VOL 3, ISSUE 6 » NOVEMBER/DECEMBER 2011
Where smart grid meets business—and reality.
SMART CO-OPS & MUNIS Success stories pile up SMART TECH EQUILIBRIUM Is DR balancing the scales?
A SYSTEM OF SYSTEMS
GENERATION INTELLIGENCE
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CONTENTS S PECIAL REPORT A SYSTEM OF SYSTEMS
44 More than just smart meters The whole becomes more than the sum of its parts
DEPARTMENTS
16
4
Drawing the line
6
Transmissions 6
Letters from readers
10 The big picture
10 Top 11 projections for 2012
47 IT insights
47 Where’s the value?
FEATURES // NOVEMBER/DECEMBER 2011
Generation intelligence
16 Enabling distributed generation Decentralizing has its challenges
20 Power to the people Distributed generation can strike a balance, change the paradigm
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Smart co-ops and munis
2
22 Baking communication in from the beginning
Glendale Water & Power shares its outreach strategy
26 PUC labels project transformative Kauai Island Utility Cooperative gets green light for smart meters
28 Enabling security for co-ops NRECA project brings security template to Flint Energies
Smart tech equilibrium
32 The new demand response
The technology’s all coming together— now for the markets
30 44 50 53 58
Analytics create business value for utility grid & customer operations
50 Operational perspectives 50 Order 1000 offers
important incremental step A transmission owner’s perspective
53 Public/private initiative moves smart grid adoption Ontario’s PowerStream builds communications infrastructure
58 Customer service
58 Incremental change adds up A decade of innovation for United Illuminating
60 Consumer engagement front and center Recent reports focus on what it takes to move forward
62 Out the door
62 Understanding the regulatory compact Why smart grid advocates should learn about utility regulation
Vol. 3, No. 6, 2011 by Energy Central. All rights reserved. Permission to reprint or quote excerpts granted by written request only. Intelligent Utility® is published bimonthly by Energy Central, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Subscriptions are AN E N E RGY C E NTR AL PU B LIC ATION available by request. POSTMASTER: Send address changes to Intelligent Utility, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Customer service: 303.782.5510. For change of address include old address as well as new address with both ZIP codes. Allow four to six weeks for change of address to become effective. Please include current mailing label when writing about your subscription.
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D R AW I N G T H E L I N E
Drawing the Line
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THIS ISSUE MARKS AN IMPORTANT MILESTONE FOR INTELLIGENT UTILITY MAGAZINE:
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the completion of our third year of publication. It’s hard to believe that it has only been three years. In that time, there have been significant changes undertaken by utilities across North America to establish more intelligent, resilient and reliable processes with new technologies, right across the board. Some have been supported by way of grants and loans from the federal government, and some have been homegrown efforts all the way. We have moved, within these pages, from sharing stories about strategies, pilots and early initiatives to lessons learned from fully deployed projects. Back then, we wrote about moving from status quo to an intelligent utility, and about vision and early implementation. Now, we’re writing about the next steps along the path. And as the calendar turns to 2012, we enter a federal election year once again, along with all the uncertainty that that brings. “May you live in interesting times” is the reputed English translation of an ancient and oft-repeated Chinese proverb and curse. But we do, as an industry, live in interesting times indeed, and while they are full of challenges, they are also full of opportunities. As I pen these words, we have just put the finishing touches on this year’s UtiliQ Top 25 Intelligent Utility rankings (an Intelligent Utility/IDC Energy Insights co-production), and are gearing up for my favorite event of the year, the Knowledge2011 Intelligent Utility Executive Summit, to be held Nov. 7-9. For me, this summit sets the stage for much of the discourse that will continue throughout these pages in 2012. The agenda of roundtables and panel discussions is meant to spur thought and the sharing of utility experiences and ideas across IT, operations and customer service. The networking opportunities over the two days (and there are many) take this discourse far beyond the roundtable discussion topics. Between the structured and the unstructured I, too, listen, learn and bring these ideas back to our readers for further thought and discussion. sue? Then Enjoy the is As I noted in my letter here in the September/October issue, Intelligent Utility magazine for free at subscribe .com/ is evolving right along with the utility industry. These changes are visible in the magazine’s igentutility www.intell subscribe departments and in our continued sharing of utility successes, strategies and thought leadership. The hows and the whys of success will be particularly highlighted going forward. In 2012, we will feature stories from our UtiliQ Top 25 Intelligent Utilities, as well as stories from those who didn’t make the Top 25 but are moving forward in an innovative fashion all the same, focusing on strategies and technologies of most needed to maintain reliability and cost-effective service. And now, ladies and gentlemen, if we may all lift our glasses, I’d like to propose a toast: “To interesting times, and a successful 2012!”
Kate Rowland Editor-in-Chief, Intelligent Utility magazine krowland@energycentral.com
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TRANSMISSIONS
Letters from readers www.intelligentutility.com the big picture
EDITOR-IN-CHIEF Kate Rowland
krowland@energycentral.com 250.227.8938
health, safety, precaution, and any remnants of law.
The No. 1 utility challenge
“There has been no public discussion on the known biological hazards,
SENIOR CONTRIBUTORS
both to humans and our pets, with these new meters. There has been no testing of these meters for any kind of
Phil Carson
safety. However, utility Public Relations ‘spin’ includes that: they will cut power
++Facing 2012, this hurdle must be mastered
costs to consumers, thus lowering
by Kate rowland
Editor-in-chief, Intelligent Utility Daily
your monthly bills; help customers reduce power consumption during
This monTh, The Top 11 have coalesced inTo a Big Top 1.
peak times; and the meters can be
pcarson@energycentral.com 303.228.4757
read anytime, via a planned new ‘grid’
There are numerous challenges facing electric utilities in the comin the works for the entire country that ing year, not the least of them being a federal election in which the outcome is will use these meters. Utility compaanything but certain. nies insist these meters are safe.” In discussions with utility executives, consultants and vendor partners over Or this doozie, in the same article: the course of 2011, it has become clear to me that there are certain “sophomoric” challenges ahead for even the most technologically forward-facing electric utili“The EMR Policy Institute further notes ties. The race to deployment fuelled by American Recovery and Reinvestment that ‘components of Smart Meters are Act funding has slowed, deployments have begun or are being completed, and out of compliance with the National new hurdles are being encountered along the way. The wave of excitement that Electric Code (NEC) because they washed over the industry with federal funding and the ability for some utilities trip the Ground Fault Interrupters, to move forward more quickly with new and needed technology has waned creating a fire hazard ... Un-intentional somewhat in the face of small but vocal pockets re-radiation of RF/MW of consumer resistance. signal (with its higher effective communication And this challenge—that of effectively energy) on the electricommunicating with consumers—is the No. 1 cal wires may overload with customers about hurdle electric utilities must clear in 2012, or wires, particularly in their consumer-facing intelligent utility efforts poorly grounded or the changing utility is a will be all for naught.
FEATURE WRITERS
Mike Breslin, John Johnson, Phil Johnson, Laurel Lundstrom, Elizabeth McGowan, Cate Meredith
“
COPY EDITORS: Martha Collins, J. Ian Tennant ACCOUNT EXECUTIVES
ungrounded homes,
in fearmongers we trust new arena in which both wiring or faulty wiring.’” Try as we might to fight fiction with fact, we have in many ways gotten off to a stumbling utilities and fearmongers Fighting back start in terms of communicating effectively with Say what??? This is the customers. Unfortunately, the fearmongers have are playing. stuff that’s going viral taken advantage of the industry’s somewhat on the Internet, folks, spotty communication/education history to backed up by YouTube videos getting spread their own creeds to fill the void. Let’s face it—effective communication hundreds of thousands of hits. Put with customers about the changing utility is a new arena in which both utilities “Dr.” in front of a person’s name, and and fearmongers are playing, and the fearmongers have been the first to put the general populace is more likely to serious points on the board. believe it to be true, despite what their It should be easy, right? Combat fiction such as this (and I’m quoting directly utility tells them in response. Because, from a recent article posted on Global Research.ca by an author and environyou see, they’re also being told not mental writer with a PhD who has fought the battle on everything from toxic to trust anything their utility’s public metals and chemical aerosols to women’s feminine products, and has now relations spin doctors tell them. turned her focus to radiofrequency radiation and the invisible hazards of “smart” It’s virulent, and it’s hitting your meters). To wit, she wrote, in a piece published on the Web site on August 19: customers directly in their sweet “Smart-grid projects are supposed to ‘meet strict cyberspace guidelines’; spots. You’re the bad guys, you’re going but that has not happened, because greed trumped everything else: our to give them cancer and burn down
Jean Micketti, Ken Maness, Todd Hagen
”
sales@energycentral.com 800.459.2233 their houses, and charge them more money for the privilege while you’re doing it. Period. So what do you do to combat this virulent spread of misinformation? Unfortunately, there’s no silver bullet, no magic potion, to immediately set aside what your consumers have already heard. You’re in a position of playing catch-up now, whereas you really want to be out in front with good, solid truth.
proactive, not reactive Fearmongers are experts in the use of social media. It’s time for electric utilities to become experts, as well. First, monitor what’s being tweeted about you, and what’s being said in other social media arenas, too. Then, you need to fight fire with fire, but be responsive, rather than reactive, in doing so. Put the PhDs on your side out there in the media, and give your consumers the facts in a straightforward, easily understandable fashion. Groups such as the Smart Grid Consumer Coalition and the Smart Meter Manufacturers Coalition are working diligently to provide the industry with information to combat the misinformation. Armed with the facts, you then have to work on the trust issue, which is more specific one utility to the next.
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or homes with older
Eric Swanson, Stephanie Wilson, Patricia Davis CUSTOMER SERVICE
Cindy Witwer, 800.459.2233
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ENERGY CENTRAL
www.EnergyCentral.com
The No. 1 utility challenge September/October 2011
What should be done to master this gap in effectively communicating with consumers? What would the plan look like? Name withheld
IT workforce of the future
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September/October 2011
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Great observations here. On the consumer side, the Internet took off when apps were “good enough.” Example: Streaming video wasn’t as good as TV, but it was “good enough” to gain traction with consumers. For utilities, though, just as with banks, any degradation of security and reliability is simply not “good enough.” Name withheld
Electric vehicles: Has a revved-up topic started? Intelligent Utility Daily, Oct. 6
Very timely article on potentially “stalled EVs.” Obviously, being in the L.A. area, Glendale is in one of those targeted areas for high EV saturation; plus our customer demographic is optimal for EV adoption. While we
have started to see a small increase in EV adoption, to date it has been much slower than originally anticipated. Some of the reasons that you cited could very well be the motivation, or lack thereof. We at Glendale Water and Power, however, continue to develop the customer interface applications necessary for proper charging operations for both residential and commercial/ industrial/institutional customers. We have partnered with third-party charging station suppliers along with a large local university to ensure that both our system and the customer application will work as planned and in harmony. We are currently integrating the charging application in our newly operational smart grid system to assure seamless integration and system optimization for both customers, third parties and our utility. Bottom line, while we are preparing for a fairly high saturation of EVs, we have yet to see it develop. Glenn Steiger General Manager Glendale Water and Power
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TRANSMISSIONS “ In its most elemental form, the brand is the accu-
that the consumer feel the utility is looking out for its best interest. In each instance that a utility uses a heavy hand or makes a decision that was perceived to be counter to the consumer’s interest, it erodes consumer trust. Every frustrating interaction on the Web site or the contact center further erodes brand equity. This makes it much more difficult to communicate and influence the consumer base. A distrustful consumer will rarely listen to a utility communication and will definitely have a difficult time believing it. Thus, telling a mistrusting consumer that this smart meter will improve his life falls upon deaf or suspicious ears. As a result, this opens consumers up to believing communication sources that say smart meters cause cancer even when science and common sense suggest otherwise. There will always be good and bad information on the Web and in the media. Consumer consumption and internalization of this information reflect past experiences with this company or organization. Poor experiences will improve the chances of people being influenced by negative information and good experiences will allow positive messages to take hold. Thus, it is important for utilities to build these positive relationships, which take years if not decades, and shape its organization so it is consumer-centered. Moreover, it’s also why utilities must blog and create content that helps to shape the digital conversation.
I agree with the first poster here regarding how branding will be/is a key component of obtaining customer buy-in and adoption of smart meter technology. That said, I think many utilities traditionally have had a different sort of brand-building task than they will need moving forward. They might benefit from borrowing branding know-how from established consumer brands. Traditionally, being a good corporate citizen, sponsoring community events, etc., were key components of a utility’s brand. Basically, keep your image good within the community. But as competition starts to enter into many communities, different goals are needed. What makes one energy provider stand out from the next? Cost? Service? Friendly employees? Quality of electricity? It will be interesting to see how different companies define their purpose in the market and how they present that to the consumers. In general, this is not something electric utilities have done in the past. Most other industries are significantly ahead of utilities when it comes to customer focus and branding. I think it would be interesting to see co-branded services or promotions from familiar consumer names. What if Whole Foods and a local electric company teamed up to provide a green energy service? Would people’s positive view of Whole Foods help a utility gain that 10-percent tipping point quicker? Maybe Best Buy provides home devices and Geek Squad services in partnership with the local electric company. It seems like utilities could benefit greatly by leveraging existing consumer brands to help gain the “trusted advisor” status.
Name withheld
Stephen Smith
mulation of experiences between the utility and the consumers. Positive experiences help to build the brand and negative experiences erode it.” Hitting the tipping point in smart consumer engagement
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Intelligent Utility Daily, September 19
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In the many posts I rarely hear anyone talk about the utility brand. Branding is one of the most important topics when it comes to building relationships, communicating effectively, and influencing consumers. In its most elemental form, the brand is the accumulation of experiences between the utility and the consumers. Positive experiences help to build the brand and negative experiences erode it. For those utilities with strong brands, they will hit the tipping point much faster and with much less effort and cost. Moreover, the strong brand will provide the utility with more options for attaining its goals. For example, a utility with a poor brand will have a much more difficult time implementing an opt-out program or even raising rates. In contrast, a utility with a strong brand can consider these options moving forward. The brand in the utility industry is built largely on trust because of the information and power asymmetries that exist between a monopoly utility and consumer. If a consumer is unhappy with its utility, he cannot simply choose a competitor. This creates a relationship where the consumer is at the utility’s control, so it is essential To contribute to the Transmissions department, please e-mail your submission to intelligentutility.editor@energycentral. com. Provide your name, address and daytime phone number. Letters may be edited for style and space.
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THE BIG PICTURE
Ralph Abbott founder, Plexus Research, SAIC Energy, Environment & Infrastructure, LLC.
