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The future of electric utilities – change and disruption ahead

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The utilities industry has typically been change averse, and often for good reasons, but with the technological advances of the past few years, the low carbon imperative, and pressure from customers, utilities are going to have to figure out how to disrupt their business, or they will themselves be disrupted.

I gave the opening keynote at this year’s SAP for Utilities event in Huntington Beach on the topic of the Convergence of IoT and Energy (see the video above). Interestingly, with no coordination beforehand, all the main speakers referred to the turmoil coming to the utilities sector, and each independently referenced Tesla and Uber as examples of tumultuous changes happening in other industries.

What are the main challenges facing the utilities industry?

As noted here previously, due to the Swanson effect, the cost of solar is falling all the time, with no end in sight. The result of this will be more and more distributed generation being added to the grid, which utilities will have to manage, and added to that, the utilities will have reduced income from electricity sales, as more and more people generate their own.

On top of that, with the recent launch of their PowerWall product, Tesla ensured that in-home energy storage is set to become a thing.

Battery technology is advancing at a dizzying pace, and as a consequence:

1) the cost of lithium ion batteries is dropping constantly Battery Cost

and

2) the energy density of the batteries is increasing all the time Li-Ion battery energy Density

(Charts courtesy of Prof Maarten Steinbuch, Director Graduate Program Automotive Systems, Eindhoven University of Technology)

With battery prices falling, solar prices falling, and battery energy density increasing, there is a very real likelihood that many people will opt to go “off-grid” or drastically reduce their electricity needs.

How will utility companies deal with this?

There are many possibilities, but, as we have noted here previously, an increased focus on by utilities on energy services seems like an obvious one. This is especially true now, given the vast quantities of data that smart meters are providing utility companies, and the fact that the Internet of Things (IoT) is ensuring that a growing number of our devices are smart and connected.

Further, with the cost of (solar) generation falling, I can foresee a time when utility companies move to the landline model. You pay a set amount per month for the connection, and your electricity is free after that. Given that, it is all the more imperative that utility companies figure out how to disrupt their own business, if only to find alternative revenue streams to ensure their survival.

So, who’s going to be the Uber of electricity?

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The coming together of the Internet of Things and Smart Grids

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I was asked to speak at the recent SAP TechEd && d-code (yes, two ampersands, that’s the branding, not a typo) on the topic of the Internet of Things and Energy.

This is a curious space, because, while the Internet of Things is all the rage now in the consumer space, the New Black, as it were; this is relatively old hat in the utilities sector. Because utilities have expensive, critical infrastructure in the field (think large wind turbines, for example), they need to be able to monitor them remotely. These devices use Internet of Things technologies to report back to base. this is quite common on the high voltage part of the electrical grid.

On the medium voltage section, Internet of Things technologies aren’t as commonly deployed currently (no pun), but mv equipment suppliers are more and more adding sensors to their equipment so that they too can report back. In a recent meeting at Schneider Electric’s North American headquarters, CTO Pascal Brosset announced that Schneider were able to produce a System on a Chip (SoC) for $2, and as a consequence, Schneider were going to add one to all their equipment.

And then on the low voltage network, there are lots of innovations happening behind the smart meter. Nest thermostats, Smappee energy meters, and SmartThings energy apps are just a few of the many new IoT things being released recently.

Now if only we could connect them all up, then we could have a really smart grid.

In case you are in the area, and interested, I’ll be giving a more business-focussed version of this talk at our Business of IoT event in London on Dec 4th.

The slides for this talk are available on SlideShare.

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GE publishes Grid Resiliency survey

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GE Grid Survey Infographic

GE’s Digital Energy business produced this infographic recently, based on the results of its Grid Resiliency Survey measuring the U.S. public’s current perception of the power grid. The survey was conducted by Harris Poll on behalf of GE from May 02-06, 2014 among 2,049 adults ages 18 and older and from June 3-5, 2014 among 2,028 adults ages 18 and older.

Given the fact that hurricane Sandy was still reasonably fresh in people’s minds, and that polar vortices meant that early 2014 saw particularly harsh weather, it is perhaps not surprising that 41% of the respondents East of the Mississippi were more willing to pay $10 extra a month to ensure the grid is more reliable. A further 34% of those leaving West of the Mississippi would be willing to pay more for a more reliable grid.

