Navigant Research Blog

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.

 

As Smart Grid Spreads, Substations Go Automated

— February 17, 2015

Navigant Research estimates that there are approximately 47,000 distribution substations (D-subs) across the United States, including privately owned substations (such as for large commercial sites or military bases), and another 12,500 transmission substations. We understand that the vast majority of critical transmission substations are automated—that is, they are connected to utility operations centers by communications networks, which allow personnel to monitor and control what happens inside these substations.

When it comes to the distribution grid, however, the level of visibility and automation in substations varies widely. Some utilities report that they have brought fiber to virtually all of their substations; others indicate that their visibility into the distribution grid is limited. We know that this is changing and that the percentage of D-subs with connectivity and automation capabilities is growing, but we also know that those sites historically served by leased copper lines for supervisory control and data acquisition (SCADA) are now in need of a new solution as telephone companies abandon their legacy copper networks.

Our present forecasts for automated substations estimate that total distribution grid substation connectivity was approximately 34% at the end of 2014; over the next 8 years, Navigant Research expects D-sub connectivity to exceed 50%.

Whither Substation Automation?

These figures are important for quantifying the evolution of the smart grid. You can’t have an estimate for automated substations if you don’t know how many substations there are to begin with. Absent government databases, though, it can be tough to nail down infrastructure statistics like these, and so I’m turning to the readers of this blog.

I’d like to invite readers to share anecdotal or specific data related to a few key questions related to overall infrastructure and the status of smart technology deployment.

What do you think? What percentage of your distribution substations are connected?  What technologies (fiber, microwave, T-1, etc.) are used for that connectivity? How quickly, if at all, is your company investing in D-sub connectivity, and why? Interesting anecdotes related to the topic of substation automation are welcome! I hope you’ll take the time to send your thoughts and data points to richelle.elberg@navigant.com.

Next time around I’ll explore distribution feeder automation and other distribution grid smart technology. Below is our forecast for distribution substation connectivity, which underlies the networking forecasts in the Navigant Research report, Smart Grid Networking and Communications.

United States Distribution Substation Connectivity Outlook

(Source: Navigant Research)

 

Net Metering Fight Comes to New Mexico

— January 8, 2015

The fight over solar interconnection and net metering – a topic I’ve covered previously in several blogs (here, here, and here) – has come to my home state.  In a rate case filed in December, Public Service of New Mexico (PNM) asked that customers with their own solar generation capacity solar customers be charged $6 per kilowatt (kW) of capacity, per month, beginning in 2016.  It also proposed that “banking” of excess power sold back to the utility be discontinued; this means that rather than selling back excess kilowatt-hours (kWh) generated in March for top dollar in July, solar customers will receive the net value of the energy in the same month that it’s generated.

Girding for a Fight

Solar industry advocates suggest that the plan will severely dampen demand.  New Mexico has abundant sunshine, but a relatively poor economic base, and solar adoption in the Land of Enchantment has been lower than one might expect.  According to IREC, New Mexico ranked 9th nationwide in total PV installations, with 257 megawatts (MW), at the end of 2013.  With accelerating economic recovery and the expiration of federal tax credits just 2 years away, New Mexico is poised for strong growth in 2015-16.

And that’s why PNM is making this move now.  Its argument that non-solar customers are increasingly subsidizing solar customers has merit, and growth in installations is only going to cost PNM more as it not only loses revenue from solar customers, but also must invest in its grid to support increased two-way electricity flow and changing load profiles.

Hitting Home

I’ve studied the proposal with more than just professional interest.  I recently got a quote for a solar array on my own home, in southern New Mexico, and while PNM isn’t my utility, El Paso Electric, my local provider, will surely be watching the proceedings closely.  Here’s my take on the situation, both as an analyst and as a potential solar customer.

First, $6/kW is fairly substantial, from a solar customer’s point of view.  PNM says that the average New Mexico system in its territory is 3-5 kW, but solar installers suggest that recent installations average 6 or 7 kW.  In order to serve my 2,800 square foot home, a 10 kW system was proposed.

So while PNM says its fee would average $18-$30/month, my own system would cost $60/month under the PNM proposal.  That would extend the payback period for my system from 8 years to 11 years.  But, unless I sell my house in the next 10 years, it’s still a good investment.

The solar industry, however, doesn’t agree.  A recent article in the Albuquerque Journal offered detailed numbers to illustrate how PNM’s fees will change the solar equation to the point where consumers are better off sticking with the utility.

Payback Period

There are some flaws with this analysis, however.  First, solar panel prices have been falling dramatically, and should continue to do so for many more years.  So the math outlined in the Journal, based on current prices, will likely become moot in another year or two.  Second, the article fails to ascribe value to the fact that once the system is paid for, the homeowner pays only the connection fee to the utility.

In my case, the average monthly bill would fall from $223 (today) to $60.  Call it a $200 per month saving to account for rate increases.  Even with PNM’s proposed connection fee, the system will easily last long enough to support the investment.

New Mexico’s installed base of solar systems is likely to double or triple over the next decade.  It’s not reasonable to expect utilities to interconnect these customers for free, pay them peak prices for non-peak production, and spread those and other costs over the shrinking base of ratepayers.  But I do think it’s reasonable to question the $6/kW figure and ask PNM to justify it—especially since Arizona’s compromise plan last year came in at a far lower level.

 

Utilities Poised to Join Enterprise Cloud Migration

— January 8, 2015

According to a study released by Infosys in November, more than 80% of large organizations are either using or planning to use cloud-based, mission-critical applications over the next 2 years.  Here at Navigant Research, we believe that trend is now extending to electric power utilities, as described in our white paper, Smart Grid: Ten Trends to Watch for 2015 and Beyond, also released in November.

Infosys and Forrester Consulting surveyed more than 300 technology managers and business decision-makers from the United States, Australia, and Europe.  Key findings included:

  • 77% of respondents are either using or planning to use Internet as a service (IaaS), platform as a service (PaaS), or software as a service (SaaS) for a wide range of business applications.
  • 66% of enterprises agree that they should prioritize developing a comprehensive cloud strategy for their IT infrastructure.
  • 70% of businesses want to work with a cloud implementation provider that offers a single point of accountability.
  • 66% of companies are either concerned or very concerned about the complexity involved in managing and governing a hybrid cloud environment.
  • 83% of the cloud adopters surveyed are struggling to consolidate their cloud services – from IaaS, PaaS, and SaaS and from public and private clouds.

The survey also found that agility – rather than cost savings – is now the dominant driver for cloud adoption.  The full report can be found here.

Smart Grid in the Cloud

In Navigant Research’s white paper, we observed that smart grid as a service (SGaaS) is now moving from hype cycle to real world product, driven by the growing complexity of smart grid applications, a dearth of qualified IT professionals at all but the largest utilities, and increasing understanding on the part of utility execs that they may benefit by sticking to their knitting (i.e., keeping the lights on).  Itron, General Electric, ABB, and AT&T have all moved decisively into the SGaaS space over the last 18 months.

From a vendor perspective, the SGaaS model is appealing because it generates recurring revenue, which can help smooth out the ups and downs of direct sales.  Navigant Research expects that the market for managed utility services will grow from $1.7 billion in 2014 to $11.7 billion in 2023.  (For additional analysis and detailed forecasts for the SGaaS market, see Navigant Research’s report, Smart Grid as a Service.)

Annual SGaaS Revenue by Category, World Markets: 2014-2023

(Source: Navigant Research)

 

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