NARUC panel conjures utility of the future as cloud solution

By Christine Stearn

The last time I was in Nashville — 20 years ago — I was a teenager, and about the only thing I remember was visiting the Grand Ole Opry.

So, when I recently visited the city again — this time for the National Association of Regulatory Utility Commissioners (NARUC) summer meeting — Nashville was nothing like I expected, from its bustling nightlife and the live music scene to its delicious food. The NARUC meeting also upended some of my expectations. Attending one of the meeting’s general sessions, “Getting from Data to Intelligence,” I heard a panel of industry leaders — representing tech firms, utilities and consumer advocates — push the envelope of typical regulatory docket-talk to instead focus on the challenges of the future.

(Source: Christine Stearn)

Data has transformed almost every industry in our nation. But regulated utilities, which operate the most extensive, interconnected network in the United States, have lagged behind putting that data to use. The panelists at NARUC addressed what is happening now, what might be possible in the future, and the practical implications for a data-driven, intelligent utility industry.

Alex Laskey, President and Founder of Opower — a company providing a customer engagement platform to utilities — opened with how his very early Tuesday morning start was entwined with technology, from a 4 a.m. phone alarm to his Uber ride to the airport. Without this technology, he said, he would have had little visibility — and more anxiety — about the status of his wake-up call, the arrival of his ride to the airport or the departure of his flight.

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That story kicked off a whole line of what-ifs in my mind. The data we have today is transformed into intelligence that allows us to make slight adjustments or different decisions — for example, your Uber is seven minutes out so you have time to grab a cup of coffee in the hotel lobby. What if future travel apps could give you information about the energy efficiency of the hotel, the car share and the airplane flight on your itinerary, as well as their electricity or fuel source, before you book your reservations? What if we could track our energy use and supply sources at a personal, household, or even a corporate level through a fitbit-like app, something called enerbit or consumebit?

I could envision a future where employees on business travel have directives to not only keep expenses but also their carbon emissions to a minimum, and both could be tracked with easily reportable metrics.

Metrics of electricity use are now being demanded by commercial utility customers at the facility level and within a portfolio, said Tim Healy, CEO of EnerNOC, a company that designs energy management software. Investors in real estate want to know the performance of buildings as it relates to their utilities as well as other factors, he said.

The Global Real Estate Sustainability Benchmarking (GRESB) group, with members representing $2.3 trillion in assets, provides a benchmarking report that can affect an organization’s ability to access capital. For a firm with a multilocation footprint, just getting utility bills entered efficiently and accurately into benchmarking systems can be a significant challenge. A simpler way is needed, Healy said.

The Internet of (important) things

But to get to that future of easy accessible, granular data at the reporting level, we may need what Eric Dresselhuys, Executive Vice President of Silver Spring Networks, called “an Internet of (important) things.”

The typical Internet of Things (IoT) scenario is where everyday devices embedded with electronics, software, sensors and network connectivity are able to store and exchange data. Your house is connected to your phone, so when you are 5 minutes away, you can set the thermostat to a preferred setting and turn on the electric kettle for a cup of tea.

The Internet of (important) things, Dresselhuys said, is the same connected-device scenario but for industrial and critical infrastructure.

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Historically, we have managed infrastructure through isolated networks that are reliable, predictable and controllable, but in today’s world, you lose the benefits of connectedness. Dresselhuys sees a future with a lot of opportunity to capture efficiencies, such as self-healing grids that limit outages, or smart distribution systems that optimize energy supply and demand.

But this distributed connectedness comes with its own set of challenges.

— The tech innovation cycle — currently about 12 to 18 months — is moving faster than either utility adoption or regulation cycles, which typically run three to five years. In other words, by the time utilities or regulators can make a decision on adopting and deploying a technology, that solution may already be out of date.
—  Gartner, Inc., a global information technology research firm, predicted that through 2018, 75 percent of utility-initiated IoT projects will take up to twice as long as planned. The projected time lag will be due to culture and process change related to the development of new business models.
— Gartner is also forecasting that by 2020, addressing compromises in IoT security could add 20 percent to annual security budgets, versus a less than 1-percent increase in 2015

The panelists discussed how our connected devices, such as smart phones, can evolve and stay relevant amid ever-changing customer expectations. One panelist compared our current electric industry infrastructure investment approach to purchasing a phone and apps. The current utility approach is the equivalent of going to an Apple store to buy a phone and having to decide, there and then, all the apps you want loaded on the phone and then not being able to add on new ones.

Designing a “future-proof” system

Applied to energy infrastructure, this is a limiting view of how to procure and invest, as we don’t yet understand all the functionality we will need. What’s needed, ideally, is a “future-proof” platform that stays open to changing technology and also is responsive to customers’ and the grid’s evolving needs.

How to address these challenges going forward? The following thoughts are a mix from the NARUC panelists and my own ideas for changing utility and regulatory approaches to data and infrastructure.

— Identify ways to deploy ongoing functionality updates to the grid and consumers, which will also mean getting security and safety right — and defining standards for interoperability.
— Purchase solutions that have a bit more capacity than you need at present, as premature obsolescence is expensive. Such an approach may challenge least-cost investment methodologies unless we can identify ways to quantify the benefits of avoiding premature obsolescence.
— Regulatory policies need to allow for bundling of technologies that provide more value as a holistic package, rather than looking at individual technologies as stand-alone investments.
— Capital investments mean investing organizations in permanent or semi-permanent solutions. But what happens in the future can be envisioned thousands of ways. If we want utilities to invest in digital, nondurable grid capabilities, why not allow them to earn a return on efficiency and cloud-based solutions rather than only on hardware?
— Standard operating systems for personal computing and mobile phones have been defined — Mac and Microsoft, iPhone and Android. We have yet to define the standard system or systems for the Internet of (important) things or the industrial Internet operating system.

Closing out the panel, one of the speakers wondered, will the utility of the future be perceived as a cloud solution?

As I think back on the teenager who visited Nashville 20 years ago, one of my regrets is that I didn’t learn in school that the world wasn’t fully figured out. I learned to memorize and regurgitate facts, but the unanswered questions were what really excited me — and still do.

The unanswered questions about the evolution of the energy industry are exhilarating — and hopefully, will drive technology innovators, utilities, regulators and other industry stakeholders toward ever smarter, data-driven approaches to change.

Christine Stearn is a Utility Strategy Analyst at the Smart Electric Power Alliance (SEPA). She can be reached at [email protected].