2014 strategic directions: utility automation &...
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2 0 1 4 S T R A T E G I C D I R E C T I O N S :U T I L I T Y A U T O M AT I O N & I N T E G R A T I O NA Black & Veatch Report
TABLE OF CONTENTS INTRODUCTION 2The Black & Veatch Analysis Team 4About This Report 6
EXECUTIVE SUMMARY 8
TELECOMMUNICATIONS 12 The Evolution of the Utility Network 12Outlook: Generating Value From Network Convergence 17
UTILITY AUTOMATION 18 Pushing the Boundaries of Smart Grid 18Hong Kong: Real-Time Data Monitoring Helps Keep Tabs on Stormwater 23
DATA ANALYTICS 24Bridging the Gap Between Data and Knowledge 24Outlook: A Growing Relationship Between Data Centers and Utilities 28
TECHNOLOGY 30Utilities and the Cloud 30Outlook: Tech Advantages Moving to Small Utilities 33
CONCLUSION 34The Road Ahead: Smart Integrated Infrastructure™ 34
2 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
Welcome to the inaugural Black & Veatch Strategic Directions
report on Utility Automation and Integration. The purpose
of this report is to provide insight on common challenges
and opportunities that utilities of all sizes and types face
with regard to adding greater levels of intelligence into
their network operations.
Electric, water and gas utilities must all manage common challenges associated with the availability of natural resources,
costs, regulation and customer requirements. These challenges are driving factors for increasing automation and
communications across utility functions and implementing real-time monitoring and diagnostics to enable proactive
decision making for enhanced asset management.
Unprecedented access to information continues to break down once-siloed functions, altering traditional utility
paradigms and, in some cases, business models. This creates new opportunities for utilities to leverage automation and
communications technologies for reliability improvements, operational efficiency and enhanced security.
As utility leaders work to maintain regulatory compliance and manage budgets, it is important to align investments with
the organization’s long-term strategic vision. Telecommunications, automation and analytics programs offer utilities the
ability to accelerate the return on past, present and future capital investments.
On behalf of Black & Veatch, we are grateful to all who participated in this industrywide survey. We also acknowledge the
Black & Veatch professionals who provided their time, talent and insight in the creation of this report.
This report and all Black & Veatch industry insights are available at www.bv.com. In order to continuously improve our
reports and thought leadership materials, we welcome your questions and comments.
Please send your feedback or requests for information to MediaInfo@bv.com.
Sincerely,
MARTIN TRAVERS | PRESIDENT
Black & Veatch’s telecommunications division
JOHN CHEVRETTE | PRESIDENT
Black & Veatch’s management consulting division
INTRODUCTION
BL ACK & VEATCH | 3
BLACK & VEATCH IS WORKING WITH PUBLIC SERVICE ELECTRIC AND GAS COMPANY TO ACHIEVE MEASURABLE NETWORK IMPROVEMENTS USING TECHNOLOGY.
4 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
BLACK & VEATCH ANALYSIS TEAM
EXECUTIVE SUMMARY
Fred Ellermeier is a Vice President and the Chief
Operating Officer of Black & Veatch’s Smart Integrated
Infrastructure service line. This service line leverages
distributed infrastructure development capabilities with
a high-end analytics platform to address the areas of
asset management, operational efficiency, reliability,
and sustainability to a wide variety of clients. With more
than 20 years of experience, Ellermeier is an expert in
energy management, energy optimization and sustainable
design practices.
UTILITY TELECOMMUNICATIONS
Paul Miller is a Vice President in Black & Veatch’s
telecommunications division where he leads the
company’s Private Networks business line. With
nearly 25 years of experience, Miller provides
executive leadership over all utility automation and
telecommunications projects involving electrical
substation and distribution automation, SCADA systems,
and wireless and fiber telecommunications networks.
Charles Hill is a Regional General Manager in
Black & Veatch’s telecommunications division. With more
than 35 years of experience, Hill’s technical expertise
includes telecommunications strategic and business
planning, along with design and construction of the full
range of telecommunications technologies for utilities.
Dean Siegrist is the Director of Black & Veatch’s Utility
Telecommunications business line. With more than
20 years of experience, Siegrist leads the development
and execution of utility telecommunications projects,
including a continued focus on the impact of smart grid
programs on utility telecommunications infrastructure.
UTILITY AUTOMATION
Curtis Johnson is the Utility Automation Director for
Black & Veatch’s telecommunications division. He is
responsible for client satisfaction, quality, cost and
schedule for all utility automation projects and services.
Johnson’s areas of expertise include a thorough
knowledge of the management of complex infrastructure
projects, from planning and engineering through testing
and commissioning, in order to achieve desired project
objectives. Johnson spent nearly 25 years working at
multiservice utilities before joining Black & Veatch.
Dave Roberts is an Associate Vice President in
Black & Veatch’s water business and the National Practice
Leader for instrumentation and controls services in the
Americas region. He has more than 25 years of experience
in the application of automation for energy monitoring,
control and optimization of water and wastewater facilities.
William Biehl is an Automation and Telecommunications
Project Manager in Black & Veatch’s telecommunications
division. With more than 20 years of experience, Biehl
manages projects for electric, water and gas utilities
across North America. Biehl has led projects for water
utilities in the areas of treatment, distribution and
collection specifically focused on automation and SCADA
to improve reliability and efficiency. Biehl leads electric
utility projects in distribution, substation automation and
telecommunications, improving reliability and security
with a planning focus on future requirements.
