doe. sg ipu predictondisci. widisnotonoecdioeeedies...

DOE. SGIP. PREDICTIONS. US ARMY. UTILITIES. IEEE. EURELECTRIC. PJM.

DOE. SGIP. US ARMY. PREDICTIONS. UTILITIES. IEEE. EURELECTRIC. PJM.

DOE. SGIP. US ARMY. UTILITIES. PREDICTIONS. IEEE. EURELECTRIC. PJM.

PREDICTIONS. DOE. SGIP. US ARMY. UTILITIES. IEEE. EURELECTRIC. PJM.

DOE. PREDICTIONS. SGIP. US ARMY. UTILITIES. IEEE. EURELECTRIC. PJM.

DOE. SGIP. US ARMY. UTILITIES. IEEE. PREDICTIONS. EURELECTRIC. PJM.

DOE. SGIP. US ARMY. UTILITIES. IEEE. EURELECTRIC. PREDICTIONS. PJM.

DOE. SGIP. US ARMY. UTILITIES. IEEE. EURELECTRIC. PJM. PREDICTIONS.

VOL 6, ISSUE 1 » JANUARY/FEBRUARY 2014 Realizing the digital utility evolution

®

AN ENERGY CENTRAL PUBLICATION

» WWW.INTELLIGENTUTILITY.COM

TM

April 9-11, 2014 | Raleigh, NCUtilityAnalyticsSummit.com

details on back cover

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�COVER // JANUARY/FEBRUARY 2014

On the cover: You’ll�notice�something�a�bit�different�about�the�artwork�in�this�issue.�Because�of�the�predictions�concept,�we�wanted�the�entire�issue�to�feel�streamlined,�open,�light�and�airy—a�vision�of�the�future�as�a�clean,�well-lit,�high-tech�space.

SPECIAL SECTION // THE PREDICTIONS INTERVIEWS

About this special section: We asked industry insiders for

their views on the industry future between 2014-2020.

8 The predictions interviews

8 Richard Kidd, U.S. Army

10 Noel Schulz, IEEE Power & Energy Society (PES)

12 Wanda Reder, IEEE Smart Grid Taskforce

13 Hans ten Berge, EURELECTRIC

14 Michael J. Kormos, PJM Interconnection

14 Benjamin Beberness, SnoPUD

15 Mike Smith, UAI

15 Bill Gaines, Tacoma Public Utilities

16 Jimmy Autry, Flint Energies

16 Eye on electricty in 2035 + An infographic on power in the future

17 Rebecca Herold, SGIP privacy subgroup

18 Henry S. Kenchington, DOE

20 SGIP 2.0 and the near future + Our agenda is a window onto likely

outcomes in 2014

DEPARTMENTS

4 Drawing the line

6 Intelligentutility.com

22Analytics

22 The continued cool

of smart meters

+ How one utility keeps finding new analytics opportunities

26Operational Perspectives

26 What Sandy taught

Con Edison

+ Lessons from a superstorm

27 Here comes the Sun

+ A tribal authority gets smarter

29International

29 Europe’s electricity

market toward 2020

+ A continent at a crossroads

30 Utility2utility

+ GEN-I (Slovenia)

33IT insights

33 CIOs, VPs eye the

industry horizon

+ Cybersecurity, customers, expanding IT all concerns

35 Lessons on cybersecurity

from the defense industry

+ Via ViaSat

37Top 3

37 Looking at cybersecurity today

+ Protecting against threats starts now

39Out the door

39 Eyes wide shut

+ Are utilities underestimating the impact of new technologies & new entrants?

Vol. 6, No. 1, 2014 by Energy Central. All rights reserved. Permission to reprint or quote excerpts granted by written request only. Intelligent Utility® is published bimonthly by Energy Central, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Subscriptions are available by request. POSTMASTER: Send address changes to Intelligent Utility, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Customer service: 303.782.5510. For change of address include old address as well as new address with both ZIP codes. Allow four to six weeks for change of address to become effective. Please include current mailing label when writing about your subscription.


CONTENTS

Globa

l ene

rgy de

mand w

ill gro

w.

Fossil fuels in

the world’s energy mix fall fr

om 82% to 76%.

Low-carbon energy sources meet around 40% of the growth in primary energy demand.

Nearly half of the net increase in electricity generation comes from renewables.

90% of energy demand comes from emerging economies.

Energy demand growth in Asia is led by China fi rst, then India and Southeast Asia (after 2025).

India becomes the largest importer of coal, but future global demand uncertain.

U.S. almost to goal of meeting energy needs (in energy equivalent terms) domestically.

Gas demand rises by almost half.

Eye on ELECTRICITY

in 2035

Source: Internationa

l Ene

rgy A

genc

y, W

orld

Ene

rgy

Outlo

ok 20

13. M

ore at w

ww.iea.org.

EyeOnElectricity_Infographic.indd 1 12/3/13 11:20 AM

8

22263033

16

37

Current Utility Analytics Institute utility members include: Black Hills Corporation, Bluebonnet, Canadian Electricity Association, Centerpoint Energy, Cleco, Duke Energy, Exelon Companies ComEd, BGE, Peco, KCP&L, Nebraska Public Power District, Northeast Utilities, OG&E, Pepco Holdings, Inc., SDGE, Sempra Energy Utility, Southern California Gas Company, Southern Company, Snohomish PUD, SRP, UGI Utilities, Inc. and We Energies. Solution provider members include: ABB, Accenture, Software AG, Black & Veatch, Copperleaf, Detectent, HP, Intel, Itron, KX Systems, Landis+Gyr, Lockheed Martin, Onzo, Oracle Utilities, SAS, and Teradata.

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Enjoytheissue?Then

subscribeforfreeat

www.intelligentutility.com/

subscribe

Kathleen Wolf Davis

Editor-in-Chief, Intelligent Utility magazine [email protected]

DRAWINGTHE LINE

The problem with predicting the future: the future is now

I WAS NEVER TOO GOOD AT PREDICTIONS—NEVER COULD guess what I was getting for Christmas, never accurately guessed my future or what I would be when I grew up. (Sorry, younger self, you

do not become an Indiana-Jones-esque archeologist/lawyer married to John Taylor from Duran Duran. Hey, it was the '80s, and Taylor had really awe-some hair in the '80s, or so we thought at the time.)

Pop culture does a little better at predictions than I do, but there are still missteps. For every “Star Trek” brilliance in pegging the communicator/cell phone, there’s a slew of “Terminator” movies predicting angry robots waging war in 1997, 2004 or 2011, depending on which sequel you’re watching.

What I’ve learned—even if pop culture has not—is that accurate predic-tions need to be based on real-world experience and stick to a time frame where that experience today can be particularly helpful. (For example, from my experience, I can accurately predict that I will continue to write about the energy industry for the next few years, as I have done for the last few years, and I will continue to not be married to John Taylor from Duran Duran.)

So, we took this valuable lesson to heart when knocking on doors for predictions in this issue. We didn’t go crazy and ask about flying cars and wireless electric transmission that could change the world order. Instead, we talked to experts about how their jobs, companies, associations, utilities and networks will change from now until 2020. As Bob would say from “What About Bob,” we’re baby-stepping into the future.

But, those baby steps are telling us a lot. There are some real insights in this issue: on the realities of climate change and the planning being done by the U.S. Army, on the issue of cybersecurity and advice to push ahead, on the one area of R&D that could help you get a college named after you, even. (For that advice, read Noel Schulz’s predictions interview.)

Here’s the one thing I can always accurately predict with every issue of Intelligent Utility: We talked to a whole lot of utilities: SnoPUD, Tacoma Public Utilities, Flint Energies, GEN-I, Westar, Energen, OG&E, UIL Holdings, Arizona Public Service and Vectren.

But, we cannot predict the future with utilities alone. We also talked to the U.S. Army, IEEE (PES and Smart Grid Taskforce), DOE, EURELECTRIC, PJM, SGIP, IEA, TenneT, ENTSO-E, European Federation of Energy Traders, ViaSat, Accenture and the University of Dallas.

That’s quite a lot of predictions and advice to absorb. Let us know if you agree or disagree—or what your own predictions are for our industry. You can email me anytime at [email protected].

Deep. Rich. Refined.Start your day with the industry standard for

energy news services – Energy Central Professional.Deep.Energy Central Professional delivers the most in-depth gas and power industry news, directly to your email every business day.

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Big data has become an industry darling. Retailers are capturing new consumer data to custom-

ize marketing materials for customer buying habits.

Likewise, utilities are harvesting reams of data to analyze customer energy usage.

In order to truly benefit from the big data being collected from the deploy-ment of 40 million smart meters in North America, the utility sector has to succeed in embracing the interoperabil-ity movement that is gaining steam in the industry.

Simply put, with the right interoperabil-ity architecture, utilities can bring together data and information from application systems across an enterprise, irrespective of vendors, to serve analytic and business needs and better serve the customer.

“We see the interoperability move-ment as one that is getting traction in the industry,” says Mike Smith, Vice President at the Utility Analytics Institute. “There are a lot of interesting developments out there.”

Smith says that the billions of dollars spent thus far on utility infrastructure intelligence, including a single $2.1 billion investment by a West Coast utility, drives a lot of future opportunity, including the need to embrace interoperability.

Patrick Corrigan, Vice President of Public Utilities for Elster Solutions, says that the increased connectivity and band-

width now present in the utility indus-try—just like other industries—is driving the need for greater interoperability.

Corrigan draws an interesting paral-lel between what is occurring with the mobile phone space with what is happening with utilities. As consumers become savvier, many want to purchase their mobile devices independent of the network supplier, and apply the phone to whatever network they choose.

Similarly, consumers who now have smart meters in their homes want the device to communicate with their cell phone or mobile device, and to integrate with smart appliances in their home like refrigerators.

“This is an expectation with a grow-ing segment of our customer base,” says Corrigan.

Corrigan says that market momen-tum is required for interoperability to strongly take hold in the utility indus-try—momentum that would result in investments in the kind of cross-func-tional bodies that provide for verifica-tion, testing, modeling and design. Progress is being made, as groups like the Grid-Wise Architecture Council, the Smart Cities Council, and the ZigBee Alliance have all conducted outstanding research to date.

“Market momentum,” Corrigan says, “oftentimes starts with a concept.”

For example, he recalls when Elster unveiled the first AMI network for com-mercial use in 2003. At the time, AMI was believed to be a marginally better way to accomplish AMR and some other tasks. As the concept built market momentum, it quickly advanced beyond that and started

to become intertwined in concepts like smart meters and even the smart grid.

That same concept applies to the potential of a 3D interoperability model. In a 2D interoperability model, which is the traditional approach followed by utilities, there is a heavy focus on de-vices and communications. Applications are often an afterthought, resulting in one-off or custom integration efforts. This approach led to many customized back-office solutions that are expensive to develop and maintain and not very flexible. It also leads to different depart-ments operating in “silos.”

For example, consider a typical customer service department at utility. Within that department you might have an AMR function serving residential accounts and a separate AMI function serving C&Iaccounts. You might also have a demand-side management system for load control, and maybe even an out-age management system, all operating under the umbrella of customer service.

But because of the way technology has been deployed through the years, each group operates as a separate silo within the same customer service function of the utility.

With the right degree of interoperabil-ity, utilities can bring together applica-tions and systems across the enterprise, irrespective of vendors, to provide benefit for the business and utility stakeholders.

“3D interoperability is a concept about helping us to remove silos in our tech-nology and within our business process,” says Corrigan. “We have affordable technology. We have deployed technol-ogy. The timing is right.”

3D Interoperability A High Potential Concept to Remove Barriers in Technology and Business Processes

“This Thought Leadership commentary is based on a recent webcast. Listen in at:http://bit.ly/1cI0qiQ”

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PREDICTIONS

WHAT ARE THE MAJOR ENERGY HURDLES OUR ARMY FACES IN THE 2014-2020 TIME PERIOD?

There are two Army-specific issues. The first challenge is remaining diligent in deciding how we allocate funding in this era of declining budgets. We need funding to achieve our goals and maintain ongoing investments that have taken place over the last few years. We have to figure out what declining budgets mean for the new programs and those already in place. The second challenge is documenting what we’ve learned as the Army returns from overseas. We need to retain the energy deployment lessons of Iraq and Afghanistan and apply them to future issues and installations.

There’s also a third hurdle that extends beyond the Army—namely, there is a certain degree of uncertainty about emerging technology, markets and business models. As one of the largest energy customers in the U.S., we want to work closely with our utility partners over the next few years to keep things as sustainable and stable as possible.

HOW ARE YOU PREPARING TO FACE THOSE MONEY ISSUES, ESPECIALLY?

The budget for Army-owned energy infrastructure has declined significantly under the effects of the budget control acts. So, we’re working with private sector partners to leverage technology in areas of energy generation projects and expertise at energy service companies to do more with less. The Army has made significant efforts to privatize our utilities. We’ve

[completed privatization with] 149 utility systems and avoided a $2 billion investment in upgrade costs. Partnering with the private sector is critical to solving our budget issues.

