2014 S TR ATEGIC DIRECTIONS:
UTILIT Y AUT OMATION & INTEGR ATION
A Black & Veatch Report
TABLE OF CONTENTS
INTRODUCTION2
The Black & Veatch Analysis Team
About This Report 4
6
EXECUTIVE SUMMARY 8
TELECOMMUNICATIONS The Evolution of the Utility Network
Outlook: Generating Value From Network Convergence
UTILITY AUTOMATION Pushing the Boundaries of Smart Grid
Hong Kong: Real-Time Data Monitoring Helps Keep
Tabs on Stormwater DATA ANALYTICS Bridging the Gap Between Data and Knowledge
Outlook: A Growing Relationship Between Data Centers
and Utilities
TECHNOLOGY Utilities and the Cloud
Outlook: Tech Advantages Moving to Small Utilities
12
12
17
18
18
23
24
24
28
30
30
33
CONCLUSION34
The Road Ahead: Smart Integrated Infrastructure™
34
INTRODUCTION
Welcome to the inaugural Black & Veatch Strategic Directions
report on Utility Automation and Integration. The purpose
of this report is to provide insight on common challenges
and opportunities that utilities of all sizes and types face
with regard to adding greater levels of intelligence into
their network operations.
Electric, water and gas utilities must all manage common challenges associated with the availability of natural resources,
costs, regulation and customer requirements. These challenges are driving factors for increasing automation and
communications across utility functions and implementing real-time monitoring and diagnostics to enable proactive
decision making for enhanced asset management.
Unprecedented access to information continues to break down once-siloed functions, altering traditional utility
paradigms and, in some cases, business models. This creates new opportunities for utilities to leverage automation and
communications technologies for reliability improvements, operational efficiency and enhanced security.
As utility leaders work to maintain regulatory compliance and manage budgets, it is important to align investments with
the organization’s long-term strategic vision. Telecommunications, automation and analytics programs offer utilities the
ability to accelerate the return on past, present and future capital investments.
On behalf of Black & Veatch, we are grateful to all who participated in this industrywide survey. We also acknowledge the
Black & Veatch professionals who provided their time, talent and insight in the creation of this report.
This report and all Black & Veatch industry insights are available at www.bv.com. In order to continuously improve our
reports and thought leadership materials, we welcome your questions and comments.
Please send your feedback or requests for information to MediaInfo@bv.com.
Sincerely, MARTIN TRAVERS | PRESIDENT
Black & Veatch’s telecommunications division
JOHN CHEVRETTE | PRESIDENT
Black & Veatch’s management consulting division
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
BLACK & VEATCH IS WORKING WITH
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY TO ACHIEVE MEASURABLE
NETWORK IMPROVEMENTS USING
TECHNOLOGY.
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INTRODUCTION
BLACK & VEATCH ANALYSIS TEAM
EXECUTIVE SUMMARY
UTILITY AUTOMATION
Fred Ellermeier is a Vice President and the Chief
Curtis Johnson is the Utility Automation Director for
Operating Officer of Black & Veatch’s Smart Integrated
Black & Veatch’s telecommunications division. He is
Infrastructure service line. This service line leverages
responsible for client satisfaction, quality, cost and
distributed infrastructure development capabilities with
schedule for all utility automation projects and services.
a high-end analytics platform to address the areas of
Johnson’s areas of expertise include a thorough
asset management, operational efficiency, reliability,
knowledge of the management of complex infrastructure
and sustainability to a wide variety of clients. With more
projects, from planning and engineering through testing
than 20 years of experience, Ellermeier is an expert in
and commissioning, in order to achieve desired project
energy management, energy optimization and sustainable
objectives. Johnson spent nearly 25 years working at
design practices.
multiservice utilities before joining Black & Veatch.
UTILITY TELECOMMUNICATIONS
Paul Miller is a Vice President in Black & Veatch’s
telecommunications division where he leads the
company’s Private Networks business line. With
nearly 25 years of experience, Miller provides
executive leadership over all utility automation and
telecommunications projects involving electrical
substation and distribution automation, SCADA systems,
and wireless and fiber telecommunications networks.
Charles Hill is a Regional General Manager in
Black & Veatch’s telecommunications division. With more
than 35 years of experience, Hill’s technical expertise
includes telecommunications strategic and business
planning, along with design and construction of the full
range of telecommunications technologies for utilities.
Dean Siegrist is the Director of Black & Veatch’s Utility
Telecommunications business line. With more than
20 years of experience, Siegrist leads the development
and execution of utility telecommunications projects,
including a continued focus on the impact of smart grid
programs on utility telecommunications infrastructure.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
Dave Roberts is an Associate Vice President in
Black & Veatch’s water business and the National Practice
Leader for instrumentation and controls services in the
Americas region. He has more than 25 years of experience
in the application of automation for energy monitoring,
control and optimization of water and wastewater facilities.
William Biehl is an Automation and Telecommunications
Project Manager in Black & Veatch’s telecommunications
division. With more than 20 years of experience, Biehl
manages projects for electric, water and gas utilities
across North America. Biehl has led projects for water
utilities in the areas of treatment, distribution and
collection specifically focused on automation and SCADA
to improve reliability and efficiency. Biehl leads electric
utility projects in distribution, substation automation and
telecommunications, improving reliability and security
with a planning focus on future requirements.
DATA ANALYTICS
Richard Azer is the Director of Development for
Mark Moskovitz is a Senior Executive Consultant in Black
Black & Veatch’s SII service line and is involved in
& Veatch’s management consulting division, where
developing smart city initiatives, such as microgrids,
he is responsible for growing the company’s business
distributed renewable energy and intelligent utility
intelligence and data analytics services for gas, electric
networks. Azer has over 20 years of experience in
and water utilities. He also has lead responsibility for
developing and implementing emerging technologies.
customer engagement projects and initiatives. Moskovitz
He is currently involved in a program to deliver the first
is a regular thought leadership contributor, industry
nationwide network of high-power, fast electric vehicle
speaker and author. He co-authored the 2012 white paper
charging stations.
Customer Transformation – A Challenge from Competitive
Markets, among numerous other publications.
Kevin Cornish is an Executive Consultant in
Black & Veatch’s management consulting division.
With more than 25 years of direct experience in the
electric industry, Cornish specializes in the integration
of intelligent infrastructure systems, such as GIS, AMI,
MDMS and OMS, into the utility enterprise.
CONCLUSION
Martin Travers is the President of Black & Veatch’s
telecommunications division and Executive Sponsor
of the company’s SII service line. Travers has led the
strategic growth of Black & Veatch’s telecommunications
business for more than 10 years. The company’s
telecommunications division provides vertically integrated
solutions to both public and private network clients
around the world. In addition, Travers is a member of
TECHNOLOGY
Black & Veatch’s Board of Directors.
G. Scott Stallard is a Vice President and oversees asset
management services within Black & Veatch’s energy
business, where he focuses on developing processes,
tools and solutions that help power generators better
address the technical and financial challenges in
today’s market. With more than 35 years of total
experience, Stallard specializes in plant performance,
information technology solutions and competitive
generation practices.
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INTRODUCTION
ABOUT THIS REPORT
This Black & Veatch Strategic Directions report focuses on Utility Automation
and Integration and is a compilation of data and analysis from an industrywide
survey. The industrywide survey was conducted from October 16 – November 8,
2013. A total of 235 qualified industry participants completed the 20-minute
questionnaire. Statistical significance testing was conducted on final survey
results. Represented data have a 95 percent confidence level.
Among these participants, 65.1 percent represent electric
The Black & Veatch survey specifically targeted executives
utilities, 10.2 percent represent water utilities and
and technology leaders within utility organizations.
23 percent represent a combined utility organization
More than half of the respondents stated that operational
(Figure 1). Nearly half of the respondents represented
technologies is their area of technology responsibility
publicly owned organizations, and nearly 42 percent
(Figure 3).
represented investor-owned utilities (IOUs) (Figure 2).
FIGURE 1
RESPONDENTS BY UTILITY TYPE
Figure 3.
