Toward Intelligent Grids

The promise of the intelligent energy grid remains elusive; however, a steady
wave of innovation in communication and information technologies, combined with
advancement in emerging energy technologies, is bringing it closer to reality.
Wider adoption of control-theory principles in a business environment (e.g.,
business process management, adaptability, real-time enterprise) and the convergence
of communication, information and energy technologies are transforming traditional
network management and coalescing business systems, field personnel and local
control devices into one connected environment (see Figure 1).

As some semblance of normalcy has returned to the industry (e.g., return of
restructuring comparability for large commercial and industrial [C&I] customers,
upturn in the economy, restoration of utility financial health), one of the
issues we see as turning the back-to-basics corner is the continuing emergence
of the intelligent-grid concept. Interestingly enough, two major intelligent-grid
enablers – communications and software – are progressing steadily irrespective
of energy player spending. The third intelligent-grid enabler – energy technologies
– remains dependent on energy player investments but represents one of the areas
where spending is increasing in the face of reliability challenges, wholesale
market evolution, customer (large C&I) expectations and regulator demands.

Communication Technologies

Utilities in the run-up to competitive retail markets made significant communications
plays, from extreme electricity to telecommunications flip, to common carrier
models, to simply trenching and construction. Although most utilities stepped
back from aggressive telecom play, communication advances continue to proliferate,
and the energy industry is a free rider.

IP Ubiquity

Standardization on the ethernet protocol across a wide range of energy networks
(e.g., business, control, mobile, AMR, LAN, WAN, SCADA, customer gateways, substation
automation, weather stations) is finally solving the decades-old problem of
a lack of universal communication infrastructure among disparate islands of
automation in energy. The first attempt to direct coherence of communication
networks in energy in the late 1980s, through the Electric Power Research Institute
utility communication architecture (UCA) initiative, failed to include customer
networks and encourage protocol standardization among business systems, process
control and customer communication networks. The latest initiatives (e.g., UCA
2.0, E2I CEIDS) and activities of the IEEE and IEC standard groups (e.g., IEC
870) have established ethernet as a dominant communication method and promoted
IP ubiquity. The proliferation of IP-enabled sensors, devices and automata owned
by energy companies and end-customers is creating a communication environment
that, leveraging Metcalfe’s Law, can significantly amplify the value of the
energy communication network and considerably increase the number of business
processes that can be automated, monitored and optimized by achieved information
ubiquity and resultant controllability and observability of the energy grid.

Pervasive Communication

In addition to IP ubiquity and creation of an enterprisewide communication
environment that integrates business systems (including partners’), utility
personnel, customer networks, sensors, devices and automata, the buildup and
technological advancement of public and private networks (e.g., WAN: 2.5/3G,
LAN:-802.11g, PAN: Bluetooth) have created much better and more affordable communication
coverage. This effect (resulting from Butter’s Law) makes information not only
financially affordable, but also pervasive and persistent. This affordable and
always-on access to information encourages adoption of sense-and-respond business
paradigms (e.g., on demand, adaptive, real time), creating energy companies
that are more agile and ready to react to technical process variation or business
environment changes as they occur.

PLC and BoPL Accessibility

Utilities are once again emerging in the communication space, this time leveraging
the regulated wire system for the transport of information and data that will
bridge the last mile to premises and that will provide the communication transport
for grid information ubiquity. Utilities are using two plays: the energy management
play and the communication play. Regarding the energy management play, utilities
have used PLC at very low speed to capture energy data from remote locations.
This utility play is now using faster-speed two-way transport to move information
throughout the system, linking from the consumer to the generator and back.
Typically, this service is offered by the wires’ line of business (LOB) for
meter data collection, dynamic pricing, controlling devices, etc. The more robust
play in this space by utilities, the communication play, is broadband over power
lines as a communication, ISP and entertainment service offering that can also
provide energy management services. This is typically offered by the communication
subsidiary of the utility; however, in the case of the offering being provisioned
by a vendor/third party, the utility simply may be providing a landlord service
over the utility’s wires.

Information Technologies Trends

IT and software, much like communications, are advancing largely as a function
of the global economical drivers and not by the energy industry. Here are the
key trends that impact intelligent grid transformation.

Integration Through Service-Oriented Architecture

The major IT architectural trend is the introduction of the service-oriented
architecture (SOA), based on the principle of the object-oriented modularization
and interoperability through XML-based technologies such as Web services. Realizing
inflexibility, high total cost of ownership and upgradeability issues of the
currently dominant monolithic enterprise applications (e.g., multi-tiered, transactional,
single relational database management system), vendors and leading IT organizations
are moving toward an enterprise IT environment where a requested unit of work
(a service) could be accomplished by a service provider (e.g., an application
module, an external BPO vendor, a device) invoked by a service broker. Using
an enterprise service bus as integration and a service orchestration backbone,
new composite applications are extending over components of the legacy systems
wrapped in a Web services envelope, commercial offthe- shelf vendor-procured
modules and external vendor-provided services. SOA architecture also facilitates
inclusion of personnel (e.g., field crews), devices and automata (e.g., sensor,
programmable logic controllers, intelligent protection units) using XML-based
technology and industryspecific vocabularies (e.g., CIM).

Software Extensibility

After harvesting the low-hanging fruit of incremental process improvement enabled
by compartmentalized applications, energy companies are now focusing on specific
energy cross-functional end-to-end business processes (life cycles) covering
several LOBs and extending across the back office, middle office and front office
into the service points (e.g., field service, IP-enabled sensor, automata) and,
in some cases, even including partner and customer systems. This vertical trend
is a business counterpart to the IT enterprise integration architecture movement
(enabled through SOA and enterprise service bus). It also resembles horizontal
back-office process integration initiatives created by the emergence of the
ERP systems and, later, CRM systems that were focused on the entire life cycle
processing. Optimization/orchestration of the complex end-to-end business processes
(extended across applications into the field and monitored/executed by sensors
and automata) is enabled by convergence of the communication, information and
energy technologies into an intelligent grid.


