Smart grids: The second wave of utilities infrastructure

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In recent years, our energy needs have achieved a level of critical mass that has brought the issue of power consumption to the forefront of public debate. Recognising the need to address accelerating population growth, the industrialisation of emerging economies, and the alarming scarcity of fossil fuels, both governments and utilities have initiated a second wave of infrastructure investment with the adoption of smart grids. Brad Williams, vice president for industry strategy at Oracle Utilities, explains.

To help drive the implementation of smart grids and promote the transition to renewable energy sources, the UK government has introduced sweeping legislation, the Energy Bill, and called for the installation of smart meters in all UK homes by 2020. Moreover, the Department for Energy and Climate Change (DECC) has defined a series of standards that utility systems must meet to ensure the security of their network data. Between these government initiatives and recent widespread investment by industry bodies such as Ofgem, who approved £38.2bn worth of upgrades to the UK power network, it is clear the smart grid conversion is well under-way.

With the exceptional level of network intelligence and data-driven insight that smart grid technology brings them, utilities can better manage energy distribution and consumption, accommodate the implementation of renewable power sources on the grid, and provide their customers with a more cost-effective and engaging user experience.

What makes a smart grid so smart?

At its core, the smart grid is a more intelligent and resourceful energy grid. What this means in practical terms is that it maximises the efficiency of power distribution, supports the integration of renewable technologies into the network, and helps ensure that energy wastage is kept to an absolute minimum.

The power of smart grid technology drives network applications to meet energy efficiency requirements. The ability to automatically balance power supply and demand in the distribution grid, for example, is a benefit that delivers deeper insight into how consumers consume energy. Smart meters are critical components of the smart grid system that allow utilities to gather and record ever-increasing amounts of data on their customers’ energy use. This insight enables them to tailor their energy distribution strategy to match real-world customer behaviour, and opens the door to an unprecedented level of power efficiency.

The large volumes of data collected from the smart grid also enables energy companies to accurately manage their networks during periods of high and low demand, and accommodate fluctuations in usage to ultimately help conserve energy and encourage savings; savings that can either be passed on to customers or re-invested into the grid to enable further improvements. To add to that, because smart meter data lets utilities identify and take advantage of user consumption patterns,  utilities can help drive down use even lower by providing bespoke offers and financial incentives to customers who make an effort to reduce their level of energy use.

Preparing utilities for the smart grid revolution

As the energy gatekeepers for the general public, utilities must implement change at the most fundamental level to accommodate the smart grid revolution. Surprisingly enough, even with the overhaul of the present energy grid system having already begun, only 17% of utilities feel completely prepared to manage the impending influx of smart grid and smart meter data, according to a recent Oracle study. To properly organise themselves for the coming change, utility retailers must learn to better synchronise their business activities and adapt their network to shifting demand conditions.

Historically, utilities have split their operational infrastructure from their other technology requirements. On one side is a discrete set of distribution software and hardware known as operations technology (OT), which is designed to ensure a safe and reliable flow of power. On the other are various departments within the business that use separate IT functions to address both financial and customer needs.

Today, utilities are learning their OT and IT functions must work in unison in order to optimise business performance. The evolution of customer and community needs, including increased energy demand and higher user concern with usage, can only be managed through close co-ordination between grid operations and customer-facing departments.

Unfortunately, this reality is often overlooked during smart grid implementations, which results in utilities not enjoying the full benefit of their smart grid network. A provider who works to eliminate the siloes that traditionally divide its engineers from the rest of the business will be better equipped to enter the smart grid era; a more integrated utilities operation provides customers with more informed service, and gives providers the jump on competitors stuck on trying to adapt new technologies to old, incompatible operational paradigms.

In addition to embracing the convergence of IT and OT, utilities must modify their network models to support the demands of next generation energy infrastructure. The smart grid will bring with it a range of new devices, most notably smart meters, home renewables, and electric cars, for which the grid must be made compatible. These new devices will inevitably breed a more complex energy infrastructure, and therefore utilities must also deploy a modern network management system capable of treating their entire energy grid to ensure that they maximise their investments and operate as efficiently as possible across their networks.

Making room for renewables

Renewable energy sources have evolved to become much more than just a minor complement to traditional forms of energy production. In fact, the International Energy Agency (IEA) has predicted renewables will become the world's second-largest source of power generation by 2015 and begin to rival coal as the world’s primary energy source by 2035. According to the IEA, this equates to adding 3400TWh of wind and solar powered generation to the existing grid, which represents more than the current electricity consumption of the entire European Union.

When implemented judiciously, smart grids have the potential to transform the entire energy landscape by providing a viable platform for dispersed forms of power generation, such as domestic wind generators and solar panel systems. Renewable energy sources such as these are not as predictable in their outputs as traditional fossil fuel-based power plants, in addition to which many more of them exist. The network intelligence and flexibility that smart grids deliver make them crucial to the integration of new green power technologies into the national power infrastructure, and as such they are the lynchpin of any realistic and impactful renewable energy strategy.

Promoting smarter consumption

When one examines the benefits of smart grid technologies from a consumer standpoint, it becomes clear smart meters are a powerful tool in stimulating sustainable power use at its source, with the user. When combined with in-home displays, smart meters record and display energy usage data in near real-time. This provides consumers with an overview of energy consumption, which in turn promotes better awareness of energy usage, builds customer engagement, and encourages users to set more sustainable energy usage targets and adapt their consumption accordingly. Customers can immediately see how much energy (and therefore money) they waste by leaving devices on ‘stand-by’ mode or by not turning off lights in unused rooms, for example, and have added incentive to modify their behaviour.

Today’s utility customers expect their energy providers to identify and resolve any issues they may be having with their service quickly and competently, at a minimum. To remain competitive, therefore, customer service representatives (CSRs) can no longer get by with knowledge of payment alternatives and stock responses to high bill complaints alone. To satisfy their customers and make the most of what the smart grid has to offer, CSRs must steer them towards decisions that will be most beneficial to them. To achieve this, utilities can demonstrate the impact of different usage alternatives, including the differences between critical peak pricing and everyday time-of-use rates, as well as ‘what If’ scenarios, such as flooding.

The utility of the future

The world is experiencing a sea-change in how its inhabitants produce and consume energy. This shift extends to how power is created, how it is transmitted, and how it is measured. Consumers will fundamentally change their relationship to energy as they look to adopt more balanced and sustainable usage habits.

The call for a new approach to energy distribution has been answered by the smart grid., as this has the potential to radically change how utilities structure their businesses. Data and data analysis will lie at the heart of the grid, providing energy providers and consumers with the intelligence and insight they need to move towards a more energy-conscious future. For utilities, this means improving business operations and maximising the grid’s efficiency, while for customers, this means engaging with technologies, such as smart meters, to save money and take an active role in managing the planet’s limited resources.

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