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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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IBM’s InterConnect 2015, the good and the not so good

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IBM InterConnect 2015

IBM invited me to attend their Cloud and Mobile Conference InterConnect 2015 last week.

Because of what IBM has done globally to help people get access to safe water, to help with solar forecasting, and to help deliver better outcomes in healthcare, for example, I tend to have a very positive attitude towards IBM.

So I ventured to the conference with high hopes of what I was going to learn there. and for the most part I wasn’t disappointed. IBM had some very interesting announcements, more on which later.

However, there is one area where IBM has dropped the ball badly – their Cloud Services Division, Softlayer.

IBM have traditionally been a model corporate citizen when it comes to reporting and transparency. They publish annual Corporate Responsibility reports with environmental, energy and emissions data going all the way back to 2002.

However, as noted here previously, when it comes to cloud computing, IBM appear to be pursuing the Amazon model of radical opaqueness. They refuse to publish any data about the energy or emissions associated with their cloud computing platform. This is a retrograde step, and one they may come to regret.

Instead of blindly copying Amazon’s strategy of non-reporting, shouldn’t IBM be embracing the approach of their new best buddies Apple? Apple, fed up of being Greenpeace’d, and seemingly genuinely wanting to leave the world a better place, hired the former head of the EPA, Lisa Jackson to head up its environmental initiatives, and hasn’t looked back.

Apple’s reporting on its cloud infrastructure energy and emissions, on its supply chain [PDF], and on its products complete life cycle analysis, is second to none.

This was made more stark for me because while at InterConnect, I read IBM’s latest cloud announcement about their spending $1.2bn to develop 5 new SoftLayer data centres in the last four months. While I was reading that, I saw Apple’s announcement that they were spending €1.7bn to develop two fully renewably powered data centres in Europe, and I realised there was no mention whatsoever of renewables anywhere in the IBM announcement.

GreenQloud Dashboard

Even better than Apple though, are the Icelandic cloud computing company GreenQloud. GreenQloud host most of their infrastructure out of Iceland, (Iceland’s electricity is generated 100% by renewable sources – 70% hydro and 30% geothermal), and the remainder out of the Digital Fortress data center in Seattle, which runs on 95% renewable energy. Better again though, GreenQloud gives each customer a dashboard with the total energy that customer has consumed and the amount of CO2 they have saved.

This is the kind of cloud leadership you expect from a company with a long tradition of openness, and the big data and analytics chops that IBM has. Now this would be A New Way to Think for IBM.

But, it’s not all bad news, as I mentioned at the outset.

IBM Predictive Maintenance

As you’d expect, there was a lot of talk at InterConnect about the Internet of Things (IoT). Chris O’Connor, IBM’s general manager of IoT, in IBM’s new IoT division, was keen to emphasise that despite the wild hype surrounding IoT at the moment, there’s a lot of business value to be had there too. There was a lot of talk about IBM’s Predictive Maintenance and Quality solutions, for example, which are a natural outcome of IBM’s IoT initiatives. IBM has been doing IoT for years, it just hasn’t always called it that.

And when you combine IBM’s deep expertise in Energy and Utilities, with its knowledge of IoT, you have an opportunity to create truly Smart Grids, not to mention the opportunities around connected cities.

In fact, IoT plays right into the instrumented, interconnected and intelligent Smarter Planet mantra that IBM has been talking for some time now, so I’m excited to see where IBM go with this.

Fun times ahead.

Disclosure – IBM paid my travel and accommodation for me to attend InterConnect.

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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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Fairfax Water’s Tammy Powlas on producing good quality water cheaply

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We talk to utilities a lot here on GreenMonk, but mostly electrical utilities. Recently I had an opportunity to talk to Tammy Powlas of water utility Fairfax Water to learn more about what they do.

It was a fascinating chat we had. Fairfax water makes extensive use of technology and also embue a culture in their employees of putting the customers’ needs first, and as a result, they produce safe, consistent, and cheap water for their constituency. This is vital work considering how important water is to our everyday lives.

