrano says. “When you look at the car man-ufacturers who have models coming to market or have an-nounced development plans you’ve got GM, Nissan, BMW, Honda. Around 30 or 40 companies have EVs planned or in production. When you compare that to the fi rst go-round it’s a much more market-driven mandate than a policy-driven mandate.”

While the early signs seem positive, the biggest chal-lenge for the electric car at this critical juncture will be overcoming old preconceptions and securing a solid con-sumer base. Th e customer experience of the thousands of early-adopters will be absolutely critical in this eff ort. Just as with all innovative technologies, it is the reaction of the fi rst wave of users that sets the tone for the rest of the market. Fail to win over the geeks who queue up to buy your shiny new product on the day of release and it’s unlikely you’ll be winning over Joe Six-Pack any time soon. One area of the customer experience under particularly close scrutiny is the performance of car batteries. Zam-brano contends that durability is no longer a genuine cause for concern. He points to the fact that GM and Nissan are both off ering eight-year, 100,000-mile battery warranties on their new EVs, while utility Southern California Edison are still running a fl eet of electric Toyota RAV4s from the 1990s on their original batteries. Instead, it is the pervasive

A CHARGED HISTORYAmerica’s relationship with electric vehicles goes back further than you might think

1835Thomas Davenport builds a small electric locomotive, the fi rst practical EV

1859Gaston Planté invents the rechargeable lead-acid battery, leading to the development of vehicle batteries in 1881

1891William Morrison builds America’s fi rst successful electric car

1897The Pope Manufacturing Company becomes the fi rst large-scale US EV maker

1900Roughly 28 percent of cars produced in America are powered by electricity

1912 Ford Model T

“Around 30 or 40 companies have EVs planned or in production. When you compare that to the fi rst go-round it’s a much more market-driven mandate than a policy-driven mandate.”

The Nissan Leaf will cost around $30,000



RETURN TO SENDERZambrano discusses the potential of vehicle to grid.

We’ve done a lot of work on vehicle to grid. We actually partnered with Google who did the technical proof of vehicle to grid.

There are a couple things that need to happen before vehicle to grid becomes a viable prioritization. One, the cars have to get out into the market in mass. That priority follows how many cars are actually out there. If there are only a thousand cars out there in year one, then it’s not very attractive relative to ancillary services. The other thing is that the utilities and the automobile OEM companies still have to fi gure out what the car manufacturer’s liability on warranty is relative to these vehicles versus a utility application.

The problem is that they’ve got to get these cars out and into the marketplace and fi gure out how they perform and then they’ve got to crunch all the actuarial data to understand what is the value from a warranty perspective of a single discharge, because what you’re asking at the battery level is; “Let me take an additional discharge cycle from the battery life and feed it back into the grid in order

to support the grid in whatever fashion from an ancillary market perspective.”

In addition to that there are certain ways that the American grid was built that means some safety issues need to be worked out as well. We’re taking these car batteries and using them as backup power and folks want to send that power to the grid to help generate a neighborhood. But if that neighborhood’s down and we have line workers there and those line workers don’t know that the equipment is going be energized, it could be a problem. Right now many places on the grid wouldn’t accept that charge in a power outage situation.

It’s kind of a one-way setup right now in that emergency situation so we’ll defi nitely have some engineering and technical challenges to overcome. That’s not to say that vehicle to grid is not something that we’re defi nitely looking at and evaluating. We want to make sure that it’s part of the future scheme of things. We’ve just got to fi gure out the appropriate applications.

1908Ford introduces the mass-produced and gas-powered Model-T, the beginning of the end for EVs

1920sEVs cease to be a viable commercial proposition due to demand for longer distance, more powerful vehicles and the availability of gas

1972Victor Wouk builds fi rst real hybrid vehicle

1974Vanguard-Sebring’s CitiCar debuts

1976 The Electric and Hybrid Vehicle Research, Development and Demonstration Act is passed by Congress

1996GM introduces the EV1, a lease-only full-electric vehicle. By the time the car was cancelled in 2002, 1117 had been produced

2001Toyota’s Prius, the fi rst commercial hybrid car, is released worldwide



issue of range anxiety which is of far greater concern to most consumers.

“I think one of the key leaps of faith that consumers are going to have to make or understand is the fact that most people drive a total less than 40 miles a day,” says Zam-brano. “Th ese new EVs have ranges of around 100 miles, so drivers can charge at home and have enough capacity to get to work and back and even further.” Th ose drivers who have a longer commute aren’t excluded from the electric revolution, as hybrid models cater for more long-distance jaunts. “Vehicles like the GM Volt have backup gasoline engines to drive the electric motor,” Zambrano continues. “Once the battery gets depleted aft er 40 miles, that engine kicks in to drive the electric engine, giving it a range of over 300 miles. People are going to make diff erent decisions based on their lifestyles and on which platform works for them, but both are eff ectively plug in electric vehicles.”

Power struggle?So what are the key considerations for the utility when

it comes to the uptake of more plug in vehicles? “What we do know is that we want these vehicles to charge intelligently,” Zambrano replies. “From 11pm to 6am, we have a tremen-dous amount of generation capacity with which we’ll be able to support them. We don’t have concerns about gen-eration capacity to support these vehicles. Th e other reason we want them to charge intelligently off -peak is because it minimizes the impacts to our distribution grid, and more importantly because it’s cheaper for us to provide power off -peak. One of the ways for consumers to play down the up-front investment of these batteries is you have to have a cost-competitive price per gallon equivalent.”

Based on PG&E’s calculations, it can provide power to electric vehicles at the equivalent cost of about one dollar per gallon. With gas prices hovering around three dollars per gallon, this represents a signifi cant saving, but it is only possible thanks to PG&E’s investment in smart grid technologies. “Ensuring that our customers have com-petitive cost economics of fueling is incredibly important,” Zambrano says. “We have one of the largest deployments of smart grids in the world. We know how to leverage it technically, to send the charging signals to smart chargers. From our perspective, we think that’s critical for adoption. Th at’s where we view our contribution to the adoption of this technology; ensuring that we have programs that support customers at the tariff level and relative to smart charging. All that works seamlessly within all the internal operations of the utility.”

It helps that the utility has been working closely with EV manufacturers in ensuring that capacity exists to power vehicles once they hit the streets. A great deal of advance planning has been done to know exactly where these cars will be going, allowing PG&E to be certain that they will be able to juice them up. “We’re coordinating with the vehicle makers so that we can coordinate with our service planning organizations and ensure that the issue of grid reliability for those hot spots is addressed,” Zambrano explains. “I think one of the underlying themes behind

this is that this is a collaborative process amongst all the stakeholders. And the stakeholders involve the automobile OEMs, the utilities, the regulators, the policy groups that are driving things either at the federal or the state level.”

Something that has become clear as a result of this collaboration is that early EV adoption is going to be geographically concentrated. Th is information has been invaluable to PG&E in knowing exactly where it needs to harden its grid to cope with the spike in demand.

As befi tting a vehicular revolution that is motivated by concern for the environment, renewable energy is ex-pected to play a major role in powering the next generation of electric vehicles, though it won’t be happening straight away. “Once there’s enough of these vehicles in our service territory, and we’ve got them charging off -peak, one of the strategies that we’re looking at is integrating wind genera-tion,” Zambrano says. Wind is the obvious choice for EVs because of one simple fact. “Generally speaking, wind blows hardest at night,” Zambrano continues. “You’ve got to look at renewables in terms of when they are generating electricity. Solar is generating electricity during the day but people are at work and there are a lot of intermittency issues. Wind off ers the perfect alignment because people are asleep when it is blowing the hardest which makes integrating that particular generation into the charging of these vehicles much easier.”

No discussion of electric powered vehicles would be complete without a discussion of gas prices. While it re-mains aff ordable to fi ll up a traditional internal combus-tion engine car with fuel, can EVs ever gain a signifi cant amount of traction? “If I can provide electricity that’s a dollar a gallon gas equivalent it’s a very attractive proposi-tion at the consumer level, even if gas costs $3.00 a gallon,” Zambrano says. “Th e higher the price of gas, the quicker the adoption of these vehicles.” Whatever happens over the coming decades, it is unlikely that the price of oil is going to go any direction apart from up. What’s bad news for some could be quite the opposite for proponents of the switch towards electric.”

Ultimately though, Zambrano believes it is demo-graphic shift s that will provide EVs with the most signifi -cant momentum. Increasing urbanization makes cleaner vehicles more suited to shorter journeys increasingly at-tractive. In addition, a whole new generation of customers are coming into the market who have very diff erent pri-orities from the ones who preceded them. “My nieces and my nephews are excited about these cars,” he says. “Th ere’s an environmental ethos that’s developing in the younger generation. We can’t look at it through our eyes any more. We’ve got to be cognizant of the fact that there are people who make purchasing decisions based on this ethos.”

Whatever happens, Zambrano is clearly happy that he and PG&E are involved in what promises to be a very inter-esting perid of history for the motor vehicle. “Th e best thing about the generational eff ect, is that it takes place relatively quickly,” he says. “It happens in 10 or 20 years. We’re quite excited about the fact that we can support the adoption of this technology and help people to adopt these vehicles.”

“We’re quite excited about the fact that we can support the adoption of this technology”

Most people drive less then 40 miles a day



Frost & Sullivan’s 360 Degree Perspective of the Global Electric Vehicle Market, published in April 2010, raises some interesting issues for the development of EVs as we move through the 21st century. Anjan Kumar is

the analyst fi rm’s Team Leader, Automotive & Transportation and one of the report’s authors. He is clear that certain trends are making the prospect of widespread EV adoption more likely. “Battery manufacturers are much more confi dent,” he says. “They have developed safer batteries and are increasing their range to the 100 to 115 mile distance. There has been considerable evolution in this area over the last 10 years.”

Additionally, vehicle emission rules have become much more stringent over recent years, a trend that is likely to continue. Governments across the world are setting targets for the reduction of greenhouse gases, with potential penalties being imposed if these targets are not met. This is a climate that naturally favors cleaner alternatives to traditional gas-powered vehicles.

But perhaps the largest driver for EVs could be wider demographic megatrends that will reshape the way people live and work over the coming decades. “The rise of megaregions, mega-areas and megacities is particularly signifi cant,” explains Kumar. There is going to be a growing concentration of people inside cities. We have seen urbanisation happen from the early 1900s to the present day. What we are going to see now is de-urbanization. Wealthy people will live in the city, while the middle classes will be situated in the suburbs. We could see a third band outside the ring roads where the less affl uent people and manufacturing type industries would be found. We could see homes and workplaces being situated close together, which will obviously have an impact on the types of transport that are used. Neighborhoods will be encapsulated so that residents will be able to fi nd everything they need at a very close distance. This kind of scenario would work well for the growth of electric vehicles.”

But before EV manufacturers start popping the champagne corks, there remain signifi cant hurdles still to be overcome. Despite recent advances in the technology, consumer attitudes have a way to go before there is widespread acceptance that they are a viable alternative to the internal combustion engine. This situation is not helped by the lack of electric charging infrastructure, whereas you’ll pass a gas station every few miles. While states and governments are pushing adoption by offering grants and consumer incentives for buying electric, we will probably be waiting a while until the whirr of electric motors replaces the growl of the petrol engine as the dominant sound on America’s streets. “According to our forecasts, by 2015 only one to three percent of vehicles – around 400,000 to 500,000 – sold in the US will be electric,” Kumar confi rms. “By 2020 we’re looking at fi ve to seven percent. In order for EVs to have a 10 percent share it will take at least until 2025.”

SHIFTING GEARA look at the prospects for the electric vehicle market



ROUNDTABLE DISCUSSION48

GETTINGSMARTERUS Infrastructure asks a panel of experts for their opinion on all things smart grid, from investment decisions to the state of regulations in this fast-moving space.

Nobody wants to make the wrong decision about a major investment. In the current high change environ-ment where the smart grid is in the early stages of a major evolution, how can utilities and the vendor com-munity effectively future-proof? J. Patrick Kennedy. Future-proofi ng sort of implies that you know what the future will hold. Th e only practical way to future-proof anything is to maintain as much fl exibil-ity in the system as possible. We always recommend that our customers build incremental value on top of a sound foundation as they proceed on one of these ‘projects’. Th e ‘big bang’ approach of building a pilot of the planned solution will only deliver what they might conceive of today and provide no fl exibility for the future. Along with asking their customer what they want and need, the utility also needs to use a building block approach to delivering the solution and take time to assure that what is initially delivered has clear customer value. Additional features

SmartGrid_RT A.indd 48SmartGrid_RT A.indd 48 29/09/2010 14:1529/09/2010 14:15

building a portion of a bridge that will never connect. At the same time, we have industry groups in which

both the vendor and utility communities participate. We do concurrent engineering, working toward the same goal. But it is also important that we communicate, to be sure the fi nal products meet both vendor community expectations as well as those of the utilities.

What are the key trends emerging not just in the regulat-ed utility space but also in the deregulated area around providing energy consumption information to consum-ers? Are these trends moving in similar directions?MU. In either space, providing actionable data to consum-ers is crucial. Technology plays a key role in acquiring, delivering and analyzing more detailed information. But without presenting this information in meaningful ways, to consumers to infl uence behavior, the vision of the smart grid will not materialize. Th is detailed information can be presented a variety of ways – web portals, in-home displays, mobile devices and so on. By understanding their usage and seeing how it impacts their check book, consum-ers can be motivated to truly change their behavior.

PDM. Th e regulated and deregulated areas are both driven by the policies and engineering-economics involved in valu-ing and providing information-related services. Technology is no longer an issue as the soft ware and hardware are avail-able in a variety of solutions. Th e pace of market activity is now directly related to clear customer value propositions that are dependent on policy direction. Th is is because the value of customer information involves several value streams, such as societal benefi ts from carbon reduction and national energy independence, customer benefi ts in lower utility bills and utility benefi ts from increased effi ciency of the grid. Th e challenge is that in many instances, utilities or unregulated services fi rms cannot monetize most of these benefi ts that oft en are required to make a cost-eff ective busi-ness case. As a result, the pace of adoption is moving slower than policymakers’ desire. Clarity on the value of the vari-ous benefi t streams by policymakers would provide better direction to the market and likely accelerate product and services adoption to enable customer empowerment.

RN. A key trend is the availability of home energy manage-ment information for customers to help them save money on the energy they consume and reduce the demand that utilities are facing. Utility regulations dictate that they provide data to consumers. Utilities need to ensure they are in a position to verify that those requesting customer information are legitimate. And this applies to either cus-tomers themselves, or those empowered by customers to seek information on their behalf.

Th e second part that will play an interesting role in this debate is that whoever is providing that customer informa-tion will want to be compensated for it, so how will they be compensated and will a public utility commission step in to decide the fees of providing the service?

In the initial phase, there will be third parties to help

ROUNDTABLE DISCUSSION 49

may be more benefi cial to the utility but early deliverables should all be customer oriented. Utilities have not gotten this message and AMI initiatives are clearly ‘utility fi rst’ eff orts that will fail to draw customer (and PUC) support.

Malcolm Unsworth. For something as critical as the smart grid, choosing the right technology can seem like a daunt-ing task. Utilities looking to embrace the smart grid need to fi nd a partner with experience and a strong commitment to the industry – and to innovation. At Itron, we’ve spent over 30 years shaping the energy and water industries. When we developed OpenWay, our smart grid solution, we collaborated with Southern California Edison to truly understand – and deliver – a system that meets SCE’s needs today, yet can evolve over time. Out of this collaboration was born our commitment to an open-standards approach to the technology, from smart meters to network infra-structure to end-use applications.

Paul De Martini. Utilities are faced with an unprecedented amount of change in their business environment and faster technology innovation cycles. Th is dynamic requires utili-ties to revisit their technology adoption and risk manage-ment practices. Th is involves consideration of appropriate methods of managing lower maturity commercial technol-ogy adoption inherent in most smart grid deployments. Additionally, utilities should consider the integration and implementation of risk management across multiple grid and customer service operational systems. Th is is oft en discussed in the context of people, process and technol-ogy, but the adoption of earlier stage commercial technol-ogy combined with changing multiple operating systems means that the complexity of the implementations grows dramatically.

As a result, thoughtful approaches involve a good un-derstanding of organizational (people and process) capa-bility as well as addressing integration and future-proofi ng in the technology. Specifi cally, integration and future-proofi ng involve two fundamental considerations; use of IP-based open standards, a thoughtful systems engineer-ing approach that includes forward-looking use cases, and modular architecture that allows for graceful expansion and/or replacement of components as needed. Best prac-tice for systems engineering starts with development of business-use cases with input from stakeholders and technology vendors to help identify existing and future requirements. Th e time horizon for the ‘future’ should be defi ned by the more expensive to implement and replace, and longest-lived (regulatory asset perspective) technol-ogy component (e.g., if a smart meter is proposed with a 15-year regulatory asset life, then the future horizon should anticipate a 15-year horizon).

Rilck Noel. First, the vendors and the utilities need to make sure they cooperate on the performance, interface and se-curity standards that will be applied to the whole industry, so they can come together in a meaningful way when de-veloping solutions. Without standards they could each be

Dr. J. Patrick Kennedy is the CEO and founder of OSIsoft, LLC. Under Kennedy’s visionary leadership, the company has grown from a small software startup in 1980 to a highly profi table global corporation. Kennedy earned a BS and a PhD in Chemical Engineering from the University of Kansas.

We always recommend that our customers build incremental value on top of a sound foundation



consumers identify the consumption and demand infor-mation they need. Th e same entities can request this infor-mation on behalf of consumers. Years down the line, it will become common for information regarding consumption and demand to be available online for either a nominal fee or for free. Utilities will be expected to support reliable, timely, and secure online access to that information.

Finally, utility executives and other stakeholders rec-ognize that they need to communicate with consumers to keep them well informed about the benefi ts they will real-ize with the new information and controls available with smart grid. As they do so, utilities need to determine how they can transform their customer call centers into cus-tomer engagement centers. Th en they can look at possible new streams of revenue allowable by regulators, such as energy analytics and creative payment options.

JPK. It is quite inconsistent and varies from paranoia about privacy (i.e. none) to totally open (e.g. Google) to some middle ground (i.e. user portals). A signifi cant issue with the current utility mindset is in their desire to ‘own’ the network for data transfer to/from the customer. Th eir use of AMI back haul creates signifi cant data latency that is not conducive to customers interacting in real time to fl uctuation in the market prices (10 minute spot market). Th e utility can only provide a forecast (a day ahead) of the rates. Also, the data latency eliminates any real-time evaluation of the eff ectiveness of demand response to price signals. Public back haul over broadband (in 70 percent of US homes) is the better solution.

What challenges exist in managing the coordinated evolution between the regulated and deregulated space? PDM. A key challenge is clear policy direction and coor-dination at federal and state level regarding the customer value proposition and methods to monetize the value for customers and regulated and unregulated service provid-ers. Additionally, continued clarifi cation on the roles for utilities and unregulated services fi rms is needed as new business opportunities emerge. Th e use of IP-based open standards enables the smart grid platform to support fl ex-ibility for policymakers in terms of encouraging broad market participation whether by regulated and unregulated services fi rms, but also increasingly customers themselves.

RN. Eventually the regulated and deregulated spaces are going to converge when it comes to consumer information and access to data. Th e data will help consumers change their consumption pattern so they can reduce demand on the system and save money.

Aft er smart grid has been implemented, utilities will still be responsible for maintaining their infrastructure, making sure it is reliable. Th ey will do this through both non-traditional approaches and rate cases. In regard to transmission, distribution and generation infrastructure, there will be a lot of changes, but it will remain regulated for the most part. But in terms of consumer data, regula-

tion will require that customers have access to their own data and have control over who gets to see it.

JPK. Th e primary challenge is to allow the market to dic-tate the price a customer will receive for their demand response (and distributed energy resource) participation. Th is comes back somewhat to the data latency in the AMI systems but more importantly regulations need to change to allow customers to fully participate in the retail market. Current subsidies for renewable energy sources should be replaced by transparent cost and pricing that refl ects the true value of each option to the market. For instance, cen-tralized wind generation requires transmission lines to be built (paid for by ratepayers) and is subsidized with large investment tax credits. It has no cost associated with in-creased emissions that it indirectly causes by forcing fossil fuel generation to provide set-point changes in reaction to the variability of wind. So, we have an industry (biased toward centralized generation anyway) betting on signifi -cant wind generation not because it is a reliable solution to the supply problem but because they have fi nancial incen-tive to do so. Th e result has been the introduction of a va-riety of new problems (grid stability, increased emissions, transmission congestion, etc.). Residential customers on the other hand, have net metering (avoided cost) and no market signals to incent them to install solar or participate in DR, both of which are 1) outside utility control (negative from utility view) and 2) more apt to directly benefi t the stressed distribution grid by injecting energy at the source of the problem.

MU. We need a grid that works for both regulated and restructured (or deregulated) markets, for utilities large and small, investor-owned, public and cooperative – everyone needs to arrive at the same destination. As we see it, one of the biggest challenges facing utilities in the evolution of the smart grid is the link between sales volume and a utility’s ability to turn a profi t – oft en re-ferred to as decoupling. If a utility’s bottom line is tied to how much electricity or gas it sells, what is the incentive to really drive consumers to use less, and to use energy smarter? On the open market, utilities need incentives to adopt new technology and to embrace the smart grid. Th is allows the utility to operate more effi ciently over time, while reducing costs, balancing supply and demand and protecting our resources and the environment.

To what extent is building the smart grid a technology issue and to what extent is it a business issue? How is it possible to balance these priorities? RN. From a technology standpoint, in my estimation, 80 percent of the technology needed to implement the smart grid is already being used, but not in a fully integrated way. Th ere are islands that our current electrical distribu-tion and transmission system represents. If you are on an island, everything is regulated, and running effi ciently, but the problem is if you go from one island to another, the effi ciency and integration in the operation of the grid is not

Malcolm Unsworth is President and CEO of Itron. Unsworth joined Itron in 2004 through the acquisition of Schlumberger Electricity Metering. As an active proponent of smart grid technology, his vision is helping to shape a new energy and water reality for utilities worldwide.

Utilities looking to embrace the smart grid need to fi nd a partner with experience and a strong commitment to the industry




there. We are working to ensure the islands connect and the grid operates uniformly and effi ciently.

At the end of the day, the technology must be lever-aged for business benefi t. Th e bulk of the benefi ts provided by smart grid infrastructure stem from demand reduction and demand shift ing, resulting in a reduced need to build expensive new capacity to serve peak demands. Substantial and persistent changes in customer behavior will be key to these results, and thoughtful regulatory decisions regarding pricing and controlled usage will play an important role.

JPK. Building the smart grid to meet future requirements could be a technical issue, but it is a business issue to fi gure out a design that will satisfy both the users and the utility – a function that I do not believe has been accomplished to date.

We now have the issue of AMI projects that are put in only to benefi t the distribution utility (i.e. billing) and really do not support user benefi ts. Expect the intrusion of non-utility entities (e.g. Google) to fi ll this gap.

MU. Th ere is defi nitely a balance, and both are important to recognize for what they bring in this evolution to a smart grid. Technology provides the foundation for a new reality in our energy delivery system. Our current grid has been patched together for so long that recent gains in technology can impact energy for the better just on their own. We’ve de-veloped our technology with a focus on open standards and interoperability, as well as an eye for long term-reliability to

Paul De Martini is responsible for the vision for Cisco’s Smart Grid end-to-end IP architecture, the technology and deployment roadmaps, identifying key technologies and global standards development. He is a member of the NIST Smart Grid Interoperability Governing Board, the EEI Y2030 Strategic Planning Committee and the EPRI Intelligrid program.

ensure we’re building out a viable grid. But to truly realize the benefi ts of the smart grid and create a new energy economy, consumers need to support the technology. Th ey need to buy in to the idea that they can control how much energy they use – and pay accordingly for it. Th is is where the business case for utilities needs to evolve and truly embrace the im-portance of the consumer. Consumer choice, conservation and empowerment eff orts need to be top-of-mind for utili-ties in a smart grid world. Technology can be the catalyst for disseminating critical information, but consumers will have to understand and use that technology to change behavior and provide the environmental, societal – and ultimately business – benefi ts that will ensure the smart grid’s success.

PDM. Th ere are no fundamental energy technology (ET) or information and communication technology (ICT) barri-ers to the development of the smart grid. Broadly, ET and ICT products are available to meet most business needs and the next generation of products and services are under development. Th ere are signifi cant technology adoption considerations for utilities; however, market adoption today is directly linked to business and customer value that are largely infl uenced by policy direction. It is very possible to more explicitly balance policy, value and technology adop-tion. Development of smart grid roadmaps by utilities for discussion with regulators and customers, as is being done in California and Hawaii, would be a very constructive pro-cess. In fact, this approach is recommended to help demon-strate to customers the value of a smart grid.

Continued clarifi cation on the roles for utilities and unregulated services fi rms is needed as new business opportunities emerge

Rilck Noel, VP and Managing Director of Verizon’s Global Energy and Utility Practice, has over 25 years of utility industry experience. He was a partner and a managing director at two other advisory fi rms consulting to the utility industry. He is also an international lecturer and has authored articles on utility-related topics.

At the end of the day, the technology must be leveraged for business benefi t



SMART GRID54

ENCOURAGING EFFICIENT CONSUMPTION

Jeff Johnson tells Huw Thomas how the smart grid can be used to get consumers on the road to energy effi ciency.

JeffJohnson 54JeffJohnson 54 29/09/2010 14:1129/09/2010 14:11

SMART GRID 55

From Atlanta to Zurich, the smart grid is big news. If all the claims made about it by some of its more evangelical exponents are to be believed, it is a virtual panacea for much of the world’s energy woes. Th e smart grid will help consumers to monitor and reduce their power consumption,

allow utilities to better cope with peak demand, promote energy-effi ciency and reduce operational costs.

But as with many new technologies, there remains the persistent challenge of defi ning exactly what it is. Jeff Johnson is Deputy CIO at Constellation Energy, one of America’s largest power providers and a frontrunner in the smart grid race. Even he agrees that the smart grid can mean diff erent things to diff erent people. “It is something of a Rorschach test,” he confi rms when I speak to him at his Baltimore offi ce. “Everybody sees something diff erent in it and I would argue that there are a couple of diff erent themes. One, it does enable much better real-time information from an operational perspective. So the actual management of the transmission/distribution grid is much more real-time, and thus able to support higher operational capability and ultimately grid reliability. It also enables us to manage the grid as it evolves. Where it was in the past, a hub-and-spoke kind of network, it’s now moving to a multi-nodal network where you’ve got distributed generation, renewable sources, even potentially fl eets of electric vehicles.”

