The Department of Energy Raises Bar for
Smart Grid /Smart Metering Initiatives –
Key Strategies for Success
Prepared by
UtiliPoint International, Inc.
6000 Uptown Blvd., NE, Suite 314
Albuquerque, NM 87110
505.244.7600
www.utilipoint.com
January 18, 2010
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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Introduction
The Smart Grid Investment Grant (SGIG) program funded by the American Recovery
and Reinvestment Act of 2009 (ARRA) has raised the bar for smart meter projects. This
paper discusses the new de facto standards created by DOE in its determination of SGIG
requirements and selection of grantees.
ARRA is a $787.2 billion economic stimulus package that is intended to provide
additional jobs and to help shorten the recession. According to the Congressional Budget
Office, the stimulus package is expected to increase gross domestic product growth
between 1.4 percent and 3.8 percent and to create up to 2.3 million new jobs by the end
of the fourth quarter of 2009.Spending on energy programs is a significant part of the
American Recovery and Reinvestment Act. Much of the spending is filtering through the
Department of Energy (DOE), and this includes over $3.4 billion for the SGIG program.
The overall purpose of the SGIG is to accelerate the modernization of the nation’s
electric transmission and distribution systems and promote investments in smart grid
technologies, tools, and techniques to increase flexibility, functionality, interoperability,
cyber security, situational awareness, resiliency, and operational efficiency.
The goals of the program involve accelerating progress toward a modern grid that
provides the following specific characteristics that DOE believes define what a smart grid
would accomplish:
! Enabling informed participation by consumers in retail and wholesale electricity
markets.
! Accommodating all types of central and distributed electric generation and
storage options.
! Enabling new products, services, and markets.
! Providing for power quality for a range of needs by all types of consumers.
! Optimizing asset utilization and operating efficiency of the electric power system.
! Anticipating and responding to system disturbances.
! Operating resiliently to attacks and natural disasters.
When the Department of Energy (DOE) announced the SGIG requirements, they
effectively raised the bar on all Smart Grid initiatives. Grant or no grant, UtiliPoint
International feels that utilities looking for investment approval must now meet the raised
expectations of customer and regulatory organizations for Smart Grid projects.
In this whitepaper you will learn about these new de facto standards for the Smart Grid,
what they mean to the utility industry, and how utilities can determine if they are set up to
meet this new bar for success.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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The New De Facto Standards for Smart Grid/Metering
Initiatives
After what seemed like a long wait, President Obama announced in October 2009 the
winners of the Smart Grid Investment Grant awards. The awards totaled slightly over
$3.4 billion for 100 projects – and covered all 50 states – to help build a smarter electric
grid. The Recovery Act stimulus money will be matched by recipient contributions for a
total public/private investment of more than $8 billion. While the SGIGs were initially
planned to be awarded over three phases, the first phase was so oversubscribed that the
DOE decided to award all of the SGIGs in the initial phase.
When DOE announced the SGIG program requirements (funding opportunity number:
DE-FOA-0000058), UtiliPoint feels that they effectively raised the bar on all Smart Grid
initiatives. Grant or no grant, utilities looking for investment approval must now meet the
raised expectations of
customer and regulatory
organizations for Smart Grid
projects.
The requirements requested
by the DOE were not that
surprising, but they are
incredibly comprehensive.
The requirements are light
on specificity, and are rather
quite broad. Requirements
are typically noted in the
opportunity as follows:
! “Such projects will
support…”
! “Projects will also
enable…”
! “Careful consideration should be given…”
! “It is expected that…”
! “Special consideration is given…”
It is clear that the DOE is looking for projects that provide a clear and comprehensive
approach to their smart grid endeavors.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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The Difficulties of the New Standards
UtiliPoint feels that utilities might have difficulties meeting the standards put forth by
DOE. The Smart Grid opens a whole new channel of communication between utilities
and consumers, but this new communications channel is fundamentally different from the
past. Transmission is conducted real time. The need to broadcast pricing alerts to smart
thermostats, email addresses, and text messaging devices happens instantaneously.
Responses from customers can be immediate, as in the case of a consumer who pushes a
"budget button" on a thermostat or website to inquire about their charges-to-date.
Legacy system platforms were not designed to handle real time events such as the ones
noted above. They were designed to operate on regularly scheduled cycles of batch
processes. From a utility's perspective, modifying or replacing those old reliable cycleand-batch systems is an incredibly daunting prospect.