INTRODUCTION
BL ACK & VEATCH | 5
DATA ANALYTICS
Mark Moskovitz is a Senior Executive Consultant in Black
& Veatch’s management consulting division, where
he is responsible for growing the company’s business
intelligence and data analytics services for gas, electric
and water utilities. He also has lead responsibility for
customer engagement projects and initiatives. Moskovitz
is a regular thought leadership contributor, industry
speaker and author. He co-authored the 2012 white paper
Customer Transformation – A Challenge from Competitive
Markets, among numerous other publications.
Kevin Cornish is an Executive Consultant in
Black & Veatch’s management consulting division.
With more than 25 years of direct experience in the
electric industry, Cornish specializes in the integration
of intelligent infrastructure systems, such as GIS, AMI,
MDMS and OMS, into the utility enterprise.
TECHNOLOGY
G. Scott Stallard is a Vice President and oversees asset
management services within Black & Veatch’s energy
business, where he focuses on developing processes,
tools and solutions that help power generators better
address the technical and financial challenges in
today’s market. With more than 35 years of total
experience, Stallard specializes in plant performance,
information technology solutions and competitive
generation practices.
Richard Azer is the Director of Development for
Black & Veatch’s SII service line and is involved in
developing smart city initiatives, such as microgrids,
distributed renewable energy and intelligent utility
networks. Azer has over 20 years of experience in
developing and implementing emerging technologies.
He is currently involved in a program to deliver the first
nationwide network of high-power, fast electric vehicle
charging stations.
CONCLUSION
Martin Travers is the President of Black & Veatch’s
telecommunications division and Executive Sponsor
of the company’s SII service line. Travers has led the
strategic growth of Black & Veatch’s telecommunications
business for more than 10 years. The company’s
telecommunications division provides vertically integrated
solutions to both public and private network clients
around the world. In addition, Travers is a member of
Black & Veatch’s Board of Directors.
6 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
ABOUT THIS REPORTThis Black & Veatch Strategic Directions report focuses on Utility Automation
and Integration and is a compilation of data and analysis from an industrywide
survey. The industrywide survey was conducted from October 16 – November 8,
2013. A total of 235 qualified industry participants completed the 20-minute
questionnaire. Statistical significance testing was conducted on final survey
results. Represented data have a 95 percent confidence level.
Among these participants, 65.1 percent represent electric
utilities, 10.2 percent represent water utilities and
23 percent represent a combined utility organization
(Figure 1). Nearly half of the respondents represented
publicly owned organizations, and nearly 42 percent
represented investor-owned utilities (IOUs) (Figure 2).
The Black & Veatch survey specifically targeted executives
and technology leaders within utility organizations.
More than half of the respondents stated that operational
technologies is their area of technology responsibility
(Figure 3).
INTRODUCTION
FIGURE 1 RESPONDENTS BY UTILITY TYPE
Source: Black & Veatch NOTE: Because of the small sample size of respondents who identified their organizations as natural gas utilities, this report provides comparisons only between electric, water and combined utility providers.
Figure 3.
0
10
20
30
40
50
60
13.1%
32.6%
52.5%
24.9%
Corporate IT networks
Field device automation
Operational technologies
Operations IT networks
22.2%
Smart metering
28.5%
Other
Figure 1.
0
10
20
30
40
50
60
70
80
65.1%
10.2%1.7%
23.0%
Electric Utility Water Utility Natural Gas Utility Combined Utility
BL ACK & VEATCH | 7
FIGURE 2 RESPONDENTS BY TYPE OF ORGANIZATION
Source: Black & Veatch NOTE: Because of the small sample size of respondents who identified their organizations as independent power producers, private or other, this report provides comparisons only between public utilities and IOUs.
FIGURE 3 RESPONDENTS BY AREAS OF TECHNOLOGY RESPONSIBILITY
Source: Black & Veatch
Figure 2.
0
10
20
30
40
50 46.8%
4.7%
41.7%
5.5%
Public IPPs IOUs Private
1.3%
Other
Figure 3.
0
10
20
30
40
50
60
13.1%
32.6%
52.5%
24.9%
Corporate IT networks
Field device automation
Operational technologies
Operations IT networks
22.2%
Smart metering
28.5%
Other
8 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
EXECUTIVE SUMMARYBY FRED ELLERMEIER
When the term “smart grid” first entered the common lexicon, it was used to
describe a future state of electric utility distribution networks. This future
state promised a grid that would have lower operational costs and be more
reliable, more informative, better integrated and more efficient, among a long
list of additional benefits.
Since the rollout of the first smart grid programs,
there has been a realization that automation and
“smart” programs benefit all types of utilities and
infrastructure systems. Gas and water smart grids, for
example, will result in more efficient storage, improved
distribution, reductions in system losses and expanded
customer engagement.
However, as noted in Black & Veatch’s 2011 Strategic
Directions in the U.S. Electric Industry report, “divergent
perspectives make the commitment to achieving smart
grid opportunities more difficult to define, quantify and
justify. Without common alignment of program objectives,
approval from regulators, utility boards and consumer
advocates becomes difficult.”
These concerns continue to resonate in 2014.
Black & Veatch believes that the objectives and
priorities of all utility stakeholders can ultimately be
achieved through a series of progressive improvements.
These improvements go beyond a smart grid or utility
distribution network. A Smart Utility™ integrates multiple
systems, such as generation, distribution and demand-
side management, to reduce resource requirements and
costs while enhancing reliability and performance.
Additionally, by not just making a smart grid, but a “smart
utility,” currently siloed infrastructure systems, such as
electric, water, gas and transportation, can work together
seamlessly to create even greater value for a community
and each other. In a real and tangible way, we can create
Smart Integrated Infrastructure™ (Figure 4).
