Enabling Smart and Sustainable Customer Offerings
Sep 02, 2015
An insight on best practice enablers in the U.S. utility sector
By Farah Saeed, Principal Consultant Energy & Environment, Frost & Sullivan
These days, significant emphasis is being placed on the term sustainability, whether it is in terms of operating a business, catering to a customer need, or planning for the future. According to the dictionary, sustainability is referred to as “the quality of not being harmful to the environment or depleting natural resources, and thereby supporting long-term ecological balance.”
Without any action to modernize the grid, the ability to obtain true sustainability is at risk. Today, 70 percent of the power transmission system is more than 25 years old and the average age of large power transformers is 40 years, making the grid more vulnerable to losses and inefficiencies. Improved efficiencies could eventually lead to reduction of harmful emissions produced by the current main source of electricity: coal. Coal, though declining, still accounts for one-third of electricity produced. The grid is also, at the moment, racing to accommodate state-level mandates to integrate renewable and distributed power by adding new infrastructure.
To counteract the immense amount of investment required to replace aged infrastructure, significant emphasis has been placed on embedding efficiencies by deploying smarter/digital technology that can improve communication among devices as well as increase visualization across the grid. As a result, modernization is occurring across transmission, distribution, and to the edge of the home—all the while remaining conservative, in part, because of rate increase constraints.
One of the successful approaches till date has been to implement power curtailment measures by modernizing the existing metering infrastructure. In Frost & Sullivan upcoming market analysis on the global advanced metering infrastructure, it is shown that between 2011 and 2014, approximately 37 million smart meters were shipped in the U.S. and approximately 5 million in Canada.
Unlike traditional meters, smart meters have the ability to send and receive data from the utility as well as offer added features such as tamper detection, accurate meter reading, power quality monitoring, and remote switch off/on. This instant access to messaging and signaling is critical for enabling power curtailment programs, such as demand response and prepayment programs. Investment in smart meters has produced a lucrative market for promoting sustainability initiatives in which companies such as AT&T are playing an important role as an enabler through its wireless offerings.
The list of AT&T’s accomplishments in the utility space is long and impressive. Over the course of the past few years, AT&T has taken important steps to align its business for the next generation of utility services based on its core competence of wireless and wireline technology.
The company is respected for its rigorous approach to innovation, uptime, and customer satisfaction. This vision was supported as far back as 2008 when the company formed a division specifically dedicated to emerging devices such as smart grid technology. The Mobile Broadband Accelerator Program certifies each device deployed on the network to ensure maximum functionality and uptime. The company currently supports 16 million meters in the U.S. for point-to-point cellular service. Overall, the AT&T utility strategy centers on 4 specific areas:
Rationalizing a Data Plan for Smart Grid Meters
One of the important steps that AT&T took was to rationalize the data plan. Earlier, a data plan could be as much as $7 to $10 a month per 1 megabyte of data. Today, the data plan is $0.50 a month per megabyte of data, making the wireless network a more achievable option for data transmission and for developing point-to-point offerings for smart meters. The transition from 3G to LTE has been a major enabler for other smart grid functionalities in addition to meters. Low latency is critical for rolling out fast-reacting control devices for Volt/VAR systems for reducing voltage variance and producing demand reduction.
Reduce Complexity to Implement Smart Grid
A healthy competitive environment has kept the industry attentive when it comes to developing improved offerings. Rapid industry changes are driven by the influx of data coming from meters and other automation systems. This data influx has created a demand in the industry for information and processes to effectively create useful analysis and output.
AT&T has identified cooperatives and municipals as a customer category that could significantly benefit from a bundled advanced meter infrastructure AMI solution that is managed in the cloud. This includes meters, head-end servers, and meter data management (MDM). This was considered an ideal target market for these kinds of solutions because smaller utilities do not necessarily have in-house capabilities. There are approximately 2,100 municipals present in the U.S., and MDM is an essential tool for data processing, analyzing, and reporting trends and; therefore, in supporting utilities in forecasting failures versus responding to them.
Capitalizing on Changes to the Existing Meter Infrastructure
AT&T identified an untapped opportunity for prepaid electricity. Smart meters with disconnect switches make it easier to offer prepaid electricity services. This practice is already well adopted in Europe where approximately 18 percent of households are on prepaid plans. In North America, the number is closer to 1 percent. AT&T sees this as an untapped opportunity.
There are currently 140 million meters, approximately 6 to 10 million are replaced every year. Approximately 90 percent of devices deployed have disconnect switches. Utilities lose between one-half and 1 percent of revenue to unpaid bills that are typically written off. This translates to $1 billion. When taking operational costs into consideration, the loss increases to $3 billion.
According to the Federal Deposit Insurance Corporation (FDIC), 8.2 percent of residents did not have a bank account in 2012. This translates roughly to 10 million of households. Typically, these households are living paycheck to paycheck and; therefore, cannot meet the minimum balance requirements. Non-salaried workers that are paid hourly would be another target customer. AT&T believes a combined 20 percent of households would be a great target market for prepay programs.
Nevada Energy has had some success with this type of program as a way to improve customer satisfaction. Other utilities with the program include the Salt River Project, Georgia Power, Detroit Edison, APS, and, most recently, Duke Energy. The offering is a cloud-based solution that interacts with meters to better manage consumption. At the moment, AT&T has an exclusive deal with PayGo.
Developing Cellular Reference Designs for Internet of Things
An area that AT&T has excelled in is developing cellular reference designs for existing and future smart grid devices. AT&T formed a global partnership with GE in 2013 that led to the development of cellular reference design for smart meters and smart city lighting. Reference design took two years to develop and cost $2 million to produce. This has allowed GE to expand its advanced meter offering to beyond just the meter. The LED lighting solution will allow cities to remotely monitor and control lighting on public roads. The two companies are now working on proof of concepts at the AT&T Internet of Things Foundry, which is located in Texas.
A separate cellular reference design referred to as Cellular Communication Module (CCM) has been developed for pre-pay energy applications. M2X is another example of enabling of future technologies. M2X is a managed service for developers with the intent of advancing IoT applications. As described by AT&T, “This cloud-based data store lets enterprises collect, analyze, and share data that can be tracked over a period of time from connected devices.” Early outputs have led to partnerships with Rockwell Automation and Emerson and could be an important tool for enhancing edge computing to the grid, allowing for decentralized rectification of issues pertaining to outage management.
Combined utilities, generate approximately $370 billion in annual sales, making it a highly valuable industry for companies such as AT&T to invest in as a vertical market, particularly due to the changes occurring. Bringing the industry into the 21stcentury is essential, making AT&T an important enabler.
(Also published in M2M Now Magazine July-August Edition)
 Frost & Sullivan: Global Advanced Meter Infrastructure (AMI) Market #MA51-14
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