IN A RECENT DISCUSSION WITH RAND, THEY BROUGHT UP THE NEED FOR EFFICIENCY ACROSS INSTALLATIONS. [SEE NOV/DEC 2013 INTELLIGENT UTILITY MAGAZINE.] WOULD YOU AGREE THAT ENERGY EFFICIENCY IS A MAJOR FOCUS THESE DAYS?

Absolutely. The RAND study is a good one, and we’ve known about that need for a while. Improving efficiency is critical, and the Army has a long-term track record of investing in efficiency. Since 2003, even though we’ve grown by 20 percent on our installations, we’ve cut our energy consumption by 16 percent. We’ve got the highest building standards and the largest energy-saving contract-ing program in the federal government. We’re on track to reach a goal of $384 million saved, which was requested by the president himself. The bottom line is: Highly efficient installations have lower costs and require less maintenance.

OUR AUDIENCE MEMBERS/READERS ARE MOSTLY IN THE POWER UTILITY ARENA. IS THERE ANYTHING SPECIFICALLY YOU’D LIKE TO SAY TO THEM ON HOW TO WORK WITH THE ARMY ON EFFICIENCY OR OTHER ENERGY ISSUES?

First of all, you are valued partners. While there may be discussions about onsite renewables and microgrid

THEPREDICTIONSINTERVIEWS

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activities, there’s no intent from the Army’s perspective to be anything other than a utility partner. We’d certainly like our bases to be more resilient, and in terms of a widespread outage we’d like our bases to continue to operate. We’re not here to take anything away. When we carry out a large-scale project, we often partner with a local utility. Many of our renewables projects are actually at the request of a local util-ity. We want members to know that we’re here to work with the utility industry, and we have no plans to be isolated or disconnected on a permanent basis.

We are aware there will be disruptive changes in certain energy markets in the near future like renewables, smart grids, and smart transmission. We’ll continue to work closely with utilities during that time of change.

ARE NEW TECHNOLOGY OPTIONS LIKE THE SMART GRID AND MICROGRIDS CHANGING THE FACE OF PROVIDING ELECTRICITY FOR THE ARMY?

Absolutely. The Army has a number of investments in smart grids and microgrids across its installations, includ-ing Ft. Bliss, Texas, Ft. Sill, Okla. and a program at Ft. Carson, Colo., where we have the largest grid-to-vehicle charging capacity in the country right now. The advantage we see for the smart grid is the ability to meet critical mis-sion requirements during a large outage. We see on-site microgrids and some on-site power generation as impor-tant for sustainability, but we want to design it to provide

services to local utility partners as well. Additionally, we want to work with utilities to provide power that the utility would value within demand response and regulation mar-kets. This extra power could be valuable to the utility and could be monetized, creating value for the Army as well.

ARE THOSE SAME TECHNOLOGY ADVANCEMENTS CHANGING THE ROLE OF YOUR JOB?

The exciting thing about energy is, across the board, all the technology is advancing: building technology, mi-crogrids, and renewables. However, what microgrids cause us to do is to be more focused on the topic of energy secu-rity and the services that a microgrid can provide in this dimension. It’s often difficult to quantify the value of energy security. This focus on what energy security is and how to value it just emerged over the last couple of years.

ARE THERE FUTURE ENERGY ISSUES THAT THE ARMY IS PREPARING FOR RIGHT NOW THAT MAY SURPRISE PEOPLE?

For the Army, energy is part of a broader concept of sus-tainability. We’re looking to energy, water, waste, transporta-tion, and walkable communities to see how we can achieve our mission and preserve options for the Army of the future by making energy-informed decisions today. We’re look-ing at installations and how to make them viable over the long term. This planning includes climate change. Climate change is real and will have increased effects over time. The hot places will get hotter; the dry places will get drier, and the wet places will see a lot more rain. This impacts us in ways beyond the realm of energy costs and speaks to the basics of our core mission as well. Climate change has and will continue to directly affect our training environment. Drought increases fire hazard, which in turn prevents train-ing with live ammunition. We’ve felt the effects in the West and Southwest already. We can plot and prove that is related to climate change; this is not a one-off. There are dozens of other Army-specific indicators of climate change as well. They’re based on science, fact and observable changes. Some may be surprised that we are preparing diligently for climate change [given that it is still controversial], but it’s an impor-tant part of our overall plan.

More information is available at www.Army.Mil/ASAIEE.

SUBJECT:RICHARDKIDD,DEPUTYASSISTANTSECRETARY(ENERGYANDSUSTAINABILITY)ORGANIZATION:U.S.ARMY

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PREDICTIONS


SUBJECT:NOELSCHULZ,PRESIDENTORGANIZATION:IEEEPOWER&ENERGY

SOCIETY(PES)

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HOW DO YOU SEE IEEE PES EVOLVING OVER THE 2014-2020 PERIOD?

First, we need to package technical materials and training so they can be utilized beyond the traditional face-to-face dynamic we’ve had in the past and that has always been part of our heritage. There are people without the funding or opportunity to travel. So, we must develop a distribution system that reaches those masses.

The interesting thing about electric power, unlike other engineering fields, is that it’s everywhere. You can have power engineers in every county of Kansas [where Schulz is] or all over the world. So, how do we disseminate best practices and opportunities for advancement around the world? How do we include those masses as we develop standards? We must figure out how to get those folks involved through teleconferencing and social networking websites. That’s one of the big evolutions for the IEEE PES.

The other big one is a paradigm shift in workforce. In the electric power industry, we’re very top-heavy with senior engineers who did a lot of great things in their careers, but those careers are mostly over. Now, 20-50 percent could be retiring in the next 5-10 years. After that, we’ll have a very different workforce. This leads to a lot of questions: How do we adapt to an engineering world with less mid-career management? How will young engineers cope with these changes and get up to speed: Where are those tools? And, how do we capture the knowledge that’s leaving? This is the largest challenge I see over the next five or six years.

HOW HAS IEEE PES BEEN WORKING ON THAT CHALLENGE?The IEEE PES has been very proactive in the U.S. over

the last several years, especially in the area of scholarships, internships and mentoring. We’re now working to package programs internationally. Our goal for 2013 was to develop pilot projects in Europe, the Middle East, Africa, Central/South America, and the Asia Pacific region. It’s all really a grassroots effort.

HOW DO YOU SEE THE OVERALL INDUSTRY CHANGING DURING THE 2014-2020 PERIOD?

We’ll continue to see new technology, such as EVs, impact that evolution. People who are bridges between

fields, such as communications, controls, computers and power systems, will have great opportunities. You’ll see more technically diverse teams approaching these programs. One of our challenges within IEEE PES is to help provide background on the power system as a platform so that those teams can work more efficiently.

HOW DO YOU SEE THE ROLE OF WOMEN IN POWER CHANGING IN THE FUTURE?

It’s been an interesting dynamic. I’ve been on the board of the IEEE PES for 10 years. There were two women when I started; now there are five on the board. Honestly, by not having more women involved, we’re trying to do the job with only part of the resources. That’s a disservice to all. On the positive side, particularly in developing countries and in areas where

we want to develop power solutions, you see a lot of women taking on development roles.

Making a difference in the world—making sure the social impact is understood and evaluated—is more evident in women engineers and the younger generation. They want to make a difference. Women look at those aspects a little more.

WHAT’S THE BEST ADVICE YOU’D GIVE ENGINEERS ABOUT MANAGING THEIR CAREERS TODAY?

To the managers/senior engineers, I’d say: Look, those younger engineers are not you. It’s a culture shift, absolutely. But, young engineers are sponges for information. Sometimes, they see that as being high maintenance, but it can be a real positive. Those kids want to learn.

To the younger engineers, I’d say: Goal setting is very important. Understand how to develop skill sets along the way. And learn a second or third language. Network and listen. Find a mentor. And, I hope they realize that it’s a very exciting time to be in the power and energy space right now. There’s so much opportunity to make a difference.

WHAT’S THE BEST ADVICE YOU’D GIVE RESEARCHERS IN THIS INDUSTRY?

Continue to work on storage. I tell my students if they can do storage, they can rename the college of engineering here after themselves. Yes, there have been incremental

“How do we adapt to

an engineering world

with less mid-career

management? How will

young engineers cope

with these changes and

get up to speed: Where

are those tools? And,

how do we capture the

knowledge that’s leaving?”

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HOW DO YOU EXPECT THE ELECTRIC UTILITY INDUS-TRY TO CHANGE OVER THE 2014-2020 TIME PERIOD?

We’ll become better at integrating smart grid tech-nologies so we can have an effective system of systems. Today, the technologies we’ve deployed are rather islanded and our thinking, engineering disciplines and businesses processes reflect traditional business silos.

Cybersecurity will become a bigger concern. We’ll increase investments to keep this critical infrastruc-ture safe. We’ll formalize cybersecurity rules and software’s role in utility cybersecurity solutions.

And, we’ll learn to create value from smart grid data. We’ll develop algorithms and visualization tools to derive high-impact insights from the data and use the insights to run our utilities better.

storage solutions, but a bigger, newer solution is needed with all this developing smart grid technology.

ALONG WITH BEING PRESIDENT OF IEEE PES, YOU’RE ALSO ASSOCIATE DEAN FOR RESEARCH AND GRADUATE PROGRAMS IN THE COLLEGE OF ENGINEERING AT KANSAS STATE UNIVERSITY. HOW DOES YOUR WORK AT KANSAS STATE GIVE YOU A FRESH ANGLE FOR YOUR IEEE WORK?

It’s taught me the importance of social media for networking: Twitter, Facebook, LinkedIn. I see that with the younger generation, and us older folks aren’t as good. It will probably take IEEE a little longer to do that, but it’s important. It builds connections. At Kansas State, I see what workforce is coming for the future, and that really allows me to help IEEE make changes and prepare for that younger set.

PREDICTIONS

IS THERE ONE ITEM THAT UTILITIES TRULY AREN’T PREPARED FOR THAT YOU SEE IN YOUR CRYSTAL BALL?

The biggest concern I have is utilities’ aversion to risk. We are extremely conservative and skeptical of everything. I don’t think we’re proactive enough to do a lot of radical thinking, and we need to do some radical thinking.

I’m not saying be foolish, but calculated risk—good risk—can help to come up with solutions faster. We’re not as agile as we need to be.

“Continue to work on

storage. I tell my students

if they can do storage,

they can rename the

college of engineering

here after themselves.”


SUBJECT:WANDAREDER,CHAIR

ORGANIZATION:IEEESMARTGRIDTASKFORCE

HOW DO YOU SEE IEEE EVOLVING DURING THAT SAME PERIOD?

IEEE entities have learned they must be nimble enough to interact and align with one another to pursue these opportunities. And, IEEE’s global profile will grow, especially in standards development.

Finally, IEEE is modernizing its identity and voice. IEEE’s audience today includes non-engineer professionals and others interested in technology.

HOW DO YOU SEE THE ROLE OF WOMEN IN THE POWER INDUSTRY CHANGING IN THE FUTURE?

Women are well suited for the power industry. They’re usually collaborative in nature, able to understand the big picture and analyze complex systems. Today in the United States, women hold just 24 percent of STEM jobs and fewer power industry jobs. We can change that.

We must get more girls to study math and science, increase awareness of power-related careers through the IEEE PES Scholarship Plus Initiative (http://www.ee-scholarship.org), and enable women to contribute more by fostering inclusive cultures and providing developmen-tal opportunities. All three strategies must oc-cur in parallel if we’re to benefit from women’s capabilities and thinking and support diverse contributions in the workforce.

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WHAT DO YOU SEE AS THE MAJOR HURDLES FOR THE POWER INDUSTRY 2014-2020 IN EUROPE?

Europe today is facing the fundamental challenge of shifting from a system of large-scale, centralized, predictable power generation to a system in which generation capacity is becoming more decentralized and intermittent. This is largely driven by the EU’s climate ambitions, according to which the share of renewables in the power system will increase to 35 percent in 2020. How do we ensure that this continued increase of solar and wind power doesn’t disrupt the system? And how can we limit the impact on affordability and competitiveness of European industries—while still ensuring that we meet Europe’s decarbonization objec-tive? Providing answers to these questions will require

a fundamental rethink of today’s system and market design. That is where we as EURELECTRIC come in: to bundle expertise from across Europe and propose sound and realistic ideas on how to address these issues.

HOW DO WE OVERCOME THOSE HURDLES?