Another challenge that utilities will face is customer recruitment. Most demand response
(DR) programs will be opt-in programs. Utilities need to reach out to eligible customers
and convince them to participate. Eligible customers might be defined as customers with
central air conditioning or all residential customers, depending on the nature of the DR
program. This will require new software functionality to handle DR recruitment,
enrollment, customer management, as well as DR program management. In addition
utilities will need functionality provided by some meter data management (MDM)
systems: management of communications to field devices, tracking of devices and their
relationships to customers and premises, and provisioning of devices upon installation.
The new software will have to be able to scale, allow multiple users, and interface with
the DR call center, an integrated voice response unit, and the Internet. It will also need to
interface with the billing system, MDM, the DR equipment installation company, and
various DR communication systems.
Utilities will also need to re-examine how they provide customer service to smart
metering customers. The utility call center will need to be able to effectively work with
customers to take advantage of more detailed information on energy use and spending
and how to apply it to customer concerns. This includes performing customer education
needed to increase the understanding of smart metering and reducing the fear and distrust
of the changes.
Call center representatives must also have a strong understanding of the end-to-end
business process and changes. Once the systems and processes are implemented, the
utility must be prepared to answer and handle a complicated set of questions and issues.
This requires call center agents to have training and access to the applications and
information to provide quality responses.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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Potential Solutions to the New Requirements: Flexible
Meter Data Management and Consumer Engagement
Software
Many of the DOE requirements can be addressed with two software solutions. The first,
a flexible meter data management (MDM) solution, provides transaction management
capability, acts as an integration platform, and delivers needed application functionality.
The second, consumer engagement software, provides customer information via a
combination of a web portal and subscriptions for “pushed” data via email, text
messages, and, potentially, bill inserts.
A flexible MDM can fulfill many of the DOE’s requirements both today and tomorrow.
One certainty about the Smart Grid is that applications and data uses will evolve and
change over time; the selected MDM must not only accommodate, but thrive on such
change.
The Smart Grid results in a paradigm shift regarding metering data. Today, utilities
create monthly files of meter reads (using manual collection) and submit them to the
billing system. With the Smart Grid, utilities become communications companies that
handle millions of data transactions every day. For a utility with over a million meters,
just the simple transactions involved in the Meter-to-Cash function are completely
transformed. When the numerous other functions are considered – from Meter
Provisioning to Outage Management to Demand Response Events to Charging Plug-In
Hybrid Electric Vehicles – the potential enormity of the challenge becomes clear.
Transaction Management
To illustrate, every day a smart meter operations team must support – per million meters:
! More than 2,000 meter exchanges per
day during deployment
! More than 1,000 customer moves per
day (25% yearly turnover)
! 10,000 missing reads per day (99%
daily read success)
! 20 meter failures per day (0.5% annual
failure rate)
! 10,000 data changes per day
! More than 97,000,000 meter reads per
day (assumes 15-minute interval data)
And unlike a file transfer, each of these is a multistep transaction, carrying on the data exchange to
its conclusion. For example, a meter read to be delivered to a web portal for display to a
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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customer might have the following steps, all of which, hopefully, are automated by the
MDM:
!
!
!
!
!
!
!
!
Web portal initiates call for interval data from the meter
MDM validates and logs the request and delivers it to AMI head-end
AMI head-end obtains the data from the meter and delivers it to MDM
MDM validates the data or, if missing, requests the data again or, if second
request fails, issues service order to the Work Management System; MDM
logs the result
MDM performs validation, editing, and estimation on received data and logs
the result
MDM stores all data including estimated data in data repository; MDM
monitors future data received from the meter and uses actual data, if available,
to update data repository, keeping both records, and logging each event
MDM delivers complete data to web portal and logs the result
Web portal receives the data and displays to consumer
These steps are not overkill, but are absolutely essential. The MDM needs to know what
the customer saw so the MDM can ensure that the customer sees the same data the next
time or that estimated data replaced with actual data is so noted. The MDM needs to log
each step of the transaction so it can be audited for both operational and regulatory
purposes.
Functionality
The purpose of the MDM is to provide functionality related to smart meters that is not
already provided by the utility’s existing information technology systems. In doing so,
the MDM extends the life of the legacy systems, such as Customer Information Systems.