Here is a transcript of our conversation:

Tom Raftery: Hey everyone! Welcome to GreenMonk TV. I am talking today to Tammy Powlas who is a senior business analyst with Fairfax Water. Tammy, water utilities, it’s an interesting field and one that we don’t talk about enough often. I think people take water for granted often, but it’s one of our more valuable resources. Can you give us a bit of background first on Fairfax Water? What kind of size are you, who do you deliver water to, and what kind of challenges you’re facing, that kind of thing.

Tammy Powlas: Okay, yes, Fairfax Water, we are the largest water utility in the State of Virginia. Currently, we serve 1.7 million people water, and one out of every five Virginians gets their water from us. We serve the Fairfax County and surrounding counties. One of our challenges or immediate challenges is we’re acquiring two new water utilities in our area. The other thing about Fairfax Water, we pride ourselves on being one of the lowest cost water utilities in the Washington, D.C., Virginia, Maryland area.

Tom Raftery: Great! So you give cheap water to people. Does that necessarily mean that’s good water?

Tammy Powlas: Oh, absolutely! We have a lab group who does testing. We have two sources of water. They are very active in testing that. Our customers can request at anytime, what’s the quality of the water. So we pride ourselves on giving the best lowest cost water in the D.C. area, and it’s always available.

Tom Raftery: And to coin the phrase, do you eat your own dog food, are you a —

Tammy Powlas: Yeah, I am a Fairfax Water customer. I live in Fairfax County. I have been a Fairfax Water customer since 1999. I’ve had good service from Fairfax Water as a customer. I do eat my own dog food, yeah.

Tom Raftery: So how do you manage to keep the prices down?

Tammy Powlas: Well, for us, I think it comes from the general manager on down. We are public sector water utility, I forgot to mention that. So revenue, we’re not tied to revenue, but we pride ourselves on always doing what’s the least cost or what’s the most cost efficient thing for our customers. So everything always has to have a business case. We do a cost benefit analysis, and it’s always questioned from the general manager, the finance manager, is this going to fit our customers, is this the best solution for our customers. So we pride ourselves on always thinking in those terms and the whole company does.

Tom Raftery: Okay. Is technology helping out at all?

Tammy Powlas: Oh, absolutely! We’ve been using the SAP utilities solution since 2004, and that has really helped us integrate all our solutions together from billing, from maintenance, and very importantly, financials. So that helps us manage the cost, manage our maintenance, manage our bills, everything is all together. We have integrated financial statements in SAP that even using a business object software, it’s all come together and really helped us be more efficient for our customer.

Tom Raftery: Okay. I mean water utilities, and utilities in general, have large issues around infrastructure management. How do you handle that?

Tammy Powlas: That’s handled also in SAP using the Plant Maintenance Solution. We’ve been lucky, because our infrastructure is relatively new compared to our surrounding utilities, surrounding jurisdictions like Washington, D.C. which to me has a lot of issues with the aging infrastructure. So for us, we’re very active in predicting what’s going to go wrong, planning our maintenance, so that’s part of our whole company.

Tom Raftery: Sure! I mean what are plans moving forward for tech roll outs and the interesting projects on the horizon, to help you better serve your customers?

Tammy Powlas: Oh, absolutely! For sure after data migrations, I would see it’s giving more visibility into how our customers are using the water, how am I consuming the water, how do I compare to my neighbors. So we’ve been relatively lucky. We haven’t had to tell our customers to boil the water, we haven’t had water shutoff, we don’t regulate the water and say you can only water on every other day. So we’ve been fairly lucky with that. But, I think given that people want to be more sustainable, I think they are going to want to see how am I managing my water and how am I consuming and how do I compare to my neighbors.

Tom Raftery: And smart meters?

Tammy Powlas: Smart meters, we have not looked at that yet. I think that is coming. What’s interesting is some of these jurisdictions that we’re getting, they have automated meter readings, and I think that will come. I think that’s got to be on the horizon. I am giving you my personal opinion, I don’t speak to Fairfax Water but I think that’s going to happen for sure, because I think the customer demand hasn’t happened yet, but I think that’s going to happen over time.