I strongly believe that the challenges we see can only be tackled through simultaneous action on several fronts. First and foremost, the EU needs to complete and consolidate its planned internal energy market. This means setting EU-wide rules and standards, building interconnections across national borders, and crucially, ensuring that national initiatives do not undermine the spirit of a European-wide electricity market. It will make the energy system more efficient, ensuring that capacities will be built and used where it actually makes the most economic sense—solar panels in sunny Spain, say, or wind turbines in the North Sea. Second, we need to revisit today’s market design, which in many places is not providing the right signals for power companies to invest in sufficient back-up capacity for days when there is no wind or sunshine. Third, we need to consider what the changes mean for the downstream side of our business. For instance, smarter grid infrastructure could


SUBJECT:HANSTENBERGE,SECRETARYGENERAL

ORGANIZATION:EURELECTRIC

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PREDICTIONS

pave the way for more data-driven distribution grid man-agement, allowing grid operators to integrate small-scale local generation into the system. At the same time, more and better data would also mean more and better deals for customers. So yes, we are facing challenging times, but they are also very exciting.

Hans ten Berge is secretary general of EURELECTRIC, the Brussels- based association of the European electricity industry. More information on EURELECTRIC is available at www.eurelectric.org.

SUBJECT:MICHAELJ.KORMOS,EXECUTIVEVICEPRESIDENT,OPERATIONS

ORGANIZATION:PJMINTERCONNECTION

WHAT DO YOU SEE AS THE MAJOR HURDLES FOR THE POWER INDUSTRY 2014–2020?

The projected low load growth in the U.S. could have significant implications for the many companies whose rev-enues are tied to load and load growth. Many factors affect load growth, with significant impact coming from a slug-gish economy and energy efficiency. But, there are other factors, too, such as distributed generation. If we continue to see distributed generation become more economically viable, growth in renewable resources and in other new technologies, our industry will have to look at a variety of solutions and strategies to ensure revenue adequacy.

Without a doubt, the electricity industry is being im-pacted immensely by the fundamental shift in the base load generation mix. Low gas prices and an abundant gas supply, combined with stringent environmental policies in the U.S., are driving the change from coal-based to gas-based genera-tion and contributing to coal plant retirement decisions. There also are possible impacts to nuclear generation, which is causing some uncertainty in the future of nuclear energy.

HOW DO WE OVERCOME THOSE HURDLES?Throughout history, many industries have been chal-

lenged by economic issues and technological advances that threatened their success. The electricity industry today is no different as we are faced with myriad changes. Innovations and new technologies designed to advance our industry also require us to consider different structures and new ways of looking at our business. Many companies will be challenged to examine their business models, find alternative revenue streams and determine new, innovative ways to add value

that are not necessarily tied to load and load growth. Regulators are going to be challenged, too, as the industry

examines the traditional model of “cents per kilowatt-hour used” since this is the most prevalent way in which many companies generate revenue today in the U.S. There will be regulatory issues to consider to ensure everybody is pay-ing appropriately for the value the grid provides. A simple “cents per kilowatt-hour used” model may not be the right way going forward.

Michael J. Kormos is the executive vice president of operations at PJM Interconnection. PJM ensures the reliability of the high-voltage electric power system serving 61 million people in all or parts of 13 states and the District of Columbia, and more about PJM can be found at www.pjm.com.

SUBJECT:BENJAMINBEBERNESS,CHIEFINFORMATIONOFFICER

ORGANIZATION:SNOHOMISHCOUNTY

PUBLICUTILITYDISTRICT(SnoPUD)

WHAT DO YOU SEE AS THE MAJOR HURDLES FOR THE POWER INDUSTRY 2014-2020?

I see four major hurdles:• Energy conservation. Much of the low-hanging

conservation fruit, such as the replacement of incandescent light bulbs, is gone, and the difference in energy savings between CFL and LED bulbs isn’t as significant. Utilities are going to have to work harder to find energy conservation opportunities.

• Demand response. Utilities will have to understand the technologies and capabilities, as well as their potential, based on their unique customer characteristics.

• Energy storage. Energy storage solutions are needed to unlock the full potential of intermittent renewable energy sources, such as wind and solar.

• Cybersecurity. A sharp increase in cyber attacks tar-geting the power industry, along with the proliferation of computing devices in the field to support smart grid initiatives, will require utilities to rethink cybersecurity.


• Energy conservation. Implement cost-effective energy conservation measures. Conservation remains the Snohomish County PUD’s resource of choice for

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meeting load growth. Successful conservation programs will provide a variety of cost-effective programs that help customers of all types use energy more efficiently.

• Demand response. Conduct a thorough situational scan of demand response technologies and applica-tions. Utilities need to establish and utilize a demand response valuation methodology. Additionally, they need to use the methodology to stay on top of tech-nologies, programs and their benefits.

• Energy storage. Evaluate energy storage technologies and execute the Modular Energy Storage Architecture (MESA) project. At SnoPUD we have partnered with 1Energy to develop and field test modular battery storage prototypes and enable a wide range of technology suppli-ers—battery and power conversion manufacturers, equip-ment makers and others—to deliver the scalable, interop-erable solutions required by the modern power grid.

• Cybersecurity. Cybersecurity standards, while itera-tive and improving, cover the basic security of utilities. That might get you 80 percent secure. Another 19 percent must be addressed by good internal practices, through existing programs like the DOE ES-C2M2 maturity model, and also through robust information sharing from government to utilities, utilities to gov-ernment, and utilities to utilities. The final 1 percent is what we can’t anticipate or protect against, and that will result in operational consequences. For that final layer of protection, utilities need robust response and recov-ery plans that include sharing of information and other mechanisms to protect against vulnerabilities.

Benjamin Beberness is chief information officer for the Snohomish County PUD, the second-largest publicly owned utility in Washington and 12th largest in the nation. He can be reached directly at [email protected]. Learn more about the Snohomish County PUD at www.snopud.com.

SUBJECT:MIKESMITH,VICEPRESIDENTORGANIZATION:UTILITYANALYTICS

INSTITUTE


A few leap out at me. First is the rapidly changing util-ity business model. If the utility industry does not grasp the changes in the traditional central station generation-transmis-

sion-distribution-customer model quickly, the train will have left the station. With the growth we are seeing in renewables and microgrids, it is only a matter of time (and innovation) be-fore the current model becomes obsolete. Utility leaders need to experiment and embrace new business opportunities to survive and deliver value to their many stakeholders. A second challenge is continuing to extract value from the massive intel-ligent infrastructure investments that many utilities have made over the last five years. This search for value typically leads to innovations in the use of data and analytics where new appli-cations are developed seemingly every day, often transforming decades-old business processes.

HOW DO WE OVERCOME THOSE HURDLES?For the challenges inherent in the changing business mod-

el, the regulatory construct needs to change (how utilities get an ROA and ROI) and utility leaders need to look at current threats (rooftop solar, for instance) as opportunities. In terms of the use of data and analytics, utility leaders need to think beyond the “lessons learned” aspects of data and start apply-ing these lessons learned predictively (replacing transformers before they fail, for instance). There is a growing community of analytics thought leaders that are literally transforming their business functions, realizing significant improvements across financial, customer, and operations metrics.

Mike Smith is vice president of the Utility Analytics Institute. More information can be found at www.utilityanalytics.com.

SUBJECT:BILLGAINES,DIRECTOR/CEOORGANIZATION:TACOMAPUBLIC

UTILITIES


One of the largest challenges I see is the greatly increased interest and influence of policymakers, legislators and regula-tors, who in turn are influenced by narrow interest groups and others who lack a holistic understanding of the industry and/or are attempting to legislate their business plans. While there is certainly a need for regulation and modernization, the electric industry is not one that can easily and quickly respond to social, political and environmental trends and mandates.

Planning horizons and asset lives for electric utilities are very long, and capital intensity is very high, so adding new requirements with expectations that they can be

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met immediately doesn’t work well and can significantly increase costs to consumers.

As an industry that is fundamental to the national econ-omy and to public welfare, the electric industry needs to be able to operate from a stable foundation. It cannot function as it should when regulations and requirements are chang-ing and unpredictable, and when expectations are based on near-term thinking, philosophies that are not durable over time, and subsidies that distort economic signals.


The electric industry needs to be a much larger part of the conversation when changes are proposed. There are many great ideas, but not all of them are well aligned with the industry’s customer service and cost minimization ethic. Rather than policymakers doing something to the electric industry, change should be considered in much closer collaboration with the industry. Utilization of industry

experts with decades of practical experience would result in profoundly better policy and would help minimize un-necessary costs for customers.

SUBJECT:JIMMYAUTRY,SENIORVICEPRESIDENT

ORGANIZATION:FLINTENERGIES


One hurdle is the lack of understanding on the part of electric consumers as to the real potential of renewables

PREDICTIONS

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Low-carbon energy sources meet around 40% of the growth in primary energy demand.

Nearly half of the net increase in electricity generation comes from renewables.

90% of energy demand comes from emerging economies.

Energy demand growth in Asia is led by China fi rst, then India and Southeast Asia (after 2025).

India becomes the largest importer of coal, but future global demand uncertain.

U.S. almost to goal of meeting energy needs (in energy equivalent terms) domestically.

Gas demand rises by almost half.

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to displace other forms of power generation, especially coal. While much of the mass media coverage focuses on “getting off the grid” with renewables, I have not seen a single mention of the investment or land necessary to have renewables replace even a small fraction of our coal-fired generation. And reporters have focused even less on the true costs of renewables on the consumer’s electric bill.

HOW DO WE OVERCOME THOSE HURDLES?Communicate the land area and the investment needed

to use renewables to replace just 10 percent of the coal-fired generation in the United States. From one Arizona exam-ple, it would take about three square miles of solar collector mirrors to build 280 megawatts of generation. 280 mega-watts is just over half of the needs of the 86,000 members of Flint Energies. And we would still need to have generation for when the sun didn’t shine.

Jimmy Autry is senior vice president of Flint Energies, one of the larger electric cooperatives in the country, located in Georgia.

SUBJECT:REBECCAHEROLD,LEADERORGANIZATION:SGIPPRIVACYSUBGROUP/

THEPRIVACYPROFESSOR


Effectively addressing privacy is a major hurdle. Too many in the power industry still don’t accept, or under-stand, that privacy is so much more than simply using encryption. [So, the first hurdle] is truly understanding the concept of privacy.

My focus since June 2009 has been on the privacy risks and impacts the smart grid, and all its many com-ponents and wide reach into the homes and electric cars of consumers, brings. I was asked by NIST back then to participate in their CSWG Smart Grid Privacy Subgroup, and I’m still leading it, but now it’s under the SGIP SGCC umbrella. When the group formed in June 2009, there were no utilities in the group, though many had been asked to participate (and it was free to join at that time). They generally simply dismissed that there was any possibility of related privacy risks. As time went on,

we would get one or two new utilities in the group every couple of months or so. Almost every time one of the new utility members would express their opinion that privacy issues were already addressed because customer billing was encrypted in their servers. One new group member, a lawyer from an energy lobby group, said at the first meeting he attended in 2010, “There are no laws governing the use of energy usage, so there are no privacy issues related to that data. Case closed! The work of this group is now done!” Well, he had a lot to learn about privacy. Now the utilities that are members of our group understand that there are broad privacy issues to resolve, and they are very cooperative in getting the issues effectively addressed. However, those outside our group still have a long way to go with understanding all the work that needs to be done to ensure privacy within the smart grid.


There are several actions we need to take:• Every entity within the smart grid needs to perform

privacy impact assessments (PIAs) as they plan, and after they implement, their systems, components and processes. I’ve helped many organizations to perform PIAs over the years, and they have all discovered issues they had not known existed prior to the PIA, making them well worth their time to perform.

• Utility executives, utility boards, and standards-mak-ers need to make some time to learn about and have a solid understanding of privacy concepts within the smart grid.

• Teach smart grid architects and engineers, of all types, privacy principles, and how to build privacy protections into their networks, systems, and specific components.

• Provide ongoing education for all involved in creat-ing, implementing, and managing any portion of the smart grid.

Rebecca Herold has over two decades of information security and privacy expertise, is CEO of The Privacy Professor and the author of more than 15 books, including an upcoming one, “Data Privacy for the Smart Grid,” which will be released in 2014. She can be reached at [email protected] and more information about her can be found at www.privacyguidance.com.

Details on the work Herold does with the SGIP privacy subgroup—especially publications on standards, training and PIAs—are available at http://www.sgip.org/smart-grid-cybersecurity-committee-sgcc/#sthash.jJe9szDr.dpbs.

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PREDICTIONS


SUBJECT:HENRYS.KENCHINGTONDEPUTYASSISTANTSECRETARYFORADVANCEDGRIDINTEGRATIONORGANIZATION:OFFICEOFELECTRICITYDELIVERY&ENERGYRELIABILITY,DEPARTMENTOFENERGY

WHAT CHANGES DO YOU SEE IN U.S. T&D SECTOR IN THE 2014-2020 TIME FRAME?

We have seen several SGIG projects already starting to build new private projects on our public-private invest-ments, such as CenterPoint Energy and New York ISO. In addition, utilities we did not have the opportunity to part-ner with are creating projects that are informed by SGIG and SGDP work.

HOW IS THE OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY PREPARING FOR THOSE CHANGES?

