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Klaus Heimann espouses SAP’s smart utility of 2020 at International SAP for Utilities conference

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I attended the 7th International SAP for Utilities event in Munich last week.

Having attended the SAP for Utilities event in San Antonio last year, I had reasonably high expectations from this conference and I wasn’t disappointed. At the San Antonio event SAP talked very much about the ‘State of the Now’ talking up their, then recently launched, Energy Capital Management software. At this event however, Head of SAP Service Industries, Klaus Heimann keynoted introducing SAP’s vision for the utility company of 2020!

In what was a very forward-looking address, Klaus confidently predicted that:

In two years time this will no longer be a Utilities conference, it will be en Energy conference

This must have had a lot of the people in the room squirming in their seats because, as Klaus himself said, “Utilities are not known as being good at change!”

But change they must.

Just a few of the upcoming major changes utility companies are going to have to cope with include the growing imperative to move to a greater penetration of renewables in the generation mix, the impending explosion in the numbers of electric vehicles to be charged, and the need to roll-out smart grids and take in distributed generation.

Klaus’ vision for the utility company of 2020 is summarised in the video interview I conducted with him above, but briefly he talked of an energy market vastly more complex than today’s. An energy market:

  • where customers can be consumers and producers (via micro-generation)
  • where customers may have shares in a wind-farm which sells electricity to the local utility
  • where customers receive rebates on kWh’s saved during times of peak demand (compared to avg previous day’s use at same time, for example)
  • where utilities will have special renewable-only power offerings (I wish they had that now)
  • where utilities will need to be able to bill customers for energy used to charge electric vehicles, away from home (at the office) or even in different countries and
  • where utilities will need to be able to offer real-time consumption information, generation data and a control interface to the customer’s appliances

Nothing too earth-shattering in that list to be honest. But, when put against the types of changes utilities have gone through in the last 100 years, this is an enormous upheaval. This is probably a good time to be a change management consultant in the utilities sector 😉

For this vision to become real (and any utilities who don’t start to move in this direction can start writing their own obituaries now), there needs to be massive changes in utilities communications infrastructures and their data handling capabilities.

With big change, comes big opportunities so it is not surprising to see SAP are all over this and helping the utilities visualise where they need to go.

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Alcatel-Lucent partners to rollout smart grid in Germany

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Alcatel

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.

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The importance of open standards for broad smart grid adoption

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Standards

Photo credit Leo Reynolds

If you are not sure why open standards are important, you need to read this quote from the opening address of the The Southern African Telecommunications Networks and Applications Conference 2005, by then Minister of Science and Technology, Mosibudi Mangena:

The tsunami that devastated South Eastern Asian countries and the north-eastern parts of Africa, is perhaps the most graphic, albeit unfortunate, demonstration of the need for global collaboration, and open ICT standards. The incalculable loss of life and damage to property was exacerbated by the fact that responding agencies and non-governmental groups were unable to share information vital to the rescue effort. Each was using different data and document formats. Relief was slowed, and coordination complicated.

If the Internet weren’t built on open standards we might have found ourselves in a situation where you’d need an IBM browser to look at the IBM website, an HP browser to look at the HP site, a Microsoft browser to view the Microsoft site and so on. In fact it is the very openness of the standards on the internet which has led to its explosive growth and ubiquity.

Proprietary standards lead to vendor lock-in and to the crazy situation where if, for instance you buy a Sony digital camera, it typically uses Memory Stick cards that can be acquired only from Sony and a few select licensees, and this memory is typically much more expensive than alternative memory types available from multiple sources but which won’t work in Sony cameras.

In the Smart Grid space, standards are also extremely important. We need ensure that there is no vendor lock-in (i.e. if a utility has GE transformers, they need to be free to buy their smart meters from any smart meter vendor, not just GE, for example).

One of the most successful of the open standards has been TCP/IP, the protocol used for communicating data across a packet-switched network, like the Internet or almost all home or company networks. The next incarnation of TCP/IP is called IPv6. The advantage IPv6 has is that it allows far more items to be networked than is currently possible and that will be vital if we are to start networking the appliances in our house so they can participate in the Smart Grid. This is why companies like Cisco, who have no history in the energy space, are going to have a part to play in the roll-out of Smart Grids. Indeed Cisco have been talking up the importance of IPv6 for Smart Grids and creating ecosystems “to facilitate the adoption of Internet Protocol (IP)-based communications standards for smart grids.”