What is most surprising is that the numbers are so low, to be honest. Especially the 41% figure, given that energy consumers East of the Mississippi had three times as many power outages as those living West of the Mississippi.

What’s the alternative to paying more? Home generation? Solar power is dropping in price, but it is still a very long term investment. And the cost of a decent generator can be $800 or more. And that’s just to buy it. Then there’s fuel and maintenance on top of that. As well as the inconvenience an outage brings.

Here in Europe, because most of the lines are underground, outages are very rare. The last electricity outage I remember was Dec 24th 1997, after a particularly severe storm in Ireland, for example.

The really heartening number to take away from this survey is that 81% of utility customers expect their energy company to use higher levels of renewables in the generation mix. If that expectation can be turned into reality, we’ll all be a lot better off.

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Ubiquitous computing, the Internet of Things, and the discovery of sound

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Sounds of East Lansing photo

I had a really interesting, wide-ranging, conversation with SalesForce’s VP for Strategic Research, Peter Coffee the other day.

A lot of our conversation revolved around how recent changes in the Internet of Things space, in ubiquitous computing, and in Big Data and analytics area are enabling profound effects on how we interact with the world.

Peter had a superb analogy – that of sound travelling through air. When sound is generated, it is transmitted from the source to the surrounding air particles, which vibrate or collide and pass the sound energy along to our ears. Without any air particles to vibrate, we wouldn’t hear the sound (hence there is no sound in space).

As you enter our planet’s atmosphere from space you start to encounter molecules of air. The more molecules there are, the better they can interact and the more likely they are to transmit sound.

If you hadn’t experienced air before, you might not be aware of the existence of sound. It is unlikely you would even predict that there would be such a thing as sound.

In a similar way, in the late eighties, when very few people had mobile phones, it would have been nigh on impossible to predict the emergence of the mobile computing platforms we’re seeing now, and the advances they’ve brought to things like health, education and access to markets (and cat videos!).

And, we are just at the beginning of another period when massive change will be enabled. This time by pervasive connectivity. And not just the universal connectivity of people which mobile phones has enabled, but the connectivity of literally everything that is being created by low cost sensors and the Internet of Things.

We are already seeing massive data streams now coming from expensive pieces of equipment such as commercial jets, trains, and even wind turbines.

But with the drastic fall in the price of the technologies, devices such as cars, light bulbs, even toothbrushes that were never previously, are now being instrumented and connected to the Internet.

This proliferation of (typically cloud) connected devices will allow for massive shifts in our ability to generate, analyse, and act on, data sets that we just didn’t have before now.

When we look at the concept of the connected home, for example. Back in 2009 when we in GreenMonk were espousing the Electricity 2.0 vision, many of the technologies to make it happen, hadn’t even been invented. Now, however, not only are our devices at home increasingly becoming connected, but technology providers like Apple, Google, and Samsung are creating platforms to allow us better manage all our connected devices. The GreenMonk Electricity 2.0 vision is now a lot closer to becoming reality.

We are also starting to see the beginnings of what will be seismic upheavals in the areas of health, education, and transportation.

No-one knows for sure what the next few years will bring, but it is sure going to be an exciting ride as we metaphorically discover sound, again and again, and again.

Photo credit Matt Katzenberger

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Just where does Intel fit in the Smart Grid ecosystem?

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Intel Solar Installation Vietnam

When we think of smart grids, Intel is not the first name we think of.

This is a perception that Intel is anxious to change. The multinational chip manufacturer, which has seen its revenues drop in recent years, is looking for new markets for its products. The smart grid space with increasing billions being spent annually begins to look very attractive. And Intel’s place in it? Intel is positioning itself very much at the smart in the smart grid. The distributed compute and intelligence needed to power the smart grid.

One of the most important functions of an electricity grid is to precisely balance electricity supply from its various generators, to the demand from consumers. This is an increasingly complex task in a world where consumers are more and more becoming prosumers (producers and consumers). Utilities need transparency to forecast how much energy will be consumed, and where to help stabilise the energy flows, and the price of energy on the grid.

To achieve this transparency, particularly towards the edges of the network, chips like Intel’s Quark SoC will be important.