BUILDING ON DATA
The first step in creating Smart Integrated Infrastructure
is creating a smart network. This network is generally
referred to as a utility’s “smart grid” program and involves
the deployment of a foundational communications
infrastructure. This foundation provides the connectivity
that enables smart meters, sensors and other devices
across the utility enterprise. These devices can collect
and transmit data to utility operators. As utilities deploy
their foundational networks and advanced metering
infrastructure (AMI) systems, they also seek additional
applications to leverage the communications network and
meter as a sensor.
The benefits realized by utilities that have fully
implemented AMI programs have been compelling.
NV Energy’s NVEnergize smart metering program, for
example, has resulted in annualized operational savings
of $35 million. Smart meters for water utilities eliminate
the need to estimate customer usage, making billing more
efficient and accurate. Further, smart meters can facilitate
better management of water resources, particularly during
periods of drought. But regardless of utility type, all AMI
programs generate data – and lots of it.
Utilities are also looking to expand data collection to
include distribution and other assets, such as water
treatment plants, pumps and transmission lines. More
than 70 percent of all utilities plan to expand the use of
sensors and other instrumentation to gather field data
within the next three years (Figure 5).
EXECUTIVE SUMMARY
Figure 4.
low Integration Progression
Str
ateg
ic Im
pac
th
igh
WisdomInformation KnowledgeData
high
I. Smart Network■ Device Connectivity■ Smart Grid
II. Smart Information■ Data Aggragation and Analysis ■ Smart Single-Use Infrastructure
III. Smart Utility■ Multisystem - Multi-Facility Aggregation
IV. Smart Integrated Infrastructure■ Multiutility Integration ■ Physical-Cyber Integration
Figure 5.
0
5
10
15
20
25
30
35
40
10.6%
26.4%
39.1%
5.5%
No plans Yes, but in very limited
applications
Yes, for some important technical
and/or business applications only
Yes, for all technical and business applications
18.3%
I don’t know
BL ACK & VEATCH | 9
FIGURE 4 THE STEPS TO SMART INTEGRATED INFRASTRUCTURE™
Source: Black & Veatch
Figure 4.
low Integration Progression
Str
ateg
ic Im
pac
th
igh
WisdomInformation KnowledgeData
high
I. Smart Network■ Device Connectivity■ Smart Grid
II. Smart Information■ Data Aggragation and Analysis ■ Smart Single-Use Infrastructure
III. Smart Utility■ Multisystem - Multi-Facility Aggregation
IV. Smart Integrated Infrastructure■ Multiutility Integration ■ Physical-Cyber Integration
FIGURE 5 PLANS TO EXPAND SENSOR USAGE FOR FIELD DATA ANALYSIS DURING NEXT THREE YEARS
Source: Black & Veatch
Figure 5.
0
5
10
15
20
25
30
35
40
10.6%
26.4%
39.1%
5.5%
No plans Yes, but in very limited
applications
Yes, for some important technical
and/or business applications only
Yes, for all technical and business applications
18.3%
I don’t know
10 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
EXECUTIVE SUMMARY
Regardless of utility size or type, AMI and other smart
grid programs involve the creation and collection of large
volumes of data. Many utilities will be challenged to
develop the in-house infrastructure or expertise necessary
to manage, store and secure the data generated across
their operations. As detailed in the Technology section,
cloud services, whether privately owned or outsourced, are
envisioned to emerge as an essential component of future
utility operations.
Today, less than 30 percent of survey participants stated
their organization currently uses some form of public
or private cloud-based solutions. Of the organizations
that are using some form of cloud services, most activity
is limited to hosting software applications, data backup
and data storage solutions. Cloud-based services
represent an area of opportunity for many utilities to
enhance operations.
Transferring data generated from smart meters and
sensors across a utility’s enterprise to a central control
location requires a robust telecommunications backbone.
Yet, the lack of available wireless spectrum and
ongoing financial pressures are limiting utilities’ ability
to incorporate smart grid programs into their private
communications network. As a result, many utilities
are increasing reliance upon public carriers for non-
mission critical applications. The Telecommunications
section addresses common problems and solutions for
maximizing utility telecom networks.
Distribution automation is another area with substantial
value for utilities. This is particularly important for electric
utilities that are preparing for greater levels of control
and monitoring in their network, while also supporting
distributed generation and renewable energy use.
Distribution automation programs allow for improved
efficiency of the network through optimization of the
system and overall better asset management (refer to the
Utility Automation section for additional information).
ANALYTICS
Managing data can be a challenge. However, converting
data into actionable information and institutional
knowledge is an opportunity. Just as the nervous system
provides critical information to the brain, sensor data
can tell a utility operator that a pump bearing is running
2 degrees warmer than usual. Analytics can tell the
operator that, without proactive repair, the pump will
likely fail.
When considering the goals and objectives that many
conceived when smart grid first came into being,
analytics is fundamental to making these goals a reality.
However, implementation of analytic programs has been
relatively slow.
When asked what they considered their organization’s
obstacles to capitalizing on data analytics, utilities listed
budget constraints, justifying the return on investment
(ROI) and insufficient in-house experience, respectively,
as the top three reasons they have not moved forward
(Figure 6).
As Black & Veatch noted its 2011 Strategic Directions in
the U.S. Electric Industry report, regulatory review and
approval and business case development were the
primary obstacles to the initial smart grid deployments.
A primary challenge with smart grid initiatives is that
“the business cases are reviewed by regulators and
other stakeholders with a level of critical analysis not
seen in most other utility projects. Additionally, internal
competition for capital and organizational focus results
in increasingly critical attention in the management
review cycle.”
