Navigant Research Blog

Are Cyber Security Researchers Burning Down the Village to Save It?

— December 7, 2012

To research smart grid markets is to immerse oneself in a succession of fads.  Here at Pike Research we watch the fads come and go while utilities quietly go about their distribution automation projects.  Two years ago, smart metering dominated conference agendas.  Last year it was customer engagement.  This year data analytics is the buzzword du jour.

Smart grid cyber security has its fads too.  One topic dominates discussion these days:  Should security researchers publish control system vulnerabilities without notifying the system vendors?  And if that’s okay, is it equally acceptable to publish software to exploit those vulnerabilities without prior notification of the vendors?

Opinion is sharply divided on this topic – as if we are holding our own presidential election.  What’s not divided is vendors’ and utilities’ response to this activity, which has been very little.  One leading researcher, after releasing a boat-load of vulnerabilities, wondered aloud, “Where’s the response?”

The stated objective of these activities is not to generate PR for the researchers but to force vendors to take action.  From one site:  “The goal of Project Basecamp is to make the risk of these fragile and insecure devices so apparent and easy to demonstrate that a decade of inaction will end. SCADA and DCS owner/operators will demand a secure and robust PLC, and this will drive vendors to finally provide a product worthy of being deployed in the critical infrastructure.”

I got news for you guys: so far, it ain’t working, but we sure are exposing a lot of critical infrastructure to attack.  That’s the only provable outcome of these exercises, and it’s a problem.

Cyber security exists to defend critical infrastructures against attack.  A strategy that accepts a successful cyber attack for its success is self-defeating.   Some agree with that position while others that I immensely respect disagree.  So be it.  From my perspective this is like an arsonist wondering why firefighters don’t have better tools to put out the wildfires that he sets.

There’s also a human element: whom have we arbitrarily doomed to suffer the coming cyber attack?  Grandma’s dialysis machine?  Traffic signals in Los Angeles?  Potable water in a developing economy?  Unfortunately, we don’t get to pick who is attacked with those exploits.  Are we willing to throw grandma under the bus to make our point?

I choose not to support any of this.  If someone else can do it with a clear conscience, good for them, I suppose.  Unfortunately, all cyber security practitioners will be painted with the same brush.  If a few set fires, we shall all be presumed arsonists.  Think about it:  how many headlines do you read about security people doing their job?  “In other news today, nothing was successfully attacked” – that makes for super-compelling copy, right?  Ultimately, we shall have thrown ourselves under the bus too, and I don’t think that will entitle us to call ourselves martyrs.

The common rap against security practitioners is that we’re a bunch of techie nerd geeks that don’t have a clue about business issues.  I’m afraid that setting fire to our own industry may earn us that stereotype for good.


In China, Wind Power Fuels Microgrids

— December 6, 2012

Wind energy in China has been expanding at an incredible rate, and the Chinese government hopes to speed up this deployment in the future.  Currently, China has approximately 62.4 gigawatts (GW) of wind energy installed, mostly in the remote northern and western regions of the country.  Transmission infrastructure, however, has not kept pace; up to 20% of the power generated is wasted because the wind farms are not connected to the grid.

Microgrids could be the solution, or at least an interim step, to integrating this burgeoning generation capacity.  By definition, microgrids incorporate distributed generation resources and have the ability to isolate, or “island,” themselves from the greater electric grid.  Deploying microgrids near the sites of non-grid connected wind power would have three main benefits:

First, microgrids utilizing the wind generation would provide the surrounding communities with a more reliable source of electricity.

Second, since microgrids have their own generation resources, they draw less power from the electric grid than regular loads.  This means that capital investments in transmission infrastructure would be reduced, since less power would need to flow into the microgrid, and already strained utility budgets would be eased.  For example, a significant amount of wind capacity exists in Inner Mongolia, but the region has a relatively small load compared to the more urbanized parts of China.  The regional utility, Inner Mongolia Grid, lacks the funds to build sufficient transmission capacity to the rest of the country.  Using that power to create local microgrids would benefit both the region and the power producers.

The third benefit is more subtle.  Microgrids enabled with storage components (e.g., batteries, flywheels, and so on) can be used to smooth out the intermittent nature of wind power.  When wind power is greater than load in the microgrid, the electricity can be delivered to the national grid.  With storage components installed, electricity could be delivered in a smoother and more predictable pattern.  Not only would this cause less strain on the physical grid, but the stored power could also be used for peak shifting and load-leveling applications, if the storage capacity is large enough.

Along with the entire Asia Pacific region, China currently has a relatively small share of microgrid installations, only about 118 megawatts (MW), according to Pike Research’s Microgrid Deployment Tracker 4Q 2012.  Microgrid deployments are accelerating in Asia, though, and significant increases in wind power should reinforce that trend.