80
70
65.1%
60
50
40
30
23.0%
20
10.2%
10
0
1.7%
Electric Utility
Water Utility
Natural Gas Utility
Combined Utility
Source: Black & Veatch
NOTE: Because of the small sample size of respondents who identified their organizations as natural gas utilities, this report provides
comparisons only between electric, water and combined utility providers.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
FIGURE 2
RESPONDENTS BY TYPE OF ORGANIZATION
50
46.8%
41.7%
40
30
20
10
0
5.5%
4.7%
Public
IPPs
IOUs
Private
1.3%
Other
Source: Black & Veatch
NOTE: Because of the small sample size of respondents who identified their organizations as independent power producers, private or other,
this report provides comparisons only between public utilities and IOUs.
FIGURE 3
RESPONDENTS BY AREAS OF TECHNOLOGY RESPONSIBILITY
60
52.5%
50
40
32.6%
24.9%
30
20
28.5%
22.2%
13.1%
10
0
Corporate
IT networks
Field device Operational
automation technologies
Operations
IT networks
Smart
metering
Other
Source: Black & Veatch
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Figure 4.
BY F RED EL L ERME I E R
When the term “smart grid” first entered the common lexicon, it was used to
describe a future state of electric utility distribution networks. This future
state promised a grid that would have lower operational costs and be more
reliable, more informative, better integrated and more efficient, among a long
list of additional benefits.
Since the rollout of the first smart grid programs,
BUILDING ON DATA
there has been a realization that automation and
The first step in creating Smart Integrated Infrastructure
“smart” programs benefit all types of utilities and
is creating a smart network. This network is generally
infrastructure systems. Gas and water smart grids, for
referred to as a utility’s “smart grid” program and involves
example, will result in more efficient storage, improved
the deployment of a foundational communications
distribution, reductions in system losses and expanded
infrastructure. This foundation provides the connectivity
customer engagement.
that enables smart meters, sensors and other devices
across the utility enterprise. These devices can collect
However, as noted in Black & Veatch’s 2011 Strategic
and transmit data to utility operators. As utilities deploy
Directions in the U.S. Electric Industry report, “divergent
their foundational networks and advanced metering
perspectives make the commitment to achieving smart
infrastructure (AMI) systems, they also seek additional
grid opportunities more difficult to define, quantify and
applications to leverage the communications network and
justify. Without common alignment of program objectives,
meter as a sensor.
Figure 5.
approval from regulators, utility boards and consumer
advocates becomes difficult.”
The benefits realized by utilities that have fully
implemented AMI programs have been compelling.
These concerns continue to resonate in 2014.
NV Energy’s NVEnergize smart metering program, for
example, has resulted in annualized operational savings
Black & Veatch believes that the objectives and
of $35 million. Smart meters for water utilities eliminate
priorities of all utility stakeholders can ultimately be
the need to estimate customer usage, making billing more
achieved through a series of progressive improvements.
efficient and accurate. Further, smart meters can facilitate
These improvements go beyond a smart grid or utility
better management of water resources, particularly during
distribution network. A Smart Utility™ integrates multiple
periods of drought. But regardless of utility type, all AMI
systems, such as generation, distribution and demand-
programs generate data – and lots of it.
side management, to reduce resource requirements and
costs while enhancing reliability and performance.
Utilities are also looking to expand data collection to
include distribution and other assets, such as water
Additionally, by not just making a smart grid, but a “smart
treatment plants, pumps and transmission lines. More
utility,” currently siloed infrastructure systems, such as
than 70 percent of all utilities plan to expand the use of
electric, water, gas and transportation, can work together
sensors and other instrumentation to gather field data
seamlessly to create even greater value for a community
within the next three years (Figure 5).
and each other. In a real and tangible way, we can create
Smart Integrated Infrastructure™ (Figure 4).
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
high
FIGURE 4
THE STEPS TO SMART INTEGRATED INFRASTRUCTURE™
IV. Smart Integrated Infrastructure
■ Multiutility Integration
■ Physical-Cyber Integration
III. Smart Utility
Multisystem - Multi-Facility Aggregation
Strategic Impact
■
II. Smart Information
■ Data Aggragation and Analysis
■ Smart Single-Use Infrastructure
I. Smart Network
■ Device Connectivity
■ Smart Grid
low
high
Integration Progression
Data
Information
Knowledge
Wisdom
Source: Black & Veatch
FIGURE 5
PLANS TO EXPAND SENSOR USAGE FOR FIELD DATA ANALYSIS DURING NEXT THREE YEARS
39.1%
40
35
30
26.4%
25
18.3%
20
15
10.6%
10
5.5%
5
0
No plans
Yes, but in very
limited
applications
Yes, for some Yes, for all technical
important technical
and business
and/or business
applications
applications only
I don’t know
Source: Black & Veatch
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EXECUTIVE SUMMARY
Regardless of utility size or type, AMI and other smart
ANALYTICS
grid programs involve the creation and collection of large
Managing data can be a challenge. However, converting
volumes of data. Many utilities will be challenged to
data into actionable information and institutional
develop the in-house infrastructure or expertise necessary
knowledge is an opportunity. Just as the nervous system
to manage, store and secure the data generated across
provides critical information to the brain, sensor data
their operations. As detailed in the Technology section,
can tell a utility operator that a pump bearing is running
cloud services, whether privately owned or outsourced, are
2 degrees warmer than usual. Analytics can tell the
envisioned to emerge as an essential component of future
operator that, without proactive repair, the pump will
utility operations.
likely fail.
Today, less than 30 percent of survey participants stated
When considering the goals and objectives that many
their organization currently uses some form of public
conceived when smart grid first came into being,
or private cloud-based solutions. Of the organizations
analytics is fundamental to making these goals a reality.
that are using some form of cloud services, most activity
However, implementation of analytic programs has been
is limited to hosting software applications, data backup
relatively slow.
and data storage solutions. Cloud-based services
represent an area of opportunity for many utilities to
When asked what they considered their organization’s
enhance operations.
obstacles to capitalizing on data analytics, utilities listed
budget constraints, justifying the return on investment
Transferring data generated from smart meters and
(ROI) and insufficient in-house experience, respectively,
sensors across a utility’s enterprise to a central control
as the top three reasons they have not moved forward
location requires a robust telecommunications backbone.
(Figure 6).
Yet, the lack of available wireless spectrum and
ongoing financial pressures are limiting utilities’ ability
As Black & Veatch noted its 2011 Strategic Directions in
to incorporate smart grid programs into their private
the U.S. Electric Industry report, regulatory review and
communications network. As a result, many utilities
approval and business case development were the
are increasing reliance upon public carriers for non-
primary obstacles to the initial smart grid deployments.
mission critical applications. The Telecommunications
A primary challenge with smart grid initiatives is that
section addresses common problems and solutions for
“the business cases are reviewed by regulators and
maximizing utility telecom networks.
other stakeholders with a level of critical analysis not
seen in most other utility projects. Additionally, internal
Distribution automation is another area with substantial
competition for capital and organizational focus results
value for utilities. This is particularly important for electric
in increasingly critical attention in the management
utilities that are preparing for greater levels of control
review cycle.”
and monitoring in their network, while also supporting
distributed generation and renewable energy use.
The primary challenge for smart grid in 2011, and analytics
Distribution automation programs allow for improved
programs today, is the need to make assumptions about
efficiency of the network through optimization of the
the desired future state of the utility as a result of the
system and overall better asset management (refer to the
smart grid/analytics programs. These assumptions can
Utility Automation section for additional information).
be the focal point of internal deliberations because
they often have significant impact on the project
financials. Black & Veatch continues to recommend that
clients perform consistent and rigorous business case
assessments for all smart grid investments.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
gure 6.
Proving the value of analytics may be the last great
obstacle to creating utilities of the future and Smart
Integrated Infrastructure. Just as the first advanced
metering and “smart grid” programs provided valuable
lessons learned and benchmarks for others to follow, the
application of data analytics and management programs
will create new ways for data-driven enterprises to
integrate real-time knowledge. This will allow managers
to make smarter operating decisions and efficiently deliver
on the business goals of the utility enterprise.