Intel isn’t relying on its silicon chops alone though. Speaking recently to Intel’s Hannes Schwaderer (Director of Energy and Industrial Applications for EMEA), Hannes was keen to point out the other strengths Intel brings to the table. Smart grids generate big data, and lots of it. Intel’s investments in Cloudera, and Mashery give Intel a big footprint in the big data and analytics spaces, according to Hannes.

And then there’s the old security chestnut. Apart from your health, no data is as personal, and so in need of privacy, as your energy information. Intel’s purchase of computer security company McAfee allows it to offer quite a unique combination of hardware (the chips), analytics, and security to its potential customers.

And while end consumers were never Intel’s customers in the PC world, similarly in the smart grid space utilities are not the end customer for Intels smart grid solutions. Rather expect to see Intel selling to the Schneider Electronics, the GE’s, the Siemens of this world.

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GE’s PowerOn systems helping utilities to work smarter

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GE's ADMS screen

We here at GreenMonk have been researching and writing about the smart grid space for over six years now. It has long been a sector which resisted significant change, but no more.

Several factors have come into play which has ensured that the smart grid we envisioned all those years ago, is now starting to come into being. Some of those factors involve necessary practical first steps such as the rollout of smart meters to homes, other factors would include the huge advances in mobile, big data and analytics technologies which have taken place in the last couple of years.

Then there’s the issue of budgets. More money is definitely starting to be freed up for smart grid investments with revenue from asset management and condition monitoring systems for the power grid projected to grow from $2.1 billion annually in 2014 to $6.9 billion by 2023.

I attended GE’s recent Digital Energy conference in Rotterdam as a speaker, and at this event GE showcased their new PowerOn product set. This is a combined outage, and distribution management system in a singular modular platform. Combining OMS and DMS systems seems to be a new direction for the industry. It remains to be seen if it will become the norm, but it should bring advantages in process efficiency and consequently in productivity.

The application uses newer modern screens (see screens above), with a more intuitive user interface, and a single system database. This combining of systems into a single platform should simplify operations for the system operators, leading to reduced outage times, and a more reliable grid for customers. Repair crews out in the field have access to the system as well, and can update the status of any repairs ongoing. This data can be fed directly into the IVR so customers who are still using telephones can get the latest updates.

In time, as utilities embrace next generation customer service, this information will be fed into customers social channels of choice as well. Then we’ll really start to see the grid get smarter.

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GE’s 2014 Digital Energy conference

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MedPanTuesday-6

GE held their annual International Digital Energy Software Summit in Rotterdam this year. They asked me to speak on a panel titled “The Grid of Tomorrow… the challenge of integrating renewables and distributed generation on the grid“. One of the reasons they invited me to present is because of the many posts I have written, and talks I have given on what I have termed Electricity 2.0 over the years.

The Electricity 2.0 vision I have espoused is one where, to help balance the grid and enable greater penetration of renewables onto it, in-home appliances would listen to realtime energy price signals from the grid and adjust their behaviour accordingly. They would come on at times of low demand, and reduce their consumption at times of high demand.

Obviously not all loads in the home are movable. If you have your evening meal at 8pm every night, you are not going to change that just because there’s a higher load on the grid. However, many in-home loads are eminently movable. Washing/drying of clothes, or dishes, for example; heating water in an immersion too is generally movable, as can be aircon or cooling fridges/freezers.

When I first started talking about these possibilities in 2006, it seemed a fantastical, impossible notion. But now that we’re in 2014, the Internet of Things is well established, and I can control the lights in my home from anywhere in the world using my phone, that dream is now a lot closer to being realised.

One company, almost uniquely in a position to deliver on that vision is GE, given that they manufacture everything from wind turbines, to sub-stations, all the way down to the appliances in the home which need to respond to grid signals.

During the panel discussion we talked about many aspects of smart grids, the utilities rolling them out, and the regulations which they are bound by. We also went into some detail on the newer technologies that are emerging, particularly as they pertained to electric vehicles, vehicle to grid, and storage in general.

And finally the panel felt that utilities will need to be far more open to change than they traditionally have been. The markets are changing, customers are changing, and the technologies are changing. Utilities are extremely risk averse and therefore slow to change, however the risk for utilities now is if they don’t move with the times, they’ll be left behind.

This conclusion was confirmed by two data points this week:

  1. Wind energy is now cheaper than coal, according to European utility EDP, and
  2. this week when Barclays downgraded the entire electric sector of the U.S. high-grade corporate bond market.

