Gazing into the future of the new utility
IT'S GENERALLY AGREED THAT THE COMING decade will bring more change to our industry than we’ve seen in the previous century.
Industry researchers have clearly indicated they see a massive increase in smart grid spending between now and 2015. Late last year, SBI Energy was definitive in its expection that “The next five years will be a pivotal period for the global smart grid market, with grid component companies expected to leverage their sales prowess to capture long-term contracts throughout the electric grid supply chain.”
But what about 2020?
We decided to plumb the depths of our own crystal ball, and asked analysts, researchers and national laboratory leaders where they think the industry is headed in the coming decade, and what we can expect come 2020.
Data analytics on the rise
In early January, Pike Research released data indicating that the software and services that will enable smart grid data analytics will represent one of the largest growth opportunities in the utility sector over the next few years, increasing from a relatively small market of $356 million last year to nearly $4.2 billion in annual revenue by 2015.
And there are clear indicators this trend will continue into 2020. “Data analysis is the area which is just emerging as a need: ‘Okay, I now have the systems in place and have lots of data, but what do I do with it?’” said John Wambaugh, a vice president of Utility Integration Solutions (UISOL). “My favorite quote is, ‘I have 100 times more data, and I still can’t tell where the problem is.’”
In my own conversations with utilities and vendors alike, especially over the past year, the subject of structured and unstructured data analytics has crept into the discussions more and more often. As Craig Johnston, OGE Energy Corp.’s vice president, corporate strategy and marketing, told us recently about his utility’s data analytics project, “The initial questions we asked were: Where are we going to store all this data, how will we organize it and how can we utilize the information to improve our business?”
If you can capture and analyze that data and use it in a predictive fashion, he said, “what can we do with it to improve our operations and enhance our customer experience?”
Data analytics + DR = new revenues
Demand response will be more seamlessly teamed with its kissing cousin, energy efficiency, and form a much larger portion of the intelligent utility equation by 2020. In January 2010, Lux Research noted that analysis and service revenues, led by demand response applications, could make up the largest piece of the smart grid picture by 2015. Five years further down the road, today’s $1.4-billion earner could lead to global revenues totaling much more than the $6.7 billion predicted by 2015.
Standards will also drive growth, according to our panel of grid modernization prognosticators. “Industry standards are progressing well, and will continue to progress,” Wambaugh said. “Everyone is committing to standards these days, and the same goes for cyber security.”
Dick DeBlasio, the National Renewable Energy Laboratory’s chief engineer, Renewable Electricity and End Use Systems Directorate, agrees, but says the country’s economy will play a part in the speed with which we move forward. “The economy will most likely be the impediment to moving fast versus slow in the next nine years,” he said. “In the meantime, cost efficiencies can be developed in construction and design with standardized smart grid interfaces but having flexibility to design as the technologies between the interfaces improve and lessons learned evolve.”
Pushing back straight into 2020?
The energy consumer of 2020 is a bit more hazy, though. Some think consumer pushback will continue, and others see it as a blip on the screen, one that can and will be overcome with a change in utility perspective.
“Consumer pushback will continue,” said Doug Houseman, vice president of technology and innovations for EnerNex. “If energy prices trend up—and it seems likely— then the pushback will get even harder.”
Houseman ties current consumer pushback to a larger issue. “Regulation and legislation, combined with lawsuits, will stop 80 percent or more of new generation construction (planned versus operating), up from about 50 percent in the 1990s. With the nuclear scare and global warming ... the result will be a lot of pressure to retire far more generation than we build. Then add the pressure of electric cars, and you have a scarce commodity,” he said.
“If Canada actually does build its transcontinental transmission system, Quebec and British Columbia will both send more power east and west rather than south. This will increase the anger and pushback. Only strong national efforts at training that includes pop culture folks will potentially change this pushback.” He predicts “lots and lots of lawsuits on everything from tariffs, meters, renewables, generation, etc.”
Wambaugh disagrees. “We’ve been rolling out smart communicating meters since 1994 and this is the first time that the pushback is occurring. This is a localized problem due to the utility communications and interaction with the customer,” he said. “No one else is seeing this type of problem. This is a blip. However, it’s up to the utility industry to show the customer why they should be doing this. Customers are smart and need to know what’s in it for them and why this is a good idea.”
Changing job descriptions
The biggest change, however, may be in the structure of the utility itself, right down to its very core: its staff. “We are undergoing a generational change in staff at the utilities,” Houseman said. “Most of the folks who were in the industry in 2005 will not be in 2020. How folks think and what is ‘standard’ will change more in the next decade than it did in the past two decades.”
“What does the utility employee of 2020 look like?” Wambaugh asked. “They will move to be customer advocates and actually provide service to customers to help them to use technology and services and rates to impact their bills and consumption.”
The more things change
Charles W. Newton, president of Newton-Evans Research Company, predicts obstacles. “From our research perspective, the biggest obstacles to faster development are these: First, the limited amount of capital and human resources available for smart grid development, which keeps utility market acceptance and new product usage trailing the technological breakthroughs available to the industry. Second is the need to ‘keep the lights on’ while testing and piloting new technology—adding years to the adoption curve.” Newton also cited the need to develop a workable communication strategic plan, and keeping cyber security in mind as a strategic concern.
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