Navigant Research Blog

What to Consider When Evaluating Networking Solutions

— November 4, 2016

Ethernet CablesAs the electric utility business evolves toward a bidirectional, multi-faceted model (i.e., the Energy Cloud), utilities’ need for robust, future-proof communications networks is paramount—but decision-making can seem fraught with risk. The wrong choice can quickly become a limiting factor as management teams explore new applications at the grid edge. But as distributed generation proliferates and overall energy usage falls, the need for that visibility will only become more critical—to customer engagement, demand-side management, transactional energy, load management, asset management, and more.

Traditionally, utilities have preferred to purchase their networking infrastructure, making large capital investments that they can put into their rate cases. Regulators have generally shown a strong preference for the lowest (upfront) cost approach.

Increasingly, however, utilities are evaluating the total cost of ownership (TCO) for various solutions. So where Solution A may be the most attractive in terms of initial costs, over the 10/15/20-year lifecycle of the network, Solution A may actually be more expensive—or worse, it may not be robust enough to support emerging applications.

Recently, Navigant Research was commissioned to do a TCO analysis comparing private spectrum options for utilities with other more popular networking technologies, including unlicensed radio frequency (RF) mesh technologies, existing point-to-multipoint technologies like that of Sensus, public cellular, power line carrier (PLC) technologies, and others.

As it turns out, the TCO for each of these can vary widely. The rural, low-density nature of cooperatives makes for a very different economic model than that of a municipal utility or a large investor-owned utility (IOU). The results of our analysis can be seen in the table below.

Total Cost of Ownership for Various Utility Networking Scenarios: 15-Year Time Horizon

TCO Study

(Source: Navigant Research)

 Is My Existing Network Adequate?

Advanced metering infrastructure (AMI) systems are now operated at utilities serving half of all United States meters. Many utilities will try to leverage those existing networks for distribution automation (DA) or other advanced applications. In some cases, this may be a cost-effective approach. In other cases, however, ongoing maintenance costs and denser equipment requirements will result in high costs over time. Repeater creep—where utilities must continuously add repeaters to a mesh network in order to accommodate growing capacity needs—is a potentially expensive outcome when existing AMI networks are tapped for newer DA functions like Volt/VAR control; fault location, isolation, and restoration (FLISR); or demand response.

Historically, utilities have not been fond of purchasing private spectrum, primarily due to costs, which public cellular service providers have driven higher as their bandwidth needs grow (thank YouTube on your phone for that). More recently, however, there are some private bands available to utilities that may provide a cost-effective solution. Our TCO analysis considered the 700 MHz A-band licenses, which are available today across much of the United States for a relatively modest price/MHz POP (population unit).

Private spectrum ownership is now an affordable option—in some cases, the most affordable option—for a utility looking to deploy a variety of DA use cases across a large or varied territory. When used for a combination of AMI, DA, and even substation connectivity needs, the control and flexibility that private spectrum offers can be very attractive.

For further information on the Navigant Research Total Cost of Ownership Analysis, contact Richelle Elberg. For further information on the regional availability of licensed spectrum, contact Robert Finch at Select Spectrum.

 

Ubiquitous Broadband vs. States’ Rights—and What It Means for Utilities

— September 26, 2016

Ethernet CablesThe Federal Communications Commission’s (FCC’s) net neutrality rules were upheld earlier this year, though challenges are likely to take that fight all the way to the Supreme Court. However, the Commission recently suffered a setback on another broadband-related front. In February 2015, the FCC issued an Order preempting state laws that restrict the growth of municipal broadband networks beyond their borders. But in August, the US Court of Appeals for the Sixth Circuit reversed that Order, giving states the right to block muni broadband expansion.

The original Order came after two municipal electric utilities—EPB Chattanooga in Tennessee and the City of Wilson in North Carolina—petitioned the FCC to remove restrictive state laws that prevented them from extending their broadband network to areas outside of their utility territory. Such rules exist in some 19 US states, thanks largely to lobbying efforts on the part of incumbent telecommunications and cable providers. Given the relatively high percentage of rural areas across the country where broadband service has limited availability (or is so slow as to hardly qualify as broadband), this reversal flies in the face of the government’s ubiquitous broadband goals.

