DistribuTECH 2015: What's the killer app for the smart grid? There isn't one.
This year's big show is over. Here are some takeaways from the interviews we had this week.
DistribuTECH 2015 is officially over, and according to the people we've spoken to this week, the takeaway is a bit different this year. While specific technologies have dominated past conferences, this year it was less about the devices and more about how utilities use them best. Doing that demands that utilities consider not just what they put on the grid, but how their workforces operate and integrate those technologies.
If you're interested in catching up on the last few days at the show, check out Utility Dive's coverage of the CEO keynotes, day 1 and day 2. The remaining highlights from the week and day 3 are below.
Black & Veatch: It’s more about people and process than the technology
Gavin Bade: Kevin Cornish, director of Black & Veatch's smart utility practice management consulting, has been coming to DistribuTECH long enough to notice key trends. A few years ago, he told Utility Dive, “all the sudden everyone did a ‘smart’ something. Whatever they did, they put ‘smart’ on the logo.”
A couple of years after that, it was big data and analytics. “All the presentations were about data, all the demos were about data,” he said, or at least it seemed that way.
This year is different, however. There’s no such focus on an individual innovation or a particular technology, he said. More than that, utilities seem to be turning inward, attempting to understand how they can make all their new toys work best.
“A lot of what utilities have been doing is the technology — focusing on getting the technology in place,” he said. “But now I think there’s more focus on the people and the process.”
In a lot of ways, that makes for a lower-key show, Cornish explained. Utilities aren’t as apt to splash out hundreds of millions of dollars on new systems and gadgets, but what they want are insights and products that help their people maximize the value of those big investments. And a lot of that means focusing on getting their operations and people — many of whom have been around for decades — to adapt to the new technology.
“You’ve got legacy systems and legacy business processes,” he said. “You’ve got organizational structure that was optimized for a certain way of doing things and now you’re asking your organization to adapt to a different way of doing things. That’s hard for any company and even harder in the utility industry.”
But these trends aren’t just Cornish’s inklings, valuable as those may be. Black & Veach recently released their 2015 Strategic Directions: Smart Utility report, a survey of more than 700 utilities and other stakeholders, and its results support the observed trends at DistribuTECH.
“The biggest challenge [utilities] identified wasn’t that the technology didn’t work,” he said. “It was about the people and the processes and adapting to the change.”
That inward-looking trend is not a bad thing, Cornish concluded. Only through this process can utilities be sure to get the full potential of all the new devices and systems flooding the market.
“The reason they’re looking inward is they realize that in order to get the value that these investments identified, whether it was improved operating efficiency, lower cost, improved reliability — in order to get the benefit, they have to change the way they do things,” he said.
Nexant CTO: Utilities need to look at convergence of changes to solve the puzzle
Davide Savenije: The U.S. electric utility industry faces many disparate challenges today, ranging from aging infrastructure to emission standards and electricity sales to distributed energy resources.
But these problems are not as disparate as they seem, according to Martin Milani, chief technology officer at Nexant, a provider of software solutions to the electric utility industry, from grid management, demand side management, and customer care and billing.
"Utilities now need to look at a convergence of all these things together to solve the puzzle," Milani told Utility Dive in an interview on Thursday. "Which means you need to be able to concurrently look at demand response, renewables penetration, energy efficiency, volt/VAR, conservation voltage reduction. You need to tie all these things together to make the whole chain more efficient. Now you have a whole bag of tricks you can play with instead of a one point solution here, a one point solution there."
One of the biggest challenges for utilities in 2015, he added, is that "they have basically operated as a bunch of disconnected silos."
Looking back 25-30 years ago, the business processes inside many utility organizations with regard to enterprise resource planning were not integrated, Milani said. Utilities would buy an accounts receivable (AR) system, then there was an accounts payable (AP) system, then there was a general ledger (GL) system, then there was an inventory management system, and then you had an order entry system.
"These things were basically sometimes integrated point-to-point and sometimes they weren't," he said. "[Utilities] basically had armies of people that made sure the data was shared and the management of these companies had a consolidated view of what was happening in the business, typically three months after it occurred."
With the emergence of enterprise resource planning, there is now full blown, real time visibility into these processes and semi-real time process management across all these systems, according to Milani.
Think of Amazon — "if you order something now, a second later, everyone knows what has occurred," he said. "A bill has gone out, a credit card has been charged, something has been ordered, and fulfillment is already in the process of shipping it out — in a matter of seconds."