Our office is the focal point for the federal government’s activities in electric grid modernization activities. Our priori-ties include technology development activities to strengthen grid reliability and resiliency, grid integration of renewables, demand response, energy storage, and distributed operation. We are also supporting projects in modeling and analysis to equip grid operators with better tools and techniques to make use of the large volumes of data being created by the installation of smart meters, distribution sensors, and synchrophasor technologies. Our programs also support the development of secure interoperability standards, so devices and systems can communicate with each other. We are also

involved in cybersecurity technologies to strengthen grid protections against cyber attacks. Our activities are carried out in partnership with utilities, equipment manufactur-ers, and system developers, other federal, state, local, and regional agencies, universities, and national laboratories.

HOW DO YOU SEE GRID MODERNIZATION DEVELOPING IN THE U.S. THROUGH 2020?

The number of intelligent, communicating assets both on the grid-side and the customer-side of the meter is increasing. Data and information are proliferating at the edge of the grid, and we believe that intelligent, coordi-nated action closer to the edge of the grid follows logically. The administration has prioritized the need for increased customer involvement with the availability of green button

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data to help empower customers to make informed energy consumption decisions.

WHAT SHOULD UTILITIES BE DOING RIGHT NOW TO MODERN-IZE FOR THE FUTURE?

There are dozens of promising technologies and applica-tions in transmission, distribution, metering, and on the customer side of the meter. While it’s true that one size does not fit all, peer experiences with cutting-edge technologies are accumulating.

For example, in electric transmission, synchrophasor technologies are being installed, thanks to the Recovery Act-funded smart grid projects. In distribution, automated feeder switches, capacitors, voltage regulators, and equipment health monitors are important technologies for grid modern-ization efforts. These devices can be used to reduce the fre-quency and duration of outages and support better control of voltage levels and reactive power management. Smart meters are opening up opportunities for customer participation in electricity. The application of new time-based rate programs, such as critical peak and variable pricing, are proving to be valuable tools for both customers and utilities.

HOW WILL THE SMART GRID INVESTMENT GRANTS CONTINUE TO FIT INTO THAT PICTURE FOR A MORE MODERN FUTURE?

The Smart Grid Investment Grant (SGIG) program proj-ects are nearing completion of the equipment installation phase. In the next year all of the equipment under the SGIG program will be installed, and we will “graduate” a class of highly experienced utilities and companies that could be ideal peers for the next generation of utility projects.

WHAT THREE AREAS OF DISTRIBUTION TECHNOLOGY DO YOU THINK WILL BE THE MOST IMPORTANT THROUGH 2020?

Outage management for reliability and resiliency is an important opportunity for most utilities. This includes sys-tems that can use data from SCADA systems, smart meters, line sensors, and customers to identify where outages have occurred, dispatch repair crews to the precise locations where they are needed, and keep customers informed of the progress of restoration activities so they can resume their normal routines as rapidly as possible. Another important and related opportunity involves expanding the capabili-ties of distribution management systems (DMS) to use information from many of the above-mentioned sources to operate the grid more efficiently and optimize applica-tion of new devices such as automated feeder switches and voltage controllers. Enhanced DMS can be part of the outage management equation but can also be part of the solution for fault identification and implementation of fixes to prevent them from becoming problems and causing outages. A third area involves the integration of renewables

and demand-side resources on the customer’s side of the meter. Systems are needed for managing the two-way flow of power in a safe and reliable manner. Also needed are tools and techniques for engaging customers and equipping them with systems for managing their own consumption and costs including in-home displays, programmable com-municating thermostats, and web portals.

WHAT TRANSMISSION CHANGES ARE ON THE HORIZON?

We believe that synchrophasor technologies present grid operators with tremendous opportunities to transform how transmission systems are planned, managed, and operated in the future. Real-time applications include wide-area monitoring and visualization, state estimation, voltage stability monitoring, frequency stability monitoring, oscilla-tion detection, disturbance detection and alarming, conges-tion management, islanding and restoration, and renewable energy integration. Off-line applications include post-event analysis and model validation. These applications will take several years to be implemented by control centers across the country. We work closely with the North American Synchrophasor Initiative and other stakeholders to get the word out and coordinate technical progress.

HOW WILL CYBERSECURITY INITIATIVES GROW AND DEVELOP?

Improving resilience of the electric power grid is a shared responsibility among federal agencies, state and local regu-latory entities, and industry partners. Because the majority of the electric power infrastructure is owned and operated by private utilities, partnerships between government and industry are essential. The Energy Department continues to invest in critical cybersecurity research and development to provide the industry with technology options it can use to help protect the energy infrastructure. The Department also works with federal partners and the private sector to promote best practices for cybersecurity and improve incident response.

HOW WILL DATA AND ANALYTICS FIT INTO THE BIGGER ENERGY PICTURE?

Like many observers, we expect data analytics to play an essential role in the grid of the future. Large volumes of data are being generated by smart grid devices at the transmis-sion and distribution levels, and on the customer side of the meter. Decision makers who operate transmission systems, distribution systems and customer systems need simple and easy to access visualization tools and actionable intelligence, which can be found in the data but only after appropriate algorithms and models have been developed.

More information is available at http://energy.gov/oe/office-electricity-delivery-and-energy-reliability.

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PREDICTIONS

AT THIS KEY JUNCTURE IN ITS BRIEF HISTORY,

SGIP 2.0, Inc., has become fully operational as a private entity focused on critical power industry issues most

relevant to our stakeholders, which include utilities, regula-tors, equipment vendors and integrators.

The challenges we’re addressing are familiar to everyone involved in grid modernization: cybersecurity, the inte-gration of renewable energy resources, gaps in standards, harmonization of global standards, consumer engagement and transactive energy—to name just a few.

SGIP 2.0, Inc. doesn’t need a crystal ball, however, to see 2014 with a degree of clarity. We’ve developed a strategy and structure to make tangible progress on power industry challenges—progress that will plant the seeds of value creation.

As a result, the power industry should see significant progress in hardware and software interoperability, man-agement of cyber security risk, utility-customer communi-cations and mutually beneficial programs, global harmoni-zation of standards and supply chain issues. We also expect

to advance current discussions on issues such as electrical vs. thermal storage, transactive retail energy applications and other topics.

A bit of background will bring us to SGIP 2.0’s current agenda and my predictions for how it will support the power industry’s efforts to modernize the grid. THE RECENT PAST

The Energy Independence and Security Act of 2007 directed the National Institute of Science and Technology (NIST—a branch of the Commerce Department) to form the Smart Grid Interoperability Panel (SGIP) in 2009 as a public-private partnership. SGIP’s charge: coordinate standards work to ensure interoperability and security as the grid is modernized.

Once SGIP developed a strategy and a structure, it transitioned in 2012 to SGIP 2.0, Inc., a member-funded organization that carried forth its predecessor’s original mission. The transition essentially put the power industry in charge of its own destiny.

++Ouragendaisawindowintolikelyoutcomesin2014

SGIP2.0andthenearfuture

By John D. McDonald

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I like the way our Executive Director Patrick Gannon, hired in 2013, described our work at our inaugural member meeting in November 2013: SGIP 2.0, Inc., Gannon said, “provides a framework for orchestrating the work behind grid modernization.” GOING FORWARD

Internally, we’ve organized our members into commit-tees and working groups to address industry challenges. In general, our stakeholders want guidance on implementing cybersecurity, clear technology use cases, tools and applica-tions for customer interactions and the latest insights on substation automation, distribution system management, energy storage and updates on progress in the priority ac-tion plans (PAPs) that address gaps in standards.

Thus the work products we’ve slated for 2014 will take many forms, including conceptual models, interoperabil-ity road maps, smart grid requirements, use cases, white papers and a catalog of (relevant) standards. MY PREDICTIONS

If you’ve ever watched a conductor lead an orchestra with a baton, you’ve noticed the conductor creates no sounds, but you see and hear the result of his direction as various sections of the orchestra come to life. That’s a good analogy for how SGIP 2.0, Inc., work supports grid modernization.

A word on strategy: our strategic values are embodied in four catchphrases: accelerate, facilitate, navigate, com-municate. SGIP 2.0, Inc., is determined to accelerate the realization of interoperability benefits for grid moderniza-tion and, in the process, bring down costs through econo-mies of scale. We are here to facilitate both the educational process for stakeholders and the core, technical work that stakeholders must work on together. We seek to navigate stakeholder-specific road maps to illuminate our collec-tive path forward. We shall communicate the merits and impacts of interoperability for practical use by stakeholders.

My predictions are simple: as SGIP 2.0, Inc., and allied efforts make headway on these challenges, the industry’s conceptual discussions will become tangible reality. What we collectively accomplish in 2014 will indeed hasten the era in which grid modernization is realized.

The following bullets capture specific deliverables on SGIP 2.0, Inc.’s 2014 agenda, with a word on the broader impacts we anticipate.

• Development of a case study and training class in cybersecurity risk management that will provide a pragmatic approach to a complex, often confusing subject for all stakeholders.

• Publication of a white paper on smart grid cloud computing that will clarify the risks, costs and benefits for utilities.

• Collaboration with NIST and other federal agencies on a Smart Grid Supply Chain Awareness Guide to highlight risks for utility executives and inform them on cybersecurity procurement concepts.

• Development of interoperability experience case studies that address smart grid functionality, particu-larly around distributed renewable energy resources, volt/VAR management, dynamic pricing and electric vehicle charging.

• Contribute to the creation of a smart grid interactive Interoperability Mapping Tool, which can aid in the development and execution of utility-specific technol-ogy road maps.

• Build a directory of all industry test programs relating to smart grid standards, to ensure a common platform for utilities and equipment vendors to evaluate technol-ogy offerings.

• Develop an application or best practices guide to test smart grid systems and devices for interference from electromagnetic sources.

• Improve communications between utilities and resi-dential devices to facilitate demand response programs; adapt home appliances for energy management pro-grams and transactive energy markets; improve data ag-gregation and privacy; and implement Internet Protocol (IP) for home devices focused on energy management.

• Issue white papers on electrical vs. thermal storage and transactive retail energy applications.

• Identify use cases that illustrate the benefits of bi-directional weather data exchanges between utilities; survey current weather-related standards efforts; and harmonize the exchange of weather data among utilities adhering to independent standards.

• Align global interoperability approaches to facilitate common approaches worldwide.

• Identify and capitalize on opportunities to work with regulators on educational seminars.

SGIP 2.0, Inc., grew in 2012 from 88 members to more than 200, as various stakeholders grasped the power indus-try’s fundamental challenges and seized an opportunity to shape the future. We’re confident that our to-do list for 2014 will provide a more solid foundation for grid moderniza-tion by informing and empowering stakeholders with the tools and knowledge they need to fulfill the promise of a smarter grid. Accomplishing that will, in turn, provide the basis for economic vitality around the world.

We’ve put a pragmatic, step-by-step process in place, governed by fundamental strategies. The results will soon be tangible. No crystal ball needed here.

John D. McDonald is board chairman, SGIP 2.0, Inc.

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ANALYTICS

EVEN THOUGH WE’VE HAD SMART METERS FOR WHAT SEEMS

like forever now (I know, I know, not everyone has a smart meter, me included), I still think they’re pretty cool devices. And their coolness continues to grow through all of their uses with analytics. I love this utility story below as it highlights how utilities keep finding new ways to leverage meter data for their organizations. You can learn more about projects like this one through the Utility Analytics Institute’s Utility Project Profile Library. To learn more about the library, please visit www.member.utilityanalytics.com.

Project overview

The utility is using meter data analytics and data from its advanced metering infrastructure (AMI) to support a number of business needs. For example, the company:

• Implemented a conservation voltage reduction (CVR) scheme in response to a regulatory order. AMI data has enabled the utility to look at the voltage at the end point to ensure that voltage does not fall below tariff when taking steps to reduce voltage.

• Collects temperature data from its meters to proactively identify any hot sockets that might exist. If an installer misses a jaw with the blade during in-stallation, then temperature build up can occur and fires are possible as other utilities have experienced. Temperature data is being analyzed using statistics to isolate potential issues, and a crew is immediately dispatched to investigate whenever a meter temperature flag is tripped.

• Collects hourly consumption data as part of the CVR project. This data is aggregated and used to as-sess the load on each transformer and to identify any overloaded conditions.

• Offers a peak time rebate program that is the default pricing structure in parts of its service territory. If the utility calls a curtailment event and the customers reduce their loads beyond a certain threshold, then the utility pays them per kilowatt-hour for the amount reduced below the threshold. Customer thresholds are calcu-lated in advance using AMI data. (Three peak days from the past 30-day period are averaged to create a customer baseline). The baseline essentially becomes the customer’s bogey for each curtailment event. Some customers have saved a tre-mendous amount as a result (e.g., a farmer dispatched load from a backup generator).

• Plans to implement an electric ve-hicle pilot involving the deployment of 50 smart chargers. The utility will communicate with these smart chargers via its AMI network.

