Utilities use network-connected meters and other new technologies to build a smart grid that will reduce outages, cut costs and improve customer service.
Smart Grid Vs. High Hurdles
Before utilities can take full advantage of the latest technologies, however, they'll need to overcome a number of hurdles.
One is inertia. "The power industry is slow to change and slow to accept new technologies," says Mort Cohen, a principal at RevGen Consulting Group, a San Carlos, Calif., energy consultancy. The existing workforce is more accustomed to analog and mechanical solutions. As the workforce retires, change may accelerate as younger engineers who are more comfortable with digital, wireless, and fiber optic technologies come on board.
Also, the certification process for verifying the performance and reliability of new technology is extensive and time consuming. "The power industry will not deploy any new technology that hasn't been thoroughly tested under all conditions," Cohen says. "It is difficult to speed up this process, but since much of the technology already exists in other applications, the time to verify performance and reliability could be shortened."
Utilities also will need to adapt their existing IT and telecommunications infrastructure to support the growing quantity of data being collected and transmitted. For instance, network upgrades may be necessary to accommodate information being sent by sensors and smart meters. And data centers will need beefing up to process and analyze raw data and support analytics software.
"This is an enormous task because of the sheer number of data inputs that have to be handled and interpreted in a short period of time," Cohen says, "and currently without any universal standards for data transfer and communications to ensure interoperability between networks."
Another barrier to progress is defining exactly what the national smart grid will or should be. Separate grids for gas and electricity won't be as efficient as a single energy grid.
"There's a lot of discussion but not a lot of consensus on how this is all going to look and how it's going to be implemented," says Atmos's Gius. "Once we're all aligned around which way this smart energy grid is going to go, that will have substantial influence on where we invest our future capital dollars."
Yet another hurdle is the fact that highly regulated utilities must show a clear ROI before investing in technology. "Without it there will be limited access to the capital needed for such investments," Gius says.
Cohen says regulatory reform will be essential. Currently, utilities are rewarded for the amount of power they sell, and their rate base is calculated based on the capital invested in new plants, he notes. "This entire reimbursement scheme has to be turned upside down, whereby utilities are rewarded for savings incurred by avoiding the construction of new power plants and, at least partially, for saving power rather than generating more power," Cohen says.
Some utilities are forced to wait for other companies to implement new technology and infrastructure. For example, TXU Energy is limited in rolling out management capabilities such as interval billing, remote turn on/off, equipment monitoring, and demand-response until electric transmission and distribution companies deploy advanced metering infrastructure. Another challenge is that TXU Energy must integrate with different smart meter technologies for each of the four main electric transmission and distribution providers it works with.
Networked meters are a key component of the smart grid
Among the key challenges Xcel Energy's Simon sees is ensuring that all the information moving back and forth between utilities and their customers is protected. "How do you make sure as we deploy these things that data will continue to stay secure?" she says.
Standards are yet another issue. Cohen notes that standards already exist for interoperability among certain types of systems, "but many utilities are selecting technologies that do not necessarily all comply with the same standards."
PG&E's Lawicki notes that smart grids require unprecedented levels of technology integration. "There is significant momentum behind the development of smart grid standards, and the industry and our broader network of vendors, regulators, and stakeholders can add tremendous value by engaging in and supporting those efforts," she says.
Even as they're figuring out how to address all these challenges, utilities are well on their way to finding new and more efficient ways to power the country.
Bob Violino is a freelance writer who has covered a variety of business and technology issues for more than 20 years, including security, enterprise applications, storage, and wireless.