In focus: Global smart grid

Twenty-first century electric grid

By Paul De Martini, CTO/VP of Innovation, Connected Energy Group, Cisco Systems.

In an effort to address the complex issues of climate change, energy independence and sustainable economic growth, global policy makers are requiring utilities to provide more reliable electricity and integrate significant amounts of wind and solar generation; all of which require new power engineering designs and technology. Further compounding the complexity, most G20 economies are powered by electric infrastructures that 40-to-50 years old and need replacing, resulting in massive capital expenditures.

At the same time, consumers’ use of energy and their expectations of services are evolving with the rapid development of new energy-smart electronics, internet applications/services, household appliances and plug-in electric vehicles. Industrial, corporate and government sustainability goals are driving wide adoption of energy and information communication technologies to create energy-efficient factories and buildings, produce and store clean energy, and enable carbon-neutral operations.

The challenge for utilities and electric service firms now becomes how to invest in both their existing core business as well as in innovation. Leading utilities are developing integrated business strategies, technology architectures and deployment roadmaps to guide these crucial investments. In doing so, it will be critical that they deploy energy and information communication technologies (ICT) allowing them to provide service in a manner consistent with present and future customer needs, while remaining flexible enough to accommodate changes in market structures and highly distributed resources.

Disruptive technologies on the horizon 

The leading smart-grid designs integrate energy technology (ET) with information technology (IT) to create a smarter, more secure and more robust grid. Key technologies that should be considered in any architecture are:

Distributed generation (DG)

DG is at the inflection point of the adoption curve in the US market, well past in Europe and emerging in Asia Pacific. In Europe, energy from renewable resources in some countries is reaching 50 per cent or more of energy delivered on a given day. The focus on distributed resources to reduce the complexities of building new transmission in several areas around the world means renewable generation on distribution circuits will continue to grow for the foreseeable future.


Wide-spread deployment of sensor technology across the electric grid is occurring in the form of synchrophasors, intelligent electronic devices in substation and distribution equipment and smart meters. In the US, synchrophasor and smart metering deployments have been accelerated by US smart grid stimulus funding. In Australia, the awarding of smart-grid funding will result in a significant deployment of grid-sensing technology.

Energy storage 

Energy storage has the potential to enable the electric system to be more reliable and stable, and provide better power quality and customer-side energy management. Climate and energy policies are advocating energy storage as an asset that can be used to mitigate renewable energy intermittency, and storage technologies that can provide adequate dynamic response are becoming commercially viable at grid scale.


Utilities worldwide are rethinking their telecommunications needs and infrastructure architectures. These architectures are addressing requirements for highly available, low-latency wired networks to link substation and control centre operations as well as robust, secure wireless field-area networks to support distribution automation, mobile field force automation and smart metering. The electric utility industry is adopting Ethernet/internet protocol (IP)-based architectures to address today’s needs and those in the future.

Data analytics 

Analytics will leverage data from many sources including smart meters, distribution and substation intelligent energy devices, and phasor-measurement unit (PMU) devices. Advanced analytics will enable smarter, faster decisions by automated utility information systems, utility personnel and customers. The challenge of managing this mountain of data will be managed more effectively through the use of communication network-based tools. Advanced data-management technology will be used in both utility data centers and cloud services. This scale of data will require effective visualisation and intelligent alarming tools to provide useful and actionable information to system operators.

Utilities, electric services firms and technology suppliers face several complex, short-term technical challenges in developing a smarter grid, including ultra-large systems architecture, cyber security and distributed intelligence.

Ultra-large system architecture 

The scale and scope of the grid I have described is vastly more complex than the existing electric system, which has been described as the most complex machine on earth. This increased complexity requires new architectural approaches to manage data and controls across tens of millions of end points, federated controls to manage various latency requirements for certain grid operations, and system security, reliability and extensibility. Cisco has developed an end-to-end network architecture to support these requirements and is engaging leading research universities such as Carnegie Mellon and California Institute of Technology to develop ultra-large scale architectures.

Cyber security 

The transformation of traditional energy networks to smart grids requires an intrinsic security strategy to safeguard this critical infrastructure. In the US, concurrent and complementary efforts are underway to address the development and implementation of a lifecycle approach for the electric industry. This and similar efforts underway in Europe and Australia can be leveraged for electric systems worldwide.  Cisco has been a leader in the development of the cyber security guidelines and working closely with utilities worldwide on lifecycle management methods to ensure secure electric networks.

Distributed intelligence

Substantial growth is occurring in the quantity and diversity of distributed systems and devices to be connected and co-ordinated. Distributed intelligence architecture embeds digital processing and software at many locations in and along the power-grid infrastructure to implement flexible grid automation. Such systems may be completely distributed, or involve distributed elements with centralised management and co-ordination. The use of distributed intelligence provides opportunities to implement scalable systems to integrate greater amounts of renewable distributed generation, enhance grid efficiency and operations. Cisco plans to demonstrate its distributed intelligence technology as part of European Commission-sponsored smart-grid demonstrations.

