Setting the stage for smart grids

“The distribution grid, it is estimated, loses 8% of its power just from the machinations of delivering power down the streets and through the neighborhoods,” Squier-Dow said. “Services like ours that are designed to optimize that power of quality and delivery can help right there…Being more efficient on the distribution grid and minding your own knitting there allows them to save money where they would otherwise purchase or generate or build new facilities to generate power.”

In addition, the smart grid alleviates costs from the labor required to maintain today’s electric grid, the capital in asset management and the lack of optimization from not using devices on the grid efficiently, Squier-Dow added. But, while cost savings are decidedly the number one driver of smart grid adoption now, the environmental benefits are no less compelling. According to the Electrical Power Research Institute (EPRI), electricity outages in the US cost the industry about $50 billion per year. The EPRI estimates that a smart grid will significantly reduce the financial impact of these outages, as well as reduce US greenhouse gas emissions equivalent to 60 to 211 million metric tons of CO2 annually in 2030. In the process, smart grid incentives and initiatives will also generate more than 280,000 direct jobs across the industry, according to The GridWise Alliance.

SMART GRIDLOCK?
While the smart grid opportunity is clear, entirely overhauling one of America’s oldest, most complex systems in the world won’t be a simple undertaking. An infrastructure overhaul and smart grid roll out is an often prohibitively expensive process, and the government’s $25 million cap on funds could turn away some interested utilities. Even if funding is secured, the true opportunity in smart grids depends largely on the market, geographical region and whether or not the utility has access to infrastructure, according to Mastrangelo. Utilities are also a very different industry than telecom – one that is marked by stringent levels of control. Shahid Ahmed, networks global lead for Accenture, which works with utilities to plan smart-grid strategies and solutions, said that this presents both a huge opportunity and a massive challenge, and it’s not a one-size-fits-all equation.

“We are talking about thousands upon thousands of elements interconnected with one another in a way that is controlled, secure and manageable,” Ahmed said. “To that extent, the role of the telecom company, particularly wireless, is huge. The question is, do the carriers have the right DNA to structure an offering for utility companies so that it can meet all the regulatory requirements and the compliance requirements?”

ARE THERE DUMB PIPES IN THE SMART GRID?

The answer will come as telcos carve out their roles in the space, issues including cyber-security are worked through and standards are established. Today, most telcos are passive pipe providers, but that could begin to change as the market matures. In fact, according to Ahmed, the carriers have a golden opportunity to provide a full end-to-end portfolio of services to utilities.

“[Telcos could provide] not just a pipe and dedicated capacity, but also, for example, a NOC (network operations center) as a managed service,” Ahmed said. “Telecom companies have been doing this for years. I could see them providing the communication part of the NOC as a managed service to the utility client. Similarly, they could be used for integrating other elements in the communication space whether that’s smart grid or other disparate elements. A lot of testing is required, and I think a carrier could offer some services there as well – it’s a lot more than just being a dumb pipe. I think this is a golden opportunity for them to get their experience and capabilities and put them in a package for the utility company that they can leverage very easily and simply.”

Next: Making money off the grid.