Such systems are perfectly fine for many Smart Grid functions, provided they are
supplemented by a powerful MDM. Here are some examples of an MDM working in
concert with legacy systems to deliver the Smart Grid capability expected by the DOE:
! Dynamic pricing:
o Framing interval data into time-of-use or critical peak pricing buckets
so the existing billing system can simply multiply these usage amounts
by the appropriate prices to generate bills
o Calculating and updating daily the baseline quantities for peak-time
rebates, then calculating rebate quantities in both kWh and dollars for
each event; the billing system can then add the rebate as a simple line
item on the bill
! Customer information:
o As the System of Record, the MDM stores all versions of the interval
data (raw, rereads, validation, estimation , and editing, etc.) for
presentation via a Web portal, generating graphics for a bill insert, or
other purposes
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o Tracking and flagging all data versions – by interval – so other
systems will always know which data version is being used; for
example, in Texas, the distribution utilities must, in delivering data to
the Web portal, indicate whether any usage interval is estimated
o Generating alarms, such as usage surpassing a tier threshold; this can
then be sent to a customer as a text message to help manage usage and
bills
! Distribution power quality: receiving and storing voltage data from meters or
distribution line sensors, monitoring the data for out-of-bounds conditions,
and reporting alarms to the existing Distribution Management System for
further handling
! Distribution reliability: receiving and processing outage alarms, including
delivering appropriate alarms to the Outage Management System only as
needed; this means filtering alarms during major storms to prevent flooding
the OMS, as well as tracking and monitoring bellwether meters to notify the
OMS of high-priority outages such as hospitals, fire stations, and schools
Integration
Prior to the DOE’s raising of the bar, many utilities focused solely or primarily on the
Meter-to-Cash function of smart meters. This allowed for two simple integrations: one
from the AMI system to the MDM and the other from the MDM to the billing system.
The problem with Smart Grid is that such integration suddenly becomes woefully
inadequate.
Following the addition of the DOE requirements, the integration must now support
multiple Smart Grid functions:
! Dynamic pricing: Customer Information System, Demand Response
Management System, Enterprise Resource Planning, Notification System
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! Customer information: Consumer Web Portal
! Reliability: Outage Management System, Work Management System
! Plug-In Hybrid Electric Vehicle (PHEV) charging: Electric Vehicle
Management System
A combination of an incremental approach and a weak system architecture will condemn
the MDM to the classic problem of “spaghetti” integration. This problem is bad enough,
just considering the multiple systems and integration points. It becomes untenable,
however, when a new AMI system is added in a few years to replace, supplement, or
enhance the technology being deployed today.
The alternative to the “Meter-to-Cash” MDM approach is strategic. By planning for the
full range of DOE functionality from the beginning and selecting the MDM with the right
architecture, a utility can ensure not only that it meets today’s broad requirements, but
that it also can meet inevitable new requirements down the road.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
9
Best Practices
CenterPoint Energy, a distribution-only utility operating in a fully deregulated and
unbundled market, is a good example of a utility that has followed best practices related
to the Smart Grid – a major reason CenterPoint received the maximum grant award
amount of $200 million from the DOE. CenterPoint’s success in implementing smart
meters and the initial steps of the Smart Grid has demonstrated the following best
practices:
! Customer education: provide simple, clear, and sufficient communications;
ensure no surprises
! Consumer benefits: provide pricing choices and clear and useful, “pushed”
information about energy usage, cost, and carbon footprint
! Billing accuracy: ensure “no surprises” by comparing prior and current bills
during the first month after installing the smart meter; catch the problem
before the custom sees it
! Real time system: support current and future Smart Grid transactions such as
connect/disconnect, outage alarms, and electric vehicle charging and roaming
! Plan for scale: both vertically (volume) and horizontally (functionally)
! Plan for change: new technology, new billing needs, new regulations, new
DOE-type requirements
! MDM first: put IT in place and prove business process integration before
deployment
! Best practices MDM: avoid basic, M2C MDM and provide flexibility to
handle multiple Smart Grid applications, multiple technologies, and coming
technology changes
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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Conclusion
The American Recovery and Reinvestment Act of 2009 that passed included over $3.4
billion for the Smart Grid Investment Grant (SGIG) program. The overall purpose of the
SGIG is to accelerate the modernization of the nation`s electric transmission and
distribution systems and promote investments in smart grid technologies, tools, and
techniques to increase flexibility, functionality, interoperability, cyber security,
situational awareness, resiliency, and operational efficiency.
