Smart Grids – Planning the
Intelligent Utilities of the Future
VIEWPOINT PAPER
A Smarter Tomorrow
A number of economic, social, political and market forces are pushing utilities to
adopt a more intelligent approach to the generation and delivery of electricity.
EDS, an HP company, examines how Smart Grids that combine the power of
information technology with emerging capabilities of environmental technology
will enable utilities to anticipate and shape consumer demand for electricity.
Table of Contents
Government 1
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2
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Utilities
3
Consumers
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Introduction
A Historical Perspective
Green Drivers
Getting Smart: Smart Power
Creating Collaboratories
Conclusion
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Smart Grids – Planning the Intelligent Utilities of the Future
EDS Viewpoint Paper
Introduction
Economics and ecology are creating a new utilities marketplace.
Driven by the surging worldwide demand for electrical power, and challenged by the need to ensure stable supplies, to improve
efficiency and to reduce the carbon footprints of their companies and customers, utilities are searching for a new and better
business model. A number of economic, social, political and market forces are pushing utilities to adopt a more intelligent
approach to the generation and delivery of electricity.
The emerging Smart Grid encompasses far more than the traditional utility distribution network. Made possible by a new
generation of embedded computing, advanced metering and data management technologies, Smart Grids will soon allow
utilities to anticipate and shape consumer demand for electrical power. By managing the demand curve, utilities can achieve the
important strategic goals of reducing consumption and meeting customer expectations, while creating a more sustainable and
profitable long-term business model.
In this viewpoint paper, EDS, an HP company, examines the demands of the coming Smart Grid environment. We analyze the
requirements of the Smart Grid, and its implications for consumers, businesses and utilities. Finally, we explore how the
convergence of information and ecological technologies will shape this new and promising utilities marketplace.
A Historical Perspective
While the fundamental structure of the electrical grid has
remained virtually unchanged since Nikola Tesla won the “War
of Currents” in the 1890s, the dramatic growth in global
demand for electric power has radically changed how utilities
must operate. In recent years, as developing economies plug
millions of new businesses and consumers into the worldwide
grid, global demand for electricity has skyrocketed.
While utilities planet-wide generated 8,027.1 billion kilowatt
hours of electricity in 1980, surging demand had more than
doubled that number by 2006, when the world generated
18.2 billion kilowatt hours of electricity.1 That dramatic
upsurge in electrical generation was driven by growing
populations, by new power-hungry technologies and by
improved living standards in many parts of the world.
Not surprisingly, the highest growth rates in electricity
Those macro trends have created a “perfect storm” for many
utilities. Consumers have developed a big box consumer
mentality wherein they believe they can consume as much
low-cost electric power as they desire. Yet, while consumption
and consumer expectations are at all-time highs, serious
challenges now threaten power supplies the world over.
From the price and availability of natural resources, to aging
infrastructure and political, regulatory and market forces –
utilities must confront a number of significant problems.
Energy in general, and utility services in particular, will
continue to greatly affect economic growth, security and
living standards on both the national and international
levels. How will utilities, consumers and governments
respond to those challenges?
At the very least, utilities must continue to invest in electrical
generating capacity and other basic infrastructure.
generation during those 25 years were seen in Central and
But in our view, to meet these daunting generational
South America, Asia, and in Middle Eastern countries where
challenges, utilities and society at large must also accelerate
populations were moving away from traditional rural or
investments in the innovative technologies needed to bring
agrarian lifestyles and toward societies defined by increased
enhanced management, reliability and sustainability to the
industry, growth and consumerism.
global power grid.
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EDS Viewpoint Paper
Smart Grids – Planning the Intelligent Utilities of the Future
Green Drivers
A number of forces are pushing utilities toward a more reliable
and sustainable approach to the business of electricity.
As noted previously, the fundamental law of supply and
demand is affecting price and availability worldwide. Utilities
now struggle to balance base load demand against the more
expensive infrastructure requirements of peak loads, with the
latter accounting for 30 percent of cost for many companies.
