What will make a utility smart?

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Maingate Solutions was founded in 1998 as an M2M service provider (a mobile virtual network operator) offering machine-to-machine communication services to enterprises and utilities in the Nordic region, while also serving industrial, domestic security and point of sale verticals. In 2008 it began to focus on how to handle the huge quantities of data produced. Maingate now supplies an information management platform, targeted at utilities. And it feels it understands the challenges involved in the digitisation of the industry.

Here, Dr Therese Cory of Beecham Research talks to Maingate’s CEO, Baard Eilertsen about the future of smart utilities in the internet of things (IoT).

Dr-Therese-Cory
Dr Therese Cory, Beecham Research

Dr Therese Cory: What comprises a smart utility? Is this the same as digitising the energy market?

Baard Eilertsen: The question here is, how do we invest smartly in infrastructure in order to avoid making the massive investments needed to upgrade obsolete infrastructure, which would amount to billions of Euros?

The use of new technology by the utilities could minimise that investment in the legacy infrastructure, by creating a digital layer above that. This would collect critical information and create decision points, allowing it to see how the utility behaves and how it can improve its business. The larger utilities – in both Europe and the US – have got a grip on this and have embraced this concept to afford greater efficiency and transparency.

TC: What is the role of M2M in the smart utility? M2M will play a smaller part in IoT developments compared with conventional M2M deployment, but will it be an essential enabler?

BE: For the first time, we can see M2M as a critical component in the business, enabling the vertical integration of energy production, grid, retail and microgeneration. This is all about decentralised equipment and infrastructures. M2M is important in how you collect, control and store data, and convert it to information to act upon.

TC: What part does cellular connectivity play in the smart utility?

BE: How you connect can be done in several ways, including power line communications,  cellular, and WiFi. Cellular is going to be one of the components – but not the only component – that we will use. As of 2014, we know the limitations of all these technologies, and will utilise the best available technologies for the purpose, for example for the geographic area.

TC: How important are traditional SCADA systems versus new IT technology?

BE: I would not say SCADA versus IT. SCADA is oriented towards the engineering of operations; it is critical for maintaining a good grid status. The new uses of IT will complement existing SCADA operations. SCADA has a centralised orientation and is the primary mechanism for control, whereas IT will add a decentralised component, allowing more data to be collected from more data points in the operations and integrated.

TC: How should the industry create the right new partnerships in the utility ecosystem, especially given the entry of big new players such as Cisco, Microsoft, Google, and Schneider Electric – as well as software providers and integrators. And how important are standards and openness?

BE: I believe that there will be room in the new ecosystem for all of us players including Cisco, Google and Microsoft – but in different parts of it. For example, I do not see Google being involved in grid solutions, but being more consumeroriented.

The digitisation of utilities will bring Google, Microsoft and Apple into the consumer part of the chain, but they will feed off the data from the grid. Other players are coming into the new ecosystem including Schneider Electric, GE and the utilities themselves.

Maingate is working with the larger partners, including with Schneider in Scandinavia. Here it is  important to understand how to manage this data in order to know how to improve grid and substation efficiency; also in partnership with Schneider, Maingate is working with the utility Vattenfall to understand the flow of the grid in real time, complementing their skills.

There is a growing need for the participation of new ecosystem members who will contribute, but who will benefit also. We are excited at the fact that the big players are coming in – and are learning. I feel they are humble and looking for the opportunity to fit into the supply chain.

There is much talk of standardisation but no one particularly wants to be a driver and make the  decisions. I feel the industry as a whole will try to work out what will work in this new complex  environment. As time goes on and new solutions present themselves, these will be brought in to  complement existing standards.

TC: New business models are arising as new services make use of the large amounts of meter data that will be collected, offering charging options for consumers. This is where the fun starts, isn’t it?

BE: No utility looking into the future really knows how it will change, only that it will change. There will be engagement from new stakeholders – including consumers – and this will engender business models that are different to those today.

