Navigant Research Blog

Utility, Corporate Leaders Increasingly Embrace IoT Strategies

— May 5, 2016

CodeThere is new evidence that utility and corporate leaders are embracing the Internet of Things (IoT) trend with greater enthusiasm, meaning a more robust grid, energy savings, and lower costs in the coming years. That’s the hope, at least. The evidence comes from two recent surveys and a corporate report on the state of IoT.

A large global survey sponsored by Schneider Electric found that three out of four (75%) of business executive respondents are optimistic about IoT opportunities in this year alone. Additional results from the survey of 3,000 business leaders in 12 countries include:

  • 63% plan to use IoT to analyze customer behavior in 2016, with faster problem resolution, better customer service, and customer satisfaction among the top five potential benefits
  • Nearly half (42%) say they plan to implement IoT-enabled building automation systems within the next 2 years
  • Two out of three (67%) plan to employ IoT solutions via mobile applications in 2016
  • 81% say intelligence gathered from IoT data is being shared effectively throughout the organization
  • 41% expect cyber security threats related to the IoT to pose a critical challenge for their businesses

Asset Management

Similarly, a global survey of electricity, gas, and water utility executives from ABB reveals a strong belief in the benefits of an IoT strategy. Nearly 58% of respondents either have or plan to have a strategy that leverages IoT for asset management, and 55% say the importance of asset management has increased over the past 12 months. In a recent release, Massimo Danieli, ABB’s Managing Director of Grid Automation, notes: “Now more than ever, utilities see the need to bring together once disparate technologies and systems to better understand their increasingly complex asset base and share those insights with the people across the organization, in order to improve planning, productivity, and safety.”

Finally, Verizon’s latest report on the state of the IoT market says “companies across all industries now have IoT squarely on their radar.” Moreover, the report states that Verizon sees IoT applications ranging far and wide, and that the company focuses on key segments which include smart cities and energy. It also notes how past regulatory decisions have resulted in millions of installed smart meters, a leading IoT device.

These examples demonstrate a rising IoT tide among utilities and other corporations. As noted in the recently published Navigant Research report IoT Enabled Managed Services, now is the time for utilities to deploy a sensible IoT strategy to remain competitive and take advantage of the opportunities the latest technologies afford for smarter and more nimble grid applications and services, while also recognizing the challenges the change presents.

 

It’s a Small World (for Dynamic Pricing) After All

— April 4, 2016

multimeterDisney recently unveiled surge pricing for its theme parks, meaning that tickets will cost more during holidays and on some weekends—up to 20% more—than during slower periods as the near-capacity parks seek to spread out demand. When Mickey Mouse announces this strategy, it’s hailed as a brilliant business move. So why is it that when utilities try to roll out dynamic pricing options, it is assumed it will lead the elderly and orphans to swelter in the heat and sit in the dark?

Dynamic pricing exists in many aspects of society, such as with airline tickets, theater and sporting event tickets, subway fares, and road tolls. The basic concept is that the value of a product varies based on time, demand, and other factors, so being able to charge prices that better reflect that value is more economically efficient than simply charging an average flat price across all hours and variables. Makes sense, right?

In the electricity industry, the concept of dynamic pricing for mass-market customers is fairly recent (aside from time-of-use rates). With the proliferation of advanced meters that can record usage at small intervals, more types of dynamic pricing can be applied down to the residential level.

The key drivers for advancing dynamic pricing include technical, policy, and economic factors such as:

  • Advanced metering infrastructure (AMI): Without the 15-minute interval data provided by smart meters, or AMI, dynamic pricing programs cannot accurately be implemented. Smart meters are now seeing more widespread deployment, which further enables the market for dynamic pricing.
  • Utility and customer costs: Offering a dynamic pricing program to reduce peak demand may be cheaper for a utility than building a peaker plant to meet increased demand. On the customer side, electric bills can be reduced by modifying consumption behavior. In the long run, all ratepayers should see lower rates than they otherwise would due to the increased capacity factor and avoided infrastructure costs.
  • Enabling technologies: Devices such as smart thermostats, smart appliances, and associated home energy management applications are becoming more commonplace, allowing consumers to more easily manage their energy demand.
  • Distributed energy resources (DER): As DER capacity from resources like energy storage and electric vehicles grows, so does the ability to shift load and enjoy the cost savings from dynamic pricing programs.

However, the slow rate of dynamic pricing program development points to the depths of the barriers to such growth:

  • Reliable service concerns: Utilities understand how important reliability is—especially for at-risk residential customers, including low-income customers, the elderly, families with young children, and the disabled—and seek to provide a resilient grid that operates disruption-free. Without proper education about the program, dynamic pricing rates could potentially send a harmful signal to these at-risk groups.
  • AMI integration: Systems integration plays a huge role in the success of AMI techniques and poses a significant cost to utilities. Ensuring AMI provides flexible and extensible solutions is paramount.
  • Lack of customer education and demand: Customer understanding of dynamic pricing is low. Unlike other energy management strategies that focus on different aspects of energy consumption, dynamic pricing depends on modulating customer habits, which may be hard to change.