Whatever confusion remains over the smart grid’s exact nature, Johnson is excellently placed to cut through it. Constellation’s subsidiary regulated utility, Baltimore Gas & Electric (BGE), is currently engaged in one of the biggest grid innovation projects anywhere in the world. At the time of writing, some protracted wrangling with the Maryland Public Service Commission has just been re-solved, allowing BGE to use $200 million of federal stimu-lus money to roll out the smart grid throughout its Central Maryland service territory.

While Johnson is understandably relieved that a sig-nifi cant potential brake on the project has been removed, he nonetheless understands that the smart grid does raise some very real concerns. “Th ere is the question of are we too early? Is the technology mature?” he says. “Is it really going be good for the consumer? Th ere’s always a negotia-tion with the utility about how much of this is going to go into the rate base and come out of the consumer’s pocket. Th ere are legitimate questions and concerns for everybody to get comfortable around.”

But despite these concerns, Johnson fi rmly believes that the benefi ts outweigh any potential downsides. “We’ve successfully completed a smart grid pilot,” he explains. “We are currently engaged in pilot programs around home energy management, and the evaluation of a couple of dif-ferent approaches and technologies in that space. We’ve demonstrated that there are signifi cant consumer savings and behavioral changes that can occur, based on the infor-mation that then can be provided to the consumer. We’ve seen that in a real-world context.”

According to BGE’s estimates, smart grid implementa-tion will lead to consumer savings of at least $2.5 billion


56

over the course of the project. While the $200 million in stimulus money is currently grabbing headlines, it is really just a part of Constellation and BGE’s long march towards the grid of tomorrow. “We have this multi-year program to re-engineer our whole service delivery approach from a utility perspective.” Johnson explains. “We are currently replacing our whole monolithic customer care and billing system and our meter data management system. Th at’s all being done based on the requirements that we have de-fi ned for a smart grid. It is a major platform for enabling of smart-grid capability and functionality. We are also re-engineering our approach to how we do e-commerce and customer-facing, web transaction support.”

It is this long-standing commitment to re-imagining the entire energy business that resulted in the Depart-ment of Energy’s decision to award BGE with federal funds in the fi rst place. “BGE is clearly ahead of most utilities in terms of a very due diligence-based approach to understanding what a smart grid means to our terri-tory,” Johnson confi rms. “How might it work? What sort of value proposition might it generate? And then, how do

we scope and plan for an implementation in a risk-man-aged way?” Now that the fi nal regulatory hurdle seems to have been cleared, the stage is set for all this hard work to fi nally pay off .

PromiseFor Johnson, the true promise of the smart grid centers

around two main threads. First is its ability to provide a higher operational capability, which in turn delivers grid reliability in a safe and eff ective manner, compensating for fl uctuations in demand and the need to react in emergency situations. Th e second is the ability to provide pricing signals to the consumer, allowing them to more effi ciently consume energy and consequently reduce their bills. In some cases, this can even see consumers being compen-sated for reducing their energy use through a demand re-sponse. “Th ere are advantages to the end consumer beyond just higher reliability of the grid and enablement of new functions,” Johnson says. “Th ere’s also the fact that they are then enabled, through better information, to manage their energy consumption in such a way that they reduce their

SMART GRID

“It’s incredibly important that this be a business-led, business-sponsored, business-staff ed program. If you try to approach it as just a technology project, you will fail”


57

utility bill without sacrifi cing signifi cantly in terms of their comfort and lifestyle.”

For many on the outside, the idea of a utility encourag-ing its customers to use less energy seems counterintuitive, like turkeys voting for Christmas. However, energy effi -ciency has become such an important long-term goal that re-gional and national governments are stepping in to promote it. “Maryland is lead-edge from a regulatory perspective in this space,” Johnson explains. “California was one of the fi rst but Maryland adopted a decoupling approach, meaning that the utility is incentivized to reduce consumption.”

Decoupling is a concept that has been catching on throughout the United States for a while now. It breaks the link between the utility’s ability to recover its agreed-upon fi xed costs, including the profi t margin, from the actual volume of sales that occur through a rate adjustment mechanism. If a utility promotes less energy use, they are rewarded rather than punished.

Under decoupling, there are a number of ways to compute the rate adjustment, but the basic principle is that if the actual sales are less than forecasted, there is a slight upward adjustment in rates to compensate the utility. Adjustments typically would only be between two or three percent and some jurisdictions have applied caps on pos-sible adjustments to protect consumers.

As a result of Maryland adopting decoupling in 2007, much has already been done to promote reduced energy use in the service area. “BGE has a variety of programs under way today to help manage consumption with exist-ing technologies that surround load response and demand management programs for their customers,” Johnson says. Th is has been under way for several years and has been providing valuable groundwork ahead of the smart grid’s ultimate implementation.

In fact, it is possible to go even further than that and view energy-effi ciency programs as a vital component in smart grid development. “Smart grid is not just fl ipping a switch, and it’s not brand new,” Johnson explains. “It’s more of an incremental approach. Th e stimulus funding and the grant money has created maybe a perception in the market-place that somehow this is all brand new and nothing has been done to date. Th at’s not the case. Utilities have been working towards smart-grid type concepts for years. I think the focus now of trying to accelerate that has created aware-ness in the consumer’s mind to a much higher degree.”

ChangeAnother thing that is far more than just fl ipping a

switch is the amount of organizational and process change a move to a true 21st century grid requires. As part of its ongoing business transformation project, Vision 2020, BGE has been breaking down silos and fostering a closer relationship between IT and the business. For example, rather than gas delivery and power delivery operating largely independently of one another, they instead share certain components and functions. As a result, processes can be organized more around end-to-end services than discrete siloed functions.

SMART GRID

Another big business buzz phrase currently rivaling ‘smart grid’ in ubiquity is ‘cloud computing’. Everyone and their dog is talking it up as a game-changing technology but, as with the smart grid, there is a certain degree of debate as to what exactly it is.

“There really are a couple of ways to think about so-called cloud computing,” says Johnson. “There’s software as a service. There are external IT clouds for IT capacity, such as Amazon, Google or Verizon who provide those services. And then there’s also the capability to build so-called internal clouds, where you have IT loads that need to exist for various reasons – such as IT security or operational realities – within the confi nes of the four walls of a corporate data center.

“My belief is that major companies, especially utilities which have high data security issues, will for the foreseeable future need to maintain many of their operational systems within their own corporate data centers. Thus, we are looking at how we evolve towards the capability to provide IT services on demand through internal clouds, while leveraging external clouds where appropriate, to provide services as part of our solution set.

“For example, we haven’t completely solved this problem of whether we want all of our historical data around, say, meter reads and meter data, which is potentially a very signifi cant data volume, on-site in our data centers, or is that something that we buy in a secure manner through external cloud providers?

“You can start to build these hybrid approaches to how you leverage this IT service on-demand capability, whether it’s through your own internal cloud and/or external cloud providers where appropriate.

“And then, on top of that, you can also say, ‘Maybe there are some services that we want to buy as a software as a service,’ which is extending cloud IT on-demand capacity concepts up to the actual solution level.”

In the clouds


58

“It’s important because you start to drive towards more integrated, real-time management of the operations,” says Johnson. “Th at has implications from a process and an or-ganization perspective. Th e last part is something Gartner has been talking about for several years, where you start to see a convergence of two siloed domains. Traditionally, there’s been a split between the operations side of the busi-ness, and the IT side of the business. As you start to deploy a smart grid, you begin to see a convergence between the traditional operational technologies and the more IT tech-nologies. Th ey start to become one. Gartner calls that the convergence of OT and IT.”

Having access to the kind of detailed data the smart grid allows becomes important in order to response to rapid changes in demand and in emergency situations. Th ere are several diff erent types of load response that are emerging,” Johnson says, “but the most common one that has been supported is the concept of emergency demand/response and load shedding in an extreme situation. For example, if we have a series of 38-degree-plus days, like we just recently had here in Baltimore, the system is stressed. In that kind of case, the ISO can declare a demand/response event, and within minutes, we can notify customers that have signed-up as demand/response enabled. Th en we can have them shed load, or to allow us to make the predefi ned decisions to shed load.

“Th ey get compensated for providing that load back to the grid, thus avoiding either spinning up much more expensive and dirtier resources in the best case, or outright

potential grid reliability issues if the utility did not have that capability. Th at is the area where most utilities oft en fi rst focus, provided their territory supports those kinds of programs and tariff s.

“As you move forward, there are other kinds of load response scenarios where certain customer types can sign up to provide a more discretionary type of load shift ing. Th ese can be load management functions where, de-pending on market price, sheer power demand or power regulation needs, they can manage their demand in such a way to help manage the grid. Th at kind of thing is more transactional day-to-day load response. Th at’s a more sophisticated approach that is just beginning to be recog-nized in various markets.”

Johnson points out that within this process, Con-stellation is thinking in terms of architecture and thus platform. “First of all, there’s an architected approach to thinking about the business process. Especially in our utility, we’re thinking about what is the re-engineering of the business process fi rst, and starting from there. And then you drill into what is our technology strategy to enable that from an application perspective, and then from a technical architecture perspective, and a vendor partnership perspective.

“It’s incredibly important that this be a business-led, business-sponsored, business-staff ed program. Because, ultimately, you’re re-engineering the business. If you try to approach it as just a technology project, you will fail.”

SMART GRID

BGE estimates smart grids could save at least $2.5 billion over the course of the project.




BPL Global’s Keith Schaefer, Comverge’s John Rossi, eMeter’s Gary Bloom and Johnson Controls’ Clay

Nessler take an in-depth look at the impact smart grids and meters are having on energy consumption.

What role can giving consumer’s better information about their energy consumption have in reducing peak demand?Keith Schaefer. Visibility is an important part of reducing energy consumption. Our experience consistently results in a 10-20 percent reduction in energy use from customers using our EasyGreen portal. More and more, consumers are choosing to be green and they have consistently valued lower energy bills. Over the next 10 years, home area energy networks will create a web of connected devices providing consumers with visibility into energy use, information on energy saving and services to optimize energy intensity. Coordinated management of electric devices in a home, and among homes and commercial facilities, will help level load during peak demand. However, peak load reduction is best achieved with our integrated Demand Dispatch technology for direct load control. BPL Global (BPLG) has demonstrated nearly twice the eff ective yield compared to traditional load management systems. Direct load control

SmartGrid_RT B.indd 60SmartGrid_RT B.indd 60 29/09/2010 14:1529/09/2010 14:15

John Rossi, a co-founder of Comverge, has 25 years of experience. As Senior Vice President of Business Development he leads all Corporate Strategic Planning. Rossi evaluates different approaches to energy use and optimizes the Comverge solution portfolio. He holds six patents for utility related applications and an MS in Electrical Engineering from the University of Detroit.

ROUNDTABLE DISCUSSION 61

and verifi cation takes the uncertainty out of timing and level of load reduction, replacing the need for new peak power plants. Deploying our technology provides utilities with a solid ROI and consumers with the benefi ts of peak load management.

John Rossi. While empowering consumers with actionable information on their energy consumption has a critical role to play in reducing peak demand, it should not be seen as the silver bullet. Instead, a combination of technology, services and information management solutions are re-quired to intelligently manage and reduce peak demand. Th is fact has been demonstrated in a number of cases and trials over the years.

For example, dispatched demand control will continue to play an important role as many residential customers would prefer to have their AC cycled off when necessary rather than investing time in monitoring their energy consumption and dealing with the complications of price

response. Th is has been demonstrated in some of our programs as when the customer is given a choice between switching on a compressor that requires no interactions or a programmable communicating thermostat that they need to monitor regularly, they oft en choose the switch. Th at said, it is important to note that one size does not fi t all, a sentiment that was echoed by FERC chairman, John Wellinghoff at a recent Demand Response Town Meeting, when he stated that both traditional DR and price response will play a role going forward.

Gary Bloom. We recently ran a pilot in the District of Columbia (PowerCentsDC) to determine how consumers would react when given better information about their energy use. Th e program found consumers participating reduced summer peak demand by up to 50 percent, with the greatest reductions occurring when dynamic prices were combined with automated air conditioner control via smart thermostats.

Clay Nesler. You can’t manage what you don’t measure. Most US businesses and homeowners receive an electric bill that provides them limited information. Th e bill is not timely and does not provide information on what consumes, when it occurs and how it compares to other consumers. When people see energy data in a timely manner, several things happen to reduce peak demand. First, they reduce consumption. Several studies establish that feedback via visible displays creates energy reductions typically between fi ve and 10 percent. Second, they adjust consumption patterns. When frequent energy information is combined with price signals, peak demand is reduced. Commercial and industrial sites in California have used information and automation to reduce demand 10 percent during critical peak price signals. Lastly, they invest in energy effi ciency. Good energy data provides a framework for better energy management. Recent research by John-son Controls shows that organizations that monitor daily energy usage execute roughly 50 percent more energy-saving projects than those that do not. Th ese organiza-tions will also have higher energy-savings to cost ratios as compared to their peers because they know exactly where to invest.

Do challenges exist in promoting energy monitoring to customers? Are such challenges focused around tech-nology or ingrained consumer attitudes?JR. Changing consumer behavior is always diffi cult, even when the benefi ts are very clear. In the case of promot-ing new energy monitoring solutions to consumers, the key is to design programs that save the consumer money through a compelling and intuitive user experience. By adding simple “set and forget automation” features, the barriers to adoption are removed and consumers are able to easily realize the benefi ts of intelligently monitoring their energy consumption.

Th is has been demonstrated in our work over the last decade with Gulf Power on its pioneering price-response

Keith Schaefer, President and CEO of BPL Global, a technology innovator and successful entrepreneur, has co-founded or led more than 10 start-ups. Foreseeing the potential to transform the energy effi ciency and reliability of a global industry, Schaefer co-founded BPL Global in 2004 to provide integrated smart grid solutions.



energy management program. As part of that program, customers are given a Programmable Communicating Th ermostat that controls HVAC and three other appli-ances based on time or price or a combination of both. Customers love the program and it is easy to understand and respond to. In fact, what we see is that customers program their thermostat once and then just let it do the work for them.

Th is combination of simplicity and cost saving is key to customers embracing a program. Remove either and you’ll face an uphill battle.

GB. Th e biggest challenge is making energy information available to consumers through a home area networking (HAN) device and/or a web portal.

Consumers are begging for more data. Th ey want to see how consumption directly relates to their bill. In our PowerCentsDC pilot, we found that smart meters com-bined with smart prices and good energy information give consumers meaningful energy saving opportunities. Over 90 percent of the customers saved money – and over 90 percent said they would recommend it, with its features of dynamic prices, information and smart meters, to their family and friends.

CN. Th ere are two main obstacles. First, systems are not set up to provide real-time energy data to customers. Every user interface needs data and this means meters, subme-ters, loggers and other hardware that must be connected and confi gured to work with legacy building systems. Today it is a fairly custom process, but energy services companies (ESCOs) continually improve with experience and scale that lowers costs and increases value.

Th e bigger challenge is the diffi culty for customers to evaluate the energy information benefi ts because it enables further action that may or may not require additional investment. Th is is being overcome as organizations shift to managing facility energy usage with similar processes used in their operations (e.g., Six Sigma). Today, Johnson Controls is helping leading organizations embed energy management into their core business – monitoring usage, assessing priorities, setting quantitative goals, implement-ing projects, and tracking results – bringing energy into focus and obtaining signifi cant results.

KS. In the US and Europe, we fi nd great enthusiasm for energy effi ciency programs. Not everyone signs up, but even 20 percent voluntary participation will transform the industry. Th e technology exists and enough consum-ers are ready. Th e challenge is changing the regulatory paradigm to place more value on investments in peak load reduction and energy effi ciency than on generation and T&D infrastructure. With business as usual, the world will use 30 percent more electricity in 2020 according to the US Energy Information Agency. With the accelerated smart grid deployment, we could save 10 percent in ef-fi ciency gains and enable 20 percent from renewables. Th e challenge is greater in high growth countries like China.

While China is building signifi cant new generation ca-pacity to fuel its economy, a commitment to clean energy and smart grid investment is likely to accelerate energy effi ciency programs that engage customers. As the regu-latory environment shift s to value energy effi ciency, dis-tributed storage and renewables, the industry will evolve to off er a broader array of services that engage more and more customers.

Do challenges exist around the interoperability of smart metering technologies? What efforts are under-way to resolve any issues?GB. Th e single most important communications standard in the smart grid is the interface between smart meters and electricity consumers’ premises. And the winning standard for wireless links has likely emerged: ZigBee Smart Energy.

As successful deployments of tens of millions of smart meters in North America, Europe, and Asia-Pacifi c have shown, multiple proprietary and open protocols work well for two-way communications between utilities and meters. But the smart grid vision can’t be achieved without a single, open protocol from the meter to the premise.

Th e next big thing aft er smart meters is sending messages from those meters to in-home displays, smart thermostats and smart appliances. Th ese messages con-tain the usage, pricing and control information that enable consumers to capture the desired smart meter and smart grid benefi ts of demand response, energy effi ciency, renewables integration, distributed generation and elec-tric vehicle charging. And an open interface for sending those messages is essential for the free market to invent and deliver, at low cost, all sorts of exciting and creative products and services.

CN. Interoperability is always a challenge. While utility deployment of Advanced Metering Infrastructure is not trivial, the bulk of the interoperability challenge (and op-portunity) is within buildings. From the commercial build-ing perspective, there are three primary issues. First, no consensus around the communication standard between meters and equipment exists. Second, the medium for communicating is not settled (e.g., wireless, IT networks, Building Automation Systems). Finally, there are no formal tests to ensure standards compliance. Each issue is being addressed by experts through the NIST smart grid interop-erability initiative. Th e upside benefi t of a connected and interoperable systems is massive. Tens of billions of dollars in annual savings are possible through lower energy bills, capital deferral and better grid operations.

KS. Interoperability challenges exist in deploying smart grid solutions across the grid. Th is is a much bigger question than interoperability of smart metering tech-nologies. Th e value of a smart grid is multiplied by sharing information across applications. Smart grid ap-plications across the energy value chain from generation to consumption must interoperate for the smart grid

Gary Bloom is CEO & President of eMeter. Previously, Bloom served as Vice Chairman & President of Symantec. He joined Symantec through its merger with VERITAS, where he served as President & CEO from 2000 to 2005. Bloom joined VERITAS after a 14-year career with Oracle rising to the rank of Executive VP.




to realize its full potential. We have built our Power SG smart grid soft ware solution as an open platform de-signed to integrate vertical smart grid applications. In-teroperability enables collaboration across applications. For instance, when a transformer monitor identifi es an imminent failure, a substation automation system takes the transformer off line and the demand management system reduces the corresponding load on the substation. Eff orts are underway in the US and Europe to develop in-teroperability standards. Having a common, global set of standards is vital to a robust smart grid industry.

JR. Th is is a complex and challenging area, but standards such as Zigbee are being developed that are starting to be rolled out. Alongside industry standards, operating systems such as the Comverge Apollo platform can help overcome interoperability challenges by intelligently em-powering a host of emerging energy management applica-tions and smart grid technologies.

Logic seems to suggest that more energy-effi cient cus-tomers will result in lower revenues for utilities. What business benefi ts does effi ciency bring for suppliers of energy?CN. It is clear there is a misalignment of incentives be-tween energy effi ciency and selling electrons, but the regulated utility business model is more complicated than just selling electrons. Utilities have the “obligation to serve” their customers with safe and effi cient service. If building power plants and substations is not the best way to meet customer needs, utilities should promote and be compensated for these alternatives. Th is is hap-pening in some markets. In these markets both Johnson Controls and utilities see the benefi ts of working together. Th e benefi ts of energy effi ciency to utilities are numerous. Smart investments in energy effi ciency can substantially decrease peak demand, extend the life of existing infra-structure, improve the ability to shape the demand curve, enhance customer relations and decrease business risk. Working with credible ESCOs that guarantee their work creates an extremely reliable “supply source” to meet future needs with no fuel price risk, no siting issues and can be implemented now.

KS. In the short-term, effi ciency can result in reduced util-ity revenues. However, regulators can approve decoupling to sustain utility revenue while lowering consumption, aligning utilities and their customers on energy-effi ciency goals. In addition, we fi nd operational, environmental and economic advantages to deploying smart grid solu-tions. Reducing peak demand on congested substations or replacing spinning reserve assets with load manage-ment solutions provides a measureable ROI for utilities even though demand is reduced. Energy effi ciency is the most cost-eff ective approach to reduce utility asset costs as well as reducing carbon emissions that contribute to global warming. Investments in the smart grid create local jobs for a nation and help achieve energy independence.

According to the EIA the world will use 30% more electicity in 2020




Energy effi ciency creates lower energy intensity, generat-ing the same benefi t with less energy. Just like a capital investment in new generation or T&D infrastructure, returns on investments in energy effi ciency and the smart grid must be built into the rate base. Done correctly, this can be a win for the utility, the regulator, the consumer and the environment.

JR. While that would seem to be the case on fi rst glance, decoupling utility income from the amount of energy de-livered, as is the case in California, eliminates this concern. In addition, performance metrics for utilities can be put in place that tie returns to customer satisfaction or other parameters not tied to the quantity of electrons pushed through the wires.

Another way of circumventing this issue is a legislative mandate like Pennsylvania Act 129. Th is is one of the most forward thinking energy laws in our country as it sets both peak demand reduction and energy effi ciency improve-ments goals that need to be implemented by 2012. Th e law provided a budget for the program and imposes penalties if the goals aren’t met. Both of these approaches, the carrot and the stick, accomplish the goal of having utilities em-brace energy effi ciency.

GB. Regulators are cognizant that the current business model does not reward utilities for promoting energy ef-fi ciency. For this reason, a number of states (California,

Connecticut, Idaho, Maryland, New York and Vermont) have all created market structures that decouple profi ts for one or more utilities. Decoupling eff ectively removes a major disincentive for promoting energy effi ciency. We expect decoupling to become even more commonplace as consumers and regulators become increasingly energy ef-fi ciency conscious.

Effi ciency also leads to improved asset utilization. Currently, more than $200 billion of assets are used only 100 hours per year. We can halt the production of addition-al power plants and learn to better use existing resources by making information available and giving consumers the tools to manage usage.

Th ere is also concern that some of the new innovations hitting the market such, as electric vehicles and renewables will have diffi culty incorporating into the grid. With im-proved effi ciency, we can help solve these issues and pro-vide a more solid platform for further innovations.

Here are some of the facts that drive the move to-wards the smart grid: US utilities will realize about $3-5 billion in annual operating savings from smart meters. Demand response savings, at a 10-15 percent reduction in critical peak demand, will save about $5 billion per year total. Also, energy effi ciency (at just fi ve percent) will save about an additional $18 billion per year or so. Most of the demand response and energy effi ciency savings will fl ow through to consumers via lower wholesale power purchase and production costs.

Clay Nesler is the Vice President, Global Energy and Sustainability for the Building Effi ciency business of Johnson Controls. In this role, he is responsible for energy and sustainability strategy, policy, marketing, education, innovation, operations and NGO relationships on a global basis. He also serves on the company’s global environmental sustainability council.



Is the smart grid the greatest innovation of the 21st century or a gaping security black hole? US Infrastructure speaks with Professor Ross Anderson to fi nd out.

SMART GRID68

Ross Anderson ed.indd 68Ross Anderson ed.indd 68 29/09/2010 14:0629/09/2010 14:06

Just about every great scientifi c advance comes with a catch. Th e Romans’ pioneering work on domestic plumbing brought with it widespread lead poisoning. No sooner had penicillin come into everyday use than bacteria were mutating into more virulent and resistant forms. More

recently, the rise of the internet has allowed us to shop, communicate and work without ever leaving our homes, while simultaneously making us targets for a faceless army of online crooks and scammers. Now the smart grid is promising to revolutionize the way energy is delivered and used, throwing the systems that preceded it into the dust-bin of history. For utilities it enables closer control of the network, the ability to manage peak loads and new ways to push energy effi ciency. For consumers, there is the chance to save money by monitoring energy usage and a potential end to frustrating power outages. But just as with previous leaps forward, there can’t be a silver lining without a cloud, and concerns are being raised about new security vulner-abilities that the move towards smart power might bring.

Misgivings chiefl y center around the communica-tions technology at the heart of the smart grid. Designed to allow real-time contact between utilities and meters in customers’ homes and businesses, there is a very real risk that these capabilities could be exploited for more nefari-ous ends. One of the key capabilities of this connectivity is the ability to remotely switch off power supplies, enabling utilities to quickly and easily cut off or modify supplies to customers who default on payment. Th is is undoubtedly a massive boon for energy providers, but also raises some signifi cant security issues.

“Th e off switch creates information security problems of a kind, and on a scale, that the energy companies have not had to face before. From the viewpoint of a cyber at-

A dark New York skyline in 2003 during a citywide blackout. Offi ce workers crowded bridges and streets in a mass exodus from the city. The power outage affected much of the northeastern United States and parts of Canada, and trapped many commuters in subways and elevators.

SMART GRID 69

tacker – whether a hostile government agency, a terrorist organization or even a militant environmental group – the ideal attack on a target country is to interrupt its citizens’ electricity supply. Th is is the cyber equivalent of a nuclear strike; when electricity stops, then pretty soon everything else does too. Until now, the only plausible ways to do that involved attacks on critical generation, transmission and distribution assets, which are increasingly well defended.

“Smart meters change the game. Th e combination of commands that will cause meters to interrupt the supply, of applets and soft ware upgrades that run in the meters, and of cryptographic keys that are used to authenticate these commands, create a new strategic vulnerability.”

Th e above words come from the introduction to a paper titled Who controls the off switch?, which outlines the threats lurking behind the smart grid’s promise. Ross An-derson is Professor of Security Engineering at Cambridge University and the paper’s co-author. He believes that the rush towards innovation risks undoing much of the work that has gone into protecting critical power infrastructure. “In 1996 the IRA tried to blow up three of the super grid substations in London, and they only failed because their paymaster was in fact in the pay of the British Army,” he says. “At the time these facilities were undefended and had the IRA been successful then they would havr wrecked the power supply to London for maybe six months. Th e social and economic consequences of that would has been simply horrendous. Since then governments have been trying to put walls around major substations whenever they’re refurbished. But nonetheless, these are big targets. Th ese 400kV transformers are made to order; if Al Qaeda blows one up you can’t just phone the supplier and tell them to stick another one on a ship and get it there by Friday; it doesn’t work like that.”


however and the rebuttal is swift . “Don’t go down that clichéd route,” he says. “Th ere are ways in which stuff can be very well defended indeed, but you have to know in ad-vance that you’re trying to do that. If you’re going to have a tamper-evident suitcase carried around by an armed escort walking three paces behind the chairman of OFGEM, for example, that’s doable. But you have to know that it’s neces-sary. Alternatively, if you want to keep master keys under the same kind of conditions that banks keep their master keys; locked and tamper-evident processes in data centers that are professionally managed with situation awareness and monitoring and all the rest of it, then fi ne.” Rather than a failure of security processes, it is instead inexperi-ence that poses the biggest threat. “At present the utility in-dustry knows nothing of this world,” Anderson continues. “It’s completely ignorant of the world of high security IT systems, because there has been no need for it.”