PROVING THE VALUE OF
ANALYTICS MAY BE THE
LAST GREAT OBSTACLE
TO CREATING UTILITIES
OF THE FUTURE AND
SMART INTEGRATED
INFRASTRUCTURE.
FIGURE 6
TOP OBSTACLES TO IMPLEMENTING DATA ANALYTICS SOLUTIONS
80
70
63.7%
60
50
40.6%
40
30.3%
30
20
26.9%
24.8%
10.3%
10
0
Budget
constraints
Justifying
the ROI
Insufficient in-house
expertise
Security
concerns
Lack of in-house
understanding
or support
Source: Black & Veatch
Participants were asked to select the three greatest obstacles to implementing data analytics at their organizations. This chart highlights the
top five items as ranked by industry respondents.
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TELECOMMUNICATIONS
THE EVOLUTION
OF THE UTILITY NETWORK
BY PAUL MIL L ER , CH AR L E S H I LL AN D D E AN SIE G R IST
Increased connectivity is creating new types of data and control functions for
utilities. Smart grid investments are increasing utilities’ telecommunications
network requirements from both a geographic and capacity perspective.
As noted in the Technology section, growth in the use and deployment of
automation technologies, devices, and systems that use utility telecom
infrastructure is ongoing. However, without adequate improvements to a utility’s
telecommunications network, the full value of ongoing and future smart grid
investments cannot be realized.
For example, among the ongoing technology expansions,
Utilities need to be able to efficiently manage and control
advanced distribution automation is seen as having the
their infrastructure for service restoration even when
greatest impact on utility operations within the next five
commercial communications are not available.
years. Distribution automation is driving new telecom
requirements into areas of the utility’s operations that
Emphasis on the continued rollout of smart grid initiatives
have not had this type of connectivity. In turn, new
perhaps explains the diversity in responses to the
levels of connectivity create a need for greater network
question of how utilities will meet their telecom network
performance, reliability and security.
needs in the future. If a utility is actively deploying AMI,
it could mean that it is increasing its reliance on public
MEETING FUTURE NEEDS
Today’s utilities typically use a combination of both
public networks provided by telecom carriers and private
networks built to address their own internal requirements.
The use of this hybrid model is expected to continue
for the foreseeable future. The majority of survey
respondents stated they expect their utility to continue
to use both public and private networks.
Public networks are widely used by utilities for advanced
metering infrastructure (AMI) and traditional business
needs, such as voice and Internet connectivity. But
public networks are viewed less favorably for missioncritical applications. Direct control and operation of
the infrastructure is vital for utilities, particularly during
extreme circumstances such as severe weather events.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
networks. If the utility is advancing to more automation
activities, then it is likely building out or expanding its
existing private networks to support these operations
(Figure 7).
Most utilities continue to see private networks as an
indispensable component of their operations. As a
result, substantial investments are planned across both
traditional and new telecom technologies to replace
outdated systems and meet future requirements as well.
However, a number of factors challenge utilities when it
comes to addressing their network needs.
Utility staffing, for example, is generally focused on
meeting operational requirements. Aging workforces,
challenges with recruiting technical talent to work in utility
operations and costs associated with necessary personnel
make it difficult for utilities to engineer and deploy new
The Utilities Telecom Council (UTC) has estimated that 30
technologies and networks in a manner that can keep pace
megahertz (MHz) of spectrum in a frequency range below
with evolving requirements. Several Black & Veatch clients
2 gigahertz (GHz) is necessary in order to meet future
are investigating options to outsource the engineering
utility communications requirements. Unfortunately,
and operations and maintenance (O&M) of their private
utilities do not have reliable, available alternatives for
telecom networks. This emerging trend was confirmed
dedicated spectrum to support these needs.
by survey respondents, where 18.4 percent stated
outsourcing was likely or very likely (Figure 8).
WIRELESS SPECTRUM
Utilities rely on wireless telecommunications networks,
such as microwave and mobile radio, to meet specific
operational needs and support the reliable delivery of
services. In addition, wireless networks represent the most
efficient means for meeting growing smart grid network
requirements. However, wireless networks need spectrum,
and utilities typically do not have access to adequate
amounts of spectrum to meet existing and future needs.
FIGURE 7
MEETING FUTURE TELECOM NETWORK NEEDS – BY UTILITY TYPE
50
Electric Utility
Water Utility
Combined Utility
42%
40
33%
30
31%
30%
28%
26%
19%
20
18%
17%
13%
10%
10
0
7%
Maintain utility
owned or
other private
network
6%
Maintain use of
public carrier
network
4%
Maintain
Increased
combined use of dependence on
private network
private
and public
to support utility
networks
operations
5%
4%
4%
Increased
dependence on
public carrier
network to
support utility
operations
4%
I don’t know
Source: Black & Veatch
Utilities were asked how their organizations will meet operational telecommunications network needs in the future.
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TELECOMMUNICATIONS
FIGURE 8
LIKELIHOOD OF OUTSOURCING ENGINEERING AND O&M OF PRIVATE TELECOM NETWORK
23.5%
25
21.4%
20
15
15.0%
12.8%
10
5.6%
5
0
Very unlikely
Unlikely
Neutral
Likely
Very likely
Source: Black & Veatch
Participants were asked how likely it will be for their organization to outsource the engineering and O&M of their private telecom network. This
chart excludes “I don’t know” responses (21.8 percent of respondents).
FIGURE 9
LIKELIHOOD OF IMPLEMENTING A PRIVATE NETWORK
34.9%
35
30
25
19.6%
20
15
10
11.9%
10.2%
5
0
Not likely, utilize
public carrier
network
Not likely,
already have
private network
solution
Moderately
likely, would
consider for future
smart
grid needs
Very likely, would
consider building
network utilizing
this spectrum
Source: Black & Veatch
All participants were asked the likelihood of their organization developing a private network telecom solution to support utility operations or
resiliency if additional radio spectrum were allocated by the FCC. This chart excludes “I don’t know” responses (23.4 percent of respondents).
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
ure 10.
A key advantage of public carrier networks is that they
Based on available information, it appears unlikely that
control large bands of radio spectrum. This spectrum,
the FCC will allocate additional radio spectrum dedicated
allocated by the Federal Communications Commission
for utility use in the near term. As a result, utilities are
(FCC), could help utilities connect the thousands,
challenged to leverage all available spectrum choices,
if not millions, of smart devices across wide service
including public and private carriers and unlicensed
territories. However, these carrier networks do not provide
spectrum, in order to maximize their wireless capabilities.
immediate access and availability under all circumstances
because utilities are only one among a large number of
There is also potential for utilities to access spectrum
customers and connections. This circumstance drives
recently allocated on a nationwide basis for the First
many utilities to the conclusion that they should build
Responder Network Authority (FirstNet). The Middle Class
their own private wireless networks to meet specific
Tax Relief and Job Creation Act of 2012 created FirstNet
operational requirements. Nearly half (46.8 percent) of
in order to develop the first nationwide high-speed,
all respondents stated it was moderately or very likely
broadband network dedicated to public safety. FirstNet is
that their utility would develop its own a private wireless
to be built on the Long-Term Evolution (LTE) technology
network if additional radio spectrum were allocated by the
standard in order to deliver a cost-effective, reliable public
FCC (Figure 9). This is particularly true for small utilities
network across the United States.
(serving populations less than 50,000) where nearly
60 percent indicated their organizations would consider
The authorizing legislation encourages FirstNet to seek
building private networks (Figure 10).
additional participants such as utilities on a secondary
FIGURE 10
LIKELIHOOD OF IMPLEMENTING A PRIVATE NETWORK – BY SIZE OF POPULATION SERVED
<49,999
50,000-99,999
50
100,000+
47%
40
35.7%
35.3%
35.3%
30
20
10
0
18%
17.6%
21.0%
18.9%
15.4%
11.8%
9.1%
18%
12%
6%
Not likely, utilize
public carrier
network
Not likely,
already have
own private network
solution
Moderately
likely, would
consider for future
smart
grid needs
0%
Very likely, would
consider building
own network
utilizing this
spectrum
I don’t know
Source: Black & Veatch
All participants were asked the likelihood of their organization developing a private network telecom solution to support utility operations or
resiliency if additional radio spectrum were allocated by the FCC. Nearly 60 percent of small utilities said such activity was moderately or
very likely.
