Navigant Research Blog

Are Drones About to Catch More Air Among Utilities?

— August 30, 2016

DroneDrones are on the verge of becoming a more commonly used tool by US utilities to improve operations and management of dispersed assets. The latest catalyst is the Federal Aviation Administration’s (FAA’s) new rule called Part 107, which went into effect on Aug. 29. Part 107 comes with some hurdles utility stakeholders need to be aware of, but there is a process that should prove helpful.

Essentially, Part 107 sets the rules for routine commercial use of drones, or small unmanned aircraft systems (sUAS), in the federal parlance. The aim of the rules is to open “pathways towards fully integrating” drones into the nation’s airspace, according to an FAA release. These rules apply to non-hobbyist drone operators who are flying drones weighing less than 55 pounds. The person flying such a commercial drone must be at least 16 years old and hold a remote pilot certificate with a rating for this type of drone, or be directly supervised by someone with such a certificate. A Transportation Safety Administration (TSA) security background check is also required of all commercial drone pilots before a certificate can be issued.

However, there are restrictions likely to frustrate utilities or third-party drone vendors who might contract with a utility to provide drone services. For example, a drone operator must maintain a visual line-of-sight with the drone; keep the drone below 400 feet; fly during the day; keep the drone’s speed below 100 mph; not fly over people; and not fly from a moving vehicle. The line-of-sight and daytime-only restrictions are likely the most onerous to utilities. However, there is a waiver process by which specific restrictions can be removed. That waiver process is supposed to be done within 90 days, but one could expect a backlog, particularly through the rest of 2016 and into next year, assuming there is a flood of waiver filings.

The rules make sense from a cautious regulatory standpoint, but have taken several years to emerge. The slow pace has the US commercial drone market among the laggards compared to other countries, and the US rules are seen as among the most stringent in the world. Nonetheless, the regulatory framework is taking shape, and utilities can make plans.

Beyond Cameras – Lidar

One of the obvious benefits of drones is the use of onboard cameras to inspect grid assets for damage and current condition assessments. But there is another non-camera advantage through the use of lidar technology, which employs laser light instead of radio waves to generate precise, 3D data that can create real-time virtual maps of areas—something quite useful for utilities and transmission and distribution operations. The expectation is that the use of lidar combined with thermal and visual data will pave the way for virtual reality (VR) applications. For instance, a transmission operator could remotely explore storm damage at sites or transmission circuit failures.

The upshot of this new rule is that drones are likely to go from experimental gadgets to important devices in the utility toolbox in the near term. The cost to send drones into the field to monitor remote transmission lines or substations is much less than sending a truck in numerous instances, and as with other new technology, there are likely some new applications not yet devised. For more details of how the drone market among utility stakeholders is likely to unfold, see Navigant Research’s report, Drones and Robotics for Utility Transmission and Distribution. It’s worth a test flight.


The IoT Gets a Model (and Perhaps the Needed Catalyst for Market Growth)

— August 25, 2016

CodeWith little fanfare, the first Internet of Things (IoT) model I am aware of has been published by the National Institute of Standards and Technology (NIST), the folks who set the standards for smart grid interoperability in recent years. This new model is an important step in defining exactly what the IoT is and outlining the necessary security standards that go along with it. Could this be the catalyst needed to help drive the emerging IoT market? It sure doesn’t hurt.

Up until now, there has been a vacuum of standards and uncertainty around the buzzy IoT. The new model, called Network of Things (NoT), was created by Jeff Voas, a NIST computer scientist, and was announced in late July. Voas based the model on a traditional idea of distributed computing. It should be noted that the model uses two acronyms—IoT and NoT—extensively and interchangeably, and the relationship between the two is subtle, according to the published document.

The NoT model features four fundamental elements: sensing, computing, communication, and actuation. The model goes on to describe five primitives, or building blocks, which are:

  • Sensor: An electronic utility that measures physical properties such as temperature, acceleration, weight, sound, location, presence, identity, etc.
  • Aggregator: A software implementation based on a mathematical function(s) that transforms groups of raw data into intermediate, aggregated data.
  • Communication channel: A medium by which data is transmitted (e.g., physical via USB, wireless, wired, verbal, etc.).
  • External Utility (eUtility): A software or hardware product or service. The current definition of an eUtility is deliberately broad to allow for unforeseen future services and products that will be incorporated in future types of NoTs yet to be defined.
  • Decision trigger: A trigger that creates the final result(s) needed to satisfy the purpose, specification, and requirements of a specific NoT.

The model describes more technical aspects of the IoT/NoT, and anyone who is working on the engineering end of this trend should study the details. To the less technical, the model might appear too abstract. Nonetheless, having some basic building blocks delineated does everyone a service by establishing standards that can be employed, particularly for security and interoperability reasons.

NoT Model Primitives

NIST IoT(Source: National Institute of Standards and Technology)

The NIST model is a strong first step in creating an easy-to-grasp IoT framework. It might appear simple at first to some, but it also has a certain elegance in that simplicity. Given its lack of complexity or specificity, it is more likely to gain wider acceptance for further development by stakeholders, since it sets a relatively clean starting point on which to iterate as the technologies and market mature. In fact, Voas encourages others to build upon his foundational model, even as he and his colleagues continue to explore reliability and security issues going forward. Members of the Navigant Research team will join industry experts from Silver Spring Networks and Lynxspring to explore key facets of emerging IoT technologies and the security and interoperability issues surrounding the IoT market in an upcoming webinar.