This explains why standards and interoperability are becoming really hot topics in the Smart Grid space at the minute. In fact that’s what the majority of the company announcements from last week’s Gridweek conference were about:

By far the most important announcement around Smart Grid standards though wasn’t from a company, it was from the National Institute of Standards and Technology (NIST). They presented for public comment a major new report on Smart Grid interoperability standards. That this document was launched by US Commerce Secretary Gary Locke should be an indication, not just of the importance of standards for Smart Grids but fortunately, just how important the Obama administration perceives them to be as well!

Cisco famously said that the Smart Grid space:

will be 100 or 1,000 times larger than the Internet. If you think about it, some homes have Internet access, but some don’t. Everyone has electricity access–all of those homes could potentially be connected

The only way Smart Grids will achieve that scale is if the standards required for that growth are drawn up and adopted.

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The Electricity 2.0 revolution has begun

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Smart meter projects globally

This is a map of current smart meter/smart grid projects globally overlaid on Google maps.
Screenshot credit Me(!)

I wrote my first Greenmonk post about Smart Grids and Demand Response back in April 2008 and followed up with a few more in the next few weeks including one in June 2008 where I said the electrical distribution system needed to be more like the Internet. Those posts were extremely cutting edge at the time but the world has caught up considerably in the last 18 months due in no small part to the election of Barack Obama and the focus on energy efficiency in his stimulus package!

Under Obama’s administration the US Dept of Energy announced in June of this year the rules for $3.9billion in Smart Grid stimulus grants. The first winners of $3.9 billion in smart grid stimulus grants will be announced in mid-November according to DOE deputy press secretary Jen Stutsman.

In a very positive move earlier this week, US Energy Secretary Steven Chu endorsed the importance of Demand Response as part of the solution when he said that electricity costs should move to reflect demand. Secretary Chu went further though arguing for the kind of automated Demand Response we have proposed here on GreenMonk when he said:

“Price signals do matter, but you can’t just simply use a price signal,” Chu said. “You really have to make it very easy to save energy.”

Consumers need to have a very simple system that will provide them with specific information about their energy use and they should be able to adjust their appliances so that they run mostly during non-peak energy hours

Adrian Tuck, CEO of Tendril announced last week that mass market home energy management is three years away. Obviously, being the CEO of a company in the space, he would say that, wouldn’t he? But looking at the slew of announcements which came out of the Gridweek conference (see below) it is hard to fault his optimism.

And just yesterday U.S. Commerce Secretary Gary Locke and the National Institute of Standards and Technology (NIST) presented for public comment a major new report on Smart Grid interoperability standards. The approximately 90-page document [pdf] identifies about 80 initial standards that will enable the vast number of interconnected devices and systems that will make up the US Smart Grid to communicate and work with each other.

You know that the administration is taking Smart Grids seriously when the Commerce Secretary presents for public comment a report on standards!

This week saw the GridWeek conference happening in Washington DC and with it a massive slew of Smart Grid related news. I’ll try to do a quick round-up of the main stories:

Partnerships

Acquisitions

Smart Cities

Launch

Other Announcements

With finance, administration backing and so many announcements (many of which are worthy of blog posts in their own right) there is no doubt but that the Smart Grid train has well and truly left the station. There are still a significant number of issues to be addressed by companies involved in the Smart Grid space. Some companies will founder, some deployments will fail (esp as utilities are notoriously bad at customer communications!) but there is no doubt that finally the Electricity 2.0 revolution has begun – there’s no turning back now.

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Not so Smart Grids, doomed to fail?

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Command and control

Photo credit Mikey aka DaSkinnyBlackMan in Iraq

I was invited by James McClelland and Maureen Coveney to participate in a panel at SAP’s Sapphire conference earlier this year discussing Smart Grids.

