At the Space-Time Insight annual SI World conference this year, Dave Haak of Accenture gave a riveting overview of the research that Accenture has conducted on smart grid deployment including a survey of utility executives in Europe and North America. Some fundamental questions that Dave was able to shed some light on are
- Is smart grid here to stay or is it a passing fad ?
- Is smart grid expected to reduce the cost of maintaining the grid in 2030 ?
- How do you manage the complexity of the modern distribution grid ?
- Is the electric power utility industry entering a disruptive phase ?
Managing the smart grid
Dave discussed the complexity of the modern grid which has to support distributed generation including intermittent renewable energy sources like solarPV and wind, energy storage, PEVs, and potentially microgrids. Monitoring and managing the modern complex grid is a challenge that traditional tools that have been used for the current grid such as traditional GIS are simply not capable of. A new "converged" approach that tightly integrates GIS, intelligent grid analytical tools using grid topology (what's connected to what) and visualization, all in real-time, is required. It needs to integrate traditional IT systems (GIS, CIS, work management, financials, and meter data management) and traditional OT systems (outage management, distribution management, SCADA, and energy management). Accenture points out that Other industries such as telecommunications, retail and banking have gone through a similar disruptive phase and have applied IT including embedded analytics to transform their business processes to improve productivity.
Is smart grid here to stay ?
98% of respondents in Accenture's executive survey said that smart grid is a natural extension of the ongoing upgrading of the grid. In other words this is not a flash-in-the-pan fad that will go away. The evolution of grid operations is going to involve a broad change to how utilities are organized and how they operate. Accenture predicts that it will require a major overhaul of utility organizations and will affect operational groups, as well as information technology and security.
Staffing the next generation utility
It also requires development of new skills, either through hiring new staff or retraining existing staff. This is a key part of the challenge. I have blogged on multiple occasions about the challenge facing the electric power industry as the older generation retires and a younger, but inexperienced workforce takes their place. Accenture reports that utilities are finding it difficult to staff their workforces with the necessary combination of power engineering and IT skills.
Grid reliability and resilience
As the world becomes more dependent on IT solutions in our daily lives from point of sales to hospital admissions, reliability of the electric power network has become increasingly important. A few years ago 40% of U.S. power went to chip technologies. By 2015 this is expected to reach 60%. Reliability of electric power supply varies significantly among countries. For example, the duration of outages (SAIDI) in the U.S. is greater than the UK, France, or Italy and much greater in the than Germany. I was not happy to see that Canada's average outage duration is over twice that of the U.S and 20 times that of Germany.
A major challenge facing utilities as they move to the smart grid is how to achieve better reliability (and reduced emissions) with less cost. Accenture asked executives whether smart grid would reduce the cost of maintaining the grid in 2030. 72 % of respondents said that that expected that the costs of upgrading/maintaining the grid will be less in 2030 as a result of the adoption of smart grid technologies.
Smart grid business drivers in different regions
There are significant differences between different regions of the world in the priority business drivers for smart grid deployment. For example, in Brazil and India the primary driver is non-technical losses. According to the Accenture survey in North America the primary drivers for smart grid are improving grid reliability and outage response. In Europe where climate change is taken more seriously, distributed generation and support for renewables are priorities.
Increasing competition from microgeneration
Accenture's view is that the industry is experiencing a disruptive phase. Technologies such as distributed generation, storage, EVs and microgrids have the potential to impact competition and regulatory models in a fundamental way over the longer term.
In every part of the world decreasing solar PV prives combined with cheaper storage are beginning to displace centralized generation. This is changing the economics of the traditional electric power business model based on the existing, centralized power networks. Accenture argues that if consumers are given a cost-effective option to move off the grid (for example, grid parity of coupled solarPV and storage), utility revenues will be at risk.
Utilities under threat from PV and other microgeneration technologies will need to look at novel strategies to develop new sources of revenue and integrate new distributed generation capacity while maintaining quality and security of supply.
23% of respondents said that they expected their utility would have a significantly different business model by 2030. For example, incentivizing consumers with
microgeneration capacity to stay on the grid or developing and
maintaining microgrid solutions on behalf of consumer groups.
Other areas of competition
The Accenture 2013 Executive survey indicates a substantial degree of competition from new entrants is expected even within the next 5 years. Respondents saw increased competition in the following areas:
- 85% - beyond the meter energy efficiency and demand response
- 85% - distributed generation
- 85% - data-related services (using customer electric power usage data).
- 67% - demand-side aggregation
- 58% - PEVs and charging infrastructure
- 57% - smart meter services
- 52% - microgrid development and operations
- 48% - Embedded (distribution) energy storage
- 46% - Power electronics h/w and services
- 43% - Last-mile deployment
While increased competition in areas such as distributed generation and demand aggregation is widely expected, respondents expect competition to increase even in the core distribution business including embedded energy storage, power electronics hardware and services and last-mile network deployment.
The changes that are required are fundamental and a majority of the respondents said that legislative and regulatory change will be required.
The telecommunications, insurance, and other industries view IT as a strategic asset, whereas utilities still treat it as a cost centre. Utilities are under invested in data management technology which does not position them well for the rapidly increasing volume of data and the competitive environment that they are beginning to experience. 96% of the utility executives that Accenture surveyed said that data management will be critical or important for managing the complexity of the network. Some industries are taking data management very seriously. A survey of 600 companies revealed that 66% of them have appointed Chief Data Officers.
Convergence and Analytics
The area where respondents saw the most value from analytics was grid operations (96%). Being able to use visualization and analytical tools to monitor and manage complex modern networks which include distributed generation, storage, PEVs, and potentially microgrids is the first priority in both Europe and North America. This where the next generation of "converged" analytical tools that integrate GIS, artificial intelligence, grid analytical models that take account of network topology, and visualization tools and can operate in a real-time data streaming environment are required.
Outage management (93% in NA) and asset management (92%) were the next priorities in NA. In Europe the next priorities were asset management (92%) and volt/var analytics (83%).
In 2009 12% of the companies surveyed were using predictive analytics. This had risen to 33% in 2012. But the same year 60% of internal customers surveyed said that they wanted predictive analytics.
In the specific area of AMI, Accenture's analysis suggests that the value of using smart grid analytics to transform operating results conservatively could approach $40-$70 per meter per year. Financial benefits of this order provide a strong motivation for companies to use modern grid analytics to drive change in business processes.