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Oct 29, 2012

Can You Hear Me Now?

 

The smart grid can usher in a whole new way of interacting with the electricity system. When storms knock down wires, smart sensors can detect and isolate the problem without us noticing. Or, if we’re feeling especially ambitious, we can program our electric vehicle to automatically charge when electricity prices are low. To do this, the smart grid requires a robust communications network.

Smart GridUnfortunately, the current grid is as dumb as it can be. 

A smart grid requires the ability to send and receive information from its distribution assets as well as from its customers. The exchange of information could be a game changer; a responsive, data-driven grid would result in a system that is more reliable, more efficient, and more capable of integrating resources like wind and solar.

But this is easier said than done. The electric utility has little experience with two-way intelligence at the distribution level. The market for communications systems is also complicated, creating a slow learning curve. However, a quiet renaissance within communication technologies is occurring. Companies of all kinds (even those in the security business) are seizing the opportunity to light up the distribution grid with activity.

Technology has made steady progress in communications. Today, most data in our lives are transmitted wirelessly through the air (e.g. cell phones) or through fiber optic cable (e.g. our internet connection). Many utilities have installed similar technologies, adapting radio frequency networks and fiber lines to their systems. Others are trying new approaches and a few utilities are minimizing new purchases by leveraging assets that they already own: power lines.

By applying power-line communications (PLC) technology, utilities can apply frequency signals in their power lines to transmit data. In layman terms, PLC technologies turn your electric wire into a phone line. Electric vehicles with PLC, for instance, would be able to send and receive data (i.e. user information, billing rates) whenever they are hooked up to the electric grid. Several utilities are experimenting with PLC technology to capture its significant cost savings.

The Need for a Simplified Solution

With the dizzying array of technical innovations, the question is not whether a solution exists, but which technology ecosystem is best suited to meet local needs. GTM Research and others have provided valuable insights and frameworks for utilities to make the right decision. From our perspective, a utility generally faces several competing issues:

  • Right-sizing the communication system: Depending on the type of smart grid application, the communication system must be appropriately vetted and designed to utility needs. On one end of the spectrum (pun intended), utilities want to adjust distribution voltages in real time. This requires near-instant responses at near-perfect reliability. On the other end, automatic meter reading capability has much more lax requirements—data is only exchanged a few times a month.
  • Accommodating equipment lifetime: Each utility brings its own unique history of equipment that may or may not be compatible with certain types of communication networks. Moreover, utilities are in the mindset of buying equipment that will last 10 or 20 years, so new communication networks must be robust and flexible enough to remain relevant.
  • Hitting cost expectations: Though the communications market is worth billions, the price point per device is surprisingly low. Utilities expect to pay 25 cents to 50 cents a month per smart meter. To put that into perspective, a cellular company will charge more than 200 times this amount for a single iPhone plan.

Telecommunication Companies to Save the Day?

Telecommunications Utilities have historically favored building and operating their own private networks. Some, likeDominion Virginia Power, want to sell their own tools to help others. Increasingly, however, utilities are looking elsewhere for simplified solutions. Some in particular are warming up to partnership opportunities with telecommunication giants such as AT&T and Verizon. 

Regulatory and market changes have set the stage for this union. First, the idea of owning an entire communications system is losing its luster. The regulatory process is making it increasingly risky for utilities to make smart grid investments. The Illinois Commerce Commission rejected Amaren’s Smart Grid proposal this year, and Xcel has found itself in on-going process to recover its $16.6 million investment in Boulder’s SmartGridCity program.

Second, market transitions are changing the name of the game, creating new business opportunities. To provide faster data services to consumers, the telecommunication industry is shifting its consumer-based systems from a 3G network to a 4G network. This shift leaves an open 3G network that can be tapped for machine-to-machine communication, which would be an ideal setup for next- generation utility communication networks.

As a result, an intelligent partnership between the telecommunications industry and the electric utility industry may be just what the doctor ordered. San Diego Gas & Electric licensed spectrum from the Federal Communications Commission in 2009 to pilot its own WIMAX communication network. The original plan was to provide the ability to monitor the real-time health (e.g. voltage and frequency characteristics) of the distribution grid.

But SDG&E has since reversed its communications strategy. For the reasons mentioned above, SDG&E is now finding third party solutions more and more attractive. Having sold its frequency license to AT&T, SDG&E is looking critically at ways to leverage the data systems that public carriers are already using.

Whether this indicates a long-term match or is destined to be a short-term fling, it remains to be seen. But early signs look promising.  

Highlighted Resources


Electricity wires down



A Crisis is a Terrible Thing to Waste


Lights Out
Lights Out in San Diego: A Case to Reexamine the Future of the Grid


Renewables



A Renewable and Resilient Electricity System

 

 

 

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