The primary challenge for smart grid in 2011, and analytics
programs today, is the need to make assumptions about
the desired future state of the utility as a result of the
smart grid/analytics programs. These assumptions can
be the focal point of internal deliberations because
they often have significant impact on the project
financials. Black & Veatch continues to recommend that
clients perform consistent and rigorous business case
assessments for all smart grid investments.
BL ACK & VEATCH | 11
Proving the value of analytics may be the last great
obstacle to creating utilities of the future and Smart
Integrated Infrastructure. Just as the first advanced
metering and “smart grid” programs provided valuable
lessons learned and benchmarks for others to follow, the
application of data analytics and management programs
will create new ways for data-driven enterprises to
integrate real-time knowledge. This will allow managers
to make smarter operating decisions and efficiently deliver
on the business goals of the utility enterprise.
FIGURE 6 TOP OBSTACLES TO IMPLEMENTING DATA ANALYTICS SOLUTIONS
Source: Black & Veatch Participants were asked to select the three greatest obstacles to implementing data analytics at their organizations. This chart highlights the top five items as ranked by industry respondents.
Figure 6.
0
10
20
30
40
50
60
70
80
63.7%
30.3%
Budget constraints
40.6%
24.8%
10.3%
Insufficient in-house expertise
Justifying the ROI
Lack of in-house understanding
or support
Security concerns
26.9%
PROVING THE VALUE OF ANALYTICS MAY BE THE LAST GREAT OBSTACLE TO CREATING UTILITIES OF THE FUTURE AND SMART INTEGRATED INFRASTRUCTURE.
12 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
THE EVOLUTION OF THE UTILITY NETWORKBY PAUL MILLER , CHARLES HILL AND DEAN SIEGRIST
Increased connectivity is creating new types of data and control functions for
utilities. Smart grid investments are increasing utilities’ telecommunications
network requirements from both a geographic and capacity perspective.
As noted in the Technology section, growth in the use and deployment of
automation technologies, devices, and systems that use utility telecom
infrastructure is ongoing. However, without adequate improvements to a utility’s
telecommunications network, the full value of ongoing and future smart grid
investments cannot be realized.
For example, among the ongoing technology expansions,
advanced distribution automation is seen as having the
greatest impact on utility operations within the next five
years. Distribution automation is driving new telecom
requirements into areas of the utility’s operations that
have not had this type of connectivity. In turn, new
levels of connectivity create a need for greater network
performance, reliability and security.
MEETING FUTURE NEEDS
Today’s utilities typically use a combination of both
public networks provided by telecom carriers and private
networks built to address their own internal requirements.
The use of this hybrid model is expected to continue
for the foreseeable future. The majority of survey
respondents stated they expect their utility to continue
to use both public and private networks.
Public networks are widely used by utilities for advanced
metering infrastructure (AMI) and traditional business
needs, such as voice and Internet connectivity. But
public networks are viewed less favorably for mission-
critical applications. Direct control and operation of
the infrastructure is vital for utilities, particularly during
extreme circumstances such as severe weather events.
Utilities need to be able to efficiently manage and control
their infrastructure for service restoration even when
commercial communications are not available.
Emphasis on the continued rollout of smart grid initiatives
perhaps explains the diversity in responses to the
question of how utilities will meet their telecom network
needs in the future. If a utility is actively deploying AMI,
it could mean that it is increasing its reliance on public
networks. If the utility is advancing to more automation
activities, then it is likely building out or expanding its
existing private networks to support these operations
(Figure 7).
Most utilities continue to see private networks as an
indispensable component of their operations. As a
result, substantial investments are planned across both
traditional and new telecom technologies to replace
outdated systems and meet future requirements as well.
However, a number of factors challenge utilities when it
comes to addressing their network needs.
Utility staffing, for example, is generally focused on
meeting operational requirements. Aging workforces,
challenges with recruiting technical talent to work in utility
operations and costs associated with necessary personnel
TELECOMMUNICATIONS
BL ACK & VEATCH | 13
FIGURE 7 MEETING FUTURE TELECOM NETWORK NEEDS – BY UTILITY TYPE
Source: Black & Veatch Utilities were asked how their organizations will meet operational telecommunications network needs in the future.
0
10
20
30
40
50
13%
Maintain utility owned or
other private network
Maintain use of public carrier
network
Maintain combined use of
private and public networks
Increased dependence on private network
to support utility operations
Increased dependence on
public carrier network to
support utility operations
I don’t know
28%30%
33%
7% 6%
42%
31%
26%
4%
10%
19%
4%5% 4% 4%
18% 17%
Electric Utility Water Utility Combined Utility
make it difficult for utilities to engineer and deploy new
technologies and networks in a manner that can keep pace
with evolving requirements. Several Black & Veatch clients
are investigating options to outsource the engineering
and operations and maintenance (O&M) of their private
telecom networks. This emerging trend was confirmed
by survey respondents, where 18.4 percent stated
outsourcing was likely or very likely (Figure 8).
WIRELESS SPECTRUM
Utilities rely on wireless telecommunications networks,
such as microwave and mobile radio, to meet specific
operational needs and support the reliable delivery of
services. In addition, wireless networks represent the most
efficient means for meeting growing smart grid network
requirements. However, wireless networks need spectrum,
and utilities typically do not have access to adequate
amounts of spectrum to meet existing and future needs.
The Utilities Telecom Council (UTC) has estimated that 30
megahertz (MHz) of spectrum in a frequency range below
2 gigahertz (GHz) is necessary in order to meet future
utility communications requirements. Unfortunately,
utilities do not have reliable, available alternatives for
dedicated spectrum to support these needs.