Recent Innovations

Cisco has launched an IP standards-based platform for advanced field-area networking to support the most demanding utility operational needs. As part of this strategy, Cisco has established non-exclusive strategic alliances with Itron and Cooper Power Systems to integrate its ‘Connected Grid’ technology with their energy technologies to create effective advanced smart metering and distribution solutions.

Cisco also recently signed a strategic agreement with Control4 to deliver network-enabled automation platforms for connected smart communities and home energy deployments around the world. The collaboration between the two companies includes the integration of Control4 technology into Cisco’s service delivery platform and the introduction of Cisco-branded Control4 products.

Cisco was part of a recent North American industry coalition demonstration of transregional use of synchrophasor technology for wide-area measurement using live data streaming over 1900 km from the eastern US to Texas over a Cisco-configured Verizon wireline backbone. Using open standards, commercial or off-the-shelf equipment and a carefully crafted architecture, the demonstration proved that multiple data formats can be transported via MPLS and Multi-cast.


The transformation of the electric grid across the globe is being driven by the intersection of energy and climate policy, customer and business value and technological innovation. This journey will likely take 20 years or more, with key policy and technology milestones along the way. Utilities and electric service firms will be challenged to invest in both their existing core business and innovation and the potential for alignment challenges between policy milestones and the maturity of the ET and IT required to meet will be significant. Many key technologies will be vital to the security, scalability, and reliability of the grid, none of which will be built by one company. This transformation and the innovation necessary to support and accelerate it will only take place via collaboration among many partnerships, both public and private.

Mr De Martini leads a team of industry experts who develop the vision for Cisco’s smart grid end-to-end IP architecture, technology and deployment roadmaps, identifying key technologies and driving strategy and co-ordination around global standards development. De Martini is a member of the National Institute of Standards and Technology Smart Grid Interoperability Governing Board, the Edison Electric Institute’s (EEI) Y2030 Strategic Planning Committee, and the Electric Power Research Institute’s (EPRI) Intelligrid program.


US smart grid investment to provide significant benefits

By Paul Budde, Managing Director, BuddeComm.

A number of recent reports and studies into the US energy industry reveal there are significant benefits to be gained by the deployment of the smart grid. It also shows the enormous amount of money that is involved in upgrading the energy infrastructures; literally trillions of dollars. While the largest amount of money is spent with a handful of very large companies, there are still hundreds of millions of dollars that will be available for innovative entrepreneurs and new companies specialising themselves in the many niche markets that all form part of the larger smart grid concept.

Industry co-operation is the key here, being connected within the total ecosystem that is involved in this industry transformation is paramount. A trans-sector approach (breaking down silos) is essential to get an effective and efficient new industry emerging from these massive changes. Organisations involved in this are the Gridwise Alliance in the US and Smart Grid Australia.

A new report by the US Electric Power Research Institute (EPRI) documents the methodology, key assumptions and results of a quantitative evaluation of the investment needed (costs) for an envisioned smart grid. Over and above the investment to meet electric load growth, the estimated net investment needed to realise the envisioned power delivery system (PDS) of the future is between $US338 billion ($AU317.8 billion) and $US476 billion ($AU447.6 billion). This is a significant increase in projected costs associated with building the smart grid as indicated in the 2004 report.

The increased costs are a reflection of a newer, more advanced vision for the smart grid. The concept of the base requirements for the smart grid is significantly more expansive today than it was seven years ago and those changes are reflected in the report.

The updated analysis assumes steady deployment of smart-grid technologies beginning in 2010 and continuing through 2030. Estimates were subdivided into the investment required to meet load growth and to correct deficiencies – such as power-flow bottlenecks and high-fault currents that damage critical equipment – through equipment installation, upgrades and replacement, as well as investment needed to develop and deploy advanced technologies to achieve ‘smart’ functionality of power-delivery systems.

The costs cover a wide variety of enhancements to bring the power-delivery system to the performance levels required for a smart grid. The costs include the infrastructure to integrate distributed energy resources (DER) and to achieve full customer connectivity, but exclude the cost of generation, the cost of transmission expansion to add renewables and to meet load growth, and a category of customer costs for smart-grid ready appliances and devices.

Included in the investment estimates are estimated expenditures needed to meet load growth and to enable large-scale renewable power production. As part of these expenditures, the components of the expanded power system will need to be compatible with the smart grid.

The assessment found that deploying a smart grid will require careful policy formulation, accelerated infrastructure investment and a greater commitment to public-private research, development and demonstrations to overcome barriers and vulnerabilities.

Two-way information will improve energy ecosystem

A US report from Zypryme Research & Consulting, LLC, The New Energy Consumer, found that an increase in information will deliver significant benefits to stakeholders across the smart grid ecosystem. According to the Electric Power Research Institute (EPRI), the increase in information gained from $338 billion to $476 billion investments in US grid modernisation will yield $1.3 to $2 trillion in benefits from 2010 to 2030. However, utilities have plenty of work to do in educating consumers about the smart grid, as only 18.5 per cent of respondents in Zpryme‘s Home Energy and Smart Grid survey said their utility had provided them with information about the smart grid. The survey also found that only 4.1 per cent of respondents considered themselves to be very knowledgeable about the smart grid.

