Smart grid delivers a new level of interactivity

by CXOtoday Staff    Oct 07, 2010

Kyle McNamaraRemember the days when consumers had to call power utility companies to inform about power cuts? Thanks to smart grid, those days are ending. Smart grid is the application of digital and software technologies, such as smart metering and energy management applications, to today’s outdated analog grid of electric wires and transformers. Smart grid’s two-way flow of energy and information allows utilities to more efficiently use their infrastructure.

On the other side of the meter, smart grid gives customers greater control and visibility into how they consume, manage, and in some cases, generate power. The information produced by smart devices allows customers to directly control consumption and businesses to achieve their sustainability goals.

The ability to view and manage energy use is a natural progression and expectation of millions of customers who are comfortable using the Internet or cell phones to interact with service providers.

In fact, many consumers already access online tools to see their energy consumption. These tools take customer usage data from the utility and place it onto a portal, where customers can see and interact with the information. Even though utility companies have no control over the tools, they can expect to field customer questions concerning the information published online.

With more granular data, utilities can closely monitor energy across the grid and charge variable rates throughout the day, which helps consumers save energy by setting appliances to turn off when rates are high. In many states, utilities will manage devices inside the home, such as shutting off appliances or changing thermostat settings to smooth demand.

Smart grid is on its way, and it’s moving fast. In the US there already plans to speed up smart grid development and give consumers tools to control electricity costs and reduce energy consumption.

The rollout of smart grid creates disruption through new technology, new business processes, and new kinds of customer inquiries concerning the impact of smart grid on utility bills and service. Despite the promise of smart grid, many utilities are not yet prepared to handle the changes and challenges associated with implementation.

Controlling devices across the grid and within a customer’s premises requires access to more detailed information about customers and will generate a high volume of real-time information from a variety of sources. Utilities need updated infrastructure to capture information regarding customers, consumption, and related services, and to make the transition to an environment that provides customers and employees with the necessary information and tools to manage their energy usage. Doing this effectively will require significant changes in staff, systems, and business processes.

Changes in customer relationships are bound to occur as third parties enter the utility arena. Utility customers who access usage data on other companies’ Web sites may begin to see this third party as the face of their energy provider. Third parties are already lining up to sell smart appliances and energy management devices directly to consumers. As customers adopt these devices, they are likely to turn to their utility companies for support, especially when a device doesn’t result in demonstrably lower bills. This model mimics the experience of telecom network providers, whose customers purchase mobile phones from various manufacturers yet rely on their carriers for support.

Smart grid will indeed be a game-changer in the utility industry. Newly introduced technologies, such as smart meters, renewable energy, automatic outage detection and resolution, dynamic pricing, and demand response, provide many benefits to utilities and their customers.

The author, Kyle McNamara, is the Managing Principal - Global Energy & Utilities Practice at Verizon Business