Critical careEnergy’s status as critical infrastructure is backed

up by some of our most recent military adventures. In Kosovo in the late 1990s and during both Iraq wars, power networks were key targets. Cutting off supply has impacts on a nation that are both swift and signifi cant. Modern economies cannot function without power and popula-tions are quickly demoralized when they cannot heat and light their homes. Creating the opportunity for malicious actors to cause this kind of disruption without recourse to large supplies of explosive ordnance does have worrying implications.

“If you’re going to create a strategic national vulner-ability like that it’s got to be done with eyes open and it’s got to be done with proper protection,” says Anderson. But fi rst, the good news. “It’s not such a big deal in America, where there are thousands and thousands of utilities, most of them tiny,” Anderson continues. “If some ecoterror-ist does manage to turn off the electricity meters in Des Barres, Montana then, quite frankly, who the hell cares, apart from the people who live there? But in a large market like Britain you’ve got these problems of scale. It becomes a big enough target for somebody to invest the eff ort to have a go at it. Th ere are a few targets in America – Con Edison for example, or PG&E – that supply electricity to key industrial and fi nancial centers that are clearly poten-tial targets, but most of America is simply not an interest.”

However, that doesn’t mean that the US is off the hook when it comes to smart grid security. Following publication of his paper, Anderson spoke to cyber security representa-tives at the National Institute of Standards and Technology (NIST), who confi rmed that they were concerned about these issues and looking to address them. Concerned or not, with smart meters building momentum, it is unlikely that the habitually slow-paced government can come up with any solutions in short order. “Th e government takes 10 years to do anything,” Anderson states. “In the mean-time you’ve got all these smart meters rolled out and the master keys are just sitting in a laptop somewhere in a power company. If that laptop goes walking, there’s not much they can do.”

Attack vectorsWhile a lot of the biggest noises being made about

smart grid security are focused on attacks from outside, many of the most signifi cant dangers are actually much closer to home. “Th ere’s fi rst the risk from insiders,” An-derson explains. “As many power industry workers retire over the next 10 years there will be an opportunity for ill-intentioned foreign governments to have their own agents inserted in key facilities. Th is is generally outside the system of national vetting and clearances in most countries. Second, it is straightforward to install malware on peoples’ PCs. Social engineering, spear phishing can be used easily.”

When it comes to digital security there can be a ten-dency towards defeatism and an acceptance that total protection is an unattainable goal. Put this to Anderson

SMART GRID70

Money talksWhile one of the key drivers behind smart grid adop-

tion is the opportunity for utilities to save money, the failure to approach security issues with suffi cient attention could come with a very high price. As Anderson says: “If they knew what the likely bill would be for protecting the stuff properly they might very well decide not to do it.”

While some of these costs are associated with there being insuffi cient protection for critical power assets, the inverse could also prove true. Take the standardization drive currently being pursued by NIST, which is pushing the installation of security mechanisms where they are ar-guably not required. “An example of this is a proposal that communications within electricity substations be authen-ticated,” Anderson explains. “Th ere’s a draft IEC standard that hopefully is going to be abandoned or rewritten, but that called for all message traffi c within a substation to be digitally signed. Th ere is simply no need to provide this kind of protection, because if the stuff remains inside the substation then it’s only accessible to people who physi-cally get access. If someone does get physical access they can cause mischief anyway by tripping circuit breakers or taking a crowbar to the engineering workstation, for example.”

While it is vital to protect communications between substations and network control centers, installing such technologies internally is both expensive and unneces-sary. In some cases it could even be counterproductive to the point of hampering a facility’s operations. Anderson

“While it is vital to protect communications between substations and network control centers, installing such technologies internally is both expensive and unnecessary”

The Northeast blackout

of 2003 affected

10 MILLION people in Ontario and

45 MILLIONin the US


dollars to replace substation equipment that is perfectly serviceable.”

Th ere are other ways in which the smart grid revo-lution could bring unwelcome side eff ects. In the rush to implement security standards on a national scale, a number of organizations are getting involved, including NIST, the Department of Homeland Security and even the Securities Exchange Committee. With new standards come new compliance rules, along with all their associ-ated costs. According to Anderson, the desire to circum-vent that compliance burden is already having negative impacts. Take the recent requirement that any piece of infrastructure deemed critical must have information security measures installed. Th e defi nition of critical includes power-generating facilities described as ‘black start’, meaning they can still be fi red up should the grid be compromised. Th is description applies to hydroelectric plants, which only need open the gates to get the turbines spinning, and coal-fi red plants, but only if they have an auxiliary diesel generator to fi re up the furnaces in the event of an outage.

“What we’ve observed over the past two or three years in America is that some generating asset owners were simply taking out the auxiliary diesel engines,” says Anderson. “Th ey reckoned it was better for their generat-ing plant to be no longer critical than to have to go and retrofi t information security. Utilities tend to be very much compliance-oriented because of the heavily regulated world that they work in. So they just see to it that they do whatever the minimum cost is to comply with those rules and avoid getting sued.”

Clear and present danger?So far, so depressing. Is there any good security news

that can restore some of the smart grid’s lustre? Yes and no. On the subject of whether the grid is at imminent risk from terrorist groups or foreign powers, Anderson is a little more positive. “I don’t think it’s a threat yet, but maybe in 10 years-time it will be,” he says. “Th ere is an awful lot of hype going on. Th e security industrial complex, the NSA and the big security vendors are talking up the threat from China, for example, so they can encourage the sale of their products. At present I don’t think the Chinese could do very much to pull down a nation’s infrastructure, but that will change. In a decade or so we will be so dependent, for example, on the internet and on various middle layers of smart information systems and trading systems that there will undoubtedly be issues there.”

While it is true that the smart grid off ers signifi cant benefi ts, it is vital that the rush towards implementation doesn’t obscure legitimate concerns about security. A system is only as strong as its weakest link and failure to address these issues risks handing a terrible power to those who would seek to do us harm. “Th e message for people working at board level in investor-owned utilities and also for people working in state energy commissions and other regulators is clear,” says Anderson. “Th is is an area that they’ve got to get up to speed in.” ■

provides the example of GOOSE messages, which are sent within a substation in response to events such as the failure of a circuit breaker. “Th ese typically have to be acted on within fi ve milliseconds,” he explains. “You cannot gener-ate and verify a digital signature within fi ve milliseconds; the process is just too slow, even in high-end processes. So you either have to abandon the dream of digitally signing all the messages, or else you have to accept the signifi cant performance degradation. And if you install this kind of protection, which doesn’t protect against any realistic threat, you can be involved in hundreds of billions of

Regional securityAnderson on the smart grid differences between Europe and the US.

“The challenges are different between regulated monopolies on the one hand and deregulated markets on the other hand.American states have got both models, whereas the EU has moved towards deregulation. However, there are problems of scale in Europe because whereas most US states are of a manageable size, a lot of European countries are quite large. In the UK for example, the regulator OFGEM is trying to become the smart grid integrator for the whole country. That is a role that in the US would presumably be done by a state-level distribution operator, and would therefore be more manageable.

“You also fi nd that in a place like the UK the various big energy companies own all bits and pieces of stuff up in there in the stack. They own generators, they own energy retailers, they own bits of the distribution infrastructure. There’s a hodgepodge of business ownership, which makes the whole situation very much more complex. So the scale and complexity of doing smart metering in Europe is signifi cantly worse than they are in the US.”

SMART GRID 71


SOLAR ENERGY72

TURN ON THE POWER National Grid’s Edward H. White explains the potential of solar energy in the 21st century.

EdWhite.indd 72EdWhite.indd 72 29/09/2010 15:3029/09/2010 15:30

73SOLAR ENERGY 73

American utilities are facing a host of new challenges today. Chal-lenges that urge us to re-think the landscape of available energy solutions we provide to our customers.

From global threats to our environment in the form of climate change, to dwindling and hard-to-reach domestic fossil fuel sup-plies resulting in an increasing dependence on foreign fuel, to unfortunate incidents that impact our natural resources and public image, the choices we make – as utilities and as a society – are worth examining. Further, our customers are becoming more aware of the impact that these traditional sources of energy have on our daily lives and the adverse eff ect they have on our environmental footprint. In fact, it is both logical and expected that utilities need to think diff erently if we are to change the landscape of energy solutions currently available to our customers. Utilities need to introduce a myriad of energy solutions that both suit our customers’ needs and minimize any further impact on the environment.

Renewable energy needs to be an inte-gral part of the solution. And why shouldn’t it be? Renewable energy generations such as solar, wind and hydro-power are environ-mentally friendly, green, sustainable and are right here in the communities in which we live and serve.

National Grid believes that climate change is one of the most important chal-lenges facing society today. While conserva-tion and effi ciency are the most aff ordable ways to reduce carbon emissions and energy costs, critical investment is needed in renewable generation and smarter grid technology across the industry. National Grid is looking to mitigate climate change with a diverse blend of energy effi ciency, a smarter grid and renewable generation off erings.

As the second largest utility in the US, National Grid has been actively participating in and leading debates across the industry and beyond to ad-dress the challenges the utilities of the future will face. With more than 20 years of experience in delivering energy effi ciency programs and installing solar generation systems, we are committed to being a leading advocate of solar generation and other renewable technologies across the Northeast. We have learned that the successful integration of renewables into the energy mix is only attainable when states and regions work collectively to share a similar vision of creating a green economy.

Recently, the Commonwealth of Massachusetts passed the Green Communities Act (GCA), which set goals to meet 20 percent of the Com-monwealth’s electric load by 2020 through renewable and alternative gen-eration. Moreover, the Commonwealth set a target to install 250 megawatts (MWs) of solar generation by the end of 2017 and has challenged utilities to be part of that solution. National Grid rose to the challenge and was among the fi rst utilities to submit a fi ling to the Massachusetts Department of Public Utilities (DPU) to construct, own and operate approximately 5 MWs of solar generation on fi ve separate company-owned sites. Four of those sites that National Grid chose were former manufactured gas plant sites. Th e company is turning these brown fi elds that previously had very limited use into renewable energy generation sites. National Grid took the Commonwealth’s challenge seriously and we hope that other states and utilities will join us.

Th e 5 MWs of solar generation in Massachusetts, while a small con-tribution to the state’s entire renewable energy needs, will help decrease emissions by approximately 2.9 tons of sulfur dioxide, 6.37 tons of nitrogen

oxide and 3044 tons of carbon dioxide per year. At that emission rate, 5 MWs of solar generation in Massachusetts would save approximately 160 tons of sulfur dioxide, 73 tons of nitrogen oxide and 76,100 tons of carbon dioxide over 25 years.

Evolving technologies such as smart grid are increasingly becom-ing part of the mix of the comprehensive energy solutions for customers. Several utilities in the US are either engaged in full-scale system imple-mentations or pilot programs. It is widely believed that smart grids will be the fundamental service platform for future years. Smart grids have the potential to help customers reduce energy consumption and greenhouse gas emissions while enhancing the reliability of the electric grid.

As part of the American Recovery and Reinvestment Act of 2009, the US Department of Energy committed more than $4 billion of stimulus funds for Smart Grid Investment Grants and Smart Grid Demonstrations. Subsequently, National Grid was one of 54 smart grid workforce training

programs in the US that was awarded a share of nearly $100 million in DOE funding.

National Grid has proposed smart grid pilot pro-grams in our Northeast service territory. National Grid’s vision is to deploy smart grid technology to optimize the fl ow of green energy resources, enhance the performance of the electric transmission and dis-tribution grid, and provide customers with the ability to make informed decisions about how they use energy.

In making the case for renewables, they should not be seen as an initiative or some temporary buzz word upon which forward-thinking utilities need to seize upon. Understandably there are some concerns that could aff ect the addition of renewables to the energy mix. For example, some renewable options are not as

cost eff ective as others. Frequently, the market is slow to respond to pro-viding funding to off set the initial cost. Moreover, while some customers are early adopters and embrace cost-eff ective energy solutions, the reality is that there remain certain segments of consumers who are not ready or fully aware of the benefi ts of renewable energy. Th is should not be a deterrent to the utility model of the future. It just means that we need to work harder to engage and educate our customers, shareholders, govern-ments and other stakeholders on the benefi ts of renewable energy that go beyond the initial implementation cost.

At National Grid, part of our vision is to ensure that we commit to being an innovative leader in energy management and in being environ-mental stewards who safeguard our global environment for future genera-tions. It is critical that we, as the utility industry, realize that the actions we take today will serve to address climate change will benefi t our customers and communities in multiple ways.

“Critical investment is needed in renewable generation and smarter grid technology across the industry”

EdWhite.indd 73EdWhite.indd 73 29/09/2010 15:3029/09/2010 15:30

EXECUTIVE INTERVIEW74

Can you describe the main business challenges in the utilities market and explain how you are attacking these challenges? Ryan Keefe. Th e main business challenges we face are over-coming the incentives utilities have to make a rate of return on CAPEX. As a result, much of the industry is attempt-ing to own and operate their own private communication networks. Th is is translating into longer pilots, additional R&D, regulatory education, new standards development, etc. All these issues are delaying the modernization of the energy grid.

History has shown us that all industries should focus on their core competencies. We are attacking these chal-lenges by developing alternative business models that align better with utilities daily business practices. We are also creatively partnering with utilities to align national broad-band eff orts with smart grid deployments.

What is the difference between commercial and pri-vate networks? RK. Th ere are many diff erence, however, the biggest dif-ference between the networks are licensed vs. unlicensed spectrum and how they are operated. Private networks typically operate on 900mhz or 2.4Ghz radio frequencies (RF). Unlicensed RF must accept interference and cannot interfere with anything else. Additionally there are thou-sands of pre written scripts that can be used to exploit and hack into these networks, generating much of the cyber security concerns from regulators.

Unlicensed RF is also used in many household and consumer devices such as: cordless phones, wireless speak-ers, wireless headphones, baby monitors and Wi-Fi rout-ers. In addition many home area network devices, such as thermostats, light switches and appliance modules are in development to operate in the 900mhz space. Th ese devices are constantly in jeopardy of interfering with each other, add millions of meters to the mix and you drastically reduce the reliability of these networks, indirectly increasing OPEX.

Commercial networks operate on dedicated spectrum. T-Mobile operates on 1900mhz and AWS (1700/2100mhz). T-Mobile operates above 99 percent reliability with mil-liseconds of latency, and we must meet federal mandated guidelines for security, reducing cyber security concerns. Additionally, the network is already built and stimulus funds (tax dollars) shouldn’t pay to duplicate what already exists. Commercial networks cover 99.6 percent of the population that live within a census block.

Can you describe how your relationships with strategic partners provide an end-to-end solution? RK. Our strategic relationships leverage their AMI and smart grid systems with commercial networks. For example, we have a great partnership with Echelon Corporation, which combines commercial networks and their technology, delivering the benefits to the util-ity and consumer. Their new Echelon Control System (ECoS) provides an open applications platform that can host a range of third-party applications that provide intelligent distributed control services to utilities and their customers. With ECoS running on transformer-mounted ECN 7000s throughout the distribution grid, local, autonomous control decisions are made in near real-time for maximum reliability, survivability and responsiveness of the electric grid. All connectivity is made possible through commercial networks. This solves your interoperability and longevity concerns that many regulators and utilities have.

How can you address coverage concerns when working with utilities? RK. Today, the T-Mobile network covers 96 percent of the population. 100 percent of our network is built within utili-ties service territories. In many cases our network is built on utilities real estate. T-Mobile and utilities can swap real estate for tower sites in order to provide ubiquitous cover-age for smart grid initiatives. It’s a win-win-win. T-Mobile benefi ts by expanding our network, utility gains access to commercial networks for smart grid, and consumers ben-efi t by gaining a broadband network.

What can we expect to see from T-Mobile in the next 12 to 24 months? RK. You can expect to see T-Mobile continuing to be the easiest to do business with and lead the M2M industry.

Modernizing the energy grid

Ryan Keefe reveals how T-Mobile is creatively partnering with utilities to improve smart grid systems.

Ryan Keefe currently leads T-Mobile’s Smart Grid initiatives nationwide and has been developing T-Mobile’s efforts to address connectivity requirements as they relate to the smart grid. Keefe works with several business units to bring a turnkey solution to many utilities that would like to utilize existing commercial networks.

“T-Mobile benefi ts by expanding our network, utility gains access to commercial networks for smart grid, and consumers benefi t by gaining a broadband network”

T-MOBILE.indd 74T-MOBILE.indd 74 29/09/2010 13:5729/09/2010 13:57


Can you describe the main business challenges in the utilities market and explain how you are attacking these challenges? Ryan Keefe. Th e main business challenges we face are over-coming the incentives utilities have to make a rate of return on CAPEX. As a result, much of the industry is attempt-ing to own and operate their own private communication networks. Th is is translating into longer pilots, additional R&D, regulatory education, new standards development, etc. All these issues are delaying the modernization of the energy grid.

History has shown us that all industries should focus on their core competencies. We are attacking these chal-lenges by developing alternative business models that align better with utilities daily business practices. We are also creatively partnering with utilities to align national broad-band eff orts with smart grid deployments.

What is the difference between commercial and pri-vate networks? RK. Th ere are many diff erence, however, the biggest dif-ference between the networks are licensed vs. unlicensed spectrum and how they are operated. Private networks typically operate on 900mhz or 2.4Ghz radio frequencies (RF). Unlicensed RF must accept interference and cannot interfere with anything else. Additionally there are thou-sands of pre written scripts that can be used to exploit and hack into these networks, generating much of the cyber security concerns from regulators.

Unlicensed RF is also used in many household and consumer devices such as: cordless phones, wireless speak-ers, wireless headphones, baby monitors and Wi-Fi rout-ers. In addition many home area network devices, such as thermostats, light switches and appliance modules are in development to operate in the 900mhz space. Th ese devices are constantly in jeopardy of interfering with each other, add millions of meters to the mix and you drastically reduce the reliability of these networks, indirectly increasing OPEX.

Commercial networks operate on dedicated spectrum. T-Mobile operates on 1900mhz and AWS (1700/2100mhz). T-Mobile operates above 99 percent reliability with mil-liseconds of latency, and we must meet federal mandated guidelines for security, reducing cyber security concerns. Additionally, the network is already built and stimulus funds (tax dollars) shouldn’t pay to duplicate what already exists. Commercial networks cover 99.6 percent of the population that live within a census block.

Can you describe how your relationships with strategic partners provide an end-to-end solution? RK. Our strategic relationships leverage their AMI and smart grid systems with commercial networks. For example, we have a great partnership with Echelon Corporation, which combines commercial networks and their technology, delivering the benefits to the util-ity and consumer. Their new Echelon Control System (ECoS) provides an open applications platform that can host a range of third-party applications that provide intelligent distributed control services to utilities and their customers. With ECoS running on transformer-mounted ECN 7000s throughout the distribution grid, local, autonomous control decisions are made in near real-time for maximum reliability, survivability and responsiveness of the electric grid. All connectivity is made possible through commercial networks. This solves your interoperability and longevity concerns that many regulators and utilities have.

How can you address coverage concerns when working with utilities? RK. Today, the T-Mobile network covers 96 percent of the population. 100 percent of our network is built within utili-ties service territories. In many cases our network is built on utilities real estate. T-Mobile and utilities can swap real estate for tower sites in order to provide ubiquitous cover-age for smart grid initiatives. It’s a win-win-win. T-Mobile benefi ts by expanding our network, utility gains access to commercial networks for smart grid, and consumers ben-efi t by gaining a broadband network.

What can we expect to see from T-Mobile in the next 12 to 24 months? RK. You can expect to see T-Mobile continuing to be the easiest to do business with and lead the M2M industry.

Modernizing the energy grid

Ryan Keefe reveals how T-Mobile is creatively partnering with utilities to improve smart grid systems.

Ryan Keefe currently leads T-Mobile’s Smart Grid initiatives nationwide and has been developing T-Mobile’s efforts to address connectivity requirements as they relate to the smart grid. Keefe works with several business units to bring a turnkey solution to many utilities that would like to utilize existing commercial networks.

“T-Mobile benefi ts by expanding our network, utility gains access to commercial networks for smart grid, and consumers benefi t by gaining a broadband network”

T-MOBILE.indd 74T-MOBILE.indd 74 30/09/2010 16:0230/09/2010 16:02

“Breaking down the barriers to M2M”

T-Mobile USA M2M team

[email protected]+1 877.284.1009



What impact has the National Response Framework (NRF) had on public safety agencies?Matt Jackson. Since 9/11, the need for tiered response and unifi ed command has increased signifi cantly. In order to be prepared for a crisis, whether man-made or natural, lo-calities require the ability to directly engage higher levels of government to assist in responding when their capabilities are outstripped by events. Th e NRF provides a mechanism for collaboration and partnership between leaders at all levels of government to prevent any one level from becoming over-whelmed. However, to achieve this type of tiered response eff ectively, scalable operational capabilities are required. Scaling requires seamless coordination across various gov-ernmental jurisdictions in order achieve common objectives.

As a result of NRF driving for unity of eff ort, govern-ment agencies are better prepared to respond swift ly and aff ect better decision making. To enable these eff orts, a key change has been in how geographically distributed levels and agencies collaborate to share real-time information and make decisions under crisis conditions. Video conferencing and telepresence are being adopted to support life-like com-munications and information sharing between various gov-ernment agencies whether in command centers or in the fi eld.

Have state and local budget cuts had an impact on public safety?MJ. Resulting from the economic downturn, the recent cutbacks in government spending are having a real eff ect on the public safety of citizens. In Tempe, Arizona, a $30 million budget shortfall for 2010 had local leaders looking to eliminate needed police positions. A $14 million cut in the 2010 operating budget of Gilbert, Arizona, had offi cials there warning citizens that layoff s of nearly 100 positions could lead to “possible loss of life and property due to more than a four minute response time.”

A $39 million budget defi cit caused Los Angeles Fire Department to impose ‘rolling brownouts’, or temporary furloughs, which removed 87 fi refi ghters from the daily work rotation. Th e result is one battalion command team, three emergency battalion offi ces, 15 fi re trucks and nine ambulances would be left unstaff ed every day for a year. With fewer resources, response times will likely grow longer, according to offi cials.

Clearly, the cuts are having an impact so public safety agencies are having to be creative in how they maintain re-sponse times on a smaller budget. One approach is to lever-age video conferencing and telepresence to reduce the need for transportation when off ering classroom training. Addi-tionally, training can be off ered to multiple or all stations in

a district simultaneously instead of serially, thus resulting in quicker roll-out and recording of sessions allowing playback for those who miss a session or need a course refresher.

How have you seen public safety agencies benefi t from telepresence and video conferencing given these current challenges?MJ. Collaborating using timely, accurate information can determine the diff erence between a disaster and a crisis averted. Th is is a key reason that public safety agencies use video communications to prepare for and respond to events and conditions that threaten lives and property.

In my experience of working with public safety agen-cies, comprehensive audio and video communication in-frastructure helps to streamline emergency response and eff ectiveness, better prepare for the crises to come, and reduce ongoing operational costs.

During an emergency, combining audio and video can enable more immediate understanding of complex and high-stress situations in the fi eld. Agencies can enhance decision making and response by using video communications to equip emergency management personnel with real-time information, visuals and intelligence to provision resources and response where they’re needed most. Th ey can also enable centrally located experts to provide remote support by having video-equipped fi eld personnel serve as their eyes and ears on the ground and streamline coordination among diff erent agencies by sharing rich information for comprehensive com-mand and control in an emergency operation center.

Come togetherMatt Jackson answers our questions on the latest trends in public safety collaboration.

Matt Jackson, Director of Global Government Markets, oversees solutions at Polycom for public safety, judicial and agency collaboration. Jackson holds a BS degree in Computer Science from Virginia Tech, an MBA from NC State University and a graduate certifi cate from the University of Virginia.

Polycom_ExecInt.indd 76Polycom_ExecInt.indd 76 29/09/2010 15:3729/09/2010 15:37


PROTECT AN

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EMERGENCY RESPONSE 79

As events of the past couple of years have unfortunately shown, disasters and emergencies can – and inevitably do – show their faces time and time again. Fortunately, there are those ready, waiting and prepared for precisely that. Welcome to the world of the unsung heroes of emergency response.

tress”, whole nations can arise, merge and respond to di-sasters and emergencies with priceless levels of experience and speed accrued from planning, education, training and improvements months prior to a potential hazard unveil-ing itself.

However, emergency response is a lot more than just bringing cutting edge management and theory to the table – although that remains part and parcel of the industry. Ensuring that IT systems and communications between emergency response units, both those in-house and those in-fi eld, continue to push the boundaries of time and knowledge is pivotal to succeeding in keeping people alive and delivering temporarily dangerous situations from the hands of trauma and back to their former glory.

For the emergency response teams of the US, this is a daily occurrence. Th e question is, with so many casual-

ties and scenarios to deal with, how do they ensure top-notch results? Well, for the stars of our fi rst article, the St. Louis Regional Response Team (STARRS), it’s a case of working with disruptive technologies to grow a truly in-novative patient tracking system that functions across all emergen-cy response disciplines. Not only

does it mesh the dedication of all teams – from ambulatory to fi refi ghters, hospital staff to police – but in doing so, it increases the survival chances of the casualties in question.

Where novel technology works for some, managing the right system works for others – which is certainly the case of the San Francisco Fire Department. Providing an esti-mated 1.4 million people across San Francisco with their services, Captain Robert Kuzma gives US Infrastructurethe low down on precisely how they keep their IT and com-munications systems as sharp as they can possibly be while keeping his staff on their toes and ready for action right around the clock.

For the men and women of emergency response teams, the key to success lies not only in the ability to respond and react when crunch time comes, but to involve themselves in the incessant discipline of preparedness; the time spent doing so will not only serve them well as professionals, but as people. Aft er all, emergency response has, and will always be, a pioneer industry based on the ethos of people working for people.

a daily occurrence. Th e qthrfiRctntc

AND SAVE

In the days of old, emergency response involved little more than the rolling up of sleeves to help a fellow being in times of desperation and need. Common sense and ingenuity were the weapons of choice, a calm head the prevailing champion. But times have changed exponentially since then; an unstable growth

of the world’s population and an excessive build up of urban infrastructure worldwide, regulated or otherwise, has translated into a battleground of potential risks and di-saster areas, becoming increasingly more diffi cult to fi ght and repair.