Progressive US utilities such as Southern California Edison, Austin Energy, PG&E, SDG&E, Florida Power & Light, AEP, Xcel Energy and Duke Energy are currently setting the precedent for deploying smart-grid networks and technology. On the vendor side, major players such as Itron, Oracle, SAP, IBM, AT&T, Sprint, Verizon, SmartSynch, Alcatel-Lucent, Cisco and Juniper Networks are aggressively seeking market leadership in the utility enterprise system and smart-grid communications market. By 2015, Zpryme projects the US market for enterprise and purpose-built systems and networks will reach $6.5 billion and the smart-grid networks market to reach $1.6 billion. As utilities continue to debate the use of private or public networks to link utilities and customers with real-time energy information, the rise of the ‘new energy consumer’ will ultimately become the driving force behind the smart grid and the green economy of the future.

Over the next five years, the market will continue to be dominated by Oracle, SAP, IBM and Microsoft, but companies such as SolarWinds and Infor will make a strong push to seize their share of the US market. Zpryme projects the US market value for utility enterprise and purpose-built systems and networks for mission-critical operations will grow from $4.2 billion in 2010 to $6.5 billion in 2015.

The compound annual growth rate (CAGR) from 2010 to 2015 is projected to be 9.2 per cent. By 2015, the utility enterprise systems market and the purpose-built network market are projected to reach $5.1 billion and $1.4 billion, respectively. During this time period, the enterprise system market will grow at 10.4 per cent annually while the market for purpose built networks will grow at 6.4 per cent annually.

Connected grid

The market value for smart grid communication access networks in the US is projected to grow from $734.6 million in 2010 to $1.6 billion in 2015. The CAGR from 2010 to 2015 is projected to be 16.7 per cent. In 2010, wired networks accounted for 65 per cent of the total communication network value, while wireless networks accounted for 35 per cent of the market. In 2015, wired networks are projected to account for 48 per cent of the total communication network value while wireless networks are projected to account for 52 per cent of the market. Within the wireless network segment, the market value for public networks reached is projected to achieve revenues of $US333.4 million by 2015 and grow by 38.8 per cent annually over the next five years.

US executives prioritise and prepare

A new study by Platts and Capgemini involved 100 senior utility executives from the North American electric and natural gas utility industry to identify and prioritise current industry trends, assess opinions about the future of the industry and measure the steps utility companies are taking to prepare for the future. The most important strategic planning issues included operation and maintenance cost-reduction, new pricing policies and leveraging smart grid technology.

Seventy-two per cent of US utility industry executives report they are or have been involved in a smart meter roll out to their customers. Most report they either do not know or have not experienced a reduction in peak demand or energy usage yet as a result of these efforts. Additionally, 46 per cent say they do not expect consumer use of smart meter-provided information to manage energy consumption to become mainstream. The respondents describe the leading benefits of smart meter information as the ability to better manage outages and the ability to tailor prices to demand.

The surveyed executives said they plan to increase their focus on environmental regulation, pricing/rates, end users, consumer technologies such as electric vehicles and energy-efficient appliances, and infrastructure over the next five-to-10 years. Over the same period, the industry leaders anticipate their companies will increase the use of wind, solar, and natural gas in their overall fuel mix and the majority expect to decrease their use of coal as a fuel source.

Eighty per cent of the respondents believe the industry should create business models that support decoupling, but only a small proportion strongly agree the industry will move in this direction (12 per cent). Nearly 72 per cent of the executives report they are currently involved or have been involved in rolling out smart meters to their customers and 26 per cent of those report that a significant number of their customers have smart meters installed.

Sixty per cent of the surveyed executives strongly agree that utilities need to embrace the concept of proactively engaging with their customers. Fifty-five per cent strongly agree that utilities will have to focus more on system and cyber-security and that utilities need to be more media-savvy and more involved in public relations. One concern for utility executives is how best to communicate and educate end users about the costs of green energy.

Demand response to reduce peak demand consumption

The US Consumer Electronics Association (CEA) found in a new report, Unlocking the Potential of the Smart Grid – A Regulatory Framework for the Consumer Domain of Smart Grid, that smart-grid technologies will revolutionise the way US citizens understand and manage energy consumption. The most efficient untapped energy resource may be energy efficiency achieved through demand response.

In studies conducted by the Federal Energy Regulatory Commission (FERC), technology-enabled demand response has the potential to reduce peak demand consumption by 188 GW nationally in 2019 – a 20 per cent reduction in estimated peak demand. These reductions can alleviate the need for additional energy generation and allow the country to achieve many of its energy goals.

Consumer-driven demand response will not happen without fundamental changes in the way consumers participate in the energy marketplace. CEA believes that in order for demand response to succeed, consumers must be provided the economic incentive to reduce peak demand through dynamic pricing programs and their third party smart grid providers must have access to real-time consumption and pricing information in a format they can use.

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