Recent history confirms just how much the utility industry has achieved in providing reliable resources for billions of people around the planet. In light of the pressing challenges that remain, it’s also an encouraging reminder of what the industry can achieve in a short amount of time through innovation and collaboration.
The leaders of Itron’s three business units – Don Reeves, SVP of Outcomes; John Marcolini, SVP of Networked Solutions; and Justin Patrick, SVP, Devices – sat down together to discuss these challenges and where the industry is heading in terms of solutions, partnerships, regulations and more.
What solutions do you think will be most significant in helping the utility address aging infrastructure while improving grid reliability and water efficiency?
Don Reeves: The first step is to gain a complete picture of what’s happening on the grid. Utilities have incredibly detailed information coming out of some assets, but they also have endpoints about which they know almost nothing, aside from a few billing-related data points. We now have powerful grid-edge devices that can complete the operational picture with high granularity, so the job is to get them deployed and reporting in a cost-effective manner.
Then, once utilities have the complete picture to improve reliability and efficiency, they need to be able to act on the data effectively. The increasing complexity of the grid means that a single, centralised control system won’t cut it. Utilities will need to migrate to distributed control that’s automated via edge computing running centralised policy engines. That’s how we’ll gain the greater responsiveness required to achieve those higher goals.
Utilities are making infrastructure and service plays in the booming electric vehicle market. What is Itron’s role in enabling this evolution?
John Marcolini: Electric vehicles represent a giant opportunity for utilities in terms of a new load and a new revenue stream. But utilities can’t control who purchases EVs, and it’s possible to have too much of a good thing. Itron’s role is to give utilities greater visibility and control as the adoption of electric vehicles ramps up. We’re helping utilities develop a perspective on what the grid can support, as well as an understanding of the needs of EV fleets, individual charging stations, and the trends of actual users. Our aim is to pull all the data together and help utilities optimise solutions that don’t stress the grid. At the neighbourhood level, that includes monitoring transformers and flagging issues before they arise. At the fleet level, it might mean moderating charging activities. We’re also prototyping advanced solutions for using the batteries in EVs as dynamic assets that can discharge energy back to the grid during peak load events.
Justin Patrick: Ultimately, our aim is to enable the smooth adoption of electric vehicles with the best available data and tools. We’ve been a long-term partner in smart meter rollouts across the globe, and now we’re helping those utilities and municipalities apply their devices and network capabilities for intelligent EV charging. In fact, we’re in the middle of two big real-time demonstrations in Europe right now.
What needs to happen in the next five years to make distributed energy resources (DERs) a benefit to utilities and the distribution grid, rather than a risk?
Reeves: As with electric vehicles, DERs are challenging because utilities don’t necessarily control them. They need greater visibility into how much rooftop solar capacity exists in a neighbourhood, for example, and they need to know what to expect on cloudy days. DERs also present a giant systems-integrator challenge, because utilities need to be able to send and receive control signals through third-party systems. Itron is working to pull together all the technical pieces and provide a facade of simplicity across what is actually a huge amount of underlying complexity.
Marcolini: Embracing new standards like IEEE 2030.5 over wi-fi is a big part of the answer. It will help create a broader, open ecosystem of devices and solutions that are needed in this space. No individual vendor or utility can solve this challenge on its own. The entire industry needs to be in step to enable integrated solutions that tie all the way back up to the highest level of grid management, and all the way down – beyond the meter – into the smart homes of the future and the many consumer electronics that will be involved.
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Has the vision for smart cities evolved among utilities and community stakeholders over the last decade? If so, what’s needed in the years ahead?
Marcolini: What we’ve learned is that successful smart city initiatives have to begin by solving real community problems that justify the investment. The COVID-19 pandemic has also affected community visions in a way that could be a boon for smart city technologies. Digital transformation has certainly accelerated, and cities and businesses are actively trying to figure out how to do more remote monitoring and management of assets. As a result, I think we’re on the precipice of much faster growth. At Itron, we believe the roadmap for smart cities should begin with a single, anchor application on a scalable network. If the anchor application has proven benefits that stand on their own, it justifies the investment and lays the networking foundation for subsequent applications and innovations. For many of our municipal or utility partners, the anchor technology is intelligent street lighting. They’re swapping in LED lamps with a comms module that enables operational benefits, energy savings and carbon reductions.
