Are utility companies ready for full smart grids?

Power management display

In the Smart Grid Heavy Hitters video interview series I have been publishing here on GreenMonk, one of the questions I ask all interviewees is, “What is a Smart Grid?” Almost all the interviewees talk about an infrastructure capable of full end-to-end, two-way communications. That is, communication from utilities down to the appliance level in-home, and from appliances back up to utilities.

Great. But what does this mean in practice and is this something utility companies have given enough thought to?

Utility companies currently typically take one meter reading per month. With the roll out of smart meters and smart grids that will change drastically. If a utility goes to 15 minute meter reads, we are talking about a shift from one meter read a month to around 2,880 meter reads a month (4 x 24 x 30 = 2,880).

This has huge implications for a utility company’s IT infrastructure. They will need to capture and store orders of magnitude more information than they have ever needed to previously.

On top of that, the information coming from smart meters is vastly more complex than the simple output of analog meters, as well. Particularly if the consumer is also a producer, selling energy back to the grid (via generation or from storage), getting rebates for lowering consumption in times of peak demand and/or getting roaming bills for charging up electric vehicles at public charging facilities, for example.

What will utility companies do with this new data?

Well, the primary use of this data will be for billing. Do utility companies have billing systems in place which are able to take in these vast quantities of data and output sensible bills?

Today’s bills are generated off that single monthly meter read, however bills generated from 2,880 meters reads a month (or even 720 – one meter read per hour) will be very different. They should be easy to understand, reflect the intelligence gained from the extra information and offer customers ways to reduce their next bill based on this.

Crucially too, utility companies will need to be pro-active in contacting people who go out of their normal pattern of usage/billing, otherwise we’ll see even more consumer backlash against smart grid roll-outs.

Obviously, transitioning away from paper bills to electronic ones will vastly enrich the possibilities utilities have with data presentation for customers as well as offering utilities ways to monetise their billing delivery (Google Adwords for bills anyone?).

On the consumer side, consumers will need to be able to see their energy consumption in real-time. Not only that, but to ensure that they act appropriately on the information, the user interface will be critical. A poor user experience will see a deluge of calls swamping customer care as people struggle to understand their consumption patterns. Or worse, mis-understand and send their bills soaring!

Consumers will need to be given ubiquitous, secure access to their energy consumption information. But more than that, consumers will also need to be given the tools to help them reduce their bills, without necessarily reducing their consumption (i.e. load shifting).

This will also necessitate a move to smart appliances by the consumer (appliances which can listen for price signals from the smart grid and modify behaviour according to a configurable set of rules). The Smart Appliances market is expected to reach $15bn by 2015 so the move to smart appliances can represent a new revenue stream for utility companies. Especially if they, with consumers consent, utilise energy-profile information from consumers smart meters to make more appropriate energy saving suggestions.

All of these changes require seismic shifts by utility companies both in terms of IT investments, but also in terms of their approach to customer care and communications.

Are they up for the challenges ahead? With the increasing liberalisation of energy markets and growth in consumer choices, they better be!

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When will we have full Smart Grid deployments?

electric cables

Photo credit mckaysavage

Despite a lot of talk and some high profile trials the day we have ubiquitous full Smart Grids is still a long way off.

I attended the Smart Grids Europe conference in Amsterdam this week.

It was a great conference, I met a ton of interesting people and had some fascinating conversations.

I can’t help feeling a little deflated though.

I’m a huge advocate of Smart Grids. I gave my first international talk about Smart Grids and demand side management (Demand Response) at the Reboot conference in Copenhagen back in early 2007. We are now a full three years later and many utility companies have yet to roll out smart meter pilot programs.

Others are rolling out smart meters more because of pending of legislative requirements than because of any desire help reduce people’s energy footprints.

In fact, after talking to more utility companies, I suspect that smart grids may not proceed beyond smart meter deployments in some regions. The recent Oracle survey of Utility CxO’s confirms this view

utilities executives put improving service reliability (45 percent) and implementing smart metering (41 percent) at the top of the list [of Smart Grid priorities]

So why the apparent passive aggressive response from the utility companies?

Well, they have to keep the lights on. To paraphrase the old saw, they do not want to ‘fix’ their grid, if it ain’t broke! And, let’s be fair, the idea of investing large sums of money to help their customers use less of their product isn’t one which sits comfortably with them. That’s understandable.