Tom Raftery: As people see the advantages of the smart meters for electricity.

Tammy Powlas: Yeah, absolutely! I can see that today with my own electric bill. I can log on and do all that and there’s a lot of benefits to that and there is a lot of incentives for the utility company as well.

Tom Raftery: Okay, cool! Tammy, that’s been great. Thanks once again for talking to us today.

Tammy Powlas: Absolutely! Thank you, thank you Tom!

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Utilities should open up API’s to their smart meter data

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Smart meter

The world of utilities is changing with the roll out of smart meters. One of the biggest changes will be the wealth of data that utility companies will suddenly be flooded with.

As we noted in a previous post on GreenMonk, Centrica has:

18 million residential accounts and one million business accounts. Right now they are billing residential accounts every three months and they are managing 75 million meter reads per annum.

With the move to smart meters, Centrica will take electricity reads every 30 minutes and gas reads once per day. This means a shift from 75 million meter reads per annum to 120 billion meter reads a year. 120 billion – that’s billion with a b. That’s a phenomenal amount of data to have to deal with.

What will utilities do with this sudden influx of data?

Apart from the traditional billing function, many utilities have no idea what, if anything, they will do with the data. And this is hardly surprising, this is a new level of energy consumption information that we have not had access to previously. And furthermore, utilities have not traditionally been in the data business.

So, what should they do with all this new data? Obviously, I have a couple of ideas (more on that later), but likely you do too, and possibly so too do some utilities.

However, to really maximise their chances of coming up with a good use of the data, it’s best to expose it to as many people as possible. Crowdsource the ideas.

Utility companies should now give serious consideration to exposing their data, anonymised, through the use of openly documented API‘s and allow developers have at it. They should then run hackathons and competitions to see who can come up with the best applications making use of the data. Why not?

A couple of ideas – how about an application to highlight exceptional energy use. For example, would customers pay an extra €1 a month to receive an alert if their elderly relative’s lights didn’t go out at 11pm, or come on again at 8am? Or for people with holiday homes, would they pay €1 a month to be alerted if the lights went on when they’re not there? Or if the electricity went off (and there was food in the freezer, or worse beer in the fridge!), for example?

If utilities were to open the data to developers, who knows what amazing ideas would emerge – developers are after all, as we are fond of saying, the New Kingmakers.

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SAP for Utilities event 2013 was all about utility customer communications

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Huntington Beach

GreenMonk attended the North American SAP for Utilities event in Huntington Beach California last week. The theme of this year’s event was Designing the Modern Utility. This was our fifth time attending the event, and for the first time we saw a significant focus on the voice/opinion of the customer (although in fairness, we didn’t attend the event in 2012).

Utility companies, as we have said many times in the past, have a very poor record with customer communications. Typically, the only times you hear from a utility company is when they are sending a bill, a disconnection warning, or notice of a rate increase. None of these are very positive interactions. It is no surprise then that in an age of increasing customer importance, trust in utility companies is the lowest level it has been in years.

It is hardly surprising though. Many utilities are coming from a situation where they are, or until recently have been, regional monopolies. Their customers had no choice of supplier, and so the utilities didn’t feel a need to listen to their customers views. Furthermore, utilities are, by their nature, extremely conservative organisations. They need to be, given they are handling such necessities as water, gas and electricity. So any change in their attitude to customer communications will happen slowly.

Change, it would appear, is very much underway now in the utilities industry. Jane Arnold from City of San Diego Public Utilities, San Diego’s water utility, gave a talk entitled Putting the “E” in Customer Engagement. Kevin Jackson from Oklahoma Gas and Electric (OGE) discussed in his talk how OGE have rolled out 800,000 smart meters and are using these to provide their customers with access to realtime energy consumption information. They hope that by providing customers with this information, and by rolling out time of use billing to defer the need to build a new power plant in 2020.

