Last week, Power Technology Research attended European Utility Week 2016 in Barcelona. The show is one of the leading trade fairs in Europe for Smart Grids and Smart Cities covering themes ranging from Grid optimization and smart metering to Data Management and Grid communications. The show is targeted towards utility scale automation solutions along with a strong focus on Internet of Things (IoT). It consists of Hub-Sessions, Summit Sessions and floor exhibition attracting more than 12,000 visitors primarily from Europe and from other parts of the world.
Our goal at the show was to analyze new trends in the utility industry by meeting thought leaders, attending various presentations, and by discussing the advancements in the portfolio of companies to get a firsthand view of which direction the market is moving and what are the leaders of the market thinking. Some of the key topics which were increasingly brought up during the show:
1. Smart metering, now that the roll outs are done, what next: In many European and Asian countries, there have already been large roll-outs of smart meters. With China having already more than 60% penetration of smart meters, and Finland and Sweden with 100% smart meter penetration, many manufacturers are wondering what is next? The next steps come on both sides of the meter. On one hand, utilities (or other actors) need to be able to enable this new platform of data to fully interact with the home or business thus enabling new control from end users. On the other hand, the head-ins and other network infrastructure needs to be standardized, analyzed, and authorized from those same end users in order to unlock the new data management and aggregation platforms to resell the information to other industries. Despite significant progress from companies like Landis+Gyr and Itron on AMI management, there has been significant resistance to a next step as reflected by conservative adoption policies of utilities. This is partially due to the multitude of solutions offered by traditional T&D OEM’s to adjacent Telecommunications companies, to more abstract offerings from Microsoft, SAP, and the like. It is also due to the utilities themselves all creating their own definition of a “Smart Grid” and at times, not even compatible with their neighbor utilities. Sure there are still plenty of roll-outs happening for smart meters in Central Europe, and other countries around the world, but all eyes are looking towards these next steps and which business models which will successfully take them there.
2. What are the new business models for distribution utilities in a prosumer world: With advancements and associated cost reduction in distributed generation, more residential and commercial consumers have shifted to their own sources of generating electricity. This is the reality all distribution utilities in developed countries are facing, but are they resigned to be relegated to only maintaining the “pipes”? The answer may lie in the multitude of business models which were presented at the show, but before going to what answer works for who, one must have the right questions such as how a DSO would utilize the prosumer data for better profit to both parties? Should a return on investment calculation include charges to the consumer for availability of the grid or could other services offered offset this expense? If a charge would to be made would it remain on a usage base per kWh or shift to a one-time charge embedded within other taxation mechanisms such as property? PTR believes any model considered will need to provide, at the least an illusion of, choice to the prosumer as motivations range from irrational to opportunistic and that will undoubtedly be a change from mechanisms offered in the past. Moving away from the cost plus perspective may hold the key with solutions from utilities and system operators such as Enel and Elia, piloting EV charging and tertiary commercial building controls, respectively. These strategies may provide both the commercial and control levers necessary to convince the prosumer that the grid is working for rather than against them.
3. Sub-system integration proves stumbling block in moving towards the “smart city”: The problem is different sub-systems such as smart metering infrastructure, street lighting, waste/water management systems, have typically been designed independent of each other. This means they are unable to work with each other directly as they may have relied on different standards thus making smart equal to complex. Even though some companies are offering solutions to integrate devices from different manufacturers within a sub-system, such as the smart meter head-in solution provided by Netinium, there is no momentum towards these sub-systems working together on city scale. The common fear is “we know how the sub-systems work, but we do not how to integrate them with each other” said Mr. Reji Kumar Pillai, one of the leading global experts on smart grids and president of India Smart Grid Forum. Over the past decade, a pure focus on “function” was the driving force in adoption; however in order to integrate, a refocusing on “form” needs to now be considered. One “form” could be achieved through standardization of the communication infrastructure however there still exists more questions than answers with data privacy and security concerns facing whomever takes on this challenge be it a distribution utility to Telecommunications company.
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