As of June 2011, more than 5 million smart meters had been installed in the United States as part of federal stimulus-funded efforts to accelerate modernization of the nation's electric grid. Today, according to the Department of Energy, every cent of the US$813 million in federal stimulus funds dedicated to advanced metering infrastructure (AMI) has been spent on — or has been committed to — smart meter installations.
Couple that with highly publicized consumer resistance to those same smart meters in California and elsewhere, and it is not all that surprising to hear executives at smart grid telecom companies saying the market is shifting away from AMI and toward distribution automation (DA). Indeed, many telecom executives are already proclaiming 2012 as a breakout year for DA in the U.S.; some are expecting the market to explode.
“With stimulus money going away, utility investment has to be tied to a concrete business case,” said David Lubkeman, distribution product manager for Sensus, a provider of point-to-multipoint radio networks.
Lubkeman believes utilities will be able to make that case for DA, especially in what he calls the “hot areas,” such as advanced volt/VAR optimization (VVO), automatic sectionalization and restoration (ASR) and conservation voltage reduction (CVR). “We're having a lot of conversations with customers along those lines,” he said.
Lizardo Hernandez of Landis+Gyr agrees. “A lot more can be done with DA,” he said, and because of that, Landis+Gyr expects an “explosion” in the market for DA products and services. “In our view, this is the next best area for expansion,” he added.
Ready for Smart Meters?
Others, like Rob Conant, Trilliant's CMO, still see life in the AMI market. With regard to smart meters, “The biggest change this year is that we're seeing a lot more activity outside the U.S.,” he said. He cites a couple reasons for the domestic slowdown: the winding down of the federal stimulus and the regulatory uncertainty. He cautioned, “A lot of regulators look at what's happening with consumers and, as a result, are asking, ‘Are we ready for smart meters?’”
Hernandez is similarly wary, noting regulatory policies could present a possible hurdle to smart grid investment. “Coming off stimulus grants, we're now entering a phase where utilities will need to show tangible benefits of their smart grid investments,” he said.
But Conant also underscores what he said is the difference between the domestic U.S. and foreign AMI markets. Other countries have different drivers pushing them toward smart meters, he said. In the European Union, for instance, the environment is a big driver, and in the U.K., the government has stated its commitment to rolling out 56 million meters over the next seven years.
Interest in smart meters goes beyond North America and Western Europe. “There's a lot of movement toward smart meters in Brazil and Asia,” Conant noted. By contrast, in the U.S., “There's a lot more certainty — and a very clear business driver — for distribution automation, so in the U.S., we're seeing a lot more utilities focus on DA instead of smart metering,” he said.
AMI Market Still Viable
Mark Madden, Alcatel-Lucent's regional vice president for North American energy markets, has a bit of a different take. He sees the smart meter market moving to the municipal utilities and cooperatives, with greater emphasis on substation automation and DA at the investor-owned utilities. “We see that now in the RFPs that are coming out,” he noted, and it is largely because federal dollars are less available and utilities need to provide a strong business case to their regulators to invest in the smart grid.
Yet, Silver Spring Networks' Michelle McLean views the AMI market with optimism. “We're seeing a pretty strong return, including U.S. and international markets, to demand for smart metering,” said McLean, director of product marketing for Silver Spring. “The lull in smart metering was more last year.” This year, she said, “Forecasts are up again.”
“The use case for AMI doesn't go away just because stimulus funds are gone,” said Scott Truitt, director of marketing for Grid Net, whose machine-to-machine network operating system manages devices and applications on broadband networks. “However, the business case for ‘AMI only’ certainly does,” he added.
According to Truitt, Grid Net sees three things happening in the market today:
A move to leverage cellular data networks
A push to deploy more and higher-value applications (DA being just one of them)
A need to do flexible deployments that show immediate returns and deliver lasting value. “This is the next phase of smarter grid deployments,” Truitt added.