Top projections for 2012 ++Experts weigh in on the top challenges for the coming year By Kate Rowland
IT’S ONE THING FOR ME TO PROGNOSTICATE ABOUT 2012
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industry trends using my own, admittedly somewhat murky crystal ball.
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A quick glance back at last year’s Top 11 projections for 2011 shows I was right in 7 of 11 predictions, with only four being a little over-anticipatory in nature. Electric vehicles did not, in fact, begin to push the limits of distribution transformers; intermittent renewable generators did not test the limits of stable, reliable power; energy storage is not yet front and center; and the jury’s still out on venture capital and other industry investments. So this year, I decided to widen the view. I asked 11 industry consultants, analysts and researchers to give me their top-of-mind answers—in only a few words or in as many as it took—to the following question: “What is the biggest issue facing our industry today?” I received both brief and lengthy answers, and each rang bells, identifying key issues that need to be addressed in 2012 . HERE
IS WHAT THEY TOLD ME. »
The problem? The progress in developing peak-sensitive rates that balance cost recovery, load shifting incentive, fairness, understandability and the many other facets of innovative rate design is negligible to almost undetectable. This is a huge challenge! The expected benefits of AMI and demand response are not being realized, except in tiny pilot projects. Rate design is no walk in the park! Today utility rate designers are burdened with a multitude of social welfare and income redistribution objectives that confound pure costbased rate-making. If we don’t have simple, clearly understood time-of-use rates, how can we expect the consumer to respond or even participate, unless such rates are mandatory? And if the consumer cannot or does not participate, the expected demand response underpinning of many AMI justifications becomes a mere fairy tale!
Mark Gabriel senior vice president, strategy and business process, enterprise management solutions, Black & Veatch Corp.
The No. 1 issue facing our industry today is dealing with pending regulations—the oft-cited “train wreck”— at the same time as managing rising customer expectations of service quality at a low cost during times of declining electricity consumption. This issue is not just about carbon, but rather how capacity will be met at a cost the public will tolerate. The greatest challenge for the intelligent infrastructure in 2012 will be the deluge of data and the struggle to prove out the initial business cases which vastly overestimated the direct
ture, as it represents one of the few ways our industry can better manage supply, demand, reliability, quality and security.
Stephanie Hamilton smart grid R&D manager, global and regional solutions directorate, Brookhaven National Laboratory
I think the biggest issue is whether early smart grid deployments will receive cost recovery from regulators.
Patti Harper-Slaboszewicz management consultant, Bass & Company
It is clear now to our industry that consumer opinions and experiences matter a great deal. Offering customers new products and personalized information is
W W W. I N T E LL IG E N T U T I L I T Y.CO M
customer benefits (expecting end users to carry the proverbial benefit ball) and greatly underestimated the utility side benefits which ultimately will benefit customers. In order to prove the worth of the investments, utilities will have to make use of the mountains of information that are now flowing from smart technologies as they work to show prudency in the investments. Ironically, the two challenges— proving the worth of smart grid investments (and not drowning in data) and meeting the overwhelming impact wrought by new regulations—meet at the juncture of intelligent infrastruc-
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THE BIG PICTURE to offer low-interest loans for top efficiency replacements. Move the EnergyStar bar every five years (some have not moved in more than two decades). We have lots of goals that Congress has passed and the president has signed into law. Now they need funding and teeth.
Charles W. Newton
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owner, Newton-Evans Research Company
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an appropriate path forward to show customers how the smart grid may benefit them. The customers are probably not interested in the effort it will take for utilities to successfully achieve this vision, but regulators and consumer advocates should take the time to understand the complexities that go into providing a secure and scalable customer platform. Utility regulation in its present form remains cumbersome and expensive. Regulators should lead by example and require collaboration rather than continuing a system so dependent on contention and positioning. Technology advances are happening too fast to continue to regulate the industry this way. A recent example comes from the cellular world where we as consumers will now be informed when we are about to use up our minutes. Five years ago, that would have been great. Today, how many of us use our phone to talk?
Doug Houseman vice president of technology and innovations, EnerNex
Put up $5 million to create a 2,000-square-foot home that uses 5 MWh a year or less of electricity or equivalent, and does not have batteries (and overproduction of PV or wind does not count), and we will find people looking for better ways to build homes that use less energy and use more of their environment to a beneficial effect (earth-sheltered, roof overhangs, etc.), and then put the learnings into the building code. The problem is not energy policy, but the unwillingness to put teeth in the policy we have. Want higher efficiency? Tax the daylights out of gasoline and non-EnergyStar refrigerators. Tax low-efficiency air conditioners and furnaces. Increase property taxes for old air conditioners and furnaces that do not have the level of efficiency that is needed. Then turn around and use the tax money
The first thing that hits me squarely as the most important issue facing the electric utility industry is uncertainty over four things. First, uncertainty over the lack of a long-term energy policy (or even a statement of goals and the means to reach these goals). Second, a lack of clarity for a national regulatory approach to transmission policy (wherein federal, state, local and environmental concerns can be worked through in less than a year or so). This will surely have a positive effect on grid integration of renewables. Third, a need for federal provision of underwriting for smart grid and infrastructure redevelopment programs during uncertain economic times. I believe a key to utility confidence in investing more in infrastructure and automation is the recovery of their industrial (and, to a lesser extent, commercial) customer base. Fourth, there is a need for utilities to think outside the box to grow their business without having to rely on basic price hikes. That is, the industry needs to realize what great opportunities are out there for participating in evolving segments. I believe there are multiple issues confronting the industry. There are different issues in different regions of the country, and issues vary among the different utility types (IOUs vs. Munis vs. Co-ops).
THE BIG PICTURE
Richard G. Pate principal, Pate & Associates
The issue of public expectations for smart grid technologies being set higher than utilities are capable of delivering anytime in the near future is the biggest challenge facing utilities in 2012. This will play out in outage restorations that take as long if not longer than before, as well as utilities not being able to deploy PEV infrastructure to meet market demand. These high-expectation failures will surface in public utility commission meetings as utilities try to get funding for the new technologies. The end customers will have not seen immediate tangible benefits, and they will push back against the rate increases for the technologies.
I would say that because the federal government has not clearly defined the direction that’s needed for the smart grid, the country is being split into “haves” and “have nots.” The “haves” are utilities that have already started down the path to a smart grid and can offer their customers the benefits that it brings, whereas the “have nots” cannot. Recent state regulatory action only exacerbates this problem, making it more difficult for the “have nots” to move to a smart grid. The only solution is for the federal government to set this direction.
Dr. Zarko Sumic
Rob Wilhite
managing director, Cognyst Advisors
vice president distinguished analyst, energy and utilities, Gartner Industry Advisory Services
The biggest issue facing the industry today is a lack of alignment of national energy policy, regulatory framework and utility business model.
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principal, energy and cyber security program, Booz Allen Hamilton
To me, the one issue that stands out is the lack of meaningful efforts and funding to develop, scale and implement storage in the grid at generation, transmission, distribution and end-user locations. Nothing has the potential to change the game so much as efficient, cost-effective storage, and yet the investment in it is small compared with things like smart meters, which don’t have anywhere near the current and future impact. Storage is also critical to the implementation and integration of virtually all alternative energy sources, especially those such as wind and solar that can never be continuous on their own, to microgrids, and to electric vehicles. “One word, Benjamin—Storage.”
Howard A. Scott
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Ken Van Meter
global director/senior vice president, management and operations consulting, KEMA
Utility executives I speak to are concerned about the current period of reduced load growth in their regulated markets due to the economic malaise, which impacts their ability to seek regulatory cost recovery on a number of investment fronts. However, the more important consideration is how they apply new innovation and new business models today, as they seek value creation for their stakeholders when the economic recovery eventually does surface. Therefore, there is a need to revisit approaches that failed and succeeded in the past, as well as what is currently working in markets that are still exhibiting strong growth today (e.g., Brazil, China, India). We will be exploring this topic throughout 2012 in our “Out the Door” column. If you would like to contribute your thoughts, please e-mail krowland@energycentral.com
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++Decentralizing has its advantages By Kate Rowland THERE’S AN OLD ADAGE THAT CAUTIONS
there’s no point reinventing the wheel. Oftimes, it’s true, but every once in a while, taking a step back and looking at potential new uses for that old yet favorite shirt—or wheels—has its advantages. So it is with the concept of distributed generation, and distributed energy resources. A history and a legacy Back in 2006, in a paper titled “Installing distributed generation into electric power systems: A review of drivers, challenges and opportunities,” J. A. Pecas Lopes et al. wrote: “It is now more than a decade since distributed generation began to excite major interest amongst electric power system planners and operators, energy policy makers and regulators as well as developers.” But it actually reaches much further into the past than that. A February 2007 study by the U.S. Department of Energy entitled “The Potential Benefits of Distributed Generation and Rate-Related Issues that May Impede Their Expansion,” notes: “Distributed generation is not a new phenomenon. Prior to the advent of alternating current and large-scale steam turbines—during the initial phase of the electric power industry in the early 20th century—all energy requirements, including heating, cooling, lighting and motive power were supplied at or near their point of use.” Energy storage and responsive loads It is the concept of distributed energy resources, rather than that of distributed generation alone, which is most exciting today. Distributed energy resources (DER) include not only distributed generation, but also energy storage and responsive loads.
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ILLUSTRATION BY MELISSA DEHNER
Generation intelligence
Enabling distributed generation
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GENERATION INTELLIGENCE
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Microgridding, too, becomes part of the mix. A 2009 Pike Research analysis of microgrids indicated that, although microgrids “offer a compelling alternative to traditional energy generation and distribution, utilizing smart grid technologies to enable integrated control of distributed power generation assets either in parallel to or ‘islanded’ from the utility power grid,” there are still few commercialized, state-of-the-art microgrids with significant generation capacity actually up and running in North America. The same can be said for energy storage, though that may be changing in the coming year. In late October, the Federal Energy Regulatory Commission (FERC) issued a final rule designed to justly compensate energy and storage-based resources that provide certain key reliability services on the electric grid. Order No. 755, on frequency regulation compensation in the organized wholesale markets, noted in part: “Commenters cite several studies to support the argument that faster-responding resources will result in economic benefits. Among them is PNNL’s study showing that fastramping energy storage devices (such as flywheels and batteries) could be as much as 17 times more effective than conventional ramp-limited regulation resources because of how quickly and accurately they respond to a system imbalance; and a California Energy Commission study which shows that, ‘on an incremental basis, storage can be up to two to three times as effective as adding a combustion turbine to the system for regulation purposes.’”
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Implementing energy storage This past summer, American Electric Power (AEP) became the first electric utility in the U.S. to deploy a community energy storage (CES) system in its service territory. Termed “a watershed in the history of grid-connected electricity storage in the United States” by James Greenberger, executive director of the National Alliance for Advanced Technology Batteries, the AEP CES system consists of 80 25-kW units, installed in a residential neighborhood in Columbus, Ohio. Greenberger feels that many industry experts are coming to the view that CES will be the “killer app” in grid-connected energy storage, as CES has a number of unique advantages. “Because CES systems are located immediately proximate to the ultimate customers, they can provide backup power, level
peak loads and reduce the strain on, and necessary investment in, the complicated and often unsightly infrastructure needed to distribute centralized electric power,” he said. As well, CES systems can be networked to provide transmission support and leveling of variable renewable energy generators, and can “facilitate the deployment and rational net metering of distributed solar and wind electricity generation and support the recharging of electric vehicles on demand,” he added. Microgrids on the rise? While the town board of Lewisboro, NY, said “no” to a microgridding plan—in fact, the board refused to even hear the proposal—brought forward by a private entreWhilst the pace preneur back in 2009, U.S. military bases, college camof change is likely puses and utilities themselves are moving forward with to be evolutionary, pilot projects and research designed to prove microgrids the change itself is as a boon to system reliability. San Diego Gas & Electric’s expected to be nothing Borrego Springs project is one example. In another, AEP’s short of a revolution. hosting, for more than a decade, of the Consortium for Electric Reliability Solutions (CERTS) test site has allowed for key breakthroughs in potential microgrid commercialization. And the Sacramento Municipal Utility District (SMUD) is now taking the CERTS research out of the laboratory and into the real world. SMUD’s headquarters-based microgrid will include three 100 kW CHP combined-heat-and-power natural gas-fired generators, 10-kW of solar PV panels, and a 500-kW battery for storage purposes. It is meant to further test, monitor and potentially refine the electrical integration of micro-generation systems with the larger utility electrical supply systems and other small power sources such as photovoltaic or fuel cells. SMUD expects to operate the facility for a decade or more.
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Brave new world? According to Pecas Lopes, the power system architecture is bound for change. “The power system architecture of the future, incorporating DER, will look very different from that of today,” he and his colleagues wrote. “Whilst the pace of change is likely to be evolutionary, the change itself is expected to be nothing short of a revolution as many traditionally held views and approaches to system operation and planning developed over the past 100 years are challenged and transformed to suit the requirements envisaged in the brave new world of the future.”
