Navigant Research Blog

Utilities Aim for Brilliant Grids

— August 14, 2013

There are generally two types of smart grid deployments:  those with smart meters only, and those that also implement distribution automation (DA).  The first has an automated metering infrastructure (AMI), a grid populated with intelligent endpoints that transform the utility’s  data collection.  The second transforms the way a utility tackles outages (and improves grid efficiency) by automating the entire distribution infrastructure – from the substation down to the new endpoints.  DA is the brains and backbone that enables and controls a neural network of power distribution.

The U.S. Department of Energy’s Smart Grid Investment Grant (SGIG) program has transformed around 10,000 distribution circuits to date.  As the SGIG program nears completion, vendors and utilities are taking aim at hundreds of thousands of aging, poor-performing circuits across the world.  And distribution automation will play a crucial role in upgrading these antiquated systems.

The Navigant Research report Distribution Automation analyzes and forecasts the global DA market, covering switchgear, intelligent electronic devices, communications, and popular systems such as integrated Volt/VAR (IVVC/CVR), fault detection/isolation, and feeder protection/control (FLISR).  Navigant Research forecasts that global DA revenue will grow from $6.3 billion in 2013 to $11.3 billion in 2020.  Reliability, a theme throughout the report, is more relevant than ever as utilities and regulators try to strike a meaningful balance between cost and benefits for smart grids.

Upping the Value

In a recent blog, I wrote about the outages during the tornados in Oklahoma.  A regulatory filing from OG&E shows a guaranteed utility savings of over $10 million in 2013.  (Not bad, since utility benefit estimates tend to be conservative.)  DA deployments will also reduce outage times –saving OG&E customers many times that amount every year.  Reduced outage time is a real benefit, but because the benefit of avoided outages does not affect rates directly, they cannot be included in the formal cost/benefit business case.  The Oklahoma Corporation Commission tracks outage durations in Oklahoma, and will find some great benchmarking tools in the SGIG reports to estimate customer benefits.

Lessons learned from smart grid deployments, backed by billions in Department of Energy (DOE) grants and company matching, are being tallied and molded into available best practices.  At the 2013 Smart Grid Distribution Automation Conference chaired by Navigant Research, the DOE presented initial findings on reliability improvements.  Data from four projects showed that the average outage duration dropped 18%.  The DOE findings suggest how utilities and regulators could consider the value of reduced outages.  More specifically, the DOE suggests using a value of service (VOS) coefficient of $373 per hour (technically per kilowatt-hour) for customers in the commercial customer class (that’s up from $250 in my previous blog).  The VOS coefficient is a metric used to describe the estimated average customer interruption cost.  An 18% improvement in VOS – reducing the annual outage duration from 100 minutes to 82 minutes – results in a combined annual total VOS improvement of $45 million for 20,000 commercial customers with an average load of 20 kW.

VOS improvements justify significant investments in DA.  Such proven reliability improvements are likely to result in favorable rate case rulings for more utilities as regulators are directed by their bosses – the customers – to modernize an aging infrastructure and allow utility investments in grids that are brilliant throughout.


With ComEd Contracts, Chicago-Style Smart Grid Advances

— July 23, 2013

ComEd, the Illinois utility, has had quite a go of it over the past year, since announcing plans to pursue a $2.6 billion grid modernization project.  After the company said in early 2012 it will install more than 4 million meters over a 10-year period, beginning with 500,000 by the end of 2012, outcry by special interest groups and wary customers gradually increased, due to fears of rate hikes and privacy intrusions.  As a result, Senate Bill 9, which would have funded the project via rate increases over the installation period, was vetoed by Governor Pat Quinn in early May.  Shortly thereafter, the Illinois house and senate both voted to override the veto.  Meanwhile, consumers filed a class-action lawsuit demanding compensation of $182 million cost that was incurred in rate increases over the 1-year delay of the rollout.

Those last three events occurred over the course of a few days last May.  Does it get any more exciting?

With a thumbs-up from the Illinois state legislature to move forward, ComEd has started awarding vendor contracts for integrated grid solutions.  This week, both GE and Silver Spring Networks announced contract wins for the 10-year project.  For GE, the $200 million deal will include the delivery and installation of approximately 4 million meters in Chicago-area residences, while Silver Spring will provide smart grid infrastructure solutions and support.

What a Bargain

As the North American market for smart grid deployments (meters in particular) has leveled over the past year, a project of this size is represents a significant win on behalf of GE.  The advanced meters will provide hourly usage data, remote meter reading, and outage detection.  This offers both the utility and its customers the ability to better monitor personal and aggregated energy use.  As a result, ComEd hopes to gain increased reliability, savings and clarity in scheduling and planning for future generation assets, and more effective integration of smaller renewable sources into the grid.

Given these advanced capabilities, ComEd is getting these meters at a bargain rate.  At about $50 per meter, the price is substantially below the average selling price that Navigant Research foresees for advanced meters through the remainder of the decade, which is closer to $80-$100 per meter.

This comes back to the leveling off of the North American smart meter market, which is increasingly shifting toward smaller, specialized deployments as Smart Grid Investment Grant mega-rollouts came to an end in 2012.  Large utility contracts are increasingly scarce, leaving contracts for smaller batches of custom (translation: cumbersome) meters for municipal and cooperative utilities.  With the scope of ComEd’s smart grid upgrade, this alone seems like incentive enough to bid low and invest in a more efficient supply chain.

Now, if ComEd can manage to keep any Chicago-style hiccups and scandals at bay, it should do well on the deal.