From Barclays credit strategy team:

Electric utilities… are seen by many investors as a sturdy and defensive subset of the investment grade universe. Over the next few years, however, we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo. Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii. Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.

In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power. We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade. We see near-term risks to credit from regulators and utilities falling behind the solar + storage adoption curve and long-term risks from a comprehensive re-imagining of the role utilities play in providing electric power.

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The Internet of Things is bringing Electricity 2.0 that much closer

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One of the reasons I started working with GreenMonk back in 2008 was that James heard my Electricity 2.0 vision, and totally bought into it.

The idea, if you’re not familiar with it, was that as smart grids are deployed, homes will become more connected, devices more intelligent, and home area networks would emerge. This would allow the smart devices in the home (think water heaters, clothes dryers, dish washers, fridges, electric car chargers, etc.) to listen to realtime electricity prices, understand them, and adjust their behaviour accordingly. Why would they want to do this? To match electricity demand to its supply, thereby minimising the cost to their owner, while facilitating the safe incorporation of more variable suppliers onto the grid (think renewables like solar and wind).

That was 2008/2009. Fast forward to the end of 2013 and we see that smart meters are being deployed in anger, devices are becoming more intelligent and home area networks are becoming a reality. The Internet of Things, is now a thing (witness the success of devices like Nest’s Thermostat and Protect, the Philips Hue, and Belkin’s WeMo devices). Also, companies like Gridpoint, Comverge and EnerNoc are making demand response (the automatic reduction of electricity use) more widespread.

We’re still nowhere near having realised the vision of utility companies broadcasting pricing in realtime, home appliances listening in and adjusting behaviour accordingly, but we are quite a bit further down that road.

One company who have a large part to play in filling in some of the gaps is GE. GE supplies much of the software and hardware used by utilities in their generation, transmission and distribution of electricity. This will need to be updated to allow the realtime transmission of electricity prices. But also, GE is a major manufacturer of white goods – the dish washers, fridges, clothes dryers, etc. which will need to be smart enough to listen out for pricing signals from utilities. These machines will need to be simple to operate but smart enough to adjust their operation without too much user intervention – like the Nest Thermostat. And sure enough, to that end, GE have created their Connected Appliances division, so they too are thinking along these lines.

More indications that we are headed the right direction are signalled by energy management company Schneider Electric‘s recently announced licensing agreement with ioBridge, and Internet of Things connectivity company.

Other big players such as Intel, IBM and Cisco have announced big plans in the Internet of Things space.

The example in the video above of me connecting my Christmas tree lights was a trivial one, obviously. But it was deliberately so. Back in 2008 when I was first mooting the Electricity 2.0 vision, connecting Christmas tree lights to the Internet and control them from a phone wouldn’t have been possible. Now it is a thing of nothing. With all the above companies working on the Internet of Things in earnest, we are rapidly approaching Electricity 2.0 finally.

Full disclosure – Belkin sent me a WeMo Switch + Motion to try out.

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Smartphone energy management – at last there is an app for that!

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Carat

The World Bank issued a report yesterday showing that the number of mobile phone subscriptions in use worldwide, both pre-paid and post-paid, has now reached over 6 billion.

The report went on to reveal that more than 30 billion mobile applications, or “apps,” were downloaded in 2011 alone – these apps extend the capabilities of phones, for instance to become mobile wallets, navigational aids or price comparison tools. However the apps also have a cost associated with their use – they drain the phone’s battery.

Carat - smartphone energy managament

Some of these apps are energy hogs – they require a lot of energy to run, and so they drain the phone’s battery quickly (maybe they are legitimately using the camera, the GPS radio, and the 3G network simultaneously). Other apps have bugs in them whereby they may not properly close out battery use after a particular function and they continue to drain the battery. Until now, there has been no way to identify which apps were the ones draining your battery’s charge.

I have written a couple of times here before wondering why there was no energy management app for smart phones. Now there is – Carat.

Carat has been developed by a very small team at the Algorithms, Machines, and People Laboratory (AMP Lab) in the Electrical Engineering and Computer Sciences (EECS) Department at UC Berkeley, in collaboration with the Department of Computer Science at the University of Helsinki.

