Smart grids set to revolutionise energy companies - Part 2

Smart grids and telecommunications partnerships are rapidly transforming utility providers’ businesses. That spells new threats and challenges for CIOs — and new opportunities for those who step up to greet them

Smart grids complicate the picture significantly for CIOs, who will become de facto guides for business leaders forced to explore the technology’s potential. Scores are out of a possible 5. 
<br><i>Source: Logica</i>

Smart grids complicate the picture significantly for CIOs, who will become de facto guides for business leaders forced to explore the technology’s potential. Scores are out of a possible 5.
Source: Logica

New partnerships, new skills

Smart meters have a way to go. The recent 2010 Australian Smart Grid Study, a survey of 13 Australian utilities by sector consultancy Logica, showed an average self-reported maturity rating of just 2.14 on a scale of 1 to 5, and communications networks to support them rated 2.80.

Worse, business intelligence for smart grids rated just 1.85 out of a possible 5. In other words, even companies that are readying for smart grids still aren’t ready to manage the data they produce. Changing the situation will drive a major investment in ICT infrastructure: Research group IDC, for one, anticipates the myriad driving pressures on energy providers will force steady growth that pushes Asia-Pacific utility industry ICT spending to $US9.1 billion by 2014. Back-end processes such as customer care and billing, analytics and mobility rate highly on utilities’ priority lists, but smart grid investments will also factor heavily. By 2014, IDC anticipates utilities will spend about $US4.1 billion towards ICT services in smart grid-fuelled areas such as network management, automation, and security; a further $1.3 billion will go to networking and storage systems — spending on which is expected to rise by 9.3 per cent annually through 2014.

Those sorts of figures are likely to have service providers rubbing their hands with glee, and CIOs rubbing their foreheads in anticipation as they find themselves heading to executive boards, hats in hand, to ask for strong ICT investments to meet the challenges of the new environment. In companies already committed to billions in fixed infrastructure upgrades over the next few years, that sort of spending won’t come easily.

Read Part 1 of Smart grids set to revolutionise energy companies.

But it will come: As has become eminently clear, this time around the business drivers for change are even stronger than those from ICT. Smart grids represent a new business model, after all, as do opportunities to extend the business to take advantage of serendipitously occurring investments in, and partnerships with, telecommunications providers.

Any real progress is dependent on whether as distributors we can ever get our act together in the time frame of the NBN

These partnerships could be particularly transformative. Government bodies are already lobbing around the idea that the optical network terminals (ONTs) installed on houses to support the National Broadband Network (NBN) should be rolled out in conjunction with smart meters. The joint approach would allow NBN authority, NBN Co, to work with utilities to both leverage their existing field-service networks, and to split the costs of the rollouts between the two organisations.

EnergyAustralia had floated the idea a year ago, with engineering, technology and transmission general manager, Geoff Lillis, repeating the idea that it was an “obvious” partnership at the IQPC Smart Grids Forum in November.

Yet other discussions at the event suggested a widely divergent range of opinions around the idea: NSW energy minister, Paul Lynch, said the government was “actively engaged” in encouraging negotiations between NBN Co and state power companies, for example, but NBN Co planning chief, Peter Ferris, blamed short-sighted Victorian utilities that had been less than enthusiastic about the idea.

Any real progress, EnergyAustralia’s Lillis says, “is dependent on whether as distributors we can ever get our act together in the time frame [of] the NBN… Other than intent, there is a lot of work to be done.”

If a utility manages to forge an agreement with NBN Co to partner on a joint network termination unit–smart grid rollout, the implications for its CIO will be significant: Not only will it require close partnership with NBN Co and its engineers, it will require the addition of skilled telecommunications staff to ensure proper integration between the two networks. That kind of integration may seem like souped-up version of existing SCADA networks, but with millions of end-user devices in the field, utilities will have to work carefully to ensure their communications infrastructures can scale up as necessary.

“This whole environment broadens our focus, not just to internal obligations,” says SP AusNet’s Peck, “but also to opening up our communications and opportunities to the wider market. We’re now not only focused on technology around corporate IT and SCADA areas, we are also opening up the possibility of communication all the way down to the house.”

Synergies with the NBN may appeal to many utilities, but question marks around the controversial project’s rollout seem to be encouraging many utilities to go it on their own.

In May 2010, for example, EnergyAustralia announced plans to set up its own WiMax wireless network — which will not only link up 2 million smart meters but will provide important asset management capabilities by allowing remote monitoring of 12,000 network monitoring devices, 3000 mobile field computers used by maintenance staff, 200 substations and its Newington Smart Village.

Building that network will involve installation, configuration and management of about 140 WiMax base stations in a rollout that should be complete by early 2012. It may give the company access to a cutting-edge communications network, but it will also require a major change in the organisation’s technical support infrastructure.

In becoming a mini mobile telco, after all, the utility will take on a significant and ongoing maintenance burden that requires a very different skill set than that required to manage physical transmission and data-focused SCADA networks.

In any case, the organisation is already ungoing rapid change. As of 1st March 2011, the retail and network businesses of EnergyAustralia have separated; the EnergyAustralia brand now represents the organisation’s retail operations, while Ausgrid owns and manages the electricity network across Sydney, Hunter and the Central Coast.

The need to add large-scale telecommunications, wireless, and even more exotic technologies such as machine-tomachine communications, will all put utility providers in contention with similarly minded competitors as well as with NBN Co itself, all of which are competing for a relatively steady-sized pool of telecommunications talent.

“We have a good organisation in place but as we move forward, and as the NBN gets to the point of mass and criticality and some telcos are doing large-scale work, our ability to attract and maintain talent around communications networks will no doubt become a challenge,” says Peck, whose to-do list also includes SP AusNet’s plans to roll out its own WiMax network to cover 680,000 homes.

Read Part 1 of Smart grids set to revolutionise energy companies. Read Part 3 - Business transformation.

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Tags energyData storagepowerSCADAgreen ITsmart meteringsmart gridsSP AusNetEnergy AustraliaUtilitiesAusgridAsh PeckGeoff Lillis

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