The editors of T&D World are proud to bring you an in-depth view of how our utility industry is building out enterprisewide telecommunications platforms to support and enable smart grid. Smart grid is being developed along the same S-curve that most technology evolutions follow: start slow, build interest, accelerate investment, increase number of participants, increase speed of innovation and then begin to flatten out and mature. But we couldn't have foreseen all the twists and turns.
A Time for Straight Talk
Some utilities had seen smart grid primarily as an opportunity to build up the rate base, while telling their customers how much smart grid and smart meters would benefit their lives. But customers in several states dug into the issue and found they wouldn't benefit much but would experience increased rates. Some even feared health risks from the meter electromagnetic radiation. Potential risk, higher costs and foggy benefits — what's the customer to like?
Fortunately, there is a rest of the story. Some utilities decided to take a second approach and build out a business plan to meet customers' needs and, in the process, discovered that an enhanced and well thought out smart grid would be essential.
Take Oklahoma Gas and Electric (OG&E). Rick Bush, T&D World's editorial director, was so impressed with what was going at this utility that he visited twice to make sure he really grasped what it was achieving.
OG&E was denied a rate increase to build a coal-fired plant, but the state definitely needed more electric supply. So OG&E worked with regulators to find a way to fund load-shifting solutions that would meet increased demand with the same ability to control that would have existed on new generation. It is now building out the smart grid and communications platform to meet a legitimate need and at a legitimate price.
So, let's be honest up-front and build what the customers need, want and are willing to pay for. In the long run, they will appreciate the honesty.
A year ago, smart grid telecom discussions seemed to be all about technology winners. WiMax, cellular, radio, satellite — lots of technologies, lots of small providers and a few large (but not as vocal) ones. Within the utility industry there was general agreement that for many utilities, no one technology would meet the needs of the entire service area. However, we found in our earlier interviews that many of the telecoms were pitching one-size-fits-all solutions — a pitch that utilities rightfully pronounced naïve.
The picture has now shifted. At a recent utility industry trade show, there seemed to be less participation by the smaller telecom providers. But the ones that were there were sharp, focused and had their value propositions well laid out.
Telecoms are now looking to be seen as solution providers rather than just telecom technology suppliers. All the buzzwords — open systems, interoperability, standards-based — are there to try and assure the potential buyer that the risks of stranded assets and obsolescence are minimal. Some are going after the “middleware” and network management market — choose your technology and they'll make it work.
The really big companies, such as Alcatel-Lucent and Schneider, are branding themselves as total solution providers — meters, communications, customer management to back-office, soup to nuts. The appeal here is proven competence and low risk. That has appeal to many beleaguered utility decision makers.
Smoother Utility-Telecom Partnerships
As some loose utility-telecom partnerships began to form, it seemed that telecoms in general didn't give enough credit to the utility industry's telecom sophistication.
Those of us in the industry know utilities have been heavily involved in telecom for years. Even before smart grid was a gleam in anyone's eye, utilities were managing massive amounts of data communications, usually on proprietary networks, and doing it well.
Utilities perceived telecoms as being naïve regarding the needs of power companies, and the communications companies underestimated the utilities' telecom technology sophistication. No wonder the courtship got off to a rocky start.
Now, however, both sides are meeting in the middle and are forming long-term relationships.
Nothing Succeeds Like Success
The good news is that smart grid communications enabled telecom investments are already paying off for millions of customers. PEPCO customers are seeing a 50% increase in reliability. PECO greatly improved storm outage restoration as did Alabama Power. These and other success stories result from strategically integrating distribution automation, outage management and other existing operational systems with new smart grid telecom networks.