Electricity. It's everywhere around us, powers the machines that run our society and yet we seldom think more about it than the effort it takes to flick a switch.
But a nationwide project underway to lift the IQ of our dumb power grid to make our homes and workplaces better able to manage the power they consume is poised to sweep away that complacency.
And it offers a broad swathe of opportunities for IT resellers to find new markets, energy insiders say.
In the biggest change to power generation, distribution and use since Nikola Tesla was a boy gazing up at lightning storms in the night sky, Australia's electricity companies and governments are rolling out smart networks to replace those powering the nation for the past century.
The most obvious change most will see is attached to the wall of their premises. At a cost of $2.8 billion to $4.6 billion about 10 million humble, electromechanical power meters with patent histories harking to 1872 will be replaced by smart meters loaded with scores of features and potential to reduce and provide usage information. The new meters are $150-$250 each.
They report to energy companies on how power is consumed, are disconnected and reconnected remotely and promise to connect wirelessly to devices inside the house to manage loads. And they may be controlled remotely, for instance, to lower the air-conditioning on a hot day or schedule energy-guzzling white goods such as fridges to defrost or clothes dryers to operate at night when the load on the network is light and the cost lower.
But this advanced meter infrastructure and its $4.8 billion to $7.5 billion savings is only the visible component. Distributors are installing thousands of sensors at substations and on Australia's streets to alert them to events that could harm the grid. And the pay day for resellers, power industry insiders say, is to bring IT smarts to the back offices of energy companies so they can secure and make sense of the welter of data about to come their way.
When all the pieces are in pace some time around the end of next decade, Australia will have a smart grid that intelligently routes electricity in the most efficient way and heals itself when disaster strikes.
Water suppliers are keen observers, so impressed are they by promises of reduced emissions and operating costs. Waiting for a blackout or a burst water main to identify flaws in our ageing utilities networks may one day be a dim memory.
Flipping the switch on smart grids
Energy Australia is a pioneering electricity distributor building out a smart grid. It put 12,000 sensors on its network to judge, for instance, the loads applied to sub-stations and at street level. The century-old power distributor to 1.6 million houses that operates over 22,275 square kilometres in four states started by understanding that telecommunications was the "glue" to bond its $170 million smart grid, says its intelligent networks manager Adrian Clark.
"You need good, two-way telecommunications to collect that data and bring that back into the organisation to get good knowledge," Clark says.
The 800 kilometre optical fibre network that it started deploying three years ago to its 200 major sub-stations was completed earlier this year, creating robust links, Clark says. The utility progressed from enterprise to carrier-class networking gear.
"Another key thing we kicked off was a whole bunch of first-generation smart meters [with] time-of-use tariffs," he says. "We did a lot of strategic work around how customers would benefit." It has installed 400,000 of these somewhat-smart devices that don't talk to base but respond to price pressures during the day.
"We've trialled just over 7000 two-way communication smart meters since 2006 and tried a number of different telecommunications technologies to communicate."
Although there is discussion about using the $43 billion national broadband network to carry data back to base, many in the industry advocate a mesh of technologies including flavours of wireless.
Clark says an innovation of which the utility is proud and that generates much interest with other distributors is its monitoring project.
"It's, I think, a world first in smart grids - we've begun the rollout of smart sensors at street level to enable us to improve the reliability and efficiency of the low-voltage grid." Vendor partner IBM is in the process of mining the data collected into information for use in the organisation to plan the network.
And that's where the early gains will be for energy markets - helping distributors better run their networks. Today it takes calls from angry customers to alert an energy company to a problem but soon it will be the first to know.
"We have real-time sensing on every street," Clark says. "It provides us with a whole lot more data about what's going on so we can start to have engineering analytics and diagnostics sitting on network so the types of issues (such as transformers blowing out) can be avoided.
"It allows us to plan the network, respond to outages and maximise assets ... for as long as possible."
To understand why power companies are so keen to maximize their investments, it's important to know how electricity is generated and why even small changes in consumer behaviour when taken over a population make a big difference to the reliability of electricity and its cost.
There are three forms of power generators - coal generators are the back-bone: relatively cheap but take a week or more to fire up. They produce a base load of electricity; what isn't used is wasted. Pricier, mid-range, diesel generators kick in when demand rises and for peak consumption, a third, ultra-expensive generator helps out on those few days in the middle of summer when everyone retreats to air-conditioning. At the moment, the consumer pays the same whether it's the middle of the night when power is cheap or the height of summer when it costs a prince's ransom; such costs have to be smoothed across the network, the year and all consumers.
