Smart Grid Data Analytics

With Smart Meter deployments reaching 30% market penetration level, a huge new opportunity for data analytics is emerging. Instead of collecting data once every month, utilities are going to be collecting data 96 times a day or roughly 3000 times per month. This is a 300,000% increase in the amount of customer data that utilities have had before. Converting this data into actionable intelligence will create a multi-billion dollar opportunity. By applying smart analytics and machine learning techniques to the smart meter data, utilities can start to understand their customers' behavior in real-time and take advantage of this understanding to serve them better while improving the efficiency of the grid.

According to a reccent report from Pike Research, the software and services that will enable smart grid data analytics will represent one of the largest growth opportunities in the utility sector over the next few years, increasing from a relatively small market of $356 million in 2010 to nearly $4.2 billion in annual revenue by 2015 with a CAGR of 65%.



Industry analyst Marianne Hedin says the 'data tsunami' that will wash over utilities in the coming years is a formidable IT challenge, but it is also a huge opportunity to move beyond simple meter-to-cash functions and into more robust business intelligence capabilities, true situational awareness with real-time optimization of their operations, and even predictive analytics".

Like most emerging technology sectors, the market is highly fragmented. Large IT companies (such as IBM, Oracle, SAP, Google), traditional power systems provider (such as ABB, Siemens, Areva, GE), specialized consulting firms (SAIC, Accenture, Jacobs, CapGemini, Infosys) and pure-play smart grid providers (Itron, eMeter, Alcara, Ecologic, Opower, Telvent) are all working towards this market but as Hedin puts it "at this stage of the race, the competitive market is wide open".

Smart Meters - Crossed the Chasm?

Despite consumer concerns and recent reports around cooling of the smart-grid market, the Smart Meter deployment is well underway and actually picking steam. According to the recent report from Pike Research, the total number of planned smart meter installations has grown to 57.9 Million. Over 90 utilities are either installing smart meters or have approved plans for installations. By end of 2010, about 21 Million smart meters will be installed in United States. With an estimated 150 Million electric meters in US, very soon we will have more than 30% market penetration of smart meters. Looks like Smart Meters have truly crossed the chasm and are now into the "early majority" phase of the technology adoption life cycle.

Here is a link to the ARRA funded Smart Meter deployments projects. Interesting thing to note is that the ARRA funded projects while significant are a small minority of total smart meter deployments happening in the country. Out of the approximately 20 Million smart meters that will be installed by the end of 2010, only about 2 Million are from the ARRA funding. Rest are approved by state public utility commissions  and are funded by the  public.

M&A in Smart Grid

Interesting chart from a report on Smart Grid vendor ecosystem showing how the Smart Grid area deal-making is accelerating over the years -

Constellation buys CPower: More consolidation in DR ahead?

CPower was acquired by Constellation Energy today. Although the terms of the deal are not disclosed, chances are this is a good exit for investors who came in the last round of funding in April 2009. CPower was the smallest of the three main DR providers. The other two much larger players are EnerNoc and Comverge - both are public. Is this acquisition a sign for more consolidation in the DR industry ahead. The two other main players, EnerNoc and Comverge are small-caps with market capitalization of a few hundred million dollars making it an attractive target for the larger IT or Utility Provider company to move in this growing space. I wouldn't be surprised if one of the IT majors get into the action by purchasing one of them. Cisco, Oracle, IBM, Google & Microsoft are all looking to make in-roads in the Smart Grid sector. None of the existing IT folks have particularly strong channels in the utility world. So, in addition to giving them a good entry in a fast growing DR market, the acquisition will also provide a major channel access. Cisco is already making several acquisitions/partnerships in this area (Itron partnership, Archrock acquisition) and count on them to become a major player. Comverge and/or Itron will be a great addition to Cisco's hardware business. EnerNoc is particularly well suited for Oracle or IBM given their DR portfolio as well as their recent entry into the Carbon footprint management software. 

Energy Storage on the Grid

The idea of using energy storage to increase the efficiency of power systems is almost as old as the industry itself. There was a burst of activity in the area of electricity storage in 1880's, especially in Britain that took a significant lead over the United States in this area. The first application of large-scale energy storage in the US occurred in 1929 when pumped hydroelectric power plan was placed in service. Pumped hydro which involves pumping water from lower elevation to a higher elevation and using this to generate electricity at the time of peak demand is still the most widely used storage mechanism for electricity and are used to manage grid frequency and provide reserve generation capacity. Other common forms of bulk storage are -

• Compressed  Air Energy Storage (CAES)
• Batteries
• Sodium Sulphide (NaS)
• Nickel-Cadmium 
• Li-ion (Cobalt Oxide or Phosphate) 
• Vanadium Redox
• Zinc Bromine
• Lead-Acid
• Flywheels
• Superconducting Magnetic Energy 
• Electrochemical Capacitors

The following table shows the breakdown of major bulk storage technologies in the grid presently. 

Storage in the Grid

Storage Type	US (MWs)	Rest of the World (MWs)
Pumped Hydro	22,000	88,000
CAES	110	367
NAS	8	250
NiCad	26	0
Other	10	10

With the advent of Electric Vehicles (EVs), a significant amount of distributed storage is expected to come online in the next few years. Optimal control and management of these EVs offers a significant opportunity to increase the of efficiency of the electric grid.

Storage Model

The key physical attributes that differentiate the various energy storage technologies and therefore determine which applications they are most suited for are -

• Storage Capacity [MWh] - This is the total energy that can be stored in the system. 
• Power Rating [MW] - The maximum power output (or input) capacity. This is the rate of charging (or discharging).
• Efficiency - The ratio of energy discharged by the system to energy input to the system to charge it. Conversion Efficiency refers to the losses experienced when charging the system. Storage Efficiency refers to the 'leakage' losses during the time energy is stored. 
• Reaction Time - The time needed to "turn on" the system and begin charging or discharging or switch between the charging/discharging modes.
• Cost - Cost has many components including fixed cost of installing the battery and the cost to charge or discharge the battery. Energy density is an important factor in determining the cost as it has an influence on the real-estate costs. Note that the cost of discharging the battery may not always be negligible. For example, in a CAES system, natural gas might be needed to run the turbine for converting compressed air into electricity. 

Economic Benefit of Electricity Storage

There are many economic benefits that storage can provide. These include -

1. Load leveling between off-peak and on-peak times
2. Peak Generation
3. Arbitrage
4. Spinning Reserve
5. System Regulation
6. Deferred cost of Transmission and Distribution upgrades
7. Environmental Impacts

Useful Smart Grid Related Resources

• IEEE Smart Grid
• Smart Grid Clearing House
• IEEE Power and Energy Society (PES)
• FERC
• ISO-RTO Council
• AESO (Alberta, Canada)
• CAISO (California)
• ERCOT (Texas)
• IESO (Canada)
• ISONE (New England)
• MISO (Midwest)
• NBSO (New Brunswick, Canada)
• NYISO (New York)
• PJM (Pennsylvania, Jersey, Maryland)
• SPP (Southwest Power Pool)
• WECC
• EPRI

Does the world need nuclear energy? | Video on TED.com

Here is an interesting debate on Nuclear vs Wind/Solar. I agree with Mark that going Nuclear is not worth the risk of proliferation. However, if a breakthrough like TeraPower as outlined by Bill Gates in another TED talk becomes possible, I will change my view. I do think that we need to invest in all possibilities as we never know where the silver bullet might come from.

Debate: Does the world need nuclear energy? | Video on TED.com