TODAY’S STUDY: THE PROGRESS OF THE SMART GRID

In a recent conversation with Internet entrepreneur Brian Kariger, founder of dictionary.com and thesaurus.com, Brian emphasized that he attributes his sites’ success to methods he and his team developed to interact with the sites’ users and refine the product to meet their needs. (There is more about Kariger in today's QUICK NEWS item about EVs.)

The need to interact with users is a lesson the survey highlighted below suggests is still to be learned by the people who run the nation’s utilities and a lesson they must learn if they are to win their customers’ support for the building of the new, smarter, more capable transmission infrastructure so vital to a New Energy economy.

Utility managers are, the survey shows, sincere in their intention to bring the best possible service to their ratepayers. They take their profound responsibility to keep the lights on and the air conditioning cooling very seriously. But the burden seems to obstruct their ability to allow their service to be a two-way street. They are so consumed with serving, they are inadequately available for feedback.

To be sure, utilities face a far more massive data management problem than even the busiest of websites and adding the kind of feedback from its rate base recommended by the report will add enormously to that burden. Nevertheless, utilities will need support from their customer base if they are to institute urgently needed smart changes to their systems.

Only with such upgrades will transmission systems be fully ready to incorporate variable New Energies and vehicle-to-grid (V2G) capabilities. When the system is smart enough to integrate V2G operations, plug-in cars can make it possible to use more of this good earth’s sun, wind, deep heat and flowing waters.

Only with a smart, two-way electricity delivery system and V2G capabilities will the grid will be fully ready to fulfill the simple advice of those who have long heralded the transition to a New Energy economy: “Get the cars on the grid and clean up the grid.”

Making the needed changes in the system will be easier with the support of electricity consumers. Enlisting customers’ support, as Brian Kariger thoroughly learned on his way to Internet success, requires listening to users and partnering with them.

It is a lesson the people in charge of the transmission system, the survey below shows, have yet to learn. In other words, a smarter grid will require the system’s operators to get smarter.

Smart Grid Challenges & Choices, Part 2: North American Utility Executives’ Vision and Priorities
May 23, 2011 (Oracle)

Introduction

• In March 2010, Oracle Utilities released its first survey of C-level utility executives. The Smart Grid Challenges & Choices Report surveyed 152 North American utility executives to understand their vision for the next 10 years, how they expect smart grid to evolve in our communities and homes, and what challenges and opportunities lie ahead

• Now in its second year, the report comes at a critical time for smart grid visionaries. In his recent State of the Union address, President Obama called for a new national goal of generating 80 percent of America’s electricity from clean energy sources by 2035…While the goal may seem a long way off, utilities must prepare to address the challenges that lie ahead

• Against this backdrop, the 2011 report seeks to further understand utilities’ vision for the upcoming decade, how smart grid plans and expectations are evolving, and how utilities can more effectively communicate these changes to their customers

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Executive Summary

• Utility executives say that their top priorities for the next 10 years will be improving service reliability and controlling customer costs

• While the majority believe customer buy-in is key to smart grid success, less than half are preparing their customers for the change

• While 71% of utilities say securing customer buy-in is a key step needed to drive the success of smart grid, just 43% say they are educating their customers on smart grid’s value proposition

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• Additionally, three-quarters of utilities rely on one-way customer communication via mail and/or Web sites. Few use social media or other channels to engage customers in a two-way discussion

• Looking ahead, executives see increased service reliability and improved collaboration with customers; but do not expect all customers to embrace the new technology

• Utilities that have implemented pilot programs or system-wide deployments anticipate that just 38% of customers will take advantage of energy conservation programs once available

• Utilities must exchange information – both with customers and peers – to move smart grid forward

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Priorities for the Next Decade Take Away: Sights on Improved Customer Service and Reliability

• Utility executives agree that their top priorities for the next 10 years will be improving service reliability and controlling customer costs

Smart Grid Is Just Part of the Smart Utility Puzzle Take Away: More than Smart Grid; Smart Utilities Need Smart Data

• Just half of utility executives believe smart grid is the answer for improving energy service

Where are Utilities in the Smart Grid Journey? Take Away: Utilities Look Before They Leap

• Many utilities are executing internal research on smart grid; fewer are taking steps forward with pilot programs

