Smarter, Not Harder –
The Way Ahead for Utilities Organisations need to do more to capitalise on the potential of smart energy.
By James Forrest A
s the green shoots of economic recovery begin to emerge (at least for some), industry leaders are starting to peer out of the bunker and survey the damage done
by the worst recession since the 1930s. For utilities, the legacy of the recession has been a significant slowing of investment programmes, with companies across the globe revising timelines for development, and cutting funds earmarked for future growth. So what next? The way ahead for utilities is leveraging emerging
technologies to reduce costs, improve operational performance, and to take advantage of potential new revenue streams offered by smart energy. Inspired by countries like Sweden and Italy, and various ‘Smart City’ projects cropping up worldwide, the public and private sector alike is jumping at the opportunity to adopt smart energy solutions. Utilities cannot afford to miss the boat. So what exactly is ‘smart energy?’ In simple terms, it is an
umbrella expression that encompasses the end-to-end process of delivering energy to consumers in an intelligent, cost- effective and environmentally friendly way. It encapsulates ‘smart grid’, the delivery of electricity from a supplier to a consumer levering digital technology; ‘smart meter’, a device that measures energy consumption in more detail; and ‘smart home’, the use of in-home automation devices to control demand response and energy usage. It also refers to ‘distributed generation’, or the creation of energy close to the point of use to enable the economic use of renewable energy sources and reduce inefficiencies borne out of transporting power over long distances. Smart energy has two-way benefits, with consumers better able to control the money they are spending on energy, and utilities better able to manage the distribution and measurement of supplies. So far, the geographical
spread of smart energy adoption has been ad hoc, and this is almost exclusively due to different regional regulatory environments. Countries such as Italy and Sweden for example each boast close to 100% penetration of smart metering
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implementation, with the UK, Netherlands, Ireland, Norway, Finland, France and Spain taking significant steps to follow in their footsteps. In the US, the government has been strongly pro-smart energy, pledging US$3.4 billion in government grants funding for smart grid projects in October, 2009. By way of contrast however, Switzerland, Russia and Ukraine are all behind the curve owing to the different regulatory pressures and market dynamics experienced in those regions. Across the board, smart energy is growing in momentum, but there is still a long way to go before it reaches anything close to its potential. Aside from immediate regulatory concerns, many utilities are coming up against barriers preventing them from cashing in on a potentially lucrative new revenue stream. Short-termism is one of smart energy’s biggest enemies. Accepting the financial burden of investing in smart grids and smart metering is something utilities are finding difficult to stomach. It can be a long and costly process, requiring considerable capital expenditure. A lack of interoperability is also a put-off for utilities as few registered open standards currently exist that cover all of the relevant functions including metering, communications, presentation and network. In this context, developing a solid business case has been an ongoing challenge for utilities. In spite of these barriers, smart energy has gained huge
political momentum over the past year. Despite not reaching a binding agreement, COP-15 in Copenhagen played an important role in ensuring media coverage and political
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