Microgrid Capacity by Region, World Markets: 4Q 2012



EVs and Smart Meters Seek a Common Language

— December 3, 2012

For several years EV charging equipment companies have been discussing designs for enabling their products to talk with smart meters and other home energy equipment.  Establishing communications pathways would enable a vehicle’s energy consumption to be balanced with other home energy use and minimize the cost of electricity for transportation.  Of the many wireless and wired options for these communications, interest in the ZigBee wireless protocol has grown of late.

Australian company Percepscion recently unveiled what the company is calling the first EV charger to be certified to work with the ZigBee communication standard.  The ChargeIQ unit can be programmed to enable charging at specific price targets or to respond to grid signals relayed by the smart meters when the power grid is under stress.  Other EV charging equipment companies including BTC Power are also developing products with ZigBee capabilities.

This communication link benefits grid operators and EV owners alike.  Eventually, EV chargers in a region could slow or stop charging at times of peak demand, as part of regional demand response systems that could prevent blackouts or protect grid equipment from being overloaded

However, while getting the smart grid industry to agree on a single standard is often a challenge, corralling multiple industries is far more problematic.  EV charging and automotive companies have been considering power line communications, local area networks, Wi-Fi, ZigBee, and cellular as options for vehicle to infrastructure messaging.  Thanks to its use by some smart meters as well as endorsement by the Society of Automotive Engineers (SAE), ZigBee is a leading contender.  Smart grid applications company Silver Spring Networks is working on integrating EV charging equipment via ZigBee, as highlighted in Pike Research’s Electric Vehicle Charging Equipment report.

However, the SAE has also incorporated power line messaging between vehicles and stationary equipment into its set of charging equipment standards.  Several automakers have begun work on power line communications via the HomePlug Green PHY standard, so a combination of wired and wireless communications is likely.

Startup Greenivity is looking to reduce the cost and complexity of these communications options by integrating two on a single chip.  The Hybrii GV7011 chip bundles both ZigBee and HomePlug Green PHY, allowing equipment manufacturers to cover their bases.

While the communications picture is unclear today, in the end, EV drivers won’t care where or how the magic happens.  They’ll just be happy if the grid gets a tad more stable and they can save a few pennies when they charge their vehicles.


Managed Services Spearhead Smart Building Technology

— December 3, 2012

Integrating new IT platforms like building energy management systems (BEMS) poses a challenge for many corporations and organizations with large building footprints. Although firms may see the potential benefit in using these systems to reduce energy costs and increase operational visibility, many lack the internal resources and capacity to make use of them.

Some firms have staff skilled in enterprise IT and facility management, but busy schedules may prevent them from being able to take the time to log into and use a BEMS. Other firms may have deeply entrenched ways of monitoring operations and managing facilities that discourage them from considering new technology. The responsibilities for managing energy, operations, and facility management are often split across many job functions, business units, and control systems, making it difficult to pinpoint who would use (and pay for) an integrated energy management system.

Given this pervasive reality, many BEMS vendors are beginning to offer managed services platforms for customers that do not have the time or resources to operate a BEMS. In essence, these software developers “loan” energy and operations managers to their customers. These managers gain access to a company’s energy-related data (utility bills, building management systems, and so on) and either make decisions autonomously or offer recommendations to key decision-makers within the company.

From a software vendor perspective, offering smart building managed services may require a considerably different approach from selling software licenses. There are three main components in a smart building managed service offering:

  • Cloud-based software-as-a-service (SaaS)
  • Network operations center (NOC)
  • Installation and facility maintenance services

Of these, the one that departs most dramatically from the traditional software model is the network operations center. In establishing an NOC, software firms will need to hire new employees who can both operate the software and interact with the client. These energy consultants need to have skills beyond basic software customer service; they must play a proactive role in analyzing customer energy data and communicating energy/cost savings opportunities to the customer.

Another important component of the smart building managed service equation is facility maintenance services. Many smart building managed services offer fault detection and diagnostics (FDD), which can identify performance anomalies and inefficiencies and pinpoint the cause (malfunctioning equipment, etc.). Fixing these faults, however, may involve truck-based maintenance services, which managed service providers often offer in tandem with local contractors.

Some of the leading providers in this arena are Ecova, SCIenergy, and Pacific Controls.  In fact, leading commercial real estate manager Jones Lang LaSalle offers Pacific Controls’ software as its own white-labeled managed service, IntelliCommand. AtSite, an award-winning company based in Washington, D.C., provides a comprehensive smart building managed service offering by connecting many of the missing links in building optimization – BMS integration, engineering services, remote energy management – and goes to market with other BEMS vendors such as SkyFoundry.

Smart Building Managed Services Revenue by Service Type, Global Markets, 2012-2020


(Source: Pike Research)

The market for smart building managed services stands at $290 million worldwide today and will grow to over $1 billion by 2020, (described in Pike Research’s report, Smart Building Managed Services) as the concept is proven and a greater number of firms develop interest in outsourcing their energy management needs.


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