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Moving Smart Grid Forward

• Utilities must exchange information – both with customers and peers – to move smart grid forward

• Of those who are educating customers, smart grid messages revolve around definitions, benefits, and rate expectations

Communication without Conversation

• The majority of utilities rely on one-way customer communication via mail and Web. Few use social media to engage customers in a two-way discussion

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Other Ways to Connect Take Away: Consider Recreating In-person Events Online

• When asked to think of non-traditional communication methods, many utilities say they connect with customers in-person

Keeping Momentum Take Away: Clear Communication and Actionable Data are Key

• Utilities understand that securing customer buy-in is just the beginning

Smart Grid Predictions Take Away: Communication Required to Spur Action

• Utilities expect smart grid’s real-time usage and cost data to be most popular with customers

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Are Utilities Ready for PHEVs?

• One in every two utilities is taking steps to support plug-in hybrid electric vehicle (PHEV) adoption

The Road Ahead – Technology

• Utilities see technology integration and vendor partnerships as critical for the road ahead

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What critical technology issues will most impact your organization over the next five years? …
- 47% Integrating new and old technologies
- 41% Partnering with the right technology vendor(s) that provide and develop applications that will lead us into the future
- 36% Managing the volume of data generated by smart meters and other smart devices
- 26% Learning what they can do with the technology they already have in place
- 16% Adhering to new operating standards
- 11% Justifying the need to migrate away from current legacy IT infrastructure
Take Away: Choose Trusted Partners to Manage Evolution

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The Road Ahead – Financial Hurdles

• Utilities anticipate funding major power generation and grid improvement projects over the next five years. Many are also concerned with potential punitive actions of political and regulatory groups

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What critical financial issues will most impact your organization over the next five years? …
- 51% Obtaining financial support and risk mitigation for large capital expenditures for power generation and grid improvement projects
- 51% Dealing with unpredictable financial consequences of punitive actions of political and regulatory groups
- 36% Making prudent business decisions that will improve shareholder value
- 28% Maintaining or improving an investment grade financial rating in an uncertain political environment

Take Away: Progress Requires Investment

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The Road Ahead: Policy

• Utilities believe carbon taxes will be the top political issue for their industry

What critical political issues will most impact your organization over the next five years?...
- 41% Carbon taxes
- 30% Renewable portfolio standards
- 30% U.S. Environmental Protection Agency (EPA) air emissions
- 18% U.S. Federal Energy Regulatory Commission (FERC) cyber security standards
- 11% U.S. National Institute of Standards and Technology (NIST) Guidelines for Smart Grid Cyber Security
- 11% 2012 U.S. Presidential election

Take Away: Work with Legislators

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What’s Next?

• Utilities look forward to improved reliability and greater customer collaboration, but express different views on how the changes will impact costs

What does the utility of the future look like to you?

 Increased reliability: “I see a more stable and reliable renewable energy source the way more companies are coming out with energy efficient designs and pieces of equipment”
 Greater customer collaboration: “Consumers are going to want more real-time information that they can act on; they will want to see how their actions immediately change their usage patterns and what the cost benefits are”
 More advanced technologies: “More technological advancements and improvements”
 Different views on costs: Some see “significant cost increases,” while others see “better production and costs”

Take Away: Vast Opportunity; Uncertain Costs

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Our Take…

• Keep an eye on the prize: “Smart grid” is one piece of the puzzle for the next-generation utility and will help spur organizational transformation, but utilities are placing a greater focus on the “basics” – reliability, affordability, and customer satisfaction. Utilities should define smart grid priorities through the lens of overarching organizational objectives. Start small, work with trusted industry partners and vendors, and drive toward a clearly defined end goal

• Provide the right information: Providing clear, consistent, and actionable information to customers is critical to smart grid success. Open communication, transparent processes, and standards-based IT tools will help utilities extract and derive value from the data they need to effectively communicate with their customers

• Engage: True communication is a two-way street. Utilities must develop plans to engage consumers in a collaborative discussion on smart grid and energy conservation by opening up new channels including instant chat, text messaging, and social media

• Develop information management strategies: Smart grid technologies and increased consumer communication will flood utilities with data. Partner with key technology providers that can help define information management strategies and architectures to capture, protect, analyze, use, and share data effectively and in real-time across your organization