Fortunately, the accelerated world we live in today is also witness to the unstoppable advancement of technology, in-telligence and human comprehension that has paved the way for next generation emergency response and understanding. Instead of dealing with a disaster as it happens, emergency

response bodies and governments now mitigate, prepare, re-spond and recover – in that order – before, during, and aft er a disaster or emergency. For the catch 22 of an increasing population equating to more frequent and intense disasters, we’ve done well to counter balance our retort.

Take, for example, Moditech Rescue Solutions, a Dutch company off ering a database that US fi refi ghters can call up on a laptop to pinpoint and deactivate potential rescue hazards when using the ‘jaws of life’ to recover a casualty from a car wreck. Th e system includes diagrams and other data for 20,000 vehicles – essentially every make and model they could come across in the US – eliminating much of the risk that ‘fi rst responders’ face every time they cut into a car. Potential hazards, a battery or an airbag for example, are highlighted on the system in diff erent colors. Clicking on any given hazard pulls up the procedure for avoiding or deactivating it.

And that’s just on the micro-scale. In the event of an infrastructure-aff ecting disaster, subjectively defi ned as: “an occurrence causing widespread destruction and dis-


EMERGENCY RESPONSE80

it was the fi rst system to allow collaboration capability, coordinated planning and response across multiple jurisdictions around emergency operations. Nick Gragnani explains how and why the St Louis Regional Response System is a groundbreaking emergency tracking system.

SUPER STARRS

“Th e federal government realized that that magnitude of attack will require a response from a large region and that it needed to start preparing now in order to prepare a coordinated response”


Since 2003, STARRS has spent over $70 million across the St Louis metropolitan region L ike many other regions across the US, the St Louis

region emergency response was weak and disjoint-ed, with the lack of regional perspectives, further hindering response eff orts between the 200 region-al fi re departments, 40 plus hospitals and multiple EMS providers. But in 2003 everything changed

with the development of the St Louis Area Regional Response System (STARRS) to coordinate planning and response for large-scale critical incidents in the bi-state metropolitan region. Nick Gragnani, Director for STARRS, explains that the system was developed as a response to the 9/11 attacks.

“Prior to 9/11, there were a couple of agencies within the St Louis metropolitan area that were working on di-saster mitigation and some terrorist mitigation programs preparing the region in case an attack were to occur, but is was a disjointed eff ort. Aft er 9/11, the federal govern-ment realized that that magnitude of attack will require a response from a large region and that it needed to start preparing now in order to prepare a coordinated response.”

Right away it was obvious that STARRS would require the implementation of advanced communications technol-ogy in order to ensure that it would be possible to collabo-rate with every function that was involved in the system in order to convey what was required when a major incident occurred. “Using Hurricane Katrina as an example, the area received warning that something was going to happen and it was possible to start collaborating on what to do all the way up to the event, the recovery from the event and then rebuild aft er the event,” says Gragnani.

“We established what we refer to as our Virtual Emer-gency Operations Center or VEOC, which is a way for the entire region to instantaneously start collaborating over a web portal where we can share information as to what is known, what is going on and then line up resources; ev-erything from cots, blankets, response equipment, medical supplies and so on, for the particular event.”

Another part of VEOC is the patient-tracking pro-gram, within which, explains Gragnani, a triage method is established at the scene, incorporating a load balancing concept that means the most critical patients are sent to the closest hospitals that are capable of handling them. Load balancing means that resources from across the region can be used as opposed to one individual hospital being under pressure.

“Patient-tracking is very much like a UPS or FedEx package delivery – we put a regular MCI tag on the victim that has a barcode on it, we scan that barcode with the handheld scan device, which then identifi es that individual and we’re able to enter information about their condition. Th e whole time that we’re at the scene the hospital is watch-ing over this on a website so the minute that a victim is picked up and transported they know exactly what to expect and how best to treat them.”

By using existing technology in a new format, it has proven possible and successful to track patients and ensure they receive the best possible treatment in as short a time as possible, and besides patients the system can be used to track equipment, stashes of pharmaceuticals and other

resources, allowing even more value with the technology.And the patient-tracking system has been working so

effi ciently in the St Louis region that Kansas City, Missouri has implemented a similar plan, although it is only to be used when a disaster occurs. Across the St Louis region, the program is being used all day every day by emergency personnel to improve the effi ciency in day-to-day operations and help responders maintain profi ciency with the system.

“Our concerns are that if the system is used like it is in Kansas City it’s being put in a box and it’s only going to be pulled out in an emergency. Th e problem there is how do you know if your personnel are trained on it, plus are you going to be able to get to the boxes in the middle of a disaster and start handing out handhelds? In our mind it just doesn’t make operational sense that way,” says Gragnani.

However, this system doesn’t come cheap. Th e soft ware costs alone are $125,000 a year, which is what Gragnani dubs the “Achilles heel” of the whole program. Indeed, these costs are huge when there are years going past before any mass ca-sualty incident actually occurs. Does it make sense to spend over $125,000 a year for a system that you may use once over a fi ve to 10 year period?

Gragnani believes it does, particularly when the benefi ts of the whole system are looked at. “Th ere’s a high percent-age of people that when they are sent to hospital have been known by that hospital before and there are records on fi le about them. Where we’re trying to go with this is that once that medical technician scans them they’re automatically tapping into the hospital network and can then do the ad-mitting right there on the scene because they will already have been known by that hospital and can start that record-ing procedure so that all the records are taken care of.

“And not only that, but the medical technician in the past will have had to sit down and write the report on what happened. With this new system in place, when they get to the ER they simply have to print their report from a com-puter and it will be done.”

Looking forward, Gragnani is working on a regional interoperable communications network, a voice communi-cations network for public safety and fi rst responder agen-cies across the region, in other words, all the fi re, police, public health or any other agency that could be considered as a fi rst responder.

“We’re right now building an eight-county microwave network that is very similar to an offi ce computer network. Th e only diff erence is that instead of a hard wire cap fi ve line that runs between computers and then back to a server and a router, it’s all being done with a microwave link that would serve the same purpose, but over the eight-county area.

“Each county has its own individual microwave ring and each of those are tied together across the region so that we don’t have any one single point of failure and the whole system should survive no matter what’s going on. What that allows is the LAN mobile radio system to be connected up to 50 miles away from their home base system – not only can they travel across the region, but a fi re fi ghter in the base of a building in downtown St Louis will be able to transmit for additional help and resources.”



REGIONAL

Th e decision will be driven by an analysis of past invest-ment, anticipated revenue, economy of scale, and risks, real or perceived, of using shared off site resources.

Th e San Francisco Fire Department as part of the City and County of San Francisco is an example of where previ-ous investments in publicly owned IT and communications infrastructure provide an opportunity to continue to invest and upgrade essential public safety systems.

As one example last year the 10-year-old Public Safety Data Network (PSDN) was upgraded from a Motorola DataTac system to a Motorola High Performance Data System (HPD) using existing City and County of San Fran-cisco owned radio sites.

Th e decision to upgrade versus migrate to a commercial cellular 3G network was driven by the previous public bond funded investment in a city owned network and the real risks of relying on private providers in an area oversaturated with cellular devices and at risk for disruption due to natural or manmade disasters.

What are the main challenges facing communication and IT infrastructure in your opinion? How are you tack-ling these challenges at San Francisco Fire Department?RK. Th e greatest challenge for fi re departments – and the public sector as a whole – is how to secure funding for IT infrastructure and support. Th e San Francisco Fire

The San Francisco Fire Department provides fi re and emergency services to an estimated 1.4 million people across San Francisco with ,approximately 1700 fi re fi ghting staff. Captain Robert Kuzma is in charge of ensuring that vital communication and IT infrastructure helps keep the department running as smoothly and effectively as possible.

In your opinion, how important is communication and IT infrastructure within a fi re department?Robert Kuzma. Communications and information tech-nologies are critical to all aspects of the San Francisco Fire Department including response, planning, records manage-ment, cost recovery and public communication.

However, the current economic climate is driving the burgeoning question of whether fi re departments should continue to invest in publicly owned communications and IT infrastructure or to examine the cost eff ectiveness of application service providers (ASP) for IT and commercial cellular for wireless voice and data.

EMERGENCY RESPONSE82



RESPONSE

“When prolonged response times result in the loss of lives and property, leveraging technology and infrastructure is oft en the most cost-eff ective means to improve service delivery”

Department, through the leadership of Chief of Depart-ment Joanne Hayes-White, has a proven record of lever-aging IT systems to improve effi ciency while decreasing administrative costs. Specifi c examples of cost eff ective technologies and fi re department or San Francisco owned infrastructure include: in-vehicle GPS with GIS routing to emergencies; human resources ERP with integrated personnel scheduling, and online training; electronic records management for fi re and emergency medical ser-vices; planning solutions through SAS and ESRI GIS; and, wide area networks (WAN) connecting over 50 facilities. For example, the justifi cation for funding the infrastruc-ture to support in-vehicle GPS and mobile GIS mapping, was the opportunity to reduce response times by leverag-ing the city-owned wireless data network. Th e alterna-tives would have been either to contract to a commercial vender with an annual maintenance fee that would have equalled the overall project cost or to have staff ed addi-tional apparatus. When prolonged response times result in the loss of lives and property, leveraging technology and infrastructure is oft en the most cost-eff ective means to improve service delivery.

What impact is technology having on infrastructure at San Francisco Fire Department? RK. Over the past decade, technology has had a tremen-dous impact on IT infrastructure in the San Francisco Fire

Department. Th e simultaneous implementation of a fi ber optic WAN and enterprise level relational database based applications, required the procurement and maintenance of multiple standalone servers and SANs. Th e current tech-nological push is towards centralization of IT through the virtualization of servers and cloud computing.

Even for the largest of fi re departments, the economic pressures will push, at least in the near term, towards the sharing of infrastructure and support costs amongst city and county departments. Th e pressure may even necessitate that smaller fi re departments partner with larger departments to host the infrastructure and shoulder the initial development costs for enterprise level applications. In this model you may see the development of public sector to public sector ASP as a cost eff ective means to develop and maintain public safety specifi c infrastructure and applications.

What improvements do you hope to see in the IT and communication infrastructure in the fi re and emer-gency sector?RK. Th e hope is to see a modernization and standardiza-tion of computer aided dispatch systems that will provide opportunities analogous to those provided by ODBC for relational data base applications and P25 for digital RF Voice Communications. Th e opportunity would be to integrate localized premise hazard information, GIS information, city assessor data and even occupant data. Th rough the use security levels all public safety respond-ers would have access to information including hazardous materials, recent medical calls and patient treatments, and where permitted, law enforcement contacts or regis-tered fi rearms.

Current proprietary systems lack the capacity to seamlessly integrate data sources and provide access through an elegant mobile application. With the move-ment to smart phones, there will be an increased pressure for public safety technology and infrastructure to catch up to what the consumer is currently enjoying courtesy of 3G and soon 4G bandwidth.

What are your current priorities in terms of IT and com-munication infrastructure? What’s in the pipeline over the next 12-24 months?RK. Th e current projects involve the procurement, instal-lation and implementation of P25 compliant 700MHz voice and data infrastructure, both in San Francisco and in the Bay Area region. Th e initial emphasis will be on providing shared voice capability amongst complimen-tary response personnel functioning within a unifi ed command structure, for example public safety and transit personnel responding to an incident involving commuter light rail trains.


ASK THE EXPERT84

Modern ingenuity has provided technology that transformed communication, entertainment, transportation and the way we do business. It has transformed some aspects of emergency

response, and improvements continue to be developed.As the population increases, water conservation is

more important than ever, changing the notion of water as a widely available commodity for fi refi ghting. Fortunately, compressed air foam (CAF) technology combined with fi re suppression formulations off ers a viable solution for eff ec-tive fi refi ghting that uses 78 percent less resources than water alone and knocks down fi re 79 percent faster than water alone.

Th e British Navy experimented with CAF technology in the 1930s. Adding a chemical formulation to water to create foam to extinguish fi re can be found in an English patent dated 1877. Th ese technologies have also evolved over time, becoming more eff ective and effi cient. Some systems that deploy CAF have also been evolving into systems that may

be used for a wide variety of applications, from fi re suppres-sion to decontamination and hazmat remediation.

Today, fi rst responders have been tasked with re-sponding to a wide range of incidents, whether accidental or man-made. Local fi rst responders have the advantage of getting to the scene faster to at least contain the inci-dent. A fast and eff ective response will reduce the inci-dent’s economic and social impact. Yet to date, not all fi rst responders have the tools they need to respond to today’s wide range of potential threats. Th e time and expense required to accomplish this is substantial. Multi-asset equipment – equipment that may be used for more than a single type of incident – can ease the burden on tight budgets. Rather than focusing on equipment training, more time can be dedicated to incident training, since the equipment would work in much the same way.

Intelagard equipment has been designed with today’s fi rst responders in mind. Intelagard systems are easy to use and maintain, with a low cost of ownership. Th e systems may be used for a wide variety of purposes. While it may generally be expected that the systems will primarily be used for rapid fi re suppression, the ability to quickly swap out formulations as appropriate to the incident at hand

while using the equipment in much the same manner may provide a level of comfort to responders when they dearly need it. When seconds count, Intelagard equipment pro-vides users with fast and eff ective response ability.

During tough economic times, organizations natu-rally tend to protect their budgets. However, should an incident occur that local fi rst responders are not equipped for it could cause a signifi cantly greater economic impact than the cost to prepare would have been. Th ere’s a cor-relation between an eff ective response time and the cost to mitigate and remediate many incidents. It would be wise to also consider the emotional and social impact of a fast and eff ective local response to a wide range of incidents. Everyone wants to believe that they are safe in their own community, and that if something were to happen, it could be dealt with quickly and eff ectively.

Th e availability of fresh water has come full circle. Populations used to settle where water was readily avail-able. Over the years, many came to take water sources for granted. Now it seems that once again the availability of water is becoming a more important social issue. Using water alone to fi ght fi re no longer makes good economic sense, not when systems and solutions exist that more ef-fectively and rapidly suppress fi re. Using less water reduces damaging run-off and lessens mop up time.

We live in a world abundant with technology. Using technology to our advantage to maintain and protect our way of life, including in emergency response situations, just makes sense.

The technological advantageDennis Smagac explains why using technology in emergency response situations makes sense.

Dennis Smagac is one of Intelagard’s founders. He combined his expertise in compressed air foam technology with his knowledge of decontamination to create a technologically advanced product line of multi-hazard response equipment for fire suppression as well as decontamination and hazmat remediation.

“Using technology to maintain and protect our way of life just makes sense”

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For far too long water infrastructure in the US has been forgotten. And it’s only a matter of time before a major incident happens to the crumbling, failing pipes. Most of the buried water infrastructure in the US is over 100 years old and has been starved of investment for decades. Sustain-ably managing, maintaining and repairing

water assets is now becoming impossible and astronomi-cally expensive upgrades and maintenance means that water utilities today have little knowledge of water main condition until breaks and leaks happen.

With approximately 160,000 public drinking water systems and 16,000 publicly owned wastewater treatment systems in the US, around 84 percent of the population receives their potable water from these drinking water systems and 75 percent has its sanitary sewerage treated by these wastewater systems, which all adds up to a huge logistical challenge.

So what’s happening to combat this huge challenge? Well, in a word, nothing. Infrastructure built around World War II has remained untouched since and with basic information about the pipes, including their loca-tion, depth and materials, never recorded, it means that water authorities are in the dark as to where a pipe is in the ground, what it is made of or even how old it is. Th e innumerable impact on the water sector includes poor water quality, water contamination, public health risks and costly infrastructure repair.

But overstressed, deteriorating pipes are not the only diffi culties currently facing the industry. Tom Curtis, Deputy Executive Director at the American Water Works Association (AWWA), believes that the biggest challenge is fi nancing. And without fi nance it’s unlikely the dire situation will be getting better any time soon. “Financing is just a huge, huge issue: it’s related to inadequate rate structures, inadequate revenues for water systems and the diffi culty water systems have in investing in the replace-ment and rehabilitation of the water infrastructure,” says Curtis.

Many things are being done at diff erent levels to combat the tricky fi nancing problems. Th e AWWA for in-stance, is promoting a campaign entitled ‘Only Tap Water Delivers’, which includes messaging and advertisements that water systems can use locally in a campaign to revise rate structures. “Many utilities are themselves looking at their rate structures and seeking to raise rates over the coming years in order to increase their ability to invest in repairing and rehabilitating their water infrastructure,” adds Curtis.

And the Environmental Protection Agency (EPA), responsible for regulating the quality of drinking water and wastewater quality, has recognized that rates are an important issue and is itself developing materials relating to sustainable utilities. One important feature of a sus-

tainable utility is an adequate fi nancial base, so the EPA is helping to promote awareness and consciousness of that among not only utilities, but also their governing boards who set the rates.

“Many water and wastewater systems have done a marvelous job of moving forward on making progress in the fi nancial sphere, while many others still have a lot of work to do,” admits Curtis. “Th ere’s a reluctance on the part of elected offi cials who set the rates to rise water and sewer rates suffi ciently and we need to make progress on that. Frankly, water and wastewater services are under-priced in the US, that said, there’s a growing awareness of the challenges that that brings so I really hope we can continue to move forward on that.”

Despite the slow, yet positive work going on in the sector, it still remains vulnerable to a variety of attacks from terrorist contaminations to natural events like hur-ricanes. Curtis explains that a number of improvements are going on in this regard. First of all, the AWWA has spearheaded the development of a group of networks called WARN systems, which stands for Water Agency Response Networks. Th ese are state-by-state networks of utilities that together in a collaborative eff ort establish intra-state mutual aid and assistant agreements for water and wastewater utilities to enhance preparedness and re-sponse. Utilities involved are prepared to help others out if they experience a trauma of any sort, be that a terrorist attack or a natural event.

“No one is better equipped to help a utility in distress that another utility,” claims Curtis. “Th e utilities that are like a stressed water system and close by in the same state are prepared to lend crews and equipment and materi-als, as well as advice and support immediately. And the networks for delivering and coordinating that kind of as-sistance have been largely set up, almost every state now has a functioning WARN network.

“Utilities join this webpage, which is a consistent way for sending out a distress call and describing what the needs are, and other utilities have an organized way of describing what materials or assistance they can off er to help. We believe the WARN networks are very important and have already been activated and used in a number of instances where there were natural events that required assistance.”

In the same vein, the AWWA worked together with the American Society of Engineers (ASME), building on the earlier work done by the US Department of Energy and Sandia National Laboratory, to come up with an offi -cially-sanctioned standard for judging risk and resilience and taking measures to protect utilities.

Th e Sandia National Lab has developed a risk as-sessment methodology called the risk assessment meth-odology for critical asset protection (RAMCAP) as a sophisticated and robust tool for identifying the risks relevant to critical assets. AWWA and ASME took the

Why failing water infrastructure can no longer afford to be forgotten.


WATER FOCUS 88

ability to man-made events and have developed emergency response plans in case of an attack, which has been required by federal law. Many wastewater utilities have done the same thing voluntarily, even though they have not been required to as a matter of law – they recognize that they are at risk and want to take steps to protect themselves and the population they serve.

EPA has also been working with its security partners with the goals of enhancing the water sector’s ability to plan for and respond eff ectively to security threats and breaches. In response to the Bioterrorism Act of 2002, which provides EPA explicit authority regarding community water systems, it handles the receipt of community water systems’ vulner-ability assessments and emergency response plan certifi ca-tions. In support of maintaining a resilient infrastructure, EPA is partnering with the water sector on multiple pro-grams and eff orts including WARN and the National Inci-dent Management System (NIMS).

RAMCAP method and adapted it for water and wastewater utilities. It identifi es critical assets, points of vulnerability, and potential points of failure as well as how to get those assets back online or replace them quickly.

“Th e standard recognizes that it’s not possible to have 100 percent guaranteed protection against a determined attack so the standard is all about resilience. It’s important to have as much resilience as possible and be able to bring assets back online quickly so that essential levels of service can be restored and protected as much as possible,” says Curtis, who goes on to explain the enormous progress in the sector.

“We’ve done so much since 9/11 to prepare, plan and defend the water sector. We’ve off ered lots of training and workshops, alongside developing the standard I mentioned and the campaigns to promote awareness.”

With respect to potential terrorism attacks, utilities in the drinking water sector have assessed their vulner-

CASE STUDY: San Diego County Water Authority“We are facing a variety of challenges at San Diego County Water Authority,” explains Maureen Stapleton, General Manager at the authority. “The fi rst is the new and evolving regulatory restriction we have in California and in our Bay Delta region, which is one of the most signifi cant imported water sources in the state. The second area of challenge is climate change and then third is related to the pricing of water and the increasing cost, not only to acquire water, but its delivery.

“Our business plan at San Diego County is a fi ve-year rolling plan that ensures we are implementing our multi-faceted approach to water reliability for our region. It’s made up of three focus areas: water supply, water facilities and our core business, which relates to the support programs to the supply and facility focus areas. In each of those areas are a variety of specifi c management strategies, goals, objectives and timelines.

“We have found that the business plan allows us to truly focus in a laser-like approach to the key strategic areas around water reliability and overall our mission of supplying water to San Diego County. It really moves it forward in a deliberate manner. We have a formal update every couple of years and we have an annual report out and update it. In addition, we’ve real-time monitoring of our various goals and objectives and we’ve put it online so that the public, our retail water agencies, our board of directors and anybody else can see what we’re working on, how well we’re doing, if we’ve succeeded in achieving an objective or if we’re lagging behind on the issue of timing.”

Gary Eaton, San Diego County Water Authority’s Director of Operations, talks through some of the technology improvements seen at the authority: “We continuously monitor emerging technologies that will help us become more effi cient and more effective in what we are doing.

“We’re the fi rst agency in the world that was able to deploy acoustic fi ber optic cable in our pre-stressed pipelines, which has given us the ability to monitor pipelines 24 hours a day, seven days a week to provide us early warning should we have an issue with the pipelines.

“We’ve also implemented a GPS system that monitors our pipelines that are in the ground – we have 52 different corrosion monitoring systems and this network monitors and alerts us, which has been a big saving in staff time because we don’t have to go out on an annual basis and examine each of those systems. And fi nally we have a continuous water quality monitoring system that we’ve put into play. It monitors a baseline condition on the water that’s being brought into the county and should that baseline deviate for any number of different reasons, it alerts our operations staff.

“Security is a key issue for us so we’ve gone through several vulnerability assessments and participated at the state level on the development of a guide for water districts here in California on how to conduct vulnerability assessments and we continue to upgrade those. For instance, the Department of Homeland Security has recently been out to look at our system, evaluate it and provide us with feedback.

“No one is better equipped to help a utility in distress than another utility”

“Security is a key issue for us so we’ve gone through several vulnerability assessments and participated at the state level on the development of a guide for water districts here in California on how to conduct vulnerability assessments”


WATER FOCUS 89

prevent chlorine gas from escaping into the community. Th at’s the kind of technology that is being very widely em-ployed by US water and wastewater systems.”

But despite the obvious benefi ts of emerging tech-nologies, Curtis states that the response and recovery side remain vital to the water and wastewater industry. “Th ere’s no question that American water and wastewater systems are much stronger, better protected, more resil-ient and better positioned now that they were before the events of 9/11,” says Curtis. “Obviously nothing is 100 percent secure, but we are in far stronger position to pro-tect, defend and respond to events of all kind – natural and manmade. Part of that is the fi nancial challenge, but those challenges exist regardless of any security threats, and a part of being secure and resilient is having a strong, working sustainable infrastructure under you. Th ere’s no doubt that we’ve made tremendous strides in the last fi ve years, no doubt at all.”

As a consequence of all the work, eff ort and money that has been dedicated to the sector, all water and most wastewater systems have assessed their vulnerabilities and developed emergency response plans. And within this, technology has played a role in a number of respects. Th ere is – at least experimentally – a technology that is in place in a number of water systems in the US designed to detect contamination in real-time that might be introduced down-stream of the treatment process. Th is is still currently in the pilot-test stage, but is showing great promise, says Curtis.

“One of the vulnerabilities that utilities face of course is the possibility that disinfectant chemicals might be used against the community; that there might be an attack on let’s say a chlorine storage facility. So there’s been a hard-ening applied to chlorine tanks, our recapture and scrub-ber technologies employed to prevent a release of chlorine gas to neutralize if it were to be released from a storage tank, and recapture it inside of a contained structure to

“We’ve also just completed the Supervisory Control And Data Acquisition (SCADA) system that we use to control our aqueduct operations. We have just completed an assessment from Homeland Security called a penetration test, which was designed to see if that system could

be penetrated by an outside person and create what they call a denial of service attack that would shut us down.

“We’ve also implemented an integrated contingency plan that has been set up in compliance with our national infrastructure and allows us to have an organizational structure that is consistent with our other fi rst responders, whether that’s at state or federal level.”

Looking forward Stapleton foresees continuing challenges for the industry. “At San Diego County we will be working on a couple of things around supply diversifi cation over the next fi ve to 10 years. We’re going to see restricted water supplies due to both regulatory restrictions as well as the climate impacts that we’re experiencing today and potentially in the future, combined with a reliance on new technologies to improve effi ciency and reduce costs. I believe that with the ever-increasing cost of water supply in the west, our ratepayers are going to demand us to produce that water and deliver it to them in the most cost effective way possible.

The third area that will be looked at is related to water use and water ethic, which is around moving communities towards an understanding of the preciousness of water supply and to rethink the use of water, in residential, commercial and industrial uses. We are focusing in rethinking our landscape and the water use so that the next fi ve years will be about developing a water ethic that is refl ective of the scarcity of water in the west.”


INDUSTRY INSIGHT90

Today, water utilities are looking for ways to be “smarter”. Market demands are changing, making it even more diffi cult. Utilities are faced with chal-lenges like reducing non-revenue water loss, aging

of both physical infrastructure and human capital and the reliability of both, balancing power and energy needs against improved water and carbon effi ciencies, and an increasing desire by consumers for a role in water manage-ment and conservation.

In order to conserve the world’s most precious re-source, you need to be able to measure it. Traditionally, metering monitored water usage data so that utilities could bill customers. Today, utilities have moved far beyond basic meter reading. Extended capabilities in data collection and management enable water management companies to become more effi cient and eff ective when managing their businesses. Water management companies now commonly monitor, assess and control meter-reading processes, and use this information for account reporting, maintenance and customer service activities.

Th e future of water management will continue to be based on information, but what will become more critical is the ability to manage disparate silos of information and employ advanced analytics tools to drive smarter business decisions.