• Participates in a pilot that is deploying smart inverters for about 30 solar residential customers. The AMI network will be used to

The continued cool of smart meters

++How one utility keeps finding new analytics opportunitiesBy H. Christine Richards

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communicate with these inverters. The goal is to prove that transformer high-voltage issues can be mitigated by managing these inverters.

• Operates electric vehicle pro-grams in every jurisdiction. In two of these jurisdictions, the utility receives address-level DMV information on registered vehicles enabling it to screen for the ad-ditional load driven by electric vehicle chargers. This analysis is currently being done manually, and the utility has plans to auto-mate this process.

In short, there are a number of

analytics applications enabled by the utility’s smart meters and AMI. Some of the other applications include a synchrophasor program, integration of “last gasp” data from smart meters with the utility’s outage management system (OMS), and the utility is one of the more advanced utilities in terms of distribution sys-tem modeling related to intermittent renewables.

The utility has always considered analytics to be one of the five key fundamental steps necessary to move toward a smart grid, and these five steps are outlined below:

1. Deployment of intelligent end devices

2. Deployment of a robust commu-nications system

3. Deployment of integration of IT systems in order to move infor-mation around quickly

4. Deployment of analytics, en-abling the utility to listen to the system in an entirely new way

5. Real-time optimization of the grid Steps 4 and 5 are not possible until

Steps 1, 2 and 3 are completed. These five key steps have served to guide the utility’s efforts to deploy and leverage the potential benefits from a smart grid since deployment of the utility’s

AMI began several years ago. The drivers behind the company’s meter data analytics initiatives include those

things that it knows and those things that it does not yet know. There are individu-als who see analytics goals in a very pragmatic way and seek to address specific business issues using the data that is known to be available. Others view analytics in a more academic or experimental fashion and seek to gather and learn from information never known to exist though it can be hard to develop a business case around this approach.

Ultimately, the goal of meter data analytics is to show as much value as possible, as quickly as possible, from the investments made in AMI and a smart grid. The value needs to be demonstrated to customers, to regulators, and to investors. It is likely that this will include new discoveries. Perhaps the utility will gain a better understanding of the life cycle of assets and how to extend asset life. Perhaps it will be able to deter-mine with some certainty when a critical asset is going to fail. The overall objective is to make service interruptions less frequent and to deliver higher levels of reliability and service quality to its customers.

Technology

The utility is in the strategic planning phase when it comes to the selection and deployment of an analytics solution across the enterprise and the implemen-tation of a data governance model.

The data sources include, but are not limited to the following:• AMI meters • Distribution automation devices • SCADA data• Customer records• GIS data• Outage data • Third-party data, which may grow to include social media data, vegetation

management data, and so on Key data is integrated through an enterprise service bus enabling the data to be

moved quickly to the system requiring that data for processing purposes. For exam-ple, all of the operational data is being stored in a data historian. There is a data mart for certain OMS data and a separate database for GIS data. Subject matter experts access the data that they need via the appropriate system. Some operational informa-tion around reliability, such as regional outage information, is available on the utility’s website. An enterprise data warehouse is not yet part of the picture though it is being contemplated as part of the strategic evaluation currently underway.

Business process

The utility operates its electric grid as one of its enterprise processes. This process will most certainly be impacted by the meter data analytics initiatives described. Some of the other processes that will be impacted include:

• The customer relationship management process• The meter-to-cash process• The revenue protection process• The construct and maintain process The utility’s implementation of AMI required an investment of about $500

million. The utility has yet to receive any financial return from regulatory com-missions. The benefits achieved have thus far been in the form of customer

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ANALYTICS

benefits. This is part of the reason driving the utility’s use of analytics. Data analytics will help the company validate the benefits delivered by AMI. The busi-ness case that the utility presented to its regulatory commissions showed that the customer benefits would outweigh investment costs, so it needs to demonstrate the benefits achieved to obtain investment recovery.

Strategy

The utility essentially modified its overall corporate strategy around its decision to implement AMI and a smart grid. The company intends to be a leader in smart grid deployment. Analytics on the backend is considered essential to validate the decision to move forward with the implementa-tion of a smart grid and prove the value. Much like Paul Harvey would say, “Analytics is the rest of the story.”

People

Two individuals acted in the role of technology lead. The program manager for AMI deployment led the AMI implementation, and the manager of special projects is now leading the development and execution of the overall strategy to derive benefits from AMI and a smart grid.

Approximately 100 internal resources were engaged. The project team in-cluded IT resources and individuals supporting a variety of different business functions with titles ranging from analyst to senior vice president. Company resources developed the overall AMI and smart grid strategy, implemented that strategy with the help of vendor partners, and the utility plans to manage and operate its smart grid primarily by relying on internal resources.

Lessons learned

The lessons learned included in the following:• Nothing is shovel-ready. Some were under the impression that AMI and

smart grid technologies were ready to go and that did not prove to be the case. A significant amount of development was required to make it all func-tion correctly.

• There is a lot of work to do before an open standards-based architecture is in place that really operates as desired. Having a phone connection between the U.S. and France does not mean that one can communicate effectively; it is still necessary to speak the same language and the same can be said about equipment from different vendors. Specifying standards is not by itself enough to ensure that these systems can communicate. The equipment must be tested and communications must be validated.

• Ensure that the benefits of the technology can be demonstrated in a real and understandable way.

• Effective customer communications are essential. There have been instances where a lot of negative media attention resulted from ineffective customer communications. It is imperative that customers understand how to use the technology and/or see the value.

• Going first is not always best. Sometimes the pioneers get the arrows, and the settlers get the land. Stimulus funding accomplished largely what was intended by encouraging some utilities to move forward aggressively with AMI and smart grid deployment. The efforts of these utilities have served to be a rising tide that has raised everyone’s boats.

• So what is your utility doing with meter data analytics? What challenges and opportunities are you facing? I’d encourage you to check out some of our

resources for meter data analytics, including a recent report on the topic at www.utilityanalytics.com/research-reports.

H. Christine Richards was the research director for the Utility Analytics Institute for over two years. She recently left the Institute, which is a sister brand to IntelligentUtility magazine under the Energy Central corporate umbrella. We know Christine will be successful in whatever she does next, and we miss her already.

“There are a number of

analytics applications

enabled by the utility’s

smart meters and AMI.

Some of the other

applications include a

synchrophasor program,

integration of “last

gasp” data from smart

meters with the utility’s

outage management

system (OMS), and the

utility is one of the more

advanced utilities in

terms of distribution

system modeling

related to intermittent

renewables.”

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OPERATIONAL PERSPECTIVES

WHEN SUPERSTORM SANDY STRUCK THE EAST COAST

October 2012, the storm left billions worth of damages in its wake. Sandy’s 14-foot storm surge devastated parts of New Jersey and New York, leav-ing millions in the dark and a re-building process that continues today.

A decade from now, when Sandy is a distant memory, the storm will perhaps be remembered as a major impetus for technology innovation within the utility sector, especially when it comes to substation technology.

In Sandy’s aftermath, utility Con Edison was left with more than 1.1 million customers without power after nine of its substations and three facilities that generate steam for customers in Manhattan were severely flooded and damaged.

The utility quickly formed a response team to research new technologies, innovative engineering designs, and new operating strategies to prevent such severe damage from occurring again.

Despite damages that exceeded $500 million, Con Edison committed to de-ploying much of the new technology at its impacted substations by June 1—the official start of hurricane season.

Con Edison has poured $65 million into rebuilding its infrastructure and storm hardening the substations impacted by Sandy. The utility has budgeted to spend more than $1 billion for storm protection measures by 2016, which includes nearly a quarter-billion investment in the low-lying substations impacted by Sandy.

“We’ve made several benchmarking presentations to other utilities, and as far as I can see, many of the other utilities are still in the planning stages,” said Luciano Villani, a Con Edison department manager in project engineering. “I think it would be safe to say some of the attributes of our projects can be consid-ered leading edge. We’ve been told that by other utilities.”

The following is a look at some of the innovative engineering and cutting-edge high-tech solutions that have been deployed over the last 12 months, how they were achieved in such a short time, and what technologies are down the road. While the immediate focus has been on the substations damaged by Sandy, the entire process to storm-proof all substations will take about three years.

For starters, Con Edison set out to minimize the potential for water damage in

the future by successfully sealing the conduits that carry wires and conduc-tors from one substation to another. As Sandy’s storm surge rose, water that made its way into one substation trav-elled to other substations via open con-duits, resulting in further damage. Con Edison found a foam material that not only prevents water from entering the conduits, but serves the dual purpose of acting as a fire retardant as well.

The utility is also migrating from copper wire to fiber-optic technol-ogy for its control wiring, and will include fiber-optic in all future projects when possible because it performs much better than its cop-per counterpart.

In one of the more interesting improvements, the Con Edison team designed crucial changes for lift relay panels that typically sit at about three feet off the ground and were inun-dated with water during Sandy. Con Edison workers fabricated a solution that allows the relay panels to be moved to an elevation of 10 to 12 feet whenever a severe storm is in the fore-cast. The keys to the solution are the flexible connectors that are attached to the relay panels and allow them to be raised and lowered. The system was entirely designed by Con Edison’s engineering team.

While the current solution requires a station operator to turn a lever that raises the box, Villani’s team hopes to eventually automate the solution, which would be especially beneficial at unmanned substation locations.

“These three initiatives have received a lot of attention from our counterparts in the utility industry,”

What Sandy taught Con Edison

++Lessons from a superstormBy John R. Johnson

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said Villani. “They are certain to be utilized by other utility groups in a similar manner and are destined to become best practices.”

That will likely also be the case for the submersible 460-volt network protectors that Con Edison worked with manufac-turers to design. Because salt water has such a devastating effect on its 460-volt equipment, Con Edison expects to com-plete retrofitting all 405 of the 460-volt network protectors in flood zones 1 & 2 over the next four years.

“There has never been a submers-ible design in the past, and we’ve created that design, we’ve installed several and that will continue over the next three years,” said Kevin Davis, an engineer with Con Edison. “In many cases these network protectors are lo-cated right at the connection point to our customers, particularly our large high-tension customers.”

Villani says that it took a total team effort to expedite the internal review process of construction documents and to compact the purchasing cycle into six weeks. Construction was then completed in just two months, meet-ing the June 1 deadline.

“Our new substations and critical equipment are designed today well above new FEMA flood criteria,” said Villani. “We’ve always relied on historical records and we’ve always had our equipment above the largest storm ever experienced at each indi-vidual location.”

Many of the previous high water marks dated back decades to the hur-ricane of 1938, which ravaged Long Island and southern New England with 14 to 18 foot tides. Now, Superstorm Sandy has its own place in Con Edison’s history books and will forever be remembered for chart-ing a storm of technology innovation within the utility sector.

John R. Johnson is a Boston-based freelance writer specializing in alternative energy and technology topics.

HERE IN T-TOWN, WHICH IS WHAT INSIDERS CALL TULSA, WE

have a handful of tribal-based casinos within easy driving distance; heck, one’s even right here in town. The largest by far is the Hard Rock (connected to the Vegas-based franchise but owned by the Cherokee tribe). I reckon, however, that if you merged all of those conveniently-within-driving-distance casinos together in one spot, the resulting facility would be nowhere near the size of the Mohegan Sun Casino.

Owned and operated by the Mohegan Tribe of Indians of Connecticut, the Connecticut-based Mohegan Sun operates in an approximately 3.1-million-square-foot space, making it the second-largest casino in the United States. It includes more than 300,000 square feet of gaming space within three separate casinos, 130,000 square feet of retail space, a 10,000-seat Mohegan Sun Arena, 100,000 square feet of meeting and convention space and the approximately 1,200-room Sky Hotel Tower.

The power games started for the Mohegan tribe in 1996 when the tribe obtained its federal recognition and decided to go into the gaming business—and, by default, the power business. (For the casino, the tribe purchased property on the Thames River, which was placed into trust; that property no longer falls within the franchise area of a larger investor-owned-utility. So, the tribe created its own utility.)

That’s a lot of space, and running that space requires a lot of load—nearly 25 MW (with a peak load that can get near 30 MW). Keeping that giant casino’s

Here comes the Sun++A tribal authority gets smarterBy Kathleen Wolf Davis

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OPERATIONAL PERSPECTIVES

power structure up and running is the responsibility of an eight-man team known as the Mohegan Tribal Utility Authority (MTUA), with the reliability and revenue metering responsibilities going to the utility’s electrical engineer Paul Woronik. Woronik has worked for utilities in the public power and private arenas for over thirty years, but the tribal authority gig is differ-ent, more personal. (In addition to the electrical services, the MTUA also provides gas, water and wastewater utilities to the reservation.)

An expansion in 2001 pushed that utility past simply serving strictly the casino to servicing retail space and having more “customers” beyond those winners at the blackjack table. (And they serve tribal businesses, agencies and departments as well these days, including a tribal retire-ment home.)