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energy
GENERATION INTELLIGENCE
Power to the people ++Distributed generation can strike a balance, change the paradigm By Doug Houseman
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MOST OF THE WORLD CONSIDERS ELECTRICITY
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to be the answer to clean energy. The assumption is that all electricity can be created in a renewable fashion. This means a change in the way the industry operates. For the last century, the power industry has been a loadserving industry—in short, running according to the maxim, “You turn on a switch and we will make more.” In the future, that basic paradigm has to change if we want to support the maximum amount of renewable energy. The new paradigm has to be a supply-following industry, i.e., “If you make more, we will find a place to use it.” Even if we are successful at changing the industry, will consumers accept the new ways that power will need to be made in their backyards? Will they accept the infrastructure required to move the power from where it is made to where it needs to be used? These are the questions that industry and society will have to tackle and answer together. Electricity demand vs. preserving nature Some have no issues with windmills that are 300 feet tall being planted in close proximity to their communities and backyards. For others, any viewable windmills pose a problem, even if they are miles away. A more energy-efficient future may include such features as a horizon dominated by concentrating solar plants with acres of mirrors and towers that are each a hundred feet tall and are as bright as the sun if you look at them from the wrong angle; fields of photovoltaic panels (solar cells) that reflect the slightest light at night and can provide the same level of reflectivity as a well-polished car and that fill the fields that used to grow
corn; dams and river turbines that generate power either around the clock or on demand and that may change the flow of the river water and store water for times when more power is needed. How do we balance the demand for electricity with the idea that nature should be preserved? This is an issue that needs to be discussed and for which suitable answers need to be found. Today, much of the discussion is happening at the two extremes of public opinion and the people in the middle are sitting on the sidelines. The final decision on these issues may determine if we can even afford electricity in the future. A measure of balance needs to be struck between the demand for energy and the ability to make it. It may end up that some regions of the country that reject new generation may end up paying much higher prices for energy that is imported from other regions and that power may become so scarce at times that people are without power for hours or even days at a time. California already experienced some of this with rolling blackouts in the last decade. Distributed generation Human-scale generation that is close to the locations where power is used has been a goal for the past 30 years. Distributed generation comes in many forms, ranging from diesel and gasoline generators to windmills and solar cells. Not all of this power is created equally and not all of it is especially well-liked by the public. A diesel generator humming away at three in the morning right after a hurricane is very acceptable to the neighbors, especially if the owner is willing to share the generated power. However, a diesel generator that hums away every night and requires a weekly visit from a fuel truck is frowned upon by most neighbors. In many cases, it is considered to be a sign of failed infrastructure similar to the situation that existed in Baghdad in 2005. Solar cells are almost always acceptable, unless their installation requires removing trees to allow the sun to shine directly on the panels. The desire to have generation in close proximity to the communities where it will be used is strongly held until the actual implementation starts and residents realize that it will change their neighborhood and environment. Again, there is
going to have to be a wide-ranging discussion that includes a broad spectrum of people to set rules that are reasonable.
niques. In an extreme case, this will mean that in one minute, enough power exists to wash the clothes, while in the next, there is not sufficient power to complete the task. Potentially, this could necessitate a complete redesign of equipment to use flywheels to ride through the loss of generation. This has already been done by many people who have built houses off the grid. Figuring out how to coordinate generation with demand is the subject of a large number of ongoing research projects, many of which are focused around “smart homes.”
Distributed renewables Run-of-the-river hydro, solar cells and small wind are all distributed generation methods that people accept as renewable and to some extent are willing to support in their community and even in their own neighborhood. Run-ofthe-river hydro uses slow-turning river-bottom turbines that look like old-style ship propellers. Because they turn slowly, very little life in the river is disturbed. They can be installed in local creeks and rivers, even if the water is not Smart homes and businesses always present. There is no impoundment of water, so there Not only are homes going to get “smart” in the near future, is little disturbance of the actual flow of the river. but so are businesses and appliances. Developing technology Another version of run-of-the-river technology is using to allow homes, appliances and businesses to communicate small waterfalls in mountainous regions that may be season- about energy needs, prices and schedules is an important able in nature. These facilities seek step in changing the industry paradigm. If to capture the water before it falls these devices can understand the amount of Will consumers and return it to the area where it power that is available without the intervenwould fall. The presence of piping tion of the homeowner and the home or busiaccept the new ness owner can set priorities for energy use, and turbines are the only sign that the systems can largely manage themselves. anything has changed. ways that power Some are fearful of having appliances and Neither type of run-of-thehomes that are intelligent, and they often river hydro is without drawbacks, will need to be made point to old science fiction films as the reason but both seem better than conwhy. After all, who wants a HAL9000 running ventional dams from an environin their backyards? their lives? Others are very worried about primental standpoint. Most people vacy and the loss of it. Getting to the “iPod” understand solar cells and what they entail for installation. Small wind comes in an array of of smart homes that homeowners are comfortable with will choices, from vertical windmills that look like upside-down take time and research into how people want to interact with egg beaters or pop cans with the sides cut open, to old-style their energy equipment. This is not a single-step process, but farm windmills, to modern-looking propellers in the air. rather a journey that may take a decade or more to perfect a Each has its own advantages and drawbacks. first-generation technology that large numbers of people are willing to adopt. Distributed non-renewables Combined heat and power plants that burn natural gas or Smart grid fuel oil to produce electricity, hot water and space heating Beyond the home is the infrastructure that connects the can be as much as 98 percent efficient. This is a leading tech- homes and businesses to the electrical generation equipnology in the Netherlands and Demark. Likewise, diesels ment. This set of poles, wires and transformers will be even have been around forever and are the basis for most of the more critical in the future as people attempt to balance a demand response in the major East Coast electricity markets. system that has even more variability than the system they Instead of turning off the use of energy, most businesses that are used to today. Offering surplus power to a neighbor— participate in demand response programs can make enough or a neighboring state—in return for electricity from them money to make it worthwhile to run the diesel instead when when you are running short will be a minute-by-minute or the power price is high enough. Non-renewables offer some- hour-by-hour process. The more connected people are and thing that most of the renewables don’t: namely, the ability the more efficient the connection system is, the better chance to schedule generation when you want power. there is of using more renewables as a source of energy in the If you want electricity on demand, then you need sched- future. The smart grid is a complex topic that encompasses ulable resources, since it is today impractical to store elec- literally hundreds of technologies. tricity as electricity. The more generation in an area that is Doug Houseman is vice president of technology and innovations pushed into the non-schedulable boxes, the more the use of for EnerNex. This is an excerpt from Houseman’s new white paper, electricity has to be driven by the available generation tech- “The Low Carbon Menu”©.
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SMART co-ops + munis As smart grid planning was under way, the utility began meeting with customer groups to discuss the upcoming effects the water shortage would have on the community as well as the utility. At this time, GWP customers were receiving bimonthly bills. One of their main concerns was that they didn’t know what their usage was until they received their bill, so they had no way of knowing whether or not they were conserving. I decided it was time to start planting the seed that smart meters were the best way for customers to monitor their water usage and to know exactly how much they were using and when, and how it would help them conserve.
Baking communication in from the beginning ++Glendale Water & Power shares its outreach strategy
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By Glenn Steiger
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GLENDALE
WATER
&
POWER
(GWP),
A
medium-sized municipal utility based in Glendale, CA, started brainstorming the idea of entering the smart grid around 2007. By 2009, ideas on paper actually led to the utility starting one of its largest utility projects ever—deploying an advanced metering infrastructure (AMI). At the same time, the utility, which provides both electric and water services to its customers, was also implementing a mandatory water conservation ordinance due to the overwhelming water shortage California was experiencing. Customer focus on two fronts GWP was now focused on customer education and outreach on both the water and electric side on two completely separate topics—encouraging customers to conserve water and introducing customers to the concept of the smart grid.
A phased approach As we approached our City Council to obtain approvals for consultants and vendors to start the AMI project, we determined that the project would consist of four phases. The first phase—the AMI and meter data management system (MDMS) phase—included the installation of a citywide Wi-Fi mesh connected at 13 points to the GWP-owned fiber as well as the installation of more than 120,000 electric and water smart meters, which would communicate through two-way radios. The second phase included customer programs, inhome displays, future pricing plans, thermal storage and demand response. During the third and fourth phases, the utility would focus on distribution automation, including system upgrades to the software supporting distribution automation and hardware upgrades within substations and along distribution feeders. Launching such a turnkey program with the installation of smart meters required a heavy emphasis on education
Identify the stakeholders GWP’s first steps involved identifying all of our different stakeholders and then setting out to talk to each group and inform them of the project. At the same time the utility cre-
ated a stakeholder management advisory committee comprised of various members of the community representing different stakeholders. This committee met with GWP on a monthly basis to discuss the project, its benefits and how the utility is reaching out to the residents of Glendale. Stakeholder meetings consisted of town hall meetings, as well as more than 50 presentations made to a variety of stakeholders such as Rotary clubs, realtors’ associations, merchants’ associations, the school district, hospitals, and large commercial clients. The utility also followed some of the other investorowned utility projects and the issues they were having with their customers, in order to ensure we didn’t run into similar problems. After being the first utility in the nation to sign the Department of Energy grant to receive $20 million for this project, GWP made the $70 million cost of the project
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and customer outreach. Not only was the utility becoming smarter and entering the smart grid, but our job is to make our customers smarter about the new technology, since they are the ones who will be experiencing most of the benefits of this modernized technology. The utility’s success in implementing this project and program hinges on the creation of an effective dialogue with customers in order for them to understand it, and for us to meet their needs and address their concerns while helping them understand and take advantage of the full benefits of the technology.
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SMART CO-OPS + MUNIS
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public in all our outreach efforts and reassured customers their rates would not be affected as a result of the smart meter installations. Press releases were also regularly issued to announce grant receipts, installation timelines, project progress and project successes.
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Pre-notification in stages The utility launched the project with a proof-of-concept phase in which we not only tested our installations, meters and system, but also tested our communication outreach materials. We developed an introductory letter that notified customers four weeks out that they would be receiving a smart meter. Included with the letter was a FAQ (frequently asked questions) brochure. Two weeks out customers received a postcard about their installations as a reminder and door hangers were placed on their doors after a successful installation. Bill inserts also started going out at this time to inform customers of the project, and directed customers to the GWP Web site for more information. The letter, brochure, bill inserts, and all related smart grid advertising had the same look, same message and remained consistent throughout the entire smart meter installation project. The Web site was updated regularly with FAQs, information on radio frequency, benefits of entering the smart grid and installation schedules. Community outreach in a public fashion As the project progressed and the utility was starting to install thousands of meters each day, the local press quickly lost interest in the subject of smart meters. GWP relied on its internal communications team to continue outreach and education. We started attending more community events, where we hosted a booth with information on the meters, had a sample smart meter at the table where customers could see what was going to be installed on their home. The utility also started advertising “Coffee’s in the Park” and inviting residents to a different park each weekend to come out and have coffee with us, where we could address residents’ questions and comments. GWP hosted more than 10 of these events and drew about 200 residents. Monthly progress reports to televised GWP Commission and City
Council meetings also informed customers on the status of the project. What were the challenges? Older, under-recording water meters were replaced with extremely accurate meters, therefore producing higher bills. Customers negatively associated smart meters with higher bills and distrusted the new meters. Addressing this concern was important, as was assuring all customer service representatives knew how to explain this when customers called, in order to help erase this misconception. Customers were also advised that all meters will be manually read at first to provide parallel testing of the automatic reading capability of the system. Other challenges include the issue of privacy and security. Customer outreach will never end. As more and more negatively focused videos get uploaded to YouTube and the Internet links shared among groups, more and more people can be misinformed about the benefits of the technology instead of how it can assist our customers. As a utility, we have to be ahead of the game and always ready and proactive in responding to these negative claims, as well as addressing Our job is to make customers in a way that will keep them informed and educated.
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our customers
Working through smarter about the the challenge in an open fashion new technology, Each utility might have its own set of challenges to work through since they are the as its project progresses. How the utility addresses these chalones who will be lenges can weigh heavily on the outcome of the project and can experiencing most possibly make all of the outreach and education a utility has done of the benefits. up to a certain point disappear or seem like it wasn’t enough. Showing customers proof, having real stories and examples to share of successes and challenges and how the utility has worked through them, is good reassurance. Always having open communication, open dialogue and transparency is important so customers see beyond just the installation of the smart meter. It just takes one misinformed customer to stir the pot. Focus on the following at all times: keeping communications consistent across the board, quickly addressing all customer issues and keeping customers well-informed are the key to launching and maintaining a successful AMI project.
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Glenn Steiger is the general manager of Glendale Water & Power.
Big Cities Or Small Cities. All Cities Can Be Smart Cities.
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SMART CO-OPS + MUNIS
approval to the KIUC, noting in particular, that “As a result of this funding, the rate impact to KIUC’s ratepayers is anticipated to be relatively minimal as (KIUC) estimates a residential customer’s bill using 500 kWh will increase approximately $0.57 per month as a result of the proposed project.”
PUC calls project transformative ++Kauai Island Utility Cooperative gets green light for smart meters By Kate Rowland
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HAWAII’S KAUAI ISLAND UTILITY COOPERATIVE
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(KIUC) received the green light from the Hawaii Public Utilities Commission at the end of September for its part in the National Rural Electric Cooperative Association’s (NRECA’s) Cooperative Research Network (CRN) smart grid demonstration project. The KIUC project, which will span five years, will see the installation of about 33,000 smart meters, a wireless mesh network system, a meter data management system, and smart meter thermostats and in-home energy displays along with ZigBee modules and software to enable consumers to view their energy usage. The project’s total cost is $11,964,004, half of which is funded by the U.S. Department of Energy/NRECA grant. Dual approval The KIUC project, which was filed in October 2010, got a thumbs-up both from the Consumer Advocate and from Hawaii PUC commissioners. “The project is transformative for the island of Kauai,” the PUC said. It added: “The commission also recognizes the additional benefits gained through access to study results from a wide range of national project participants through NRECA.” For its part, the Consumer Advocate, while acknowledging there were long-term uncertainties to the project, gave its
Efficiency high on the list KIUC, which is based in Lihue, Kauai, is a not-for-profit electric cooperative engaged in the production, transmission, distribution, purchase and sale of electric energy on the island. The project will bring advanced meter technology to every household on Kauai. “We are a small island grid,” Mike Yamane, the co-op’s chief of operations and project lead engineer, said in a statement issued shortly after the decision was announced. “Upgrading our electrical grid with smart meters and related technology can make our system more efficient and help integrate new smart appliances, electric cars, and other new and evolving technologies over the coming years.” According to the PUC decision and order, the new infrastructure will allow the co-op to conduct remote meter readings, detect outages at the household level, and demonstrate the effectiveness of load control and demand response systems and allow the utility to evaluate alternate rate designs. Installation is expected to begin in early 2012, and last for two years. The final three years of the project will be used for data gathering FASTFACTS and analysis.
Rural utilities represent
Advance community outreach more than 42 million KIUC began its community outreach people (and 17 million for the project as early as 2009, using meters) across 47 bill inserts, magazine articles, online different states in the U.S. information and more. In 2011, even (Source: Smart Grid Coop Utility Snapshot 2011) before the project was approved, it held quarterly meetings to discuss it with members, explaining the expected benefits for consumers: greater accuracy, fewer estimated bills, no meter readers on the property, billing date flexibility, a way to monitor energy consumption, improved power quality, faster outage restoration and potential energy efficiency savings for members. Additional projects on the go Another project KIUC has undertaken, this one without NRECA CRN funding (it was unsuccessful in its application), is an energy storage project on the island, necessitated by the addition of customer-sited PV systems. The co-op currently has approximately 4 MW of customer-sited PV systems throughout the island, with the largest system being 800 kW. So far, Yamane reported at the co-op’s last quarterly meeting, there have been no technical issues noticed with the addition of PV to the system.
