The electric utilities sector is facing some challenging times as it struggles with a regulatory model designed for an earlier era. As increased renewable integrations into the grid intensify, electric utilities will need to take steps to accommodate the variable output of distributed generation and develop new insights and technologies that will shape the future of the grid. In fact, my colleague Rick Geiger recently authored a blog with his thoughts on what the future of the grid looks like.

The electric utilities business model is being disrupted and the days of the regulated monopoly appears ripe for change. So, how exactly can electric utilities work to modernize the grid? The answer is by addressing current customer requirement trends taking place in the industry through the collection and analysis of pertinent data. These utility industry megatrends include:

  • Changing customer expectations resulting from the digitization of services allowing anytime, anywhere personalized services.
  • Rise of social networks and the ability to quickly form communities of interest and communicate instantaneously with a billion people globally via text, video and/or voice.
  • Pervasive connectivity and computing that is unlocking a sea of change in productivity gains for businesses, disrupting existing businesses and creating new opportunities for agile firms.
  • Expansion of energy markets for distributed energy resources are enabling greater adoption and increased transactions.
  • Financial innovation that is enabling a wide range of customers to amortize initial capital costs of DER to align with benefit cash flows and make a stronger value proposition.
  • Energy technology advancements for power system and distributed energy technologies are accelerating at exponential rates while also leveraging breakthroughs on business models and system performance.

These trends are disrupting utilities’ ability to effectively manage the grid as customers become more involved in the way energy consumption evolves. As we look at the integration of renewable services or renewable generation from wind, solar, biogas and others, the grid is now becoming a two-way system.  Take solar panel installations on rooftops. You now have customers generating electricity and sending it back into the grid – it’s not just coming from the generating plant anymore. In order to stabilize the grid, we need to collect data and be able to make decisions that impact the outcomes seen.

In order for utilities to successfully meet these customer requirements, they must create an intelligent energy network platform that is:

  • Observable – enabling full determination of grid state – deep situational awareness.
  • Intelligent – enabling ability to gain situational intelligence to support operational decisions.
  • Automated – ability to rapidly adapt to changing conditions with minimal human involvement.
  • Transactive – dynamically balancing diverse resources and distributed market participation.

If you consider blackouts that have happened in the past, having an automated grid with the ability to collect and react to data may have helped with those cascading power outages. That is the problem modern-day utilities are solving. Electric utilities are changing their mindset about using data analytics to meet customer requirements and in my opinion, data analytics will be one of the best ways of effectively managing the grid. Harvesting reams of data opens up new, great opportunities for both utilities and ratepayers, which in the end reduces the cost of managing the grid and gives utilities real-time capabilities to deal with issues that may impact grid performance. One of the market entrants in the utilities sector taking this approach is Bit Stew.

We’re already seeing the benefits of advances in technology helping modernize the grid. For example, the deployment of smart meters is one way utilities can modernize the grid and collect data. According to the Edison Electric Institute, more than 50 million smart meters have been deployed in the US as of 2014. Smart meter information is collected over the communication network and gives utility companies the ability to pinpoint outages in a more effective manner. The collection of data and analytics associated with advanced metering points to opportunities for situational awareness, customer sentiments, and predictive maintenance.  Smart meters allow utilities to collect data every 15 minutes or so instead of monthly.  By collecting data from meters and others devices on the grid such as switches and transformers, utilities then have the ability to collect the proper intelligence to address anything that may drive the grid into instability. There’s another component around modernizing the grid’s network, as it relates to the actual data networking or the network transfer of information and that is the migration from time –division multiplexing (TDM) communication to packet-based communication.

Microgrids will also play an important role in transforming the nation’s electric grid. Microgrids are local grids that can disconnect from the traditional grid to operate autonomously and help mitigate disturbances and strengthen grid resilience. PG&E announced their “Grid of Things” not long ago and ComEd recently won approval to invest over $300 million dollars in Microgrids. In both cases, analytics will play central roles in each deployment.  In a recent interview, Karen Lefkowitz, Pepco Vice President for Business Transformation, explains how Pepco plans to meet rising customer expectations using data analytics after deployment of smart meters.  “Getting people to think differently about the business on change is hard and so one of the challenges that we had as a big company is getting enough people to think about how data could influence the way they approach solving a problem.”

With new data stream for analysis, cross-functional collaboration has to become a part of the fabric of an organization. What does this mean for Cisco?  Cisco, together with our Partners, offers a robust portfolio of analytics solutions; using our UCS platform in the case of SAP Hana to do real-time analysis. Engage your analytics teams now to start the conversation!


Donald Graham

Practice Advisor, Manufacturing & Energy Practice

Business Transformation Group