Utilities — certainly the larger ones — have the resources to be able get to that process, Milani suggested. "That's the kind of coherent integration that utilities need to get to if they are truly going to be customer centric."
Milani was quick to remind Utility Dive that technology is only part of the equation.
"It's much bigger than just integrating technologies," he said. "It's changing the way the business is run — and then you need the systems to do that. Because if you're just doing this as an IT exercise without all the business ecosystem changes that are required, it's probably not going to be successful."
The question, as always — how do utilities do this (and do it well)?
There's not a lot of clarity there, Milani said, but most utilities — if not all — realize they need to do something.
Utilities deliver a must have service and that's not going to change, he said. "What will change is how much money they make."
Milani told Utility Dive to look at the disruption that previously took place in other industries, such as telecom or financial services. The first ones that changed, survived, he said.
The same thing will happen in the utility industry, he said. The survivors in those other industries were often the ones that were willing to cannibalize their existing businesses to realize the opportunities that were coming.
Silver Spring Networks: It’s not about gadgets. It’s about connectivity.
Gavin Bade: Shows like DistribuTECH can be dizzying for those trying to make sense of smart grid technology. With so many vendors pushing countless smart technologies from metering infrastructure to smart inverters to energy data management systems, where is a utility (or a journalist, for that matter) to begin?
According to Eric Dresselhuys, executive vice president of global development at Silver Spring Networks, that focus on individual gadgets is misguided. More than the devices you put on the grid, what matters is how they connect and interact with each other. At least that’s what Dresselhuys says has pushed his company’s growth over the last decade.
“Our take on it was, we’re not sure if we’re smart enough to guess all of the different underlying technologies that are going to win at the device level,” he told Utility Dive, “but … it seemed like everything’s was going to have to be connected.”
That was back in 2002, when some viewed the company’s networks as a bit overkill. If you just want to read meters, why would you need a high-end IT-based system with built-in security and grid integration options? Those complaints have largely vanished today, according Dresselhuys.
“If you generally buy this idea of this major technology transformation we’re going through in the industry, one of the core tenets is going to be network connectivity,” he said.
Not recognizing that connectivity has been the harbinger of doom for many utility vendors, Dresselhuys continued. In today’s world, if you don’t have a fast, reliable network, none of the devices will work properly. But if you build a network, you can allow your customers to use their devices in a way that suits them best.
“If your iPhone doesn’t have a network, it doesn’t matter how cool the app is because you’re not connected,” he said. “So, you’ve got to get that part right, and I think that’s really been the legacy of us teaming up and partnering with our customers to give them a platform on which they can do all this cool stuff.”
“They all do different things, which is the best part of it from our standpoint,” he said.
That expectation for connectivity has been driven by other industries, Dresselhuys told Utility Dive. While utilities used to refer to their customers only as ratepayers or even just as load, the internet revolution made that thinking obsolete. When consumers can buy anything online and be notified of its status in real time, it changes how they think about energy services.
“[Customer] expectations for energy are driven largely by their interaction with retail in general,” he said. “Our expectations of knowledge and insight are just so much higher now, driven by being constantly connected human beings, so what we’re finding is consumers have a higher expectation for energy services.”
ABB: Nobody is making use of renewables in the most efficient way
Davide Savenije: The utility business is "more challenging than it's ever been," Howard Self, ABB's program manager for smart grid distribution automation, told Utility Dive in an interview on Thursday.
There's no doubt about that, but Self believes that utilities can use some the same technologies that are causing them problems to their benefit.
"We're not making use of the renewables in the most efficient way," he said. "Nobody is right now."
The question is not, how do renewables hurt the system? According to Self, it's about asking, how does it help the system?
The same thing goes for microgrids. A lot of public utility commissions are looking at utility reliability metrics and seeing they're not where they should be, Self said. Many state regulators are then recommending microgrids as a solution for the utility.
But if it's being mandated by PUCs, it's going to be a bad business model for utilities initially, he said. A microgrid, after all, is not just a group of components. It's about the design of the microgrid and the system that it's integrated with.
"We get all these questions — do you have the microgrid software?" Self said. "We've had it for 100 years. It's an EMS system."
In fact, Self added, "we started off the whole country as a microgrid in little segments, little pockets, and what we found it is, the more we tied it together, the more stability we had."
The challenge for utilities and microgrids is that it can be become very complicated in terms of pricing, technology, safety and — most of all — "the coordination of all those different things."
The technology is there, but the operational and business models are not, and that's where utility innovation needs to take place.
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