Magazine Article | July 21, 2009

M2M And The Smart Grid

Source: Field Technologies Magazine

M2M (machine to machine) and the smart power grid are providing utilities with ways to improve their environmental standing and customer service as well as decrease costs.

Integrated Solutions, July/August 2009
Being "green," as in environmentally responsible, is today not just smart politically and public relationswise, but from a business perspective as well. Spurred by advances in technology, with encouragement from the Obama administration, the combination of M2M and the smart power grid is providing utilities with new opportunities to enhance their environmental standing, as well as cut costs and improve customer service.

At issue here is smart technology that works with M2M along the smart power grid. "The grid now has no intelligence," notes Marcus Torchia, IDC research manager, Intelligent Grid Strategies. That is in the process of changing, he says, as an information and communication technology overlay is applied to the existing grid. Included in this overlay are smart meters, smart thermostats, two-way M2M communication, smart sensors, demand response technology, cellular radios, and more. The combination of M2M and the smart grid gives utilities remote access to data, such as energy consumption and energy disruptions, while customers gain access to such data as what appliances account for most of their energy consumption and how much they are spending on energy at a given time.

Yet, we are nowhere near to having a smart grid. To have a two-way communication solution, says Michael Lang, executive VP of sales and marketing at Numerex, requires multiple technologies. How far along are we to rolling out such a smart grid? "We're in its infancy," says Lang.

One trend worth noting is the use of two-way M2M technology to shave peak demand and lower the demand curve of energy consumption. Nationally, we are trying to lower our production of carbon emissions. Rather than building more and more power plants, we are trying to be smarter in our use of energy. "Instead of throwing more energy at demand, we're trying to shift the usage," comments Torchia. That is where M2M and the smart grid combination come into play.

Smart meters are part of this, and there are a number of pilot programs now under way involving the deployment of smart meters. Expect to see more such meters in the coming years.

Wireless communications is a technology being used to implement two-way M2M communication. "I think wireless technologies really enable utilities to save having to build multiple power plants just because of the way they can design and create efficiencies in the network," observes Lang.

"Cellular and wireless networking are ways to make remote assets in the field, such as meters, transformers, and other transmission and distribution equipment, connect to the utilities' back end in an automated way, rather than manually," observes Sam Lucero, senior analyst, M2M connectivity at ABI Research.

In addition to wireless, Torchia is also seeing a trend towards open standards. Proprietary solutions are now the norm, but he predicts that during the next three to seven years, there will be a "pretty dramatic shift" towards open standards, interoperability and nonproprietary platforms. This is getting a boost from the National Institute of Standards and Technology, which is getting stimulus funding to promote standards for power equipment, communication, and information technology.

Lang sees the development of price response that allows consumers to alter their energy usage in response to a utility's pricing structure. The consumer will be able to decide when to curtail their use or just shut down their home devices and even communicate to the utility to turn everything off for a week because they are on vacation.

Trends we may see in the future could be heavily influenced by government policy. Peter Fowler, president of Cinterion Wireless Modules, Americas Division, notes that cellular smart meters have been deployed to several hundred thousand homes in the Nordic countries, at least in part due to encouragement by government. He expects government to play an important role in the United States as well.

Lucero thinks the government is key to creating best practices that will allow the utilities industry to operate more in a cookie-cutter fashion, rather than having to start from scratch. Smart meters are an example of best practices.

Fowler compares energy costs to that of healthcare where, in a free market, both continue to rise. "The individual has no choice to seek medical attention or to get energy," he notes. "It's only when government says that the costs to the consumer are too high and we need a solution to stop that, that you see legislation which will help drive costs down."

These trends promise utilities an array of benefits. Cost efficiencies are one. Meter readings will no longer be done by truck rolls and eye-to-eye contact with the meter, but remotely through M2M communication. As consumers alter their usage of energy in response to better knowledge about what devices are consuming energy and when and the costs of such energy usage, utilities will benefit from deferred capital expenses, notes Lucero. Rather than having to increase generation capacity to satisfy peak demand, consumers will slice their demand in response to higher energy prices at certain times, says Lucero, thus reducing the need for more power plants.

Improved customer service is another promise of M2M and the smart grid. Now, utilities do not know if a street light goes out unless a utility observer or a consumer reports it. And it costs $120 each time to have someone make the repair, notes James English, CEO of Telemetry Labs. And if they do not have the proper equipment, the repair person must make a second trip. With smart technology, light outages and their causes can be monitored from a central facility, improving customer service, as well as cutting costs.

Quicker response to power outages is another aspect of customer service that should be improved. Now, utilities often depend on customers to call in when the power goes out. With M2M and the smart grid, "the utility will know before the user that there is an outage," says Lucero.

Quicker response to outages, fewer truck rolls, lower demand for energy at peak times, fewer power plants needed — these all help provide business value related to green benefits through more efficient use of resources and reduction of carbon emissions.

The M2M technology will also enable utilities to keep up with technology in other fields. Torchia gives the example of plug-in electric or hybrid cars needing M2M so the utility knows who owns the car and where to send the bill when the car is plugged into the grid.

An additional business value of the smart grid relates to the use of alternative energy sources. Lucero foresees the smart grid enabling, say, wind farms in Montana to connect with electric users in New York City. "Our grid doesn't have the capability to transfer electricity over extended lines to make renewable energy a viable part of the fuel resource in the country," he says. But a smart grid, he thinks, will help bring renewable energy to the service of utilities nationwide.

Hard to quantify is how the government's economic stimulus package will affect the business value of the smart grid. Torchia says there is about $4.5 billion earmarked for smart grid initiatives, including demonstration projects and full deployments. This does not include monies earmarked for such related projects as renewable energy. Smart meters, smart thermostats, smart grid technologies, and M2M communications all promise dividends to both consumers and utilities. Fewer emissions, reduced use of fossil fuels, lower costs, enhanced customer service, and more consumer control and understanding of their energy use all are helping to create a strong argument for M2M and smart grid deployments.