With this integrated system data, utilities will be able to make more rapid decisions and respond before a crisis hits. A complete water management system will involve the monitoring of water systems in realtime, collecting that information, analyzing it, and then extrapolating that data to detect anomalies, analyze trends, understand behav-ioral models and detect leaks. Utilities will be able to plan maintenance and downtimes, assuring higher customer satisfaction.

A smarter water delivery infrastructure consists of smart, connected devices, such as water meters and sen-sors, communicating through integrated communication networks like a backhaul network. Th e data being com-municated is then integrated, stored and analyzed. Th e information is then presented to the user, for example the utility or its customer, to assist with decision-making. Th e consumer, for example, could see their hourly consump-tion and make changes to their behavior based on the information.

Smart water measurement will give utilities the abil-ity to profi le consumption patterns. Th is information will help utilities detect theft and unbilled water usage, and they could provide consumers with personalized usage

guidelines in their monthly bill to increase awareness and conservation.

With this level of understanding of its water system, utilities could begin to consider time-dependent water pricing by matching water production and distribution cost. Th ey could also develop optimal pumping strategies based around the amount of water required at a given time.

Consumers want accurate billing, increased effi ciency through clean electricity sources, and more information and control. Utilities need to automatically monitor and maintain the health of their systems, reduce their cost to serve, and meet or exceed their customers’ expectations. In the end, smart water measurement will provide utilities with the ability to balance the needs of their customers with the needs of the utility itself.

Kim Stoll reveals the importance of advanced metering solutions for water conservation.

Smart water management

Kim Stoll is the Vice President of Marketing for Badger Meter, a leading manufacturer and marketer of products incorporating liquid fl ow measurement and control technologies.

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ASK THE EXPERT92

The vulnerability of our water supplies to intention-al attack, not to mention accidental contamina-tion, has been well documented. Due to its nature, the distribution system that delivers water from

the treatment plant to the end-user is the primary focus of this vulnerability. Th e distribution system’s widespread nature and easy accessibility makes the task of physical hardening impractical. Th e only solution to address this weakness is the use of monitoring to rapidly detect and respond to any anomalies.

Th e distribution system represents the last analyti-cal frontier in the water quality industry. Once the water reaches our aging distribution systems, our knowledge as to its continued integrity is limited. Historically, most monitoring in the distribution system has been relegated to the occasional snapshot provided by grab sampling for a few limited parameters. Th e development of water security monitoring based on the use of multi-parameter sensor packages coupled with interpretive algorithms in the years since 9/11 has begun to change this paradigm.

Monitoring in the distribution system is a diffi cult proposition. Th e sheer number and diversity of potential threat agents that could be utilized in an attack against the system makes monitoring for them on an individual basis an eff ort that is doomed to failure. To counter and detect the unprecedented number of compounds that may be encountered, what is needed is a broad-spectrum analyzer that can respond to any likely threat and even unknown or unanticipated events.

Rather than attempting to develop individual sen-sors to detect contaminants, the Hach Homeland Secu-rity Technologies approach was to utilize a sensor suite of commonly available off -the-shelf water quality monitors such as pH, electrolytic conductivity, turbidity, chlorine residual and total organic carbon (TOC) linked together in an intelligent network. One of the diffi culties encoun-tered when designing such a device is that the normal fl uc-tuations in these parameters found within the water can be quite pronounced.

Th e problem then becomes how we diff erentiate between the changes that are seen as a result of the introduction of a contaminant or anomalous condition and those that are a result of normal everyday system perturbation. Th e secret to success, in a situation such as this, is to have a robust and workable baseline estimator to facilitate event detection.

In the system as it is designed, signals from fi ve sepa-rate measurements of water quality (pH, Conductivity, Turbidity, Chlorine Residual, TOC) are processed from

a fi ve parameter measure into a single trigger signal that indicates if water quality has changed in a meaningful way. Th is signal is easy for operators to interpret and recognize when an intrusion occurs.

Th e deviation vector that is derived from the trigger algorithm is then used for further classifi cation of the cause of the trigger. Th e direction of the deviation vector relates to the agent’s characteristics. A deviation vector from the monitor can be compared to agent vectors in the threat agent library to see if there is a match within a tolerance indicating the potential cause. Th is system can also be very useful in developing a learning-based system for classifying normal operational events that is a useful process control tool.

Such systems have been deployed in a number of loca-tions. Th ese deployments include both municipal water systems and major projects at military and government fa-cilities. While at the time of this writing no actual intention-al attacks have been recorded, detected events have included pressure problems, rain events, main breaks, chlorine over and underfeeds, ammonia feed problems and other opera-tional events. More serious problems that could have caused health eff ects if they had not been detected have included fl u-oride overfeeds, caustic soda overfeeds and a contamination of a well with jet fuel on a military base. Th e system’s ability to detect such events and theories of response and operation when anomalous events in the distribution system are de-tected will be of paramount importance as we endeavour to secure our water supplies from not only terrorist activity but also a variety of other hazards.

On the lookoutDan Kroll explains how event detection can have a major impact on the quality and security of water supplies.

Dan Kroll is Chief Scientist at Hach Homeland Security Technologies and Principal Investigator for the Hach Advanced Technology Group. Kroll has developed both advanced and simplifi ed methods for a variety of crucial water quality parameters and is the author of Securing Our Water Supplies; Protecting a Vulnerable Resource.

“The secret to success is to have a robust and workable baseline estimator to facilitate event detection”

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INFRASTRUCTURE PROTECTION94

Claiming that there is no such thing as a typi-cal day, Keil generally starts each day with an update brief at 7:45am to get an overview of current and important issues. “Th e daily update brief is a chance for staff to highlight breaking

issues related to critical infrastructure,” he reveals. “We focus on signifi cant incidents and discuss what happened yesterday, what happened overnight, and what we’re poten-tially dealing with today.”

In order to ensure the Department of Homeland Secu-rity leads a coordinated eff ort to reduce risks to critical in-frastructures, Keil explains that the Offi ce of Infrastructure Protection works across a number of areas. “A top priority is to ensure our outreach eff orts help our stakeholders and partners mitigate risk across the country.”

Indeed, the Offi ce of Infrastructure Protection leads a coordinated national infrastructure protection and re-

silience program outlined in the National Infrastructure Protection Plan (NIPP). Under the NIPP, a sector-specifi c agency is assigned to each of the nation’s 18 critical infra-structure sectors and leads a collaborative process involving public and private sector partners. Th e NIPP framework allows the department to provide the coordination and col-laboration needed to set national priorities and goals for the critical infrastructure community.

To that end, the Offi ce of Infrastructure Protection is initiating a stakeholder input project to obtain feedback from critical infrastructure owners and operators across the country. Th e intent of this project is to ensure resources align with the unique needs of each sector. Another prior-ity is to elevate partnerships with critical infrastructure owners to a new level, and Keil explains the Offi ce of In-frastructure Protection has already begun to take steps to make that happen.

The Department of Homeland Security is responsible for protecting the infrastructure essential to the nation’s security and economic vitality. Assistant Secretary for Infrastructure Protection Todd Keil brings more than 22 years of experience to the department’s national infrastructure protection mission.

Th D t t f H l d S it i ibl f t ti th

Cutting risk

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“Within the Offi ce of Infrastructure Protection we are looking at how we do business. We want to make sure that we’re focused on the fi eld, that we’re focused on our customers and stakeholders and that our resources are aligned with the needs of everyone. We’re taking a region-al approach where we can project our eff orts, programs, capabilities and tools to the people that need them most in order to put what we have available to the greatest use and keep the country safe.”

The three R’sIn addition to a risk management approach to ensure

that resources are used effi ciently and eff ectively, and a regional approach to better focus on stakeholders and customers, the department is also focusing on resilience, by working with stakeholders to build a nation that is es-tablished upon a strong foundation of partnerships and prepared for any situation that terrorism, Mother Nature, or chance leaves at the doorstep. Specifi cally, the depart-ment is looking to engage federal resources with those of public and private partners to ensure that those resources are maximized to help everyone involved understand the current landscape, as well as emerging and future threats.

Risk management also plays a critical role in the de-partment’s approach to working with the private sector and other stakeholders. “Th e private sector and our criti-cal infrastructure stakeholders look to the department to help them achieve a better understanding of risk and threat so they can mitigate in the best possible way.”

Across the department, offi ces including, infrastruc-ture protection, are working together to ensure a more streamlined and collaborative approach to identifying and mitigating risk. Th e 2008 Department of Homeland Security Strategic Plan serves to focus the mission and sharpen operational eff ectiveness by including prepara-tion for and response to all hazards and disasters. “It’s not just that we’re looking to keep our country safe from ter-rorism. Th e department looks at it as an all-hazards risk environment; from accidents to acts of Mother Nature,” he says.

Th ere are 18 risk-based performance standards di-rectly related to chemical facility security. According to Keil, risk-based performance standards specify the out-come that is required, but leave the measures to achieve the outcomes up to the discretion of the regulated entity. Th e performance standards essentially set a goal and let the entity decide how to meet it.

“Previously there was little fl exibility – you would have to install a certain piece of equipment or put a par-ticular process in place – and that was supposed to achieve a goal,” says Keil. “Today, there is more fl exibility and this means that [entities] can choose the most cost-eff ective method for achieving a satisfactory level of security on the basis of their risk profi le.

“I think the regulated entities appreciate the approach where they get to choose the method that best works for them. And the department reviews what is proposed to ensure the entities are able to meet the goal.”

Critical protectionFrom energy systems that power our neighborhoods, to transportation networks that move us around our communities and the country, to facilities that provide our families with safe drinking water, critical infrastructure impact nearly every aspect of our daily lives.

Because this critical infrastructure provides our country with benefi ts, services and opportunities on which we rely, it’s important to be mindful of the risks posed to critical infrastructure by terrorists, pandemic diseases and natural disasters.

The Department of Homeland Security is working to raise awareness about the importance of our nation’s critical infrastructure and to strengthen our ability to protect it, overseeing programs and resources that foster public-private partnerships, enhance protective programs, and build national resiliency to withstand natural disasters and terrorist threats. Key activities in this area include:

• Assessing vulnerabilities, implementing protective programs and improving security protocols

• Enhancing preparedness through training and exercises

• Assisting with contingency planning, response and recovery

• Implementing real-time information sharing • Implementing cybersecurity measures • Assisting with infrastructure data collection

and management • Implementing regulations for high-risk

chemical facilities • Developing standards for federal building

security

“Th e private sector and our critical infrastructure stakeholders look to the department to help them achieve a better understanding of risk”


INFRASTRUCTURE PROTECTION96

Square, New York, earlier this year and alerted the New York City Police Department, a potentially deadly fi rebomb was aborted.

In addition to expanding the department’s relationship with the public, one of the other areas the department is em-phasizing goes back to partnerships with stakeholders. “It is the strength of partnerships that really brings this together: creating a common purpose that unites and drives us to act even in the face of threats,” Keil explains. “Leveraging those partnerships we’ve built is one of our greatest strengths.”

In his role as Assistant Secretary, Keil is working on behalf of the department to evolve the Offi ce of Infrastruc-ture Protection into a more transparent organization, and taking a more regional focus so that its programs, tools and resources are leveraged in communities around the country. “Our eff orts will continually be focused on how we can keep our communities safer and we need to ensure that our resources are focused. At the end of the day we have to be good stewards of the public trust, and that will be our ultimate focus.”

ProtectionA primary mission of the department is to ensure the

safety and security of the American public. However, is it diffi cult to fi nd the balance between making the public aware of potential infrastructure threats without instill-ing fear? To increase public awareness and preparedness, the Department of Homeland Security continues to expand its national ‘See Something, Say Something’ cam-paign in coordination with law enforcement, the private sector and community groups, integrating this eff ort with the National Suspicious Activity Reporting Initiative and the transportation, sports, travel and law enforcement industries.

Keil explains that the recent introduction of the See Something, Say Something initiative has played a vital role in educating the public in being vigilant: “Th e department wants the public to get involved. If you see something that appears out of place, just say something.”

For example, because of the vigilance of two street vendors who reported a suspicious looking car in Times

Under attack

More than half the world’s critical infrastructure organizations admit to being targeted by cyber attacks, according to research commissioned by McAfee. Fifty-four percent of IT security executives at 600 critical infrastructure providers surveyed said they had been hit by large-scale attacks or infi ltration, while 29 percent said they face multiple attacks every month.

The report found that organizations relied on physical security and have little or no cyber protection. The cyber attacks on Google and more than 20 other companies earlier this year could easily have been targeted at critical infrastructure, says Dave DeWalt, Chief Executive at McAfee. The attacks were the most sophisticated in years, making it a critical moment in cybersecurity because of the targeted and coordinated nature.

Critical infrastructure needs to be even more resilient against these potential attacks and look at improving every potentially weak or exposed area. The report said authentifi cation of users and encryption of data are two key areas that need to be improved.

Source: www.computerweekly.com

“Our eff orts will continually be focused on how we can keep our communities safer”




Can you outline concerns or challenges in connecting remote assets to the enterprise and explain how you are changing the way companies look at managing and monitoring their critical assets?Jeff Newman. With over 50 billion assets in the world today, the real challenge is to determine the best and most cost eff ective way to connect them, turning them into smart assets designed to drive business growth, op-erational effi ciencies and create value added services. And while there are intelligent devices of all shapes and sizes, it is the confi guration, provisioning and management of those devices that poses the biggest challenge. But with the right partner, seamless connectivity to the enterprise can be achieved for deployments of all sizes.

What are the obstacles that enterprise organizations need to overcome to achieve the goal of connecting their remote assets? JN. While intelligent edge devices have the ability to con-nect critical data to multinational enterprise applications, a company must always consider the challenges that must be overcome to bring that data reliably to the application for use. Overcoming the dynamic cellular infrastructures of the world, surviving and thriving in the always connected world requires a clear understand of the idiosyncrasies of diverse communications networks.

Understanding how to manage the data produced by the vast number of end-points can be a daunting task for almost any company, but with an extensible architecture, one that is dynamic yet stable, scalable and reliable is critical to the overall success of an asset management deployment.

How are advances in technologies helping accomplish ubiquitous connectivity? JN. Th e anywhere, anytime experience is driving a pro-found technology transformation and broadband wireless users are demanding ubiquitous connectivity for a host of new applications. Delivering that ubiquitous connectiv-ity can be a tumultuous task given the vast number of devices, their unique confi gurations, design parameters and a host of deployment issues. Th ere are some things that require years of exposure and eff ort to refi ne and the wireless industry is one of those disciplines where expe-rience and demonstrable results are paramount. We see through our unique solutions approach, the ability to help enterprise clients of all sizes get to an end-to-end solution

that helps them connect with critical fi eld based assets faster, and more reliably, helping them manage informa-tion that drives business decisions.

What are you doing differently than your competitors in this sector?JN. With an extensible architecture designed to enhance enterprise communications, our N4A platform puts more intelligence at the edge of almost any network. From far reaching remote devices to backend enterprise applica-tions, our solution enables real-time communications to a company’s most critical business applications delivering up-to-date asset information for timely decision making. Our industry leading, vertically optimized architecture delivers fast wireless asset management solutions develop-ment and deployment. We do not see any other fi rms of-fering services like that and as a result a host of enterprise clients, the systems integrators and the carriers that sup-port them are engaging like never before.

What can we expect to see from Enfora in the coming 12 to 18 months? JN. Enfora is at the forefront of enterprise asset manage-ment connectivity solutions for the most demanding en-vironments. We are delivering on a vision, bringing assets of all shapes and sizes into the dynamic world of IP con-nectivity, no matter where they may be in the world.

Our goal is a simple one, to help clients of all sizes connect their valuable assets most anywhere, anytime – globally.

Connecting the anywhere, anytime enterprise

Jeff Newman discusses how Enfora is focusing on a systems and solutions approach to connecting remote assets to the enterprise.

Jeff Newman leads the strategic business development, market development and sales at Enfora. As CSO, he is responsible for setting corporate strategy and identifying, developing and managing new business opportunities for Enfora’s next-generation wireless products.

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CONNECTING AMERICAWith over 100 million Americans still lacking access to broadband, the Federal Communication Commission’s national broadband plan lays out a bold roadmap for the future.

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Broadband is the indispensable infrastructure of the digital age. Similar to railroads, electricity and tele-phones for prior generations, broadband is rapidly be-coming a primary platform for innovation, economic growth and enduring job creation, providing a vibrant, ubiquitous high-speed internet that is vital for global

competitiveness.Phoebe Yang, Senior Advisor on Broadband for the Federal

Communication Commission (FCC), has been a key player in the FCC’s creation of a national broadband plan with the key premise that it has been designed with recommendations that would encour-age much needed investment in the infrastructure required; free up spectrum to foster world leading wireless broadband; and redirect government resources.

Th e FCC has also been endeavoring to cut red tape and remove the other obstacles to investment and innovation in order to opti-mize the use of broadband to achieve certain national priorities like healthcare, education, energy, public safety and economic opportu-nity. “Th e way we’ve structured our national broadband plan was to address not only deployment issues, but also adoption, so where and how broadband is currently being used,” explains Yang.

“From our standpoint, the national broadband plan was a long overdue US strategy to bring fast, aff ordable broadband to all Ameri-cans and we believe if followed it would promote economic growth, job creation and global leadership.”

Back in early 2009, Congress directed the FCC to develop a national broadband plan to ensure that every American has access to broadband capability. Information was gathered for the plan in 36 public workshops, nine fi eld hearing and 31 public notices that produced 75,000 pages of public comments. Th e broadband debate also went online with 131 blog posts triggering 1489 comments, 181 ideas on IdeaScale garnering 6100 votes, 69,500 views on YouTube and 335,000 Twitter followers.

Yang explains that in March 2010, FCC Chairman Julius Genachowski unveiled the long-anticipated plan. At the time Gena-chowski said: “It’s an action plan and action is necessary to meet the challenges of global competitiveness and harness the power of broadband to help address so many vital national issues.”

Titled Connecting America: Th e National Broadband Plan, the report found that while broadband access and use has increased over the past decade, the nation needs to do much more to connect all individuals and the economy to broadband’s transformative ben-efi ts. “About half the plans recommendations are aimed at the FCC itself,” explains Yang. “So we haven’t been in the position of saying everybody else should do things and we would just sit on our hands. About a quarter of the recommendations are directed at other fed-eral government agencies and about a quarter to Congress and the states themselves.”

Th ree weeks aft er the broadband plan was released, the FCC then issued a broadband action agenda outlining the implementa-tion plans for the rest of 2010 with respect to the recommendations that were made for the FCC in the national broadband plan. “Th ere were about 64 items in that ambitious action agenda”, explains Yang, “but we wanted to let interested parties know that we were taking this very seriously and that it wasn’t simply a plan to put on the shelf and collect dust.

“So far this year the FCC has launched a reform of the around nine billion dollar universal service plan,” she says. “It has proposed certain

“It’s an action plan and action is necessary to meet the challenges of global competitiveness, and harness the power of broadband plan to help address so many vital national issues”


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rules that would reform that fund, including the parts of the fund that go to support education and rural healthcare in-frastructure projects with respect to broadband.”

Th e FCC also unleashed around 20 MHz of spectrum for mobile broadband use and is looking into other pos-sibilities for freeing up more spectrum consistent with the plan in order to help support mobile broadband growth. “Th e FCC also launched a program to accurately measure the speed and performance of broadband that customers actually receive as opposed to what is advertised to them.

“Th ere are certain challenges that we saw as being key in the national broadband plan to bringing down the costs of deployment,” continues Yang, “for example, expediting and making the process for access to rights of way conduits and poles that help support broadband infrastructure and speeding up the make-ready process for that infrastructure uniform.”

Indeed, there are a number of potential barriers to adop-tion, one of which is the lack of suffi cient spectrum going forward, particularly with the current high growth rates of mobile broadband usage. FCC research found that many of the underserved communities that had access to fi xed broadband, but were not subscribing when using mobile broadband at higher rates than the average population.

Another key area is simply cost. Along with digital literacy and relevance, cost came out in the FCC’s survey work as the leading factor many of the non-adopters claim as being why they do not adopt broadband. “We’ve seen that particularly true in a down economy,” says Yang. “But in general, non-adopters have not had the experience to know what broadband can actually do for them and how it can improve their lives as well as cut the costs of other key expenses in their lives, so they’re not always well informed.

“But they oft en also lack key digital literacy skills, as well as lacking the ability to access, for example, par-ticularly for immigrant populations, the internet in their

own language and other applications that they are perhaps interested in using.”

Th ere are also potential stumbling blocks on the de-ployment side. One area in particular is that the current government initiatives have been set up like the FCC’s universal service fund, which was originally established to support universal support of telephony particularly in rural and high cost areas, however, it has yet to be reformed to support the deployment of broadband infrastructure.

Th e national broadband plan has recommended that that happens and the FCC has already begun a series of proceedings to support the possibility of that happening in order to support infrastructure that can enable both voice and broadband service.

Th e poles, ducts, rights of way and conduits are the other problem area associated with deployment, suggests Yang. Th e key pathways for broadband deployment have not always been accessible and aff ordable in a timely way to companies or entities that are trying to deploy broadband infrastructure. “Th e poles are owned by many diff erent entities, some are municipal and some are private sector, but what we call the make-ready process for enabling those poles to be accessible to someone who wants to use them for broadband deployment has not always been effi cient.

“Th ere are further disputes when various companies own the poles, say for example, cable versus telephone companies who pay diff erent rates to access those poles, if there’s an application pending before municipal govern-ment, sometimes those proceedings can take quite a long time to resolve. So in May of this year the commission adopted an order and proposed rules to promote faster and more ubiquitous deployment by harmonizing the rules across the country that relate to rights-of-way and poles and trying to make consistent the pricing structures and factors such as that to contribute to lowering the cost of deployment.”

LONG-TERM GOALSThe FCC’s National Broadband Plan recommends that the country adopt and track the following six goals to serve as a compass over the next decade:

Goal No. 1: At least 100 million US homes should have affordable access to actual download speeds of at least 100 megabits per second and actual upload speeds of at least 50 megabits per secondGoal No. 2: The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nationGoal No. 3: Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so chooseGoal No. 4: Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildingsGoal No. 5: To ensure the safety of the American people, every fi rst responder should have access to a nationwide, wireless, interoperable broadband public safety networkGoal No. 6: To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption

Th e number of Americans who have broadband at home has grown from eight million in 2000 to nearly 200 million in 2009


BROADBAND INFRASTRUCTURE 103

To combat these challenges, the national broadband plan has a whole series of recommendations around pro-moting adoption in the US specifi cally and how this relates to public/private partnerships to help support the use of broadband, particularly working alongside community-based organizations, libraries and other institutions in order to provide digital literacy training to the elderly and other underserved communities.

Looking forward, Yang explains that one of the nation-al broadband plan’s aspirational goals is for 100 million US homes to have access to broadband that can support speeds of 100 megabits per second down and 50 meg up by 2020.

“We’re going to see and continue to see a lot of invest-ment in the 4G wireless infrastructure. Increasingly we’re seeing a proliferation and a growth in the smart phone market – much like Europe – and therefore demands on the current wireless networks continue to increase. We’ve

already seen announcements of major 4G wireless deploy-ments coming up or underway; Clear Wire and Verizon in 2010; Cox, AT&T and Metro PCS in 2011. So we expect that we’ll see more of that and we think that’s a positive devel-opment for the American broadband ecosystem.”

Yang goes on to explain that there are a number of other things that are really important for the future of the broadband plan. First, the integration of broadband into the smart grid over the next decade and a half, which would be a signifi cant leap forward and is something that the FCC has recommended in terms of moving broadband properly into the 21st century.

“In short, investing in broadband infrastructure is absolutely critical to our national competitiveness and leaders from the public, private and non-profi t sectors are increasingly recognizing that fact as well, but as a country, there’s no question we’ve still got work to do.”

As President and CEO of the American Cable Association, representing almost 900 small and medium-sized independent operators in the telecom space, Matthew Polka is concerned that as the FCC implements its national broadband plan, it has the potential to be a little “heavy handed” in its approach.

“The problem I foresee is that the FCC is not in touch with the smaller companies and doesn’t understand the impact that these regulations have on them,” he says. “If they don’t take these things into account then what can ultimately happen is the opposite effect, meaning these smaller rural companies will be less likely to deploy new services rather than more likely to deploy new services.”

Every regulation has a cost component to it, which is essentially an unfunded mandate meaning the government requires a company to comply with regulation with no subsidy help. This cost component will have a huge impact on small and medium businesses, says Polka, with a further key concern over universal service. “As part of the national broadband plan, the FCC wants to revise and reform the current universal service, which currently provides funds to help deploy telecom services in rural and smaller markets. A key component is revising universal service from telecom to broadband so that funds collected under universal service would be used to deploy broadband.”

Current universal service fund rules focus on eligibility for telecom companies, but if it is going to transition to broadband it must be wider and more inclusive to include all providers of broadband service, regardless of whether they are small or large organizations.

“This universal service goal is fi ne, but what I want to know is that the commission will be doing this fairly, meaning that all companies that are providing broadband service are eligible to use those funds to deploy broadband? Or, as based on

pre-existing rules under the fund, are only those previous users going to have access to those funds? In my view, if we don’t have a plan that allows for all users, there’s going to be a problem.”

The FCC’s ultimate plan for a national broadband plan is good, continues Polka, however, it will take a lot of work and effort in the regulatory process to ensure regulations are provided fairly for all providers in the market. Nobody wishes to see the plan fail, but it is going to take a lot of work to make sure it is right for everyone involved.

Unfortunately, due to the ongoing processes involved in the broadband plan it will literally take years and dozens of rule makings to ensure that all businesses are considered. “As a result of the approval of the plan by the commission, the plan itself will spawn some separate rule makings on individual issues,” says Polka.

And in terms of the future, he explains that the huge debate over the FCC’s decision to reclassify broadband service as a Title II common carrier service as opposed to an information service has the potential to completely change the way that broadband is regulated. “Julius Genachowski at the FCC wants to accomplish this because he wants to regulate the internet and needs legal authority to do so,” he says. “He thinks he has authority under Title II, which is a completely different ballgame to the way broadband has been regulated previously.

“There needs to be a plan, and the FCC has a clear role in administering that and ensuring that all users take part in that plan, but at the same time, what the FCC has to be understanding of is the fact that broadband has been widely and successfully deployed in our country largely because the government has not been signifi cantly involved in the regulation of the broadband service.

“The FCC needs to be more of a coach and a guide,” advises Polka, “because my fear is that the FCC will impose regulations that are in fact too heavy handed, that dictate marketplace rates and fails to take into account the unique needs of providers.”

Not forgetting the little guys

Nearly 100 million Americans lack broadband at home today and 14 million Americans do not have access even if they want it


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There is no doubt that the US railroad has suff ered over the past few decades. Indeed, aft er 60 years starved of investment, is it any wonder that America’s dilapidated railroads have slowly been sinking out of sight?

