Navigant Research Blog

Emerging Broadband Technology Offers New Connectivity for Utilities

— July 15, 2014

In the battle for smart grid communications standards, yet another contender is now on the horizon, promising ultra fast data speeds over existing copper wires.  And while telephone companies (telcos) are the primary target market for the G.Fast standard, chipset developer Sckipio believes that the standard will be attractive to utilities for smart grid applications, in addition to broadband connectivity and over-the-top applications like video.

Designed to help telcos cost-effectively compete with cable broadband and very expensive fiber-to-the-home (FTTH) connectivity, G.Fast employs vectoring technology to eliminate interference (cross-talk) between multiple wire pairs in a single copper cable.  The International Telecommunication Union (ITU) instituted the standard in 2010, and recent field trials have shown promising results.

Belgacom has trialed the standard with 3,000 customers and reported a nearly four-fold increase in access speeds over copper.  This makes the technology a reasonable alternative to FTTH, particularly in urban areas with extensive copper infrastructure already in place.  In multi-dwelling units with extensive in-wall phone lines, the use of existing copper lines represents enormous cost-saving, as well as a speed-to-market advantage over running new fiber.

Coming Soon

G.fast is designed for use in the last-mile – in practice, over distances of less than 250 meters.  This allows fiber to reach as far as the basement of an apartment block, for example, eliminating the need to rewire the whole building and still allowing a notable acceleration in access speeds.  G.fast requires a short loop (less than 250 meters) and operates at higher frequencies than digital subscriber line transmissions, which also run over existing copper wires, increasing the risk of cross-talk unless the new vectoring technology is employed.

Sckipio says it has seen interest in Europe, North America, and Asia Pacific, and expects to see telco deployment begin in earnest in 2015.

Tel Aviv, Israel-based Sckipio was founded in 2012, and in December 2013 announced a $10 million venture capital round with Gemini Israel Ventures, Genesis Partners, Amiti Capital, and Aviv Ventures.  The company  is building ultra high-speed G.fast broadband modem semiconductors.

The G.fast standard is still working its way through ITU approval, and a few technical hurdles remain:  Powering the equipment and the unbundling of sub-loops is something that different countries are treating differently.

G.fast represents a great leap forward for telcos struggling with legacy copper networks.  As a viable alternative for utilities seeking connectivity for smart grid applications, it is likely still a couple of years out.  Given its very high data transfer speeds, however, it may well present a new alternative for utilities needing visibility and control at the grid edge — while also providing telephone companies with an opportunity to ramp up their business in the utility/smart grid vertical.

 

Coming to the Motor City: A Smarter Grid

— July 13, 2014

The smart grid in Detroit is about to get smarter – and so are utility industry executives exploring options for real-time grid data and analytics.  Distribution grid sensor developer Tollgrade Communications recently announced a $300,000 project to deploy its LightHouse sensors and predictive grid analytics solution across DTE Energy’s Detroit network.  The companies aim to demonstrate how outages can be prevented.

The 3-year program was selected as a Commitment to Action project by the Clinton Global Initiative (CGI) at the recent CGI event in Denver, where Tollgrade CEO Ed Kennedy took to the stage with former president Bill Clinton to discuss the project.  Tollgrade, Kennedy said, will make public quarterly reports on the project, beginning in 1Q 2015, identifying best practices and sharing detailed performance statistics.

Cheaper Than Building a Substation

With 2.1 million customers and 2,600 feeder circuits, DTE Energy has already begun piloting the system around Detroit, and Tollgrade says that it hopes to prevent 500,000 outage minutes over the next 3 years.  Because of the heavy concentration of auto manufacturing in the Detroit area, those saved minutes should translate into substantial economic benefits.  The system will leverage several communications protocols, including DTE’s advanced metering infrastructure communications network, reducing the startup cost and improving the return on investment.

The sensors will be placed along troublesome feeders as well as outside substations where older infrastructure increases the likelihood of outages.  Combined with the predictive analytics solution, the sensors cost just a few thousand dollars per location and could help DTE Energy avoid or defer replacing a million-dollar substation.  Both investors and regulators are sure to like those stats.