And Tracy Kirk from New Jersey’s Public Service Electric and Gas Company (PSEG) talked about how PSEG started to use Twitter to begin a two way conversation with its customers. Then it was hit with Hurricane Sandy, and Tracy outlined how Twitter helped PSEG to manage its customers expectations and reduce frustrations associated with the hurricane’s damage to its infrastructure.

There was even a keynote from Julie Albright, a research scientist at the University of Southern California, on the topic of the Social Utility, strongly echoing the closing keynote GreenMonk gave at the same event in San Antonio in 2011 on the topic of Potent Social Media strategies for Utilities.

Even the conversations in the corridors referred to the need for increased customer communications, far more than at any previous SAP for Utilities event.

Utilities are starting to realise the necessity of improved customer communications, and this can only be a good thing.

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Belkin brings the Internet of things home (with bonus IFTTT)

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Home electricity consumption

We had a fascinating conversation with Belkin’s Kevin Ashton recently about home automation. Kevin is the general manager, global product management for Belkin Business.

Right now, Belkin have a nice home automation platform called WeMo where they have devices like Wifi connected wall outlets, Wifi connected motion sensors, WiFi connected baby monitors, and WiFi connected webcams. The platform also has smartphone apps for Android and iOS so you can connect yo your home on your phone or tablet from anywhere in the world and switch your appliances on/off, listen in on your baby, and even check the webcam to make sure your child/elderly parent are doing ok.

Wemo even connects to IFTT so you can set rules for your devices (turn on lights when sun sets, alert me if there’s movement in my house, alert me if there’s no motion in my parent’s home, etc.).

This would be very cool if Belkin just stopped there, but Belkin’s CEO Chet Pipkin, has an interest in home connectivity, and so the company is taking it’s home networking and internet of things several steps further.

Belkin recently announced that they are working on a new series of products branded Belkin Echo. They will bring to market two devices, Echo Water and Echo Electricity. The two devices are for analysing and reporting on your usage of water and electricity respectively.

One of the things which is unique about these devices is how unobtrusively they work. Echo Electricity uses a single sensor which can be placed at the meter, breaker box or in an outlet and it detects current and voltage signatures within the building’s electrical circuit to determine which devices are being used, when they are being used, and how much electricity they consume.

Similarly, the Echo Water sensor can be attached to your plumbing and it senses changes in pressure and vibrations which occur everytime you use your water. It uses these to identify every fixture which uses water (shower, dish washer, toilet, etc.) and can report on how much water each device uses. This enables you to use water more efficiently, and identify leaks before they become a serious problem.

We asked Kevin if people would buy one of these Echo products. He replied that “We all care about things which affect us now, and tend to discount things where the benefits are down the line.” The Echo platform, he said can help with immediate savings. It can identify waste, identify costs and potentially shut off water in the event of a burst pipe (which leads us to wonder if insurance companies might discount customers with an Echo Water device installed).

At the moment the devices are still in development but the US Department of Defense is currently trialling the Echo Electricity in an effort to increase its energy intelligence, and reduce its carbon bootprint. A “major US utility” is also trialling the Echo Electricity, and this gives a hint to one possible route to market for these devices. The Echo Electricity could well be a customer service differentiator for a utility company (especially in deregulated markets). Customers ringing to find out why their bill is so high could potentially get an immediate answer, and utility bills could become itemised, and so look more like a credit card bill, than the current single line item bill customers receive.

When will these devices be available?

Don’t hold your breath – according to Kevin, Echo Water will be generally available in 2014 while Echo Electricity is a bit more complex so there will be pilots through 2014 with it being generally available in 2015.

As Kevin said at the conclusion of our conversation, “The goal at Belkin is to launch the products when they work, not before”.

Image credit Tom Raftery

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SAP releases mobile app for utilities customer engagement

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They say the secret to any good relationship is communication.

Most utility companies don’t seem to have received the memo though. In a lot of cases, the only time you hear from your utility company is when you receive a bill, or a disconnect notice. Neither are very positive forms of communication. It is no wonder then that utility companies generally are not held in high regard.