Still, McLean recognizes the appeal of DA, both to her customers and to regulatory commissions. “A lot of folks are realizing smart grid is so much more than smart metering,” she said. “We think of DA as the unsung hero of smart grid — huge benefits in energy efficiency and energy reliability, but fairly invisible to the average consumer.” However, she added, “DA is not invisible to commissions, which seem very inclined to approve DA projects because of their obvious benefits and good payback.”
Of course, the decision to invest in AMI or DA, or both — along with what technology and architecture to deploy — is never easy. And different utilities come to different conclusions. A December 2011 report by Newton-Evans Research bluntly stated: “We begin 2012 in desperate need of a national mandate and strong federal investment to move the electric power industry ahead and to shore up our entire range of critical infrastructure sectors.”
The report also documented the range of choices utilities are making in communications technologies for supervisory control and data acquisition (SCADA) systems. “Fiber was the clear leader among the many communications options available for acquisition of SCADA data from transmission and distribution substations,” the report noted. “Microwave was next in importance, followed by licensed spectrum radio and a mix of licensed and unlicensed spectrum,” according to the report.
“When is the best time to buy a computer?” asked Martin Travers, head of telecommunications at Black & Veatch. “Tomorrow,” he said, and “it's the same with utilities.” Accordingly, he advises utilities to plan for the future, “so even if you're only focusing on AMI today, you don't waste the entire deployment when you upgrade.” Travers said Black & Veatch tries to provide clients a migration path that is expandable and scalable.
Utilities seem to get the message. Whether utilities are considering an investment in smart meters or focusing on DA, or both, virtually all telecom companies see two trends unfolding: utilities are pushing for equipment interoperability (no Tower of Babel effect wanted here) and the ability to run multiple applications over a single network (leveraging).
Interoperability is Critical
Like Black & Veatch's Travers, Sensus' Lubkeman reflected a common sentiment, “The choice of a communications system is a big decision for utilities.” Not only do utilities have to live with the system for a long time, they likely will want to choose more and more endpoints (that is, meters or field devices) every year, and they will want the ability to switch vendors at any time. “So interoperability is critical,” he said.
Lubkeman also noted utilities' desire to ensure their smart grid telecommunications system can handle multiple applications over the same infrastructure. “If a customer can apply the same telecom infrastructure to operate multiple systems — such as water and gas — in addition to electricity, it lowers the overall cost.” He cites growing utility interest in outdoor lighting control as an example. Landis+Gyr's FlexNet system could be used to dim streetlights, turn them up or turn them off, or for emergency notification, thus helping to spread the cost of the system over multiple applications, Lubkeman said.
Of course, if utilities want more functionality in their telecom systems, they will need to add more processing power and more memory to those systems, and they will need the ability to update application and security software wherever and whenever they need it. As such, Landis+Gyr's Hernandez said the ability to do “over-the-air updating” is vital.
Sanket Amberkar, senior manager of smart grid marketing at Cisco, says utilities face two common problems:
Networks designed for AMI cannot support the more demanding needs of DA.
There is a lack of interoperability between proprietary legacy telecom systems.
According to Amberkar, rather than periodically replacing those underlying networks to resolve the first problem, utilities seek a telecom infrastructure that protects their investment by scaling to meet future applications. To solve the second problem, utilities need an open standards-based communications infrastructure that can share information from multiple sources.
For instance, Amberkar said, AMI information integrated with distribution management systems can improve fault detection, isolation and restoration for managing outages. “Trying to extract the same level of information from siloed, proprietary networks adds operational cost and employee resources,” Amberkar said. Additionally, he noted, the layered architecture of Cisco's field area network not only offers utilities the flexibility to deploy multiple applications over common network infrastructure but also the ability to support both wired and wireless communications over the same converged network.
“When we decided to build a smart grid platform, the whole point was to serve multiple smart grid applications, not just one given solution,” Silver Springs' McLean said. Along with networking equipment and back-office software, Silver Spring sells communications modules, essentially network cards, third parties can embed in other smart grid devices. Essentially, Silver Spring builds the middle layer of the ecosystem, McLean explained.