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TELECOMMUNICATIONS
use basis or possibly as public-private partners in the
NETWORK CONVERGENCE
network. Individual states are currently reaching out to
As utilities have evolved over the past several decades,
potential stakeholders within their state to establish
separate networks were built for specific operational
requirements and explore assets that might support
functions (e.g., mobile radio, SCADA). Reducing the
the FirstNet initiative. Black & Veatch recommends that
number of separate networks a utility owns and maintains
utilities actively engage in discussions at the state level
is one way to potentially reduce operational costs. One
to explore the value, synergy and benefits for them that
advancing solution is an Internet Protocol (IP)-based on a
might be achieved.
Multi-Protocol Label Switching (MPLS) network (refer to
Outlook: Generating Value from Network Convergence).
WITHOUT ADEQUATE
IMPROVEMENTS TO A
UTILITY’S TELECOM
NETWORK, THE FULL VALUE
OF ONGOING AND FUTURE
SMART GRID INVESTMENTS
CANNOT BE REALIZED.
Another area of opportunity to gain cost efficiencies
is for electric, water and/or gas utilities to share
communications infrastructure. Wireless infrastructure
needed for remote meter reading is just one example
of where utilities could collaborate to leverage the
investment costs between utilities implementing
similar functions.
Multiutility collaboration could be particularly beneficial
for water utilities where extending wireless infrastructure
may be cost prohibitive. By extending network access
and reach, water utility leaders could improve watershed
monitoring and scheduling of resources, reduce energy
consumption and implement asset management
programs in a cost-effective manner. However, joint
use agreements and regulatory hurdles will need
to be addressed in order for utilities to implement
collaborative plans.
Optimizing a utility network requires thorough
planning. Black & Veatch recommends developing a
telecommunications master plan. A telecom master
plan outlines the strategies and business requirements
that a utility has in place today, as well as its vision and
anticipated future needs.
Using the current state as a starting point, the master
plan is created to provide a blueprint of what the future
network will look like. The plan will also provide utilities
with a phased roadmap for efficient migration to the
desired future state. The phases of the roadmap are
often implemented over multiple years, with potential
midcourse updates along the way.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
Outlook:
Generating Value From
Network Convergence
BY C H A R LES H ILL
Reducing the number of networks a utility owns and
A key element in network convergence is interoperability.
maintains helps reduce the overall complexity of the
As utilities continue adding new technology applications
utility network. This also makes it easier to manage and
and services to their communications network, a
secure the network, while reducing operational costs.
standardized transmission and packetization protocol,
Multi-Protocol Label Switching (MPLS) is one technology
such as Transmission Control Protocol (TCP)/IP, will allow
solution that many utilities have chosen to converge their
these different technology applications to communicate
disparate networks.
over a single, integrated network architecture.
MPLS is a globally leveraged, standards-based Internet
Moving forward with a network convergence program
Protocol (IP) network virtualization technology used by
requires comprehensive planning and execution. Steps
large network owner/operators to scale and connect
must be taken from start to finish to ensure that the
thousands of devices, sensors and users across a single
implementation of connected technologies is approached
cost-effective communications network platform.
with great care. And, as the new network is developed
One of the main advantages that utility companies are
and put in place, utilities still must maintain and operate
finding with MPLS is the ability to segregate and “tag”
legacy network technologies, such as Time-Division
mission-critical data applications apart from noncritical
Multiplexing (TDM) or Synchronous Optical Networking
applications. This separation of data allows a utility
(SONET), until a full migration can take place. Black &
to maximize its investments in a shared, physical
Veatch offers proven program and project methodologies
infrastructure while ensuring high performance and
to assist utilities every step of the way and to help utility
reliability for its operational goals and objectives.
leaders ensure that they are maximizing both their capital
and staffing resources in a manner that reduces overall
Network convergence lowers the operational expense
operational and capital costs.
and maintenance costs utilities need to support missioncritical infrastructure, while providing scalability. The
convergence of data network infrastructures using
virtual, standards-based IP solutions is one of the best
paths forward for a utility considering modernizing its
network infrastructure.
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UTILIT Y AUTOMATION
Figure 11.
PUSHING THE BOUNDARIES
OF SMART GRID
BY CURT IS J OH NS O N , DAV E RO B E RT S AN D WIL L IA M B IE H L
The past several years have brought an unprecedented level of automation
technology deployments. Spurred by U.S. government funding, millions of
“smart” advanced metering infrastructure (AMI) devices were placed throughout
electric utility networks to improve operational efficiency. For operators weighing
the decision to invest in greater utility automation, validation of expected
benefits from installed systems and alignment of advancing technology for a
demonstrable impact on operations appear to be key decision factors.
Significant progress has been made by utilities adopting
infrastructure at a more granular level. For electric
AMI technology, as demonstrated on Figure 11. AMI
utilities, this includes using less energy, balancing energy
provides information about customer energy, water
resources and automating processes that enable the utility
and/or gas usage at a level of granularity never before
to stabilize and recover services faster. In essence, the
experienced. The application of this information is proven
concept of a “self-healing” grid is coming closer to fruition
to streamline a host of cost drivers, such as the number of
through automation efforts built on the AMI foundation.
“truck rolls” and reductions in manual meter reads, as well
as potential loss detection or prevention.
Customer benefits from these deployments have included
more accurate billing information and, for electric
customers, faster service hook-ups/disconnects. Most
importantly, AMI provides the foundation for the twoway networks that can identify customer outages before
individual customers call the utility to report them.
Federal support accelerated AMI programs, but with
strong mandates for reliability and safety, utilities
were unlikely to make large-scale investments without
supporting data. However, increasing environmental
and security regulations are creating new cost pressures
that require managing the effectiveness of distribution
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
AMI PROVIDES THE
FOUNDATION FOR THE
TWO-WAY NETWORKS THAT
CAN IDENTIFY CUSTOMER
OUTAGES BEFORE INDIVIDUAL
CUSTOMERS CALL THE
UTILITY TO REPORT THEM.
ure 12.
FIGURE 11
INFORMATION CURRENTLY COLLECTED FOR REMOTE MONITORING
50
44.7%
43.8%
39.1%
40
26.8%
30
20.4%
17.9%
20
10
0
Facility
operational data
AMI data
Distribution
metering
data
Major facility
status and
alarming data
Distribution
pressure
data
I don’t know
Source: Black & Veatch
All participants were asked to select all areas where their utility is currently collecting and transmitting facility operations information to a
central location for remote monitoring and/or historical data collection.
FIGURE 12
AREAS REMOTELY MEASURED OR MONITORED – BY UTILITY TYPE
Electric Utility
Water Utility
Combined Utility
70
62%
60
57%
54%
52%
48%
50
46%
44%
42%
40
33%
31%
30
25%
28%
54%
46%
44%
26%
17%
20
17%
9%
8%
10
0
48%
4%
Consumer
devices or
meters
Distributed
energy
production
Distribution
systems
Facility
operations
communications
Fleet
vehicles
4% 4%
Plant/
facility
performance
Transmission
networks
I don’t know
Source: Black & Veatch
All participants were asked to select the areas where their utility remotely measures and monitors equipment performance and/or conditions.