Energy Superhighway

I’ve been urging utilities to consider the provision of broadband services (via fiber-to-the-meter, 4G LTE, private licensed spectrum options, and/or, eventually, 5G) as the way to financially justify a territory-wide, high bandwidth, low latency network. Said network, dubbed the Energy Superhighway in my recent white paper, can support not only smart grid applications like smart metering and substation and distribution automation, but also smart city applications (lighting, waste, parking, etc.) as well as EV charging station networks and smart solar management. It’s future-proof, unlike the networks utilities tend to build in an ad hoc, application-centric, silo-based manner.

Many of the emerging technologies mentioned above are a long way from being widespread in most geographies. A utility’s ability to offer Triple Play (video, voice, and broadband) services—much like EPB has so successfully done in Chattanooga—supports the economic equation in the near-term while allowing the utility to aggressively plan for the more dynamic, two-way energy economy of the future.

The utilities in the suit (or the FCC) may well appeal this recent reversal, but the conflict between federal goals for broadband connectivity and states’ rights proponents is sure to drag on, to the detriment of both utilities (and other Internet of Things-centric verticals) and consumers.

 

Meters Are Sensors and Sensors Are Meters—and It’s All IoT

— August 30, 2016

Power Line Test EquipmentOn August 11, Hazelwood, Missouri-based smart metering system vendor Aclara announced it acquired the smart grid business of Tollgrade, a provider of distribution grid sensors and software for monitoring and analytics. The deal comes just 8 months after Aclara acquired GE’s electric metering business, and all of this in the wake of its own sale to Sun Capital Partners in 2014.

It’s no surprise that Aclara is broadening its portfolio horizons. Upside potential for Aclara’s legacy technology—power line carrier (PLC) communications for smart meter data transfer—is on the wane. While still popular with low density utilities such as rural cooperatives, PLC isn’t as strong a platform for some of the newer smart grid applications that utilities want their advanced metering infrastructure (AMI) networks to support. Aclara has more than 14 million meters in the field and has been looking for growth opportunities since before its sale to Sun Capital.

Aclara has ventured into software, including solutions in the customer engagement and asset planning realms. It also offers several wireless communications solutions as an alternative to its enhanced Two-Way Automatic Communications System (eTWACS) PLC offering. These include cellular solutions and its Synergize RF point-to-multipoint system for utilities. But with the addition of GE’s meter business and now a leading line sensor/grid monitoring solution provider, Aclara has (or will have, presumably) a far more integrated set of products to offer. That means greater customer retainment.

The LightHouse product line also provides Aclara with an entry into the investor-owned utility (IOU) market where it has concentrated its efforts—Tollgrade has deployed its LightHouse system with DTE, Duke Energy, Toronto Hydro, and Western Power in the United Kingdom. In theory, Aclara can now better promote its various AMI solution sets to electric IOUs while marketing the LightHouse distribution monitoring solution to its sizable installed base of cooperatives and munis. Aclara historically has had a sizeable presence in the IOU marketplace with its gas and water AMI systems, with millions of endpoint systems deployed with customers in states including California and New York.

It’s All About the Smart

What makes a grid smart is the overlay of communications and software solutions that allow formerly manual controls to be automated. While Aclara was offering a piece of that smart equation with its legacy communications system, it now offers a broader array of solutions to smarten up not only the meters at the very edge of the grid, but also feeders throughout a distribution network.

The line sensor market hasn’t exactly taken the world by storm in the last few years, but it has shown promising traction more recently. Where the devices used to be expensive and analytics solutions (from which the return on sensor investments really come) were nascent, today’s costs are lower and the ways that real-time operational data can be used are growing exponentially. Navigant Research expects the global installed base of overhead line monitors to grow from a couple hundred thousand in 2016 to around 1.7 million by 2025.