In an effort to help utility companies improve their communications, and connect more closely with their customers, SAP this week launched their Utilities Customer Engagement mobile app. The new mobile app is available now for download from the iTunes Store and Google Play.

SAP Utilities Customer Engagement

The app has lots of cool functionality, such as the ability to see and pay bills, check consumption and outage information and High Bill Alerts and other messages in the Message Centre, to warn customers when their bill is going to be higher than usual. This would have been very handy for PG&E to have had back in 2009 when their smart meter rollout was incorrectly blamed for customers suddenly receiving higher bills.

Facebook reported last December that the number of people accessing the site from mobile devices now exceeds access from desktop devices, and not surprisingly, this has also been true of Twitter for some time. Given that, it could be that SAP are missing a trick here. It would be very useful if in the My Profile section of the app, customers could enter their social media details (Twitter account, Facebook, Google+ etc.), then the app could send them messages and alerts to their social network of choice, rather than customers having to log into the app to see alerts.

This is a fundamental tenet of good communications – talk to the customer on their platform of choice, don’t force them to come to you. Perhaps in version 2.0.

Of course, this mobile app will only be any good, if SAP can persuade their utility customers to deploy it – whether they can pull that off remains to be seen (but, I know I’d want my utility company to roll it out!).

Image credit Lady Madonna

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Social media and utility companies

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I’m moderating a panel discussion on social media and utilities at next week’s SAP for Utilities event in Copenhagen. My fellow panelists will include two representatives from utility companies, and one from SAP.

This is not new ground for me, I have given the closing keynotes at the SAP for Utilities in San Antonio in 2011 and the SAP for Utilities event in Singapore in 2012, both times on this topic.

In my previous talks on this topic I start out talking about how utilities have started to use social media for next generation customer service – this is an obvious use case and there are several great examples of utilities doing just this.

However, there are also other very compelling use cases for social in utilities. In the US over one third of the workforce is already over 50 years old, and according to the US Bureau of Labor Statistics 30-40% of the workforce will retire in the next 10 years. This is not confined to the US and so recruitment and retention are topics of growing concern for utilities.

Now, utilities are rarely seen by young graduates as a ‘cool’ place to work. But this can change. Remember a couple of years back when Old Spice was the cologne your grandad might wear? Old Spice rolled out a social media campaign with a superb series of YouTube ads (the first of which has been viewed 45 million times). In the month which followed their sales went up 100%, and a year later their sales were still up 50%.

Videos like the one above produced by Ausgrid, while not about to rival Old Spice for viewership, do show a more human and appealing side of the company to any potential employees.

Rotary dial phone

Also, when I ask utility companies whether they allow employees to access social media from their work computers, the majority of times the answer is no, or limited. Even if only from the perspective of retaining good employees, this has to change. Today’s millennials are far more likely to use social media as a way to network and find information online (see chapter four of this three year old Pew Research study on Millennials [PDF] for more on this). Blocking access to social media sites, especially for younger employees, is analogous to putting a rotary dial phone on their desk, with a padlock on the dial. Don’t just take my word for it. Casey Coleman, the CIO of the U.S. General Services Administration said recently:

Twitter is a primary source to gather information about changes in my industry. It helps the organization stay current with the latest trends and thinking.

Blocking employees access to social media stifles them from doing their job effectively, and any employee who feels that s/he is not being allowed to do their job properly won’t be long about looking for a new one.

Social media can also be used internally as a means of retaining knowledge from retiring workers, and as a way of making employees more productive using internal social collaboration tools (Jam, Huddle, Chatter, etc.).

Finally, as I’ve mentioned before, with the rise of mobile usage of social media, there is now the ability to tap into social media’s big data firehose in realtime to improve on outage management.

There are bound to be more uses of social media (real or potential) that I’m missing – if you can think of any, please leave a comment on this post letting us all here know.

Also, the panel discussion is on next Friday April 19th at 3pm CET – we’ll be watching the Twitter hashtag #SocialUtils. If you have any questions/suggestions to put to the panel, leave them there and we’ll do our best to get to them.