The utilities will become more transparent with their data – whilst not necessarily offering services themselves with this data, but cooperating with other companies to create new business ventures. The whole market will be more oriented towards consumers, businesses and also governments.

Already small consumer-driven initiatives of this kind are happening across Europe. These enable communities to create their own ventures based on the new info derived from grid data – controlling their own consumption and securing their supply and incorporating microgeneration. All this will happen quickly after the start of the digitisation we talked about earlier. Coupled with this will come environmental awareness and responsibility in the production and use of energy.

In all, no-one has the answer yet but the whole industry is going to change dramatically. We cannot put a timeframe on this change, but it will be in line with the increased digitisation of the utilities, how the available data will be utilised by the different stakeholder groups to create services – they rather than the utilities themselves.

Google and Apple will utilise data from the utilities to create services themselves, and likely not turn around the service back to the utilities. We must also point out that regulation will play an essential role, and that this role must be respected.

TC: How has the utility landscape changed when going from the past to  smart utilities? Is there an opportunity to open up adjunct markets, such home automation or buildings control?

BE: The utility landscape is changing, due in part to the community-driven energy schemes described already. These will involve thousands of private consumers and hundreds of  enterprises which will create another element in the utility landscape. The new landscape will be more complex than in the past with new stakeholders and rapidly growing “Digitisation of utilities will bring Google, Microsoft and Apple into the consumer part of the chain, but they will feed off data from the grid.” Baard Eilertsen, Maingate demand for ‘near real-time’ information. This may or may not be good for the utilities, who must decide how they will face up to their changing future role.

It is interesting here to compare other industries where digitisation is happening; here new  opportunities are being created on top of solid businesses, whilst elsewhere these have been ignored, resulting in failure. Currently, the view is that the utilities are not up to speed.

TC: What about the grid owners? Do their responsibilities range from large scale production plants to supporting microgrids while securing supply?

BE: The grid owners are not necessarily responsible for large scale production plants. Most of the European grid structures are around 40 to 50 years old. In the past, adding more capacity meant adding more cables and copper; adding more capacity today using the old methods would be too costly.

At present the grid owners have very little control of the grid, nor understanding of how the energy  flows and what is happening there. Some already understand that by ‘smartening’ the grid through  digitising the infrastructure more data will be collected in real time.

If the grid owners can utilise existing infrastructures and assets more cleverly, they can save the billions of Euros they would need to upgrade an obsolete grid which is becoming ever more expensive to maintain. The effect of this will be to lower the investment needed going forward, by being able to control energy flows, including the flow from microproduction sites (such as solar and wind). They will then know how much energy to take from the centralised production sites and how much from the microsites. They will be the winners from digitisation, safeguarding future supplies.

All the grid companies in Europe and the US, and even globally, are looking into these possibilities.

TC: How will different European government interventions affect rollouts and development of the market, in view of the regulated versus non-regulated grid environments?

BE: Regulation will continue to be important – this is needed to ensure the environment is safeguarded, and supplies are secured. It is a human right to be connected to an energy supply.

The non-regulated environment will be expanded by additional technologies from the companies that interact with the grid, for example producers of solar power or community-based microgeneration. Here control will become a regulatory issue. All this generation will feed into one system which will be critical and will need safeguarding.

Hence future regulation will need to go hand in hand with current developments; we think that this will entail creating a new framework specifying how things should work, rather than creating new rules. It is in the common interest to have it working, while always respecting the grid.

TC: What do utilities need from the communications providers to avoid service provider lock-in?

BE: We see quality of service from communications service providers to be important, to ensure reliable transmission of data with minimal latency and so on.

However, the important issue here is embedded SIMs (eSIMs). Utilities do not want lock-in by a single mobile network operator for the 15 to 25 year lifetime of a smart meter, and would prefer the ability for customers to switch operators remotely. Whilst the GSMA is working on an embedded SIM standard, this is taking time to develop and its members have a vested interest in the status quo.

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