The Utility/Smart City Connection

The city of Chattanooga expanded the bandwidth of its smart grid network and now offers internet services to city residences and businesses, which a University of Tennessee at Chattanooga study reveals has generated substantial “incremental economic and social benefits.” Photo courtesy of Chattanooga Convention & Visitors Bureau.

Proactive Providers Seek Collaboration at Next Level

More and more cities are deciding to “get smart.” Navigant Research’s Smart City Tracker Q1 2017 reports there are “250 smart city initiatives in more than 178 cities around the world with the majority focusing on government and energy initiatives, followed by transport, buildings and water goals.” Because participation in these initiatives requires investment of time and capital, there must be a value proposition for all stakeholders. Never has there been doubt that utilities, as infrastructure providers, have a role in smart city development. Forward looking utilities are determining what they can offer to these initiatives, what value they can derive and what is the best way to engage.

A panel of utility, government and non-profit professionals in-the-know about the connection between utilities and smart cities came together at DistribuTECH 2017 in January to discuss how utilities can position themselves for future opportunities in this space. Panel participants Glenn Pritchard from PECO, Michael Pesin, from the U.S. Department of Energy (DOE), David Sandel from iNeighborhoods, John Gibson from Avista, and Ron Beck from Central Lincoln PUD (Oregon) were guided by moderator Michael Beehler of Burns & McDonnell.

Technology as an Enabler; Ecosystem as a Foundation

In its early days, the smart city was largely a construct of technology providers. Digitizing the city with intelligent devices connected through communication networks, could provide a rich source of data for better planning. More recently, the Internet of Things (IoT) and edge computing promise to advance the smart city beyond planning to day-to-day and even near real-time operations.

As the idea of a smart city caught on, cities realized that the high impact smart city is “90 percent sociology and 10 percent technology,” Sandel said.

Technology is an enabler, but to solve problems smart city initiatives require collaboration of many stakeholders and an ecosystem of providers, including citizens, government, businesses, planners, community groups, educational institutions, utilities and providers of products and services.

What Cities Want

Cities that aspire to become smart cities do so to promote economic development, improve their citizens’ lives and become environmentally sustainable. Citizens and businesses expect their city to provide high quality transportation, public safety and health along with access to energy, water resources and telecommunications. This is easier said than done in an era of increasing urban population density and limited resources.

Utilities as Infrastructure Providers

Utilities share cities’ desires to deliver reliable services to city residents and local businesses. Utilities see the entire socioeconomic range because all residents and local businesses are their customers.

“As grid providers, utilities are uniquely qualified to help smart city development,” said Gibson.

They are experts in supplying power, operating and maintaining energy or installing and managing water delivery networks or a combination of these. Utilities, especially those that have implemented smart grid and advanced metering infrastructure (AMI), have expertise in communication network design, data management and analytics for decision-making. They are especially attentive to protecting the privacy of personal data. To address some of the privacy concerns, DOE has recently introduced “DataGuard,” a self-certification program that utilities and other organizations can use to ensure they take appropriate steps to protect their customers’ data. In addition, utilities have experience in running real-time control systems and public safety can be enhanced by utilities’ experience in responding to alerts and alarms. These competencies are helpful in managing street lighting security and even parking space location, traffic signals for congestion and autonomous vehicles. Plus, assuming electric vehicle (EV) penetration continues to increase, utilities must be involved. EV charging and potentially discharging will change the way the electric grid is operated.

Fiber and Smart Grid–Recipe for Success

Government utilities have been able to justify participation in smart city initiatives. Beck described the example of Central Lincoln PUD in Reedsport, Oregon. Although not a smart city, businesses in Oregon’s Central Coast are serviced by CoastNet, a high-speed data network using fiber optic cable, owned and operated by Central Lincoln PUD. Regulator approved and supplied communications services have become part of its business model.

Pritchard cited the City of Chattanooga as a notable municipal effort. In 2005, the city and its utility, Electric Power Board (EPB), investigated whether to install a fiber optic network to modernize its electric system. After careful consideration, the decision was made to expand the bandwidth of the smart grid network and offer internet services to city residences and businesses. As part of the initiative, EPB was awarded $111 million in smart grid funding by DOE.

The dual use of the communications network is delivering on its potential. The University of Tennessee at Chattanooga conducted a study, revealing that the fiber infrastructure generated “incremental economic and social benefits ranging from $865.3 million to $1.3 billion while additionally creating between 2,800 and 5,200 new jobs” over the period of 2011 to 2015. Benefits to the electric side of the municipal utility include reduced outages and economies of scale in maintaining communication and electric networks.

For many utilities, especially those that are investor-owned, providing communications networks is not an option. There are legal and security restrictions on using communication networks to service the electric grid and smart city communications. In addition, there are natural competitors, like telecommunications companies and Google, which provided fiber for Kansas City.

It’s Hard Work to Get to Value

The panelists agreed that champions of smart cities initiatives within investor-owned utilities (IOUs) must develop reasonable business cases to invest. While smart cities deliver lots of non-monetizable benefits, the economic value for utilities is harder to reach. Value exercises typically come down to the specific technologies deployed, such as EVs, microgrids, smart lighting and more.

