Navigant Research Blog

If You Build It, They May Come: Solving for Customer Experience in TE Platforms

— November 16, 2017

The utility customer of the future lives at the center of an ecosystem of networked and largely automated smart devices. Their household is within their preferred temperature range whenever they are at home; their EV charges when electricity prices are cheapest and is always ready for the morning commute; and they store any surplus electricity generated by their rooftop PV or, if the price is right, sell it in a digital market. Every decision made by each of these devices is a data point used by different service providers to refine and optimize customers’ distributed energy resources (DER) and integrate them with wider grid processes.

Transactive energy (TE) platforms will underpin tomorrow’s consumer energy market. The interface between energy producers and consumers, TE platforms allow parties to interact with one another in an open market while ensuring the needs of end users and the grid are met. These platforms will incorporate multiple technologies—including blockchain and machine learning—which have attracted a great deal of interest from the energy industry. But what should the consumer experience with TE platforms look like in practice?

TE Platforms Must Balance Grid Needs, User Preferences, and Ease-of-Use

TE service providers must supply an appealing product that creates value out of the box while providing options for users who are more hands-on. Optimizing household energy consumption to minimize costs requires a multitude of forecasts, calculations, and decisions. Since electricity bills in the US average around $115 per month, or 0.2% of the median household income ($55,000), the typical consumer has little incentive to manage these processes themselves.

Grid+, a technology startup and TE platform provider, solves this problem by supplying users with intelligent agents—hubs that integrate price signals, user preferences, and grid needs to coordinate a household’s smart device (TransActive Grid and Grid Singularity have a similar approach). While some user preferences may be set manually (e.g., preferred temperature range), most will be automated based on analyses of user behavior (e.g., heating the house prior to the customer’s return from work). The user decides their preferred balance of comfort and profits and they need only supply the agent with enough currency to pay bills and execute the necessary transactions on their behalf. All transactions are recorded rapidly and securely on a blockchain.

Thinking with Portals

Aspiring platform providers must devote as much attention to the end-user experience as they do to their platforms’ underlying technology. Customers balance their own comfort levels, convenience, financial costs and profits, and societal or ethical goals when making decisions about electricity consumption. Automation and machine learning solutions have the technological capability to deliver on that balance, but optimizing behind the scenes won’t be enough to inspire consumer trust or purchasing power.

The reality is that the Energy Cloud customer won’t care whether their platform rests on blockchain or a centralized database or a traditional billing system. They’ll care about outcomes and will need on-demand access to a portal that elegantly consolidates and visualizes their Internet of Things (IoT) ecosystem’s performance: What are their profits from selling power to the neighbors? How well is their PV system performing and have they paid off the install costs? How efficient is their home? Positive, confident results will drive further investment into the platforms themselves (so might friendly rivalries between local users).

For TE platform providers, competition for users will be fierce, and consumers will have their pick of platforms vying for their attention. The TE leaders in the Energy Cloud future may not have the most advanced technology, but they will have a blend of technology, functionality, user interface design, and perhaps gamification that creates an attractive and compelling user experience.

 

Cybersecurity Threats Mount, but Overall Picture Not So Bleak

— November 16, 2017

Cybersecurity threats keep mounting against the grid, corporations, and individuals. The known attacks and security holes revealed in the past year are real and cause for serious concern. The whole picture, however, might not be as bleak as it first appears if utilities focus on getting ahead of cybersecurity threats. The good guys are in this fight and they have solid tools to keep us safe. Among grid-related threats, at least three incidents stand out as examples of how grim the situation could become if utilities do not proactively address cyber attacks.

It was revealed in August that a foreign power had compromised the state-owned Irish power grid company EirGrid, according to a report by Ireland’s Independent newspaper. When the hack was first discovered, experts said the breach occurred more than 2 months beforehand. At the time, the newspaper’s sources said it was still unknown if any malicious software had made its way into EirGrid’s control systems. Though it is unclear which foreign power was involved, the hackers used Internet Protocol (IP) addresses sourced from Ghana and Bulgaria.

In July, US officials revealed that hackers had penetrated computer networks of companies operating nuclear power stations, other energy facilities, and manufacturing plants. Wolf Creek Nuclear Operating Corp.’s power plant near Burlington, Kansas is one of the nuclear facilities specifically named. The nefarious activity caused the US Department of Homeland Security and the US Federal Bureau of Investigation to issue an amber warning, which is the second-highest rating level. It turns out the hackers were unable to hop from victims’ computers into control systems, and officials said there was no sign of a threat to public safety.

In mid-October, millions of people found out that nearly all Wi-Fi devices were at risk of hijack and eavesdropping because of a bug known as KRACK that exposes a flaw in the common security protocol WPA2. If exploited, a hacker could use a skeleton key to access any WPA2 network without a password. Patches for thwarting the threat have been made available from some vendors, while others are still pending.

Grid Cybersecurity

So, how high are the overall risks? Potentially rather high, but perhaps not as high as one might think for the grid in particular. According to Philip Propes, chief security information officer for the Tennessee Valley Authority (TVA), the situation is not doom and gloom in the electric utility sector. During a recent webinar, he said officials in the utility industry are well aware of cybersecurity issues and many have taken appropriate steps. In TVA’s own case, he says his team is moving from a reactive approach to a proactive approach around security and getting ahead of attacks before an event occurs.