14 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
FIGURE 9 LIKELIHOOD OF IMPLEMENTING A PRIVATE NETWORK
Source: Black & Veatch All participants were asked the likelihood of their organization developing a private network telecom solution to support utility operations or resiliency if additional radio spectrum were allocated by the FCC. This chart excludes “I don’t know” responses (23.4 percent of respondents).
0
5
10
15
20
25
30
35
10.2%
19.6%
34.9%
11.9%
Not likely, utilize public carrier
network
Not likely, already have
private network solution
Moderately likely, would
consider for future smart
grid needs
Very likely, would consider building network utilizing
this spectrum
TELECOMMUNICATIONS
FIGURE 8 LIKELIHOOD OF OUTSOURCING ENGINEERING AND O&M OF PRIVATE TELECOM NETWORK
Source: Black & Veatch Participants were asked how likely it will be for their organization to outsource the engineering and O&M of their private telecom network. This chart excludes “I don’t know” responses (21.8 percent of respondents).
0
5
10
15
20
25
15.0%
23.5%21.4%
12.8%
Very unlikely Unlikely Neutral Likely
5.6%
Very likely
BL ACK & VEATCH | 15
A key advantage of public carrier networks is that they
control large bands of radio spectrum. This spectrum,
allocated by the Federal Communications Commission
(FCC), could help utilities connect the thousands,
if not millions, of smart devices across wide service
territories. However, these carrier networks do not provide
immediate access and availability under all circumstances
because utilities are only one among a large number of
customers and connections. This circumstance drives
many utilities to the conclusion that they should build
their own private wireless networks to meet specific
operational requirements. Nearly half (46.8 percent) of
all respondents stated it was moderately or very likely
that their utility would develop its own a private wireless
network if additional radio spectrum were allocated by the
FCC (Figure 9). This is particularly true for small utilities
(serving populations less than 50,000) where nearly
60 percent indicated their organizations would consider
building private networks (Figure 10).
Based on available information, it appears unlikely that
the FCC will allocate additional radio spectrum dedicated
for utility use in the near term. As a result, utilities are
challenged to leverage all available spectrum choices,
including public and private carriers and unlicensed
spectrum, in order to maximize their wireless capabilities.
There is also potential for utilities to access spectrum
recently allocated on a nationwide basis for the First
Responder Network Authority (FirstNet). The Middle Class
Tax Relief and Job Creation Act of 2012 created FirstNet
in order to develop the first nationwide high-speed,
broadband network dedicated to public safety. FirstNet is
to be built on the Long-Term Evolution (LTE) technology
standard in order to deliver a cost-effective, reliable public
network across the United States.
The authorizing legislation encourages FirstNet to seek
additional participants such as utilities on a secondary
FIGURE 10 LIKELIHOOD OF IMPLEMENTING A PRIVATE NETWORK – BY SIZE OF POPULATION SERVED
Source: Black & Veatch All participants were asked the likelihood of their organization developing a private network telecom solution to support utility operations or resiliency if additional radio spectrum were allocated by the FCC. Nearly 60 percent of small utilities said such activity was moderately or very likely.
Figure 10.
0
10
20
30
40
50
17.6%
6%
18%
9.1%
35.3%
47%
18.9%
11.8%
35.7%
12%
15.4%
0%
35.3%
18%21.0%
<49,999 50,000-99,999 100,000+
Not likely, utilize public carrier
network
Not likely, already have
own private network solution
Moderately likely, would
consider for future smart
grid needs
Very likely, would consider building
own network utilizing this
spectrum
I don’t know
16 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
TELECOMMUNICATIONS
use basis or possibly as public-private partners in the
network. Individual states are currently reaching out to
potential stakeholders within their state to establish
requirements and explore assets that might support
the FirstNet initiative. Black & Veatch recommends that
utilities actively engage in discussions at the state level
to explore the value, synergy and benefits for them that
might be achieved.
NETWORK CONVERGENCE
As utilities have evolved over the past several decades,
separate networks were built for specific operational
functions (e.g., mobile radio, SCADA). Reducing the
number of separate networks a utility owns and maintains
is one way to potentially reduce operational costs. One
advancing solution is an Internet Protocol (IP)-based on a
Multi-Protocol Label Switching (MPLS) network (refer to
Outlook: Generating Value from Network Convergence).
Another area of opportunity to gain cost efficiencies
is for electric, water and/or gas utilities to share
communications infrastructure. Wireless infrastructure
needed for remote meter reading is just one example
of where utilities could collaborate to leverage the
investment costs between utilities implementing
similar functions.
Multiutility collaboration could be particularly beneficial
for water utilities where extending wireless infrastructure
may be cost prohibitive. By extending network access
and reach, water utility leaders could improve watershed
monitoring and scheduling of resources, reduce energy
consumption and implement asset management
programs in a cost-effective manner. However, joint
use agreements and regulatory hurdles will need
to be addressed in order for utilities to implement
collaborative plans.
Optimizing a utility network requires thorough
planning. Black & Veatch recommends developing a
telecommunications master plan. A telecom master
plan outlines the strategies and business requirements
that a utility has in place today, as well as its vision and
anticipated future needs.
Using the current state as a starting point, the master
plan is created to provide a blueprint of what the future
network will look like. The plan will also provide utilities
with a phased roadmap for efficient migration to the
desired future state. The phases of the roadmap are
often implemented over multiple years, with potential
midcourse updates along the way.
WITHOUT ADEQUATE IMPROVEMENTS TO A UTILITY’S TELECOM NETWORK, THE FULL VALUE OF ONGOING AND FUTURE SMART GRID INVESTMENTS CANNOT BE REALIZED.