Predicting Change

Predictive grid analytics has been a hot topic in the industry for the last few years, but only recently have the prices of solutions and sensors fallen to a level where utilities can justify the cost to deploy them widely throughout the distribution network.  Navigant Research expects the market for distribution grid sensor equipment to grow from less than $400 million worldwide today to 4 times that amount by 2023.  (Detailed analysis of distribution grid sensors can be found in Navigant Research’s report, Asset Management and Condition Monitoring.)

Since its first meeting in 2011, CGI America participants have made more than 400 commitments valued at nearly $16 billion when fully funded and implemented.  The Modern Grid was one of 10 working groups this year; others include efforts in Sustainable Buildings and Infrastructure for Cities and States.

Another CGI Commitment to Action grant announced last week will fund a market-based, fixed-price funding program for solar and renewable technologies.  The Feed-Out Program from Demeter Power will support solar-powered carports with electric vehicle charging stations at a net-negative cost to the customer.  In other words, eligible businesses pay a fixed monthly fee to Demeter Power (lower than their previous monthly electricity bill) and their employees and customers enjoy free car charging while parked there.  Demeter will own and maintain the infrastructure.

The program will initially make financing available to commercial properties located in Northern California communities participating in the California FIRST property assessed clean energy (PACE) Program, which is offered through the California Statewide Community Development Authority.  Interested participants must register with Demeter Power Group to participate in the program, which is expected to launch in the first quarter of 2015.

 

Q&A: Doug Houseman of EnerNex on the Future of Utilities and Power Generation

— June 17, 2014

The release of the U.S. Environmental Protection Agency’s (EPA’s) long-awaited new rule on carbon emissions from U.S. power plants has heightened the debate over the future of power generation in this country.  Environmental organizations and renewable energy industry figures have suggested that wholesale replacement of fossil fuel-based generation with renewables is both achievable and desirable within the next few decades.

I spoke with Doug Houseman, vice president of Innovation and Technology at EnerNex, to get his take on the future of power generation and on utility industry challenges in general.  Houseman has 30 years’ experience in the global power industry and is widely recognized as an energy sector thought leader.  EnerNex specializes in engineering services and consulting to utilities, government, and private institutions.

Navigant Research: In a new report on power generation from renewable sources, Greenpeace suggests that smart grid investments will facilitate integration of extensive distributed generation, but later in the report it shows a “power plant value chain” where generation utilities disappear after 2020 and grid operators become state- or community-controlled.  What’s the logic there?

Doug Houseman: The implication is that the grid can mostly just disappear and that renewable energy will have the same ability to be scheduled as conventional power plants.  A peer-reviewed IEEE [Institute of Electrical and Electronics Engineers] paper I coauthored estimated that, if the U.S. were to use only wind energy, in order to deal with the annual cycle of wind and demand, the U.S. would need large amounts of storage – for example, pumped hydro, which is the most cost-effective storage available today for long-term storage.  We would need to take Lake Michigan twice and put it behind a 200-foot-high dam.  Solar and mixed renewable scenarios all require significant annual storage cycles.  If we move all transportation to electricity, those numbers would grow significantly – say, three to four Lake Michigan equivalents of pumped storage.

NR:  Plans like this rely not only on green generation sources but also reduced electricity and heating demand, thanks to more efficient electronic devices and energy-related renovation of the residential building stock.  Who pays for these innovations?

DH: The consumers will, which means that the people who have money will end up even better off than the people who don’t.  These devices will have a much higher initial cost than less efficient devices – unless the government intervenes in the market in a significant fashion, by either taxing the low efficiency devices heavily or subsidizing the high efficiency devices.  Since many energy-consuming devices have a 20- to 30-year life, even if the manufacture of low efficiency devices are banned, the resale of them through Goodwill and other resale shops will happen, extending use of these devices to the end of their useful life.