Furthermore, private experts and researchers at the US Department of Energy’s national labs are working on new methods to reduce the threat from cyber attacks. One project at Oak Ridge National Laboratory would set up a private communications and control system for the grid, called darknet, that would operate separately from the public internet. Also, the use of quantum encryption capabilities could add enhanced security for the grid.

Cybersecurity risks should not be taken lightly, but there is no reason to panic. There is a growing sense of urgency among experts and officials to collaborate on robust solutions and progress is being made quietly, despite the mounting threats. For a more in-depth look at how utilities are responding to these threats, check out Navigant Research’s Cybersecurity for the Digital Utility report, written by my colleague Michael Kelly.

 

Utilities Will Rely on Vendor Ecosystems to Support the Energy Transition

— November 10, 2017

Until recently, I often introduced presentations or blog posts with a warning that the utility industry was about to enter the most disruptive decade in its century-long existence. That is no longer true, because I believe the industry has now entered that decade. Okay, the timing for different countries may vary, as will the length of the period of disruption. In fact, some countries—Germany and Denmark in particular—have experienced significant disruption already. But for most markets, the rumblings, threats, omens, and rumors have only recently turned into action.

Navigant Research has a significant volume of commentary on future energy markets, all based around its concept of the Energy Cloud—where energy becomes more distributed, clean, intelligent, and mobile. The old business model of centralized generation will shift to a decentralized, customer-centric value chain, where energy services become far more important than energy supply. Navigant Research also identified an additional $1 trillion of new value created in the Energy Cloud by 2030.

There Will Be No Energy Transition without a Digital Transformation

It is important to note that the energy transition is as much a digital revolution as it is an energy revolution. The $1 trillion of new value identified by Navigant Research will likely be created through the provision of digital energy services, from automated demand response to transactive energy. None of this value will be delivered without access to vast quantities of data from an enormous and heterogeneous array of devices. None of this value can be delivered without a robust IT infrastructure to support digital energy services.

As part of thought leadership, Navigant Research has identified seven platforms that are critical to the delivery of digital services within the Energy Cloud. Additional white papers are on the roadmap to discuss these platforms in further detail. Next up is a white paper on the neural grid platform, which describes—among other things—the devices, communications, and analytics that will underpin all other digital services in the Energy Cloud.

Vendor Ecosystems Will Help Manage the Complexity of the Energy Cloud

Navigant Research’s upcoming Neural Grid white paper will shine a light on the sheer complexity of the IT infrastructure required. There will not be any plug and play platform for the foreseeable future. The market is new, moving rapidly, and different utilities have different requirements. As a result, over the next decades individual utilities will deploy many platforms that rely on many datasets created by many devices communicated over many networks using many protocols stored in many locations supplied by many, many different vendors.

It is critical for the success of the Energy Cloud that vendors cooperate within official and unofficial partnerships and work toward their customers’ common goals. Join us on November 14 at 2:00 p.m. EST for an Intel-sponsored Navigant Research webinar. We’ll explore in more detail how the energy transition and associated digital transformation requires strong vendor ecosystems and gain some insights from Intel, which sits at the heart of one of the largest smart grid ecosystems.

 

Dell, Others Make Bold Moves in IoT Market

— November 10, 2017

Dell made a splash in the Internet of Things (IoT) market recently, announcing a $1 billion investment over 3 years to set up a new IoT division of the company and to fund new IoT-specific products, labs, and a partner program. The goal is to prod customers into speeding up the deployment of its IoT projects. This move follows a quiet 2-year period during which Dell honed its strategy. Dell’s new IoT division will be helmed by Ray O’Farrell, executive vice president and CTO at VMware.

Dell Is Not Alone

Others are also pushing hard to drive IoT adoption across multiple sectors, including energy, mining, manufacturing, and smart cities, to name but a few. Some of the other recent IoT-related moves include:

  • Apple and General Electric (GE) announced a partnership in mid-October to produce “powerful industrial apps designed to bring predictive data and analytics from Predix, GE’s industrial IoT platform, to iPhone and iPad.” The companies also released a new Predix software development kit for iOS, which developers can use to make their own industrial IoT apps.
  • Germany’s Dialog Semiconductor announced its plans to acquire California-based Silego Technology for as much as $306 million in a move to help Dialog fortify its position in the IoT market.
  • Also in Germany, business software provider Software AG recently said it would form a new IoT cloud unit in January 2018. It also set up a new strategic alliance with a group of manufacturers that will focus on new industrial applications for IoT and Germany’s Industrie 4.0 digitization initiative.
  • In Dubai, Sheikh Mohammed bin Rashid, the vice president of the United Arab Emirates and ruler of Dubai, launched an IoT strategy aimed at preserving the emirate’s digital wealth and setting the foundation for a smart lifestyle transformation process for its people.

More of these of investments and strategic moves related to IoT are expected as competition heats up among vendors trying to seize early market momentum and as the trend moves well beyond the hype phase. This should be good news for those companies seeking to leverage IoT technologies for their business processes. Customers should derive benefits as IoT solutions vendors invest more in their products, channeling engineering horsepower into solving complex industrial problems. For a window into what the industrial IoT market could look like over the next decade, see Navigant Research’s report, Industrial Internet of Things.

 

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