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SMART CO-OPS + MUNIS
Enabling security for co-ops ++NRECA project brings security template to members By Phil Carson FLINT ENERGIES IS A COOPERATIVE UTILITY
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serving 17 counties in central Georgia, from four customers in the poetically named Chattahoochee County to more than 55,000 in Houston County. That’s 88,000 meters in all. And you can count the number of employees in Flint’s IT department on one hand. That’s one reason Frank Sams, manager of network systems for Flint Energies, is glad to be one of nearly two dozen co-ops participating in the Cooperative Research Network’s (CRN’s) smart grid demonstration project that has produced a cyber security toolkit dubbed Guide to Developing a Cyber Security and Risk Mitigation Plan. (The demonstration project is taking place under the aegis of the National Rural Electric Cooperative Association.)
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Remaining invulnerable Sams described the toolkit as an “actionable template of best practices” created so that any co-op could apply it to its own legacy systems and service territory, rather than having to reinvent the wheel or decipher the many cyber security standards. The driver for the cyber security measures is ensuring that in the course of automating parts of the grid with digital technology, these co-ops don’t become vulnerable to attack. The same co-ops participating in the Cooperative Research Network’s demonstration project are also testing in-home energy use displays and their effect on customer behavior. “Flint, like many co-ops, utilizes anti-virus software, firewalls, passwords and the like,” said Sams. “But that doesn’t add up to a full-fledged cyber security plan. For us, without a full-time cyber security person, we can customize a plan around our circumstances by using this template. This gave us a good, useful tool to walk through and review our practices and plans.” The template forces the user to walk through operational risks, for instance, and address vulnerabilities—it asks “Can you accept that risk or are you going to mitigate it?”—while linking to documentation in support of a co-op’s plan to meet those vulnerabilities.
Cutting through the verbiage The template is a good way to cut through the rather opaque verbiage in, say, the security standards created by the National Institute of Science and Technology (NIST), Sams said. “You can get this done on your own, but I wouldn’t have done as good a job, especially in the same amount of time, as we’ve done by using the CRN template.” The template provides guidance for co-ops to ensure that their vendors follow best practices. “We’re working on implementing a new SCADA (supervisory control and data acquisition) system and, by using the template, I have good questions for our vendor,” Sams said. While the CRN reviews the results of security reviews using the template and makes recommendations based on a utility’s answers, like much of what gets done at co-ops, the onus to remain vigilant and keep up with security lies squarely in the co-op’s court. “Once you’re done, you’re on your own,” Sams said. “The intent is that once you get this far, you’ll have an interest in maintaining your readiness.” Making the task do-able For instance, in coming months, Flint will be testing ways to apply cyber security to its SCADA system without adverse impacts on functionality. “You don’t want to lock down these systems so that they’re not usable,” he pointed out. “So you document your changes and procedures for making changes so that you don’t introduce new risks.” Speaking to the CRN template’s usefulness for co-ops, Sams said, “I’m an IT guy, but here, like most co-ops, I wear a lot of hats, so I’m not a full-time cyber security guy. It’s hard to read some of those NIST standards. “The CRN has cut down a huge task for my co-op and made the process so much more understandable and do-able.” This article originally appeared in Intelligent Utility Daily.
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SMART TECH
EQUILIBRIUM The new demand response
32
now for the markets By Kate Rowland DEMAND RESPONSE IS EVOLVING AND, AS
markets continue to change across the United States, it will evolve from a resource of last resort to one with market value, just like generation. In the past, demand response has been used as an emergency response for reliability by electric utilities. Today, though, it has the ability to be used as an economic resource. Federal Energy Regulatory Commission Orders No. 719 (issued on Oct. 17, 2008) and No. 745 (issued March 15, 2011) clarified demand response competition and compensation, and the requirement for grid operators to reform their tariffs and practices in this area, according to Jeremy Laundergan, director of utility services consulting for EnerNex.
Orders explained For purposes of background, FERC Order No. 719, Wholesale Competition in Regions with Organized Electric Markets, offered a series of reforms to improve the operation of organized wholesale electric power markets. As to Todd Griset, an attorney with Preti Flaherty, who blogged about both orders, explained: “Based on the premise that improving the competitiveness of organized wholesale mar-
ILLUSTRATION BY ABBY ORLANDO
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++The technology’s all coming together—
Prior to joining EnerNex, Laundergan was senior project manager with Southern California Edison, where he worked on emerging markets and technologies for demand response, including pilots to integrate demand response into the California Independent System Operator’s Market Design and Technology Smart tech equilibrium Upgrade (MRTU) wholeis all about using sale electricity market. available technologies—all He says that, while available technologies—in these orders clarified matbalance to build a stronger, ters on one hand, Order more resilient, more stable No. 745 put California in grid. Part of that equilibrium, a holding pattern for an going forward, will continue entire season to determine to include demand response, not only as an emergency whether the California measure, but dispatched as approach complied with a reliability resource. the order or not.
kets is integral to the Commission’s mission, FERC required regional grid operators to reform their tariffs and practices in the areas of demand response, long-term power contracting, market monitoring, and the responsiveness of grid operators to their customers—and through them, to the consumers who benefit from and pay for electricity services.” FERC Order 745, Demand Response Compensation in Organized Wholesale Energy Markets, requires regional grid operators to compensate customers fairly for reducing their consumption of electric energy in response to the grid operator’s warnings of supply scarcity (i.e., demand response), when that reduction in energy usage is costeffective and capable of displacing the need for additional generation online. Technology serving to move DR forward We are seeing technology being deployed as a part of AMI (automated metering infrastructure), Laundergan said, that is further enabling demand response, and furthering its capabilities. “We are seeing technology deployed Home energy in implementations which enables demand response networks will enable in new ways,” he said. Home energy networks customers to be will enable customers to be price responsive, and the price responsive. California Public Utilities Commission is currently looking at the constructs of just exactly how this will work. With Smart Energy Profile and OpenADR both about to release new versions of their certifications, the options continue to open for manufacturers and utilities. The state of Texas, Laundergan said, is working with an earlier version of Smart Energy Profile and is, as he puts it “off and running” with new demand response opportunities. As demand response becomes available marketwide for ancillary service response, it truly will morph from poor relation to equal partner as an economic resource option. W W W. I N T E LL IG E N T U T I L I T Y.CO M
Tapping the resource successfully “While we’ve had air conditioner and water heater demand response programs for some time,” Laundergan said, “What you didn’t have is the wholesale market construct to enable utilization of ancillary service.” Next year will see DR making a big step, just as California did with its Proxy Demand Resource (PDR) program, approved by FERC on July 15, 2010, and implemented on August 10 of the same year. Through PDR product,
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California is now able to both increase demand response in the ISO market as well as facilitate the participation of existing retail demand response programs in the ISO market. The trick to successful implementation, Laundergan explained, is to “figure out what their bid prices are going to be, and how often can this resource be tapped?” He added: “The nice thing is that it’s fairly quick. Air conditioner cycling can be triggered in short durations, but more frequently, without customers being inconvenienced by a noticeable change in temperature. And it can be dispatched as an economic price-responsive resource. “It’s going to take program design, as well as compensation for the end-use customer.”
It’s not one-size-fits-all There is a caveat, though: not all demand response should be placed in the economic resource category. “Everyone’s starting at different points: some have distribution automation (DA) without home area networks (HAN), some have AMI without DA ... utilities are figuring out the next best priority for investment. They have to consider: Where are we now? Where is our congestion? Where is our reliability?” he said. “It needs to be well-planned out before you jump,” Laundergan concluded. “However, don’t shy away from it, because it’s worth it.”
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Automated demand response provides new opportunities
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At Connectivity Week earlier this year, I was asked to moderate a panel titled, “What is ADR and Why Should I Care?” Demand response programs have been around for decades, primarily as interruptible programs, but technological advances including the Internet, smart metering, and reduced cost control have reduced barriers to entry, and increased interest in demand-side management has led to explosive growth in this market. Automated demand response (ADR) development and the evolution of common standards should serve to help continued growth. The OpenADR communication standards being developed by the OpenADR Alliance at the Lawrence Berkeley National Laboratory Demand Response Research Center aim to ramp up the interoperability of demand response and energy efficiency products available to the utility market. “OpenADR is the link between the dispatch systems and the end devices,” Jeremy Laundergan explained during the panel discussion. Laundergan, who is a director, utility services consulting, with EnerNex, was previously
senior project manager with Southern California Edison, whre he worked on emerging markets and technologies for demand response (see main story). Michael Manning, product manager of demand response for UISOL/Alstom, another panelist that day, explained the changes needed in demand response moving forward this way. Some current DR programs, he said, are more “spray and pray that you get the right response when you need it. Utilities need predictability and reliability of response.” “Automated demand response consists of fully automated signaling from a utility, Independent System Operator (ISO) or other appropriate entity to provide automated connectivity to customer end-use control systems and strategies,” explained Carl Besaw, project manager with Southern California Edison’s tariff programs and services group. Besaw, who is currently leading demand response emerging markets and technology efforts for the utility, explained that demand response reliability can be substantially improved through automation, as it reduces human error and serves to improve customer participation. “The customer still has the choice regarding strategy,” he said. “They decide.” Kate Rowland
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Using knowledge to shape the future 2011 Itron Users’ ConferenCe sharpens the foCUs R u s s Va n o s
“The world is watching what we are doing in
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North America. So we have a responsibility here.” With those words, Russ Vanos, Itron’s vice president of corporate marketing and communications, welcomed the more than 700 utility customers from 14 countries and 120 partners to the 2011 Itron Users’ Conference.
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For two days in mid-September, The Phoenician Resort in Scottsdale, Arizona, was the site of intense focus and collaboration by utility representatives and Itron partners – including more than 270 firsttime attendees – as they shared new information and experience designed around the conference’s theme: FOCUS. As Itron Users’ Advisory Board 2011 Chairperson William R. Cloutier, Jr., told attendees in his welcome letter: “Turning the smart grid, energy, water and environmental goals of our world into reality will require the focus of industry leaders to collaboratively improve, standardize and implement technology solutions.” Let’s listen in on some of those discussions, spread over 150 breakout sessions and literally thousands
of conversations that went on over two days throughout the conference center.
Setting the stage for shaping the future “We’re bombarded with 3,000 new pieces of information every day,” Vanos told the standing-room-only audience in the opening general session. Endless streams of data available to us all make honing in and truly focusing on the important pieces difficult. This year’s conference was designed to help attendees do just that. “We want you to really focus on one aspect of the future while you’re here,” Vanos said. In setting the stage for the keynote speakers and conference sessions to
follow, Vanos shared his thoughts on why a renewed focus on resource management is critical to ensuring sustainable energy and water delivery for generations to come. “The way the world manages energy and water will shape this century,” he said. “This is Itron’s vision. Our mission is to provide critical knowledge to empower the world’s utilities to responsibly manage both energy and water.” Knowledge, Vanos said, is critical to optimizing and managing precious resources. “Every vendor is talking about data and information. Only a couple are talking about knowledge,” he said. “For us, it’s really about taking knowledge and helping you shape your future.” Itron’s specific areas of focus include:
Getting electricity right, and water’s rising tide The first morning’s keynote speakers talked about changing trends in energy and water. Jesse Berst, managing director of GlobalSmartEnergy, detailed the reasons why Electricity 2.0 is the biggest opportunity of the century: “We are reinventing electricity, and reinventing the consumer.”
A full 40 percent of today’s patents are related to electricity and how it is delivered, Berst said. “We are reinventing how we create energy that doesn’t steal from the future, and we are reinventing what we’re using it for. Grid 1.0 is not keeping pace: it was invented in the age of Edison, designed in the age of Eisenhower, and installed in the age of Nixon,” he said. The new grid, or Electricity 2.0, is borrowing from lessons learned already from other industries in order to provide a grid that is more observable, much more controllable and self-healing. As electricity customers evolve, the industry must evolve with them. “The new consumer is very engaged. The passive ratepayer is disappearing at a rapid rate,” Berst said. “The new consumer demands control and expects choice. We’ve moved into this world of choice in all aspects of our lives. And the new consumer wants actionable insight. We have entered the Electricity Economy, Berst said. In fact, 2008 statistics showed that 60 percent of our economy is now dependent upon electricity, compared to only 20 percent in 2005. “We’ve got to recognize that, and we’ve got to rethink the role of electricity and power ... There’s nothing more important than getting electricity right. The choices we make now
special RepoRt sponsoRed by itRon
starts with you. Tell us what you like about Itron, but more importantly, tell us what you’re having trouble with.” The return of LeRoy Nosbaum to the helm at the end of August wasn’t the only change Itron made this year. Early in 2011, the company began its own process of refocusing and honing in on the important pieces. Part of that process included centering its energy activities under Philip Mezey, who is now president and chief operating officer of Itron’s global energy group, and Marcel Regnier, now president and chief operating officer of Itron’s global water group. And at the Itron Users’ Conference in Scottsdale, activities were carefully planned to give participants the opportunity to focus on what is important to them and their businesses, with numerous concurrent sessions tailored to both water and energy, as well as the technologies that connect them both.
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simplified and tailored solutions, interoperability, relationships with customers and partners, and a global reach that is supported by water and energy groups. “We believe you cannot have interoperability without partners and innovation,” Vanos said, “and tailored solutions are essential in order to fit different needs.” Cloutier, manager of smart grid interoperability standards for DTE Energy, pointed out that change is occurring as we speak, and it will be focus that inevitably defines who, and which companies, will be on top of the changes. “Our industry has entered into a time of unprecedented change and innovation,” he said. “Remember, the difference between average and successful is focus.” LeRoy Nosbaum, who returned to Itron as president and chief executive officer only 19 days earlier to lead the company through the unprecedented industry change Cloutier spoke of, explained his return with a short story. “The rancher’s field grows best when it is blessed with the feet of the rancher,” he said. “That’s an awful lot like the work of a CEO ... so I’m back.” Nosbaum discussed the theme of the conference in terms he became more familiar with during his 20-month retirement hiatus. “Catching a 23-inch brown trout isn’t easy. It takes a lot of patience; it takes incredible focus; it takes being quick to react; and often it’s not in comfortable conditions. If you think about it, it’s a lot like work,” he said. “We are more than a meter company. We are more than a software company. We are more than a solutions company. At Itron, we do all those things,” Nosbaum said. “The whole is more than the sum of its parts, and that whole is knowedge to shape your future.” Focus is also a matter of looking at what’s working, what’s not, and changing in order to work even more effectively. Nosbaum told participants Itron is concentrating in the coming year on being as good as Itron can be, developing products that meet customers’ needs and delivering on that promise. “We need to be more customer-intimate than ever before,” he said. “You are key. Our business
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will influence and set our path for many years to come. We’re going to be rewriting the rules in the next couple of years – shouldn’t you be a part of the dialogue?” Berst asked users’ conference participants. Ned Breslin, Water for People’s CEO and director of international programs, spoke in his keynote comments about “the rising tide” in the water industry, and in particular about Water for People’s new initiative, Everyone and Forever, to improve water and sanitation throughout the world. “Africa, Asia and Latin America are littered with broken water lines, broken dreams, broken promises ... old philanthropy,” he said. “Keeping water flowing is a tremendous challenge.” To combat that, the new initiative is focused on simple outcomes – one area at a time, keeping water flowing to every family, every school, every clinic within the specifically identified area. Water meters in these areas create the opportunities for knowledge management, Breslin said. “Quantities, consumption, leakage, waste and tariffs – they all are now knowns, and creating that environment where knowledge is power,” he said. To that end, Itron has committed $365,000 to Water for People, “not only money, but also the skills set to transform the world,” according to Breslin.
