Navigant Research Blog

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.


Inverters Rise to the Challenge of Integrating Renewables

— March 13, 2012

The inverter – a technology with the rather unglamorous job of converting Direct Current (DC) produced by most solar and wind generation assets into Alternating Current (AC) for distribution throughout utility grids – is hardly the object of much love.  It’s traditionally been viewed as necessary component of most renewable distributed energy generation (RDEG), but nothing more.  A decade ago, inverters lacked any communications or larger smart grid optimization capacity.  How the world has changed.

I recently presented at the Inverter and PV System Technology Forum USA 2012 event in San Francisco.  While much of my own research (and presentation) focused on the ability of new inverters to offer the service of intentional islanding necessary for microgrids, I was astounded to learn the full gamut of other smart grid-type services modern inverters can offer.  I already knew about Princeton Power System’s ability to offer demand response, but I didn’t realize that many of the issues that seem to give utilities heartburn in regards to solar photovoltaics (PV) – voltage, frequency and ramping concerns – can now be handled by these inverters and “smart” solar PV systems themselves.

Of course, the functionality of inverters is also dependent upon scale.  Today’s inverter market can be divided up into at three primary categories:

  • Centralized Inverters: A relatively recent phenomenon, these larger scale systems have been propelled by the growth in utility-scale solar PV projects that can now reach 250 MW or even 500 MW in total capacity.  Companies such as SMA of Germany, which has deployed 20 GW of total inverter capacity worldwide and boasts a 35% total inverter market share, is big on this technology.
  • String Inverters: This is the most common configuration, as it can be deployed at a variety of scales and is, generally speaking, the most cost-effective choice.  As the name implies, inverters are linked up in a string, either in parallel or along multiple strings.
  • Micro-inverters: Perhaps the biggest market buzz surrounds these technologies, as they offer the ability to control output, voltage and frequency down to the solar PV panel level.  For example, the company Enphase – which deployed over 1 million micro-inverters in 2011 and has captured 34% of California’s residential market – can monitor the performance of all of its deployments every five minutes through a control center located in Petaluma, California.

Ironically enough, many of the variability problems utilities worry about with increased use of renewables can be mitigated by emerging solar and wind power technologies, with the inverter being one key solution.  However, right now, utilities will not allow inverters to provide many of these services in the U.S.  Markets around the world have yet to mature to create a power quality metric making provision of these services cost-effective for any of the parties involved.

Many of the Germans at the Inverter Forum (and they were in the majority since Germany is the world leader on solar PV) pointed out that the country has experienced no blackouts or major problems even though, on a per-capita basis, there is 10 times as much solar in Germany as in California.

One way Germany is able to address high penetrations of solar PV on feeder lines is that the grid operator can simply curtail solar PV systems below 5 kilowatts (kW) in size.  Interestingly enough, the entire European Union is also abolishing the standard utility protocol of requiring inverters to disconnect from the grid during a disturbance, which removes one of the largest stumbling blocks to microgrid implementations, and maximizes the value of these distributed resources.  The Europeans now see the light.  When will the U.S.  get up to speed and allow solar (and wind) technologies – including inverters – to help solve the grid challenges they allegedly create?


Smart Metering As a Service Takes Hold

— March 8, 2012

Is the smart metering business model changing before our eyes?

I am currently researching an upcoming report on Managed Advanced Metering Infrastructure (AMI) Services.  Traditionally the billing model for Managed AMI has been per meter per month, but new approaches are emerging.  Managed AMI is increasingly being priced per service per month.  In this scenario, a single smart meter may enable multiple services.  The base service of collecting meter reads might be enhanced with optional services, such as remote disconnection.  The meter – for decades the utility’s cash register – now becomes the service provider’s cash register as well.  Cha-ching!

The IT industry went through a similar evolution, as in-house systems became outsourced applications, and then outsourced applications became cloud-based services.  In each case not only the technology but also the business focus changed.  Where infrastructure was once the focus, it is near invisible in cloud solutions.  This is evident in the evolution of Service Level Agreements (SLAs) from technology metrics such as server uptime toward business metrics such as customer service levels.

Pricing by service suggests that AMI may be rapidly evolving in the same manner.  IT outsourcing was invented in 1962, after all. But with outsourcing and clouds already in play, AMI does not require the decade-long acceptance of each new business model.  All that’s necessary is to apply the latest model – at present, cloud computing – to smart metering.  As ever, there will likely be hiccups and naysayers.  I recently blogged on a cloud-based SCADA monitoring application, which could be considered a green shoot for cloud-based smart grid.  If form holds true, eventually utility CFOs will see the cost savings and render the entire discussion moot.

Pay-by-service, also known as pay by the drink, has traditionally been offered to clients as a way to control costs.  “You pay only for what you use,” is a typical positioning statement.  Systems integrators have eagerly embraced pay by the drink pricing because they know that a client ordering services one-at-a-time will end up spending more than a client ordering a fixed price bundle.  Detroit carmakers have known this since the early 1930s.

Itron’s recent acquisition of SmartSynch could ironically be another step along the path toward de-emphasizing infrastructure.  Itron has added SmartSynch’s mobile communications capabilities to its own existing mesh capabilities.  One the one hand, this is good news for wireless carriers, who have been saying for some time that their way is the best.  On the other hand, Itron has now positioned its AMI solutions as less dependent upon a single form of communication.  This could move AMI communications closer to commoditization, while focusing the sales cycle on business issues.

The signal here may be that the days of differentiating AMI based upon physical attributes such as communication layers may be numbered.  Certainly the smaller electricity retailers that are likely to favor managed AMI systems will not expect to dictate very much of the infrastructure.  For some vendors the move to the cloud will be a seamless transition.  But for any AMI vendor that differentiates solely on infrastructure, there could be stormy seas ahead!


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