Can Electric Utilities be the Platform for Smart Cities of the Future?

In the smart city of the fast-approaching future, a light pole may text you about an open parking spot in front of your favorite store downtown — or the nearest open electric vehicle charger. Residents will be able to get real-time air quality alerts via sensors on local electrical transformers, and pedestrian foot traffic data collected by streetlights will be leveraged for economic development; for example, enticing a world-class chef to open a restaurant.

As cities in the United States and around the globe expand their role as hubs of economic development, population concentration and technical and cultural innovation, the concept of making cities “smart” has become a key focus for local and state policy makers and their residents. The technology — and specifically the need for digital platforms that will provide the backbone of many smart city initiatives — could also open major opportunities for utilities to build new partnerships with their customers and develop innovative services and business models.

Yes, it all sounds good. Smart or digitally connected cities can promote economic growth in a sustainable way, while delivering core services in an effective and efficient manner. But implementation is far from simple or easy, according to a panel of city and utility executives speaking at a smart cities workshop on Feb. 1 at DistribuTECH in San Diego.

Columbus and AEP Ohio are working on a range of Smart City Challenge initiatives. (Photo by Mike Kruger)

“Cities can’t get it wrong,” said Erik Caldwell, Economic Development Director for San Diego, which has set itself the goal of running 100 percent on renewable energy by 2035. City leadership sees this target as a job creator, he said, but they also know they will need to leverage the knowledge and expertise of their local utility — San Diego Gas & Electric — to get there.

The need for new, outside-the-box thinking and partnerships between cities and their utilities was a central theme emerging from the session. Similarly, panelists agreed that knowledge sharing will be critical to develop replicable models that can be adopted to the specific needs of individual cities.

So what is a smart city, and what are the benefits these initiatives can provide for different localities? At the most basic level, a smart city relies on gathering and processing large amounts of data, usually collected by inexpensive, ubiquitous sensors spread throughout the jurisdiction. It is this data that allows city leaders and managers to make better decisions about where to invest, build and provide critical services, such as ensuring public safety.

Therefore, a city cannot even begin to transform itself into a smart city without these sensors being installed across the geographic region — which is where the electric utility comes in. The local utility owns assets widely deployed throughout the city and has a relationship with nearly every home and business owner within the community.

At DistribuTECH, questions of how, why or even if the electric utility should be the platform for the smart cities of the future surfaced in a number of workshops, with opinions running the full gamut of possibilities.

Cris Eugster, Chief Operating Officer at CPS Energy, San Antonio’s municipal utility, said his city is interested in smart city initiatives because of the desire to provide services in the most efficient manner. Eugster is also on the Board of Directors of the Smart Electric Power Alliance (SEPA).

Scott Osterholt, Director of Risk and Project Management at AEP Ohio, highlighted the investor-owned utility’s work with Columbus, Ohio, which received a $90-million Smart City Challenge grant from the U.S. Department of Transportation. The city is partnering with nonprofits and local businesses on a portfolio of initiatives, from local microgrids to energy efficiency to electric vehicle deployment. A major focus here is also documenting the program’s successes and challenges, to be shared with other cities around the world.

Sharing goals, assets and limitations

All panelists agreed that communication and collaboration between cities and utilities are key elements for the creation of the necessary smart city platforms and systems. Both sides need to share and appreciate each other’s goals, limitations and assets to ensure the network of sensors can be installed and used correctly.

On the city side, San Diego’s Caldwell said, “I know how to get us to 70-percent renewable energy . . . but that remaining gap, we need to think creatively with the utility and say, ‘How do we think outside of the framework that our public utility allows or state law allows?’” He highlighted multiple approaches the city and utility could take to get San Diego to its goal and ensure the utility is a key player in implementing it; for example, jointly seeking rule changes before the California Public Utilities Commission. Caldwell also mentioned that San Diego is looking at other alternatives, such as a city-wide Community Choice Aggregation to purchase the remaining 30% of energy they need from renewable sources.

AEP’s Osterholt provided a utility perspective: “The Columbus municipality needed some help, and we were standing there wanting to help. We had this unique opportunity where we both wanted to jump in and do something. That led to a great relationship in working with them to go forward.”

Osterhold underlined how closely AEP is working with the city by noting that the utility is now co-leading three of the four teams that Columbus created to implement the Smart City Challenge.

Utilities take the lead

The panelists all agreed that even if city leadership isn’t moving toward a smart city plan in the immediate future, electric utilities should still be taking steps to prepare themselves and the cities they serve for that move.

In San Antonio, CPS Energy is in the early phases of its smart cities plan, Eugster said.

“We are just trying to stand up the core platform that allows us to do the interesting applications,” he said, pointing to a pilot microgrid CPS developed with a local military base to ensure reliability. The model could be duplicated with larger commercial or industrial customers, he said.

As part of its partnership with the city, AEP Ohio is rolling out a limited number of EV charging units in Columbus. The utility is somewhat limited in deployment due to regulation, but is focusing on both high-traffic and underserved areas. Additionally, the utility is electrifying its own fleet of vehicles to help jumpstart the EV market in and around Columbus.

New processes and getting the job done

Even when city leadership and utilities are in agreement, challenges remain. Panelists noted that sometimes regulations and laws may prohibit a utility from implementing specific solutions that are critical for building out smart city platforms. They also agreed that sometimes both city and utility timelines can be unrealistic, especially when faced with operational issues related to the installation of the hardware and software.

Eugster said that rolling out sensors and advanced metering infrastructure in San Antonio has meant that CPS Energy has had to change its business processes. To ensure the most cost-effective and least disruptive installation, CPS Energy created a “tiger team” which is tightly focused on change management. With a fully staffed “war room,” the team is thinking every day about how business processes and training must change to take full advantage of the new technology.

Osterholt made the point more succinctly. “Anytime you put in a new computerized system, you have a new process,” he said.

To illustrate his point, Osterholt shared a story about automated reclosers — a key piece of equipment on distribution systems. Reclosers had previously been maintained by AEP’s meter revenue group, but new models, equipped with radios and antennae, required that work be switched to telecom and line crew teams. Rather than send three individuals to do a single job, the utility is creating new job classifications.

The priority is not who does the job, Osterholt said, but what is the best way to get it done.

That approach may be essential for addressing a range of issues — such as privacy and cybersecurity — related to the evolving roles of cities and utilities as they work together to make “smart” the new normal. As is occurring across the energy industry, change will be driven not only by technology, but by strategic and proactive leadership, customer engagement and institutional cultures that promote innovation.