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Using technology to drive innovation, knowledege
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The second day’s keynote focused on enterprise social technology. Author Scott Klososky told conference participants that technology has become an “X Factor” in today’s world. “Technology is hanging the world more than we understand,” Klososky said. “Social technology is just another part of the toolbox that people can reach into, and leverage to win.” The skill of leadership is changing, he told the crowd. New leadership skills include the ability to make good technology decisions, the ability to look into the future accurately and accurately predict future trends, and the recognition of cultural change, both internal and external. “There are solid fundamentals behind why Web 2.0 has become such a powerful
force so quickly,” Klososky said. From “frictionless” communication, user-generated content such as YouTube, crowd sourcing and the “rivers of information” now available, to maintaining one’s online reputation and gaining customer intelligence, the socialization of the Web has brought a whole new score of tools and dynamics to be considered. “We have to start looking at mobile devices as what they really are – our outboard brains,” he said. “They store our memories. We don’t have to memorize things anymore, we just have to remember where things are. They solve problems. And they access knowledge.” With this in mind, the companies who want to be better connected to their consumers l eRoy nosbaum will provide mobile apps for both employees and customers, as but one example. shoulders with case studies, and differing “Every organization makes a choice. perspectives shared the floor across water, Either you are teaching your competielectricity and gas, allowing attendees to tors or your competitors are teaching concentrate on those issues and knowledge you. The difference is market share or they were most keen to learn more about. customer satisfaction. Technology is Let’s take a peek at a few just the palette. These are tools you can of those sessions. use to be creative and innovative, if you pull them out and use them,” he said.
Connecting the consumer
Connecting the links Following each morning’s keynote sessions, concurrent breakout sessions offered more than 150 opportunities for conference participants to hone their focus. From advanced data collection and analytics to consumer engagement and demand response, from metering and control technologies and smart grid to utility operations and best practices, there was a lot from which to choose. Recognizing there are no one-size-fits-all solutions, the conference advisory board didn’t attempt to prepare a one-size-fits-all conference curriculum. Instead, technology solutions rubbed
A number of sessions examined differing perspectives on the smart consumer, a key component drawing increased attention. A lively discussion comparing two different perspectives on smart grid evolution and adoption drew intense interest from conference participants. John Kelly, executive director of the Galvin Electricity Initiative, proposed that redefining quality in the age of the smart grid means looking at consumers as true partners in the transformation. Kelly says it’s a four-legged equation: » reliability and power quality » energy efficiency
» cost efficiency There are three systems within the smart grid, he said: the supply system, the delivery system, and the consumer-involved system. “The system we have now is very linear. One failure can take out an entire neighborhood,” Kelly noted. “We're advocating for more of a community microgrid approach. If you build it, one city at a time, reliability goes up 60 to 70 percent. Then you have, and can employ, distributed generation with consumers fully engaged.” Craig Boice of the Boice Dunham Group pointed out that while we think we control the smart grid, it is actually evolving around us. “The key part of smart grid is that we're all becoming new people in it. The technology is telling us what's possible, who we're going to become,” he said. “Motivation without technology is futile; technology without motivation is an embarrassment ... or a rate case.” We are becoming the smart grid – it's making us as much as we are making it, Boice said. “Our industry for the next 30 years is more about the generation, movement and care of information than it is about energy,” he said. “Balancing automation, choice, recognition, fun and engagement is the key skill in technology design.” Another session discussed “What Consumer Want, What They Think.” Farrell Cox, smart meter deployment manager at San Diego Gas and Electric (SDG&E) and a 32-year veteran of the utility, spoke of his early field days installing gas meters, and compared it with today's experience. Indeed, SDG&E's deployment statistics today are impressive: » Total installed smart meters (to Sept. 11, 2011): 2,204,605
• 859,821 gas • 64,083 remaining to be installed Farrell offered three processes to help deliver a positive customer experience. The first, he said, is to focus on quality every step of the way. Second: Always take
Connecting the technology As Itron's onsite Knowledge Center so visibly confirmed, connected technologies and services are critical to growth, and to knowledge attained from what technology can do and can tell us. The Knowledge Center – a large area at the conference that displayed all of Itron's solutions – clearly demonstrated the end-to-end connectivity of the Itron hardware, software and processes for water, electricity and gas. LeRoy Nosbaum's opening-session reminder that “We're more than a meter company” was exemplified as participants moved through the room, from solution to solution, learning more about the new tools and intricacies – and the connectivity and interoperability of the solutions – from Itron specialists at each of 38 stations throughout the conference’s two days. Adjacent to the Knowledge Center, Itron showcased its eight premier conference sponsors. And in the next room, the Partner Pavilion included booths by 22 Itron partners. This is the highest number of partners
ever to attend the conference, speaking to both the interoperability of Itron’s solutions and underscoring the company’s desire to truly give its customers choices. Technology and process were at play throughout many of the concurrent sessions, as well. In one, Itron's Larry Eggleston and Mike Burns compared and contrasted advanced data collection versus smart grid in a Top 10 fashion enjoyed by session attendees. While Eggleston discussed the abilities advanced data collection provided, Burns took the smart grid side. And what is the ultimate choice? Well, as expected, it turns out that there is no one-size-fitsall answer. Some utilities are finding that advanced data collection solutions completely fulfill their needs, from water to gas to electricity, while others need more. As Eggleston noted, “What can you afford? What do you want to pay for? There are a lot of similarities, and one doesn't preclude the other. Smart grid is very electricity-centric today, but it's all continuing to change.” Meanwhile, Itron's Thomas Butler offered up the latest in smart metering for water in another session. “Smart metering has arrived in the water metering market,” he explained. “Smaller utilities are the initial adopters of residential static meters, while larger utilities have adopted commercial and industrial static meters. Integrated intelligence, communication and system monitoring are on their way. Everything is expected to be done by or with the meter in the future.” As meters transition and traditional mechanical meters are being replaced, new adaptations and technologies are being implemented. These include alternate meter materials, new metering technologies, improved/extended meter accuracies and battery life, and bundled solutions within one package. “We think the market is becoming one,” Butler said. “Manufacturers will begin to combine all solutions and we will continue to see a rise in increased technological attributes.”
Itron/Cisco alliance making great strides High on attendees' minds was an expected update on the progress of the Itron/Cisco Alliance over the past year, and
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• 1,344,787 electric
a customer-centric view, including the consideration of seasonal timing when scheduling deployment. Finally, ensure you can provide good answers to tough questions about Big Brother, RF emissions, data privacy, meter and billing accuracy, and the potential lag in perceived consumer benefits of their new smart meter. In the same session, Sharon Allan, a partner at Accenture, shared the results of her firm's global study of what customers want from their utility providers. “People have come to expect electricity, water and gas as if it's the air we breathe,” she said. “A majority of folks say price is a major factor, and 73 percent said they'd be willing to purchase electricity from someone other than their service provider.” But intrinsic value is also important, offering the customer a product that's simple, individually tailored, easy and fun. Overall, said Allan, “There is a trend towards the gradual democratization of energy generation: many of the utility's consumers are about to become its business partners. This will introduce a host of new complexities around billing, customer support and field maintenance.”
special RepoRt sponsoRed by itRon
» environmental improvement
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the companies didn't disappoint. “Open the Grid: An Update on the Itron/Cisco Alliance” generated keen interest as Cisco's Felix Davis and Itron's Tom Wilson covered the ground travelled so far. The companies' alliance is introducing technologies that will open the grid, thereby enabling a multi-application, IPv6 network which ensures security and interoperability from the physical to application layer, essentially shaping the architecture of the modern grid. The strategic
principles upon which is it focused include: » True open standards-based and interoperable
» Comprehensive end-to-end security, bringing some unique characteristics to security » Supports distribution of application intelligence over time
The alliance now has in place fully functioning systems in both companies’ facilities, and it is already doing deployments under nondisclosure agreements. The open standards-based, interoperable, multi-service architecture is
European Community (EC) mandating a change? That is a significant driver.”
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» Scalable enterprise-class management
» Multi-service architecture
IntervIew wIth Itron’S PhIlIP Mezey
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» Modular and future-proof, yet mindful of existing assets
DIversIty anD InteroperabIlIty are key
Mandated change has proven to be a significant smart grid deployment factor not only in Texas and California but also in Ontario in recent years. But for a region the size of the EC to do so is momentous within the industry. But what about the severely weakened economy, not only in the United States, but in several European countries, as well? “The utilities are one of the most predictable, long-term thinking and profitable markets out there. They’re the best com-
The global reach of the 2011 Itron Users’ Conference was a perfect setting in which to speak to Philip Mezey, president and chief operating officer for Itron’s global energy segment, about Itron’s own global focus. Mezey, who joined Itron in 2003, has served the company in a number of capacities over the intervening years, including senior vice president and chief operating officer for Itron North America, group vice president and general manager, and
senior vice president for software solutions. He feels looking globally at deployments, rather than maintaining a purely North American focus, is imperative.
Itron’s forward-looking global focus “There is a financial reality to the fact that North America is a very attractive market,” he said. “But nonetheless, what better driver do you need than the
munity to sell to in difficult economic times, and they have, typically, at least five-year planning windows. And so I think they will be the least disrupted from economic cycles,” Mezey said. “Therefore, I believe that these projects will proceed in Western Europe, specifically. Will they slide possibly to the right as a result of delays? Sure, that’s possible. Large, highly politicized projects are inherently a little difficult to predict, but the outcomes are fairly certain, which are that the projects will proceed.”
and planning impacts, inverter control and monitoring, intermittent power, harmonics, and protection (including reverse power
Connecting the edges
flow, islanding, switching impact, system
Photovoltaics (PVs) and electric vehicles (EVs, or PEVs) both touch the consumer base, either directly or indirectly, as well. Each was addressed in sessions of their own, with updates on existing architecture, effects on the delivery system, and lessons learned to date. Itron’s Chuck Hornbrook and Percy Haralson, senior manager of Southern California Edison’s (SCE’s) field technologies group, spoke to the customerside meter effects of PV on the delivery system for California. “What is happening in California will replicated across other states. My thought is that by 2012, there will be well over 100,000 solar installations on the customer side of the meter,” Hornbrook said. Haralson discussed SCE’s experience with PV. Issues at the distribution level, he said, include voltage regulation, operation
stability, fault current impact on breakers,
learning from global markets Mezey believes our industry has a lot to learn from other markets globally. The European markets and several other markets around the world, he says, are more standards-driven and have a higher demand for interoperability. As well, their competitive processes are different from those faced in North America. “That prepares us for a future in which, through globalization and the desire on our customers’ parts to drive us to open standards specifically, in order to increase competition amongst the suppliers and the market,” he said. Having the advantage of being able to rently different but also clearly changing offers an important industry lesson, Mezey feels, that a company such as Itron, with such a global reach, can learn from. As an industry, he said, “We must learn how to differentiate ourselves and improve ourselves as companies, to deal with the sorts of competitive pressures
but with a 33-percent renewables port-
taking the focus home again
folio standard mandated in California, PV
At the end of the two days, participants convened one final time to pull it all together. It had been an exciting two days of information sharing, and the room was abuzz with one-on-one discussions as utility representatives from around the world came back together to share, table to table, person to person, what they had learned. The experience was aptly summed up by Itron’s Russ Vanos in a few brief words: “I hope that, over the last couple of days, all of you were able to focus a bit, and that we gave you the opportunity to take something back home that you didn’t have when you got here.” Of that, there can be no doubt.
is definitely a large part of the solution. Chris Chen, San Diego Gas & Electric’s market development manager, electric vehicles and smart grid, discussed the adoption of electric vehicles (EVs) within SDG&E’s territory, and the questions being raised as adoption progresses. The EV adoption curve has been slower than expected in San Diego, he noted, and automakers are making commitments to plug-in Evs, but keeping their options open in other areas such as fuel cells, compressed natural gas, flex-fuel and non-plug-in hybrids, as well. As EVs begin to roll out in the state, questions have also arisen regarding whether
that we experience in other parts of the world here in North America.” This strategic, forward-looking view of the world market was an important factor in Itron’s acquisition of its international group, Mezey pointed out. “We recognized that we would need to step beyond the North American market in order to continue to grow, and that by having a global metering platform that we were then present in the markets that were going to experience a significant upgrade of technology,” he said. “That is, in fact, coming to pass in Western Europe, Brazil, and several points of Asia, so I think that there is going to be a very exciting story to tell over the next five years.”
Diversifying to meet demand Because it is a lead player in the smart meter market, it’s easy to make the mistake of thinking of Itron as a meter company. But it’s so much more. “We are not a single-sector player, and we understand that to serve the industry, and to cross-pollinate and get these interesting ideas, that being geographically
diversified, and being diversified across electric, gas, water and heat – and small, medium and large utilities – is, in fact, what we think is the correct way to approach the industry,” Mezey said. “And clearly, that gives us an advantage, because there aren’t that many players who are structured that way, but we honestly believe it.”
the continuing evolution of the smart grid Just as the demand for diversity of products, and an overall understanding of utility needs, increases, so too does the landscape change in terms of smart meter deployments. With both economic and regulatory environments changing, what analysts predicted a few years ago with regard to smart meter deployments is rapidly being revised. Mezey said a new sector phenomenon will be revealed once North American analysts finish updating their numbers to reflect the new reality. What will fundamentally drive the sector forward, he said, is having standard, low-
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see the dynamics of markets that are cur-
and more). It’s a complicated equation,
the utilities themselves will have to collect the fuel taxes, and how the low carbon fuel standards will be implemented. What, indeed, is the utility’s role as it becomes a transportation fuel provider?
special RepoRt sponsoRed by itRon
seen to be a definitive win-win for the industry, straight across the board.