There are several examples of utilities implementing successful dynamic pricing programs, such as Baltimore Gas and Electric, Oklahoma Gas and Electric, and Sacramento Municipal Utility District. These topics and more are covered in Navigant Research’s new report, Dynamic Pricing. Perhaps learning about dynamic pricing from Disney will lead more people to embrace it in other parts of their lives.

 

Big New York Smart Meter Rollout Plans Take Shape, but Issues Remain

— March 30, 2016

??????????????????Consolidated Edison (Con Ed), the largest utility in New York, recently received approval of its ambitious plans for a smart meter rollout, but the latest details point to some concerns about paying for the requirements and more details about customer engagement.

The plan, approved by the New York Public Service Commission (PSC), calls for the installation of approximately 3.5 million smart electric meters and for some 1.2 million gas meters to be deployed in Con Ed’s service territory starting next year, with an expected completion by 2022.

But in the announcement, the commission said its approval was contingent on the utility providing a detailed plan for providing continued engagement with customers and third parties. In addition, the commission expects 15-minute meter reads for residential customers, whereas the original proposal called for hourly data from meters. With the more frequent reads, the issue of charging fees, if any, for providing the more granular data has yet to be resolved. For non-residential meters, the meter data is to be at 5-minute intervals.

Program Questions

In addition, there are concerns about how Con Ed will implement the Green Button Connect program, which is a federally sanctioned initiative aimed at giving residential customers easy online access to their detailed energy consumption data. Originally, Con Ed indicated hourly data would be available at no charge. But now a group called Mission:data, which represents third-party companies like SolarCity, Stem, Bidgely, PlotWatt, and EnerNOC, has raised the issue of whether Con Ed will be charging a fee for data access. Con Ed has until the end of July to submit new details about data access and who will have to pay.

Undoubtedly, the smart meter rollout envisioned by Con Ed will eventually be deployed and customers should benefit by having a more modern and flexible system. But the devil, as always, is in the details, and when it shakes out, some of the hoped-for capabilities might be less than expected. And third-party energy service providers might be less than satisfied. As we’ve seen with other smart meter implementations—the United Kingdom’s complicated deployment comes to mind—the complexity of an advanced metering infrastructure rollout can sometimes be overwhelming, and the real costs not readily apparent. Bumps in the road have become commonplace, especially with large projects, but a smarter grid is still attainable.

 

Smart Cities and the Smart T&D Electric Grid

— March 9, 2016

Bangkok SkylineMuch of the discussion around smart cities centers around smart buildings and the proliferation of smart meters (i.e., advanced metering infrastructure). Also discussed is the growing importance of distributed energy resources (DER) and the multitude of smart devices that make up the Internet of Things (IoT). However, the criticality of the electric transmission and distribution (T&D) grid that powers the smart city or smart community is rarely or only casually mentioned. Regardless, many T&D technologies and features will likely be critical to the smart city of the future.

Generation: The shift from local coal or nuclear generators supplying urban population centers to remote utility-scale wind and solar generation resources is rapidly occurring and can be seen across North America and Europe. Large-scale wind and solar generation farms are becoming an increasing portion of the generation mix. Electric power must be transferred from these remote sites to urban populations over hundreds (if not thousands) of miles of new high-voltage transmission lines using high-voltage direct current (HVDC) and extra high-voltage alternating current (HVAC) transformers and converter stations.

Transmission grid technologies: In turn, these lines require new approaches to monitoring and control necessary to maintain voltage levels and synchronize the three-phase power delivery at each substation along the way. Relatively new phasor measurement units (PMUs) and digital protective relays collect voltage, current, and power factor information up to 60 times per second, time stamping it for comparison purposes. Synchrophasor analytics make real-time comparisons of status at each end of the transmission lines, warn operators, and automatically correct voltage or power factor when readings diverge from optimal operating conditions. These high-speed incidents go largely unnoticed with traditional SCADA monitoring and control and can sometimes create major reliability incidents.

Distribution substations: The digital substation will also be a critical part of the new smart city. As every device in the substation is upgraded to have digital communications and control, substations will be ringed with high-speed fiber optic networks. These networks connect the various devices, including transformers, switchgear, protective relays, and other intelligent electronic devices. This sets the stage for the virtual substation, where every piece of equipment is modeled, operating data is shared, and system operations are monitored, controlled, and automated at the local and centralized operations centers.

Distribution feeders and low-voltage (LV) distribution transformers: Distribution feeders connect the substation with customers in both urban and rural locations. Urban distribution feeder systems are complex meshed networks, with fleets of disconnect switches, reclosers, and other devices that allow the network to be reconfigured and continually operated when isolated system faults occur. These intelligent electronic devices increasingly include local and autonomous decision-making and control capabilities. They communicate with adjacent devices and reconfigure the network or managing voltage and power factor without control by the substation or central operations center.

There are also millions of LV distribution transformers that operate at the edge of the grid, stepping down voltage for delivery to the customer. These transformers have traditionally been mechanical/electrical devices with no monitoring capabilities, but are now being gradually replaced with smart transformers that measure and report critical operating condition information. Sophisticated transformers may provide control and automation capabilities, which are becoming increasingly critical for managing the distribution grid as DER penetration increases. Retrofit monitoring and control devices are also now available and can be installed close to problematic or overloaded transformers.

 

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