Given those realities, the economics of conservation
become more provocative every business day. For most
utilities, the average cost of generating a new kilowatt hour
of electricity is 10 cents, while the cost of saving a kWh is
just 1.7 cents. While alternative energy sources are attractive
and continue to garner positive and sought-after press
Those diverse constituencies now expect utilities to
deliver reliable, affordable and environmentally sound
electricity service.
Getting Smart: Smart Power
How can utilities meet those expectations? Forward-looking
suppliers are already developing and deploying more
intelligent ways to develop, generate and deliver electrical
power. In this new utility marketplace – where economic and
ecological challenges and opportunities converge – might
be called Smart Power.
fuel” by many utilities. Dubbed “Negawatt power” by Amory
affordably combine the historic “obligation to serve” with a
Lovins, the idea of investing in improved efficiency as a way
new and equally compelling “need to conserve.” To achieve
to reduce overall electric consumption is gaining support in
this smarter, conservation-minded objective, utilities must
the utilities sector.
by necessity move beyond the limitations of demand
The public is increasingly concerned about climate change and
the environment, and those concerns are being expressed
in the actions of lobbying groups, more active shareholders
and the voting public. Governments the world over are
responding with environmental policies that range from
carbon emissions reduction targets to cap-and-trade schemes,
sustainable procurement policies and energy-based
requirements for electronics and other consumer products.
Many consumers are prepared to pay a premium for
eco-friendly products and services. Yet at the same time,
those same consumers have embraced successive generations of power-hungry new user devices, applications and
always-on services.
At the corporate level, companies are now under pressure to
reduce e-waste pollution and their overall carbon footprints, all
while managing the rapid growth in power consumption by
servers, data centers and other IT systems. Companies in
virtually every industry must meet new and higher standards
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“green sheen” as a key indicator of corporate responsibility.
In this emerging Smart Power reality, utilities must learn to
technological forces are now driving utilities to be green.
2
looking organizations now work to create and publicize their
coverage, conservation is now seen as the undeniable “fifth
In fact, a number of social, political, economic and
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for reporting on a range of environmental activities. Forward-
measurement (understanding demand as it happens) and
toward the more complex and challenging realm of demand
management (anticipating, shaping and reducing demand).
Actually shaping the electricity demand curve, without overly
impacting the Western lifestyle, will require utilities to employ
more intelligent equipment, operations, transmission and
utilization solutions. That in turn will force utilities to
migrate from the electromechanical to the digital age and
encourage them to consider megabytes as well as megawatts
and to distribute information bits as well as atoms.
This transformation, ultimately, will usher in the age of
virtual presence, contextualized content and an accepted
behind-the-scenes regimen of utility demand management.
Smart Power will be defined by ubiquitous sensors and
intelligent homes, smart meters and grids, and growing
collaborative interconnections among consumers, businesses
and the utilities that serve them.
By combining the power of information technology with the
emerging science of environmental technology, utilities can
create a more intelligent and sustainable business model.
Smart Grids – Planning the Intelligent Utilities of the Future
EDS Viewpoint Paper
Government
sources of energy into a practical and economic energy mix.
Governments around the world are currently planning or
Utilities should encourage energy-into-the-plant solutions,
making intelligent, green investments in utilities, infrastructure
on-site generation and co-generation on the part of
and other energy-related projects.
commercial customers. Finally, utilities must focus on the
“fifth fuel” of conservation by encouraging and managing
In the United States, the Obama Administration’s New Energy
smarter, reduced and nonpeak energy usage.
for America plan envisions the creation of 5 million new
jobs through a strategic $150 billion investment in clean
Consumers
energy systems, the domestic manufacture of 1 million
Families and individuals also have a part to play in the
plug-in hybrid cars by 2015, a cap-and-trade program to
emerging Smart Power environment.