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cost solutions available. “The industry’s paradigm of doing complete implementations will still happen in some other places, but I think it’s more logical that implementations become more selective and more pragmatic,” Mezey noted. “By this, I mean that they must be self-funding in that they must demonstrate their returns during the initial implementation to fund the continued implementation. “So I really think we need to focus on a much more systematic and pragmatic implementation style, and make sure that the products and services that we bring to the marketplace return value as they are deployed.” And part of that returned value may well be in the new data initial implementations are now providing utilities, which can better inform their continuing implementation plans. Here, too, Itron is moving forward in anticipation of what its customers will most need.
opening the analytics toolbox Part of that returned value may be found in one of Itron’s newest offerings. Data analytics is a topic being keenly investigated by leading utilities in their efforts to increase their efforts across the
board on their customers’ behalf. Itron believes that focused analytics can be an extremely powerful tool for utilities. “One of the best functions that analytics should deliver is as a focus engine or a targeting engine in which you use the data that we have available to us through our meter data management system to analyze that data,” Mezey said. “Even at the level of monthly reads, you can look into that data as a targeting engine for those customers who are most likely to respond to demand notices, or price response, or those circuits which have the greatest energy imbalance – which may be a source of theft – or distribution automation. “You can then use a data-driven approach to target specific technologies to specific places to generate targeted business value,” he added. “If we are able to work with our customers to build a repetitive model, not just to do the first project, but to agree to a methodology – analyze, implement, verify results, pick the next project, analyze, implement, verify results – then that kind of framework is going to be very powerful for us.” Indeed, as energy utilities across the country are grasping the importance of the volumes of data they are now collecting, and deciding what to do with
it, and what they want to know first, the data analytics sector will continue to grow in importance as a new toolbox with which to drive both reliability and consumer satisfaction, just as it has been used in other industries in the past.
translating learning to consumer benefits As data is examined, and will soon be used to drive more consumer-centric approaches for utilities, it’s still imperative to address current consumer concerns. We have done a lot of work in the past year in monitoring customer concerns, and in trying to understand and work with our customers on thoughtful responses to those concerns. It is our belief that, while there are consumers who are concerned, we feel the industry will more forward strongly,” Mezey said. “I think the industry could do a better job at discussing Smart metering and smart grid benefits,” he added. “Communication plays a key role in addressing concerns about these deployments.”
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IntervIew wIth Itron’S MarCel reGnIer
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Giving power to the people Marcel Regnier was named president and chief
operating officer of Itron’s global water segment in March 2011. In this capacity, he is responsible for all aspects of Itron’s water business around the world. Regnier joined Itron in April 2007 with the acquisition of Actaris, and was named senior vice president and chief operating officer of Itron International in April 2008. Between sessions at the 2011 Itron Users’ Conference, Regnier sat down for a one-on-one discussion about the similarities and differences inherent in smart electricity and smart water. Here, we share portions of that discussion.
on water and electricity convergence Water is a very special ingredient in life. Water is vital. And water availability is at the heart of sustainability – it has become very scarce in many countries in the world. Too, water is a capital-intensive industry, and energy-intensive. The needs of the water and energy industries are converging: improving efficiency, reducing cost, saving labor, and focus on the customer.
on the importance of storage
on helping the consumer In Mumbai, a developing country, we are in the process of providing advanced metering technologies and automatic meter reading systems to the the Mumbai utility. Mumbai, with 20 million people, is huge. The main goal of the project is for the utility to reduce theft and waste of water. And the waste of water was estimated at 50 million litres, or 15 million gallons, per day. Misuse means you go through all that effort for nothing. They used to put meters – well, really a piece of pipe, not a measuring device – on water there. At Itron we are providing the meters, we are providing the RF system. It is a very reliable, robust system, and they’re still using it to detect leaks and theft. What
we are providing to the city of Mumbai will allow them to use the water saved to be able to distribute to more people, because there are still a lot of people in Mumbai that don’t even have water yet. And we are working locally: we have a strong presence in India, we manufacture in India, and we have a team working in India. Another project we are working on is with the public utility board in Singapore. They are in a completely different situation: Singapore is a very advanced, modern, clean city. Its issue is that it uses almost all desalinization, which is costly. So they are targeted to move from 150 liters of water used per day per person – which I think is about half of what the average American utilizes – to 100 litres per day per person, and they have initiated significant programs focused on their customers in order to educate them. We are installing a pilot of Itron’s twoway fixed-network solution, with very, very accurate, sensitive meters that really can measure very low flows. Then they can detect the leaks, they can detect the flow profile in every apartment, and they can bring that data back to the consumers to say, “Look, this is what you use.” By providing smart solutions, you give power to the people. Our solution will give the utility of Singapore the power to reach that goal. Fifty litres per day is only two liters per hour. That’s a really small leak, almost a drop. It can be a leaky tap, typically a toilet. So by detecting leaks, by conserving water, they can pay less. That’s another example that, by the combination of very accurate, low-flow capability of meters and the network, and the analysis, the intelligence on the data, you provide real value to the water company and the people. That’s what LeRoy said this morning. We do more than meters, more than communications, more than software. We are doing everything, and we use that to generate actionable data. That’s where I think Itron is unique. And another thing which I think is very specific to our company, and not specific to water: we love the business that we are in, all of us. We are passionate about it, and it is not only me.
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Electricity has a big challenge. It can’t be stored, which is creating extremely fast decision-making. Here is an example from my former energy job, Ile de la Reunion, in the French Islands. It’s a subsidiary of the EDF group, and it’s on an island. On an island you have to meet the demand, not more, not less. And those islands are massively invested in renewables. They already have hydro, but they have also invested in solar and wind, and the capacity of renewables is quite consistent. The problem they have is demand response – a very sophisticated word for a very easy problem: this is what I need, this is what I have, if I don’t match it, I have a real
problem. Itron has provided an electric system based on ion metering and GPS communication application software that allows the utility to know on a real-time basis what’s the energy produced by renewables. Legislation and good sense both dictate that renewables should not be beyond 30 percent. For what reason? Because in 20 minutes, the capacity of renewables can drop by 30 or 40 percent for a very simple reason: when it rains, there is no solar power. And what do you do then? It’s a real problem. So you have those very challenging issues with electricity. You don’t have that with water. The most advanced water companies have forecasting systems that, based on statistics and climate, do forecasting of water demand. I especially have in mind the city of Paris, which has one of the most advanced water production plants on earth. So they do that. But they can store water. They have huge storage capabilities, providing mediumand long-term demand response. They do that, but they have time. However, they have another problem, which is very critical to the city of Paris: the quality of the water. So there are a few differences, but a lot of similarities. The water distribution system will move into smart data, automation, capturing data, processing data, and turning data into decision-making, adding value to ensure our future.
special RepoRt sponsoRed by itRon
As electricity is moving from 1.0 to 2.0, I think water has to do exactly the same thing. I would split it into two categories. The first is just providing water to the people who don’t have it today, providing potable water networks. In the most developed countries, the challenge is really to move the water distribution network into a smart network, or “smart grid.” We usually don’t use that word for water, because the grid is typically an electricity term, but it’s basically the same – to be able to deploy across the entire chain from pumping of water all the way through bringing back the water to earth afterwards. To have a system that will have real-time control of everything that is going on, and utilize that data to optimize the use of water, and reduce costs, is huge. The challenge is to build a a network of networks – the same idea as smart grid – that will bring to the utility the capability to optimize operations, minimize the use of water, protect the resource and help the consumer save money. The water ecosystem will become smart. It will utilize sensors – metering sensors, pressure sensors, lead detection sensors, temperature sensors, and perhaps even quality sensors – all across the grid, the nextwork, in order to optimize and protect the resource, and to not only give to the consumers almost real-time information about their usage, but send alerts immediately should they have a water leak detected inside their home.
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» A SYSTEM OF SYSTEMS
More than just
smart meters ++The whole becomes more than the sum of its parts By Kate Rowland
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IDEALLY, THE INTELLIGENT UTILITY IS EVOLVING, PIECE BY PIECE,
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system by system, into a “system of systems” whereby the whole, and the abilities of the whole, become immensely more than the sum of its parts. On an architectural level, the disparate components are coming together, piece by piece, to form the whole. On a human level, the departments and responsibilities within the utility might be taking a little longer. System-of-systems architecture The architectural approach has been aptly described by K. Mani Chandy of the California Institute of Technology and fellow authors Jeff Gooding and Jeremy McDonald of Southern California Edison in their paper, “Smart Grid Systemof-Systems Architectures: Systems Evolution to Guide Strategic Investments in Modernizing the Electric Grid” (see FastFacts box). “The component systems are separately acquired and integrated to form a single system, yet maintain a continuous operational existence independent of the collaborative system,” they wrote. “A consequence is that properties, which do not belong to any of the constituent parts, will emerge from the combined system of systems. Moreover, the system-of-systems evolves as constituent systems are replaced.”
It is these inherently new properties that we are already seeing beginning to emerge. They are nascent, to be sure, but will mature quickly. Chandy et al. note that there are three trends that affect the evolution of smart grid architecture: evolving to a system of everything, the penetration of the Internet and the Web, and the continuous evolution of a heterogeneous smart grid. System-of-everything “We use the hyperbole, system-ofeverything, to make the point that the grid is one of the focal points by which individuals and organizations monitor and control their lives and many systems and networks that are
“(Consumers) will expect to manage their devices using
self-contained now will be to strengthen as today’s youth enter the workforce,” they said. connected in the future,” the same Internet Translating that to the electric utility sector is they wrote. just a matter of time. “The evolution of smart grid This is a heady concept, protocols they use architecture will reflect the evolution of Internet but is in fact precisely architecture because society will not want two where we are headed. To for other activities. competing systems-of-everything,” say the date, though, utilities authors. “Moreover, consumers and organizations seem to be ahead of at least a portion of their customers in terms will want tighter control of their electrical devices and information as energy of understanding this. Chandy et al. tariffs based on time-of-day become common and they will expect to manage argue that today’s youth, however, their devices using the same Internet protocols they use for other activities.” We are already seeing this begin to occur. If there’s an “app for that,” and it’s will lead the charge, and the change: easy to understand and to use, it’s likely to be more accepted by utility consum“Widespread access to broadband and ers than something requiring focus and work. And if it works on mobile devices, increasing use of smart phones and all the better. tablet computers has resulted in large segments of the public, especially the Heterogeneous smart grid young, viewing the Internet as a sys- The incongruous nature of smart grid evolution and the information infratem of everything. This view is likely structure supporting it is, simply, the nature of the beast. Chandy, Gooding
”
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» A SYSTEM OF SYSTEMS
Avoiding the IT/OT silos Giroti points out that “IT and Power Systems Engineering (OT) applications have typically operated in silos due to the lack of any compelling need for integration—integration between business units, integration between business processes, integration between applications, and even integration of databases.” While that particular siloization has begun to change within utilities, some have been, to date, more successful than others. Best practices are being shared, personnel are being shared, and the business drivers to develop a standardized approach to integration are definitely becoming clearer. Challenges still to overcome There are still hurdles to overcome. Change comes slowly, and budgets alone affect organizational structures in a way that is often not clearly understood by the utility outsider looking in. But we’re already seeing unexpected properties emerging from combined systems. Take, for example, the increased focus on analysis of data from smart meters and other smart devices on the grid. Some of the blooming Avoiding accidental architecture “Accidental architecture”—a term used in 2009 by Tony Giroti, chairman and new uses for this data—in terms of managing director of BRIDGE Energy Group, in a paper titled “Integration increased reliability, new equipment replacement scheduling Roadmap for Smart Grid: From Accidental based on the true health Architecture to Smart Grid Architecture”—is of devices such as transwhat we’d like to avoid along the way. An accidenFASTFACTS formers, etc.—is an addtal architecture is what happens when integration A system of systems (SOS) is ed bonus to the planned complexity is grossly underestimated. Accidental defined as a collaborative set of uses for load managearchitecture happens by default. systems in which the components: ment, outage manageTo become a whole more than the sum of its » fulfill valid purposes in their own ment and the like. And technological parts, the smart grid must avoid right, and continue to operate there will be more as to fulfill those purposes if accidental architecture. Strategic IT planning is disassembled from the overall time goes on and people essential. “The electric power industry has two system, and within utility organizachoices,” Giroti wrote. “One, to be proactive and » are managed, in part, for their tions continue to think have a strategy for managing grid operations and own purposes rather than the about, “What if?” and IT transformation through a strategic ‘smart grid purposes of the whole. integration architecture,’ or two, be reactive and “Can we find out...?” Source: “Smart Grid System-of-Systems tactical in responding to problems as they occur. The best thing about Architectures,” K. Mani Chandy et al “The latter approach is risky and will prove to evolution is that it be a major impediment to smart grid success.” never ends.
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and McDonald say this is true for several reasons: “Different grid functions have widely different system characteristics such as requirements for security, timeliness and bandwidth; for example, these requirements are very different for fault protection and metering, and for demand response in homes versus industrial facilities.” As well, looking more broadly, this evolution will vary from utility to utility, depending upon their own needs and the needs of their consumers. One rural cooperative’s smart grid will look decidedly different than, say, that of a large investor-owned utility covering a wide variety of geographies and population sizes. Economics come into play, as well, in terms of the technologies used to build each internal system.
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IT INSIGHTS
Where’s the value? ++Analytics create business value for utility grid & customer operations By Mike Smith RECENTLY A FEW “NON-UTILITY” FRIENDS ASKED ME ABOUT
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what’s going on in the utility industry. They had been hearing about smart meters and smart grid in the news (not surprisingly, they had not been hearing an abundance of good news), and some of them have had smart meters installed at their homes. After a lifetime of thinking about their utility on only two types of occasions and neither of those being particularly positive experiences (paying their bill and experiencing an outage), their skeptical curiosity seemed pretty rational. After explaining what all of this smart grid and smart metering stuff is all about (and hopefully quelling their concerns), it begged a question for the industry: What now?
Approaching the value phase We have all seen sweeping changes in the industry over the past few years as the smart grid era has gone from a concept to the implementation of an intelligent infrastructure and the installation of millions of smart meters. This has been more than a natural evolution of technology. New business processes and new job classes have appeared while old ones have disappeared, new operating and regulatory paradigms have emerged, and customer engagement is now more than a snappy catchphrase. After going through the development and infrastructure phases of the smart grid era, utilities are now arguably on the cusp of the next major phase of smart grid evolution: the value phase. The illustration provides a summary of this evolution.
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IT INSIGHTS ??
The leading hurdles to implementing analytics in their organizations are budgetary constraints followed closely by a lack of necessary staff/skill sets to be successful. What is your organization doing to be prepared to meet the staffing demands of this new data-rich environment?