“Our hardware partners plug in underneath, and our software partners plug in on top.” McLean said. “We make a great advanced metering system but not the meters. We partner for all our meters and put our communications module in those meters.” And the same goes for other smart grid applications, she said, “We're meter agnostic, DA device agnostic, load control switch agnostic, electric-vehicle charging station agnostic; just plug in our communications module, and they run over our platform.”
Of course, said McLean, these are not either/or decisions for most Silver Spring customers “because they're leveraging the same infrastructure they use for smart meters to deploy DA applications.” That is, they can use the information gathered by their smart meter (that is, voltage readings) to feed DA applications. “Conservation voltage reduction applications are better tuned with better end-of-line data from smart meters,” she added. “But yes, there is a strong business case with DA to be sure.”
“Interoperability comes from standards-based approach (that's an overused phrase, of course, and it goes much deeper than IP),” said Grid Net's Truitt. “The industry has accomplished much in the way it catalogs grid assets (IEC CIM 61970) and interacts with other grid applications (IEC CIM 61968). Indeed, he said, Grid Net built those very same models into its web services layer to provide a standards-based interface to its applications, legacy systems “and even applications that have yet to be built.” So, he asked, “Why reinvent the wheel when the industry has already defined its preferred approach?”
“There is going to be some networking standardization,” Truitt said, but the real story will be in the explosion of smart grid applications. “Our next-generation system has more processing capability just because of that,” he said. For example, look at the iPhone. People buy it not to make calls but rather because of the multiple applications that run on it, Truitt explained.
“It's the same with Landis+Gyr's next-generation platform,” Truitt said. “It allows several applications to run on the same hardware, which actually leverages the mesh network through the concept of distributed intelligence.” The industry is going to move away from command control at central locations and push decisions lower in the network, he said.
In a recent speech to the Federal Energy Regulatory Commission, George W. Arnold, national coordinator for smart grid interoperability at the National Institute of Standards and Technology, said the vision of a truly smart grid “requires a movement away from proprietary systems to interoperable systems based on open standards.” Without such standards, he added, “There is the potential for technologies now being implemented with sizable public and private investments to become prematurely obsolete or be implemented without adequate security.”
Voluntary vs. Mandatory
To develop those standards, the National Institute of Standards and Technology established a public-private partnership called the Smart Grid Interoperability Panel to continue development of interoperability standards and drive longer-term progress. The panel produces and maintains a catalog of standards that now contains six entries related to high-priority standards for smart grid interoperability:
Internet-protocol standards, which will allow grid devices to exchange information
Energy usage information standards, which will permit consumers to know the cost of energy used at a given time
Standards for vehicle-charging stations
Use cases for communication between plug-in vehicles and the grid
Requirements for upgrading smart meters
Guidelines for assessing standards for wireless communications devices.
Still, Arnold acknowledged the pressure for faster implementation of the standards: “With 3,200 electric utilities and hundreds of suppliers from industries that have never before had to work together, provisions in [the Energy Independence and Security Act of 2007] reflect a desire by policymakers that this transition take place in a timely manner, which may not happen if left entirely to market choice, and that regulation might need to play a role in making it happen.”
As such, said Arnold, “An important question the commission should seek to understand is whether the smart grid standards will be adopted by industry in a timely way or whether it is necessary for the commission to use its regulatory authority to encourage their use.”
Lee Harrison has been writing about the power industry since 1978. He has been an editor for Business Week, a researcher with EPRI and a freelance writer, writing articles for The New York Times and the EPRI Journal. Harrison holds a bachelor's degree in engineering from Northeastern University and a master's degree in journalism from Columbia University. He is a former writing instructor at Massachusetts College of Liberal Arts.
Utility Communications Trends and Observations
Over the past three decades, Newton-Evans Research Co. has studied a variety of control systems and related technology used by the world's electric power industry and, to a lesser extent, the use of similar control systems in other energy segments. There are a number of issues confronting utility telecommunications officials in the first half of 2012. Here are a top five:
- Network Security and Operational Effectiveness
The questions swirl around whether we can and should extend, make available and then unify Tier 3 and Tier 4 linkages (field networks and neighborhood and home networks) for customer premises applications using operational links constructed for distribution automation applications. The converse trend is to use the new implementations of metering communications paths to also serve as communications paths for new installations of distribution automation devices.