When the Department of Energy (DOE) announced the Smart Grid Investment Grant
(SGIG) requirements, they effectively raised the bar on all Smart Grid initiatives. Grant
or no grant, utilities looking for investment approval must now meet the raised
expectations of customer and regulatory organizations for Smart Grid projects.
UtiliPoint feels that utilities might have difficulties meeting the standards put forth by
DOE. The Smart Grid opens a whole new channel of communication between utilities
and consumers, but this new communications channel is fundamentally different from the
past. Transmission is conducted real time.
Many of the DOE requirements can be addressed with a meter data management (MDM)
solution. A flexible MDM solution provides transaction management capability, acts as
an integration platform, and delivers needed application functionality.
One certainty about the Smart Grid is that applications and data uses will evolve and
change over time. A MDM solution must not only accommodate, but thrive on such
change. By planning for the full range of DOE functionality from the beginning and
selecting the MDM with the right architecture, a utility can ensure not only that it meets
today’s broad requirements, but that it also can meet inevitable new requirements down
the road.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
11
About the Author
Mr. Perdue leads UtiliPoint's market research practice,
and manages a group of analysts that provide a broad
spectrum of services designed to address the research
needs of the industry, including research surveys, product
development analysis, customer segmentation studies,
trend analysis, strategic plan development, competitive
and market intelligence, best-practices studies, market
retention strategies, and satisfaction measurement.
J. Christopher Perdue
Senior Director, Market
Research
UtiliPoint International, Inc.
Mr. Perdue has over 19 years of experience working in
the energy and utility industries. His databases and
reports are used throughout the industry, the investment
community, and by governments for decisive strategic
planning. He has published more than 150 articles on
topics ranging from energy and utility industry trends,
emerging energy technologies, economic development,
energy policy initiatives, customer service, call centers,
billing, credit and collections, and smart grid
technologies. Mr. Perdue is also a frequent speaker at
industry conferences.
In addition to market research, Mr. Perdue 's expertise
includes economic and load forecasting, economic
development, financial consulting, and retail solutions
development and support. He also has work experience
at Excelergy, Duke Energy, Central and South West
Corporation, and Gulf States Utilities.
With origins dating to 1933, UtiliPoint International, Inc. is a leader in providing researchbased consulting to the utility and energy industry. UtiliPoint analysts have provided strategic
business plans and studies on information technology, and its impact on utility operations.
Direct experiences include work in trading/risk management, outsourcing, CIS, billing,
CRM, metering, AMR, demand response, work/outage management, supply chain, ERP, call
centers, rates/pricing products, and IT architectural design. The firm is also the publisher of
IssueAlert, an analysis of the utility and energy industry's hot topics sent to over 100,000
utility and energy executives.
©Copyright 2010 UtiliPoint International, Inc., all rights reserved.
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About the Sponsor
This whitepaper was sponsored by eMeter and Siemens Energy, Inc.
eMeter provides essential software that enables electric, gas and water utilities to realize the
full benefits of Smart Grid. Leading utilities worldwide depend on eMeter Smart Grid
Management software to reduce operational costs, improve customer service, and drive
energy efficiency. With the most large-scale deployments in the industry and strategic
partnerships with Accenture, IBM, Logica, and Siemens, eMeter has built a reputation for
unparalleled expertise that ensures customer success. For more information please visit:
www.emeter.com.
The Siemens Energy Sector is the world’s leading supplier of a complete spectrum of
products, services and solutions for the generation, transmission and distribution of power
and for the extraction, conversion and transport of oil and gas. In fiscal 2008 (ended
September 30), the Energy Sector had revenues of approximately EUR22.6 billion and
received new orders totaling approximately EUR33.4 billion and posted a profit of EUR1.4
billion. On September 30, 2008, the Energy Sector had a work force of approximately
83,500. Further information is available at: www.siemens.com/energy.
Siemens Metering Services is a direct reseller and implementer of eMeter Corporation’s
meter data management software, EnergyIP™. Siemens Metering Services is a minority
investor in eMeter Corporation and is committed to the business’ success. For more
information on Siemens Metering Services, please visit us online at:
www.usa.siemens.com/energy/metering.
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