Understanding smart grid technology
Smart grid technology is broadly defined as a more efficient, automated, and secure transmission and distribution system than the infrastructure used today to move electrical power from generation points to end customers in the United States. The aim is to build out a more reliable, protected and energy-efficient electrical network using digital technology that integrates components like advanced routing and switching technology and intelligent monitoring systems. Vendors and telecom carriers alike are lining up with a variety of solutions targeting utility companies that are facing increasing administrative, maintenance and security issues related to managing an aging infrastructure.
The National Energy Technology Laboratory (NETL) of the Department of Energy (DOE), through its Modern Grid Implementation Strategy initiative, specified the attributes of smart grid technology and the capabilities it should support:
- Self-healing from power disturbances and outages
- Engage consumers to use electricity more efficiently
- Resilience against physical and cyber attack
- Deliver power quality to meet 21st-century electrical needs
- Work with all generation and storage options
- Facilitate the creation of new products, services and markets
- Optimal resource utilization
The power industry wants a way to get the individual elements in an electrical generation and
In 2009, the market for smart grid technology was estimated to be almost $21 billion -- an impressive number that is expected to more than double by 2014.
Amy Larsen DeCarlo
Principal AnalystCurrent Analysis
distribution system (from the transformers down to the home power meter) to both speak and listen to each another, communicating changes in demand in order to route power more efficiently and cost-effectively and to optimize energy usage. This level of communication also supports faster remediation in the event of an outage.
Conceptually, smart grid technology also employs a level of automation that should allow for more proactive maintenance. For example, if service degrades, electrical grid components like smart meters located in the vicinity of the problem, should alert the utility to the problem so a fix can be issued. Smart grid technology also addresses outstanding security issues. Monitoring systems should be able to identify potential security vulnerabilities and threats before a breach occurs.
Critics voice a challenge. Smart grid critics charge that the current electrical grid is being built on last century's technology while trying to power next-generation applications. Simply put, the so-called "dumb" electricity distribution system lacks the ability to communicate between individual components necessary to quickly identify and repair problems in a proactive fashion. In the current environment, power companies often are unaware of an outage until a customer phones in the issue, much less whether electricity is being distributed in the most efficient way.
What telecom operators need to know about smart grid technology
With energy a perennial hot-button issue, governments are encouraging investment in smart grid technology through stimulus plans as a way to improve efficient power distribution and ultimately reduce U.S. dependence on other countries for energy. These incentives are driving a number of projects around the world, many around the implementation of smart meters that open up a line of communication that spans the route between generation plants to so-called "smart sockets," a.k.a. the electrical outlet.
Smart grid ventures are being financed in whole or in part by governments in a number of cities and countries to try to incorporate smart meters that recognize energy demand conditions on the network. Smart meters can literally power down devices during peak energy utilization periods. This will not only help with costs but will also support more efficient energy utilization.
Telecommunications technology has a key role in getting the components all along the utility infrastructure to talk to one another. A host of providers, including AT&T, Sprint and Verizon (see sidebar), are looking to capitalize on their 4G wireless networks to power the electrical infrastructure of the future via machine-to-machine (M2M) communications. These 4G networks -- some already built on WiMAX technology with Long Term Evolution (LTE) networks following close behind -- provide the bandwidth, and in the case of LTE, the prioritization necessary to scale to support high traffic volume between a tremendous number of devices throughout the network.
Many in the industry believe LTE has an edge over WiMAX in the long term because of its ability to support discrete quality of service (QoS) levels for different types of traffic. The urgency associated with some stimulus fund plans has many utilities looking at WiMAX because it is deployed today, while LTE won't be widely available until 2011 and 2012.
Why you should care about smart grid technology
Smart grid is discussed as a new idea, but utilities have actually been upgrading their infrastructures for some time. In 2009, the market for smart grid technology was estimated to be almost $21 billion -- an impressive number that is expected to more than double by 2014.
So what is driving this expansion? Simply put, a confluence of regulatory, technology and energy market factors are driving a surge in investment to modernize the grid, and soon. The U.S. government is offering billions in smart grid stimulus funds to utilities and vendors to develop new smart grid technology projects, producing a growing sense of urgency -- and new projects.
Telecom service providers are uniquely qualified to serve this sector, providing advanced, scalable and far-reaching pipes to carry communications from often far-ranging devices. The thinking is that utilities can work with telecom carriers, leasing space on their networks to support more advanced operations rather than the alternative: building their own networks. Providers like Sprint and Verizon are teaming with vendors that specialize in smart grid technology development.
While only time will tell how effectively the utilities work with telecom providers. It is clear, however, that the electric utilities are focused on making some major advances in the underlying infrastructure. This interest is very likely to translate into more smart grid technology projects, at least some of which are likely to help accelerate broad adoption.
About the author: Amy Larsen DeCarlo is the principal analyst for Security and Data Center Services at market intelligence firm Current Analysis. She focuses on managed IT services delivered by telecom and IT solution providers delivered to mid-sized and large enterprises.