Industry estimates that a fifth of generation capacity is used for just four days a year and a 10th for just nine hours a year - and this year those figures will be worse. Over the next few years as consumers share the pain of the real cost of electricity generation, peak tariffs will rise by six to 10-fold, energy insiders say.
Electricity companies admit to a lack of IT and telecommunications smarts when it comes to smart grids. IBM provided $3.2 million of services to Energy Australia to build the IT architecture that conveys the sensor readings. It's a compelling rib of Big Blue's "Smarter Planet" umbrella, that pushes its skills in bringing together uber-complex pieces of the IT puzzle to build more efficient and responsive systems for global commerce.
IBM's communications sector general manager David Murray says the channel should get involved in areas such as business analytics and workflows.
"They're traditional IT services that only recently in the energy utilities industry was the domain of network guys" such as Siemens and GE, Murray says. "The opportunity is now. There's a tipping point any day now.
"Companies like Energy Australia, SP AusNet, Integral, Powercor [are] starting to align to this transformation. If you're not talking to these companies now then your competition is."
Murray says providers of database and customer relationships systems are in particularly powerful positions to help utilities make sense of smart grid data.
"I don't think it's the domain for the IBMs [big IT integrators] solely - those who can get into the industry and show some insight in other industries [such as retail], will be successful." And he picks data storage resellers as likely winners.
Click through to page two to see why tomorrow's ZigBee smart home needs to be secured.
Take a copy of this story home with you in the August issue of CRN.
Your deep-dive guide to smart grids
Securing the grid
With all that information being collected and flowing around the networks, security and privacy will take on new meaning. The potential for abuse worries CSC senior security consultant Gabriel d'Eustachio - but not so much that he would call a halt to the rollouts.
"The amount of data you can deduce from someone's use patterns (from a meter) is really quite frightening," d'Eustachio says. "All of a sudden I know a lot about what you're doing during the day and when you're out of the house.
"I wonder if I could look at your power and your use pattern and deduce if there's an appliance that isn't working as well as it could so I'll market aggressively to you - as a private matter it's no one else's business.
"This data that can be mined [but] its data that is yours [the consumer's] - and we have to make sure we have regulatory bodies surrounding it so that people's privacy is respected."
He says the "public should weigh in on" laws and controls so that their energy and water use isn't weaponised to spy on them.
D'Eustachio sees opportunities for providers of security and privacy technologies and services to provide the ethical and legal foundations on which those with networking and marketing smarts, respectively, would collaborate.
CSC is working with technology companies as an honest broker to test the security claims of their products, he says.
Australia's smart grid work parallels that happening overseas. In announcing smart grid plans in January, US President Barack Obama identified that updating the archaic grid would save money, protect power sources from blackout or attack and "deliver clean, alternative forms of energy to every corner of our nation".
The US is throwing $US11 billion ($A13.75 billion) at smart grids as part of a $US50 billion plan to update its energy infrastructure. In June it released $US3.9 billion in grants; the Rudd Government committed $100 million in May to early work and Energy Australia will invest $10 million over five years for research at Sydney and Newcastle universities.
"In terms of the global horse race, we're up with the leaders, not up the front but close to the front," says energy consultant, Phil Perry, who has helped the Victorian Government write its smart meter policy since 2005.
"In the US there's a large number of [smart meter] programs being rolled out or planned. Over the next five years there will 100 million meters in the US replaced ... [and it] could rise significantly above that."
Texas and California are two hot states keen to see peak costs associated with air-conditioning constrained by smart networks and that's a main driver in Victoria and WA, Perry says, with the rising adoption of cooling in NSW and Queensland putting those states not far behind.
Although much of the early work is aimed at managing distributors' grids, the inclusion of the ZigBee low-bandwidth wireless home-area networking technology should see smart appliances appear in homes and offices in a few years.
At present, data is collected from dumb meters only once every few months at most when a reader visits the house. Second-generation smart meters report back every half hour but the data may only be delivered daily and then only to the power companies. But the promise held out by smart meters is real-time delivery of data to consumers to help them modify their energy use behaviours, although energy insiders say this is a pipe dream in the next five to 10 years. If this day comes, ZigBee will be a key technology.
