Efficiency Gains Will Trump Cost Concerns, Says Report

The smart grid and data analytics are creating a new, much smarter utility which will prioritise efficiency gains over financial concerns.
Published: Wed 04 Feb 2015

Smart technologies are giving power providers the ability to become more responsive, efficient and resilient. This is according to Black & Veatch’s 2015 Strategic Directions: Smart Utility report which proves that smart grid and data analytics programmes are transforming utilities. The report will be launched at the upcoming DistribuTECH Conference in San Diego.

Smart grid technology - a backbone

The Black & Veatch report finds that many utilities are deploying smart grid technologies to speed their networks and become more efficient. Use of advanced metering infrastructure (AMI) and demand response programmes are seen as important steps. They also provide the necessary backbone for broader Utility 2.0 programs that address business, operations and customer needs.

However, the report also points out that the adoption of the smart grid isn’t a global one. This is due mainly to the fact that a large number of utilities are resisting changes over investment-return concerns and pressures. More than a third of respondents have no plans to implement smart grid projects since they believe the advances are not applicable to their business model.

“Smart devices, enhanced telecom networks and the expanded use of data analytics are transforming the delivery of infrastructure services,” said Martin Travers, president of Black & Veatch’s telecommunications business. “We were surprised to find that more than a third of utilities report that they have no plans to launch smart grid projects.”

The report finds that utilities are struggling to keep pace with technology and resource constraints but utilities can use technology and data to make their rate case for them, says Fred Ellermeier, vice president and managing director of Black & Veatch’s smart integrated infrastructure service line. “Many have proven that customer buy-in and shareholder return do not have to be mutually exclusive.”

Smarter utilities and smart cities

The report also points out that the connection between smarter utilities and smart cities is clear. Travers explains that utilities learn more about their operations: “With that knowledge comes a greater understanding that they cannot plan their future without coordinating utility and municipal services. This transition reflects a major change in traditional operating models. However, it is critical to creating smart cities.”

Nearly 70% of respondents believe smart city models will gain wide adoption over the next 15 years.

Other highlights in the report include:

-Smart grid and smart utility initiatives are the top drivers of telecommunications infrastructure upgrades

-Nearly 60% of utilities plan to replace, upgrade, or deploy new communications infrastructure in the next five years

- Some utilities are embracing a converged mentality, running everything over a shared infrastructure, while others move more cautiously by keeping protective relaying and other mission-critical applications separate from the converged network

-Utilities moving aggressively into automation see advanced metering infrastructure (AMI), fault location and restoration, volt/VAR control, demand response and sensors as key steps toward network optimization. At the same time, a surprising number of service providers are on the sidelines of the automation movement, either unconvinced of its application or preferring to let other institutions test the systems and prove their worth.

With service providers increasingly joining the smart systems movement, Utility 2.0 will depend heavily on customer buy-in, either through rate cases or home installation of smart devices. Smart utility rollouts have been plagued by skepticism at the customer level, largely because they are misunderstood.

Further reading

Black & Veatch’s 2015 Strategic Directions: Smart Utility