Navigant Research Blog

5G: What It Is and What It Isn’t

— May 15, 2015

Anyone who follows the communications industry with any regularity has been hearing a lot lately about 5G technology—the amazing next generation of mobile (and fixed) technology that promises ubiquitous, low-latency, high-bandwidth connectivity. 5G will power the Internet of Things and provide always-on coverage for a hyper-connected society. Conceptually, energy cloud connectivity will be a piece of cake for 5G networks. Practically, however, it’s a long ways off.

What Exactly Is 5G?

Good question. The answer is, they’re still figuring it out. “They” being a multitude of organizations and standards bodies worldwide that are currently working independently; once they’ve each come up with working definitions, they will then all need to agree to standards and spectrum alignment issues, among others, before a final answer emerges. But 5G sounds really good on paper, especially the part about less than 1 millisecond (ms) latencies and 1–10 gigabits per second (Gbps) connections. Here are the generally agreed upon working specs for a 5G network:

  • 1–10 Gbps connections to end points in the field (not theoretical maximum)
  • 1 ms end-to-end roundtrip delay (latency)
  • 1000 times bandwidth per unit area
  • 10x–100x number of connected devices
  • 99.999% availability
  • 100% coverage
  • 90% reduction in network energy usage
  • Up to 10 year battery life for low-power, machine-to-machine devices

Cool, right? The problem is that there is currently no way that all of these conditions can be met simultaneously. Rather, certain characteristics will be needed for certain applications, while other characteristics are needed for others. And creating a ubiquitous, less-than-1 ms latency network may simply not be physically possible across large geographies. This is a pretty tall order. Delivering even a few of these goals will be tough while simultaneously reducing network energy consumption by 90.

When Will 5G Really Happen?

It may sound cynical, but it’s unlikely that 5G will become a meaningful communications platform anytime even close to 2020, which is the target date that most standards bodies have set for initial commercial deployments. For years in the nineties, I wrote articles about the zero billion dollar wireless data industry. Following the hype cycle, it took another 15 years before all the necessary components came together and real billions were generated by wireless data. Particularly given the lack of agreement today on the goals and purposes of 5G networks, it will be a decade or more before real-world installations develop. For an excellent overview of the issues and challenges faced in defining and developing the 5G networks of the future, check out this white paper from GSMA.

What Does 5G Mean for Utilities

Over the longer term, 5G infrastructure may power futuristic applications like autonomous driving and virtual reality as well as smart grid applications. But for utilities today, existing communications technology is more than adequate—in places where it’s available.

The bigger challenge for utilities is getting those networks more widely deployed with a holistic strategy for a multitude of energy cloud applications. Monitor the 5G evolution if you’re curious about how engineers plan to defy the laws of physics, but when it comes to your utility’s network, consider the best existing solutions for the smart grid applications of today and tomorrow as you build and extend connectivity throughout the grid.

 

The Comms Are the Cloud

— May 14, 2015

The Internet of Things (IoT). Smart grids. The energy cloud. What do all of these have in common? In order to achieve their promise, ubiquitous, high-speed, high-bandwidth communications networks will be needed. The energy cloud, as described in Navigant Research’s white paper, is expected to radically change the electric power industry over the coming decades. The energy cloud will emerge as the old-school, centralized monopoly utility model transforms into a decentralized, intelligent, two-way grid where utilities, markets, and prosumers transact in real-time for a cleaner, more efficient, reliable, and cost-effective energy industry. The potential in the long run is huge.

But today, adequate, ubiquitous communications that meet utilities’ needs for smart grid technology simply haven’t been widely deployed. Even in North America and Europe, where smart grid efforts have been underway for a decade or more, the infrastructure in place to transport all of that valuable data to the systems and devices that need it is, at best, a patchwork quilt of legacy and newer technologies, deployed in an ad hoc manner. The energy cloud won’t become a reality until seamless, high-speed, interoperable communications networks are present gridwide.

Utilities struggle with their communications networking strategies, even as the media waxes enthusiastically about the IoT and the coming nirvana of 5G technology; the recently announced mega-merger between Nokia and Alcatel-Lucent has been attributed to the marriage of the advanced wireless and wired communications that 5G capabilities will demand. But 5G networks are a decade away; a bit of a reality check is in order. Here’s the good news—and the bad news—about communications and the energy cloud.

The Good News

Perhaps the best news for vendors and service providers is the massive demand for utility communications that the energy cloud will engender. Navigant Research estimates that communications gear for basic smart grid communications technology will be a $30 billion opportunity over the next decade.

Communications Node Revenue by Region, World Markets: 2014-2023

Blog chart - RE(Source: Navigant Research)

 

This is likely conservative, based on expectations for deployment of advanced metering infrastructure (AMI), distribution automation and substation automation technology, and on the leading communications technologies used today—microwave, 900 MHz mesh, cellular, etc. (Detailed forecasts can be found in Navigant Research’s report, Smart Grid Networking and Communications.)

Additive to the infrastructure markets included in this forecast will be service fees collected by comms providers, independent network providers (see PDVwireless), networks for electric vehicle charging networks, connected solar panels, and more.

Remember the cell phones of the nineties? The novelty of being able call someone from outside of the home or office? That’s where we are today in terms of smart grid connectivity and applications. We can measure power consumption thanks to smart meters; we can monitor grid devices thanks to new sensor technology. That visibility provides a wealth of knowledge to grid operators—it’s great!

Now think about the explosion of applications—and revenue—that smart phones combined with 4G networks has allowed. That’s where the energy cloud is heading.