- Lack of Available Spectrum
There is a paucity of spectrum available at reasonable costs today for use by electric power utilities. The Utilities Telecom Council is championing the rights and needs of utilities to acquire additional spectrum to enable the further development of automation and the growth in deployment of intelligent field devices that can communicate to utility control centers.
- The Future of Private Utility-Operated Networks
In recent years, the major public communications carriers have been pushing for a larger share of telecommunications spending by utilities, which in North America now exceed $3 billion (for electric, gas and water utility telecommunications investments annually). The debate centers on the “make or buy” decisions with which utility telecommunications departments contend. Carriers are making their points at high levels within utilities and within regulatory and legislative bodies that they can provide cost-effective communications in a secure and highly reliable manner. However, in most recent discussions at industry conferences, there is that persistent attitude that a well-architected, finely tuned private network can provide six 9's of reliability versus a possible four 9's of reliability from public carriers. All in all, utilities are not likely to shift from their current stance (and significant investments) regarding the value and need for continuation of largely private networks, with ancillary and judicious use of commercial services.
- Technology Transfer for Managed Network Services
Not at all the same as using a commercial network provider, the use of a managed network service is simply one way to recycle private-hybrid communications networks originally constructed for another purpose but with enough capability to undertake additional missions of a critical nature. In turn, this saves hundreds of millions of dollars in duplicate investments in network design and construction. A case in point is the Harris Corp.'s operation of the FAA Telecommunications Infrastructure, as a managed network service. This is one of the largest managed network services in the nation, perhaps the world. In 2011, Harris was awarded the contract to operate the communications network for the Western Electric Coordinating Council's synchrophasor initiative that spans a broad swath of the Western United States. There will be additional opportunities for managed services operations of large-scale, assured communications networks as the smart grid rollout continues to evolve and as North America begins to be able to develop a composite real-time portrait of the interconnected electric power system.
- Divergence Between North America and the International Electric Power Community in the Approach to Telecommunications Networks
The differences in power systems architecture among international utilities contrasted with their North American counterparts are substantial at the medium-voltage and low-voltage levels for power delivery. In addition to the differing design of the power delivery networks, there are different approaches in use and planned related to telecommunications methodologies and to communications protocols. In many countries where state-managed electric power utilities are operated, the telecommunications ministry provides a “managed network service” approach for utility communications.
Telecommunications Technologies. In many international communities, the use and planned use of power line communications techniques continues to grow. Yet, in North America, after an initial flurry of activity in the 2004-2007 periods, the interest level has waned. Much of this is traceable to the differences in distribution system network design and the resulting simplicity (internationally) or complexity (North America) of using a broadband over power line and distribution power line carrier.
Communications Protocols. At least some of the differences have to do with the simple fact of procurement methods used here and abroad. While much of the international community prefers to issue turnkey contracts for large projects, most North American utility procurements are divided among a number of suppliers and services providers. Thus, while IEC 61850 makes a lot of sense when a single supplier is involved in substation construction and automation, the need for a simpler plug-and-play approach in North America, and several international markets, is the rule and not the exception. This is where DNP 3 (now IEEE Standard 1815) remains dominant.
Source: Newton-Evans Research Co. “Global Study of Data Communications Usage Patterns and Plans in the Electric Power Industry.” For additional information, visit www.newton-evans.com.
Alcatel-Lucent | www.alcatel-lucent.com
Black & Veatch | www.bv.com
Cisco | www.cisco.com
Federal Energy Regulatory Commission
Grid Net | www.grid-net.com
Landis+Gyr | www.landisgyr.com
National Institute of Standards and Technology
Newton-Evans Research Co. | www.newton-evans.com
Sensus | www.sensus.com
Silver Spring Networks | www.silverspringnet.com
Trilliant | www.trilliantinc.com