reduce greenhouse gas emissions by 80 percent by 2050,
and a goal of generating 25 percent of the nation’s
To support the new era of energy demand management,
electricity from renewable resources by the year 2025.2
consumers will accept a new generation of embedded
sensors and controls that will help manage the use of
Other global governments, nongovernmental organizations
heating and air conditioning systems, washers and dryers,
and international efforts are also focused on the need
personal computers, and other electricity-using devices.
to control energy and other types of consumption, to
Personal energy plans, controlled by Smart Black Box units
reduce carbon emissions and to create more practical and
in the home, will allow consumers to set the broad outlines
sustainable economies.
of their electricity usage below which automated systems
At the more localized level, governing agencies can ensure
will ensure that customers receive safe, reliable power in
that Public Utilities Commissions (PUCs) realign their focus
the most efficient way possible.
to encourage and require conservation, as opposed to the
Imagine a world in which cars become rolling energy storage
consumption-oriented policies of the past. Local, state,
units (RESUs) that dramatically reduce carbon emissions,
national and even international governing bodies can and
while consuming, buffering and actually contributing to
must encourage the creation of green jobs and economies,
grid-based power supplies. Envision communities where
often through positive policies such as tax incentives and
businesses and residential households function as regional
targeted infrastructure investments.
generation and storage units (RGSUs) that leverage solar,
Utilities
wind and other power sources in an intelligent electrical
network guided by nano-sensors and supercomputers.
Utilities must also do their part to support and drive the
coming green economy.
Consumers can help reduce e-waste by disposing of PCs
and other electronics properly and less frequently. Studies
Electricity suppliers must focus on intelligently matching
show that of the 205.5 million units of end-of-life computer
energy supplies with consumer demand. To effectively shape
products generated in 2007, 157.3 million units, or 82 percent,
the demand curve, astute utility executives are beginning
were disposed of primarily in landfills. Research also shows
now to plan and deploy the systems needed to support the
that lead, mercury, cadmium and brominated flame retardants
coming Smart Grid and Energy Internet environments.
are among the substances of concern in electronics. These
Utilities should begin now to ramp up their learning curves
substances are included for product performance charac-
on Advanced Meter Infrastructure (AMI), nano-sensors,
teristics but can cause problems if the products are not
embedded intelligence and other emerging technologies.
disposed of properly. Computer monitors typically contain
At the same time that they continue to invest in additional
an average of 4 lbs. of lead.3
capacity and distribution infrastructure, forward-looking
utilities are moving aggressively to integrate renewable
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EDS Viewpoint Paper
Smart Grids – Planning the Intelligent Utilities of the Future
At the DC level, companies can introduce liquid cooling,
Utilities can apply this expertise and technology to meet a
dehumidification, flywheel UPS and fifth light lighting
number of strategic objectives. In the context of the emerging
strategies to reduce energy usage. At the server, IT
Smart Grid, utilities can leverage these capabilities to shape
managers can use variable, deep sleep and other power-
and manage end-user consumption while reducing CO2
saving modes to reduce energy usage and costs. Embedded
levels emitted from electricity generation. Those same
computing is optimizing equipment and lighting for optimal
systems can help power suppliers ensure a stable and
performance and reduced emissions. Companies can also
secure supply of electricity, gas and water, while delivering
help by virtualizing systems and activities where possible,
the cost savings that allow utilities to invest in new
by consolidating operations and by improving network
initiatives designed to improve services, secure supplies
and application performance through modernization,
and ensure sustainability.
rationalization and optimization.
Other practical suggestions include increasing the time
between hardware replacement cycles, the use of thin
In today’s challenging marketplace, utilities must capture
clients that have fewer moving parts, cascading high-end
or maintain shares of deregulated markets and improve
equipment downward to manage simpler tasks, and the
the security of power supplies … all while reducing the
proper disposal of obsolete systems.
environmental impact associated with their businesses.