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UTILIT Y AUTOMATION
The next step in the automation progression involves
Automation technologies and solutions, such as Fault
the testing of automated distribution, with many utilities
Location, Isolation and Service Restoration (FLISR), volt/
already using remote measuring to monitor equipment
VAR optimization, intelligent electronic devices (IEDs) and
performance and conditions (Figure 12). Because
distributed energy resource integration, are being tested
all utilities, whether they are electric, water, gas or a
by many utilities (Figure 13). Additionally, SCADA systems
combined utility, are increasingly focused on enhancing
are one area of continuous focus for utilities. Nearly three-
operations, reducing costs and conserving resources,
fourths of survey participants are currently implementing
Black & Veatch expects remote monitoring and measuring
or planning to implement upgrades to their distribution
efforts to continue to grow across the entirety of every
SCADA system in the next five years.
utility’s enterprise.
FIGURE 13
PLANS FOR UTILITY AUTOMATION TECHNOLOGY INVESTMENTS
Figure 14.
Within the next 5 years
In more than 5 years
No plans/I don’t know
100
26.3%
80
1.3%
31.0%
32.1%
4.3%
5.2%
60
40
40.8%
6.4%
44.8%
5.6%
72.4%
64.7%
62.7%
52.8%
49.6%
Distribution
SCADA
Substation
automation
IEDs
FLISR
Volt/VAR
optimization
20
0
Source: Black & Veatch
Participants were asked what plans their organization had for investing in the listed utility automation technologies.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
SCADA systems, like any technology, become obsolete
with age. For SCADA systems, continued vendor support
to its product line and ongoing improvement of the
SCADA offering are obsolescence issues that should be
considered separate from hardware obsolescence. More
than half of utility respondents expect their organization
to replace critical operating control systems in the next
10 years (Figure 14). This upcoming replacement cycle
provides the opportunity for utilities to incorporate some
of the latest software and hardware advances. These
BLACK & VEATCH EXPECTS
REMOTE MONITORING AND
MEASURING EFFORTS TO
CONTINUE TO GROW ACROSS
THE ENTIRETY OF EVERY
UTILITY’S ENTERPRISE.
technology advances can help utilities more effectively
leverage their AMI and communications investments.
FIGURE 14
YEARS LEFT TO UPGRADE/REPLACE CENTRALIZED CONTROL SYSTEM
29.1%
30
25
20
15
15.8%
12.4%
10.7%
10
5
0
Less than
3 years
3 to less than
7 years
7 to less than
10 years
10 years
or more
Source: Black & Veatch
All participants were asked how many useful years of service life remain before their utility will need to upgrade/replace its SCADA,
distributed control system (DCS) or other centralized control system. This chart excludes “I don’t know/does not apply” responses (32.1
percent of respondents).
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UTILIT Y AUTOMATION
BENEFITS OF AUTOMATION
BENEFITS OF AUTOMATION
FOR ELECTRIC UTILITIES
FOR WATER UTILITIES
Distribution automation for electric utilities is becoming
Similarly, water utilities are increasingly looking for savings
increasingly more important as organizations prepare for
from investments in operational automation and control
greater levels of distributed generation and renewable
systems as they face continued pressure to “do more with
energy use. Automation must be able to account for
less.” To maximize performance, new automated systems
not only optimizing and increasing the efficiency of an
can interpret data from factors such as water source,
operation, it also means considering alternative energy
pump efficiency and others.
sources, the cost of those sources and how to best
schedule each energy source to optimize the total value.
Faster responses, reducing human error and
24/7 monitoring can help enhance the performance of
The integration of renewable energy into the California
existing assets and enable utilities to allocate capital
market, for example, has not been without some
based on risk using data collected from systems and
challenges. Driven by low-cost natural gas prices and
assets. AMI systems, for example, provide more granular
aggressive mandates to incorporate renewable supplies,
data that can be used to detect and prevent leaks as well
operators will require a complex integration model
as reduce other forms of nonrevenue water.
to coordinate the inflow of renewable supplies from
their source locations into the existing grid network.
Automation must facilitate the interplay between
baseload generation stations and distributed resources to
ensure system reliability.
Perhaps the most successful example of the benefits of
pushing smart technology deeper into the network comes
not from the United States, but from a program in Rio de
Janeiro to deploy meters to improve billing accuracy. The
multiyear effort to deploy AMI infrastructure resulted in
a significant decrease in power theft: from approximately
80 percent to near zero.
The Rio de Janeiro program provides a clear example of
how greater data regarding end-user consumption can
reshape a power distribution market. In the U.S. market,
continued improvement of metering tools, operational
automation and actionable intelligence driven by data
analysis will continue to push the boundaries of efficiency.
SUCCESSFUL IMPLEMENTATION
Realistically speaking, distribution automation for
electric utilities has been around for many years. Electromechanical substation relays, hydraulic reclosers, and
time and temperature controlled capacitor banks are but a
few examples of mature analog automation of the electric
power distribution system.
Digital communications and microprocessor technologies
have tremendously expanded the ability to further
automate the electric distribution system much in the
same way they have transformed the rest of the world. As
these technologies continue to develop and become less
expensive, utilities of all types and sizes will increasingly
deploy these new assets to improve the reliability, safety
and efficiency of their distribution infrastructure.
As utilities continue the migration towards automation,
it will be critical to incorporate technology investments
and systems into the their long-term plans. Automation
requires careful planning and implementation to ensure
that capital investments are used efficiently and are
aligned with business goals.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
Hong Kong:
Real-Time Data Monitoring Helps
Keep Tabs on Stormwater
BY K E LVIN L AU
Smarter use of data is taking center stage in Hong Kong’s
During tropical downpours in Hong Kong, real-time
stormwater management strategies. The award-winning
monitoring of data will help manage the flow of
Happy Valley project is one example of the Drainage
stormwater in the drainage system. In many ways, the
Services Department (DSD) of the Government of the
Happy Valley storage tank will be brought online to
Hong Kong Special Administrative Region’s (SAR) long-
alleviate stress within the local network. Stormwater will
term commitment to finding new ways of integrating data
be intercepted and peak flow attenuated by diverting
to modernize its efforts in fighting the age-old problem
water to be temporarily stored in the 60,000 cubic meter
of flooding.
storage tank. When the intensity of the rainfall subsides,
the water stored will be diverted back into the system
An advanced approach is being taken to flood alleviation
when it can manage the flows more effectively.
in low-lying Happy Valley. An underground storage tank is
being built beneath the area’s famous horse racing venue.
A movable crest weir system adds another layer of
The system, with supervisory control and data acquisition
innovation that allows the water to return to the network
(SCADA) monitoring as its backbone, is designed to
via a gravity flow. Its operation will also be hooked up
work with nature, not against it. It serves as an emerging
and plugged into the SCADA real-time monitoring.
example of how cities around the world are rethinking
Water levels and, crucially, tidal levels will be monitored
the way they plan and manage intense rainfall in crowded
by a command center tasked to respond and manage
urban spaces.
the flows.
Kelvin Lau is an Associate Vice President and Senior Project Director in Black & Veatch’s water business based in Hong Kong.
Having worked in the civil engineering field for over 30 years in both the private and public sector, Lau brings a wealth of
knowledge in areas such as water, drainage and sewage infrastructure, underground facilities installation and information
technology solutions.
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DATA ANALY TICS
BRIDGING THE GAP BETWEEN DATA
AND KNOWLEDGE
Figure 15.
BY MA RK M OS KOV I T Z , G. SCOT T S TAL L AR D A N D K E VIN COR N ISH
Now more than ever, data are informing the way utilities manage their
operations and business needs. Investments in intelligent infrastructure
technology have created an unprecedented ability to measure conditions,
asset status, performance and activity of the grid or utility networks. However,
based on Black & Veatch industry survey results, notable gaps, uncertainty
and barriers still exist for utilities attempting to develop and deploy a smarter
analytics capability.
Capturing and converting the right data at the right time
into actionable intelligence is the essence of analytics.
Taken together, much of the value from intelligent
infrastructure investments will depend on how utilities
implement analytics in order to leverage the data capture
in the following ways:
■■
■■
For example, Black & Veatch’s Asset 360 platform
provides monitoring and diagnostic services for utility
clients. The following are examples of issues identified for
a Midwestern municipal utility within the first year of using
Asset 360 services for its 194 megawatt (MW) power plant.
■■
Measuring activity within their systems (rather than
estimating it) in order to react more quickly to emerging
conditions.