It is easy to see how EVs can add to utilities’ revenue streams, but business cases for other technology might be difficult to make. Suppose a smart city focuses is on resiliency, for example. Microgrids, combining solar plus storage, can theoretically deliver stacked benefits to the grid that might provide a return on investment to a utility that owns and operates them. There might not be a market mechanism or business model in place, however, for the utility to be compensated for that value. That’s where initiatives like the New York Revising the Energy Vision (REV) are important.

By taking a broader view, there might be ways to get to value. AEP, for example, has packaged existing initiatives (EV charging, microgrids, advanced communication networks and energy storage) and is seeking full rate recovery from the Ohio Public Service Commission to support the city of Columbus’ smart city initiative–Smart Columbus (see more below).

Test Beds and Accelerators as a Low Risk Approach

Utilities are just beginning to warm to rapid innovation through digital transformation. Test beds and accelerators provide low-risk ways for utilities to test new technologies, identify new partners and discover workable business models before making major commitments.

Urbanova, a noteworthy initiative involving Avista, is a test bed for understanding smart city technologies’ potential by using the University District adjacent to downtown Spokane, Washington. The District covers 770 acres with six higher education institutions, two medical schools, businesses and residential neighborhoods. The centerpiece is a sensor network tied to a standards-based, open architecture data analytics platform for testing ideas, informing urban planning and improving systems. The idea is to provide planners, institutions, entrepreneurs and academics access to data and analytics. Citizens are expected to benefit from access to apps, outcomes of health-related research and displays of information among other things.

Smart street lighting, air quality monitoring for public health, and neighborhood energy sharing were tested first. Air quality monitoring has already born some fruit. Wildfire incursions in the Northwest have affected air quality in the region, resulting in air quality sensors showing different affects at neighborhood levels. Civil engineers and health researchers are learning what conditions–such as tree canopies–might account for the difference. Ultimately, this collaboration will lead to predicting and mitigating threats to public health.

Smart Columbus in Columbus, Ohio, shows how accelerator concepts can be magnets for smart city funding. So far, Smart Columbus has put together $271 million from sources such as Ohio State University, Columbus Partnership, the State of Ohio and others. Columbus-based AEP has contributed $175 million. Because a key piece of the concept involves EV infrastructure, Smart Columbus has been awarded $40 million from the U.S. Department of Transportation and $10 million from a Paul V. Allen fund to pursue this initiative.

Urbanova,  a noteworthy initiative involving Avista, is a test bed for understanding smart city technologies' potential by using the University District adjacent to downtown Spokane, Washington, pictured here.

Urbanova, a noteworthy initiative involving Avista, is a test bed for understanding smart city technologies’ potential by using the University District adjacent to downtown Spokane, Washington, pictured here.

Advice to Utilities

Cities are complicated, and smart cities even more so. The organization iNeighborhoods, involved in St. Louis, has developed a comprehensive process to assess readiness, involve the community and establish metrics to measure success, then design, build and operate, according to Sandel. In addition, the Smart City Council has created a guidebook (Smart City Readiness Guide) that covers much more than a short journal article.

The panelists offered some nuggets on things utilities should consider when planning or participating in smart city initiatives:

Geography counts. No two cities are alike. Smart city initiatives will take different forms, depending on economics, politics, geography and access to resources. While resiliency may be a primary motivation for building an islanding microgrid as part of a smart city in the Northeast, in the Northwest peak reduction is the motivation for a microgrid operating in the grid-connected mode. Some cities start with a technology initiative, such as smart street lighting or traffic signals that can be controlled for security, major events and traffic congestion. Others begin with a neighborhood or innovation district, such as Oklahoma City and Philadelphia where cities connect universities, entrepreneurs, start-ups, incubators, accelerators and millennials to innovate and provide economic stimulus to existing neighborhoods (see Brookings Institute). Like universities and hospitals, innovation districts require secure communication networks and redundant power.

Build critical mass. A successful smart city cannot emerge from one or two players. Partnerships are a must and partners will be attracted to popular initiatives. A good example is the Urbanova. a the newly-named smart city living lab in Spokane, Washington that started with Avista, Itron, the city, Washington State University and other partners. As pilot projects were initiated, the appropriate partners were identified and recruited. For example, Urbanova’s shared energy economy project includes engineering and design firm McKinstry, distributed energy resource management vendor Spirae, battery provider UET, Pacific Northwest National Labs, Washington State University and Schweitzer Engineering Laboratories among others.

Engage the community. Community engagement begins with involving residents, local businesses and students–especially STEM students–at all stages of planning and implementation of initiatives. When the community is engaged, there is opportunity for innovation. The city can find out if solutions will really work for their citizens or what problems the community thinks are worth solving.

Design the initiative for success. Start by setting out an overall strategic vision and a prioritized list of objectives. Set up metrics for success. The Chattanooga example is a good one. The collaborative group identified potential benefits and collected data that could be analyzed comparing planned vs. actual benefits.

Demonstrate success. Pritchard said it is important to begin with addressing current needs in the city. From there, work toward an implementation that it is stable. Then it is possible to expand.

Continuously monitor emerging technologies. This is especially important in areas where there will be high impact on the economy, the environment and the psychology of the city, such as with autonomous vehicles. | PGI

Jill Feblowitz is founder of Feblowitz Energy Consulting and an internationally recognized expert on innovation in the energy industry. With over 30 years of experience leading research and delivering consulting projects, Feblowitz provides advice to energy companies in the areas of energy markets, business models, operations, policy, regulation and technologies.

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