BL ACK & VEATCH | 17
Outlook: Generating Value From Network Convergence
BY CHARLES HILL
Reducing the number of networks a utility owns and
maintains helps reduce the overall complexity of the
utility network. This also makes it easier to manage and
secure the network, while reducing operational costs.
Multi-Protocol Label Switching (MPLS) is one technology
solution that many utilities have chosen to converge their
disparate networks.
MPLS is a globally leveraged, standards-based Internet
Protocol (IP) network virtualization technology used by
large network owner/operators to scale and connect
thousands of devices, sensors and users across a single
cost-effective communications network platform.
One of the main advantages that utility companies are
finding with MPLS is the ability to segregate and “tag”
mission-critical data applications apart from noncritical
applications. This separation of data allows a utility
to maximize its investments in a shared, physical
infrastructure while ensuring high performance and
reliability for its operational goals and objectives.
Network convergence lowers the operational expense
and maintenance costs utilities need to support mission-
critical infrastructure, while providing scalability. The
convergence of data network infrastructures using
virtual, standards-based IP solutions is one of the best
paths forward for a utility considering modernizing its
network infrastructure.
A key element in network convergence is interoperability.
As utilities continue adding new technology applications
and services to their communications network, a
standardized transmission and packetization protocol,
such as Transmission Control Protocol (TCP)/IP, will allow
these different technology applications to communicate
over a single, integrated network architecture.
Moving forward with a network convergence program
requires comprehensive planning and execution. Steps
must be taken from start to finish to ensure that the
implementation of connected technologies is approached
with great care. And, as the new network is developed
and put in place, utilities still must maintain and operate
legacy network technologies, such as Time-Division
Multiplexing (TDM) or Synchronous Optical Networking
(SONET), until a full migration can take place. Black &
Veatch offers proven program and project methodologies
to assist utilities every step of the way and to help utility
leaders ensure that they are maximizing both their capital
and staffing resources in a manner that reduces overall
operational and capital costs.
18 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
PUSHING THE BOUNDARIES OF SMART GRIDBY CURTIS JOHNSON, DAVE ROBERTS AND WILLIAM BIEHL
The past several years have brought an unprecedented level of automation
technology deployments. Spurred by U.S. government funding, millions of
“smart” advanced metering infrastructure (AMI) devices were placed throughout
electric utility networks to improve operational efficiency. For operators weighing
the decision to invest in greater utility automation, validation of expected
benefits from installed systems and alignment of advancing technology for a
demonstrable impact on operations appear to be key decision factors.
Significant progress has been made by utilities adopting
AMI technology, as demonstrated on Figure 11. AMI
provides information about customer energy, water
and/or gas usage at a level of granularity never before
experienced. The application of this information is proven
to streamline a host of cost drivers, such as the number of
“truck rolls” and reductions in manual meter reads, as well
as potential loss detection or prevention.
Customer benefits from these deployments have included
more accurate billing information and, for electric
customers, faster service hook-ups/disconnects. Most
importantly, AMI provides the foundation for the two-
way networks that can identify customer outages before
individual customers call the utility to report them.
Federal support accelerated AMI programs, but with
strong mandates for reliability and safety, utilities
were unlikely to make large-scale investments without
supporting data. However, increasing environmental
and security regulations are creating new cost pressures
that require managing the effectiveness of distribution
infrastructure at a more granular level. For electric
utilities, this includes using less energy, balancing energy
resources and automating processes that enable the utility
to stabilize and recover services faster. In essence, the
concept of a “self-healing” grid is coming closer to fruition
through automation efforts built on the AMI foundation.
UTILIT Y AUTOMATION
Figure 11.
0
10
20
30
40
50 44.7% 43.8%39.1%
26.8%
Facility operational data
AMI data Distribution metering
data
Major facility status and
alarming data
17.9%
Distribution pressure
data
20.4%
I don’t know
AMI PROVIDES THE FOUNDATION FOR THE TWO-WAY NETWORKS THAT CAN IDENTIFY CUSTOMER OUTAGES BEFORE INDIVIDUAL CUSTOMERS CALL THE UTILITY TO REPORT THEM.
BL ACK & VEATCH | 19
FIGURE 11 INFORMATION CURRENTLY COLLECTED FOR REMOTE MONITORING
Source: Black & VeatchAll participants were asked to select all areas where their utility is currently collecting and transmitting facility operations information to a central location for remote monitoring and/or historical data collection.
Figure 11.
0
10
20
30
40
50 44.7% 43.8%39.1%
26.8%
Facility operational data
AMI data Distribution metering
data
Major facility status and
alarming data
17.9%
Distribution pressure
data
20.4%
I don’t know
FIGURE 12 AREAS REMOTELY MEASURED OR MONITORED – BY UTILITY TYPE
Source: Black & VeatchAll participants were asked to select the areas where their utility remotely measures and monitors equipment performance and/or conditions.
Figure 12.
0
10
20
30
40
50
60
70
33%
Consumer devices or
meters
52%48%
Electric Utility Water Utility Combined Utility
31%
17%
8%
46%
62%
54%
25%
42%44%
4%
28% 26%
46%48%
57%
17%
54%
44%
4%4%9%
Distributed energy
production
Distribution systems
Facility operations communi-
cations
Fleet vehicles
Plant/facility
performance
Transmission networks
I don’t know
20 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
UTILIT Y AUTOMATION
The next step in the automation progression involves
the testing of automated distribution, with many utilities
already using remote measuring to monitor equipment
performance and conditions (Figure 12). Because
all utilities, whether they are electric, water, gas or a
combined utility, are increasingly focused on enhancing
operations, reducing costs and conserving resources,
Black & Veatch expects remote monitoring and measuring
efforts to continue to grow across the entirety of every
utility’s enterprise.