“Suddenly, the MTUA was more like a ‘real’ utility,” Woronik said. “We needed to be able to measure and invoice for customers.”

“The Mohegan Tribal Authority, like any tribal authority I’d imag-ine, is about personal experience,” he added. “Public power and other areas of the industry may talk about how they are part of the community. Here, we ARE the community. There really is no separation.”

Paul talked to us about that city-sized load, its management, his one-hundred-plus GE polyphase meters, his new Tantalus utility meter reading ability and his back-up plan to keep all the lights on.

And keeping all the lights on at the second-largest casino in the U.S. does more than illuminate the floor. It keeps the games going.

Near the time of the casino build, the authority had put in a phone-based dial-up metering system. It served their purposes but had a few modem-related problems. Nearly a decade later, those issues, combined with an increasing failure rate for

components, a need to cover all services and a lack of software support for the original system sent the MTUA shopping for better options—leading to smarter meters and smarter meter reading.

They had a laundry list of wants: reliability with less manual recordings, more automation, a way to pinpoint outages, real-time data that they could use to track consumption and plan ahead (and investigate issues without those manual recordings).

And, while that experience of shopping for and installing new meters and sup-port systems didn’t teach Woronik anything new after all his years in the power business, it did reinforce a few things.

“The more homework you can do on identifying all of the details, the better the installation process will go. Doing the upfront work pays dividends on the execution end,” he added.

And the #1 item on the homework list: reliability. Sure, those modem issues could be dealt with, but that phone-based system didn’t help Paul conquer his biggest fear: What if the power goes out? What can he have on hand to help manage the shift to a back-up system smoothly, investigate immediately and help restore things quickly? He needed a smart grid upgrade to help with all that—and, perhaps, to save him some diesel fuel as well. (The MTUA regularly purchases power from the general market pool and does not operate generation. But, it does have a power infrastructure in its back-up system.)

Like a hospital, casinos have massive back-up systems. The one at Mohegan Sun may not save lives, but it does save money (at least, the money coming in through the casino floor). The casino’s back-up infrastructure is a set of diesel generators and enough fuel to run the entire massive space for a week nonstop. (And, yes, that’s a more significant investment than any hospital has probably made in its life-saving back-up systems.) For the casino, any outage can have a large impact on its 24/7 operation.

“This building has never been shut down,” Paul commented. “We never want to close our doors. So, we built an infrastructure to maintain our power reliability.”

Their new smart grid options allow the tribal utility authority to help with reli-ability while planning ahead for reliability in the future: to maintain and analyze for future growth.

As for advice to other tribal authorities looking for smart grid upgrades—for a casino, residences or other businesses on tribal land, Paul suggests doing the same thing he did: homework up front. Know your project. Identify your issues. And find a good vendor partner. (Paul was very happy with Tantalus since they came up with a cost-saving solution to utilize IP data collection for the tribe.)

And, if you don’t work for the Mohegan Tribal Authority, you’re missing out, according to Paul.

“I’ve been here 14 years, and it’s a terrific organization—absolutely fantastic to work for. We provide an essential service, and it’s been exciting.”

And that excitement will continue with another expansion on the books (a new hotel added to the facilities). But, Paul, his team, the MTUA, its new smart grid stuff and its back-up infrastructure are all ready. And, I guarantee you no mater what happens weather-wise, all will be calm inside the casino. After all, they’ve never closed that facility. They’ve got a better “come rain, come snow” track record that the U.S. Postal Service.

I told Paul that, if I’m ever in Connecticut when the power goes out, I’m driv-ing straight for the Mohegan Sun and having him put in a good word for me on the hotel side of things.

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EUROPE’S ELECTRICITY MARKET IS A MESS. THE CLASH BETWEEN

the European Commission’s desire for a single European market and national considerations of renewables targets, carbon emission reductions, price regu-

lation and “keeping the lights on” is profound and getting harsher.In effect, Europe has two power generation markets—one that is subsidized

and does not react to market signals, and one that is not subsidized and driven by market forces. The growing surplus of intermittent wind and solar is a nightmare for utility companies for many reasons, and the problem is only going to get worse for Europe’s transmission and distribution system operators.

With 230 GW of wind and 120 GW of solar expected to be installed in the European Union by 2020, things have got to change. Utilities say the only solution is the complete integration of renewables into the market, and this must be done urgently.

This is easier said than done. Unlike the U.S. and FERC, the European Union has 28 member states with 28 governments, electricity regulators and national grid companies, not to mention collectively thousands of distribution network opera-tors (DNOs). Each country works to its own interest and so harmonizing electric-ity policy is almost impossible.

While the Commission seeks to turn Europe’s 28 national power grids into effec-tively a single grid with power traded freely across it, plans by Member States such as Germany and the UK to introduce capacity markets risk the viability of such a uni-fied system. Yet the world where European generators could calculate their business case by being certain of 6,000/7,000/8,000 hours of operation has gone.

Capacity markets are arguably justified in countries where there is too much renewable generation, insufficient conventional generation and where the grid is inadequate, and so the Commission has a battle on its hands to keep the single European market project on track, despite a growing surplus of 100 GW above peak demand in normal periods. The battle may already be lost.

Klaas Hommes of Dutch TSO TenneT BV sees great upheaval in the European energy market. “Feed-in tariffs are disturbing the market across Europe. An excess of solar power in Germany suppresses power prices in the Netherlands, meaning gas-fired and even coal-fired power plants are increasingly out of the money.

This is symbolized by the transfer in 2013 of a generator from the Enecogen combined-cycle gas turbine plant in Rotterdam, which had been operational for little more than a year, to Israel Electric Corporation’s Gezer gas plant near Tel Aviv, located some 2,000 miles away,” said Hommes.

“We see the strengthening of the energy-only market and complete European market integration of renewables as the only answer,” added Hommes. “However, we are really concerned at the speed of progress.”

Hommes sees the need for more flexibility due to the greater challenges in balancing from one hour to the next. Furthermore, the increased flow from

northern Europe to southern Europe and from Central Europe to Northwestern Europe will increase pressure on grids not designed to do so.

“The European market is no longer a day-ahead market, it is increasingly shifting to a near real-time market,” said Hommes. “This will require more cross-border cooperation and own-ership of TSOs, more coordination between grid and generation and more system support services to be delivered by DNO/DSOs and third-parties.”

Hommes sees a greater role for ancil-lary services, with even a role for wind and solar power to provide active power, if not reactive power for voltage control.

Meanwhile, the need for grid invest-ment continues apace. The European Network of Transmission, System Operators for Electricity (ENTSO-E) expects 100 bottlenecks on the European transmission system by 2020, requiring a 17 percent increase in grid investment worth 104 billion euros, equivalent to 52,300 kilometers of wire. Whether this investment will actually be forthcoming in an “austerity era Europe” is another matter.

Longer term, ENTSO-E’s eHigh-way2050 project is actively explor-ing the development of ‘electricity highways’, or transmission lines with significantly more capacity to transport more power than existing high-voltage lines in the AC grid.

If there can be any certainty about Europe’s electricity sector thru 2020, it is that the role of DNOs will become something akin to a DSO (distribution system operator). This is seen as crucial if Europe is to successfully integrate the ever-increasing growth of distrib-uted generation, said David Trebolle, manager of Spanish DNO Gas Natural Fenosa’s active networks and control systems and chairman of Eurelectric’s DSO network codes technical group.

“Passive distribution networks will evolve to active distribution systems,” he said. “System services like conges-tion management, voltage control,

Europe’s electricity market toward 2020

++AcontinentatacrossroadsBy Tim Probert

INTERNATIONAL

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FOR THOSE NOT WELL VERSED IN EUROPEAN GEOGRAPHY, Slovenia (or Slovenija) is nestled in south central Europe, hemmed in by

Italy, Austria, Croatia and Hungary. Part of the European Union (EU), the coun-try has a population just a shade above 2 million.

Power in Slovenia mostly comes from hydro, thermal and nuclear with con-sumption numbers around 12.6 GWh in 2011. We spoke with Andrej Šajn, CIO and a member of the management board of GEN-I, a power player in the coun-try, about the power industry in Slovenia and in the EU, along with new projects for GEN-I, a more retail-based neo-utility that works in trading, exchanges and the sale of electricity to consumers.

INTELLIGENT UTILITY: HOW WOULD YOU EXPLAIN THE POWER STRUCTURE IN SLOVENIA TO FOREIGNERS?

ŠAJN: There are two state-owned (but nevertheless competing) production pillars, together controlling roughly 80 percent of the Slovenian power produc-tion capacities. The rest are independent and smaller producers, along with an independent transmission grid operator and five distribution grid operators—all 100 percent state-owned.

Utility2utility++GEN-I (Slovenia)

INTERNATIONAL

information exchange, connection and planning are fundamental tools to maintain security of supply and quality of service at the distribution level. We will have new grid codes and ancillary services along the way.

“Real-time and near real-time networks are becoming more of a challenge. This will mean more opex spending as opposed to capex spend-ing, and this will need a change in the regulatory regime. For this change to happen, better coordination between TSOs and DSOs is a must.”

Peter Styles, chairman of the European Federation of Energy Traders’ electricity committee, says an inevitable change to the way renewables are supported—from feed-in tariffs to quotas or certificate schemes—will open up new market opportunities. “With market-based mechanisms, there will be exposure to negative prices for renewables producers, meaning they will be subject to re-dispatch, possibly easing the path toward a new type of interruptible contract,” he said.

“National renewable schemes will require cross-border validity and thus reform of existing national renew-able schemes will be necessary; cases currently before the European Court of Justice may accelerate this change,” he added. “For the future benefit of renewables, the Commission will revisit whether it will have grid prior-ity access and dispatch, and whether renewable generators are immune to grid congestion management mecha-nisms. Exposure to balancing respon-sibility for renewables generators will open up the possibility for virtual power plants operated by owners of a mixture of types of plant and better return on investment for storage and demand response.”

Tim Probert is a London-based freelance writer with a focus on European power markets and new smart grid technology. He helms Millicent Media and can be reached at [email protected].

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With deregulation, distribution grid operators had to exclude parts of their businesses concerned with selling and trading electricity into indepen-dent daughter companies. Those, along with some independent players (private and state-owned) including GEN-I, form the competitive power market in Slovenia. So, there are no vertically integrated companies here, although some ownership and con-tractual relationships exist that could be considered a step toward vertical integration.

INTELLIGENT UTILITY: HOW DOES

THIS WORK INTO THE OVERALL EU STRUCTURE?

ŠAJN: Slovenia has been a part of the EU since 2004, and that reorga-nization of the power industry I just talked about was actually driven, more or less, from the EU as a prerequisite for entry. So, in this respect, we are aligned with EU structure and prac-tices. Maybe the main difference is size

(Slovenia is a very small country) and the absence of really large players in the form of big corporations (although not completely absent). But, nevertheless, we have everything the big ones have, and I argue we can do some things even bet-ter than the big ones. Because we don’t have to carry too much baggage, we can move fast and change direction quickly, thus overtaking or outsmarting competi-tion. And, I think GEN-I’s short but very exiting history is proof of that.

INTELLIGENT UTILITY: SO, LET’S TALK ABOUT GEN-I’S HISTORY. WHAT’S THE

GREATEST PROJECT YOU’VE EMBARKED ON IN THE LAST FIVE YEARS?ŠAJN: Well, first of all, you must understand that the origins of the GEN-I and

GEN-I Group can be traced to 2004 with the supply of our first customers. So, asking about the last five years is like asking what have you been doing in the second half of your entire life. In 2004, there were around 10 very enthusiastic young people full of ideas about how to take advantage of something completely new to our part of the world: energy market deregulation and liberalization. Our (I am proud to say that I was one of them) reasoning was quite profound, but, on other hand, quite plain. We set out to start supplying our initially exclusively B2B customers with cheaper energy than that provided by state-owned incum-bents with the aim of supporting the country and its economy making it more competitive. Of course, if we saw the possibility to earn a buck or two by doing something that we believed was fundamentally good we were just that much more motivated.

Today, GEN-I group is present in 19 countries (markets), we operate on al-most all power exchanges in Europe, and we supply more than 120,000 custom-ers ranging from large steel mills to households in five different countries. Our annual revenue is around 1.5 billion euros, and we employ around 250 highly

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INTERNATIONAL

skilled professionals in all mentioned countries. So as you can see almost ev-erything we did in last five years were great projects or investments.

From a business perspective, great projects happen every time we enter a new market or introduce a new prod-uct in our portfolio.

The greatest investment project right now is implementing a com-pletely new IT solution for meter data management, billing, invoicing, debt collection and portfolio management capabilities completed with CRM pre- and post-sales processes support and highly integrated into our central ERP system. In effect, we are performing a total makeover of IT tools used to support our end customer supply side of the business—consolidating it and upgrading it. The goal is to centralize as many of the processes as possible.

INTELLIGENT UTILITY:

WHAT BENEFITS HAS THAT PROJECT BROUGHT YOU?