One of the key points I made was that utilities are not used to having to deal with customers. The only real interactions utilities have with customers are 1) sending out bills and 2) when the power goes and customers ring up to complain. It is highly unusual to have a utility company poll its customers when rolling out a new product, for example (for that matter, when was the last time your utility rolled out a new product?).

With the requirement to roll-out smart grids and the increasing empowerment of customers using web 2.0 technologies, for example, utilities are now going to have to learn to listen to their customers very quickly. Any roll-out of demand response programs which doesn’t take customer concerns into account is almost certain to run into serious difficulties. I have heard several utilities talk about using smart grids to come into customers houses and turn down their air conditioning at times of peak demand. Wrong! This kind of message will not sell easily.

A recent example of a not-so-smart grid was highlighted by 3News in New Zealand recently when they reported that the smart grids being rolled out there were ones where:

the benefits from smart meters almost entirely accrue to the retailer… Consumers will end up paying for meters that provide them with minimal benefits

Utilities are going to have to radically change how they deal with their customers, and quickly or they risk having spectacular failures when they launch their smart grid initiatives!

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Oracle’s Turning Information into Power report

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Oracle Turning information into power report

Oracle released the results of a research report last week called “Turning Information into Power“.

The report had some interesting findings – from the press release:

Americans are concerned about energy costs and show interest in new energy options.

  1. 94% are concerned with the energy costs of their primary residence.
  2. 95% are interested in receiving detailed information on their energy use.
  3. 76% are interested in renewable energy technologies for their home – and 72% of those respondents state that “reducing personal energy costs” is the most important benefit of renewable energy.

Other interesting findings include:

  1. When asked to give their utility suppliers a grade on their “current ability to provide detailed, useful information on energy consumption,” only 14% of Americans gave their utility an “A.” When grading themselves on the same question, only 16% of utility managers gave their organizations an “A.”
  2. While more than half (58%) of electricity and multi-service utilities surveyed currently offer net metering programs – which allow homeowners to generate their own renewable energy or sell it back to their utilities – just 11% of these utilities say their customers are actively pursuing the programs.

This clearly demonstrates a communications issue between the utilities and their customer base.

While on Smart Grids –

  1. 91% of utility managers believe it is critical that the U.S. adopts smart grid technologies.
  2. 41% of utilities have assessed the opportunity for smart grid technologies and
  3. Utility managers believe “upfront consumer expenses” (42%) and a “lack of consistent industry technology standards” (30%) will be the biggest roadblocks to maximizing benefits of the smart grid

There is a lot of interesting information to digest in this report – mainly though it is good news. The American people want more information on their energy use, they are interested in renewables and microgeneration. The renewables, for their part, believe that rolling out smart grids is critical, provide net-metering programs but don’t, as yet, provide detailed useful information on energy consumption in their bills.

Both sides perceive the biggest obstacle to the rollout of smart grids is financial.

Let’s hope that the $11bn pledged to the implementation of smart grids by the Obama stimulus plan will break down some of these barriers.

I hope to be interviewing Guerry Waters, vice president, industry strategy, Oracle Utilities about this report in the coming weeks, if you have any questions you’d like me to put to Guerry, please feel free to leave them in the comments.

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IBM hits the Green ball out of the park!

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Al Zollar on Smart Grids

I attended Pulse 2009, the IBM service management conference, in Las Vegas during the week. To be perfectly frank, I didn’t know much about service management software before going to the event so my expectations of what to expect from the conference were low! However, IBM hit the Green ball out of the park at this conference. Almost every speaker who stood up to speak mentioned smart grids, energy or efficiency and Al Zollar, GM of Tivoli Software above, even had a slide on demand response!

The turnout for the event was around 5-6000 I’m told and I have no reason to doubt it as the general sessions were thronged.

It really is tremendous to see Oracle, SAP and IBM all heavily touting their Smart Grid software solutions – it looks like the dream of the intelligent energy network and the massive efficiencies which will accrue, is not far off.

I met a ton of interesting people there and video’d a couple of them so I’ll be posting more in upcoming posts.

[Disclosure: IBM paid my travel and expenses for this trip]

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Oracle’s Utilities Meter Data Management taking off

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Oracle

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.

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REALLY Smart Meters!

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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?

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Utilities are too top-down, command and control

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Top-Down

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!