And no utility wants to have the kind of customer blowback that PG&E saw with their botched smart meter rollout in Bakersfield.

But there is a huge global imperative for Smart Grids – the Smart 2020 report said:

Smart grid technologies were the largest opportunity found in the study and could globally reduce 2.03 GtCO2e , worth ?79 billion ($124.6 billion).

How then do we square that circle?

We could legislate for them but a better approach would be to change the landscape in which the utility companies operate such that there is a business case for full smart grid deployments.

I suspect the best approach would be the introduction of a carbon tax. This is something we need to do anyway (and the mechanisms for doing so are a topic for a separate post) but if there were a tax on CO2 production, it would be in utility companies (and their customers) interests to cut back on energy consumption.

Even if there were a strong business case for smart grids, given the glacial speeds at which utility companies move, I suspect it is going to be many years before we see full smart grid implementations.


Smart Grid Heavy Hitter series – Chris King, Chief Regulatory officer, eMeter

eMeter provide software for utilities who are rolling out Smart Grids to help with Meter Data Management and real-time pricing visibility. Chris King is their Chief Regulatory Officer and he and I had a great chat recently about Smart Grids.

We talked about:

  • Chris and eMeter’s definition of a Smart Grid
  • Why eMeter need a Chief Regulatory Officer
  • Regional differences in regulation of Smart Grids and
  • A recent survey that showed 55% of utilities have yet to start Smart Grid rollouts

The day that we see all devices which consume water having networked flow meters is still a ways off


Photo credit Hypergurl – Tanya Ann

I wrote a post a couple of days ago asking the question How long until all devices which consume water have networked flow meters? after talking to Oracle VP Industry Strategy, Guerry Waters about Oracle’s recently released “Testing the Water: Smart Metering for Water Utilities” study.

Having put the question out there, I’m now going to discuss some of the factors which will influence the answer!

The first thing to realise from the Oracle data is that 76% of homeowners in the US are concerned with the need to conserve water in their community and 71% believe that having access to detailed consumption data would encourage them to take steps to lower their water use. So barring and big PR disasters like the PG&E Smart electricity Meter fiasco in Bakersfield, it would seem that the vast majority of consumers are bought into the idea of having smart meters to help lower water consumption.

How about the utilities? It looks like if they do decide to rollout smart water meters, they’ll very much be pushing an open door.

Funnily enough this is where it starts to get a bit nuanced!

First off, 83% of utilities who have conducted a cost-benefit analysis (n=86) support the adoption of smart meter technology, so that’s a good start, right?

Well, yes, but what are the motivations of the utilities?

It turns out that they are far more interested in using smart meters to enable early leak detection than in supplying customers with tools to monitor/reduce their consumption!

Right away this is problematic, if the aims of the utilities and their customers are not aligned, then this will greatly complicate any rollouts. Also, if the utilities are not strongly focussed on providing consumers with tools to reduce their consumption, any such tools which are provided to homeowners would most likely be sub-optimal (an after-thought).

Then, when asked what they perceived as roadblocks, the water utilities cited the lack of cost recovery or measurable ROI as well as the up-front utility expenses required – in fact, 64% of utilities are not even currently considering a smart meter program!

So, until the water utilities are as enthusiastic to roll out smart meters as their counterparts in the electrical utilities are, then the day that we see all devices which consume water having networked flow meters is still a ways off.

Of course, in the case of the electric utilities, their enthusiasm is certainly not hurt by the amount of recovery act monies being pored into smart grids!


Alcatel-Lucent partners to rollout smart grid in Germany


Photo credit Kaptain Kobold

Alcatel-Lucent announced that it has signed an agreement with the German municipal utility Stadtwerke Pasewalk to implement smart meter operation services.

New European Union rules, which come into effect on January 1 2010, will require consumption dependent billing of gas, electricity and water and by utilities. The Alcatel-Lucent solution being used here is designed to address that legislation. Interestingly, according to the release, Stadtwerke Pasewalk customers will be given a home energy monitor which will enable them to see their energy consumption in real-time and optimise it accordingly. There are no details on whether there are plans to automate the in-home energy reductions, nor do they talk about whether the the meters can be updated remotely.