Automation technologies and solutions, such as Fault
Location, Isolation and Service Restoration (FLISR), volt/
VAR optimization, intelligent electronic devices (IEDs) and
distributed energy resource integration, are being tested
by many utilities (Figure 13). Additionally, SCADA systems
are one area of continuous focus for utilities. Nearly three-
fourths of survey participants are currently implementing
or planning to implement upgrades to their distribution
SCADA system in the next five years.
FIGURE 13 PLANS FOR UTILITY AUTOMATION TECHNOLOGY INVESTMENTS
Source: Black & VeatchParticipants were asked what plans their organization had for investing in the listed utility automation technologies.
Figure 13.
0
20
40
60
80
100
Distribution SCADA
FLISRIEDsSubstation automation
Volt/VAR optimization
Within the next 5 years In more than 5 years No plans/I don’t know
64.7%72.4% 62.7% 52.8% 49.6%
1.3%4.3% 5.2%
6.4% 5.6%
26.3% 31.0% 32.1% 40.8% 44.8%
Figure 14.
0
5
10
15
20
25
30
12.4%
29.1%
15.8%
10.7%
Less than3 years
3 to less than7 years
7 to less than10 years
10 yearsor more
BL ACK & VEATCH | 21
FIGURE 14 YEARS LEFT TO UPGRADE/REPLACE CENTRALIZED CONTROL SYSTEM
Source: Black & VeatchAll participants were asked how many useful years of service life remain before their utility will need to upgrade/replace its SCADA, distributed control system (DCS) or other centralized control system. This chart excludes “I don’t know/does not apply” responses (32.1 percent of respondents).
Figure 14.
0
5
10
15
20
25
30
12.4%
29.1%
15.8%
10.7%
Less than3 years
3 to less than7 years
7 to less than10 years
10 yearsor more
BLACK & VEATCH EXPECTS REMOTE MONITORING AND MEASURING EFFORTS TO CONTINUE TO GROW ACROSS THE ENTIRETY OF EVERY UTILITY’S ENTERPRISE.
SCADA systems, like any technology, become obsolete
with age. For SCADA systems, continued vendor support
to its product line and ongoing improvement of the
SCADA offering are obsolescence issues that should be
considered separate from hardware obsolescence. More
than half of utility respondents expect their organization
to replace critical operating control systems in the next
10 years (Figure 14). This upcoming replacement cycle
provides the opportunity for utilities to incorporate some
of the latest software and hardware advances. These
technology advances can help utilities more effectively
leverage their AMI and communications investments.
22 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
UTILIT Y AUTOMATION
BENEFITS OF AUTOMATION
FOR ELECTRIC UTILITIES
Distribution automation for electric utilities is becoming
increasingly more important as organizations prepare for
greater levels of distributed generation and renewable
energy use. Automation must be able to account for
not only optimizing and increasing the efficiency of an
operation, it also means considering alternative energy
sources, the cost of those sources and how to best
schedule each energy source to optimize the total value.
The integration of renewable energy into the California
market, for example, has not been without some
challenges. Driven by low-cost natural gas prices and
aggressive mandates to incorporate renewable supplies,
operators will require a complex integration model
to coordinate the inflow of renewable supplies from
their source locations into the existing grid network.
Automation must facilitate the interplay between
baseload generation stations and distributed resources to
ensure system reliability.
Perhaps the most successful example of the benefits of
pushing smart technology deeper into the network comes
not from the United States, but from a program in Rio de
Janeiro to deploy meters to improve billing accuracy. The
multiyear effort to deploy AMI infrastructure resulted in
a significant decrease in power theft: from approximately
80 percent to near zero.
The Rio de Janeiro program provides a clear example of
how greater data regarding end-user consumption can
reshape a power distribution market. In the U.S. market,
continued improvement of metering tools, operational
automation and actionable intelligence driven by data
analysis will continue to push the boundaries of efficiency.
BENEFITS OF AUTOMATION
FOR WATER UTILITIES
Similarly, water utilities are increasingly looking for savings
from investments in operational automation and control
systems as they face continued pressure to “do more with
less.” To maximize performance, new automated systems
can interpret data from factors such as water source,
pump efficiency and others.
Faster responses, reducing human error and
24/7 monitoring can help enhance the performance of
existing assets and enable utilities to allocate capital
based on risk using data collected from systems and
assets. AMI systems, for example, provide more granular
data that can be used to detect and prevent leaks as well
as reduce other forms of nonrevenue water.
SUCCESSFUL IMPLEMENTATION
Realistically speaking, distribution automation for
electric utilities has been around for many years. Electro-
mechanical substation relays, hydraulic reclosers, and
time and temperature controlled capacitor banks are but a
few examples of mature analog automation of the electric
power distribution system.
Digital communications and microprocessor technologies
have tremendously expanded the ability to further
automate the electric distribution system much in the
same way they have transformed the rest of the world. As
these technologies continue to develop and become less
expensive, utilities of all types and sizes will increasingly
deploy these new assets to improve the reliability, safety
and efficiency of their distribution infrastructure.
As utilities continue the migration towards automation,
it will be critical to incorporate technology investments
and systems into the their long-term plans. Automation
requires careful planning and implementation to ensure
that capital investments are used efficiently and are
aligned with business goals.
