By Allan McHale, Memoori
Memoori’s annual report “The Smart Grid Business in 2011-2016” shows that smart grid’s step-by-step development in the past five years is flawed.
Even if they don’t have a new canvas, utility companies should have a clear vision of how they will join the existing parts before they begin smart grid development. This is only now being considered, however. This means when the early adopters come to deliver the holistic smart grid solution, it will be more difficult and expensive than they planned.
Leonardo da Vinci was obliged to finish his first version of “Virgin of the Rocks” some 25 years after being commissioned. Forensic evidence shows that he rebuilt the painting’s framework, allowing him to incorporate the technical improvements of light, shade, expression and beauty that he had mastered since his commission.
He didn’t simply refine minor details, which was what he was paid to do, but instead he did a complete retrofit that is now-some 528 years later-one of the world’s finest paintings.
Many electricity delivery companies face restoring an outdated and inefficient grid, as well as providing a grid that meets the needs for a low-carbon economy. Do they rebuild the framework to achieve this, or do they play around at the edge and go for incremental improvements that they hope can be seamlessly joined together later?
It’s the later in most regions of the world. Utilities are investing where they can get the quickest return on investment (ROI) with the lowest technical risk, and that, in most cases, results in most money being invested in smart meters. Utilities have the opportunity to rebuild the framework with the latest digital communications and control technologies and analytical software to produce an “Internet of things” that they can test at full scale. Had the Leonardo da Vinci mindset been applied some five years ago, utilities would be close to a total solution that could be transferred around the world. Yes, they are working on it now, but it’s well behind where it should be.
Should we be surprised that this solution was not adopted? Probably not. Faced with a $2 trillion investment, utilities were swayed by eco-political matters and restricted by regulatory frameworks and a need to drastically change the grid’s architecture. These are formidable barriers that must be overcome to deliver a truly smart grid.
Memoori’s report shows that investment so far is heavily biased to smart meters, taking the largest single segment spend in the smart grid business in almost all countries. The spend during the next 20 years will be about $194 billion. It will reach its maximum peak by 2014.
The latent potential for advanced metering infrastructure (AMI) complete with smart meters is some 9 percent, while current sales took nearly 40 percent of the pure smart grid market in 2010.The prime reason smart meters have run away with investment dollars is because utilities consider them a relatively safe bet for ROI.
The basic grid topology was built on stand-alone facilities’ offering limited, if any, interactive networked intelligence, making system integration a more expensive and technically demanding challenge. Integration will require a $1.62 trillion investment and is some 10 years behind smart meter penetration.
This means that AMI’s full benefit will not be realized until well after it has been installed. More important, it appears that utilities’ salivating on this irresistible low-hanging fruit has restricted progress on other important issues. Utilities haven’t given sufficient attention to developing open communication standards and delivering a solution that protects the grid from cyberattack.
In 10 years when utilities are in the midst of trying to join seamlessly and secure smart grid and determine its cost, they will wish they had spent more time on it and applied the Leonardo da Vinci effort.
Learn more about Memorri’s annual smart grid report and its other research at http://power-grid.com under Allan McHale’s “View of the Smart Grid” blog. It may be found on the home page.
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