A house with a ZigBee wireless hub could be programmed to turn on the clothes dryer or dishwasher or defrost the fridge only at night when energy was cheap. And when electric cars such as the descendents of the Prius become as common as Commodores on our streets, stored power trickled into their batteries at night could be fed back into the grid to power the home or sold back to the power companies.
Such possibilities excite industry mavens who see an explosion of consumers becoming producers of energy through the installation of solar cells on their roofs, for instance, selling power into the grid to delay infrastructure spending.
And it raises the possibility of more technology in the house: imagine a dashboard on your wall or a software gadget on your computer or iPhone telling you how much energy courses through the network and identifying your use in real-time along with tips to save money. Even networking makers are looking to build such smarts into consumer routers and switches. And such ideas are trickling from US development labs at Google and Microsoft but the Australian infrastructure is yet to be primed to talk to such devices.
Such "critical" technology is being "actively debated" in national forums, Perry says.
"Government doesn't like prescribing technologies but, in this case, because we wanted to have the same consumer experience across all of Victoria, Government was driven to a point where we needed one standard, open interface," he says.
"This whole area of the ‘HAN' (home-area network) is huge and its benefits to society will be enormous - it will enable people to reduce peak demand on hot days without going to a lot of pain to do it [ie blackouts]. GE and Whirlpool in the US are working on fridges with ZigBee interfaces to defer the defrost cycle.
"The appliance makers will build in (intelligence) that says: ‘You want to run the dishwasher, OK, but it's peak time so it will cost you'. The same thing applies to air-conditioning: on peak periods it would by cycled - 15 minutes on, 15 minutes off. You wouldn't notice any appreciable change in comfort levels ... [or] you can say I want to override that [and pay the premium]."
Perry says the intent isn't for the power company to be a "Big Brother" but to give consumers control over their power use and spending and to reflect the real cost of generation while reducing carbon emissions.
And it's a "huge opportunity" for resellers, he says. "And electronics vendors ought to be getting busy and their products ready and their overall market positioning because HANs enable all range of stuff. There's so much that can be done in this space ... to optimise cost and comfort levels."
Click through to page three to see how to profit from smart grids and where to go for insider information.
Where the money lies in smart grids
- Datamining and CRM technologies
- Database development (SQL Server 2008 and Oracle)
- Data storage hardware
- Business analytics and intelligence software and services
- Workflow analysis software and services
- Carrier-class networking (upgrades from enterprise-grade)
- Telecommunications provision (especially wireless)
- Security and privacy technologies and consulting
- Marketing and audience development consulting
- In-home displays and building automation hardware, software and services
- ZigBee-enabled networking equipment and white goods (for retail)
Where the action is
- Victoria Australia's most advanced state with its scoping plans and starting a second-generation smart meter rollout (complete 2012). Strong State Government support and direction.
- NSW Trials underway and start for commercial meter rollout expected over five years from 2012. Energy Australia has 12,000 sensors on its distribution network, 400,000 first-generation "smartish" meters and 7000 second-generation two-way smart meters in a trial.
- WA Power and water companies especially interested in developments in Victoria and NSW. Expected to beat NSW in its commercial rollout of infrastructure.
- Queensland Considering its plans after initial budget concerns at the cost of the rollout in its state. Trial next year.
Timeline : advanced meter rollout (Victoria)
The Victorian Government has set deadlines for the implementation of smart meters
- 30 Jun 2010 - 5% meters
- 31 Dec 2010 - 10% meters
- 30 Jun 2011 - 25% meters
- 30 Jun 2012 - 60% meters
- 30 Jun 2013 - 95% meters
- 31 Dec 2013 - installation complete
source: Victorian Government
What Victoria's smart meters must do
- half-hour interval data
- Remote reading
- Remote activation
- Remote deactivation
Where to go for more information
Keen resellers and integrators would gain an insider's view of the industry from conferences bringing the energy industry together.
August 5-7, Gold Coast
Electricity 2009: The 85th National Electric Energy Society of Australia
August 10, Sydney
Power and Electricity World NSW
September 1, Sydney
Automation and Communication Technologies in Power Conference
October 21-22, Sydney
Metering, billing and CRM 2009
Go here for more information on industry conferences.
Follow on Twitter
- @SmartGridTech - news, market research, strategy, sales, consulting
- @TandDArena - virtual event covering smart grid case studies and news
- @UtilityNewsLink - chatter from the world of utilities
- @sensorstuff - the sensors used in smart grids
Government and industry websites hold information on the laws, policies and directions