However, in an interesting turnaround, the current administration has expressed a strong com-mitment to developing a variable high-speed rail network

across the country, which will have huge implications for the current railroad system. In less than a year the Federal Rail Administration (FRA) has moved from a concept to the development of a high-speed rail vision document, a strategy for implementation and initial brand guidance. Why is it moving so quickly? Well, in a study recently presented by the Millennium Institute, the likely benefi ts of an expenditure of $250 to $500 billion on improved

It’s rail or fail time for the US railroad. Will it be returned to its former glory days through the advent of high-speed technology and a cash injection, or is it destined to grind to a halt? US Infrastructure asks Joseph Szabo of the Federal Railroad Administration for his opinion.

RETURN TO

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rail infrastructure found that 83 percent of all long-haul trucks would be eliminated from the nation’s highways by 2030, while also delivering ample capacity for high-speed passenger rail.

And if high-traffi c rail lines were also electrifi ed and powered in part by renewable energy sources, that invest-ment would reduce the nation’s carbon emission by 39 percent and oil consumption by 15 percent. Th ere is also potential for the economy to be 10 percent larger by 2030 than it would otherwise be by moderating the growing cost of logistics.

Joseph Szabo, Administrator of the Federal Railroad Administration, says there’s been nothing but a high-level of enthusiasm for the new program. “First of all, we saw it with the tremendous outpouring of application from various states around the country. We’ve also seen it on

a bipartisan basis from the members of Congress. And equally important is that the public opinion polls show tremendously strong support from the traveling public.”

So, why is there now such interest in developing a high-speed railroad for the US, aft er it has lagged behind equivalents in Europe, China and Japan for so long? Szabo explains that while he can’t speak for previous adminis-trations making the decisions that they did, there is no question that the development of the interstate highway and aviation systems were national priorities, which had a devastating impact on the fate of the railroad over the past half a decade.

“We have done outstanding work in the automobile and aviation transport sectors,” he says. “But now there’s a realization that we need to better balance our transpor-tation network. We need to off er genuine transportation

“We need to off er genuine transportation alternatives to the traveling public”

RAIL?


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alternatives to the traveling public because of congestion, because of environmental impact and because of the need to reduce our consumption of oil. We need to ensure people are able to travel using the mode that is most ef-fi cient for a particular journey. In many, many cases rail is that mode.”

Indeed, the inherent effi ciencies of passenger rail are fi nally being recognized once again. Th e lifeblood of America’s early development, the railroad saw unprec-edented use and popularity in the 19th and 20th centu-ries, reaching an all-time peak in 1920 with 1.2 million passengers boarding 9000 inter-city trains and racking up 47 million passenger miles every day.

Will it be possible to force that decline to an incline and see railroads back in favor with the public? Without question, answers Szabo. “For far too long now too many generations have forgotten the transport opportunities that rail off ers – and there is no question of the role that rail can and must play in the movements of people and goods. In hauling people within 100 to 500 mile radiuses, rail is usually considerably more effi cient than automo-tive or air, whereas air is superior for distances greater than 500 miles. It’s simply a matter of understanding where each mode is most effi cient and cultivating it in that aspect.”

A balancing actSzabo reiterates that rail is not about competing with

air or auto transportation options, it is about providing a balance for what becomes a seamlessly fl owing transpor-tation network, allowing for the effi ciencies of each mode to come forward. Indeed, a seamless transportation net-

work should surely be the core consideration at the heart of the matter. Th at said, there are a number of challenges in ensuring that the railroad fi ts with the other transport options and infrastructure already available.

“As we review applications for funding these types of interconnections, one of the key criteria is that we look at is how well high speed rail will link up with mass transit and with commuter rail to ensure that people are delivered that fi nal mile – how will it connect with airports, for example, so that the fi rst 100 miles of the journey can take place by rail and the next 1000 by air,” explains Szabo.

“It’s about ensuring that seamless fl ow between the modes. Europe does an outstanding job with that and these are some of the lessons that we’ve learned from our visits to Europe and Asia.”

When President Dwight Eisenhower signed the Inter-state and Defense Highways Act in 1956, little did he know

1815: Colonel John Stevens gains the fi rst railroad charter in North America, the New Jersey Railroad Company

1826: Stevens tests the fi rst steam locomotive in the country, showcasing his ‘Steam Waggon’ design – basically a steam-powered horse carriage

1829: Horatio Allen tested an early English steam locomotive design on a 16-mile stretch of track owned by the Delaware & Hudson Canal Company in Pennsylvania

1830: The three-year-old Baltimore & Ohio Railroad tested its famous Tom Thumb, designed by Peter Cooper

1830: South Carolina Canal & Railroad Company carried a trainload of passengers – the fi rst railroad to haul a revenue train with an American-built steam locomotive

1862: President Abraham Lincoln signed the Pacifi c Railway Bill into law designating the new Union Pacifi c Railroad and Central Pacifi c Railroad to complete the transcontinental railroad

1900: 193,346 miles of railroad were in operation

1920: Passenger rail travel reaches its all-time high with 1.2 million passengers boarding 9000 inter-city trains and racking up 47 million passenger miles every day

1932: Ralph Budd commissions a streamlined train, the Burlington Zephyr, hoping to revive interest in passenger travel

1933: Congress passes the Emergency Railroad Transportation Act, freezing railroad employment for three years

1934: Railroads introduce diesel locomotives for passenger service

1940: Railroad mileage drops to 233,000 miles

1942: Heavy reliance on railroads during the war reverses the railroads’ situation, but by the war’s end the railroads are left in poor shape physically

1957: For the fi rst time, air travel boasts more passengers than rail travel

1970: Under the Rail Passenger Service Act, Congress creates the National Railroad Passenger Corporation, also known as Amtrak, to subsidize and oversee the operation of intercity passenger trains

1980: The Staggers Rail Act signed into law by President Jimmy Carter deregulates the railroad industry

2000: Amtrak introduces the Acela Express, which operates at a maximum speed of 160 mph between Washington DC and Boston

History of the American railroads

“One of the key criteria is that we look at how well high speed rail will link up with mass transit and with commuter rail ”


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France into Belgium, Germany, Holland, Italy, Switzerland and Spain in Europe, and China, South Korea and Taiwan in Asia.

Playing catch upBack to today. Aft er the 2008 fi nancial crisis, many

countries were searching for speedy economic solutions to help ease them out of the worst world economic down-turn since the 1929 depression. Th e American Recovery and Reinvestment Act of 2009 (ARRA) was an unprec-edented eff ort to jumpstart the economy and create or save millions of jobs across the country, putting a down payment on addressing long-neglected challenges – like the railroad. In April 2009, the administration released a long-term plan for high-speed rail, called the High-Speed Intercity Passenger Rail program (HSIPR), including $1 billion a year for the next fi ve years to help the program get underway.

And in January 2010, President Barack Obama’s state of the union speech unleashed plans for pushing America’s fast train deployment ahead, with an addition-al $8 billion load guarantee from the ARRA to develop the country’s fi rst nationwide program of high-speed intercity passenger rail service. Obama’s vision for high-speed rail in America is built upon a series of strategic transportation goals, including: building a foundation for economic competitiveness; ensuring safe and effi cient transport choices; promoting energy effi ciency and envi-ronmental quality; and supporting interconnected livable communities.

At the time, Obama said: “Th rough the Recovery Act, we are making the largest investment in infrastructure since the Interstate Highway System was created, putting Americans to work rebuilding our roads, bridges and waterways for the future. Th at investment is how we can break ground across the country, putting people to work building high-speed rail lines, because there’s no reason why Europe or China should have the fastest trains when we can build them right here in America.”

Th e HSIPR program generated enormous excitement across the country, with the FRA receiving 259 grant ap-plications from 37 states, requesting nearly $57 billion in funding – far exceeding the initial $8 billion available.

For now, the majority of the $8 billion will go towards developing new, large-scale high-speed rail programs, in-cluding projects in Florida, which is receiving up to $1.25 billion to develop a high-speed rail corridor between Tampa and Orlando and California, which is receiving up to $2.25 billion for its planned project to connect Los Angeles to San Francisco with trains running up to 220 miles per hour.

Szabo believes that the $8 billion serves as a very important down payment to what will be a decades-long build-out. “Our interstate highway took more than four decades to build and if you take a look at Europe and Asia the build-out of their high-speed networks in most cases took 30 years,” he says. “Th e important thing is that the railroads have lit the spark in the imagination of Con-

that he was eff ectively sealing the fate of America’s railroads and handing over its technological advances overseas, wel-comed by a visionary group of railroaders. In 1955, Louis Armand, head of the French national railway, had proved the capacity of an all-electric test train with record speeds of 208 mph.

Inspired, Japan’s Minister of Transport, Shinhi Sogo, began planning a rail line without sharp curves or steep gradients, permitting streamlined, all-electric trains to run at even higher speeds safely. Sogo actively imported technology from America to do so, including the two-axle trucks, dynamic braking innovation and advanced comput-ers to operate the line’s signal and dispatching systems. And Japan wasn’t alone; high-speed trains expanded beyond

Th e competitionWhat the US is up against around the rest of the world

Passengers disembark from a newly arrived Shinkansen ‘bullet train’ in Tokyo Station

A TGV travels at high speed through fi elds of sunfl owers and vineyards in France

The Saspan, which will transport passengers from Moscow to St Petersburg in three hours and 45 minutes at a top speed of 250 kmph

Spending $250- $500 million on rail could take

83% of long-haul off the roads


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for the operation of high-speed rail on that freight infra-structure.

“It is vital that you do very good modeling of the proposed operations and then from there you do your planning and your engineering to make sure that the ap-propriate investments are made that allow both users to operate at a high level of performance,” says Szabo.

Looking forward, Szabo points to the clear vision the FRA are looking to achieve, both from a passenger rail and freight rail standpoint. “In a perfect world I would like to see 80 percent of America connected by a strong, high-performing passenger rail network. In addition, I would like to see freight rail perform at a high level, while growing market share, particularly when we’re talking about inter-modal shipments. Th ese all help us achieve reduced congestion, reduced consumption of fuel and improved air quality – and that’s important to the quality of life for Americans.”

Hopefully, with a little love and attention – plus the projected $13 billion being spent on railroad infrastruc-ture development over the next fi ve years – the sector will get back on track and start speeding ahead to success.

gress and the traveling public to now allow both to realize what this transportation option can mean to them.”

Looking forwardTechnology is – and will remain – at the heart of

ensuring more effi cient and safety-led advancements for the future of the railroad in the US. Szabo explains that the FRA is continuing to look at new technologies and is even proposing to fund a greater share of research and de-velopment as it relates to the advancement of high-speed rail. “Technology is the wave of the future and so under-standing, researching and advancing that technology is a critical part of the long-term development of a program depending on market needs,” he says.

And of course, those needs may bring some challeng-es in terms of co-utilizing existing freight infrastructure with planned passenger infrastructure, because there is no question that in many cases passenger and freight trains will utilize capacity diff erently. Szabo claims that balance is the key to ensuring that America’s world-class freight system is preserved and improved, while there is also investment and capacity improvement that allows

THE FAST TRACKS

California

Mid West

Texas

Florida

North East

Five areas of the country currently have the population and georgaphy to support high-speed rail



Ticket to

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When George Greanias stepped into his current role of Acting President and CEO of Houston Metro, he was inheriting respon-sibility for an organization with more than its fair share of prob-

lems. Building programs had stalled, public trust was at an all-time low and the previous chief executive had departed in a swirl of misconduct allegations, jeopardizing $900 million in federal grant money. Given the circumstances, the fact that his new job was a seemingly temporary ap-pointment might have come as some relief. Or perhaps not. “When the board asked me to take this job on an acting basis they told me not to do it unless I was willing to do it on a permanent basis,” Greanias says when we speak with him roughly three months into his tenure. “Th at’s the un-derstanding: that I very much want to continue.” Whether or not he remains in the big chair indefi nitely, it’s hard to imagine the Metro board fi nding many better candidates. With an obvious love for his city and an unshakeable belief in public transit’s power to transform the urban environ-ment, Greanias certainly seems to fi t the bill. Houston’s residents should have little cause for complaint if this tem-porary arrangement becomes permanent.

You’ve been a long time advocate for light rail in Hous-ton. Why do you think it’s a good fi t for the city?George Greanias. It’s a piece of the larger puzzle. I think that the controversy about rail in Houston has gone on for so long and has been so contentious that it’s overshadowed the fact that rail is not the solution. It’s a part of a total package and an essential distributor network. It’s the spine of the distribution within the inner part of the city, which in Houston’s case is some 600 square miles. It facilitates us doing a better job of distributing our bus routes. It be-comes critical for distributing people in any commuter rail program that’s built and it allows us to provide more public transportation at a more cost effi cient price.

But it is again, part of a total package. People who say we’re going to build rail at the expense of bus or at the ex-pense of other forms of transit are missing the point. Rail is a part of that system. It’s just as essential to have a good bus system, just as essential to have a good para-transit, van and HOV lanes and park and ride lots. It’s all part of the operating system. If we don’t do it what we’re going to miss is a major opportunity to create a more effi cient distribu-tion network within the community.

Houston Metro’s George

Greanias tells US Infrastructure about his plans to keep the city moving.


Making sure these systems interlock and fi t together must be of paramount importance. What kind of chal-lenges are involved in making sure that happens?GG. One big change I’m looking to eff ect at Metro is to make it more of a partner with other governments and agencies in this region that are taking up responsibility for transit issues. Th e Metro service area is not coextensive with the whole of the greater Houston region, so for us to be successful in our mission we need to help others, for ex-ample those who are looking to build commuter rail lines outside our service areas but which will connect up within our service areas. We need to help them become successful. What I’ve been saying is that we don’t need to be at the head of the table on every discussion, on every issue but we do need to be at the table and we need to make sure that other folks who need to be there are also in attendance.

I’ve been here a grand total of three months, so it’s very early on but I will tell you that just in the preliminary conversations that I’ve had with people there’s been a very positive response. I think that we’re at an interesting point in the history of the region. I think the realization of the need for transit is probably stronger now than I’ve ever remembered it. I think the willingness to explore various ways not only to provide the transit, but also to develop the funding sources to pay for those eff orts is further along than it’s been in a long, long time.

You mention that you’ve only been in position for three months. How have those fi rst few months been for you?GG. It’s certainly been interesting. Number one, we obvi-ously had a series of issues that needed to be addressed. I think that the board and the new management have been going aft er those questions pretty aggressively. We’ve made a lot of progress.

I also think that based on getting to know the people in the organization, meeting with virtually everybody in the company there’s a great deal of strength here. I’ve lik-ened it to being a six-cylinder engine that was only allowed to operate on two of its cylinders. We have a great deal of horsepower in this company that we need to unleash. One of my goals going forward is to make sure that the talent that’s here gets the chance to perform up to what they’re capable of.

You’ve touched on the controversy around Metro in recent years. For this kind of system to really work you have to have the support of the people that are ulti-mately going to use it. Do you think there is that kind of local enthusiasm or does more work need to be done to win people over? GG. Th ere are three things that we’re focused on, all of which I think speak to that question. Number one, we’re working to restore trust in the authority inside as well as outside. I think that’s essential to your point that Metro cannot be eff ective if it doesn’t have the community’s trust and support. Number two, we need to keep our commit-ments. Th ose commitments include the agreements that

were made in 2003 in the referendum that approved the current rail program but it also includes providing abso-lutely superior bus service, para-transit services for the dis-abled, park and ride services, the whole package of transit that Metro is responsible for. Th at’s part of building that trust.

Th e third thing is to make sure that when it comes to customer service the day in/day out delivery of the services we off er are second to none. Bit by bit, people in the au-thority, many of whom already believe this, are getting the message that we really are serious about it. We’re going to deliver superior customer service. Th at’s going to be our focus on a daily basis and all those things contribute to a better relationship with the community, which is essential for us to accomplish our mission.

The past couple of years have been pretty diffi cult no matter what kind of business you’re in. Has the down-turn had any impact on the development of transit systems in and around Houston?GG. In terms of the infrastructure construction it really hasn’t. Where it has aff ected us, of course, is in our abil-ity to maybe go as aggressively as we wanted to in some of the other service development areas. Part of that has been because of the delays in the construction program.

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The Houston Metro

is waiting for $900 MILLION

in funding


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Where it has aff ected us, of course, is because of the drops in employment where we’ve experienced reductions in ridership and our sales tax revenues have dropped because of the overall economy. Th at’s no diff erent than any other government in this area.

I will say though in comparison to other parts of the country we are still in substantially better shape fi nancially and most importantly, unlike many other transit agencies, Metro has preserved service. We have not been signifi -cantly reducing service, the kinds of things you’ve seen at other transit agencies. It’s been pretty much business as usual which I think is a real tribute to the fi nancial man-agement of the operation and the commitment to saying that the fi rst priority is to maintain the service levels that are essential for the community.

You’re still waiting on confi rmation of $900 million in federal funding. How is that progressing?GG. We’re in communication with the Federal Transit Administration who makes the decision on that. Th ey’ve indicated that they’re going to be giving us a response fairly soon. So we continue to be optimistic that sooner, rather than later we will get this grant approved. If you’re familiar with the ways of Washington, while we’re waiting on the full funding grant agreement Congress has actually gone

ahead and appropriated funds to support that agreement. So we have $150 million approved for Houston in the current federal fi scal year and the budget that’s moving through the House and the Senate right now contains an-other $150 million for the fi scal year that starts 1 October. Th e answer is actually that the money’s already there. Now we just need the agreement.

It’s a very long and complicated process. Something every transit agency in every region is going to have to think about is how much they want to build their fi nan-cial and infrastructure plans around federal grants. Th e landscape has changed a lot since this debate started in the 1980s. Back then the split was the federal government would give you 80 percent of the money, while 20 percent of the investment would come locally. Today it’s more like 50/50 and I would bet that that split will change even more, placing a heavier burden on the localities.

Th e other part of it is, depending on how urgent you feel the need is, do you really want to wait for the length of time it takes to go through the federal process. It’s a very lengthy, very complicated process and there is tremendous competition for limited dollars. Th ere’s a whole separate question here about how localities are going to fund their programs that I think everybody, not just Houston, is going to have to address.

The Metro has been in

development since 2001


Does the fact that you have to fi nd more funding locally mean that you have to make a stronger business case for this kind of development?GG. I think the business case is very strong. Maybe some-times the authorities have not made it as well as they could. I think that part of it is that public transit’s held to a dif-ferent, higher standard than other forms of transit infra-structure. Th e fact is the Metropolitan Transit Authority is probably the only operation in this region that gives you an honest accounting of what it costs to provide what they deliver. In other words when we tell you what the cost of transit is, we tell you the cost of building the infrastruc-ture, of the equipment and of the operating costs. It’s all there.

You build a freeway and you never capture the total cost. You know what it costs to build it but think about all the people that have to buy cars in order to make that road useful. Th ink about the insurance they have to pay. Th ink about the police that various communities have to provide to support the roadway. Th ink about the maintenance cost. So when we ask what a freeway costs, we actually think about a very small portion of its actual operating cost.

In terms of getting an apple to apples comparison of what’s the most effi cient way to move people around, we are a long way from getting that kind of analysis out there in the public discourse. Going back to your question, making the business case for transit is made more diffi cult because we don’t have a ready and agreed upon comparison with other forms of transportation infrastructure. If we did my guess is that public transit would be far more supported because we realize that, as a solution, it is extremely cost eff ective.

Is it a particular challenge to change public attitudes to transit in the US, which has traditionally had such a strong relationship with the private car?GG. I don’t think it’s a major attitude change because back a couple of years ago when the price of gasoline ran up to an atrocious $4.00 a gallon, our ridership numbers went up. Right now $4.00 is the magic trigger fi gure for changing people’s behaviors. My point is that I think that the attitude is already there, it’s just a matter of the incentives being appropriate. I don’t believe that it’s a case of lowering fares to encourage more people to ride.

My argument is that you’ve actually got to increase the cost and the inconvenience of the alternatives. So when Mayor Bloomberg in New York City, for example, tried to follow the example of the mayor in London of putting in congestion pricing what he was really trying to do was to say, “I’m going to make it more expensive and less conve-nient for you to use your vehicle. We want you to get out of that and get into a public transportation.” Back then it was not terribly popular and he couldn’t get it through. I suggest that as time goes on and the price of energy inevi-tably goes up the trend towards public transit is going to look more and more attractive to people. Our challenge will be to be have the system in place that can support that increased demand when it comes. ■

Travel benefi tsGreanias tackles the question of whether or not investment in public transit brings wider economic rewards.

It’s not a matter of opinion, it’s an unquestionable fact. We already have seven-and-a-half miles of rail down the main street corridor running from basically the south end of Reliant Stadium, the football stadium north of the University of Houston Downtown. If you look about fi ve or six blocks at either side of that seven-and-a-half miles of rail, which is pretty much walking distance to the stations, you’ll see something pretty striking. The estimates run from one billion to maybe as high as two or three billion dollars worth of new investment, investment that came since the rail program was announced and the construction began. It’s a very clear correlation between the decisions on the placement of rail and the decisions on development.

You see it now on the north line, which is an extension of the current line. You see property values already going up. You already see decisions being made about bringing in new businesses based on the fact that we’re putting a rail infrastructure in. To my mind, development follows infrastructure decisions. You don’t want to start on a barren plain.

We route based on where ridership demands justify it, but it’s sort of a chicken and egg situation. We look for areas where there’s ridership. We start construction there and then people decide that because we’re building rail there they are going to make investment decisions around that decision. It’s a constant cycle of us evaluating where the opportunities are, moving forward in infrastructure and then the private sector coming and seeing investment opportunities based on what the public sector is doing. It’s a virtuous circle once it gets going.

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How enterprise content management is making a difference

Philip Cleghorn reveals how enterprise content management addresses some of the current challenges for the utilities industry.

What is the most common issue that you see impacting the utilities industry that enterprise content manage-ment (ECM) is addressing?Philip Cleghorn. Environmental awareness has changed signifi cantly over the last decade. Concerns about the envi-ronmental impact to land, air and water quality have been growing and that has led to further legislation and regula-tion in the utilities industry. Emphasis on employee health and safety has never been more stringent, and to comple-ment that the rules governing quality and service levels to customers have also increased creating a combined impact that drives up costs signifi cantly. Th e resulting impact in a business environment today is that businesses are required to have a much greater and broader emphasis on legislative and regulatory compliance in order to be sustainable. Open Text has continued to develop its solutions like document management, records management, email management, web content management and digital asset management to meet these ever increasing compliance demands, not only by adding fl exible features but by also expanding the vari-ety and volume of content that can be managed, everything electronic and all physical records. Th e ever-changing requirements demand that the solutions be both fl exible and confi gurable. By addressing all the diff erent business issue driven content that a utility company must deal with, we are truly an enterprise solution enabling our utility customers to reduce the cost of compliance and position themselves for long-term sustainable market growth.

What about changes to the technical environment facing utility companies?PC. Utility organizations are implementing smart grid and smart meters as part of the worldwide move in this direction. We oft en get asked about where we fi t in that solution puzzle. We see our solutions for asset management: engineering records, contracts and transmittals management help tackle the additional complexity that smart grid infrastructure re-quires. By keeping a better track of CAD drawing revisions, construction documentation and by logging communica-tions on-line via transmittals management we see customers taking away the pain from sharing out of date information or from an inability to fi nd a critical piece of content.

With respect to smart meters, we see diff erent challeng-es there. Consumers can have an impact on their consump-tion and costs but in order to do so they need information that they can utilize. Our customer relationship manage-

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EXECUTIVE INTERVIEW 117

organization, providing consistency in the business process of adding new assets through capital projects or changing existing assets in the operations and maintenance phase.

What other demands do you see coming from the utilities industry?PC. We see more and more customers looking to us to solve the challenge of connecting their ERP and ECM platforms. Organizations no longer want to see a silo based approach to their structured and transactional data from their un-structured and document centric information. Th ey desire an integrated environment where their supply chain, human resources, projects and operations staff can easily fi nd the rel-evant content related to activities in the business unit. Open Text has built solutions for both SAP and Oracle ERP’s. As a result ERP and ECM are no longer standalone. Contracts can be found with the supplier or customer master data. OEM manuals can be found with the equipment master, procedures can be stored at the functional location where they belong. It’s quite revolutionary and amazing to see ERP users contributing to ECM and ECM users supplementing the structured data available in the ERP.

We are oft en asked to help organizations deal with the glut of content that is an ever-increasing problem. Several companies have seen their cost of litigation steadily increase as the amount of content grows in their organiza-tion. When an organization realizes that each signifi cant case requires tens or hundreds of thousands of dollars in discovery and legal review and the cost of defence can exceed a quick settlement, they become motivated to ad-dress the issue. Our customers use our records manage-ment and retention schedule capabilities for content that comes from email or from other desktop applications to classify information and retain it for its period of rel-evance. Th e records retention schedule is oft en dictated by legislative and regulatory requirements or by company policy. Much of what we receive in email is not a corporate record and this content can be disposed of in 30-180 days. Other email needs to be retained for a few years while other key email records need to be kept for the contract duration, employment term, etc. Th e result is that once an RM pro-gram is in place, irrelevant information is disposed as per the schedule, overall content is reduced signifi cantly. Th is not only reduces legal review costs when litigation arises but it signifi cantly impacts the overall IT management costs for storage, backup and recovery of information.

What can we expect to see from Open Text in the next 12 to 24 months?PC. Without doubt you will continue to see new releases of the Open Text products, for web content management, email management, engineering records, digital assets, electronic and physical records. You will also see improved integrated solutions for SAP and Oracle, a new release of our Open Text Everywhere solution for mobility. You can expect to see Open Text continue to address the needs of utility organizations as regulations tighten, new technologies are deployed and the downward pressure on operations costs continues.

ment (CRM) solutions include web content solutions that can help consumers digest the information coming from their smart meter to help them make informed decisions as to how to change their consumption patterns and save money. Call costs can be impacted through both delivering more information via the web and by providing operators an identical copy of the customers billing record to speed up the time to resolve inquiries. Open Text social media so-lutions can give utility companies the edge to leverage new ways to communicate with customers to drive up customer satisfaction and reduce costs.

What about service reliability and security?PC. System security, reliability and redundancy have become a frequent conversation with utility operators. Regulatory service demands have increased and new sources of envi-ronmentally conscious energy are entering the grid. Open Text has always been concerned about providing a secure platform with built in redundancy to ensure that services are secure, steady, predictable and scalable. When the latest re-lease of Content Server comes out later this year, customers will appreciate our next leap forward in providing reliable soft ware that can meet the tremendous growth in data and information that has exploded in organizations.

