The Smart Grid: Will Utilities Build Or Lease?
The utility industry’s embrace of smart-grid technologies has the potential to add millions of connections and hundreds of terabytes of data to today’s communications networks. The largely unanswered questions are: “Will utilities build private networks or use commercial providers?” and “Will they use wireless or wireline solutions?”
Speaking at yesterday’s 4G Caucus in Arlington, Va., sponsored by the Wireless Communications Association International (WCAI), Dr. Mo Shakouri, corporate vice president/Innovation and Marketing at Alvarion, said, “There are over 2 billion unautomated utility meters worldwide. Think of this as the number of nodes that will get connections. The amount of potential investment is significant.”
Shakouri reported that, in 2011, there will be some 30.5 million smart meters installed in the United States, and that number is projected to climb to 85.7 million by 2015. Similarly, data consumption by utilities will expand sharply – more than fourfold during the next decade – as utilities roll out distribution and substation automation systems, advanced metering infrastructure and other smart-grid applications.
So will utilities turn to commercial broadband carriers to provide service? It depends on the application.
“The amount of latency and reliability needed for your toaster or meter will be different from what your nuclear power plant needs to know regarding when to cool or not,” commented Scott Harris, executive vice president/Legal and External affairs at Neustar and former general counsel for the U.S. Department of Energy. “There may be some things the telcos can do well, like reading meters, and some things better for utilities.”
However, commercial broadband providers wanting to serve the utility industry will have to address reliability and latency. “Battery backup is much longer on a utility network. The telco network is not as reliable as we need,” noted Brett Kilbourne, director of regulatory services and deputy counsel for the Utilities Telecom Council.
Low latency – in the milliseconds – also is essential for some mission-critical utility applications. “On transmission systems, utilities use teleprotection systems. If they trip too late, you have a situation like the Northeast blackout,” Kilbourne explained.
The utility industry believes it will need roughly 30 megahertz of wireless spectrum to address its smart-grid needs – and most of that is slated for the middle mile. “From an economics standpoint, we can cover more homes with a wireless network than running wireline to every home,” said Kilbourne.
So far, however, the Federal Communications Commission hasn’t allocated spectrum to the utility industry. “We need the process to move faster. We can’t hold up the smart grid forever because of a lack of spectrum,” Kilbourne added. “In the short term, we may have to rely on commercial providers.”
Richard Amons, managing director at Capital Wireless, recommended that utilities and spectrum owners work together, especially in small markets. “It will take away investment dollars to build 20 different silos of spectrum,” he said. “There is a lot of spectrum out there that is not being utilized. Use some small rural areas as the sandbox and kick the tires. This would educate spectrum holders on how we can service each other without being completely redundant.”
In the end, the utilities will decide whether to build their own networks or to partner with others. “The telecom companies need to do a better job of understanding the utility companies’ needs,” Neustar’s Harris concluded. “They haven’t made the utilities feel comfortable.”
-Jennifer Whalen