ŠAJN: The project is still under way, but parts of it are already in full production. So, we can speak of some benefits. The main

one is consolidation (and thus reducing) the resources needed to maintain the solutions. The second: Centralization, central data collection and data warehousing, which will enable us to perform more sophisticated and comprehensive data mining and drill-down analysis across multiple markets, countries, products and commodities. In our business, forecasting is the name of the game and good forecasting needs good data, a lot of good data.

INTELLIGENT UTILITY: WHAT LESSONS HAS THAT PROJECT TAUGHT YOU?ŠAJN: For me personally, the biggest lesson was the real-life verification of a

theory from one of my professors at college: No matter how well you plan the time needed to execute a project, multiply it with pi and you are getting closer to a more realistic time estimate to execution. Of course, he was a math professor trying to prove to us, future power engineers, that even boring math constants such as pi have some more universal real-life meanings. I can safely say that after this experience, I am definitely better at time and resource management.

INTELLIGENT UTILITY: WHAT ARE YOUR PLANS FOR THE NEXT DECADE? WHAT

ARE YOU WORKING TOWARD?ŠAJN: Optimization and further consolidation. Our business enables us to do

it right because everything is done electronically. So, we are very much like a bank, insurance company or brokerage house in that respect. We will keep grow-ing our business thus adding customers, markets and products to our portfolio. We will strive to be on the lookout for new technical and IT solutions to handle big data challenges as efficiently as possible.

To be more specific, the next investment project in our portfolio for 2014 is a similar IT makeover for our wholesale trading division with pretty much the same goals and expectations.

INTELLIGENT UTILITY: ONE FINAL QUESTION, SINCE THIS ARTICLE IS FOR OUR

PREDICTIONS ISSUE, HOW DO YOU SEE THE ENERGY MARKETS IN SLOVENIA (AND OVERALL THROUGHOUT THE EU) CHANGING IN THE 2014-2020 TIME FRAME?

ŠAJN: The EU started the liberalization process on energy markets 10 to 15 years ago. However, what we now observe is that the EU policy with its 20-20-20 goals (reduce EU greenhouse gas emissions by 20 percent lower than 1990 emissions levels, derive 20 percent of EU consumption from renewable resources and increase energy efficiency by 20 percent) by 2020 so far is not producing the expected results. Greenhouse emissions fell at first but have been on the rise since 2009 as the EU is overcoming financial and economic crisis, and the CO2 market is not functioning properly. Supporting schemas for renewable resources caused a surge in renewables production but highly influenced the commodity price on the electricity market—creating rising prices for end consumers and thus impacting their global competitiveness. The consumption of primary energy as an indicator for energy efficiency has fallen significantly, but since 2009 has risen sharply due to the post-crisis restart of EU industry.

Currently, we are facing a situation that is not sustainable. In order to solve these issues, additional administrative measures are expected, which drives us toward market reregulation and away from the initial goals of deregula-tion. The challenges are great, and profound structural changes are needed to overcome the current situation. But, one thing is sure: EU energy markets in 2020 will be significantly changed. And, what goes for the EU, goes for every EU member state.

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DURING THE 8TH ANNUAL KNOWLEDGE CONFERENCE IN NOVEMBER

2013, we gathered representatives from the utility space to discuss their predic-tions for 2014-2020—and how their roles will be changing with those times.

Roundtable panelists included: John Fitzgerald, executive director, informa-tion technology, Westar Energy; Lynn Lovelady, vice president of information technology, Energen; Cristina McQuistion, vice president, strategic planning, performance improvement and CIO, OG&E; Craig MacGibbon, vice president and CIO, UIL Holdings; Cindy Berger vice president and CIO, Arizona Public Service; Doug Petitt, CIO and vice president of IT and customer service, Vectren; and, Barbara Sugg, vice president, IT, Southwest Power Pool.

INTELLIGENT UTILITY: THINKING ABOUT 2014-2020 IN YOUR PARTICULAR BUSINESS, WHAT TRENDS DO YOU SEE COMING UP FOR THAT TIME FRAME?

MACGIBBON: The biggest issue for the industry overall may be renewables. People will install their own solar, their own power generation and that impacts all of us. How are we going to provide the infrastructure to support this, and how will we negotiate the costs of that? From an IT perspective, how do we monitor and manage that? How do we get the right information flowing to those people making decisions?

BERGER: Rather than the new of renewables that Craig mentioned, we’re more concerned with the old: Aging infrastructure, aging people, aging systems is my take on what our company will deal with through 2020. And, as a company, how are we going to change our business models and our approaches with all those aging assets that require replacement or repair?

PETITT: Building on Craig’s look at the future, there are incremental costs associated with allowing distributed generation, including renewables, onto our systems. There’s also a stranded cost issue. On top of that, especially in the Midwest, we can see a potential sunset for coal-fired generation, which speaks to Cindy’s aging infrastructure point.

On top of all of that, so much of what we, as utilities, do in our daily lives will be dictated by what the customer wants—more so than ever. The millennials will be the largest generation we serve. They’re going to drive how they want to interact with us. That’s new and different—and difficult.

SUGG: I think trying to be a little bit more flexible on many fronts is the key to surviving this time frame. For us, being platform agnostic will be more and more important. Our road map includes the flexibility to evaluate different vendors, different solutions, different platforms and find less risky ways of bringing some of the new technologies, the new offerings into the workplace—not being so dependent on one particular vendor. Right now, we have only four or five that make up ninety-five percent of our current infrastructure, including the applications. That’s a little bit frightening, honestly.

CIOs, VPs eye the industry horizon

++Cybersecurity, customers, expanding IT all concernsBy Kathleen Wolf Davis

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LOVELADY: From an IT perspective what concerns me the most is the breadth of things that IT is respon-sible for, which just keeps expanding horizontally. Technology concerns such as cybersecurity consume more resources every year.

MCQUISTION: We, as an industry, are transitioning from an electromechani-cal business to a technology-centered business. For us [at OG&E], that means that some of the mindsets in IT—that we’re a service organization to the operating units, for example—must change. There isn’t an IT distinc-tion anymore, but, as Lynn mentioned, we’ve got more and more things to deal with daily.

LOVELADY: One thing we’ve done, Cristina, is move people around departments. In the past four to five years, we have brought in about a dozen people out of the business into IT. And, conversely, we’ve had five or six IT employees go into the business side, in a number of roles. And that’s helping us with [the mindset change].

MCQUISTION: We’re doing the same thing. We need to.

LOVELADY: Right. We all do. You have an IT advocate inside the business and vice versa. That’s been a win for us.

MCQUISTION: And for us, too. It’s about being “multi-lingual,” so to speak—knowing the multiple lan-guages of the utility.

MACGIBBON: I couldn’t agree more. I think one of the things that IT did as a disservice to ourselves was coming up with the “IT needs to align to the business” discussion. IT doesn’t have to align to the business because we are a critical part of the business. The other big trend is cybersecurity.

We’ve received help from Washington with standards and compliance. In addition to the various federal agencies’ involvement and oversight, we are seeing more involvement from the states, too. What will be the best way to navigate all of that? And how do we balance

protecting the grid and protecting corporate assets? Due to the increasing demands of cybersecurity, and all of the complexity we’ve all mentioned before, the role of IT will continue to expand.

FITZGERALD: To add to Craig’s comments here, I don’t look at IT as a central-ized environment anymore because it needs to be part of the business. We’re becoming more enterprise-level focused as opposed to siloed environments like customer care, distribution of power. That’s definitely where IT is going; that’s where the business overall is going.

As for cybersecurity, here’s an example: 15 years ago, I had one cybersecurity person. Now, I’ve got 15.

INTELLIGENT UTILITY: BUILDING ON THAT COMMENT FROM JOHN, HOW DO YOU SEE YOUR ROLE CHANGING IN THE NEXT THREE YEARS, IN THE NEXT FIVE YEARS, WITH ALL OF THESE NEW TRENDS AND ISSUES COMING TO A HEAD?

PETITT: I’m new to the CIO role. In fact, this is my third month, but I’ve been in the utility business for 25 years, mostly on the customer-facing side. And this business will be, in the future, all about where the customer’s taking us. I think that’s fairly unique. [Bringing a customer-focused executive into the CIO role] probably would not have been contemplated five or ten years ago.

MACGIBBON: As we go forward as CIOs, it will really be about highlighting the “I” in the “IO”—being those information officers. We’re getting so much data pumped into our organizations. A lot of it’s structured, a lot of it unstructured. How do we help the organization navigate through that data? How do we help will the decision-making? We’re already making good decisions, but how do we make even better decisions utilizing that data?

BERGER: Our role is going to be about driving the change within our organi-zations right down to the individ-ual business units. I don’t think we’re going to be confined to just IT. So, we’ll need to become experts at managing priorities.

PETITT: Is that another way of saying that we have to migrate from having internal customers to partners?

BERGER: Exactly.SUGG: I think that IT can take a

stronger leadership role in helping the business make good decisions. That’s really artful facilitation more than anything else. It’s not saying no, necessarily. It’s helping the busi-ness to understand when no is the best answer. Since IT, overall, is now leading the business, CIOs must take a stronger leadership role as the business becomes more reliant on IT as a partner.

This roundtable conversation continues in the Jan/Feb issue of EnergyBizmagazine (www.energybiz.com).

“Somuchofwhatwe,

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dailyliveswillbedictated

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LAST NOVEMBER’S KNOWLEDGE SUMMIT BROUGHT TOGETHER CIOs, CEOs and utility executives to discuss the major issues, hurdles and

accomplishments in three major areas: IT, customer service and operations. One of the major hurdles utilities faced in 2013—and have faced in the years before and will face in the years to come—is cybersecurity.

We asked ViaSat’s Brett Luedde, director of critical infrastructure protection, to answer a few questions on mission assurance, advice and lessons from the defense industry that utilities should take to heart.

INTELLIGENT UTILITY: HOW DOES YOUR EXPERIENCE WITH THE DEFENSE INDUS-TRY APPLY TO YOUR NEW WORK IN THE ELECTRICITY SECTOR?

LUEDDE: Over the past 10-15 years, the U.S. military has undergone a signifi-cant transformation in its communication, using highly networked systems and advanced technology in place of the old siloed command and control model. ViaSat has been an integral part of enabling the military to take full advantage of the efficiency gains and networked system architecture by providing the highest grade information assurance and secure communication technologies, as well as the most advanced cybersecurity monitoring, detection, and response systems. In recent years we have worked with the military and government to allow us to provide these capabilities to critical infrastructure owners and operators. We started working with the electric utility industry first because the electrical

grid is the most fundamental layer of infrastructure and the industry is facing the same daunting task that our military faced 10-15 years ago: going from siloed and non-networked systems to fully networked and secure, highly automated systems. We believe that we have unparalleled expertise in this area.

INTELLIGENT UTILITY: YOU OFTEN SAY THAT VIASAT DELIVERS A PLAT-FORM THAT GIVES “MISSION ASSUR-ANCE.” WHAT DOES THAT MEAN, AND WHY IS THAT SO IMPORTANT?

LUEDDE: It is a reference to our heritage with the military in provid-ing the tools, technology, and systems that allow our troops to achieve their mission goals. In the electric utility in-dustry for us it means something very similar and simple: enabling electric utilities to be resilient in the face of grid events, or more simply, keeping the lights on. Based on our experi-ence we know and understand that operationally there are many complex decisions that must be made with con-fidence based on an operator’s ability to trust the information it is receiving. Establishing the basis for that trust and giving the operators the ability to act quickly and decisively is critical. That’s what we mean by mission assurance.

INTELLIGENT UTILITY: WHY IS THE ABILITY TO VISUALIZE ALSO IMPORTANT?

LUEDDE: Because operators need trusted actionable information and situational awareness about their systems and equipment, and they need it in real time. With all of the advanced and intelligent devices being deployed in operational networks there is a glut of data. Literally terabytes of data that are really great for post-event analysis, but not very helpful when you have a handful of seconds to respond to anomalous or suspicious behavior in your systems. When you can see the network acting and reacting in real

Lessons on cybersecurity from the defense industry

++Via ViaSat

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time, with simple, highly effective visual cues, you can focus on what is happening, what you need to do to respond, and take that action quickly and decisively.

INTELLIGENT UTILITY: WHAT ADVICE WOULD YOU GIVE UTILITIES LOOKING TO SECURELY RETROFIT AR-CHITECTURES AND NETWORKS?

LUEDDE: This is a bigger issue with more complexity than you probably think. Your networks are systems of systems, and you need to really assess what you’ve got end to end before you can get to the work of adding security and deploying the right solutions. It is critically important that you have a clear picture of where you want to go and how to get there. Having said that, we understand that electric utilities are faced with evolving compliance requirements at the same time that they are hoping to take advantage of advanced automation technology and its promise of greater operational efficiencies. Without proper security that addresses how these devices will talk to each other securely, how the older assets with lots of good useful life remaining can talk to the newest most advanced devices, and establish-ing trust in the data, the full promise of automation technology can’t be realized. In addition, the newer de-vices and networked communication increases what we call the attack sur-face of your systems and operations. This needs to be addressed with a system that can monitor networks and identify threats whether they originate inside or outside your systems.