??
Although numerous organizational drivers/champions were identified in the study, the leading primary drivers are the vice president, transmission and distribution (or related title) and the chief executive officer. With this level of support, analytics is strategic, with a high visibility and correspondingly
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At the core of the value phase is the role that analytics will play in delivering value from the smart grid. There are massive volumes of data being generated from both the grid and customer sides of the smart grid. Utility managers now have the opportunity to leverage this data to effect significant improvements in grid and customer operations. The examples of how analytics will impact utility operations range from improving asset management processes and optimizing power flow on the “grid side” to revenue protection and demand response program design on the “customer side.”
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high importance. ??
Approximately one in five analytics project are at the 50 percent or higher level of completion. There is still a lot of work to do!
Adding more Identifying data analytics dynamics predictive capability XO Communications By the way, this new age of analytics is not limited Charles Newton, president to utilities. It is difficult to not see analytics emergof Newton-Evans Research experienced a cost ing across many different industries. For example, Company, has been The Wall Street Journal recently reported that XO studying grid operations savings of between Communications experienced a cost savings of for more than 30 years. between $9 million and $13 million from a single On the impact of analyt$9 million and analytics application geared toward reducing ics on grid operations, customer turnover. The book and subsequent movie Newton said: “As far $13 million from Moneyball is a dramatic example of leveraging data as the control center is analytics to literally “change the game.” concerned, representing a single analytics The Utility Analytics Institute, a Division of the operational IT side Energy Central, is engaged in a year-long research of grid analytics, this is a application. effort, the Executive Insights Series, to identify field wherein operations the dynamics of this emerging area of focus, with management and staff have been research results to be published each quarter. The first deliverable from this efusing analytics in one form or fort, the Market Outlook & Forecast, was not available at press time for this issue another for the past 20 years or more. of Intelligent Utility, but a glimpse at some of the preliminary results includes: State estimation is really a prime ??
Over two-thirds of survey respondents have started an analytics initiative in their organizations. This will be growing toward 100 percent very quickly as more of the smart grid/meter implementations come online over the next one to two years.
example of operational analytics, taking SCADA data and using it to try to identify what is actually happening throughout the grid based on several computed measurements.
“The current approach is to strengthen the near-real-time nature of state estimation and resulting analytics ever so more. Doing so provides some additional predictive capability, strengthens situational awareness and provides improved visualization into the network to operate the grid (controls) in an increasingly intelligent manner.” On the “customer side” of how utilities are leveraging analytics, Howard Scott, managing partner of Cognyst Advisors, tells us, “As the utility industry has evolved over the last five years, the metering function itself has hardly changed. The big change has been the ability to collect much more data and to remotely control and change how the meter assembles and reports this data. Furthermore, all this new data will now be correlated with other grid information to help the utility operate ‘smarter.’
“The challenge is that our industry does not have much experience analyzing all this data and extracting useful information from it. We will draw from experiences of other industries as they went through this evolution and add our own insights. However, we should assume that there will be false starts and some mistakes as we work through this process.” Taking a modular approach Scott added: “The wisest path is to take a modular approach, so as we find useful analytics we can keep them and as we make mistakes we can easily discard them. The beauty of this evolution is that once the basic infrastructure tools are in place, the analytics will be much less expensive to produce and a large number of employees will have access to the collected information, thus ensuring that we can draw from the collected wisdom of many members of our industry.” As utilities continue to move forward in the smart grid era, analytics can be a significant differentiator for utility leaders who are looking to meet and exceed a variety of demanding expectations. The possibilities are seemingly endless: operating costs can be maintained or lowered; revenue can be secured and increased; customer benefits can be realized; and environmental impacts can be minimized. It will be the actualization of analytics that will turn “possible” to “done.” Mike Smith has been studying and working in utility IT and automation markets for 22 years and thinks that analytics has the potential to be The Next Big Thing. He is vice president of Energy Central’s Utility Analytics Institute.
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understand our vision for the Smart Grid.”
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O P E R AT I O N A L P E R S P E C T I V E I think that there are varying degrees of what people mean when they say that they support transmission. Clearly, I think everyone agrees that we need to build transmission to make sure the lights stay on—reliability upgrades. Then there are some who also agree we need to make sure that we connect all market participants, all generators who want to have access to the grid or to the market. And then finally there’s the issue about transmission to support the regional markets that do exist within the RTOs, and the transmission that’s needed to enable those economic transactions. Not everyone supports all three types of transmission, and that’s why planning is such a challenge. As a transmission developer, we recognize the challenges to getting investment and transmission built are A transmission owner’s perspective planning, cost allocation and siting. In other words: what are you building, FEDERAL ENERGY REGULATORY COMMISSION (FERC) ORDER who’s paying for it and how are you 1000 has set the industry abuzz. Energy Central’s TransmissionHub getting it built? discussed the opportunities and challenges offered by Order 1000 in an October FERC Order 1000 deals with two webcast with a panel of industry representatives, including one transmission participant. Here, edited for length, are excerpts from Nina Plaushin’s comments. Plaushin of these ideas: planning and cost allocation. One of the first underlying is vice president of federal affairs for ITC Holdings, the nation’s largest independent assumptions I want to try to debunk transmission company. is the idea that this is ITC is a transmission-only company, and what that somehow all very new. means is that we do not generate, we do not buy and we We’ve had decades We’ve had ongoing do not sell energy. We are simply the carrier for energy direction to some for other market participants. We are the eighth largest of under-investment degree for many transmission owner in the country, and we are not a years under FERC market participant in any markets. We operate in several in transmission. 890, a previous order states: Michigan, Iowa, Kansas, Oklahoma, Minnesota, by FERC. And what Missouri, as well as Illinois. FERC is doing now, really, is trying We’re in two RTOs (regional transmission organizations), and we’ve been to go back and reassess what that doing investment across the country for quite a number of years now. My experience has been, and improve perspective is really that of a transmission developer who’s in the field, who is upon the existing regional processes not having a hypothetical conversation, but is actually trying to surmount the that we have. challenges that exist to getting transmission built.
Order 1000 offers important incremental step ++
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Decades of transmission under-investment There seems to be some general consensus about the idea that we do need more transmission built. One of the things we see, and the reason why we see a movement by FERC to do something like Order 1000, really is the lack of investment. We’ve had decades of under-investment in transmission. It hasn’t kept pace with generation growth or with load growth. And in terms of high-voltage lines, we have a discrepancy about which parts of the country have more development versus other parts of the country.
Optimized bottom-up planning Obviously outside of the RTO regions, there are varying levels of coordination and planning but, at least from ITC’s experience, we’re mostly talking about the areas of the country that have RTOs and organized markets, and the kind of planning that we’ve
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been doing, and those regions do bottom-up transmission planning. The local transmission company plans, and that gets rolled up into a larger plan, and then that plan hopefully is optimized. Optimized means you take all the different projects that you have, and you figure out the most efficient way to build them: the most cost-effective and the best engineering design that takes in the multiple needs that are out there. And so while we recognize that there’s a lot of rhetoric about, “Well, we don’t want a top-down push on planning, so we have to build something that the local regions don’t want,” I would argue that that’s not the case. I think Order 1000 codifies the notion that the regions are the ones who are making these decisions. We support regional planning, as well. I think that it’s a little bit of a quandary, and another one of these underlying assumptions I worry about a little bit, which is, “Well, we support letting the regions decide how to do planning and having local planning, but when we get to the issue of how we’re going to pay for the transmission, we sort of part ways.” And in doing so, that directly influences planning. You can’t talk about what is a benefit and what isn’t a benefit, and not have that filter into the overall planning process. It is the benefits that are the drivers for the projects that get built and selected. So if in fact we aren’t comfortable, as some have argued, with allowing the regions to decide what those benefits should be, and we in fact want FERC to dictate what those benefits should be (and thereby, by definition, limit benefits that can be considered), then we are essentially dictating to the regions, and that would be a top-down approach.
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Fairness is important User cost is also a big concern. Everybody wants to make sure that we’re not paying for something that we don’t need. We don’t want a gold-plated system, and we want fairness. I think that we would all agree on those principles. Obviously if this was an easy problem to fix, it would have been fixed by now. And so there are good arguments on both sides, and a lot of where you come out on this question ends up with what are you trying to accomplish. That goes back to my earlier point about “What are we planning for?” and “What kind of transmission expansion are you supportive of?” Because if all
you’re worried about is building the next increments to preserve reliability, the answer of how you do cost allocation will be a lot different than if you’re looking to facilitate transmission to enable markets. Transmission is a very small portion of the overall cost of delivered power to the consumer. Most of the cost associated with the power you use in your home comes from the generation portion of your bill. That doesn’t mean that transmission costs aren’t important. They are important. We certainly don’t want to pay for things we don’t benefit from. And, in fact, Order 1000 codifies that concept. But what it also tells you is that a small increase in the transmission component of your bill, if in fact it helps to offset the larger portion— the generation portion—of your bill, might be a good investment. What ITC has been trying to do is educate people about the fact that when we see these big numbers that people are talking about ... by the time you’re all done with it, oftentimes we find that transmission not only pays for itself, but actually accomplishes savings for customers in the end. So it should not be assumed that every time you put a piece of steel in the ground and you string wire, that it’s money out the door. In fact, MISO has done a system analysis for their region and Southwest Power Pool has done a system analysis for their region about the benefits that come to consumers from expanding the grid that are not necessarily all negative in terms of “Oh, it’s going to cost money.” Plaushin brought up some other cogent points in her presentation about fluid regional borders, cost allocation and border seams, curtailed transactions, the lack of a National Energy Policy for guidance purposes, transmission to enable regional markets, and more. To hear the entire webcast, go to http://bit.ly/thTJTN
Public/private initiative moves smart grid adoption ++Ontario’s PowerStream builds communications infrastructure By Edward Chatten REPERCUSSIONS OF THE INFAMOUS BLACKOUT OF AUG. 14,
One-way vs. two-way All utilities in the province are regulated by the Ontario Energy Board (OEB) under the Ontario Energy Board Act of 1998. PowerStream’s more than 330,000 customers are located in a relatively high-density service territory covering more than 309 square miles (or 800 square kilometers) in communities located immediately north of Toronto and in Central Ontario. PowerStream worked jointly with six other large distributors and the provincial government on the crucial phase of establishing minimum specifications for AMI functionality. There was intensive lobbying of the government to adopt a one-way
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2003, that impacted northeastern North America were swift and wideranging, affecting more than 10 million people in Ontario, who were among those left without power for extended periods of time. The outage put into motion a series of events that would subsequently reshape the province’s electrical power infrastructure and customer engagement. Ontario was a net energy importer at the time and the debilitating outage spurred government officials into action to prevent a recurrence. A major program initiated in 2004 would balance added capacity (including renewable sources) with ambitious public efficiency and conservation programs. Upgrades to the electrical grid included advanced metering infrastructure (AMI) intended to engage residential and commercial customers in managing their power consumption, in part because of impending government-mandated dynamic pricing.
PowerStream, the second largest municipally owned electricity distribution company in Ontario, was one of 13 electric distribution utilities out of the 80 in the province directed by the provincial government to be early enablers. These 13 utilities represented about 75 percent of the province’s customer base.
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communications standard for the minimum specification, but PowerStream felt obtaining the requirement for two-way broadcasting was essential to support future expansion and applications. Once the minimum specification was completed, five AMI vendors and five installation contractors were approved to participate in the program and the utilities could select from this group.
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Licensed spectrum essential PowerStream piloted three different technologies in 2006 with two mesh networks and one fixed RF system based on licensed wireless spectrum. Full-scale wireless meter deployment began in 2007 and was completed in 2011 after the installation of 314,000 residential and small commercial meters. Large C&I customers were exempt from the AMI rollout. It was clear that fixed radio frequency (RF) technology would be An affected PowerStream very suitable and successful. RF was relatively inexpensive to deploy and customer calling to report its structural characteristics were well suited to the local topography and (an) outage was still on density. Licensed 900 MHz frequency from the AMI vendor chosen was the phone when he looked deemed essential because the utility wanted the high broadcasting power, out of his window and saw which results in a high success rate when polling meters. the crew already at work. The province requires a 98 percent daily success rate when polling meters, which may seem high. But if you have 2,500 customers in a billing cycle and you don’t achieve at least that success rate, it means 40 to 50 customers aren’t billed based on the system’s interrogation and those have to be handled manually. The high strength of the licensed signal results in a higher success rate; actually closer to 99.5 percent. There have been cases in the province where public spectrum was interfering with cell phones, garage door openers, baby monitors and other devices. Licensed spectrum largely eliminates this interference. Unlicensed spectrum is regulated by the province to transmit at a much lower power broadcast signal, so success rates at polling are lower. As well, while another user can’t be forced out of the public spectrum if there is any encroachment or “non-complimentary usage” in licensed frequency, the frequency owner can force them out. Licensed spectrum can also support water and gas metering, which would enable PowerStream to potentially support those services at some point in the future. Towers with mesh collectors The physical installation of meters was not an issue, as the system chosen by PowerStream was largely plug-and-play, resulting in savings across the board. There are about 15,000 to 20,000 customers per tower, as compared with a mesh network that would have required numerous collectors. Geographic density lowered the physical costs of deployment, as individual installers working for the contractor were able to make 65-70 meter switchouts a day. In regulatory hearings PowerStream has stated that it will have one of the lowest-cost installed endpoints in the province with superior functionality.
This was essential for PowerStream’s and its shareholders’ interests to mitigate the risk of cost recovery. A winning solution had to be cost effective. The promise of the operational data stream While the Ontario government’s conservation program was targeted at billing and time-of-use (TOU) rates, PowerStream was equally interested in what could be done with the operational data coming from the meters. The licensed spectrum (managed by Industry Canada) has considerable value. Signal strength is greater, enabling the development of numerous applications. The ability to detect outages quickly is a significant advantage with the
Immediate and future value There’s no question that having a 21st century AMI system in place is producing some immediate benefits for both PowerStream and its customers. The highpower signal from the licensed wireless network ensures more accurate polling and it allows much better, targeted maintenance. Savings from reduced truck rolls for outages that actually result from a problem on the customers’ own electrical service alone are estimated to be upward of $150,000 annually.
Edward Chatten is senior vice president, smart grid and strategic support, for PowerStream.