Moving from a reactive to proactive operating/
business approach.
■■
Developing new opportunities for revenue/cost control.
■■
Improving risk management and mitigation.
ANALYTICS IN ACTION
Much of the data analytics used by utilities today appear
to be focused on tracking current or past activities
(i.e., measuring and validation) as shown on Figure 15.
However, evolving a program toward the use of predictive
and prescriptive analytics will provide utility leaders
with better information to support future action. The
value of such analytics programs is the ability to
identify and address maintenance and/or operational
issues in a manner that could prevent catastrophic
equipment failures. In essence, fixing the “small things”
and cost avoidance can have a big impact on budgets
and performance.
■■
■■
Turbine inner casing leak: A 2.5 to 3 percent drop in
low-pressure turbine efficiency was detected. Further
inspection identified a failing port gasket as the cause of
the problem. Left undetected, the failing gasket would
result in approximately $36,000 per month in additional
fuel costs and a 2.6 MW reduction in capacity margin.
Internal extraction line failure: A deviation in one of
the unit’s low-pressure turbine stage pressure ratios was
detected. Further inspection identified an extraction
line expansion joint failure as the cause. Black & Veatch
estimated that this failure was costing the client
approximately $25,500 per month in fuel costs plus a
4.5 MW derate.
Turbine deposits: Six months after upgrading its
turbine, the unit’s capacity dropped 17 MW. In addition,
there was an 8 percent loss in steam flow, among
other efficiency losses. Deposits on the turbine were
determined to be the cause of the loss in efficiency.
Left undeterred, the deposits would have cost the client
approximately $37,500 per month in added fuel costs
and a 17 MW derate.
Utility leaders recognize the value analytics can provide
their organization, rating “Evaluating operational or
maintenance options/scenarios” and “Improving/
maintaining service reliability” as the top two areas of their
organization that would benefit from expanded analytics
capabilities (Figure 16).
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
6.
FIGURE 15
DATA ANALYTICS CURRENTLY IN USE
40
37.6%
37.2%
35.5%
32.1%
35
30
24.8%
25
20
15.8%
15
10
5
0
Measurement
and validation
Descriptive
analytics
Closed-loop
optimization
Predictive
analytics
Prescriptive
analytics
I don’t know
Source: Black & Veatch
All respondents were asked what types of data analytics their utility currently uses to improve operational performance.
FIGURE 16
TOP OPERATIONAL AREAS FOR EXPANDED DATA MANAGEMENT AND ANALYTICS
Evaluating operational or
maintenance options/scenarios
51.5%
Improving/maintaining
service reliability
48.9%
38.2%
Outage management
32.6%
Identifying issues and losses
27.5%
Monitoring performance
0
10
20
30
40
50
Source: Black & Veatch
All respondents were asked to select the top three operational areas they believe their utility would be best served by expanded data
management and analytics capabilities.
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25
DATA ANALY TICS
From a business function perspective, respondents
For example, in a storm situation, real-time data on
selected asset management programs, or components
wastewater levels and flows enable an operator to make
of asset management, as the top three areas that would
decisions about what to treat and what to divert. Sensor-
benefit from expanded data management and analytics
based data can also aid in the understanding of water
capability (Figure 17).
utilization and distribution. Sound data and analytics can
help utilities provide customers with more accurate bills
The disconnect between the forward-looking
and minimize nonrevenue water, a key industry issue.
optimism toward the application of analytics in asset
management and its current usage was also highlighted
Reliability factors are also particularly important for
in Black & Veatch’s 2013 Strategic Directions in the
utilities in regions with aggressive renewable portfolio
U.S. Water Industry report. In the report, more than
standards and incentives. The influx of distributed
70 percent of respondents stated their utility has condition
generation, such as rooftop solar, can have a profound
assessment and inspection programs in place. However,
impact on the traditional daily demand curves for a service
only 27.5 percent stated their utility has or is planning to
territory. While historical load ranges can help inform
implement deterioration modeling to proactively manage
decisions, each day offers opportunities for variations.
assets. The lack of deterioration modeling represents
Analytics will be critical for utilities in scheduling
a missed opportunity to improve rehabilitation and
traditional baseload power and optimizing transmission
replacement planning for their buried infrastructure.
and distribution assets for rapid ramp ups and ramp downs
to continuously meet fluctuating power demands.
Analytics and asset management programs go hand
in glove. Data, and the analytics derived from the data,
enable utilities to develop risk-based plans to proactively
manage utility assets. Because such programs break down
functional silos that exist within many utility organizations,
it is positive to see that more than 35 percent of
respondents (Figure 18) stated their utility is using crossfunctional teams to determine which data and analytics
investments to pursue.
DEVELOPING ANALYTICS PROGRAMS
Many grid, utility and network operators have focused, and
continue to focus, on how best to use the volumes of new
data generated from across their service regions. Because
of this focus, data analytics and management represent
the next opportunity for utilities to reduce costs and
improve services.
However, more data for the sake of having more data is
IMPROVING SERVICES AND OPERATIONS
not necessarily better. Developing data flows and analytics
Improving customer service is also an important area
programs requires merging together once siloed functions
of focus for many utilities. Outage management is one
to create a whole greater than the sum of its parts. Amid
area where analytics can help electric utilities better
the flood of new information, utility leaders must use
serve their customers. Analytics, data management and
their organization’s business issues, questions, risks and
communications capabilities allow utilities to respond
priorities as the guiding influences for their analytics
to outages in real time. These capabilities also help
programs. Black & Veatch recommends that utilities use
the utility keep customers informed on the status of an
their data analysts to respond to specific business and/
outage, the repair timeline and when service was restored.
or operational questions by examining the appropriate
Additionally, analytics helps utilities study the cause of
data sources.
outages and develop preventive measures for the future.
For water utilities, analytics can be an essential part of
an integrated effort to improve efficiency across entire
infrastructure systems. Real-time information enables
operators to make informed operating decisions.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
ure 18.
FIGURE 17
TOP BUSINESS AREAS FOR EXPANDED DATA MANAGEMENT AND ANALYTICS
56.6%
Asset management
42.6%
Capital investment prioritization
29.8%
Risk management
Customer
service/engagement
28.1%
Customer billing, collections
and/or revenue protection
27.2%
0
10
20
30
40
50
60
Source: Black & Veatch
All respondents were asked to select the top three business areas they believe their utility would be best served by expanded data
management and analytics capabilities.
FIGURE 18
TEAM(S) RESPONSIBLE FOR DETERMINING ANALYTICS INVESTMENTS
40
35
35.3%
26.4%
30
25
20
11.5%
15
7.7%
10
8.1%
8.5%
2.6%
5
0
Crossfunctional
team
IT
Operations
Plant/facility
management
Senior/
corporate
management
Other
I don’t know
Source: Black & Veatch
All participants were asked who in their utility has the lead in determining what operational data management and analytics investments
to make.
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DATA ANALY TICS
Outlook:
A Growing Relationship Between
Data Centers and Utilities
BY J O H N VOE L L E R
In the United States alone, more than 600 independent
One area to watch will be whether increases in data center
data center projects of varying sizes and scope
revenue per minute justify the continuation of traditional
commenced or were completed between January 2011
power provider relationships. Should power prices
and November 2013. Business and consumer trends are
impact data center returns, or if client needs and service
expected to propel data center construction spending
levels impact the cost and capital structure, data
for the foreseeable future. The volume and pace of
center operators may choose to adopt an island or
constructing new data centers, or expanding or renovating
“off-grid” structure.
existing facilities, reflects the growing need to manage
data for virtually all types of businesses, including utilities.
