Cleantech Market Intelligence
Can You Hear Me Now? Public vs. Private Networks for the Smart Grid
In the frenzied smart grid discussions of networking topologies, standards, and frequencies, the first fundamental question is whether utilities should build their own dedicated private communications infrastructure or leverage existing public telecom networks. To anyone from the telecom industry, this seems like a silly question. Why duplicate a broad-based infrastructure when multiple competing providers have already spent billions blanketing the globe with wireless and wireline networks? Are smart grid communications needs really that special?
It seems the answer is a definite maybe. Some utilities with which we’ve spoken are adopting a “use public when we can, build our own when we must” approach. They say that smart grid bandwidth needs today are relatively modest but are likely to grow, and leveraging telecom networks provides flexibility to adapt. Bolstering this view are telecom carriers including AT&T and Verizon in the U.S., supported by vendors such as SmartSynch, who have recently refocused on the smart grid with tailored pricing and support offerings. Though public wireless is common for C&I smart meters, neighborhood AMI networks are typically considered a “build where we must” application. However, even this may be changing. For example British Gas aims to leverage Vodafone’s GPRS network to connect over 1 million smart electric and gas meters in the UK starting this year. Competitors in the UK quickly point out the standards and regulatory dance has not yet finished in the UK’s unique market, but there is no doubt that public wireless is gaining a toehold in AMI applications where it previously had none.
On the other side of the argument, there is an opposing adage: “build our own everywhere we can, unless economically not feasible.” Proponents offer a long list of reasons for this approach, but it usually boils down to control. The grid communications infrastructure is often critical and becoming more so. Having complete control of the reliability, availability, performance, security, and coverage of this infrastructure is seen as necessary. To paraphrase more than one utility exec: “A major event where I most need my communications is likely to be the same moment everyone will grab their iPhones to see what’s going on – I do NOT want to have to compete for bandwidth”. Similarly, as smart grid cyber security issues are getting greater attention with new NERC CIP requirements, NIST standards, and even looming U.S. legislation, having full ownership seems like a safe bet. Much to the chagrin of the geeks, one major issue is not technical at all. Private network infrastructure gets included in the “return on assets” equations that figure into how many utilities make money; “phone bills” generally do not.
Despite these different philosophies, our research points to similar results: smart grid networks are hybrids of private and public technologies. We are forecasting strong growth for telecom carriers in the smart grid domain, yet we see private technologies remaining dominant for most applications. Accelerated adoption of public wireless will likely need broader deployment of 4G technologies that deliver greater service level guarantees.
In any case, a simple answer to the simple question of “public or private?” will remain elusive, requiring utilities to understand their individual requirements and longer-term roadmaps, and make their choices accordingly.