U.S. Electric Utility Customers Are Satisfied Overall, But Details Tell a Mixed Story

— August 3, 2016

AnalyticsU.S. customers have spoken, and the verdict is they are generally satisfied with their electric utility. But according to the latest J.D. Power survey, there is some downside: the business is still not on par with other industries, and communicating about outages takes a hit.

The latest data on customer attitudes holds mostly positive news for utilities:

  • Overall satisfaction improved for the fourth consecutive year, averaging 680 (based on a 1,000-point scale), which is up 12 points from last year.
  • Average frequency of brief power outages (5 minutes or less) reported by customers declined once again, as it has each year since 2010; the percentage of customers experiencing perfect power—no brief or long outages—was 41%, up from 37% in 2010.
  • When it comes to informing customers about scheduled utility work, there was improvement, too, with 73% of respondents saying they were notified ahead of time, up from 71% from last year.

Cost Declines Driving Satisfaction

One of the key drivers of satisfaction has to be the continued cost decline in monthly bills. Customers who took part in the latest survey report their monthly bills are the lowest in 10 years, averaging $129 in 2016, down from $132 in 2015. There is nothing like prices going down to help drive up satisfaction, particularly for a commodity like electricity.

Nonetheless, the utility industry lags when compared with others in overall satisfaction: auto insurance averages 811, retail banking averages 793, and airlines average 726. As the study notes, just 11 of the 137 utility brands included in the survey outperform the airline industry average. In addition, telling customers about outages took a step backward, with 40% of this year’s survey respondents saying they were informed about an outage, down from 42% in 2015.

Utility Scores by Region

Among the largest utilities by region, PPL Electric ranked highest in customer satisfaction in the eastern United States for the fifth straight year with a score of 705. MidAmerican Energy was tops in the Midwest for the ninth straight year with a score of 713. In the south, Florida Power & Light ranked highest with a score of 724. In the west, Salt River Project took the top honors for the 15th consecutive year with a score of 730. Among all cooperative utilities, SECO Energy ranked highest in this newly designated segment with a score of 769.

On the whole, this survey should give utility managers some comfort about how they perform in the eyes of residential customers, though there is obvious room for improvement. These results also mirror a similar survey from earlier this year that showed business customers with an overall satisfaction score of 704, which was a sizable jump from 677 last year and the highest level in 8 years. However, as newer technologies gain more traction in the utility business, maintaining or increasing customer satisfaction will be challenging, as noted in the Navigant Research reports Bring Your Own Thermostat Demand Response and IoT Enabled Managed Services. These reports highlight how utilities can leverage the latest technologies and drive up customer satisfaction while acknowledging the risks from poorly planned or poorly executed programs.


The IoT Makes Inroads around the Globe

— July 25, 2016

AnalyticsThe Internet of Things (IoT) trend continues to make inroads among companies around the globe, according to new data from telecom giant Vodafone. Its latest survey on the topic finds more than a quarter (28%) of responding companies are already using IoT in their operations, and three-quarters (76%) say the IoT will be critical for the future success of any organization in their sector.

While this trend continues to be transformative for many businesses, one of the remaining barriers to IoT adoption is security, or the lack thereof. Nearly one in five (18%) survey respondents say the concern about security breaches is a potential barrier to wider IoT adoption within their companies. From an energy industry perspective, robust security is still key, of course, given the critical nature of the infrastructure and data. The survey indicates some positive moves in this regard, with nearly six in ten (59%) energy and utility companies working on IoT security guidelines and roughly half (52%) working with a specialist security provider. I choose to see this glass as half full, but the emphasis on the security piece could use some improvement.

Wireless Networks in Europe

Elsewhere, there is further evidence of the expanding IoT trend. In the Netherlands, telecom provider KPN has recently announced the completion of its nationwide wireless IoT network. The company also notes it has signed contracts to connect 1.5 million devices so far, and that potential customers include governments seeking to link sensors on critical infrastructure, companies that specialize in lighting and traffic control, and consumers with fobs on bicycles for monitoring location. In addition to KPN, French startup Sigfox is building a similar IoT network and is currently deploying its service in 20 countries.

One other clear sign of the growing IoT trend was the recent huge deal by Japan’s SoftBank, which is acquiring British chip designer ARM Holdings for $32 billion. The deal is the largest acquisition by a Japanese firm in Europe. The big bet by SoftBank is that ARM can become a leader in the design of chips that power IoT devices, similar to how ARM’s designs are key to the success of smartphones and tablets.

A Rising Tide

For utilities and other energy-related firms, it is hard to ignore this rising global IoT tide. The emerging technology is altering business processes, and stakeholders need to pay attention and make strategic plans. This is something my colleague Casey Talon and I point out in our Navigant Research report titled IoT Enabled Managed Services. By seizing on the opportunities of an array of IoT devices and combining the data with analytics and bundling services, utilities can improve their own operations and increase customer satisfaction. It’s a trend worthy of investment.


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