Navigant Research Blog

Utilities Flunking Big Data 101

— August 2, 2012

Oracle has released an intriguing study that includes a survey of utility executives who collectively say they are not doing so well when it comes to Big Data – i.e., the challenge of making sense of large volumes of complex data that can be transformed to help improve business operations and customer service.  In fact, the utility executives rank themselves among the least prepared to handle the data deluge, something we at Pike Research have noted as a major challenge for the industry as it transforms itself with smart grid technologies.

Here is the relevant scorecard, according to Oracle’s study:

  • Public sector (government), health care and utility industries are the least prepared, with 41% of public sector executives, 40% of health care executives, and 39% of utility executives giving themselves a grade of “D” or “F” for preparedness
  • Overall, 29% of the C-level executives surveyed from 11 different industries in North America give their firms a “D” or “F” for preparedness
  • By contrast, communications industry executives claim to be the most prepared to handle the data deluge, with 20% giving themselves an “A”

Practically all the executives surveyed are concerned about the near- to mid-term data challenges, with 97% saying their firms must improve their use of data over the next two years.  Thus utilities are not alone, just behind the curve compared to others.

So why are utilities flunking out?  One reason is a lack of experience.  Few utilities have ever seen such a huge volume of data generated from utility processes.  In the past, utilities read a meter once a month and sent a bill.  That’s roughly 12 data points per year per meter.  With the latest technology, that volume expands exponentially, with the potential number of meter reads increasing to more than 35,000 per year per meter (based on 15-minute intervals).  That’s an increase of 291,900%!

And that’s just the meter read.  Some advanced meters also send and receive other data related to pricing, pre-paid options, load control, tamper detection, and temperature, which can amount to hundreds of additional attributes that must be processed and correlated.  In addition, the grid itself is being outfitted with a plethora of new two-way communicating devices that report their measurements even more frequently than most smart meters.  These additional types of data create new challenges that many utilities are just now trying to comprehend, and leverage to their benefit and that of their customers.

Moreover, the utility industry lacks skilled data analytics experts.  With just about everyone across the corporate spectrum seeking these people, utilities have to compete for scarce talent.  Most people with these skills are gobbled up by sexier industries, like communications or web-based businesses.  As a result, utilities are turning to third-party vendors for help with data analytics, and that will help ease the burden for the near-term.  However, utilities that want to leverage the data in their own way and perhaps save the cost of outsourcing will need to bring this expertise in-house.

The data deluge is a growing, long-term issue that will test utilities for years to come.  The message from the Oracle survey does have an upside, however: executives know they are failing, which is the first step in making the necessary changes to improving their performance.


Tropos Acquisition Puts ABB in the Middle of the Field Area Network Battle

— June 4, 2012

ABB picked up another dance partner with the planned acquisition of Tropos Networks, a leader in standards-based 802.11 Wi-Fi and WiMAX for smart grid applications.  This is the latest in a spree of major and minor ABB acquisitions, with the most recent big one being January’s announcement that ABB would acquire Thomas & Betts for $3.9 billon.  Certainly Tropos Networks, with somewhere around 50 people, counts in ABB’s “minor” acquisition tally.  But it is significant nonetheless, as ABB is jumping into the communications market while its other smart grid buys have focused on software and analytics (Ventyx, Obvient Strategies) or expansion of power infrastructure and equipment (such as Powercorp).

ABB is no stranger to smart grid communications, with leadership in IEC 61850 standards for substation automation and a popular line of communications gateways.  However, ABB has been largely agnostic on actual communications technologies.  Tropos now puts ABB in the middle of the Field Area Network battle, a crowded segment with many private / public / wired / wireless offerings from a plethora of large and small vendors.  Tropos has had respectable success with Wi-Fi based mesh networks for distribution automation, AMI backhaul, and other smart grid applications, but like others, has found breakaway success elusive.

One of the key assertions of smart grid technology adoption is an evolution from vertically integrated application silos (including communications) toward horizontal multi-layer networks supporting multiple applications.  Yet this acquisition could be viewed another vertical element to ABB’s distribution and substation automation solutions.  And ABB would not be alone, as GE continues to talk about WiMAX field networks, S&C continues to develop its SpeedNet technology, and Cooper Industries (soon to be Eaton) picked up Eka Systems not long ago.  Does this portend a continuing mish-mash of grid communications?

We think the answer is a little yes and little no.  Utility business models still favor projects that have fully self-contained ROIs, making more general multi-application investments in grid infrastructure difficult to justify.  This makes the job of broader communications companies such as Cisco, Trilliant, and Silver Spring Networks (outside of AMI) that much harder.  Yet as each of these solutions adopts IP standards, which is happening though with frustratingly varying degrees, interconnectivity into viable “networks of networks” become more possible, and the benefits of a layered multi-service network can be realized.

Getting back to ABB and Tropos, there are likely other good business drivers for the acquisition outside of smart grid, as there are other industrial automation, transportation, and mining applications where the Tropos solution can help.  And Tropos, whose major strength is in North America, can help expand ABB’s footprint as well.

