The future of the smart grid looks bright. Innovations such as IP/MPLS network connectivity and the desirability to all potential stakeholders in smart cities projects have helped propel smart grid spending in general and investment in the enabling networks. In addition, government programs such as the U. S. Smart Grid Investment Grant Program have pumped $7.8 billion into smart grid systems with accelerated activities taking place around the world. In fact, driven initially by government stimulus, investments by the electric power industry in IP technology is accelerating, with US$200 trillion projected in global expenditures by 2030.
In short, the networking piece of smart grid deployments is critical, as the migration of utility infrastructure to meet the needs to remotely monitor and manage their grids grows in complexity. “The new IP/MPLS technologies offer a great deal of benefits within the utility in cost savings, operational efficiency and cost savings, and they also mandate a new way to operate, bridging those traditional organizational silos,” noted Mark Burke, VP of Intelligent Networks and Communications for DNV – GL, in a recent GridTalk posting.
In the first of what will be a three-part series on smart grids and the value that can be created the economic perspective provided by Burke, who outlined a number of ways that smart grid projects can maximize their technology investment, is instructive.
Burke provided a number of recommendations that will resonate with utilities as they evaluate how to move forward, and here are five of particular significance.
First, embrace standards.
“Standards drive innovation while maintaining security and reliability”, noted Burke. “They encourage mass production, driving the cost of equipment down, while also enabling the development of an ecosystem of value-added products and solutions. They reduce the total cost of ownership for the systems they procure, but also encourage the development of devices that may leverage communications protocols to provide additional value to customers and the society at large.”
Second, monetize excess capacity.
Adding high-bandwidth fiber is a big investment, but it also can create new profit centers that can help projects recoup the investment. One way to monetize excess capacity is through establishing an unregulated subsidiary tasked with taking advantage of the newly-created infrastructure.
Third, prepare for distributed power generation.
One side benefit of deploying a converged IP/MPLS system is readiness for distributed generation and renewable energy sources such as wind power and photovoltaics.
“With IP/MPLS you can accommodate these in a common architecture and in a standards-based environment so that the unit costs are low over time,” noted Burke. “As the smart grid environment matures and gets more diverse with renewables and other new challenges, the total cost of implementation will go down as well.”
Fourth, consider public-private partnerships, especially where investment in energy infrastructure is traditionally lacking. In some markets, demand response can’t be exploited by governmental entities or utilities but third-party, commercial concerns can capture that value instead of leaving it on the table.
Finally, it is worth the effort to help shape public regulation.
“Power providers should really get involved with educating both consumers and regulators, which may have very small staffs and are overburdened,” Burke suggested. “Only through that level of engagement will help maximize the value of moving to a more sophisticated energy system including IP/MPLS-based smart grid. The regulators are quite sensitive to the needs of the customers.”
There are other ways to maximize investment on the Alcatel-Lucent blog post, but these are ones that clearly should be top of mind.