The app is free and available for both the iOS and Android platforms. And the client-side code has been uploaded to Github, where anyone can download it, and if they have the development chops, potentially fix any issues they find, or even improve on the app.

As every Smartphone owner knows, battery life is a massive problem. Carat discovered just how big a problem when TechCrunch wrote a piece about the app a few weeks ago. Carat had estimated that they’d pick up an extra 10,000 users as a result of the article. Instead 250,000 people installed the app on their phones and Carat had to scramble to deal with the massive, influx of data.

As can be seen from the image above, Carat gives you advice on ways to get longer life from the battery in your smartphone by identifying Battery Hogs (apps that use a lot of energy), apps with energy bugs and advising on how much extra battery life you will save by re-starting or killing the app.

Carat also reports your J-Score:
Carat J-Score

The J-Score is “the percentile battery life you see relative to all other devices being measured by Carat”, so the J-Score of 54 reported for my phone means my expected battery life is better than 54% of Carat’s users.

One thing to be aware of is that because Carat needs a certain threshold of application usage before it can report accurately on your apps, it typically takes a weeks usage before it starts advising you on how to get better battery life for your device.

Speaking to Carat developer Adam Oliner last week he informed me that some of the next steps for the app will be to publish api’s so that app developers will have better access to the energy consumption info of their applications.

What is interesting about this app is that it was developed as a research project, and not by one of the Smartphone Endpoint Management providers. You’d have thought saving their customers money and reducing their emissions (through using less energy), while keeping their employees more productive (by prolonging the battery life of their smartphones) would have been a no-brainer.

Perhaps, now that it has been shown that this is possible, we’ll see more of these types of apps emerge.

Image credit Tom Raftery

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Green Button and Tendril – developers as kingmakers in the energy space now as well?

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Green button

One of the greatest success stories in the energy sector in the last year is the speed with which America’s Green Button initiative has been adopted.

The project started in September 2011 with a challenge laid down by then US CTO Aneesh Chopra:

today at GridWeek, I challenged the smart grid ecosystem to deliver on the vision of Green Button and provide customers access to their energy usage information electronically. With this information at their fingertips, consumers would be enabled to make more informed decisions about their energy use and, when coupled with opportunities to take action, empowered to actively manage their energy use

His challenge was taken up by the industry with almost unseemly haste.

Green Button data standards were quickly drawn up in conjunction with America’s NIST – this is vital to ensure that Green Button data is cross comparable across utilities – and more importantly, that energy management applications written for Green Button data works across all utilities. This immediately creates a significant userbase for Green Button energy apps.

Then California?s three largest utilities ? Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison worked to create a ?Green Button? that allows customers to download their detailed energy usage with one click. Others utilities quickly followed suit and now at time of writing, 25 utility providers are supporting Green Button, including some of the nation’s biggest, like American Electric Power, CentrePoint Energy, and PacifiCorp. This brings the number of households and businesses capable of downloading their energy use information via Green Button in the US to 30 million [PDF] as of May 2012.

Technology companies also joined the efforts, and the list of those involved is long, including most of the usual suspects (Honeywell, Itron, Oracle, Schneider-Electric, Siemens, SilverSpring Networks, and Tendril) with the surprising exceptions of SAP and Logica.

Tendril are a supplier to utilities and they have now made it possible for any of their utility customers to export Green Button formatted files. Nothing too surprising about that, I hear you say. True enough, but where it starts to get really interesting is that Tendril have created GreenButtonConnect.com, a Green Button ecosystem. On this site, consumers can upload their Green Button information to any one of a number of apps hosted there to analyse their energy consumption. Even better though, any developer can use the Tendril Connect platform to develop energy apps, get access to the energy internet and have Tendril help co-market the app!

Tendril have been one of the first to realise that the old RedMonk saw Developers are the new Kingmakers applies just as much to the energy space, as it does to enterprise IT.

To this end, Tendril have also been sponsoring Hackathons themed around energy, like the recent Cleanweb Hackathon in Boulder, Colorado and January’s Cleanweb Hackathon in New York.

In a wide-ranging discussion with Tendril’s VP of Policy, Cameron Brooks, yesterday he opined that while the Green Button files are as yet, not nearly real-time, they will go more and more that direction before long. This will go a long way to facilitating the kinds of value add energy services I posted about recently here.

Photo Credit http://www.samcatchesides.com/