Smart grids set to revolutionise energy companies - Part 1

Smart grids are set to transform the business of utilities.

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Like any entrepreneur, Andrew Dyer is excited about the possibilities for his clean-energy venture, BrightSource Energy. The company, of which he is a director, is this year partnering with energy giant Chevron to cover 1000 acres of the US desert with 4000 mirrors that reflect sunlight onto three boilers mounted atop each of three 100 metre towers. The water will be heated to about 600 degrees Celsius, and used to turn turbines that will produce 400MW of electricity — enough to power tens of thousands of homes.

The innovative physical design of the facility may be critical to the company’s success, but Dyer says there’s something else at the heart of BrightSource’s strategy: ICT. “Our biggest challenge was the ability for the mirrors to track the sun on X and Y axes, and to balance the load on the boiler at the top of the tower,” he explains.

“The key to this is information technology, and the core IP of the company is the algorithm that controls the mirrors. The reason we couldn’t do this 30 years ago is that the computing power and programming skills and languages to develop these systems just weren’t available. It has been a very interesting marriage of ICT with energy technology.”

BrightSource is typical of the new generation of utility companies that are combining good old-fashioned engineering knowhow with new ICT initiatives that support and empower revolutionary new business models. Reinforced by a growing commitment to new clean-energy processes, the mixture has fuelled big ideas and the promise of dramatic change within the industry. At the same time, it has forced CIOs to expand their information strategies to address a broad range of technologies that simply weren’t on the radar even a few years ago.

Looming change

Signs of the change came nearly a decade ago, when some electricity providers began exploring the possibility of technologies like broadband over power lines (BPL) to overlay communications capabilities on top of their networks. BPL died a relatively quick death, but other conflicting priorities — including forces of deregulation and the open-market financial exchanges they involved; increased competition, often for the first time; and recent momentum around smart grid technologies — have added new dimensions to the already-complex array of billing, supervisory control and data acquisition (SCADA) network, monitoring, analysis and other systems on which utilities rely. The changes have major implications for utilities’ ICT strategies, which for the most part have traditionally focused on keeping the lights on and customers paying. However, experts such as smart grid architect, Andres Carvallo — the Grid Net chief strategy officer who designed the first US smart grid network, a 500,000-endpoint network over which 15-minute updates generate 100TB of data per month — warn that a fully ramped-up smart grid would generate 1000 petabytes of real-time data per year.

Is your network ready to handle that even one-thousandth of that kind of data volume? And do you have the analytical systems to make sense of it to improve your forecasting and asset management strategies? And do it in real time?

Read Part 2 of Smart grids set to revolutionise energy companies.

Most companies don’t — which is why putting such systems in place has become a key priority for companies such as electricity distributor SP AusNet, where CIO, Ash Peck, is spearheading a range of initiatives to support its share of a state-wide smart meter deployment that will bring 2.5 million premises online by 2013. Based on the Grid Net figures, that suggests a potential load of 500TB of smart grid data per month from Victorian meters alone.

“There’s a real opportunity to integrate that data into other corporate information, such as weather and other demand information to get a realistic picture of value-adds, demands, and supply cycles,” he says. “That will be the next stage: We have a pretty good opportunity to open up value-add, business, data, visual representations of how we’re going to manage the customer side. Our internal organisation is thirsty for ways to look at this information and best use it — and ICT’s responsibility is to present, store and produce it in such a way that it can serve that function.”

Smart grid preparations are expected to drive a major portion of utility spending for the next few years, marking an inflection point in information-systems design. Whereas utility providers’ biggest ICT investments typically used in-usage and billing-related systems (and were joined by CRM systems as the forces of deregulation encouraged utilities to boost customer service), the shift towards smart grids involves both new operational systems, and new business systems to support them.

So far, the majority of investment into these systems is yet to come.

“Of 250,000 smart meters installed in Victoria, not one of them is currently working as a smart meter,” says Tony Sennitt, managing director of utility consultancy, Diamond Energy. That’s not the fault of the meters. It is due to the lack of infrastructure around them, as the recent 2010 Australian Smart Grid Study, a survey of 13 Australian utilities by sector consultancy Logica, confirms: Smart meters were given 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 still, 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.

Read Part 2 of Smart grids set to revolutionise energy companies. Read Part 3 - Business transformation

Follow CIO Australia on Twitter: @CIO_Australia

Recommended reading

• UNSW extends smart grid course
• Critical success factors in smart grid security
• Smart grid_market progressing but fractured - Logica
• CLP Group powers up with in-memory computing

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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