What Are Cellular Players Doing for Smart Grid?

When I hear great stories about smart grid, they are usually about smart meters, automated metering infrastructure (AMI), demand and response, home energy management, and so on. Networking is mentioned but mostly as an adjunct to those functions. Because the home area is familiar to us ordinary consumers, I hear a lot about ZigBee, Wi-Fi, and HomePlug but not other communication protocols, like cellular.

At the recent Networked Grid 2011, I heard a keynote speech by Campbell McCool, chief marketing officer of SmartSynch, on how cellular players like AT&T and Verizon are positioning themselves in the smart grid market.

Campbell McCool

SmartSynch develops and markets devices that use public cellular networks for smart grid. Even with the company’s bias towards cellular networks, it was a good opportunity to find out what cellular guys are doing in the smart grid segment. You can also check my previous blog post on what AT&T is doing in smart grid.

By the way, I heard from someone that utilities and telecom companies do not get along when they talk about network communications on the power line (power line communications, or PLC).

I am not sure if that is one of the reasons for utilities’ reluctance to use the services of incumbent wireless telecom players. Campbell pointed out that utilities historically have built and managed their own communications infrastructures, largely for economic reasons but also to meet new communications requirements as smart grid grows from smart grid 1.0 (AMI) to smart grid 2.0 (beyond AMI).

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Regarding economics, several years ago telecom companies charged $10 to $15 per meter for communication. The price was way too high for utilities, and they decided to build their own systems. Fast-forward to 2011, and the price is now down to 25 cents or less. Cost is no longer a reason to dismiss the telecom companies’ services.

What about the new communications requirements? Smart grid 2.0, as David Leeds said earlier in the conference, has moved beyond the era of smart meters and AMI and into applications that require high-bandwidth and low-latency communications like demand and response. Campbell quoted the latency requirement of less than 50 ms point-to-point that David had presented and said that the cellular guys could provide point-to-point connectivity of around 10 ms. Besides, he added, cellular carries IP, which is the protocol of choice for smart grid.

Campbell further reinforced his argument by quoting from the recent white paper by Duke Energy, which is probably the largest utility in the US. (I’ll update this post with the URL to that paper.) Duke listed seven reasons why they used an incumbent cellular provider for their communications:

  1. To exploit cellular players’ expertise in an area that is not Duke’s core business.
  2. Proven technologies and operations for more than 5 billion connections.
  3. Economies of scale.
  4. Internet protocol (IP) support.
  5. 3G backward-compatibility with 2G, covering a large number of existing nodes.
  6. Provider’s constant investment in hardware, software, and services.
  7. Significant influence over technology providers and others.

He also talked about a project with Texas–New Mexico Power. The project, which lasted about six months, included 10,000 smart meters with cellular connections. During that time, connectivity was maintained at 99.6%, nearly 100%, and the project was a success.

Another interesting trend from the communications perspective is machine-to-machine market growth in the utilities field. Campbell talked about SmartSynch’s project with Qualcomm, another incumbent wireless cellular provider, to make a smart meter really smart—as smart as a smart phone. That meter can run multiple applications downloadable from a remote server at Qualcomm. Patches and bug fixes are also downloadable automatically without human intervention. He cited an interesting statistic: the market will see anywhere between 2 billion to 10 billion new devices in the next five years. Moreover, according to some estimates, 65% of those devices will be run by utilities. This is potentially a huge market for utilities, and they want to focus on their core business rather become a network provider.

Campbell presented two caveats at the end. One is that a company like Duke Energy is a trendsetter, but many utilities are slow in adopting new trends. He thinks the mainstream smart grid market will move to cellular in one to three years. That remains to be seen. The other is that although Campbell thinks the growth rate in cellular adoption in smart grid will soar, other protocols like mesh and PLC will not go away.

In spite of some marketing pitches here and there, it was an informative speech about an example of outsourcing. Everyone knows that if something is not strategic to your core business, you would like to outsource it to someone you can trust. If you can avoid it, you do not want to build, operate, and maintain a large communications network. Also, you do not want to worry about extra buildouts, security, updates and upgrades, or disaster recovery. It all makes sense. It all comes down to trust between utilities and telecom service providers.

Finally, many of Campbell’s points are summarized in SmartSynch’s white paper, here.

Zen Kishimoto

About Zen Kishimoto

Seasoned research and technology executive with various functional expertise, including roles in analyst, writer, CTO, VP Engineering, general management, sales, and marketing in diverse high-tech and cleantech industry segments, including software, mobile embedded systems, Web technologies, and networking. Current focus and expertise are in the area of the IT application to energy, such as smart grid, green IT, building/data center energy efficiency, and cloud computing.

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