The Bad News

Solving the problem of ubiquitous connectivity—with low latency, high bandwidth, and seamless interoperability—is no small task.  Utilities tend to invest in the lowest cost connectivity solution for the application at hand. Once an AMI network is in place, utilities then begin to think about ways to leverage those networks. Now that we can connect to the meter, we could try (insert the smart grid application du jour here)! But all too often, the network in place wasn’t configured with that application in mind. Existing networks can be a serious limiting factor to cutting-edge smart grid applications. But those sunk investments have to be depreciated and a new rate case may be many years away.

Cautious Optimism

Despite the challenges utilities face in developing holistic, long-term, gridwide communications strategies, it will happen. It will take years—maybe decades—but the energy cloud revolution is already underway. Build the comms, and the energy cloud will come.

 

Connecting Mobile Utility Field Crews

— April 21, 2015

pdvWireless, formerly known as Pacific DataVision, acquired $100 million worth of 900 MHz spectrum from Sprint in January. It is now preparing to roll out a two-way radio service and cloud-based mobile workforce management solution geared toward utilities and other dispatch-centric verticals. Motorola Solutions, Inc., the leading provider of two-way radio technology to utilities in North America, has invested in the company.

Ironically, pdvWireless is headed by Nextel founders Morgan O’Brien and Brian McAuley. Most of the licenses purchased by pdvWireless were acquired by Sprint in conjunction with its $30-plus billion purchase of Nextel in 2005. That move proved disastrous for Sprint, which has more recently been dismantling much of the former Nextel network and repurposing—or selling—the associated spectrum.

Dispatchable

pdvWireless has raised more than $225 million over the past year and trades on NASDAQ under the symbol PDVW (as of February 3). Shares closed at $50 on March 31, up from $20–$25 per share paid by private investors in mid-2014. Once again, O’Brien is proving adept at creating value for investors with spectrum and push-to-talk (PTT) technology.

The company’s new two-way radio solution, dubbed DispatchPlus, will be deployed to 20 major U.S. cities, beginning in the northeastern and southern United States and later extending to markets further west. DispatchPlus is a next-generation PTT solution utilizing digital two-way radio technology integrated with pdvWireless’ proprietary cloud-based mobile resource management solutions, including worker tracking, status mapping, and intelligent call prioritization. The solution enables communications to be sent simultaneously to one or many recipients, whether the recipient is on pdvWireless’ two-way service, a cellphone, or at an Internet address.

Medium or Large

Motorola Solutions invested $10 million in pdvWireless in mid-2014 and has also paid $7.5 million in prepaid spectrum leasing fees. Historically, pdvWireless has made its solutions available through wireless carriers; the company has not yet generated revenue under its new service offering. Revenue for the nine months ended December 31, 2014 was $2.1 million, down from $2.6 million the prior year. The company’s new strategy is to become the nation’s leading private wireless carrier, dedicated solely to serving businesses and critical infrastructure entities.

Utilities appreciate PTT technology for their mobile work crews, and access to private—as opposed to unlicensed—spectrum is always preferred. But most large market utilities already have two-way radio systems, which can cost millions of dollars. With near nationwide spectrum coverage, I wonder if it wouldn’t make more sense for pdvWireless to focus on midsize markets—at least from a utility point of view.

 

Mobile Utility Solutions Move Beyond Field Crews

— April 15, 2015

The market for utility IT systems is large and growing. Navigant Research estimates that nearly $9.5 billion will be spent globally this year on everything from meter data management (MDM) and customer information systems (CISs) to advanced distribution management systems (ADMSs), outage management systems (OMSs), and new analytics solutions. (Our forthcoming report, Smart Grid IT Systems, will cover these technologies in detail.)

Mobility is a key part of this expansion. Utilities today want their workers to have access to systems data wherever they are. While this has long been true for mobile workforce management systems (MWMSs), mobility requirements are now extending to a multitude of systems.

As IT systems are increasingly integrated with each other and MWMSs, field crews can not only communicate instantly with their peers over mobile devices, but also upload critical, accurate data to central office systems from the field. Photos can be taken and uploaded in real-time, providing global positioning system (GPS) coordinates of a given grid device as well as visual information and nameplate data. Asset management systems (AMSs) and geographic information systems (GISs) have never before had the benefit of such accurate and granular data.

In Real Time

Safety measures can also be enforced by mobile systems. IBM and Apple have announced an iPhone solution that (among other things) can require a worker to view safety guidelines before performing certain tasks. The app can also ensure that the worker has appropriate, up-to-date certifications before beginning the job. It can find subject matter experts or managers in the geographic vicinity if the onsite crew doesn’t have the needed expertise.

On the customer side of the equation, utilities are recognizing the need for greater, more frequent engagement. Mobile applications tied in with MDM systems and CISs allow customers to easily check their mobile device for information on usage and bills or to participate in demand response events, giving them more visibility and control over their energy use.

Utilities are also adding social media accounts and using them to interact with consumers—a field worker can post to Facebook, for example, to advise customers when an outage is expected to be over—and keep posts up-to-date in real time readily from the field. The connected employee and real-time system access are revolutionary advances in utility IT; the possibilities for utilities to gain real worker and ratepayer efficiencies are endless.

Mobility at a Price

These new possibilities don’t come cheap, though. In addition to mobile device and communications costs, the integration expenses for utilities that upgrade one or several systems in order to achieve these benefits can be high. In a highly competitive market, the prices for utility software solutions generally are holding steady, even as functionality grows. But the number of system interfaces and the complexity of integration are increasing, as well. Although smaller utilities may be challenged to make these upgrades, in the long run, mobile access will be as common a tool for utility workers—including those in the office—as it is today for many other industries. This mobility is a key aspect in enabling the energy cloud, which promises to connect stakeholders in each link of the energy value chain.

 

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