Also, to rehab the U.S. housing stock is not a simple process, but probably a 30- to 40-year process – 100 million dwellings will take time to completely rehab to the kinds of standards necessary.  Some of those rehabs will take tens of thousands of dollars to do, and in many cases the buildings will have to be vacant to do the rehab because of remediation issues (like mold) that will be found in the buildings.

NR:  Policy changes are also needed to dramatically change the industry.  Many observers suggest abolishing subsidies for fossil fuels and nuclear energy and transferring the socialized cost of pollution back to the energy sector via carbon fees.  Do you see any of these policy changes happening in the near term?

DH: Honestly, no.  The House of Representatives has proposed a major overhaul of the tax code, which removes many of the subsidies, but the Senate has indicated it is dead on arrival because of the depth of the change.  I doubt that a comprehensive plan can get through and that is the only way to actually act on all the possible subsidies.  Some say that any investment or R&D credits are subsidies, so the depth of the overhaul on the tax code would have to be extensive.

NR:  In the wake of Fukushima, environmental activists and national governments – including Germany and Japan – are working to eliminate nuclear generation.  Natural gas is often considered a “transitional” or “bridge” fuel source.  Your thoughts?

DH: The Sierra Club, the NRDC [Natural Resources Defense Council], and others have indicated that nuclear has a place.  The administration has indicated that natural gas will either need carbon capture or have to be transitioned out.  So electricity use will rise further (as will storage) as heating and cooling move to electricity, along with transportation.

 

How Utilities Can Improve Their Public Images

— May 1, 2014

In my previous blog, I discussed the difficulties that electric utilities face in fostering positive public perception.  While a monopoly electric utility didn’t necessarily have to fret endlessly over customer satisfaction 50 years ago, that simply isn’t true today.

As William Pentland wrote recently on Forbes.com, “To remain sustainable in an era of aging infrastructure, heightened service-level expectations, shifting views of social and business risk, the monopolies that call themselves investor-owned electric utilities and the state commissions charged with regulating them depend on the public’s confidence that the system is providing adequate service, protecting public health and safety and managing infrastructure costs efficiently.”  (Emphasis added.)

That may require a new mentality on the part of utility executives.  Here are a few simple ways that utilities can improve their customer engagement and public perception:

  • Social media:  If Facebook can help foster a revolution in Egypt, you better believe it can have a meaningful impact on how your utility is perceived — for better or worse.  Many utilities already leverage social media for communication with their consumers, but don’t make it all about the outages.  Proactive, positive reinforcement of what a utility is doing for its ratepayers should be constant on outlets like Facebook and Twitter.  Most consumers toss their paper bill inserts in the trash without a second glance, but they read their Facebook and Twitter walls religiously.  Contests, giveaways, and other incentives can be used to attract friends and followers.  Social media is free and easy — use it.
  • Regular, timely communications:  Even the appearance of brushing dirt under the carpet during a negative event (outage, accident, environmental fiasco) will undo months of tweeted goodwill.   This is the age of instantaneous communications and the public expects to know what’s happening — and what you’re doing about it — within minutes of an event.  The public will be eminently more forgiving if it believes that it’s been kept aware of what happened and why — and how the utility plans to prevent a similar accident from occurring in the future.
  • Promote renewables: Keep the public informed about the renewable capacity your utility is adding and, importantly, make sure it understands the costs of that transition.  Solar and wind power are popular, but they’re not the nirvana that the public perceives.  Help educate consumers about where and when renewables make sense and where they don’t.  Also, be proactive about informing your customers about how decommissioned coal generation sites are being handled and what’s being done to minimize the environmental impact.

Excellent consumer engagement analytics programs are available to help utilities with these efforts, including solutions that can help slice and dice your customer base and target each segment with the most effective promotions based on income, location, usage patterns, and a whole host of other demographic characteristics.  Navigant Research’s report, Smart Grid Data Analytics for Consumer Engagement, provides a deep look at these tools.

Effective customer engagement and communication may very well have a deeper impact on the utility industry’s long-term success than the billions of dollars in smart grid technology now being deployed.

 

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