Smart Grids & What they Mean for WiMAX

In this article, I’ll explain what Smart Grid is, what the announcement means to
electric utilities and consumers, and the implications and opportunities for
WiMAX vendors.

What is Smart Grid?

The term "Smart Grid" means different things to different people, most using it
to their own advantage. But according to the United States Department of Energy
Modern Grid Initiative report, a modern smart grid must:

• Be able to heal itself
• Motivate consumers to actively participate in operations of the grid.
• Resist attack
• Provide higher quality power that will save money wasted from outages
• Accommodate all generation and storage options
• Enable electricity markets to flourish
• Run more efficiently

What is significant to the telecommunications industry is that most of these
require sophisticated communications networks in order to implement. In
particular, self-healing, consumer participation (including buying and selling
of electricity), and resisting attack are all integrally dependent on a
communications network overlay to the electrical grid.

In terms of what is going on in the utility business, Smart Grid sometimes
receive more marketing lip service than anything else. One utility
representative told me, "The same salesperson is coming in to sell me the same
thing as always, but now he says it’s part of Smart Grid."

This is one reason why Tuesday’s announcement was important. It is a significant
step toward reducing the hype and inaction, and toward implementing the vision.

What was Allocated


Last spring, the US Department of Energy began accepting requests for stimulus
dollars toward grid revitalization. Originally, there were to be three rounds of
funding, but the 400 requests were so overwhelming, the DOE decided to only
perform one award cycle. About 25% of the requests, covering 45 states and
territories, were granted, to the tune of $3.4B. Combining this with matching
spending by utilities and other private funds, the total commitment will exceed
$8B.

In announcing the awards, the Obama Administration outlined the following policy
goals and the related funding:

- Empowering Consumers to Save Energy and Cut Utility Bills – $1 billion.

- Making Electricity Distribution and Transmission More Efficient – $400
million.

- Integrating and Crosscutting Across Different "Smart" Components of a Smart
Grid – $2 billion.

- Building a Smart Grid Manufacturing Industry – $25 million.

The sexy part of this award is the first item, which pays for 18 million smart
meters (raising the U.S. total to 40 million, or 31% of all housing units). It
also covers one million in-home displays to help consumers monitor their energy
usage.

But to the telecommunications industry, the third item is more important, the
integration of components across the grid itself.

Going Beyond the Basics

The stimulus awards allow the electric industry to finally plant the pillars
upon which Smart Grid will be based. Certainly this is only a first step, but an
important one to an industry that is much more highly regulated than telecom –
and one funded in a vastly different way.

To the telecommunications industry, the excitement about Smart Grid isn’t about
smart meters, which are only a first step in two-way communication. (The
electric utility industry is years, even decades, behind what’s possible and
offered in the telecom industry). Where we’re really going with Smart Grid also
goes beyond in-home displays. When Smart Grid really starts to flower, it will
be capable of:

- Real-time rate (time-of-use) information delivered to the home, so that a home
energy decision-making computer can determine how to save money by turning off
appliances or even negotiating transactions to purchase from competing electric
providers.

- Two-way transactions to buy and sell energy. For example, consumers could sell
solar power or electric reserves from plug-in electric hybrid vehicles to energy
companies. In essence, the home becomes a power plant.

- More sophisticated fault management techniques.

All of these concepts hinge on communications networking. To achieve these more
advanced capabilities, though, utilities and consumers must start with a basic
Smart Grid that first gets the conversation going between the two entities.

An Avenue for WiMAX

There is a lot of discussion around the standards for Smart Grid, which goes
beyond the scope of this article. In short, standards will likely center on the
application data that flows between Smart Grid components – and its security.

This leaves plenty of room for transport options on the network, and for each
utility to decide the right networking for its needs. We can expect a mix of
private and public networks, and a mix of technologies. These decisions will be
driven by factors such as:

- Necessary security of the data – There is a lot of information that needs to
be secure, but there is also information that requires less security.

- Volume of data – The utility industry is bracing for the volume. Today,
metering typically consists of one-way monthly transactions of small amounts of
data. In the future, there will be a flood of data traveling both directions
over Smart Grid communications networks.

- Speed / latency – Quality of service and prioritization of data will be
important. These may drive different networking solutions, depending on data
types.

- Terrain and geography – An urban-based utility will have a different profile
than a rural cooperative.

These are just some of the many factors. As you can imagine, cost will be an
overriding factor in the discussion.

WiMAX is positioned to be well-suited to many of these needs. With its speed,
quality of service capabilities and security measures, WiMAX should be in the
mix as a telecom choice. Because the utilities in many cases will build their
own networks, there are green field opportunities that go beyond what the local
public cellular carriers might provide.

WiMAX vendors would do well to invest time and effort in studying Smart Grid
opportunities and learning how to take advantage, now that the pillars of Smart
Grid will be laid over the next few years.

Cecil Taylor is an independent consultant to companies in the telecom
industry, including the utilities and health care vertical markets. His
specialties include opportunity identification, strategic network architecture,
requirements planning and definition, and project management. Cecil can be
reached at networkedgrid@gmail.com