In North America, low-cost natural gas has prompted
commercial and industrial users of all types to consider
These figures do not include the hundreds, if not
on-site, natural gas-fueled generation. Such decisions
thousands, of private facilities that corporations and firms
may have strategic benefits for facility owners and electric
are building to serve their internal needs. Independent
service providers. For example, adding new, traditional
data centers represent a unique challenge and
baseload power generation can be challenging for
opportunity for electric utilities. Large facilities represent
utilities in many regions. The elimination of a large power
a lucrative power customer or resource. Independent data
consumer from the local grid could delay or prevent
centers also represent a potential service provider for
the need for new capacity additions. This scenario could
storing and managing the steadily increasing amount of
benefit customers by providing lower rates over the long-
information generated from across a utility’s enterprise –
term as a result of reduced or avoided utility
regardless of utility type or size.
capital spends.
DATA CENTERS AS A CUSTOMER OR RESOURCE
As client demand increases the load on a data center,
the infrastructure supporting the facility must become
more robust as well. Meeting the unique and growing
needs of data centers will require a thorough assessment
of an electric utility’s business capabilities and plans,
its customer needs and the economics of developing
alternative power solutions.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
“Off-grid” data centers can also benefit utility operations.
The dynamics of an evolving power portfolio, in addition
to potential financial, environmental, security and other
issues, could result in some utilities encouraging off-grid
data center operations, or providing independent systems.
For example, the increasing penetration of distributed
generation, particularly intermittent renewable resources
such as rooftop solar, requires grid operators to have
reserves available for rapid start up. Data centers could be
Further, as utility system technology evolves, demands
a resource by selling excess capacity back to utilities that
for greater productivity and improved customer service
need to constantly balance fluctuating loads.
will push utilities to generate more and extract value from
as much data as possible. For smaller utility operators,
DATA CENTERS AS A SERVICE PROVIDER
The growing wave of data generated by utility investments
in intelligent metering and automation devices helps
to create a trove of information at the operational and
enterprise level. But for some utilities and telecom
services providers, the data wave creates a logistical
challenge as well. Specifically, each bit of data must
be both stored and accessible to facilitate its use in the
development of data-driven, analytics-based decision
making. While storage prices continue to come down,
the sheer volume of utility “smart” data could pose a
capital challenge requiring innovative solutions and
off‑site data storage and cloud technology can offer
benefits in terms of security and resiliency at a price point
that in‑house management cannot.
In the future a greater role can be expected for
independent data centers as a consumer and as a
resource for many utilities. But it remains to be seen
whether the independent data center marketplace will
take on a uniform structure or whether different client
needs will result in different approaches. One certainty is
that the wave of new information managed and stored in
data centers is nowhere near cresting.
management approaches.
John Voeller is a Senior Vice President in Black & Veatch’s federal services division. Among his numerous career
accomplishments, Voeller served as a White House Fellow from 2003-2008 and a consultant from 2008-2010 in the Office
of Science and Technology Policy. His primary effort was to be the White House representative and editor of the National
Critical Infrastructure Protection R&D Plan to address the vast array of issues related to protecting the nation’s critical assets
as required by Homeland Security Presidential Directive 7.
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TECHNOLOGY
UTILITIES AND THE CLOUD
BY G. S COT T S TA L L AR D AN D R I C H AR D A Z E R
Most technology transitions are initially viewed with immense skepticism and,
occasionally, fear. However, once the value of any technology is fully understood,
rapid acceptance generally occurs. Considering the historical precedent and the
tremendous value such services provide, Black & Veatch anticipates utilities will
begin to rapidly embrace cloud technologies within the next three to five years.
Black & Veatch survey responses indicate that utility
While AMI does generate significant amounts of data, it
leaders are buying into the concept of enhanced
is only one system. As utilities move into more advanced
automation in the distribution of their product/service
distribution automation programs, they will deploy
and the operational benefits of mobile technologies
additional sensors across their network that generate
(Figure 19). However, only 5.1 percent of respondents
exponentially more data than the current AMI network.
selected cloud computing as the emerging technology
This will create a pressing need to manage the volume of
that will have the greatest impact on how utilities operate
data and variety of data types to make elements across the
in the next five years. This relatively low percentage for
enterprise work concurrently. This is where the need for
cloud computing likely indicates a disconnect between
cloud and advanced data analytics becomes particularly
what technologies drive functionality and what is
important (refer to the Data Analytics section).
perceived as a value point.
Cloud technology also offers resiliency benefits, including
Cloud computing can mean two things: the ability to
the ability to quickly restore servers and work capability
access data securely from any connected device anywhere
after system disruptions. For example, when a server
in the world and/or the environment to manage massive
supporting multiple systems goes offline, a range
data stores and data complexity. For example, most
of operations can be affected or interrupted. Adding
utilities have begun or have finished implementing
resiliency through the deployment of a virtualized
advanced metering infrastructure (AMI) programs.
server allows operators to quickly restore and replace
To manage the huge volumes of data generated by AMI,
its functionality.
cloud services offer a level of flexibility and efficiency
previously unavailable through hard-wired connections or
Perhaps even more appealing is the ability of virtualized
in-house storage.
cloud-based servers to interact with multiple end-user
software systems. This greater flexibility eliminates the
With most utilities still planning or finalizing AMI
need for same system replacements and can speed
implementations, the use and need for cloud services
restoration from a complete outage from days to hours.
is limited. Nearly 27 percent of utility respondents
stated their organization is currently using some form of
cloud-based solutions (Figure 20). The majority of these
respondents stated they are using these solutions for data
storage, a valuable, but limited, application.
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2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
FIGURE 19
EMERGING TECHNOLOGIES THAT WILL HAVE THE GREATEST IMPACT ON UTILITY OPERATIONS
30
25
25.1%
20.4%
20
15.7%
15.3%
13.2%
15
10
5.1%
5.1%
Advanced
data
analytics
Cloud
computing
5
0
Advanced
distribution
automation
Advanced
metering
infrastructure
Mobile
devices
Operational
technologies
Other/
I don’t
know
Source: Black & Veatch
Participants were asked which of the listed emerging technologies they see as having the greatest impact on how utilities operate their
businesses in the next five years.
FIGURE 20
CURRENT USE OF CLOUD-BASED SOLUTIONS
50
43.4%
40
29.8%
30
20
10
12.8%
9.8%
0.4%
3.8%
0 Yes, light/limited Yes, heavy Yes, light/limited Yes, heavy
use of public
reliance on
use of private
reliance on
cloud
public cloud
cloud
private cloud
infrastructure
infrastructure infrastructure infrastructure
No
I don’t know
Source: Black & Veatch
Respondents were asked if their utility currently uses any form of public or private cloud-based solutions.
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TECHNOLOGY
CLOUD BENEFITS ALL
Fortunately, third-party, multi-tenant systems are now
providing the scale and security necessary to make big
IT systems, such as customer information systems (CIS),
cost effective for smaller organizations. This not only
enables smaller utilities to use the advanced technologies
but also provides the necessary security programs many
of these organizations currently lack.
An interesting statistic within the survey data is the
significantly higher percentage of water utility use of thirdparty (public) cloud services compared to use by electric
and/or combined utility providers. Nearly 30 percent of
water utilities use public cloud infrastructure to some
capacity, compared with 7 percent of electric utilities and
13 percent of combined utilities (Figure 21).
Regardless of utility size or types, organizations should
spend time developing their cloud strategies. It is
important to consider the entirety of the organization’s
data and analytic migration. It will also be important
to consider what information is going to be required,
consumed, manufactured and used in terms of utility
operations and business continuity.
When compared by ownership structure, 16 percent of
publicly owned, or municipal, utilities use third-party
cloud infrastructure. Comparatively, 20 percent of
investor-owned utilities (IOUs) use privately owned cloud
infrastructure. Moving forward, the industry will likely see
small and/or publicly owned utilities adopt cloud-based
services on a wider scale than will the larger IOUs (refer
to Outlook: Tech Advantages Moving to Small Utilities).
Metaphorically, if system and customer data represent
individual jigsaw puzzle pieces, the cloud is the table
upon which utilities will be able to see how each piece fits
together. Paired with advanced analytics, cloud technology
enables utilities to gain the maximum value from their
IT investments.
In the past, small utilities and/or municipalities were
generally limited in the types of technologies they could
procure, be it computers, software or advanced utility
operating systems. Previous Strategic Directions reports
have indicated a sharp difference between the IT and
cybersecurity capabilities of mid- to large-scale utilities
when compared to smaller providers.
ure 21.