Our archiving solutions have a track record of taking historical data from on-line systems and placing it in our secure repository. Th is not only improves system perfor-mance but it also decreases the time to recover in the event of an upset. Many of our utility customers have benefi ted from moving information into the archive and applying the appropriate records retention schedule to meet regula-tory and legislative needs.

So, what are the new ways in which you are meeting the needs of utility customers?PC. Recently we have responded to our customers needs to achieve better management of the information surrounding their fi xed assets; engineering data such as controlled engi-neering records – CAD drawings, spreadsheets, and other documentation. More than ever, our customers want to con-tinue to improve the environmental, safety and production of their assets. Th ey are oft en faced with millions of pieces of content and they want more effi cient methods of storing and maintaining this content. We have risen to the challenge by supplementing our transmittals management and CAD manager solutions with controlled revision tracking and advanced state management. Solutions that complement Content Server capabilities of security and information management by providing features specifi cally designed for engineering content. New features that give additional business controls tuned to the individual needs of the utility

Philip Cleghorn is the Industry Manager for Energy at Open Text. With over 20 years experience in the Energy business, he has worked for Suncor Energy, Syncrude Canada and Petro-Canada. Cleghorn has a Bachelors Degree of Science in Computing Science and a Masters Degree in Business from the University of Alberta.

“You can expect to see Open Text continue to address the needs of utility organizations as regulations tighten, new technologies are deployed and the downward pressure on operations costs continues”

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Deadly skiesWith ash clouds, terrorist threats, environmental concerns and recession, it’s been a tough year for the airline industry. Gunther Matschnigg, Senior Vice President of Safety, Operations and Infrastructure at IATA, speaks with Ian Clover about the industry’s security aims, regulations and operational future.

AVIATION SECURITY118

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Airplanes are obvious terrorist targets, and so the security measures and processes passengers have to adhere to in order to fl y are willingly ac-cepted as overly heavy handed, time-consuming and thorough. Th e subconscious removal of jackets, belts, shoes and jewelry as we are herded through full body scanners has become second nature, as has the more recent procedure of gath-ering together miniature liquid bottles in clear plastic bags for our hand luggage – all thanks to 2006’s foiled Heathrow attempt to bring down six planes with the use of liquid explosives.

Earlier this year, the aviation industry faced yet another threat to its ability to safely, conveniently and effi ciently transport travelers to their desired destination – the now-infamous

Attempting to ignite a device comprised of small fi recracker-type explosives hidden in his underpants, Mutallab’s plan failed thanks to the diligence of crew members and passengers, and his own ineptitude. Frogmarched to the front of the plane, his trousers in tatters and his legs burnt and black with soot, Mutallab’s attempt at martyrdom and an eternity spent immersed among virginal bliss instead ended in the un-edifying sight of being bundled into a security van on Detroit airport runway and whisked off to await trial. If Mutallab’s actions are seen to have been in any way as serious as 2001’s Richard ‘shoe bomber’ Reid, then a life sentence awaits.

Th e airline industry has always had to be tough on terrorist threats, even before 9/11.

When the ‘Fasten Seat-belt’ light dings into action toward the tail end of your fl ight as you begin to descend to your chosen desti-

nation, what do you do? Most normal folk will close their laptops, remove the earphones, wake their traveling partner or maybe make a daring last minute dash to the toilet. However, for Umar Farouk Abdul Mutallab – a 23-year-old Nigerian student aboard a Northwest Airlines transatlantic fl ight coming into land at Detroit on December 26 last year – this fi nal ding was his cue to embark upon a fi endish plan to bring down the plane.

AVIATION SECURITY 119


still very fresh. Both of these unforeseen events shaved quite a bit of money off the industry – $1.8 billion is a lot to lose, especially when our profi t margins are slim to begin with, so an unforeseen eruption like the Icelandic ash cloud wiped away any buff er we had in place.

“Th en there was the event of December 26. In that instance we were lucky that the terror-ist attempt didn’t bring down an aircraft , but we have to be prudent and continue to work extremely hard together with the governments to ensure that these things won’t happen again. It is so challenging, because on the one hand we have got to tighten security and implement mea-sures to ensure that our passengers are safe, yet we have also to try to enhance the travel experi-ence for passengers, particularly in the current economic climate.”

Th e unforgettable events of 9/11 changed the aviation industry forever. Transatlantic busi-ness fl ights – previously the realm of perhaps the most relaxed form of airline security – suddenly became an arduous journey of long queues, intense scrutiny and oft en-invasive procedures infl icted upon innocent passengers. Suspicion reigned and security was tightened to levels never before seen. “Th is was nine years ago now and I think it’s fair to say that fl ying is much more secure today than it was then,” says Matschnigg. “Th ere are a number of measures that have been introduced since then that have

Association – has watched the last 12 months unfold from his Montreal headquarters with a mixture of pride, frustration and excitement at what the future holds.

“Th ere have been numerous challenges for IATA over the past 12 months, particularly the economic environment and the volatility of the industry,” begins Matschnigg. “We are only now beginning to see an upswing in the fortunes of the industry and may, by the end of the year, start to see parts of the industry making money aft er year on year losses.”

Icelandic ash cloud. Th is time, however, the threat was all natural (we are, as yet, to hear Al Qaeda claim responsibility for billowing mil-lions of tonnes of ash into the air from their base camp deep in the bowels of Eyjafj allajokull) and totally alien to travelers. Aircraft all over the continent were grounded for weeks; timetable chaos ensued and exasperated passengers ranted, raved, pleaded and then, eventually, accepted their lot. Th e planes were going nowhere. Safety came fi rst. Punctuality came second. Passenger comfort trailed a distant third.

Th is brief period of plane-free skies was latched upon by environmental groups keen to highlight just how damaging the aviation indus-try is to the environment, decrying the immi-nent demise of airlines as we knew it. Far more injurious, though, was the fi nancial damage this downtime did to the industry. With recession still barely shaken off , the airline industries and travel operators could ill-aff ord to be grounded. Businesses in Europe alone lost an estimated $3.2 billion during those trying few weeks in May. Unsurprisingly, airlines were some of the biggest victims, with losses totalling something in the region of $1 billion in revenue.

Such a challenging start to the year proved wearisome for fi gureheads throughout the in-dustry, yet Gunther Matschnigg, Senior Vice President of Safety, Operations and Infrastruc-ture at IATA – the International Air Transport

1972 After decades of hijackings throughout the world, the USA’s Nixon administration hit upon the idea of installing metal detectors at airports throughout the country in an attempt to prevent guns and knives being brought on board. Early metal detectors were sometimes two meters long, and were known to spread a sense of mild panic among those fi rst through. Consumer worries about radiation were soon alleviated when a study by the Federal Aviation Administration (FAA) confi rmed that a typical metal detector gave off less radiation than the luminous dial on a wristwatch.

2001 The attacks of 9/11 dramatically altered the atmosphere of airport security. Where previously passengers were afforded the benefi t of the doubt, the actions of the hijackers on that fateful day were unprecedented. Not only was security tightened worldwide at the screening stage (such as a restriction on the types of items passengers could bring on board), but cabin crew were retrained in order to deal more effectively and forcefully with hijack attempts.

THE HISTORY OF AVIATION SECURITY

1989 The Lockerbie bomb disaster of late 1988 forced the FAA to re-visit their screening policy, more carefully checking portable computers, bags and radios with the use of X-ray machines that were able to verify the contents of all carry-ons. A new ruling was introduced in early 1989 that meant only bags which were accompanied by a passenger could board the cabin.

Th e past 12 months have, reveals Matschnigg, been wholly characterized and defi ned by ter-rorist threat, ash clouds and the ongoing drive for increased passenger security. “Th e terrorist attempt at the end of December last year and the volcanic ash cloud are the two issues that are

“What we haven’t yet done as an industry is place more focus back on to passenger travel – some security regulatory bodies have lost sight that it is actual people going through their security processes”



folly of the prevailing attitude toward the ash cloud as it was happening, the issue of safety hung heavy over the industry. Surely it was better to ground fl ights wholesale than run the potential risk of even one fatality or injury? “If that were the case, then why did France open up but Germany and Belgium did not? Th e ash cloud, rather peculiarly, stopped at the political border. Nobody can explain that. Th is was a very uncoordinated event for Europe. Our strong recommendation to the governments of Europe was to implement a crisis management team that could have dealt with this better.

“Volcanoes and volcanic ash occur right across the entire globe. Th ere are more than 500 active volcanoes and nearly every week there is an eruption somewhere, so this ash cloud was nothing new for the international fl ight commu-nity. Europe handled it totally diff erently, closing airspace that would have remained open else-where in the world, all to the detriment of pas-sengers, the airlines and the economy. A lack of knowledge, a lack of experience and a reluctance to look at other parts of the world for guidance made the problem worse. But Europe’s aviation industry has learnt a lot from this experience.”

Aviation in general has much to learn as the industry continues to mature. Consumer demand is at its highest ever levels, while envi-ronmental and safety pressures continue to be the catalyst for better technologies and more

legitimate reason for the hold up. But May’s ash cloud deposited not just very fi ne particles on to the wings of planes, but also a collective volca-nic funk throughout the moods of travelers at most airports across the world. If this seemingly unprecedented occurrence was hard for pend-ing passengers to comprehend, then the air-lines’ collective response was even more arcane for Matschnigg to grasp. “From an airline point of view we followed the instructions given by the service provider and regulatory bodies. On the fi rst day of the ash cloud they closed the air-space in Europe and nobody knew exactly what was going on, although it was only the fi rst day so we were willing to accept this.

“But as the second, third, fourth and fi ft h day came along and we [IATA] knew that there was no threat to airlines, there was still nobody with the courage or authority to instruct airspace to be opened up fully. I can clearly say today that it was a wrong decision not to open the airspace quicker, and the whole debacle was all handled based upon incorrect information – many test fl ights were undertaken by airlines and govern-ments that proved there was no risk to engines or aircraft in that part of the world. But still, the newsreels showed maps and charts with ash cloud cover. Th is was totally wrong. It was an overreac-tion; Europe was completely uncoordinated.”

While an individual with Matschnigg’s expertise might have been able to challenge the

greatly improved security, including the data transmission that goes to the airports; the information that reaches the cockpit, and the information that is generally submitted to staff at every level of the fl ying procedure.

“But on the other hand what we haven’t yet done as an industry is place more focus back on to passenger travel – some security regulatory bodies have lost sight that it is actual people going through their security processes. Although secu-rity is presently heightened, I think we can still make travel convenient and enjoyable, which is why we have decided, with the support of the Department of Homeland Security and the In-ternational Civil Aviation Organization (ICAO), to develop a checkpoint for the future, to really focus on making the passenger experience as enjoyable as possible.

“We have to utilize the same dedication we have shown with our security measures on pas-senger comfort and ask ourselves: ‘Is it really necessary that we implement this or that secu-rity measure?’ While I cannot fully reveal exactly what is in the pipeline at the moment because we are still at the development stage, I can safely say that we are working toward fewer queues, less waiting time, more technology and the eradi-cation of this two, three hour waiting that still prevails in some airports across the world.”

Even the most exhausting and frustrating delays are tolerated by the masses if there is a

2002 Richard Reid’s failed December 2001 attempt to blow up a transatlantic fl ight with a bomb concealed in his shoe prompted the authorities to again make changes. From the beginning of 2002, all passengers boarding a fl ight to or from the US now had to remove their shoes and socks when passing through the scanner.

2006 In the immediate aftermath of the foiled Heathrow liquid bomb attempts, all airports in the US, the European Union and Australia restricted passengers from taking any liquids on board as hand luggage. This ruling was relaxed after a few weeks, but passengers are still not permitted to take on board any liquids over 100 ml (although liquid purchased in the airside safe area are pre-screened and safe to take on board), and all liquids under 100 ml must be placed in a transparent, re-sealable plastic bag that is not more than one liter in capacity.

THE FUTURE Aviation bodies around the world are constantly seeking new methods to further improve airport and airline security, including biometric scanning, retina scanning, advanced X-ray machines, combined shoe and iris scanners, RFID tracking and even more subtle passenger screening techniques, such as interviewing passengers, tracking their movements through the concourse and analysing body language.

AVIATION SECURITY 121


whole new world of weekend-tripping opportu-nities, business ventures and stag and hen party destinations. We are all much more frequent fl yers than we were 10 years ago, yet for every two-hour fl ight to the sun, there’s that immea-surable period of misery awaiting us at airports, in baggage claim and even online, where hidden

Initiative – to fi nd the right people because this business cannot survive without professional human beings. We know this. However, our needs can be supported by the right technology, and this is where we need to work hand-in-hand with airlines’ development departments.”

Striking the right balance between well-trained staff and optimum technology is some-thing that Matschnigg is continuously working

streamlined collaboration between the vari-ous entities that ensure passengers get through check-in, on to the plane, on to the runway, into the air, then safely on to their destination. Th is patchwork of professionals has proven to some-thing of a logistical nightmare in the past, which is why Matschnigg devised the internationally-recognized IATA Operational Safety Audit, which aims to make the entire regulatory pro-cess of aviation smoother, more accurate and, by default, safer for the passenger.

“Th is audit came about when I was working for Austrian Airlines and we would be audited 13 times a year,” says Matschnigg. “I was thinking ‘what the heck? Why do we have to go through theses audits?’ I didn’t see where they added any value. Other airlines thought the same – they saw it as a redundant process that wasted a lot of time and money because there was no unifi ed standard. So when I came to IATA I brought this up with the operations group and they fully en-dorsed a concept for a global safety audit. Th en between 2000-02 we developed the standards to cover the industry and the regulators, and launched the audit program in 2003.

“Since then we have completed 860 audits on 330 airlines on the register, where before there would have been thousands of disconnect-ed audits on the go, because under the previous system the IOSA (IATA Operational Safety Audit) recognized some but not others. So one goal – to reduce the number of redundant audits – was achieved. Th e second goal was to enhance overall safety, and I think the fact that ground operation units and airlines use this same audit process has led to a standard that is known by everybody. It is a very thorough and methodical audit of safety procedures, fl ight operations, en-gineering departments and every aspect of the airline process. If a company passes the audit then I think it’s fair to say that they have an ex-tremely robust set of practices in place.”

Tallying audit procedures with overall operational safety is a very quantifi able goal, and one that – while ongoing – is progressing satisfactorily. Less tangible, but equally impor-tant for the industry, is the measure of human error. Complete eradication of manmade mis-takes is universally recognized as impossible, but Matschnigg is confi dent that improved staff screening, staff training and technology can help minimize the impact humans play when things go wrong. “We always need people who have the right mindset to work in aviation and this is one issue where personally I am a little concerned,” reveals Matschnigg. “Th is is why IATA and ICAO launched a program three years ago called the ITQI – the IATA Training Qualifi cation

we have to make best use of the technology that we have at our disposal but, of course, human error will always be a factor. To address it, sev-eral programs are on the way for the cockpit, for the engineer, on the dispatch side of things and also for air traffi c control.”

Flying anywhere these days is cheaper and more fi lled with choice than ever before. Th e proliferation of budget airlines has opened up a

toward. “Th e optimum varies in each discipline. Flight operation is diff erent to engineer main-tenance for instance; the need for training for each technology diff ers drastically. For example, fl ying an Airbus 380 today compared to fl ying a 727 30 years ago – the diff erence is day and night. Th e technology has advanced immeasurably, so

“Increased security needn’t be more expensive to implement, even if it has to be to the detriment of some measures of comfort because ultimately, safety is paramount”



are governments not picking up security costs in aviation? Why is the government picking up security costs when it comes to soccer games, when it comes to traveling with the rail com-panies, when it comes to making sure people are safe when they visit theaters and festivals? Why not aviation? Th is is still an unanswered question. Why does the aviation community – the airports and the airlines, but also the passengers – pick up all of the cost of security? Th is is still not clear. Th is is something we have got to emphasize – responsibility. Th e govern-ment has a responsibility to create a safe and secure political environment, so why not in aviation?”

Governments and aviation authorities have worked hard in the past to foil and thwart would-be bombers and terrorists. Th eir col-laboration has averted disaster numerous times when armed with tip-off s, intelligence and a sense of urgency. Th is desire to protect the public should not begin and end with each tangible terrorist threat. Increased government collaboration in aviation can help to make the entire fl ying experience safer, cheaper and more comfortable for all. ■

increased security and a more enjoyable and ef-fi cient fl ying experience, but with the skies open to all and sundry, Matschnigg is unlikely to ever get his wish. Besides, passengers are willing to go through the rigmarole of being corralled in like cattle, treated like criminals and subjected to stealth taxes as it is, so why should the indus-try change? “Our fi rst and foremost priority in this industry is safety and security,” concludes Matschnigg. “I do think that increased security needn’t be more expensive to implement, even if it has to be to the detriment of some measures of comfort because ultimately, safety is paramount. However, the two issues of comfort and safety are not mutually exclusive – you can have both.

“As an industry we need to improve how we operate. Th e long waiting lines, this being treated like you’re a criminal – these are things that can be avoided so long as we do things more intelligently. Th ere is still lots to improve upon, but air travel can become the pleasant luxury it used to be.”

Matschnigg stops short of saying that lower costs are in any way correlated to poorer security, but his passion for his fi nal point hints that that may indeed be the case. “Why

taxes and extortionate baggage costs are making the experience of fl ying more stressful by the day. Profi teering, driving down overheads and the old ‘sell ‘em cheap, stack ‘em high’ mental-ity pervades throughout, all because the entire aviation network is comprised of a number of disparate entities competing for your business.

Th is is a situation that Matschnigg is look-ing to change. “I’m not satisfi ed with the co-operation between airlines, ground operations and travel companies. I think we need to do better with the regulatory bodies; there are situ-ations that can be improved if only the industry had the chance to comment. Th is is only my opinion but I can speak from both sides, having been a regulator in the past. Aviation is built on trust and working together. It is the responsi-bility of the regulators, of the manufacturers, of the service providers. It is the responsibility of the airlines and the airports and the pilots and the ground staff to work together. Sometimes this coordination and cooperation is lacking because people are all pulling in diff erent direc-tions based on their constituency, and this is something we should do better on.”

Better cooperation would no doubt lead to

AVIATION SECURITY 123AVIATION SECURITY 123


INTERNATIONAL FOCUS124

peninsular of Bahrain Bay, a $2.5 billion master-planned, mixed-use, super development projected to serve as one of Bahrain’s forefront residential and commercial communi-ties. Cited as a paramount factor in the country’s Econom-ic Vision 2030 development plan, Bahrain Bay is estimated to play host to around 30,000 residents and workers upon completion. In addition to providing the premium accom-modation popular in the country, Bahrain Bay will include prime corporate buildings, commercial and retail space, as well as a comprehensive infrastructure to support all the construction and communities within the project.

As a development, its sheer size and budget echo the extravagant mega-projects that pushed neighboring UAE onto the world stage over the last decade, but more impor-

It’s fair to say that Bahrain is having a moment. While perhaps not enjoying the same booming success as neighboring Qatar, the GCC’s smallest nation is fl ourishing in the recovery, playing on its reputation as the ‘gateway to the Gulf ’ in order to develop its tiny oil and fi nance dependent economy into a diverse and sustainable country with booming

sectors in business, tourism and infrastructure. Large-scale mega-projects are shooting up across the country, providing attractive business and residential stations for international investors looking to tap the region’s emerg-ing economies.

Among them, reaching out into the crystalline seas of the Persian Gulf north of Manama, lies the reclaimed

A landmark mega-project on the north coast, Bahrain Bay is setting the standard for development in the Gulf’s smallest nation. US Infrastructure speaks to CEO Bob Vincent to fi nd out how the project is set to boost Bahrain’s economy, and how it managed to survive the crash in the Middle East’s property market.

Bay of plenty

BahrainBay.indd 124BahrainBay.indd 124 29/09/2010 14:5129/09/2010 14:51

INTERNATIONAL FOCUS 125

such as this is in itself no mean feat considering the scale of the project, the number of third parties involved and of course the economic maelstrom that brought a signifi cant proportion of the GCC’s booming construction sector to a grinding halt. Bahrain Bay is made up of more than 40 buildings, with each individual project taking up to two years to plan and design, and costing anywhere from $100 million to $700 million. With this in mind, the chance of a default somewhere along the line is not unlikely. And indeed, a number of Bahrain Bay’s project did slow down considerably when the market crashed in 2008. Still, the development remains on track and has managed to keep all of its third party investors on board, facts that are down to a fl exible business strategy and a little bit of luck, as Vin-cent explains.

“We are very fortunate in terms of the timing for the civil contract for the main infrastructure of the site,” he says, “because it was locked in prior to the fi nancial down-turn and provided a forward projection of works for a two and a half year period, which we are still completing.”

Th e nature of that contract allowed works to continue on the project, and all of the utilities and services found within it that are necessary for a development of that size. Similarly, Vincent reveals, the contracts with the third party investors and developers required a certain level of upfront payment for the land in Bahrain Bay, and a subse-quent program for ongoing payments. “Th at’s been very fortunate for us because we’ve locked in a commitment of a signifi cant portion of the project in terms of the fi nancial returns,” he explains. “It’s also been signifi cant because it’s allowed us to negotiate fairly and openly with our third party developers to keep their programs on track. By that I mean we have been willing over the last 12 to 24 months, during the fi nancially diffi cult period, to show fl exibility with the third party developers in terms of their payment because we’ve had signifi cant funds already collected.

“By providing that fl exibility we’ve enabled them to revise their plans in terms of the program and the design intent and the product within the project, and we’ve al-lowed them some opportunities to revisit the program in terms of construction start dates for their developments.”

Th is approach is now paying dividends as the develop-ment begins to mature and the market moves into recovery. Stabilizing revenue collections, as well as development of the civil works and infrastructure, have left Bahrain Bay in a comfortable position to off er its third party develop-ers the opportunity to commence their programs in a time frame that best suits their business plans – and has there-fore been able to keep every one of its developers on board with the project.

“We have progressed signifi cantly with the majority of our 13 co-investors or third party developers for the proj-ect,” says Vincent, “and all of them are progressing with their development program design submissions. We have approvals for seven of the 13 developers for their schematic designs and we have building permits for four of the third party developers, two of which have already started con-struction onsite.”

tantly, in its tiny 1.5 million populous country, Bahrain Bay is set to stimulate signifi cant yet sustainable economic growth. Already the project has welcomed anchor develop-ments from Arcapita investment bank, which has chosen the site for its new corporate headquarters; global hotel brand Four Seasons; and luxury residential accommoda-tion Raffl es City Bahrain, as well as investment from high profi le companies across the world.

“Th e project is still on program and on budget,” ex-plains Bob Vincent, CEO of Bahrain Bay, speaking back in June. Following the initial conception and master-planning of the idea in 2005, the project began to take form in 2006, beginning with the 430,000 square meter land reclamation process. To stay on track with a development

“It’s much more important for us in terms of the long-term to demonstrate that we do have the holding power and the fl exibility to give surety to these investors that they will be successful in the long term”



ally made it an attractive destination for western businesses looking to establish operations in the region. Over the last decade or two however, the advancing economy and fl ourishing property sector in the UAE, and in Dubai in particular, have made it an attractive prospect in the region, usurping Bahrain’s popularity. Still, today the stability of Bahrain’s economy is beginning to regenerate interest in the country, and the Economic Vision 2030 aims to turn that spark of interest into a fully-fl edged fi rework, capturing for-eign investment back into Bahrain – a goal that the Bahrain Bay is paving the way to achieve.

Vincent reveals that a signifi cant proportion of invest-ment for the development has come from overseas. “We wanted to ensure that the third party developers who came into the project had the fi nancial experience and the devel-opment experience to deliver on their projects,” he high-lights, “and to add value to Bahrain Bay and to Bahrain’s economy in general. We specifi cally went out and tried to attract international investors in Asia, in Europe, in India and in the broader region of the Gulf in particular.” Th is was a successful venture; the targeted approach from Vin-cent and his team resulted in attracting signifi cant invest-ment from India, Europe and within the GCC, as well as Bahrain’s own major developers. And this was all part of the long term strategy to establish Bahrain as a major player on the world stage.

“We feel that by bringing that diversity of investors into the project we’ve been able to fi rst of all demonstrate that there is an interest in investing into Bahrain,” off ers Vin-cent. “We’ve been able to demonstrate that these investors are knowledgeable and capable and are prepared to commit to a market that is in some respects new, but also where they see tremendous expansion opportunities within the Gulf region. Th ey’ve done that in the context of knowing that Bahrain Bay is not a short-term development.”

Vincent is fi rm in reiterating the merits of Bahrain as a business destination in the Gulf region. “While [it] may be a smaller economy than some of its surrounding neighbors,” he says, “it’s able to focus on making the initial investments from these overseas entities successful and in doing so providing further opportunity for the incoming investor – not only in Bahrain, but more importantly in the Gulf region.

“Irrespective of the diffi culties of the fi nancial market, Bahrain has continued to take that role and has continued to push forward to make sure that it’s seen as a valid way of going about introducing investment into the Gulf.”

Bumpy roadOf course developing a project such as this is not going

to be plain sailing, a fact that Vincent is well aware of. “Th ere are a series of signifi cant risks in any major develop-ment,” he points out. “Th e initial risks are in undertaking the market assessment of whether or not a development of this scale is viable and sustainable and will be commercially successful; that risk was assessed in 2005.”

Indeed, that risk was assessed when the MENA prop-erty market was booming and the future for such devel-

New beginningsWhile Bahrain Bay is very much a cutting edge and

stylish mega-project for the country, it is still intended to maintain Manama’s character, as well as provide a boost to the country’s economic growth. Closely linked with old downtown Manama, both geographically and in design terms, Vincent describes the Bay as revitalizing the coun-try’s capital, situated “in a prime corridor of development”.

“Th e corridor of new development is seen as the future expansion of economic development within the kingdom,” explains Vincent. “As an important part of that corridor, Bahrain Bay’s objective was to ensure that we were sustain-able and that we brought investors into the project that had the ability to perform.”

Indeed, Bahrain has long been seen as a gateway to the Gulf region; its relatively liberal culture has tradition-

Last October, the Bahrain Bay

project reached

5 MILLION accident free

man hours

At a glance: Bahrain Bay

Start date: Masterplan 2005, construction 2006

Target completion date: 5-7 years (Phased completion)

Total fl oor area: 1.450 million square meters

Total land area: 450,000 square meters

Total number of buildings: 40

Anchor developments: Arcapita Bank HeadquartersRaffl es City BahrainFour Seasons Hotel

International investors: Al Baraka Banking GroupAjmera Mayfair GroupArjaan RotanaCoopertation Investment HouseDAMACKanoo TowerKhaleejCapitaKoheejiSalhia Real Estate Company


INTERNATIONAL FOCUS 127

opments across the region looked bright; but in 2008, the economic downturn hit, bringing the sector to its knees.

