The main smart grid challenges to conventional utility business models come from integration of more distributed supply and demand response, along with consumers demanding more sophisticated interactions, according to delegates at the 7th Smart Energy Summit in London on January 28-29th. While there are opportunities for new entrants with disruptive technologies, utilities are bolstering their position and making a successful transition by bringing in technology experts such as IBM, Vodafone and Opower. The main challenges are in monitoring, data analytics, and cloud based demand management, but also for bigger consumers and small generators to make money by selling to the grid at peak time and buying when prices are low.
That trend is already getting underway in the UK, with demand response specialist, Flexitricity, now offering an automated service that helps larger consumers increase demand when wind farm output is at its greatest - in addition to providing demand cuts and distributed supply availability when supply from utility scale plants is tight and prices are high. This means users can benefit from low renewable prices when available, as well as selling or avoiding purchases when prices are high. The grid also benefits, as it lowers peak demand and less wind power is wasted, as well as cutting emissions.
Another area technology experts are required is in establishment of the infrastructure, including metering and remote data collection. To ensure this in the UK the Data and Communications Company (DCC) has been set up to manage the network connecting smart meters to energy suppliers, network operators and other users. In addition, standards are being selected to ensure interoperability, under the Universal Smart Energy Framework (USEF). This provides an international common standard, according to Frits Verheij, Director Smart Green Cities at DNV: “Because of USEF, all players in the energy system can benefit from consumer flexibility by building on one common standard.”
The USEF framework defines the market structure, stakeholder roles, how they interact and enables the commoditisation and trading of flexible energy use. Founded by seven key players active across the smart energy chain (ABB, Alliander, DNV GL, Essent, IBM, ICT and Stedin), the system plans to benefit new and traditional energy companies as well as consumers. The resulting market structure and “dynamic tariffs and critical peak pricing to ensure incentives for demand-side response,” should allow consumers to extract full benefit from smart metering, said Jeremy Yapp Deputy Director, Smart Metering at BEAMA.
The most important part of the infrastructure are smart meters themselves. In the UK, 53 million electricity and gas smart meters are to be installed in all homes and small businesses by the end of 2020, costing an estimated £6 billion. Over 30 different energy suppliers will be offering smart meters to their customers, according to Claire Maugham, Director of Policy and Communications at Smart Energy GB. The new infrastructure has the “potential to transform the supplier/customer relationship,” said Sara Jane Asquith, SSE Director of Metering and Smart Transformation. However, she added that customer engagement is essential, as there are far more benefits for those who monitor trends and anomalies in their energy use.
Among the main obstacles to smart grid success is low consumer interest and engagement with energy, which requires more effort to educate and reassure customers, according to conference delegates. “Consumers need to be aware of the multiple benefits of connected homes”, said BEAMA’s Mr Yapp. Security is a priority, particularly given recent concerns over data privacy - providing more new opportunities for expertise from outside the industry.
But once customers are made aware of the benefits and meters are installed, engagement and satisfaction are higher, according to a UK government survey. It showed 72% of customers were satisfied with their smart meter and In Home Display (IHD), from a total of 2 million so far installed. In addition, the meters are encouraging more efficient use of energy, with 7 out of 10 using their IHD to see how much energy different appliances used, and 79% have taken steps to use less energy.
Anthony Ainsworth, Marketing Director at E.ON UK said: “The key to building customer trust is in empowering them with tools to understand and control their energy use.” Smart meters provide a huge opportunity to foster customer loyalty by making their operations customer-centric. To achieve this E.ON is bringing in Opower, a cloud-based software provider. Cloud technologies can rein in spiralling costs, standardize and optimize operations, enable secure storage of massive amounts of data, and deploy company-wide asset management solutions. A recent US study by Oracle showed 69% of utilities are or will be using cloud technologies for their customer information systems by 2018/9, and similar trends are likely to be repeated in Europe.
The E.ON/Opower system can provide customers with personalized overviews of their energy usage and how it compares to neighbours, along with tailored strategies to make their homes more energy efficient. Dan Yates, CEO of Opower, said they aim to “transform [utility] customers into their best advocates.” E.ON won several awards at the conference and is being hailed as the first utility to have an “Independent Consumer Council” able to “demonstrate third-party engagement in developing solutions.”
Such comprehensive monitoring of customer consumption patterns will only work if people are confident that utilities and their partners can keep the information securely. Releasing sensitive information about when customers are at home or away, what appliances are used, when and for how long, could be a security risk and affect consumers’ willingness to have meters installed in the first place. There is already opposition among some privacy groups to the use of smart meters.
Among the biggest challenges to utilities is how to deal with the massive new amounts of data that are becoming available. Speaking at the conference, Frans Campfens of Dutch network operator, Alliander, said the type of data that smart meters could collect included load, voltage and current profiling, supply detection, outage duration and much more, adding up to “pentabytes” of data.
The skill is in converting the data into key decision drivers, although delegates pointed out that smart meter data won’t be real time, and so predictive models based on usage, production and storage would be necessary. “Converging storage, smart analytics and big data can provide system wide benefits, providing more control, more flexibility and more visibility…” said DNV’s Dr Matthew Rowe.
To help, utilities are turning to technology specialists like IBM to monitor and predict issues from the data. Using advanced analytics, energy companies can turn business challenges into opportunities, driving rapid time-to-value and real business outcomes. Big data analytics is now a strategic priority for every major utility across Europe. And whilst the benefits and business case are well understood, how to apply it to the grid system is still being worked out. Challenges come from handling the rapidly rising volumes of data, combining data from different silos and maintaining data quality and governance as well as fully integrating IT systems.
Grid system data can also be analysed to help address the growing challenge of managing grids as the proportion of intermittent wind and solar grows. Alternative supply, lower demand or use of storage must be used to balance supply and demand, which requires high level data analytics and data from new monitoring devices.
Scottish Power has introduced an Accelerating Renewable Connections (ARC) project, which can provide renewable generation projects with accurate curtailment assessments by utilising network information. To help it has brought in Vodafone, which will also manage and upgrade performance monitoring and fault identification systems across the company's networks.
So while new entrants such as Flexitricity may snap up specialist opportunities within power systems, it is the incumbent utilities with their generating plant and vast network of consumers that are best placed to move into new areas of business, with the help of specialist products and assistance from tech’ specialists.
Image: Control room of National Grid located in Northboro, Massachusetts. Source: HB Communications.