FIGURE 21
USE OF CLOUD-BASED SOLUTIONS - BY UTILITY TYPE
Electric Utility
60
Water Utility
Combined Utility
54%
50
38%
40
30
25%
20
16%
13%
10
0
7%
Yes, light/limited
use of public
cloud
infrastructure
4%
0%
0%
Yes, heavy
reliance on
public cloud
infrastructure
Yes, light/limited
use of private
cloud
infrastructure
Source: Black & Veatch
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7%
4%
2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
5%
0%
0%
Yes, heavy
reliance on
private cloud
infrastructure
No
52%
Outlook:
Tech Advantages Moving
to Small Utilities
BY G. SCOT T S TAL L AR D A N D R ICH A R D A ZE R
The benefits of advanced automation and metering have
not been distributed evenly among service providers
to this point. Lacking the requisite economies of scale
to support large-scale capital investments in IT and
advanced metering infrastructure (AMI), many small
utilities have lagged their larger peers across the water,
electric and combined utility markets. Black & Veatch
forecasts that the small utility technology gap will narrow
as a result of the availability of cloud-based solutions.
Small businesses of all kinds are now enjoying access to
the latest software and technology advances as a result of
scalable, cloud-based subscription services. Despite their
relatively recent introduction, cloud-based administrative,
finance, customer relationship management and other
tools have helped businesses succeed at the retail level.
These services offer users the ability to harness a level
of software functionality that was previously not feasible
because of cost barriers.
Traditional IT infrastructure follows a cost curve similar
to most capital investments. Regardless of its capacity,
the first unit includes all of the startup costs and is,
therefore, the most expensive. Each subsequent capacity
addition then drives average unit costs lower. For small
utilities, these startup costs have precluded investments
in advanced data analytics, cybersecurity, mobile
technologies and system automation. However, the
adoption of this technology could be pushed forward
by a combination of new economic realities and
regulatory pressures.
In February 2013, President Barack Obama issued
the Executive Order Improving Critical Infrastructure
Cybersecurity, requiring all critical infrastructure systems
to become more hardened against cyber threats. While
electric utilities have previously fallen under the auspices
of the North American Electric Reliability Corporation
Critical Infrastructure Protection (NERC CIP) standards,
the executive order will force each of the covered vertical
markets, including water, gas and telecommunications
providers, to address potential areas of cyber vulnerability.
Black & Veatch anticipates that the executive order, like
any regulatory mandate, will result in a wave of IT-focused
capital spending among utilities. Additional guidance
from the administration will likely shape the financial
repercussions of the order.
While larger utilities have begun to take steps to address
their vulnerabilities, cybersecurity needs are significant
among smaller utilities. The Black & Veatch 2013 Strategic
Directions in the North American Natural Gas Industry
report showed that less than 40 percent of small gas
utilities, or utilities serving less than 50,000 customers,
had formal cybersecurity programs in place. This is
in marked contrast to utilities serving more than
100,000 customers, in which 76 percent of respondents
had plans in place. The pressure is building for smaller
utilities to modernize or implement cyber protocols
to protect customer information and enhance
operational resiliency.
Interestingly, cloud-based services, particularly thirdparty services, provide the equalizing effect for small
utilities. Multi-tenant systems have the scale and security
needed to safeguard critical operational data and sensitive
client information. Most importantly, they give even the
smallest organizations cost-effective access to big system
capabilities. Previously inaccessible computing power and
data analytics and management tools can be deployed
to increase efficiency and help facilitate data-driven
management approaches.
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CONCLUSION
THE ROAD AHEAD:
SMART INTEGRATED INFRASTRUCTURE™
BY MA RT IN T R AVE R S
Aging infrastructure, aging workforces and limited budgets continue to increase
the pressure on utility service providers to do more with less. This Strategic
Directions report shows that many utility service providers have made progress
in using their telecom networks to deploy advanced metering infrastructure
(AMI) and automation capabilities. However, significant opportunities remain
to expand “smart” programs to other parts of the utility network and to use
analytics to improve performance.
INFRASTRUCTURE IS BECOMING MORE
Water and wastewater utilities that make operating
INTELLIGENT, DISTRIBUTED AND COMPLEX
decisions based on supply source information, regional
Black & Veatch is frequently asked by our clients about
power needs and other factors are helping to propel this
the steps they need to take in order to become a “Utility
transition. Greater communication between water, energy,
of the Future.” We believe that greater use of network
telecom and transportation infrastructure will make
connectivity, automation and data analytics provides
communities more adaptive, resilient and sustainable.
the foundation for Smart Integrated Infrastructure (SII).
The use of analytics can help operators make data-driven
SII combines integrated infrastructure and smart analytics
decisions so that less focus is spent on gathering system
solutions to improve a utility’s efficiency, reduce the cost
data and more time is spent analyzing and acting on it.
of operation, increase reliability and enhance the overall
This focus is particularly important because the adoption
quality of service.
of asset management programs is a key goal for utilities
worldwide. Analytics can also be applied to help address
However, SII is not simply the proliferation of intelligent
these more complex issues.
devices. The concept of SII is based on many large
infrastructure groups interacting with each other across
Over the next few years, renewable energy resources pose
platforms. For example, smarter electric grids represent
a particularly interesting situation for electric utilities as
a major step in making intelligent infrastructure. By
they grapple with its promise and challenges. A report
providing a wealth of new data about usage, loads
released by the California Independent System Operator
and power quality, smart grid systems provide critical
(CAISO) in December 2012 detailed the growing need for
information that can help improve utility business
flexible power generation resources to offset the growing
systems. Deploying additional sensors and using
use of intermittent renewable resources. These resources
available telecom networks to stream data from across
are needed to meet the state’s 33 percent renewable
a distribution network, operators can begin to develop a
portfolio standard by 2020. At the same time, the influx
much more complete picture of their overall integrated
of renewable resources is projected to create a roller
energy network.
coaster-like dip and then rapid increase in daily demand
for thermal plant generation (Figure 22).
34
|
2014 STR ATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGR ATION
ure 22.
The dip in the CAISO chart shows how the influx of solar
As renewables become a greater part of the energy mix
power reduces the overall demand for conventional power
and utility systems get more complex, it will be essential
when these assets are delivering at their peak power
for operators to better understand their assets, so they
capabilities – between the hours of 10 a.m. and 4 p.m.
can plan, operate and adapt to extract the maximum value
local time. The steep decrease in demand is followed by
from their renewable energy and energy storage assets.
a rapid spike to daily peak demand levels. This pattern
Black & Veatch anticipates that the industry will see a
reflects the growing complexity of providing reliable
wide array of creative solutions to address this integration
power flows that operators will have to plan for and
problem and a wide variety of systems and tools to
adapt to. Most notably, the CAISO chart reflects a typical
manage the complexity.
day. Many other factors, ranging from daily temperature
changes, wind speed, sunrise and sunset times, and
Building on the capabilities created by smart grid
scores of other issues, create an inherent need for
investments, the Utility of the Future will not be viewed as
automation and analytics. A fully integrated data analytics
a single operating entity. Rather, the Utility of the Future
program can help manage the complex system changes
will integrate and coordinate its infrastructure system with
in order to optimize efficiency, maintain reliability and
other service providers (i.e., electric, gas, water, telecom
minimize network damage.
and transportation) in order to provide performance
improvements. As utilities large and small prepare for
greater systems integration, Black & Veatch will provide
the knowledge and solutions necessary to speed these
transitions.
FIGURE 22
CAISO NET LOAD 2012-2020
27,000
25,000
Typical March Day — Significant
Change Starting in 2015
23,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
21,000
19,000
17,000
15,000
13,000
Potential
Over-Generation
11,000
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23
Source: California ISO “Flexible Resource Adequacy Criteria and Must-Offer Obligation Market and Infrastructure Policy Straw
proposal.” December 13, 2012.
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LEGAL NOTICE
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