Recent advances in communications networking technology have created a multitude of ways for people, devices and things to become interconnected. And this digital revolution is not expected to slow down anytime soon, with the Internet of Things (IoT) exploding and new technologies like 5G on the horizon promising to transform the utility business model.
As more industries take advantage of this kind of ubiquitous connectivity, many innovative new use cases are being developed, resulting in business improvements and service offerings that were not feasible in the past. With the capability to enable enhanced safety and security, cost-efficiency and improved customer service, many of these ‘smart’ technologies also can be applied in the utilities market. However, although the promise of these benefits might be attractive to both private and public utilities, these organizations often are not sure how to build out and monetize connected infrastructure.
The Winds of Change
While recent advances in high-speed connectivity and smart technologies have spawned a great deal of excitement, they also continue to raise expectations in equal measure. For example, many young people are leaving rural communities in search of high-tech lifestyles and better job prospects in the city. And in urban areas, some residents are switching to alternative and renewable forms of energy. As a result of these changing market dynamics and trends, public power companies and rural electric cooperatives alike are dealing with a perfect storm of customer erosion and flat revenues.
When faced with a shrinking customer base, the pressure to simply cut costs can be immense, and that initial reaction is not at all surprising. Ultimately, however, the prospect of diminishing returns over time means that additional measures are needed to grow profits. To proactively address this situation, a number of utilities are leveraging advanced, smart technologies. This enables them to not only improve operational agility and efficiency, but also to monetize existing assets to reduce costs and develop new, profitable revenue streams.
Moreover, taking the initiative to become a smart utility offers an opportunity to build stronger customer engagement and strengthen future viability by modifying business models to address key trends in the industry:
· De-Carbonization – Leveraging renewable energy resources to reduce current and future carbon footprints
· De-Centralization – Expanding energy solutions to include wind, solar, hydro, micro-grids and other distributed energy resources
· Digital Transformation – Adopting digital technology to increase data harvesting to inform key decision making.
Step by Step Journey
The path to becoming a smart utility can take different directions, depending on where you are starting and how far you want to travel. And despite the potential for desirable outcomes, embarking on a new business model can be intimidating. Yet with a vision and goals, you can map out a plan to get there. Fortunately, this process lends itself to a phased approach that can be tailored to meet your specific goals. Becoming a smart utility can help you make better decisions faster, enhance customer experience, and improve productivity and reliability; the key is knowing how to get started.
As the power industry has evolved in recent years, many utilities have initiated infrastructure modernization projects, such as installing advanced metering infrastructure (AMI), or replacing the old standard of 40 Mbps transmission with advanced 100G networks. These investments have contributed to the availability of network intelligence, speed and capacity, providing an entry point to the essential building blocks of a smart utility.
The five building blocks are key to enabling a utility to gather real-time intelligence through connected sensors and devices, transmitting valuable data through a high-speed network to be aggregated and analyzed in the cloud:
· Sensing Block – Gather data from IoT devices and sensors, cameras, microphones, etc. Key sensing metrics might involve speed and direction of turbine blade rotation, system voltage or current, weather conditions, suspicious persons, tower pitch or network connectivity status.
· Network Block – Fiber or wireless network infrastructure transports data between IoT devices, cameras, microphones, management systems and the cloud. Traditional networks include SCADA, AMI, fiber, microwave and 4G/ LTE mobile networks. Newer technology options are 5G, LoRA and other Low Power Wide Area Networks (LPWAN) technologies.
· Data Block – The data infrastructure block is where data from the sensing layer is aggregated, stored and processed, making it available for use. Data management in the cloud requires significant compute power and high-availability databases, or data lakes, that are both secure and scalable.
· Cloud Services Block – In the services block , cybersecurity, managed network services, artificial intelligence (AI) and big data analytics combine to ensure data integrity, protect devices, secure and optimize the network, and extract insights. With increasing cyber and physical attacks aimed at utilities, the cybersecurity layer is vital to protecting public infrastructure, citizen data and community safety.
· Smart Apps Block – Smart applications are the user interfaces that utility executives and employees access to consume actionable insights, such as real-time access to energy consumption, flow control, leakage detection and load monitoring.
A Smart Investment
With the five building blocks in place, a utility network can be infused with the intelligence needed to gather and analyze substantial amounts of smart data. Of course, a key aspect of your business case planning will include an assessment of what you will do with that data to minimize costs, alleviate risks, improve efficiencies, deliver new services and facilitate regulatory compliance.
As critical national infrastructure, electrical utilities have a special obligation to ensure the viability and availability of the power grid. This is especially important due to the very present threat of cyber-attacks against the electrical grid, and cybersecurity continues to be a top concern for utility executives. Smart cybersecurity tools that leverage AI can enhance a utility’s ability to detect, analyze and respond to cyber threats automatically. With smart data and AI automation, utilities can maintain compliance with the North American Electric Reliability Corporation (NERC) critical infrastructure protection (CIP) standards through real-time response to cyber-attacks, keeping the network available and safe.
Moreover, smart technology can be a valuable asset to help prevent outages and public safety disasters. For example, camera-based AI technology can be integrated into mobile monitoring stations, drones or fixed installations within the utility transmission and distribution footprint to detect and ultimately prevent fire from damaging substations and power lines. As recently witnessed in Santa Rosa, California, a fire sparked by electrical equipment caused dozens of deaths, destroyed thousands of structures and led to the pending bankruptcy of a major utility company. New technologies using thermal imaging and AI to identify overheated equipment, power lines or emerging fires threatening utility substations can help prevent similar catastrophes in the future.
Delivering on a Vision
A convergence of trends is creating new challenges for electric utilities and rural cooperatives alike. Yet at the same time, the advancement of hyperconnected technology is generating considerable potential for new revenue models and operational improvements across the utility market. As a result, utilities have a range of options available to improve the bottom line by leveraging existing assets and adopting smart technologies. And these opportunities will only continue to expand as more intelligence is infused throughout the network, offering a brighter future for the smart utilities that embark on this digital transformation.
About the author: Rob Worden leads Smart Cities/Internet of Things (IoT) efforts for Fujitsu Network Communications. Bringing 25 years of telecom leadership to this role, Rob has been an invited speaker to the Utilities Technology Council (UTC), Next Century Cities, Mountain Connect, National Telephone Cooperative Association (NTCA) and United States Telecom Association (USTelecom), among others.