Alcatel Lucent have partnered with Vodafone Germany, DIEHL Energy Solutions and SIV AG for this project. Alcatel Lucent will operate the central meter data management system to monitor and control the smart meters, Vodafone will provide communications, DIEHL Energy Solutions will deliver the smart meter systems while SIV will provide the backend ERP system to handle the data. The SIV ERP system (kVASy) is based on an Oracle database.

Stadtwerke Pasewalk is one of nearly 900 utility companies in Germany (!) and is quite small with only 12,000 meters so this is akin to a trial-sized project.

The involvement of so many partners, in even this modest rollout, is a clear indicator of just how complex smart grids can be to implement. Partnerships (and interoperability) amongst smart grid solution vendors will be critical to the success of these ventures.

The skills learnt here will benefit not just Stadtwerke Pasewalk and its customers, but all of the companies involved as they move onto future larger smart grid projects.


Oracle’s Utilities Meter Data Management taking off


Photo credit Not Quite a Photographr

Interesting bits of news from Oracle on the Smart Grid front in the last couple of days:

  1. Oracle recently released Oracle Utilities Meter Data Management 1.5, which includes enhancements to help accelerate advanced metering infrastructure (AMI) integrations, to ultimately lower implementation costs for utilities that are implementing smart metering programs, to detect outages more quickly, drive energy efficiency initiatives and provide more accurate billing information to customers.
  2. UtiliPoint reported that Oracle won seven out of 14 major meter data management customers in 2008 (no link, sorry as UtilitiPoint charge around $3,000 for their reports!)
  3. Modesto Irrigation District is rolling out a Smart Meter project to more than 91,270 residential and about 12,700 commercial and industrial customers using Oracle’s Meter Data Management. Tom Kimball, MID’s Assistant General Manager for Transmission and Distribution, said

    Smart meters make good economic sense for consumers and utilities alike in this time of rising electric rates. Moreover, the California Energy Commission may soon require this type of electric meter, and the Legislature is moving in the same direction

  4. And news just in today that Italy’s Acea Distribuzione selected Oracle Utilities Meter Data Management to support its Automatic Meter Management (AMM) project, covering approximately 1.6 million meters – making it one of the largest AMM deployments in Europe to date.

    The Oracle solution will help us to provide our customers with advanced options including consumption profiles as well as consumption information online – ultimately allowing the consumer to make more informed decisions about their energy use

    said Delio Svaluto Moreolo, Metering Department, Acea Distribuzione S.p.A.

We have been writing a lot on this blog about the advantages of Smart Grids, and president Obama has recently called for the rollout of 40m smart meters in the US so it is great to see the big software vendors pushing out the necessary apps to help utilities make smart grids a reality.


REALLY Smart Meters!

Smart meter

Photo Credit yewenyi

Smart electricity meter projects are being rolled out all over the globe at this stage (here’s a map of the Smart Meter projects in the US), and with the Smart Meters, come Smart Grids and Demand Response programs whereby the utilities implement peak shaving programs (and in certain cases demand stimulation) to match demand and supply curves. This will lead to a more stable grid and therefore increase the amount of variable generators (i.e. weather based renewables) it is possible to add to the grid. Great.

However, this is not nearly ambitious enough as far as I am concerned. First off, as I have said previously, cheaper electricity typically has a higher % of renewables in the generation mix. Therefore, if I am getting a smart meter, I want it to be a very smart meter. I want my meter to be going out across the grid, checking the realtime price from all utilities and dynamically sourcing the energy from the cheapest supplier at any given time. Nothing too new there, I have written about that concept previously.

Taking that idea to the next level. Imagine if utilities were mandated to publish, not only the price of electricity in realtime, but also the generation mix. I could then have a Smart Meter which would actively chose the greenest electricity for me at any time. Or the one with the best price/renewables mix.

And if we had a SuperGrid in place, then that Green electricity might be coming from Danish windfarms, Icelandic geothermal generation or North African solar farms.

Now that would be a Really Smart Meter!

UPDATE – I have been asked the relevance of the photo above – it is subtle, anyone care to guess?


Utilities are too top-down, command and control


Photo Credit Mikey aka DaSkinnyBlackMan

Utilities are top-down.