Did the FCC Get it Wrong on Progeny?

— July 22, 2013

On June 6, the FCC issued an Order granting permission to Progeny LMS, LLC to begin commercial operation of its multi-lateral location and monitoring service (M-LMS) in the 900 MHz spectrum band.  Progeny’s system is expected to improve on existing location services like GPS by providing information on height – it can tell what floor a person is on in a high rise, for instance.  In addition to commercial applications, the service is intended for Enhanced 911 (E-911), which provides 911 operators with the physical location of the caller.  The company has received support from public safety agencies nationwide.

However, the utility industry is in an uproar.  Petitions for reconsideration were filed by seven entities last week, including Silver Spring Networks and the Part 15 Coalition (which includes companies like GE Digital Energy, Itron, Landis+Gyr, the UTC, and others).

The hubbub stems from the likelihood of interference with already deployed utility advanced metering infrastructure (AMI) and supervisory control and data acquisition (SCADA) systems, which operate in unlicensed 900 MHz spectrum.  Progeny uses licensed spectrum, and in granting the company permission to begin commercial operations, the commission made it clear that it placed Progeny’s business case (and potential E-911 benefits) ahead of the concerns raised by the utility industry.  In fact, the Part 15 system operators and devices are at the bottom of the heap when it comes to sharing spectrum in the lower 900 MHz band.


(Source:  FCC)

Unlicensed system operators are expected to make nice and engineer their systems so that signals can find alternate routes around interference – and for the most part, that’s what existing users have done.  The concern over Progeny’s system is that it is a high power system—30W—whereas most of the utility applications like AMI and SCADA are low power (from 1-3W).  Where interference develops, existing systems may have to be reconfigured, physically in some cases, and/or more hops may be required for a signal to reach its destination, increasing the latency of the data messages.

Safety Above All

Petitions for reconsideration point out that Progeny’s field tests – which were a requirement of the approval – didn’t test a wide-enough variety of devices.  In particular, they didn’t test against distribution SCADA systems that are dependent upon low latency.  Instead they tested only against AMI systems, which are less time-sensitive.  In its order, however, the FCC “concluded that the purpose of the field test is to promote the coexistence of M-LMS and unlicensed operations in the band by ‘minimizing’– not eliminating – the potential for M-LMS interference to Part 15 operations.”

The Order does require Progeny to work with other system operators to alleviate interference and also to report interference complaints to the Commission.  It also required Progeny to set up a  reporting website for interference issues and to report launched markets, which it did June 21.

A review of that list reveals that Progeny is already operational in 40 major markets covering two-thirds of the U.S. population.  “Operational” means that it has deployed equipment to cover at least one-third of the market.

Even before the order was adopted, PG&E filed ex parte comments with the commission describing SCADA interference that occurred at one of its sites in San Francisco last fall.  Based on how widely the Progeny system has already been deployed, such problems could soon arise in other cities.

The LMS spectrum license was originally established by the FCC in the mid-1990s, well before the widespread deployment of smart grid technology.  But in applying license conditions established nearly 20 years ago in its review of the Progeny situation, the commission appears to have been more motivated by the post-9/11 reverence for public safety than by smart energy goals.  In its petition for reconsideration, Silver Spring Networks asserts that “the Commission’s substantive rebalancing of the governing policies was peculiarly myopic, preferring a disappointingly modest improvement in E-911 services to a number of other important public policies, such as the reliability of critical infrastructure [and], amelioration of anthropogenic climate change.”


Trilliant Takes Smart Grid Lead in Great Britain

— July 8, 2013

Despite the recently announced delay in the mass rollout stage of smart meters in Great Britain, smart grid technology vendor Trilliant continues to land new business there.  Redwood City, California-based Trilliant has signed a new contract with utility RWE npower to supply hardware and software during that utility’s first phase of smart meter rollouts.

The deal calls for Trilliant to provide its head-end software platform (called UnitySuite) and the in-home communication hubs that link smart meters and home area networks with RWE npower’s smart grid infrastructure.  The value of the contract with RWE was not disclosed, but Trilliant said the deal will make it the largest provider of in-home communications solutions in the country.

The deal extends Trilliant’s solid foothold in the British smart meter market: Trilliant has been supplying smart metering communications gear to British Gas for several years.  Now, with a second major utility buying its products, Trilliant is poised for a strong run in Great Britain where a national mandate calls for up to 50 million smart meters (both electric and natural gas) to be deployed by the end of this decade.

In the Hunt

Trilliant aims to be at the forefront of this first phase of Great Britain’s smart metering – called the Foundation Stage – so that when the mass rollout begins in a couple of years, the company will have learned the hard lessons that can help it and its utility customers stay ahead of competitors.  The competition promises to be stiff: the multiyear, countrywide upgrade to smart meters is valued at some $17.8 billion.

With that much money at stake, many smart grid technology vendors in addition to Trilliant are focusing on Great Britain as the next big opportunity.  It’s a complicated process, however, with the Department of Energy & Climate Change (DECC) in charge of procurements, which are split into three separate competitions.  The first is for data and communications (which has attracted two bidders, G4S and Capita); one is for data services (IBM, HP, and CGI Group have made the final cut); and the third is for communications services (bidders for this include Airwave, Arqiva, Vodafone, and Telefonica).  The winners are expected to be announced in August.

So while Trilliant has staked an early lead, many other vendors are poised to grab a share of one of the most interesting and lucrative smart metering deployments announced to date.


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