W W W. I N T E LL IG E N T U T I L I T Y.CO M
smart meters providing valuable supplemental information to the Outage Management System (OMS). An interface between the AMI, OMS and GIS systems was built and implemented almost three years ago, providing the equivalent of a low-end SCADA functionality. The interface among the three systems is real time. The AMI working with the OMS lets technicians locate the outages quickly and accurately, enabling us to determine if the affected service is underground or overhead. Operators use data from smart meters to effectively manage their dispatch because fault location is so precise. In years past, crews dispatched at night would use flashlights to detect breaks in the conductor. Now, the system is able to indicate which homes are affected and in some cases to identify if the problem is with the resident’s electrical system.
The AMI network functionality enables the utility to enhance reliability and improve its service delivery. One case had a crew performing regular maintenance around the corner from a group of houses that were suddenly without service. A dispatcher immediately saw the problem and instructed them to check out the transformer. An affected PowerStream customer calling to report that outage was still on the phone when he looked out of his window and saw the crew already at work. Asset optimization and life management is another benefit of having the licensed spectrum network. PowerStream is in the early stages of installing smart meters in the pad- and pole-mounted transformers scattered throughout its service territory. The rationale for this effort is straightforward. First, the smart meter has the ability to measure current and differentiates between the three phases. Second, if the bulk of communications about asset life, outages, faults, transients and excessive voltage conditions comes from the transformers instead of the endpoints, this can radically decrease communications traffic to decease the latency. Doing so can reduce the number of RF signals by approximately 90 percent to help conserve bandwidth. PowerStream reasons that improved transformer monitoring can maximize asset life by avoiding the overloading conditions that shorten their life. Although the associated savings are difficult to quantify, this initiative has great promise. PowerStream is confident that the technology strategies adopted were correct and in line with Ontario’s goals for energy supply security and conservation. Today there’s certainty that the risk of repeating the experience of August 2003 is much reduced.
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CUSTOMER SERVICE
Incremental change adds up ++A decade of innovation for United Illuminating By Phil Carson UNITED ILLUMINATING (UI) IS AN INVESTOR-OWNED UTILITY
headquartered in New Haven, Conn. UI serves 325,000 residential, commercial and industrial customers in the greater New Haven and Bridgeport areas. As vice president of client fulfillment and electric system operations, Joseph Thomas’ responsibilities include all aspects of revenue-cycle services, from metering, billing, collections, call center operations and revenue control to ensuring the safe and efficient construction and operation of the electrical transmission and distribution system. He recently engaged in a Q&A session with Intelligent Utility Daily editor Phil Carson about the utility’s grid modernization activities and direction. INTELLIGENT UTILITY
What changes has smart grid wrought within
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United Illuminating?
58
THOMAS We don’t often use the term “smart grid,” we use the term “smart systems.” Many utilities have invested in good technologies, but they haven’t done a great job at integrating them and transforming the resulting data into information that the utility, the regulators, the suppliers and the customers can utilize. United Illuminating has worked in a deregulated environment since 1998. Back in 1999-2000, we upgraded our metering infrastructure so we’ve read all our electric meters at least once a day for 10-plus years. That data doesn’t just go to a customer billing system. We integrated the data into multiple business processes. We are providing the data with robust, Web-enabled presentment and analytic tools to all our customers. We also provided the same data and analytical tools to our customer care center representatives to help them support our customers in both understanding not only how and when they’re utilizing their energy but most importantly developing ways to conserve and get the best value out of every energy dollar. In Connecticut we’ve had residential time-of-day rates for 48 years, commercial time-of-day rates for 33 years. Now we have mandatory, residential time-of-day rates if your use exceeds 2,000 kWh in a month or, for commercial accounts, if you generate 100 kW of demand, based on the highest 15-minute interval during one billing cycle. So over the past 10 years we’ve been upgrading and integrating all our technologies, including our metering system, our customer information system (CIS), our mobile workforce solution, our IVR (interactive voice response) and our outage management system. We’ve automated a lot of our business processes, which reduces operating costs as it streamlines our operations.
Over time, the demands on our system have grown. So we recently upgraded the communications network to a two-way mesh network. We have remote connect/disconnect capabilities for approximately 75,000 meters. Our mobile workforce solution is integrated into our Customer Information System (CIS) and our networked metering system. So our technicians in the field can utilize the wireless network to enable realtime work order processing along with metering system validation and automated data entry. Our customers via the Web can tap into all kinds of analytics—billing/usage history, daily data, time-of-day rate analysis, when and how they use power along with ways to save through conservation, supplier choice and overall improved account management. The system also calculates a bill to date and estimated month end bill to enable customers to make energy
the mesh network we didn’t have to replace all our meters. Therefore, we were able to build upon a solid technology foundation without having to redeploy new costly systems. That approach, coupled with our practice that everything must have a good business case, meet regulatory demands and customer expectations has resulted in significant benefits over the years for stakeholders. We built core infrastructure and then, over time, started adding components. INTELLIGENT UTILITY
We hear that
utilities often succeed in driving customers to a Web portal, but persistence of that behavior is a hurdle. Any advice to encourage “stickiness”?
usage changes mid-month if they are going to exceed their budget amounts. In the near future we will provide proactive alerts via the Web, outbound calls and text messaging. The entire new metering infrastructure is Zigbee-enabled. So we’re piloting home area networks and in-home displays with direct load control capabilities. We’re now upgrading our SCADA (supervisory control and data acquisition) to better manage the transmission and distribution system, including volt/VAR management, transformer load analysis and enhanced outage detection and restoration. We’ve been evolving all this for the past 10 years. Even our vendors are linked into our computer systems. Our approach to this was really about partnering with regulators, vendors and customers. Where many utilities have hit roadblocks on their investments, we’ve had nothing but full regulatory support. INTELLIGENT UTILITY
How have you managed to garner “full
regulatory support”?
This interview originally appeared in Intelligent Utility Daily. It has been edited for length.
W W W. I N T E LL IG E N T U T I L I T Y.CO M
THOMAS You have a lot of dynamics. Connecticut is a high-priced area. A year or two ago, we were among the five highest-priced utilities in the continental U.S. So besides informing customers to help them reduce their costs, we also looked at whether they were reducing their use due to conservation programs, timeof-day rates or picking an alternate supplier. That supported UI and the state’s Department of Public Utility Control, which had the same goals: lower costs, let customers choose, enable them to manage their use through information. Also, we didn’t go in and say we want to spend $200 million all at once. We didn’t go with the sticker-shock approach. We built foundational systems first. We implemented a fixed metering network. We commissioned a new state-ofthe-art CIS. This positioned UI to upgrade systems to meet the ever-changing customer, regulatory and market expectations at a minimal cost. When we installed
THOMAS Running your payments processing through the dashboard page helps customers understand their usage and resulting bill. For those who want to pay online, it forces them to go to the site. Some utilities use two different screens. Our Web portal utilization is about 30 percent. When in doubt ask the customer what they would like to see on the Web. We’ve started looking at in-home displays and load control capabilities, which could bring customers value and enable us to manage the electric system on a more granular basis. At this point, I think the in-home display may not be the ideal solution. An alternative is to make pricing and billing information conveniently available via cable television or mobile technology where you can see your usage, pay your bill and get billing alerts. The customer sets budget thresholds and gets billing alerts in return. You really want to inform customers long before they get their monthly bill. In December we’ll roll out an option for customers to set thresholds and be notified when they approach or exceed them.
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CUSTOMER SERVICE ??
TENET: Attitudinal segmentatino may improve program
Consumer engagement
messaging. EXAMPLE: AEP Ohio developed six psychographic-based segments, and looked at each segment across four energy usage levels to identify highlikelihood, high-value custom-
front and center
ers, but to date have only
++Recent reports focus on
well in pilot and plan to use it in
used this scheme to aid in plot design. They believe their segmentation scheme has worked the future to target programs to
what it takes to move forward
customers that are both likely
By Kate Rowland
to enroll and also have high energy reduction potential.
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IT WAS A BUSY WEEK IN LATE OCTOBER, AS BOTH THE SMART
60
Grid Consumer Collaborative (SGCC) and J.D. Power and Associates released reports on electricity consumer behavior. SGCC’s report, Excellence in Consumer Engagement, examined customer engagement strategies and tactics used to engage with their consumers from a range of smart grid programs across the United States. Of more than 1,500 customer-facing smart grid programs in the U.S., the study researched and analyzed approximately 150 of them and focused on 21 specific programs, including those from 14 IOUs, four municipal utilities, two co-ops and one nonprofit, all with programs in the field long enough to have some meaningful measures of program performance. “It became clear,” wrote Patty Durand, SGCC’s executive director, in the report’s introduction, “that many have focused on answering similar questions across a range of programs: What types of messages should I communicate? How do I engage the vocal minority? What can I do to drive program enrollment?” Rather than offer definitive answers, the report posits 10 basic themes, or tenets, backed up within the pages by supporting evidence from the utilities themselves. Within each tenet, there are many utility examples. I’ve chosen but a few to share here. ??
TENET: Internal messaging and education improve engagement. EXAMPLE: Portland General Electric used a 60-person team with representatives from across the organization (installation team, customer relations, media relations, etc.); oversaw AMI deployment, trained installation team to field common customer questions and coordinate deployment schedule with call center; AMI deployment received very few persistent or formally filed complaints.
??
TENET: Urgency and purpose spur customers to act. EXAMPLE: The Climate and Energy Project used a competition model with finite duration to drive behavioral change; leaders found that it was easy to engage residents in the competition once they made one-on-one contact.
The same day, J.D Power and Associates released its 2011 Smart Energy Consumer Behavioral Segmentation Study. The first in a planned series, this report identified six behavioral segments, based on the types of smart energy activities and degree of control that diverse customer populations will undertake to manage their consumption, costs and environmental impact. While the SGCC’s report is openly available on the collaborative’s Web site, the J.D. Power report is only available for purchase. Consumer engagement is currently a hot topic. These are unlikely to be the last we’ll see of these types of reports.
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OUT THE DOOR These two regulatory principles tell us a lot about utilities. In the 1990s, we heard a lot of complaints that utilities were not generally making investments in renewable resources, particularly wind turbines. Today, there is not a utility in the region that isn’t investing hundreds of millions of dollars in wind turbines. This can Why smart grid advocates be explained by the two principles should learn about utility regulation mentioned. Utilities like capital investBy Bob Jenks ment, once that capital investment is considered low-risk. IT HAS BECOME APPARENT THAT MANY SMART GRID In the 1990s, utilities might have advocates don’t understand the current regulated electric system. been concerned that wind turbines They don’t understand how we analyze utility investments or how prices are were untested, that their useful lives set. They don’t understand the incentives provided to utilities or protections were not well documented, and that required by customers. Put simply, they don’t understand the “regulatory shareholders would take on a significompact” between customers and utilities. cant risk that the investment would The smart grid has the potential to change our electricity system in fundanot be “used and useful” for a long mental ways. But to effectively create positive change, it’s necessary to underenough period to recover the cost of stand the present. In other words, for the smart grid to live up to its potential the investment and see a return on by fundamentally changing the electric system, we the investment. Once wind have to begin with our current system. We can and Once smart grid facilities were well proven, should desire to change it, but it is necessary to utilities were happy to begin by understanding and accepting the existing technology becomes make huge investments electrical grid. in wind power. Similarly, mature and ‘safe,’ once smart grid technology Responsibility to protect customers becomes mature and “safe,” In the Pacific Northwest, we rejected the Enrongetting utilities to getting utilities to invest in sponsored deregulation proposals a decade ago. it will not be difficult. And This means that we have integrated monopolistic invest in it will not so, the problem right now utilities that are regulated by the states’ regulais: How do we get smart tory agencies or are accountable to locally elected be difficult. grid technology to the boards. Regulators and local boards have the mature and safe level? responsibility to protect customers from monopoly abuses and get power at just, reasonable and Customers own the assets affordable rates. And that regulation is subject to legal requirements and historic Other important principles in policies and principles. Some of the key elements applicable to the smart grid: understanding the regulatory ?? Rate base as an incentive for investment. The current structure of system that guides investor-owned regulation for investor-owned utilities was developed in order to incent utilities include:
Understanding the regulatory compact
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++
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long-term capital investment. Building power plants, transmission
systems and distribution networks costs billions of dollars. The current
??
Cost-based rates are required.
system is designed to encourage capital investment by providing a
Rates are based on actual util-
utility a return on invested capital-utility profits from investing in power
ity costs of providing service,
facilities, not directly from selling the kilowatt hours.
not the marginal cost of power in the marketplace. Although
??
Utilities can generally only charge customers for investments that are
some smart grid proponents
“used and useful” for providing utility service. It may take a utility more
would like customers to be sub-
than a year to build a power plant or construct a transmission line, but
ject to the marginal costs of the
it cannot put those costs into rates until the asset is up and running.
marketplace in order to create
Likewise, utilities are generally discouraged from keeping assets in rates
an incentive for customers to
after those assets stop providing service.
purchase smart appliances and
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OUT THE DOOR home energy applications of the smart grid, Oregon law requires rates based on the utility’s actual costs. ??
Regulatory compact. As utilities make investments on behalf of customers, customers pay the utility that cost of that investment plus a reasonable rate of return. That is all to which the utility is entitled. The asset itself becomes dedicated to customers for its useful life. In many respects, utility customers are buying the actual system from the utility and, as we pay off the rate base (mortgage) on each asset, that asset belongs to us and is dedicated to us. We are the owners of the electrical system, not the renters.
These two provisions are important. Smart grid proponents, who believe smart meters will lead to customers paying real-time prices related to the prices in the wholesale market, need to recognize that customers have actual generating assets that serve our load at cost. We own those assets because we have spent Do you agree or disagree years purchasing them from our utilities. with Bob Jenks? Look for this article online at www. Just as my housing costs do not increase intelligentutility.com/magazine as rents rise in my neighborhood because and let’s discuss. I am purchasing my house on a fixed-rate mortgage, my utility rates do not change simply because the wholesale power market changes. There are clearly smart grid advocates who disagree with each of these principles. Some argue that investments should not be made by a utility because that will interfere with the competitive market. Others argue that utilities should
be allowed to invest in research and development that will not necessarily be used and useful. And some believe that rates should be based on the marginal costs of new generation, not the depreciated costs of decades-old hydro facilities. Although regulatory principles are important elements in protecting consumers, some identify them as roadblocks to the future development of a smart grid. Regardless of whether you agree that these principles are necessary structures that protect customers or see them as roadblocks that prevent new technology integration, they do exist and are integral to the regulation of utilities in this region. And whether you want to build on them or tear them down, stakeholders in the smart grid conversation must acknowledge that they are currently there and plan to deal with them. Bob Jenks is executive director of the Oregon Public Utility Commission. This article originally appeared in EnergyPulse in its entirety.
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