Reeves: San Antonio and CPS Energy are a model city for this approach. They began with electric and gas meters. But when they added the streetlights, it established the communications coverage that allowed follow-on applications for safety, traffic and parking. Now they’re bringing on water applications, which have a lot of interesting and challenging aspects. But again, establishing that core platform is what allows pervasive connectivity and data access, which is at the core of any smart city vision.
What combinations of innovation and regulations are needed to support the trend toward decarbonisation of the utility industry?
Patrick: I think everyone recognises that we’re not going to get to carbon neutral with the solutions we have today. So, we need to encourage innovation and appropriate levels of risk-taking within the industry to enable both the utilities and the vendor community to bring new technologies and capabilities into the market. One example is the increasing use of hydrogen within the gas industry to enable the transition of renewable power to gas infrastructure, as well as energy storage.
From a regulatory perspective, the standard cost-of-service model in economic regulation doesn’t really support innovation. Yet there are state utility commissions that are experimenting with alternative or performance-based rate designs that can incentivise new technology solutions, while the European Union has a directive pushing utilities to transition to the digital model faster. Ideally, the regulatory frameworks that successfully speed the integration of renewables and energy-efficient technologies will rise to the top and be replicated.
Reeves: Justin makes an important point about the risks associated with new technology. Historically, economic regulatory frameworks have discouraged risk by requiring clarity on payback and instituting penalties when investments don’t generate forecasted results. But we’re at a point with regard to carbon emissions where we need to enable greater experimentation to achieve innovation, and that inherently requires more risk – risk that can be shared between taxpayers, ratepayers and shareholders. In addition to tweaking regulations to allow this, the industry also needs help in quickly sorting out the most effective technological solutions. Fortunately, there’s already a lot of good information sharing happening. But even greater transparency will help the industry move faster towards decarbonisation.
What are the biggest obstacles in the way of realising the promise of a stronger grid?
Patrick: The biggest obstacle is the investment needed to modernise distribution networks. We have to find ways to make the upfront investment more palatable for utilities, municipalities and their customers. The first generation of AMI had very clear, tangible operational benefits from the automation of meter reading. The benefits of AMI 2.0 come from optimisation. In total, these benefits are potentially much greater, but they involve many more use cases and complexity. So naturally, building the appropriate business cases and buy-in for each situation takes time.
Marcolini: Cloud-based services tie together a lot of what we’ve been talking about. We’re building analytical tools that will enable utilities to achieve the next level of grid resiliency and efficiency through optimisation. But these software solutions don’t necessarily fit the CAPEX cost recovery models that have traditionally driven utility investments and regulatory decisions. Ultimately, the industry will need to continue to educate state regulators on the merits of allowing cloud-based services into utility rate base and place more value on the benefits – and new market opportunities – created for end consumers.
Reeves: Another obstacle the industry will need to overcome is velocity. We talk about the increasing velocity of data and its effects, for better or worse, on society. But the utility industry isn’t yet able to move at this pace. Right now, instituting a software change, or even a firmware upgrade, can be a multi-year project. By comparison, I notice my smartphone updating apps every day. So, if we’re going to achieve that kind of modernisation and the benefits it can produce, we’re all going to have to fundamentally change the way we work together in the industry.
Looking ahead, where do you see utilities and cities in 10 years?
Reeves: I think we will see a lot of the progress and collaboration required to take advantage of new technologies— especially the highly capable edge sensors and computing. I believe we’ll find a way to make this information broadly available to consumers, grid operators and the vendor community so that solutions start to roll out more rapidly. Ultimately, this will begin to reshape our cities and the way we live and move in them.
Patrick: As we modernise our utility infrastructures, there’s also going to be a new level of consumer engagement required to help people optimise their own lifestyle choices and resource consumption. Also, we’re certainly going to see a lot more renewable energy resources coming online, and the biggest achievement will be integrating these so that it’s not a matter of choosing between greener power or grid reliability and resilience.
Marcolini: We talked about the path from automation to optimisation, but we didn’t mention the next phase, which is transformation. By that, we mean looking deeper into utility operations to help transform the industry from what we’ve been doing for the past hundred years to what we’ll be doing for the next hundred. Grid reliability and resiliency will, of course, be paramount, and we’re seeing new safety technologies that allow better remote management of these end goals. But we’re also beginning to see new customer-engagement models emerge, and I think the utility industry will eventually be welcomed into people’s lives just like the myriad of digital products and services that we as consumers embrace every day.