Recently, I was talking with an information technology/telecom engineer who was excited about smart phone apps being developed for home automation. From his perspective, smart grid technology is all about the last 50 feet or so between meters and appliances, solar panels and electric vehicles. But experts working in the smart grid trenches know better: The critical challenge is having the right networks on the utility side of the meter.
Without the right communications platform, a utility's smart grid deployment could create a financial sinkhole and plenty of buyer's remorse.
The Challenge
Electric utilities generally avoid being the first to try new technologies, except maybe as pilots. However, communications strategies fall squarely on individual utilities rather than industry consensus, because no single approach applies to all utilities. Local constraints and issues such as existing communications infrastructure, customer mix and density, geography and even regulatory climate will affect technology selection.
Individual utilities will need to answer some tough questions: How many networks are required? Should networking be public, private or both? How can system obsolescence be avoided? How can cost recovery be managed?
Decision Crunch Time
Smart grid development is tracking the familiar S-curve most technology evolutions follow: start slow, gather interest, accelerate the investment, increase the number of participants and innovation, and then flatten out when mature.
The foot of the curve consisted of several decades of pre-smart grid activities, such as utility communications architecture, smart substation projects, direct demand management and distributed generation studies. Then, in 2009, US$8 billion of combined federal and industry smart grid funding became available and launched the next stage of the S-curve, the risky phase of accelerating investment and commitment where the burden of leadership falls squarely on utility decision makers and regulators.
Do Not Lose This Opportunity
If utilities let up on the momentum now, paralyzed by which communications technologies to choose, smart grid could go the way of many past utility initiatives and end up as pilot studies and a set of binders or disks on cubical shelves.
Conversely, overly hasty decisions in choosing network solutions could result in stranded assets and unsupported technologies. These results could not only damage a utility's technical credibility, but the utility could face financial penalties, because ratepayers are less willing to support capital projects that do not have obvious and immediate consumer benefits. And regulators and city councils are listening. In the last year, the industry has seen pushback or even downright rejection of several smart grid-related metering deployments.
Utility decision makers are understandably uncomfortable with being rushed to make risky decisions — state and local regulation make it very difficult to correct any mistakes in judgment. Also, the industry is used to slow dancing to the beat of multi-year rate cases and technology decision cycles. Now, it must seem to utilities they are being pushed onto the dance floor of a technology sock hop.
Utility-Telecom Partnerships
Smart grid deployments offer new, potentially lucrative utility markets to the telecom industry. It is a good time for telecommunications companies to form tight relationships with an industry on the ascent with strong government regulatory and financial support.
Most utilities need some use of public networks for smart grid deployment — at least for data backhaul.
Some telecommunications companies may even choose to lease the majority of required smart grid communications services. More importantly, utilities benefit from a partnership with telecoms by being plugged into the latest technology and business developments, resulting from the “refiner's fire” of competitive pressure within the telecom industry.
True, there is a culture mismatch between utilities and the overall telecom industry, particularly in the speed of decision-making and technology cycles. We have seen recent dustups between the two industries. Several major telecom providers have been outspoken about utilities not being capable of running a private smart grid network, with one even publicly stating that those who create proprietary networks are “the scourge of the industry!” In response, utilities have pointed out that private utility networks were the only means of communication in much of the area hit by Hurricane Katrina. The public networks were knocked out.
Regardless of public sparring, more utility-telecom partnerships are expected, so the two industries will just have to play nicely. This is where the many smaller utility-oriented telecoms can play the role of mediator between the two industries.
The Payoff
Choosing the right smart grid communications platform presents plenty of challenges for an industry that traditionally resists change. But if the utility industry does this right, utilities can construct an energy delivery and management system the industry only dreamed of 20 years ago.
Paul Mauldin is the editor of SmartEnergyPortal.Net. He earned his BSEE and MSEE degrees from the University of California-Berkeley and is a registered professional engineer. He has worked in the energy industry for more than 25 years, developing and implementing advanced energy technologies. As research director for Pacific Gas and Electric Co., he pioneered methodologies used in the design, maintenance and control of energy delivery systems. As a consultant, he has provided guidance to utilities and the vendor community, nationally and internationally.
