eff austin (sep 7, 2011) - michael hathaway - smart grid and the internet
DESCRIPTION
Michael Hathaway, CEO of Tiga Energy Services, Inc, www.tigaenergy.com, will share his unique and controversial perspective on the Smart Grid as it mirrors the evolution of the Internet.He will outline the similarities between these two industries, explore lessons learned from the Internet and ponder the various scenarios for Smart Grid ranging from it transforming our lives to becoming a dot-com bubble.This will not be a conventional industry overview of the Smart Grid, so bring an open mind and lots of questions!TRANSCRIPT
So, what is the
SMART GRID?
THE “LEGACY” UTILITY GRID
Consists Of: ! Generation ! Transmission ! Distribution ! Metering
Electric Utility Technology …has not changed significantly in 100+ years
SMART GRID is the Industry’s attempt to MODERNIZE
BASIC SMART GRID COMPONENTS
Communications Infrastructure ! Connecting electrical delivery assets
! Advanced Metering Infrastructure (AMI) ! Transmission, Distribution and Generation
Enhanced Computing Systems ! Enhanced Supervisory, Control and Data Acquisition (SCADA)
! Monitoring and controlling generation, transmission & distribution ! Meter Data Management (MDM) ! Billing & customer management systems
GRID MODERNIZATION: “SMART GRID”
Enhanced Computing
Systems
Communications Infrastructure
THE SMART GRID VISION AND PROMISE
Improved Efficiency ! Better control and automation means ! Less energy lost due to inefficiencies ! Faster detection of problems
Better Customer Services ! Advanced meters ! Provide real time usage information to customers ! Remote meter reading connect/disconnect ! Extend services into the home via a Home Area Network (HAN)
Support Increased Renewable & Distributed Generation It is YET TO BE DETERMINED whether the
Smart Grid will Deliver on these promises
Later…
More on that
have in common with the
INTERNET
… So what does the
SMART GRID?
THE UTILITY GRID & INTERNET SHARE A COMMON HISTORY
Railroads ! Established transcontinental rights of way
Telegraph ! Leveraged railway rights of way
“LEGACY” UTILITIES Telecom ! Leveraged railway/telegraph rights of way ! Extended a “web” into communities ! Delivering services to homes & businesses
Electric Utility Grid ! Embraced the Telecom model
A WORD: ABOUT THE VERTICALLY INTEGRATED BUSINESS MODEL
These businesses adopted a 19th century Vertically Integrated model: ! They owned the distribution infrastructure ! They owned the services being delivered ! They “owned” the customer
The Utilities naturally evolved into MONOPOLIES And became subject to Government Regulation
THE WIRELESS “REVOLUTION” Broadcast TV & Radio
The First Challenge To The 19th Century Model ! Wireless lacked dependency on rights of way established by railways ! Airwaves became the first “shared” communications infrastructure ! Requiring government regulation to coordinate usage of wireless spectrum
! CONTENT became the service being delivered HOWEVER ! Broadcasters still owned content delivered over their “networks” ! Cable TV filled service gaps re-establishing the legacy Utility model
MEANWHILE THE PRE-INTERNET COMPUTING INDUSTRY WAS EVOLVING
Computing resources were centralized ! Centrally managed mainframes ! Proprietary systems ! Point to point, proprietary computer networks
Large computer companies provided a complete solution
Adopting the same 19th Century, Vertically Integrated Business Model used by Utilities
THE INTERNET DISRUPTION
The Internet Protocol standard was established in 1982 ! Enabled disparate private & public networks to interconnect or “peer” ! Established public standards bodies to insure interoperability ! The WWW emerged in the early 1990s
It enabled distributed and disruptive business models ! Threatened Vertically Integrated utilities and businesses ! Created entirely new models for delivery of services and content
Best Of All
It Empowered The Customer and Enabled Innovation
INTERNET REMAINS A THREAT
Powered by massive speculative investment ! Well funded Start-Ups continue to establish new business models
Internet threat to broadcast & entertainment industries ! De-centralizes the ownership & distribution of content ! Enables direct relationship between consumers & content creators
Internet threat to telecom & cable industries ! Offering cost, feature rich, competitive services
THE COMMON INTERNET THREAT TO LEGACY PROVIDERS & UTILITIES: LOSS OF DIRECT RELATIONSHP WITH THE CUSTOMER
Have to do with the
INTERNET
… So AGAIN. What does the
SMART GRID?