“I think initially the Middle East in general and Bah-rain in particular was not as immediately eff ected as Europe and North America,” off ers Vincent, “but it very quickly got caught up in the outcomes of overleveraging, cheap debt and rapid overinvestment in real estate and infrastructure.” Still, Bahrain’s relatively diminutive size meant the reces-sion had a less crippling impact upon the economy, and with his contracts already tied up, Vincent has been able to remain pragmatic about the situation. “We’re having to face – as all real estate projects have had to face over the last two years – a reality check in terms of what the invest-ment criteria might be, what the lending criteria might be and what the market absorption has projected to be in the start-up phases of the project. Th at’s a major commercial issue we’ve had to manage, but as I said, we’ve been able to manage it because we have a very stable, well funded project with no debt and with signifi cant revenue already collected to support the project going forward.”

Indeed, Vincent is positive about operating in Bah-rain, adding that the size of the economic market in Bah-rain has allowed the value of property under construction to remain stable, as the country has not seen the level of overbuilding that has occurred in a number of other coun-tries in the region.

Following the market assessment, the next major chal-lenge posed by a project of this size is the planning approval, which Vincent explains is becoming increasingly diffi cult over time as expectations from government and planning authorities become more demanding. Ensuring that the best practices are being introduced, that environmental and sustainability issues are being addressed, and social equity contributions are being addressed are all factors that, Vincent says, became critical to the success of the master plan and also to securing sales for the project. However, he continues, “it’s also been fair to say that the government has enthusiastically examined what large master plan develop-ments are and how they can benefi t the economy.

“We’ve been a fore runner of major master planning in Bahrain and we’ve demonstrated good practice, and the government is being supportive of that.”

Looking to the future, Vincent upholds the same down-to-earth attitude. Well versed in the real estate sector, he knows that what goes up must come down, and then inevitably go back up again. “Th ere’s no doubt that lend-ers, developers, purchasers are more cautious, but that’s a normal part of a real estate cycle,” he explains. “Real estate works on cycles of fi ve to seven years. Bahrain is no diff erent to anywhere else in the world in this respect.” He is positive that, as the market moves into recovery, sales of units on the development will continue to fl ow, although emerging from the downturn it may well be slow and steady that wins the race. His ambitious claim that $70 million worth of sales would be tied up by March did not materialize, and he is prudent in his belief that the next year is likely to throw up as many challenges as it does opportunities. Still, with con-tracted sales completed on 65 percent of the land so far and

Bahrain’s development landscapeDurrat Al BahrainAt the opposite end of the country to the Bay, the Durrat Al Bahrain is a multi-purpose island development not dissimilar to it’s northern counterpart. The project will consist of luxury beach-front residential accommodation, offi ce and retail space, premium hotels and a marina.Status: Under constructionCompletion: 2015Cost: $6 billion

Water Garden CityA commercial district within convenient proximity of Manama and the country’s transport hubs, including Bahrain International Airport. The project consists of high quality offi ce space, residential tower blocks and hotels, and the marina area aims to provide a platform for Bahrain’s cultural water-related festivities and events. Status: Under constructionCompletion: 2020Cost: $7 billion

Marsa Al Seef DevelopmentA waterfront project that is set to cover an area of approximately 2.6 million square meters, the Marsa Al Seef will be another luxurious mega-development to add to Bahrain’s portfolio.Status: DesignCompletion: 2020Cost: $2.5 billion

Bahrain Monorail – Green LineThe initial part of the massive $7.9 billion public transport network that will grow across Bahrain over the next 20 years, the Green Line of the Monorail is a 23 kilometer long section linking Juffair with the Seef district through Manama. Designed to ease traffi c and ultimately boost the economy by attracting more foreign investment into the country, the network will, when completed, include monorail, a light rail link and bus rapid transport system, covering a total of 184.2 kilometers.Status: Tender for consultancy contractCompletion: 2016 (Full network completed 2030)Cost: $1 billion (Total network cost $7.9 billion)

e

-ett

andscape



no debts to speak of, he can aff ord some confi dence in the way Bahrain Bay has operated, and its position as it moves towards completion.

“Th ere’s no point in forcing developers into situations where they fail. It’s much more important for us in terms of the long-term outcomes for the project, and for Bahrain in general, to demonstrate that we do have the holding power and the fl exibility in our management and development of the overall project to give surety to these investors that they will be successful in the long term.

“We as a development company were at no time in any danger of not proceeding or having any hold up on the proj-ect. We have returned signifi cant revenues on the project … and we’re in a position where we can work with our third party developers to ensure that when they do start they will be successful as well.”

Green BahrainBahrain currently has an energy consumption rate 10 times higher than that of Japan, a fact that the government is looking to turn around as part of the Economic Vision 2030. “Sustainability issues are at the forefront of good urban design and development,” says Bob Vincent. “We have addressed those sorts of issues preliminarily by having our environmental criteria properly assessed by the government, in relation to the possible impacts of reclamation, circulation and water quality assurance.”

In addition to this, the master-plan guidelines for the development indicate that all buildings should be at LEED gold certifi cation standard. In addition the utilities and services within the site have been designed such that all grey and wastewater within the project is recycled and reused for district cooling or for landscaping in the development.

“We are participating with the Bahrain government in instituting new building guidelines for energy effi cient buildings,” adds Vincent. “That legislation is currently being drafted; the guidelines are being examined in consultation with overseas experts and we will participate wherever possible to ensure those guidelines are adopted by our third party developers.

“It is a very important emerging fi eld and I think it’s fair to say that the developers within the real estate community in Bahrain are starting to understand the signifi cance and cost savings associated with green energy and will fully embrace these as they move forward in consultation with government.”


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SAFETY130

Th ere is no question that there were problems. What is worrying, how-ever, is that these mistakes were made by what is considered as being the “royalty” of the industry: BP is the largest operator in the Gulf, Transocean the biggest rig operator. Whoever is to blame there is no doubt that some-thing needs to change.

Aft er the Gulf disaster, executives from other companies around the world have argued that the accident was preventable and that in fact their own safety systems were robust enough to need no signifi cant reform. Chevron Chairman and Chief Executive John Watson for example, testi-fi ed before US Congress that aft er the BP incident he ordered a complete review of the off shore operations across Chevron and found operations “Are safe and environmentally sound”.

At Shell, spokesman Jaryl Strong explains that management at the or-ganization is reviewing information from the investigation of the incident and plans to incorporate relevant insights and learnings into its guidelines and standards. “Shell will also participate in any industry committees or task forces resulting from this incident that look to form recommendations on improvements or precautions that will help prevent such an incident from occurring again in the future.”

Around the rest of the world, the oil industry has seen the same pat-tern. In the UK, the government revealed that it has conducted an initial review showing the regulatory system to be robust and is set to double in-spection in order to ensure compliance when the deepest well ever drilled in the country’s water comes online.

But while the US ordered a deepwater drilling moratorium, other coun-tries have not followed suit, including Greenland, Norway, Canada, Libya, China, Brazil and Angola. And Australia, for example, despite suff ering it’s

130

SAFETY FIRSTHundreds of drilling incidents happen every year, yet most go unreported, despite the fact that the cumulative effect of these events has the potential for a devastating impact on human life. US Infrastructure takes at look at the importance of offshore health and safety.

Back in July 1988, when condensed gas aboard the Piper Alpha oil platform in the North Sea ignited and exploded, it ultimately re-sulting in the deaths of 167 people, remaining the world’s worst off shore oil rig accident in terms of lives lost.

Since then there has been a dramatic overhaul in health and safety aboard rigs and platforms across the world, yet the threat to workers – and the environment – continues. Th e dangers highlighted by the Deepwater Horizon oil spill and more recently, the explosion on a Mariner Energy, Inc. rig 100 miles south of Louisiana’s Vermilion Bay, serve as a stark re-minder of the dangers of the off shore drilling industry.

And statistics show that while off shore oil facilities have improved health and safety facilities, it remains one of the most hazardous occupa-tions, along with construction, logging, fi shing and agriculture. According to the Occupational Safety and Health Administration, 4340 workers across all industries died on the job in 2009.

According to the US Minerals Management Service (MMS), 858 fi res and explosions have broken out on oil and gas industry facilities in the Gulf of Mexico alone since 2001, killing more than 55 workers. And as the exploration and production industry pushes further into challenging loca-tions, health and safety needs to stay at the top of the agenda.

Th e subsequent report on the Deepwater Horizon incident has opened up the usually secretive oil and gas industry to the public, which means it can no longer hide under the mantra that “safety always comes fi rst”. BP and Transocean, the rig operator, are currently playing a blame game where each refuses to admit they were totally at fault in the incident, with human judgements, engineering design and operational implementation all apparently at fault.

Offshore safety article.indd 130Offshore safety article.indd 130 29/09/2010 14:1329/09/2010 14:13

SAFETY 131

own major blow-out and spill recently, did nothing. Martin Ferguson, the country’s Resources Minister said: “Shutting down the industry and putting the nation’s energy security, jobs and economy at risk, does nothing.”

And so it seems that the US – which has resisted tougher rules on safety for years – has a number of big changes in store for the industry. An idea for a second emergency relief well drilled for every deep off shore well – like one that was drilled by BP in the wake of the disaster, just in case of a blow out – has been hailed as a waste of time. Oil giant chief Rex Tillerson said in response to the idea: “I would say you just doubled your risk.”

But while this idea remains out, companies are aware that they will in fact be required to submit more comprehensive and rigorous rules regard-ing off shore drilling in the US – including the provision of more thorough and in-depth information of their drilling programs, the way the project will be developed and how they plan to minimize a blow out – which bears more than a passing resemblance to the regulations imposed aft er the Piper Alpha explosion back in 1988. At the time the US dismissed the idea aft er being heavily lobbied by various oil companies, but this recent turn around just shows that safety should always come fi rst.

CandaThe National Energy board has launched a review of Arctic safety and environments, to inform decisions about future applications for permits. The review will look at safety regulations and spill response

USA National Commission backed by the president is investigating the disaster, and about 40 bills affecting offshore oil drilling have been circulated. A moratorium on deep-water drilling remains in force

Brazil“It is very important to complete a deeply technical investigation before deciding on regulatory changes... we only have a preliminary vision”ANP, The National Oil Regulator

Australia“Shutting down the industry and putting the nation’s energy sercurity, jobs and the economy at risk dose nothing to ensure safe oil exploration”Martin Ferguson, Resources Minister

European Union“Given the current circumstances, any responsible government would at present practically freeze new permits for drilling with extreme parameters and conditions”Gunther Oettinger, Energy Commissioner

Norway“It is not appropriate for me to allow drilling in any new licences in deep-water areas untill we have good knowledge of what has happened [with]the Deepwater Horizon”Terje Riis-Johansen, Energy Minister

UKThe government has increased environmental inspections and has asked a new oil industry group to report on the UK’s ability to prevnt and respond to oil spills

OIL INDUSTRY SAFETY: THE RESPONSE TO BP’S SPILL

Offshore safety article.indd 131Offshore safety article.indd 131 29/09/2010 14:1329/09/2010 14:13


HEADING 12


Portugal.indd 134Portugal.indd 134 30/09/2010 13:4130/09/2010 13:41

NO DATA

COUNTRY FOCUS 135

a base of fossil fuels to be fi red up at will, Portugal is building highly effi cient natural gas plants.

Such a drastic reorganization of power supply may prove much more diffi cult which is why here in the US where individual states decide whether to promote renewable energy and power companies hold strong political sway. Colorado for instance, recently legislated that 30 percent of its energy must come from renewable sources by 2020, but neighboring Utah has weak voluntary goals and coal states like Kentucky and West Virginia have few policies to encourage alternative energy.

And if we are to catch up to countries like Portugal, we need to overcome obstacles such as a fragmented and outdated energy grid poorly suited to renewable energy; a historic reliance on plentiful and cheap supplies of fossil fuels like coal; powerful oil and coal industries that often oppose incentives for renewable development; and energy policy that is heavily infl uenced by individual states.

The relative costs of an energy transition would undoubtedly be higher in the US than Portugal, but, says Alex Klein, Research Director of Clean and Renewable Power Generation at IHS Emerging Energy Research, as the expense of renewable power drops, an

“Portugal expects to become the fi rst country to inaugurate a national network of charging stations for electric cars”Land-based wind power has

expanded sevenfold in the last fi ve years

increasing number of countries could see such a shift as worthwhile. “The cost gap will close in the next decade, but what you get right away is an energy supply that is domestically controlled and safer,” he says.

Last year, President Obama offered billions of dollars in grants to modernize the energy grid in the US, but it is not clear that such a half-hearted effort will rejuvenate the renewable energy sector, particularly with the various procedures in different states. The American Society of Civil engineers gave the US grid a D+, stating that it is “in urgent need of modernization”.

John Juech, VP for Policy Analysis at Garten Rothkopf adds: “A real smart national grid would radically change our technology profi le. But it will be very costly, and the political will may not be there.”

Indeed a 2009 report commissioned by the Pew Center estimates that the US would need to spend $3 billion to $4 billion a year for the next two decades to create a grid that could accommodate a potential 20 percent of electricity through wind power by 2030, which is a 40-50 percent increase over current spending.

Portugal is currently on track to reach its goal of using domestically produced renewable energy, including large-scale hydropower, for 60 percent of its electricity and 31 percent of its total energy needs by 2020. Will the US follow suit? A recent report by IHS, thinks not, predicting that by 2025, Portugal, Ireland, Denmark and the UK will get 40 percent or more of their electricity from renewable sources, while the US will lag behind at 16 percent. A poor effort, but a prediction that may not come true if some of the nation’s green energy supporters have their way.

CANADA3.3

U.S.3.3

BRAZIL7.9

Portugal21.6

Denmark28.7

Iceland29.8

INDIA3.6

RUSSIA0.7

CHINA3.1

AUSTRALIA2.8

NO DATA 0 5 10 20 30% of powerShare of power fueled by renewable energy other than large hydropower, 2009

Portugal.indd 135Portugal.indd 135 29/09/2010 14:1329/09/2010 14:13

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Details.Travel36 hours in Los Angelesp138

AgendaOur pick of the councry’s top eventsp140

GadgetsA look into the executive toyboxp142

BooksThe best business reads of Q4

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Travel | Gadgets | Books | Leisure | Money

California dreamingAn insider’s guide to LA’s hotspots

Back Section.indd 137Back Section.indd 137 29/09/2010 14:0629/09/2010 14:06

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36 hours in... Los Angeles

EatCa’Brea is a charming restaurant known for Italian food that looks as good as it tastes. The starters, bread, risottos and pasta dishes, such as homemade agnolotti stuffed with veal and prosciutto in a mushroom sauce, are particularly recommended. A great spot, with lots of wonderful-looking carved wood, polished granite, high ceilings and sand-blasted glass. Popular with young lawyers and fi lm industry people, the restaurant gets very crowded in the evening, so reservations are essential.

Housed in a remarkable building, commissioned in 1928 by Charlie Chaplin, Campanile is composed of elegant dining rooms and an atrium courtyard, central to the sky-lit room. The menu is modern Mediterranean with robust fl avors, such as beet with pomegranate and cod with eggplant puree. A superb place to do business or relax with attentive, yet unhurried service and delicious food.

Saddle Peak Lodge is a real hunting lodge, high in the hills above Malibu, a fantastic place to escape the madness of LA. Think real wood, fi replaces and no cell phone reception, with plenty of game on the menu along with seafood. All in all a unique menu, attentive service and cozy atmosphere.

In the knowThe second largest city in the US after New York, Los Angeles, often called by its initials or nickname of the City of Angels, is a world center of business, international trade, entertainment, culture, media and technology. Sprawling along the pacifi c coast of Southern California, its coastline stretches 122 kilometers from Malibu to Long Beach. Los Angeles is also the largest manufacturing center in the western US and the contiguous ports of LA and Long Beach together comprise the fi fth busiest port in the world.

LA is often billed as the Creative Capital of the World, due to the fact that one in every six of its residents works in a creative industry. And according to the USC Stevens Institute for Innovation, “There are more artists, writers, fi lmmakers, actors, dancers and musicians living and working in Los Angeles than any other city at any time in the history of civilization.”

Time: PST (UTC-8) | Population: 3.8 million (city) | Area: 498 square miles | Elevation: 77 yards

LA-headquartered fi rms

AECOMCapital GroupCB Richard EllisDeviantArtDunn & CrutcherFox Sports NetGuess?Health NetNorthrop GrummanOccidental PetroleumParamount PicturesPremier AmericaSunkist GrowersTutor Perini

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TRAVEL 139

SleepThe Beverly Hills Hotel is pure old-style Hollywood glamour. Behind the famous façade lies the star-studded haven, and following a $100 million restoration a few years back, the hotel’s grand lobby and impeccably landscaped grounds retain their over-the-top glory, while lavish guest rooms boast every luxury.

Petit Ermitage is a quaint boutique hotel located right in the center of West Hollywood with fantastic views and great rooms. Nestled on a quiet street, eclectic European antiques grace every space in the hotel and details include custom-crafted mattresses, 618-count sheets, water works fi xtures, in-suite fi replaces with handcrafted mantels and hand-woven Turkish carpets. While it’s budget friendly, the Petit Ermitage is not a budget experience.

DrinkLA offers a mix of live bands, cabaret, jazz, rock and blues as well as being home to some of the most vibrant comedy clubs in the US. Sunset Boulevard still boasts some of the most famous clubs, but other good spots are Santa Monica, Hollywood and West Hollywood, Pine Avenue in Long Beach and Pasadena’s Old Town.

Some of the fi nest views of LA are found at Skybar, an open air, ivy-covered pavilion perched between the Pool and Outdoor Living Room at the Mondrian Hotel in West Hollywood.

Time off If you like to work out in your down time then the best place to head is Runyon Canyon Park. The 134-acre park’s main drag snakes along the canyon fl oor, gradually ascending to the scenic point called Cloud’s Rest. Fitness buffs can choose to proceed downward via a steep dirt fi re trail while the rest of us can retrace the path for a gradual, paved return to the bottom.

You have to head to the beach during your stay, and like everything else in LA, there’s one to suit everyone: Zuma beach in Malibu is typical LA with hot mums and surfer dudes; Venice beach is great for people-watching and Manhattan beach is the home of beach volleyball and a great place for a walk.

If you are into shopping, Third Street Promenade is an outdoor mall just three blocks from the beach, and just as good is The Grove in the Fairfax District. The Grove’s trolley travels the one block between the mall and the amazing Farmer’s Market where every single booth sells delicious food.

LA is the second largest city in the US

LA was founded on September 4, 1781, by Spanish governor Felipe de Neve

LA has hosted the 1932 and 1984 Summer Olympics

LA enjoys a subtropical climate, with an average of 35 days of precipitation annually


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Coming up…

Oct. 24Coarsegold Tarantula Awareness FestivalThe annual Coarsegold Tarantula Festival is a favorite event among locals and visitors alike, as they take part in numerous events all honoring this eight-legged denizen of the region. Numerous events take place as part of the festival, from a cheesecake contest, to a hairiest leg contest. The highlight, however, is the Tarantula races, which consist of heats of 10 tarantulas making their way through a dryer tube, with a handler at each end.

Oct. 2-10Albuquerque International Balloon FiestaThe Albuquerque International Balloon Fiesta is a yearly event that takes place during early October. A nine-day event with around 750 balloons, this is the largest hot air balloon festival in the world. On any given day during the festival, up to 100,000 spectators may be on the launch fi eld, where they are provided the rare opportunity to observe infl ation and take-off procedures. Countless more people gather at landing sites all over the city to watch incoming balloons.

Nov. 6Ironman FloridaSince it began as a challenge between a group of Navy Seals, the Ironman has grown to become one of the most recognized endurance events in the world. Originally a combination of the Waikiki Rough Water swim, the Around Oahu Bike Race and the Honolulu Marathon, the Ironman consists of a 2.4-mile swim, a 112-mile bike ride and a 26.2-mile run.


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Nov. 25Macy’s Thanksgiving Day ParadeAn annual Thanksgiving Day Parade presented by Macy’s, the tradition started in 1924. The parade is held in New York City starting at 9am EST on Thanksgiving Day. In addition to the well-known balloons and fl oats, the parade also features live music and other performances, such as those from college and high school marching bands from across the country. More than 44 million people watch the parade on television each year.

Nov. 07New York City MarathonOne of the largest marathons in the world, the New York City Marathon had over 43,000 fi nishers in 2009. The race attracts many world-class professional athletes, not only for the $600,000 in prize money, but also for the chance to run the race before two million cheering spectators and 315 million worldwide television viewers.

Dec. 2-11National Finals RodeoOrganized by the Professional Rodeo Cowboys Association, the National Finals Rodeo, held at the Thomas & Mack Center at the University of Nevada in Las Vegas, is the grand fi nale of the modern professional rodeo circuit. It has been held in Las Vegas since 1984. Known as the Super Bowl of Rodeo, this 10-day event puts the talents of the nation’s top 15 money-winners to the test as they compete for championship titles.


Technology for today’s executive

Sony DR-GA500 gaming headphonesSony has offi cially unleashed their brand new gaming headphones, with 7.1ch 3D surround sound effects. With a separate signal-processing unit, which decodes and delivers Dolby Pro Logic llx audio, Sony has also ensured that the headphones themselves are created with ‘triple enfold-ing’ padding, so they’ll sit on your ears for hours without the least bit of irritation. While they’re primarily designed for gaming, they’ll also be great for watching movies or listening to music too, and the built in mic will be handy for Skype conversations or other VoIP services.

Sanyo Xacti VPC-PD2Sanyo have fi nally delivered what we’ve all been waiting for: a high-def pocket camcorder with optical zoom lens. The VPc-PD2 offers a 3X optical zoom lens that ranges from 38mm wide angle to a 114mm telephoto, along with stereo microphones on the sides of the camera. The price fi ts the rest of the market at only $170 and it measures a slinky 2.48 x 0.87 x 4.36, weighing 3.7 ounces – that’s positively pocketable. Good work Sanyo.

Polaroid 300 Instant CameraAfter being dropped for a few years, Polaroid instant cameras have been rejuvenated by a new creative director, Lady Gaga, and a new fl agship instant snapper in the shape of a Polaroid 300 Instant Camera. While pretty chunky, the Polaroid 300 is also surprisingly lightweight. An instant fl ash is now built in and there are four scene-settings to get the most out of the straight-to-shot prints.

Apple 12-core Mac ProPacking a punch, the 12-core Mac pro desktop beast is now available from Apple, with prices starting at a whopping $4999. But for that price tag you get a lot of machine. Entry models feature two 2.66GHz six-core Intel Xeon Westmere processors, a 1TB hard drive and 6GB of RAM with an ATI Radeon HD 5770 in charge of graphics duties. Splash the cash further and the 12-core Mac Pro offers even more.

GADGETS142


BOOK REVIEWS 143

Change: Bring it on!By Keely Nugent

Change is a tricky concept in business. It invariably happens and yet somehow, when it does, we are often reluctant to get on board. Author and strategic thinker, Keely Nugent, has recognized the same resistance to change in international racing horses and in her book she applies the tried and tested techniques of the equestrian world to business. Using a fi ctional company as an example, Change: Bring it on! clearly and concisely explains how to establish a winning team by managing change and the challenges it brings.

US Infrastructure says: Simplicity is key with this book, broken down into sections of no more than two pages, it’s manageable even for the busiest among us. A light and refreshing read while still insightful.

Seven Keys to Imagination: Creating the Future by Imagining the Unthinkable and Delivering itBy Piero Morosini

Morosini’s book examines the power of the imagination as taught throughout history, and how that can be applied to generate a successful future. An intelligent and complex book, Seven Keys to Imagination unravels the various elements of an innovative and creative mind, and applies them to real world, industry-leading examples. This book offers an alternative way of thinking about how to develop your own future, however the parallels that Morosini draws between magic and business become somewhat gratuitous and irksome.

US Infrastructure says: Lengthy and dense and most likely futile to anyone who currently holds a creative position. However those who do not consider themselves natural innovators would benefi t from this book’s insight.

Employees First, Customers Second: Turning Conventional Management Upside DownBy Vineet Nayar

In this book, Nayar argues that the best way for companies to meet their customers’

needs is to stop making customers their top priority and instead shift focus to empowering employees to solve customer problems, by making management accountable to employees who are the real creators of value. Only by turning the organization upside down will companies be able to unleash their employees’ creativity, energy and passion.

US Infrastructure says: An honest and practical account, Employees First, Customers Second, offers valuable insights for managers seeking to realize their aspirations to grow faster and become self-propelled engines of change.

Good Boss, Bad Boss: How to be the Best…and Learn from the WorstBy Robert I. Sutton

Good Boss, Bad Boss was inspired by the thousands of emails, calls and conversations that Robert Sutton received after

publishing his bestseller The No Asshole Rule. Sutton’s subsequent research showed that the success of every boss depended heavily on how well (or badly) they managed those they worked with and in Good Boss, Bad Boss he demonstrates this by weaving together the best psychological and management secrets with true stories, to reveal the mindset and moves of the best bosses, and contrasts them with the behavior of the worst.

12 Steps to Power Presence: How to Assert Your Authority to LeadBy John Baldoni

Philosophers and management theorists have endlessly debated the single most important quality a real leader should posses. Enter John Baldoni’s 12 Steps. Over 68 pages, Baldoni claims that leadership presence is a form of communication that can be learned, and then provides the hows and whys of learning it. Along the way he adds some provocative comments on the importance of ethical actions in tough times, as well as good, including why merely thinking good thoughts and voicing good intentions is never enough.

US Infrastructure says: A succinct guide, punctuated with real-life examples, this book is a good and easy read for new leaders or managers who are looking to visit the fundamentals of leadership.

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US Infrastructure says: If you want to learn how the best bosses think and act, read this book. An interesting look at how to become a better boss to work for.


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With global warming and the idea of more effi cient, carbon-friendly buildings beginning to ingrain themselves into our psyche, a three-vaulted prototype that has been in development since the mid-1980s is seemingly spearheading the move to next generation ‘green’ housing – so much so, that NASA scientists are considering using the design on the moon and Mars.

Deriving from a pattern of three offset vaults, the system can be combined with domes and apses, or repeated back-to-back to form a variety of effi ciently planned house designs. But it’s more than just cutting-edge architecture and interior design. The three-vaulted house has been tested and approved to withstand California’s severe earthquake codes and natural elements – specifi cally important as it stands slap-bang in the middle of the Mojave Desert. Combine that with the universality of the materials used and the simplicity of the design, and it’s no wonder that NASA believes this ‘future pod’ looks attractive for the “in-situ utilization of planetary resources”.




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