Whenever I talk to utilities about Smart Grids and Smart Meters they always trot out the same speech. They want to use Demand Response for peak shaving and they want to implement it by having a mechanism whereby they can come in to their customer’s houses at times of maximum demand and turn down the settings on the aircon, immersion heater, etc.

Unfortunately this kind of traditional top-down, command and control attitude is more likely to turn people off Demand Response programs than to sell it to them.

I know that as a consumer I want to be able to program my appliances myself so that I decide when they turn on/off in response to price signals from the grid. The same is true for fridges/freezers and water immersions – I want them to change thermostat settings to take in electricity at times when energy is cheap and not when it is expensive by MY definitions of cheap and expensive.

I want control of my appliances. I do not want the utility deciding to come in and adjust or turn them on/off for me because it suits them.

Demand Response programs will be hugely beneficial to the utilities and consumers alike but they are complex to explain. If you couple that with the utility having control of your appliances they suddenly become a far harder sell.

Give customers more control of their electricity bill. Allow them reduce costs without reducing usage, by owner controlled, programmatic, time-shifting of consumption and suddenly Demand Response programs becomes an easy sell.

And when you couple that with how Demand Response will stabilise the grid facilitating greater penetration of variable supplies (i.e. weather-based renewables like wind and solar) and you have a win, win, win!


Smart Grids and unlocked Smart Meters

Smart Meter

Photo Credit Tom Raftery

I have been talking to a lot of Smart Meter and utility companies in the last few weeks and it has been fascinating. I have learned a huge amount about some of the challenges and opportunities involved in rolling our Smart Grids.

The first thing to say is that Smart Grids are coming. None of the utilities I have spoken to have given me feedback to indicate that they are rolling back on their Smart Grid projects – and they all have Smart Grid projects at some level, whether it is in planning, in trial or in roll out.

One of the questions I have asked and not received a satisfactory answer to yet is “What happens if I decide to change utility co.? Does my existing utility come along, take the Smart Meter off my wall and my new utility then needs to send an engineer to install their Smart Meter?” Unfortunately, so far the answer to this appears to be “Yes”!

In reality, this will probably be solved with some kind of cost or asset transfer solution.

As an electricity consumer (be that industrial or residential), ideally what I want is either an ‘unlocked’ Smart Meter, or one which is owned by the grid management company, as opposed to one which is locked into a particular utilitity.

In fact, for me the ultimate solution would be a neutral Smart Meter which can go out at all times, find the cheapest electricity at that time and pull from that utility!


GreenMonk interviews Stefan Engelhardt about SAP’s vision for Smart Grids

One of the more interesting keynote talks at the recent SAP for Utilities conference in San Antonio TX was the one given by Stefan Engelhardt, SAP’s Head of Industry Business Unit Utilities.

In his keynote he discussed decarbonisation and SAP’s vision around Smart Grids and Smart Meters. I asked him if he’d be willing to come on camera to talk about some of these topics and he very graciously agreed.

With the vast majority of the world’s utilities using SAP’s software, they have their fingers firmly on the pulse of this sector. What was pleasantly surprising to me was the amount of interest SAP is seeing from their utility client companies in Smart Grids. As Stefan himself said in the interview:

For the next couple of years we see a clear trend towards the deployment of Smart Metering technology in the Utilities industry… and that means we have to adapt the existing business processes to this new technology

It was also fascinating to hear Stefan’s predictions around how Smart Grids will be rolled out gradually by utilities. Polling of smart meters by utilities will be ramped up bit-by-bit from maybe once a day to once every 10-15 minutes and this will have huge implications for the amount of data utilities will have to manage. Previously they may have collected 1 terabyte every 10 years. With smart meters reporting energy usage every 10-15 minutes they could be collecting 1 terabyte every month, or less!

With the roll-out of Smart Grids, utility companies will be able to publish energy prices in realtime based on supply and demand. This is important because electricity is more plentiful when renewables are contributing to the mix, so cheaper electricity should also track closely with Greener electricity!.

Utilities will now be able to offer new products like critical peak pricing for peak shaving in times of electricity shortage and even demand stimulation, to encourage people to consume electricity when supply is exceeding demand. This will encourage people to shift some of their loads to times when renewables are contributing more, thereby reducing the CO2 emissions associated with that load.

[Disclosure – SAP covered my expenses to attend this conference]