Naturally, other independent vendors of grid communications technology, including Trilliant, FreeWave Technologies, On-Ramp Wireless, and Silver Spring Networks, are certainly watching and wondering if one of the other grid infrastructure vendors might ask them to dance. Fortunately for them, the music is still playing.


‘Good Enough’ Isn’t Good Enough for Smart Grids

— April 6, 2012

I’ve had it with technology.  I’m through!  Why can’t things just work?  Isn’t it easier to make something work all the time than to dream up hundreds of cases where it won’t work?

Today my HP printer refuses to talk to my laptop.  This is the same printer I’ve used for four years, and the same laptop that has been sending print to it for over a year (but only after HP saw fit to release a Windows 7 driver for a printer already on sale globally).  I have not changed anything recently on either laptop or printer.

But today, nothing.  Nada.  Zilch.  And why?  “The document cannot be printed at this time because of a problem with the printer configuration.”  Of course.  I change the printer configuration every week because it’s so much fun and so easy to do.  Especially a 345MB driver that cannot seem to be patched, only downloaded and re-installed.  I’m down with that.

This vignette captures in microcosm how traditional IT must change to successfully support smart grids.  Can you imagine discovering that you can’t have a cup of coffee tomorrow morning because your coffee maker cannot interact with the power grid?  Multiply coffee maker by kidney dialysis, and things get serious in a hurry.  But IT seems to have no such worries.

Before I’d even finished fuming at my printer, I came upon an excellent article by Christine Hertzog, of the Smart Grid Library.  After reading a recent study from MIT on the future of the Electric Grid, she comments that the study is missing several key concepts.  First and foremost:  resiliency.  I agree completely: resiliency is the keyword for smart grids.

Systems must be designed so that they find a way to keep working even when things aren’t working perfectly  – not bail at the first sign of trouble.  Utility Operations have understood this for over a century.  IT service level agreements (SLAs) just aren’t good enough for smart grids.  The power has to stay on no matter what.  Who could imagine that, 130 years after the first large scale electrification of a city, we may be voluntarily signing up for an arrangement that no longer guarantees resilience?

Last week a vendor disputed my analysis of their product with a note that read in part, “I don’t think you’ve seen our current messaging on smart grids.”  That’s the problem we face:  bullet-proof reliability has been moved out of the engineering department and into the marketing department.  But crisp market messages won’t keep the lights on and the dialysis machines running.  I’m all for strong established vendors entering the smart grid market, as anyone could tell from my Pike Pulse reports.  But please give us stronger products, not just stronger web pages.

And finally… thank your lucky stars that I am a cleantech energy researcher.  That way you don’t have to endure a rant about my obstinate swimming pool pump.


Smart Grid Communications’ Awkward Adolescence

— March 21, 2012

While communications technology was used in the electrical grid long before we started labeling it as “smart,” integration of these communications networks into a common fabric is an essential characteristic of the smart grid.  This integration requires adapting existing standards or creating new ones to meet the specific needs of the grid applications.  That process is well underway – as documented in Pike Research’s new report, Smart Grid Networking and Communications.

There are two particular areas of progress to note: the evolution of a standards-based radio frequency (RF) mesh network for field area networks, and broader mainstream adoption of cellular communications.

The RF mesh network used for AMI networks and some distribution automation applications has historically been one of the most proprietary domains of grid communications.  Silver Spring Networks carved out a leadership position in the wave of AMI deployments starting in 2008-2009 by offering an IPv6-based system.  However, due to a lack of available standards, the radio and mesh protocols underneath the IP-layers remained proprietary.  The IEEE and IETF, with the participation of many of AMI vendors, embarked on development of the appropriate standards embodied in IEEE 802.15.4g , 6loWPAN , and RPL specifications.  Even as these were jelling, Cisco and Itron partnered (leveraging the Arch Rock technology acquired by Cisco) to develop a fully standard AMI network implementation, which was finally unveiled at the beginning of this year.  Virtually every other AMI vendor has released IP-based roadmaps and meters promising the flexibility to be “IEEE 802.15.4g ready.”

In parallel with the emerging standardization of private field networks, public cellular technology is making significant gains, supported by broader 4G technology availability, more focused (and cost-effective) offerings by carriers, and more open cellular-based systems provided by vendors.  SmartSynch won one of the largest AMI deals in the United States at Consumers Energy, and was ultimately acquired by Itron.  RF Mesh innovator Silver Spring Networks released its Gen4 lineup featuring seamless private/public network integration, which may allow greater access to markets outside North America and Australia.
Though multivendor, standards-based, interoperable RF mesh networks and bullet-proof cellular offerings may not be quite here yet, we are getting very close.  Some of the vendor solutions still have all the grace of pimply-faced teenagers, but it is clear that the trends identified in 2009 are becoming reality.

On March 27-28 I will chair the “Smart Communications for Energy Management 2012” conference, created by our friends at Smart Grid Update, in Atlanta.  A solid collection of leading vendors and utilities will gather to examine the issues around smart grid communications implementations, roadmaps, and standards.  Join us if you can.


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