Installed Base Overhead Line Monitors by Region, Worldwide: 2016-2025

Aclara Smart Meters

(Source: Navigant Research)

Generally, we don’t expect the overhead line monitor business to reach the same levels of penetration as, say, smart meters. They’ll be used on particularly troublesome feeders or where there are high levels of distributed solar wreaking havoc at the grid edge.

The Internet of Energy

What Aclara is doing by consolidating various sensors types—and a meter is just another sensor in the grid—into its product line is demonstrating its commitment to going beyond meter reading and boldly into the broader Internet of Things—or Energy—to make its platform more valuable and deepen its reach with utility decision makers. I wouldn’t be surprised to see more announcements from Aclara, perhaps related to software or analytics that leverage the underlying network and devices now incorporated in the company’s stable of products.

 

Harder, Better, Faster, and Stronger Communications Networks

— December 17, 2015

A few months back I wrote a blog entitled “The Comms Are the Cloud,” where I suggested that utilities intent upon enjoying the full potential of the coming Energy Cloud need to develop more holistic communications strategies—specifically, they’ll need enterprisewide, low latency, high bandwidth networks in order to get there.

This is a tough nut for utilities because over the years innumerable ad hoc, application-specific networks have been deployed. Even relatively new advanced metering infrastructure (AMI) networks were built largely with meter reading in mind, and many of the underlying technologies used stumble when tasked with broader distribution automation applications—and forget about teleprotection.

That needs to change. Globally, AMI penetration is still relatively low. While many utilities are running fiber or setting up microwave links to their second-tier substations, further out in the grid, connectivity is generally comprised of a hodgepodge of incompatible, location or task-specific networks. Most often, if AMI is present, it’s the only network.

The challenges are many. For one, licensed spectrum is not something that very many utilities own—and many don’t care to. Certainly spectrum prices can be high, although Salt River Project (SRP) and a handful of other utilities have recently made the plunge; SRP is planning to put its distribution automation applications on licensed 700 MHz spectrum that it bought for about $0.75/MHz POP, or an estimated $6.5 million. But unlicensed spectrum brings the risk of interference; as the Internet of Things proliferates, that spectrum could get dangerously clogged.

Crossing the Great Divide

Meanwhile, the major telecommunications service providers and infrastructure vendors are moving ahead with the next generation of wireless technology. 5G hasn’t been clearly defined by standards bodies, but Verizon announced back in September that it will be testing its 5G network in 2016 and intends to begin commercial deployment in 2017. It has partnered with communications heavyweights like Alcatel-Lucent, Cisco, Ericsson, and others to man its innovation centers and bring the technology to market. Verizon says its 5G network will offer throughput that is 50 times greater than its current 4G LTE network.

But while these telecommunications leaders work toward the next big thing, utilities are largely still reliant upon older communications technologies. There have been some announcements related to 4G-based offerings, and a growing number of utilities are looking to leverage 4G’s low latency. But many utilities are still reluctant to use public carrier networks for their critical applications. Instead they build their own—but is there any utility out there as good as a Verizon or AT&T when it comes building communications networks?

Some large utilities are beginning to reevaluate their communications strategies, but the IT/OT silos that segment utility divisions on so many other fronts are also very much alive when it comes to the communications networks. Retail (AMI) teams don’t want to share their network with the distribution operations folks, and the distribution operations folks may not want to let other applications ride on their distribution automation networks.

At the end of the day there are several points I want to make, and I intend to bring them up again and again in 2016. Utilities need to consider their networking strategy in a holistic manner. Utilities should consider spectrum ownership in their long-term planning. And utilities should reconsider their reluctance to rely upon public networks. Without robust, holistic communications, your utility can’t participate in the Energy Cloud.

Perhaps Daft Punk said it best:  Work it, Harder, Make it, Better, Do it, Faster, Makes Us, Stronger.

 

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