INTELLIGENT UTILITY: WHAT ARE UTILITIES DOING WRONG IN THEIR CURRENT APPROACH TO CYBERSECURI-TY WITHIN THEIR OPERATIONS? WHERE SHOULD THEY INVEST INSTEAD?

LUEDDE: Well, first off, let’s not focus on what utilities are doing “wrong” and rather turn the focus to the need to do more and to learn

to think differently about threats and vulnerabilities. All of the current IT-based security measures are good and necessary, but in our opinion they are not sufficient. Security must be thought of from a holistic perspective. A larger system of systems and practices that create multiple layers of defense and enables the company to deal with both known and unknown threats that originate inside the organization, outside the organization, or both. I think that utilities are beginning to understand this more and more, and are also coming to understand that security (or lack thereof) impacts their ability to deploy more advanced grid control equipment and systems, as well as being resilient to any kind of event.

INTELLIGENT UTILITY: ARE INTERNAL OR EXTERNAL THREATS MORE DANGEROUS FOR UTILITIES?

LUEDDE: They are both dangerous, and there are well-documented cases of both in the utility sector. It is a well-known fact that humans are typically the most vulnerable points in a company. Insider threats come in two types: inadver-tent (think spearphishing victims) and intentional (think disgruntled employees or former employees). External threats can range from natural disasters to kids just trying to solve a puzzle to hacktivists to nation state level sabotage. Wherever the threat comes from utilities need to be able to quickly detect the anomalous behavior, respond appropriately, and restore the systems to steady state. Having a robust, holistic security capability enables this kind of resiliency that is so critical to our utility industry.

INTELLIGENT UTILITY: YOU’VE NOTED THAT THERE IS A DIFFERENCE BETWEEN COMPLIANCE AND SECURITY. CAN THOSE BE AT ODD PURPOSES FOR A UTILITY, AND HOW DO UTILITIES BRING THEM INTO BALANCE, IN YOUR OPINION?

LUEDDE: There is a vast difference between being compliant and being secure. Being compliant means that you’ve satisfied your regulators and met certain re-quirements. From a security perspective the problem is that by the time security requirements become compliance requirements they often don’t even meet the criteria to be considered basic good security hygiene; you are still very vulner-able. What I mean is that being compliant has very little to do with being secure. Our belief is that utility companies should look at the problem from the oppo-site perspective: What is good security practice, and what do I need to do to be secure? And being compliant will be a natural result because you will have gone beyond whatever the current security compliance requirements are. Taking the latter approach is proactive and risk-management based. It is looking at utility operations holistically and seeing that good security is a business enabler and not a hindrance. Good security allows the business to serve its customers, its stake-holders, and support industry sector and even national security concerns AND be compliant. The challenge for companies is that good security is a dynamic and evolving thing because the threat landscape is always changing and evolv-ing. This brings me back to an important point: it is not enough to just hope that you can put up more firewalls and hope your castle walls are impenetrable, you need to be able to monitor your networks and detect anomalous and suspicious behaviors quickly and respond decisively and with confidence.

INTELLIGENT UTILITY: GIVE US YOUR BEST TIDBIT ON SECURITY VS. COMPLIANCE.

LUEDDE: When you have great security capability you win twice: you operate your business in a highly resilient way AND you are compliant.

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THE CYBERSECURITY LANDSCAPE TODAY IS LITTERED WITH threats: botnets, insiders, worms, covert channels, ransomware, SQL injec-

tion, social engineering, spoofing, phishing, BYOD, DDOS, hacking, APT, cyber terrorism, and so many other threats that they cannot all be listed here. The real-ity is that there are many different cyber attack vectors that affect every organiza-tion each day. November 2013 was the 25th anniversary of the Morris Internet worm and from that we learned that Internet-connected systems are vulnerable and need to be protected. To protect these devices, we built perimeter defenses to thwart worms, viruses, DDOS, and other external attacks. While traditional perimeter defenses are needed, the porous perimeters that have arisen from ubiquitous access via Wi-Fi, Bluetooth, cellular, VPNs, mobile devices, and IP everything open new entry points into your enterprise network.

Blended attacksTo make matters worse, we now have the issue of blended attacks where the

attacker will use technical attacks and social engineering to trick users into accomplishing their goals. For this reason many of the traditional individual threat action categories such as hacking, malware, misuse, social and physical as listed in the Verizon Data Breach Investigation Reports may no longer be relevant (Verizon, 2013). Consider the following example: An attacker poses as an employee smoking at the back door along with other smokers. One person swipes the door and everyone goes in. Once in the building, the attacker hacks into a company server and plants malware while he or she is physically in the

building. This attack does not fit nicely into any one category; how-ever hackers are using all the tools in their toolbox to attack your resources. Using social engineering and hacking tactics, the attacker does not need to actually enter your buildings. Any of your systems that touch the Internet or other private networks are ripe for being compromised.

Private/Internet/enterprise (PIE) model

If the traditional model of Internet with perimeter defenses and intranet framework is no longer adequate, then how should we conceptualize network security? An alternative model is the private/Internet/enterprise (PIE) model that looks at the touch points of a device on your network (Landry, Koger, Blanke, and Nielsen, 2009). The model, shown in the lead art for this story, defines three realms: private, Internet and enterprise. The enterprise realm is comprised of all the things on your network, the Internet is all the things on the Internet, and the private realm is all the things on someone else’s network. The authors acknowl-edge that there is overlap and that a device on your network can also be on the Internet and on a private network. An example of this would be a home

Looking at cybersecurity today

++Protecting against threats starts nowBy Brett J. L. Landry

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user connected via VPN into your enterprise from a home PC. From this viewpoint, very little on your network is truly only in your enter-prise. Most things are connected to the Internet, which makes them at a minimum in the I-E realm, if not also on the P-I-E realm.

Using the PIE model changes your perception of your network security paradigm. What in your enterprise is truly secure if it touches other networks? To complicate matters, it is possible that if you have a device that does not connect to the Internet, but users interact and utilize external media such as jump and external hard drives, then this device would be considered a P-E. Compromised exter-nal devices that were on other private networks will compromise your device that you have segmented away from the Internet, as in the Stuxnet infec-tions reported in July of 2010. These issues are further blurred by the con-cept of bring your own device (BYOD) that operates in the center of the P-I-E realm. Again it raises the question: What on your network is truly isolated and on your network?

However, bringing devices owned by others is not the only way that the P-E realm needs to be considered. Lost items and the improper disposal of digital assets are also a means for things to move from the enterprise realm into the private realm. For many organizations, this may be the most dangerous realm. If data is released

to the Internet, the organization is aware of it and can make the appropriate mitigation actions for the breach. However, if data from devices that are lost or improperly disposed of is used on private networks that are isolated from the Internet, then the data loss is truly unknown.

What to do firstWhat to do first can be truly daunting. However, there are three things you

can do to protect your enterprise. The first is to examine your enterprise com-puting connections in a new way. Look at the touch points of your devices and the access provided to each one. Are they accessible from the Internet? From private networks? Are private devices entering your enterprise networks? Are internal networks really limited to only internal access? Second, educate manage-ment and users about the threats. Often we tell users what they can and cannot do on the network, but we fail to explain why. Education on good computing hygiene should go beyond administrative penalties, and should extend into how potential security breaches could result from a particular action. Thirdly, be proactive and not compliance reactive. Being compliant with the many govern-ment and industry regulations is important; however, it is not enough. Establish a culture in which security is a proactive activity and not just a reaction to some compliance effort.

ReferencesLandry, B. J. L., Koger, M. S., Blanke, S. J., & Nielsen, P. C. (2009) Using the

Private-Internet-Enterprise (PIE) model to examine IT risks and threats due to po-rous perimeters, Information Security Journal: A Global Perspective. 18, 163-169.

Verizon, 2013 Data Breach Investigations Report, available at: http://www.veri-zonenterprise.com/resources/reports/rp_data-breach-investigations-report-2013_en_xg.pdf, 2013.

Brett J. L. Landry, PhD, CISSP, CEH is an associate professor and director of the Center for Cybersecurity Education in the Satish & Yasmin Gupta College of Business at the University of Dallas. Dr. Landry has worked in IT and cybersecurity for more than twenty years in both the private and public sectors and has published and presented over 40 papers.

TODOLISTFORBETTERSECURITY(1.) Examine your enterprise

computing connections in a new way.

(2.) Educate management and users on the threats.

(3.) Be proactive and not compliance reactive.

Internet

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OUTTHE DOOR

TO SAY THAT THE TRADITIONAL UTILITY MODEL IS AT A

crossroads is perhaps an understatement. Following the drop in energy demand after the financial crisis and

continued regulatory pressure to reduce rates, as well as the proliferation of dis-tributed solar power across Europe, Australia and the west coast of the U.S., and adverse weather effects in North America, not to mention the moratorium on nuclear generation in Germany and Japan, and the continued pressure on power prices in North America due to the abundance of cheap natural gas, there has been significant pressure on utility earnings in most parts of the world.

I believe that we’re at a point of no return and the investment decisions that will be made over the coming years will determine whether a utility company thrives or struggles. Utilities will need to make significant investments in smart grid infrastructure and technology in order to accommodate new sources of

supply and demand. Forward-looking organizations will recognize the threat posed by new technologies and new entrants and turn this threat into an opportunity for growth through new business ventures.

Our recent research threw up some interesting observations and contra-dictions, suggesting that perhaps utili-ties are underestimating the impact of new technologies such as distributed generation, microgrids and energy storage solutions on grid reliability, as well as their bottom lines.

For example, only 37 percent of North American utilities executives whom we surveyed expect distributed generation to impact grid reliability and operations by 2020. Interestingly, that figure is much higher in Europe, where distributed generation is more widespread, with 63 percent of execu-tives concerned about disruptions.

Eyes wide shut ++Are utilities underestimating the impact of new technologies & new entrants?By Jack Azagury

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Furthermore, North American executives are evenly split on whether distributed generation will drive reve-nue upside or reduction by 2030, while in Europe two-thirds more expect it to generate revenues than reduce them. This suggests that European utilities are recognizing this emerging threat and are making plans to counter it.

Distributed generation isn’t going away. In fact, as many as 85 percent of utility executives told us that they expect more competition from new en-trants in this area in the next five years.

In North America, we’re beginning to see the impact of distributed solar on the West Coast, but this will travel across the country to the East Coast, with solar PV set to achieve grid parity in all 50 states over the next 10 years. And utility executives would do well to learn the lesson from Europe, where utilities were not prepared and are now paying the price.

Since January 2008, the combined market capitalization of the top 26 European utilities has fallen by more than 230 billion euros. Of course, this isn’t all due to distributed generation. There are other factors at play, such as slow economic growth, regulatory policy and the impact of policy deci-sions, especially in countries such as Germany.

Utilities own only twelve percent of renewable energy capacity in Germany, and renewable generation has peaked as high as 61 percent of the country’s total generation on certain days last

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year. In addition, as much as 70 percent of the country’s solar power is distributed generation and connected to the low-voltage grid.

So, not only are utilities not generating much revenue from solar PV, they need to fund substantial upgrades to a distribution grid that was not designed for a distributed and intermittent power model. The business model needs change.

Microgrids are also likely to cause disruption in the near future. Navigant research sug-gests that the worldwide microgrid market will surpass 40 billion dollars in annual revenues by 2020, and in the U.S. alone, they will generate about six gigawatts of electricity—enough to power almost five million homes.

However, more than two-thirds of utility executives surveyed don’t expect to see significant microgrid development in the next five years and more than half don’t expect microgrids to impact their bottom line at all by 2030. At the same time, 52 percent expect competition from new entrants to increase in the next five years in the area of microgrid development and operations while only 41 percent expect grid faults to increase by 2020, as a result of microgrids.

We found similar contradictions in attitudes toward energy storage technolo-gies, with only 23 percent of executives expecting negative impact on their revenues as a result by 2030, while 48 percent expect more competition in this space in the next five years.

So, have utilities appropriately considered the impact of these emerging technologies on grid operations and on their revenues? Is the competitive threat from new entrants going to be significant enough to threaten the traditional dis-tribution utility model? And are utilities prepared to deal with this threat? With only 26 percent of North American residential consumers trusting their utility, down from 42 percent in 2012, addressing this issue will involve changes not only to grid operations and to the competitive business model, it will also require a rethink in the way utilities build relationships with their customers.

While discussions about the potential “death of the traditional utility” are premature, it is clear that over the next 15 years utilities will undergo a period of transformational change. The winning utilities will be those that recognize this threat and start transforming now.

Jack Azagury is the global managing director for Accenture Smart Grid Services and the author of Accenture’s Digitally Enabled Grid research.

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