THREATS TO THE ELECTRIC UTILITY INDUSTRY
De-Regulation ! Utility ceases to own the customer
Distributed Generation ! Poses technical challenges
Behind the meter independence ! Micro Grid ! Onsite generation
UTILITIES FACE A SIMILAR “INTERNET LIKE” THREAT:
LOSS OF DIRECT RELATIONSHIP WITH THE CUSTOMER
THE DOUBLE EDGED SMART GRID SWORD
As with the Internet, an Unspoken conflict exists between investment community and the legacy business models:
Utility Objectives ! Retain control of customer ! Manage uncertainties as industry evolves ! Reduce overhead costs and increase margins
Start-up Investor Objectives ! Establish new businesses & technologies behind the meter ! Exploit Utilities inability expand into new energy services
Venture Funded Start-ups Seek to Create “Internet
Like” Disruptions on Smart Grid NOT NECESSARILY IN A UTILITIES BEST INTEREST
THE HOME AREA NETWORK
SMART GRID PROMISES TO EXTEND CONTROLS INTO THE HOME
HOME AREA NETWORK BATTLEGROUND Smart Meter Networks are inadequate ! Equivalent to a paging network ! Cannot offer services competitive to the Internet
Most HAN businesses are venture funded start-ups ! Establishing disruptive business models that exploit Smart Grid
Home Automation Industry is a mess ! Residential energy management doesn’t justify its own network
Cyber Security Issues Abound ! Consumer threatened by Utility invasion of privacy ! Connecting HAN to Smart Grid is a HUGE SECUIRTY RISK to Utilities!
IT IS EXTREMELY UNLIKELY THAT THE UTILITY HAN WILL DELIVER ON ITS VISION
IT BEGS THE QUESTION…
What does the Smart Grid want with my toaster?
CONSUMER CONCERNS ABOUT PRIVACY
…PALE IN COMPARISON TO THE RISK TAKEN BY UTILITIES BY EXTENDING SMART GRID INTO A HOME AREA NETWORK!
OTHER SMART GRID CHALLENGES Smart Grid enhancements on distribution infrastructure ! Regulators have begun to scrutinize value and ROI
Commercial & Industrial Customer Sophistication ! Far exceed utility Smart Grid today ! Beginning to deploy onsite generation to offset or even replace grid
Lack of Common Smart Grid Communications Standard ! No Internet Protocol equivalent for connecting disparate infrastructure
SMART GRID TODAY IS IN ITS INFANCY ITS AT THE EQUIVALENT STAGE AS THE PRE-INTERNET ENTERPRISE
CLIENT/SERVER (CRM)
DISTRIBUTED (SCM)
INTERNET (SAAS)
MAINFRAME (ERP)
CLOSED/PROPERITARY OPEN/COMMON LANGUAGE
1ST GENERATION
2ND GENERATION
3RD GENERATION
TODAY
PROCESS/B. OFFICE EMPLOYEE/F. OFFICE SUPPLIERS CONSTITUENCIES
HISTORY OF ENTERPRISE SYSTEMS
STOVEPIPE
INTEGRATED
RESOURCES
RELATIONSHIPS
CLIENT/SERVER (BSS)
DISTRIBUTED (SMART-GRID)
INTERNET (MICROGRID)
MAINFRAME (OSS)
CLOSED/PROPERITARY OPEN/COMMON LANGUAGE
1ST GENERATION
2ND GENERATION
3RD GENERATION
?????
UTILITIES UTILITIES CONSTITUANCIES
HISTORY OF UTILITIES SYSTEMS
UTILITIES
TODAY’S MARKET
REACTIVE
PROACTIVE
STOVEPIPE
INTEGRATED
A DIFFERENT VISION OF THE SMART GRID Disruptive Businesses Will Continue to Threaten Utilities ! Distributed Generation & District Energy
! Replacing remote generation & long haul transmission
! Management of “on site” & customer owned generation facilities
Home Area Network Bubble ! Questionable return on investment ! Consumer privacy concerns prevent it from “going viral” ! Security challenges will significantly restrict deployments
! Likely limited to one way meter data and alerts
! Internet based services over existing consumer LAN will prevail
ITS INEVITABLE THAT THE UTILITIES RELATIONSHIP WITH THE CUSTOMER WILL CHANGE!
RECOMMENDATIONS FOR SMART GRID SUCCESS " Embrace Trend To Move Generation Closer to the Load • Partnerships with larger energy customers • District Energy For Residential
" Execute a practical modernization strategy • Modernize delivery & distribution infrastructure
" Leverage Existing Internet Protocol Standards • Creating new standards will take a decade or more
PRACTICAL MODERNIZATION AS OPPOSED TO SMART GRID HYPE
IN THE END…
NOT A TECHNOLOGY
SMART GRID IS A BUSINESS STRATEGY