The trend toward an adaptive real-time enterprise is based on the premise that
an organization can achieve a new level of operational excellence by reducing
latency and improving the visibility and analysis of the data across systems,
both within an enterprise and throughout its supply chain. It is essentially
a business instantiation of the fundamental control theory concept of a negative
feedback control and resembles the Darwinian sense-and-respond paradigm. The
promise of shortening the information creation and delivery cycle and providing
an ability to monitor business process in real time through a closed-loop decision
support system is alluring for energy companies focused on cost reduction and
achieving operational efficiency. In addition to business key performance indicators
provided through advanced analytics that sniff the transaction processing environment,
the operational process indicators (e.g., transformer loading) acquired through
SCADA and local monitoring devices can provide additional insights into the
state of the energy system. This can enable better asset utilization and tighter
operation of the energy delivery infrastructure, resulting in higher reliability,
better efficiency and faster response to environmental changes.


Field forces are becoming a component of the intelligent grid, fueled by ubiquitous
communications, extensibility and mobile devices. As applications and back-office
services are extended into the field (forward deployment), the field crew is
empowered to resolve issues in real time, for the benefit of the grid, the consumer
and the utility. Similarly, the ability to dispatch and redispatch field forces,
contractors and outsourcers on an almost real-time basis is the key for the
wires’ LOBs to achieve operational efficiency. As back-office applications and
field force dispatchability are implemented, the field force can be enabled
to validate and renew distribution system asset data in real time. Finally,
as mobile device functionality and diversity improve, costs continue to drop
and communication ubiquity is achieved, the increases in numbers of devices
(outpacing traditional PCs) will further enable mobility and make the field
force a true component of the intelligent grid.

The Impact of Emerging Energy Technologies

Unlike communications and IT/software advances that will fuel the intelligent
grid transformation regardless of the energy sector involvement, the third prong
to advance the grid – energy technologies – is the province of the energy sector.
Key technologies that enable innovative business processes serve customers and
benefit the pool, include sensors, power electronics, modeling and simulation,
intelligent control systems, distributed generation and storage technologies.
Once integrated, they will enhance the quality of the energy delivery and maintenance
of the supply/demand equilibrium through increased reliability, consumer gateways,
automated megawatts and distributed energy resources delivering atomistic megawatts.


Radial feeder electric distribution systems deliver reliability levels typically
in the range of 99.98 percent (approximately 100 minutes of annual outage time,
as indicated by SAIDI). New technology in C&I processes has created an environment
where some customers have a zero tolerance of any type of power interruption.
Numerous initiatives (e.g., DV 2010 consortium) are focused on increasing system
reliability of the existing network by changing the operating mode from radial
to looped and investing into new multi-tiered protection schemata enabled by
local automation control. The high-speed networked primary voltage distribution
system implements a combination of traditional directional overcurrent protection,
distribution automation and high-speed communications to accomplish a high level
of reliability to the customer, creating a premium operating district. The system
integrates equipment on both sides of the substation fence into a single system
using peer-to-peer communication and control logic to autonomously perform remote
switching to provide high-speed interruption, system restoration, voltage control,
remote monitoring and control, and outage detection.


Once the promise of commoditized energy markets, consumer gateways were in
vogue throughout the early days of energy market restructuring. As the markets
halted, the promise of gateways eroded. Now, however, gateways are re-emerging
as a tool that will enable end users to become a component of the intelligent
grid. Gateways enable consumers to provision self-service on their home turf,
not just through energy company portals, linking and integrating energy management
into the consumer’s total quality of life (the hot in the water, cold in the
beer and drive in the motor, with apologies to RMI CEO Amory Lovins), enabling
early adopters to think and act as an energy generator, and making energy consumption
choices on the consumer’s own terms rather than on the utility’s terms.

Distributed Energy Resources

Distributed energy resources (DER) (e.g., distributed generation sets, energy
storage, power parks) enable a wide variety of energy services for both the
restructured energy markets requiring high energy to enable profitability and
grid stability and the digital economy requiring high power through reliability,
criticality and productivity. DER operation requires local and distributed control
different from conventional centralized EMS controls. DER-induced reversed energy
flows require new multi-tiered protection schema. Finally, DER interconnection
standards are emerging through IEEE 1547 and through regulatory proceedings.
As cost curves decline, interconnection barriers crumble and focus on energy
security expands, penetration of DER is fueled and the grid becomes smarter
– benefiting consumers, the pool and the utility.

Demand Response

Demand Response (DR) programs are examples of integration of several energy
technologies enabled by communication and IT that link the retail and wholesale
markets and promote market maturity. Through these programs, consumers become
part of the equation and make the grid smarter as economic signals are delivered
and knowledgeable/intelligent reaction is enabled, if not automated. These programs
can be structured to meet emergency conditions on the grid or to provide economic
alternatives to consumers. Communication is a key component of DR programs,
with advanced two-way communication in real-time-coupling usage information
and pricing information. Sophisticated metering is the core enabling technology.
Advanced billing and revenue management systems are also critical for DR deployment.
Price-transparent DR programs will promote disruptive technology (DG, energy
storage, power parks) deployment by customers. Although cyclical in nature even
in supply boom periods, DR serves a valuable system optimization function.

Leading energy companies must develop a vision for their play in the emerging
energy industry. Industry players that have best weathered the past half-decade
storm are the ones that have had a physical presence and linkage with the consumer.
The grid will continue to play an increasingly important role in the market
and will drive decent, if not handsome, returns.