Utilities and the Road Ahead

Engerati’s Strategic Business Review-The Future of the Smart Grid: The ICT and Data Management Perspective, makes a few recommendations to utilities as they work towards the effective management of the smart grid.
Published: Wed 06 Feb 2013

Evidence from the last couple of years suggests that ICT suppliers understand the future ecosystem imperative very well. A string of mergers, alliances and acquisitions between larger players, such as IBM or HP and smaller enterprises have developed dedicated technologies to handle cutting edge solutions. However, utilities appear slower to accept this new reality as they continue to build their own in-house solutions, using old standard technology.

The report suggests the creation of a support ecosystem. By bringing together an alliance of utility, major ICT and communications specialists, plus niche players (either small entrepreneurs or academic-based) who are able to bring with them dedicated applications, one can ensure the collaborative management of the smart grid.

Recommendations for utilities

Utilities need to break out of any complacency they may have. They should treat tools, such as the Smart Grid Maturity Model which was created out of dialogue between utilities, and given the stamp of approval by the US Department of Energy, with caution. This is because it risks locking in complacency as it may encourage the idea that so long as utilities are progressing against a vision that has changed little since it was first set out, they are doing fine. The report makes the following recommendations to utilities:           

Strategy-Utilities should select a range of partners ie. ICT company of appropriate size (enabling support rather than dominance), support academic/technology incubators, fund decent studies and support cutting edge companies, specifically those with cloud capability

Transmission & Distribution-Utilities should future-proof decisions about communication by recruiting “best of breed” suppliers to support ICT function. A communications solution is effectively locked in for several years so it should therefore be accepted that it may not be possible to achieve some abstract “best.” They should instead seek future-proof investment by opting for solutions that show evidence of potential for future upgrade by negotiating deals with solution providers that are based around cost and benefit, rather than performance.

The smart customer-Utilities should lock in, look smart and learn from applications. The report suggests that consumers should be “locked in” where possible via packages beneficial to consumers. This includes elements such as TOU pricing; user-friendly IHD’s and the use of smart meter data to demonstrate responsibility and customer benefit. They should form alliances with key application providers and learn from what is working in the application market

Regulators-Utilities should determine the stance towards emerging markets in renewable and re-sale of electricity.There should be a discussion with regulators around the possibility of more flexible, less onerous supply obligations. Decisions must be made regarding the trade-off in seeking economic benefit now-or goodwill- as the basis for future positioning and negotiation. Utilities should look at the short-term benefit by opposing consumers who are getting what they regard as a “fair price” for their electricity with a view to protecting some economic advantage longer-term benefit by allowing consumers to enter the energy market as equal (if small-scale partners) in the generation of electricity.

Engerati Analysis

Utilities cannot afford to be complacent with the introduction of the smart grid. While new technology and systems must be embraced, utilities also need to form a range of partnerships, thereby ensuring control and position for success.