Creating Collaboratories
must address a number of fundamental requirements.
capabilities of environmental technology. The resulting
workable architecture and the deployment of a system capable
of managing the massive volumes of data needed to support
Smart Grids will enable utilities to anticipate and eventually
shape consumer demand for electricity. That will, in turn,
allow power suppliers to satisfy both their traditional
obligation to serve and the new drive to conserve.
an intelligent utilities infrastructure. Utilities must also
But to create this more intelligent utility model – described
address the crucial issues of implementation, integration
by some as Smart Power – utilities must master and
and long-term governance of the Smart Grid environment.
leverage a new generation of embedded computing, AMI,
Few utilities have or want to build the complex internal
structures needed to plan and manage a Smart Grid
environment. That is why many successful utilities have formed
collaborative partnerships with “smart partners” capable of
data and integration technologies. Utilities and governments
worldwide must continue to invest in the innovation and
infrastructure needed to plan, build and operate the Smart
Grid environment.
contributing the hardware, software, tools and automation
By partnering with allies that understand the convergence
needed to function in the coming Smart Power environment.
of information and ecology, utilities can meet the seemingly
EDS, an HP company, helps energy companies improve
operations through advanced technology and business
processes designed to improve energy management, drive
privacy, security and safety, and enhance the customer
focus and transformation of energy firms. HP offers
technology solutions designed specifically for the utilities
industry, global deployments and support for business
technology software, established industry partnerships and
environmentally focused best practices.
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more intelligent operating structures that combine the
power of information technology with the emerging
formulation of a detailed business plan, the selection of a
4
To do that, forward-looking utilities now see the need for
To create and operate the Smart Grids of the future, utilities
Those requirements include preliminary planning and the
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Conclusion
contradictory goals of reducing consumption and meeting
customer demands. In doing so, utilities can also create a
more profitable and sustainable business model.
Smart Grids – Planning the Intelligent Utilities of the Future
EDS Viewpoint Paper
ABOUT THE AUTHORS
Jeff Wacker
EDS, Director of Strategy
Jeff Wacker is a director of Strategy for EDS, an HP company. He
is also an EDS Fellow and an EDS Futurist. As a director of Strategy
for EDS, Wacker is responsible for shaping the future goals of
EDS through innovative and market-leading strategies focused
on advanced and emerging capabilities.
Currently, Wacker is working extensively with Eco 2.0 IT
(Economically Sound Ecologically Sustainable Information
Technology) and is a core member of EDS Environmental
Sustainability initiatives. His presentation “Eco 2.0 – Achieving
Both the Green and Gold Agendas” brings to light both the
economic and environmental side to the Green phenomenon.
Keeping with his role as futurist, Wacker continues to work with
broad technology trends. His presentation “Five Technology
Forces Changing The World” explores the impacts of Infotech,
Biotech, Nanotech, Robotech and Envirotech on our personal as
well as our business lives.
Anthony Erickson
EDS Global Utilities Industry Leader
Anthony Erickson is Global Utilities Industry leader for EDS, an
HP company. He is responsible for determining global strategy
and key initiatives that allow EDS to provide innovative solutions
to utility clients. His career has been focused on identifying new
business opportunities and helping clients understand and
integrate innovative technology solutions.
Before joining EDS, Erickson led IBM’s Energy & Utilities sales for
its Global Business Services division. He was responsible for
managing a team of professionals who sold and serviced IBM’s
Notes
industry business solutions. He participated in developing IBM’s
go-to-market strategy for solutions supporting the Intelligent
1
U.S. Department of Energy, Energy Information
Utility Network, Enterprise Asset Management, Corporate
Administration: World Total Net Electricity Generated
Support Services and Customer Operations Transformation.
Most Recent Annual Estimates, December 2008.
2 Change.gov, Office of the President-Elect Energy &
Environmental Plan, December 2008.
3 United States Environmental Protection Agency e-Cycling
2008 Frequently Asked Questions.
4 Belady, C., In the Data Center. Power and Cooling Costs
More than IT Equipment it Supports. Electronics Cooling
Magazine, February 2007.
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