BL ACK & VEATCH | 23
Hong Kong: Real-Time Data Monitoring Helps
Keep Tabs on Stormwater
BY KELVIN L AU
Smarter use of data is taking center stage in Hong Kong’s
stormwater management strategies. The award-winning
Happy Valley project is one example of the Drainage
Services Department (DSD) of the Government of the
Hong Kong Special Administrative Region’s (SAR) long-
term commitment to finding new ways of integrating data
to modernize its efforts in fighting the age-old problem
of flooding.
An advanced approach is being taken to flood alleviation
in low-lying Happy Valley. An underground storage tank is
being built beneath the area’s famous horse racing venue.
The system, with supervisory control and data acquisition
(SCADA) monitoring as its backbone, is designed to
work with nature, not against it. It serves as an emerging
example of how cities around the world are rethinking
the way they plan and manage intense rainfall in crowded
urban spaces.
During tropical downpours in Hong Kong, real-time
monitoring of data will help manage the flow of
stormwater in the drainage system. In many ways, the
Happy Valley storage tank will be brought online to
alleviate stress within the local network. Stormwater will
be intercepted and peak flow attenuated by diverting
water to be temporarily stored in the 60,000 cubic meter
storage tank. When the intensity of the rainfall subsides,
the water stored will be diverted back into the system
when it can manage the flows more effectively.
A movable crest weir system adds another layer of
innovation that allows the water to return to the network
via a gravity flow. Its operation will also be hooked up
and plugged into the SCADA real-time monitoring.
Water levels and, crucially, tidal levels will be monitored
by a command center tasked to respond and manage
the flows.
Kelvin Lau is an Associate Vice President and Senior Project Director in Black & Veatch’s water business based in Hong Kong.
Having worked in the civil engineering field for over 30 years in both the private and public sector, Lau brings a wealth of
knowledge in areas such as water, drainage and sewage infrastructure, underground facilities installation and information
technology solutions.
24 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
BRIDGING THE GAP BETWEEN DATA AND KNOWLEDGE BY MARK MOSKOVITZ, G. SCOTT STALL ARD AND KEVIN CORNISH
Now more than ever, data are informing the way utilities manage their
operations and business needs. Investments in intelligent infrastructure
technology have created an unprecedented ability to measure conditions,
asset status, performance and activity of the grid or utility networks. However,
based on Black & Veatch industry survey results, notable gaps, uncertainty
and barriers still exist for utilities attempting to develop and deploy a smarter
analytics capability.
Capturing and converting the right data at the right time
into actionable intelligence is the essence of analytics.
Taken together, much of the value from intelligent
infrastructure investments will depend on how utilities
implement analytics in order to leverage the data capture
in the following ways:
■■ Measuring activity within their systems (rather than estimating it) in order to react more quickly to emerging conditions.
■■ Moving from a reactive to proactive operating/business approach.
■■ Developing new opportunities for revenue/cost control.
■■ Improving risk management and mitigation.
ANALYTICS IN ACTION
Much of the data analytics used by utilities today appear
to be focused on tracking current or past activities
(i.e., measuring and validation) as shown on Figure 15.
However, evolving a program toward the use of predictive
and prescriptive analytics will provide utility leaders
with better information to support future action. The
value of such analytics programs is the ability to
identify and address maintenance and/or operational
issues in a manner that could prevent catastrophic
equipment failures. In essence, fixing the “small things”
and cost avoidance can have a big impact on budgets
and performance.
For example, Black & Veatch’s Asset 360 platform
provides monitoring and diagnostic services for utility
clients. The following are examples of issues identified for
a Midwestern municipal utility within the first year of using
Asset 360 services for its 194 megawatt (MW) power plant.
■■ Turbine inner casing leak: A 2.5 to 3 percent drop in low-pressure turbine efficiency was detected. Further inspection identified a failing port gasket as the cause of the problem. Left undetected, the failing gasket would result in approximately $36,000 per month in additional fuel costs and a 2.6 MW reduction in capacity margin.
■■ Internal extraction line failure: A deviation in one of the unit’s low-pressure turbine stage pressure ratios was detected. Further inspection identified an extraction line expansion joint failure as the cause. Black & Veatch estimated that this failure was costing the client approximately $25,500 per month in fuel costs plus a 4.5 MW derate.
■■ Turbine deposits: Six months after upgrading its turbine, the unit’s capacity dropped 17 MW. In addition, there was an 8 percent loss in steam flow, among other efficiency losses. Deposits on the turbine were determined to be the cause of the loss in efficiency. Left undeterred, the deposits would have cost the client approximately $37,500 per month in added fuel costs and a 17 MW derate.
Utility leaders recognize the value analytics can provide
their organization, rating “Evaluating operational or
maintenance options/scenarios” and “Improving/
maintaining service reliability” as the top two areas of their
organization that would benefit from expanded analytics
capabilities (Figure 16).
DATA ANALYTICS
Figure 15.
0
5
10
15
20
25
30
35
40 37.6% 37.2% 35.5%
24.8%
Measurement and validation
Descriptive analytics
Closed-loop optimization
Predictive analytics
15.8%
Prescriptive analytics
32.1%
I don’t know
BL ACK & VEATCH | 25
FIGURE 15 DATA ANALYTICS CURRENTLY IN USE
Source: Black & VeatchAll respondents were asked what types of data analytics their utility currently uses to improve operational performance.
Figure 15.
0
5
10
15
20
25
30
35
40 37.6% 37.2% 35.5%
24.8%
Measurement and validation
Descriptive analytics
Closed-loop optimization
Predictive analytics
15.8%
Prescriptive analytics
32.1%
I don’t know
FIGURE 16 TOP OPERATIONAL AREAS FOR EXPANDED DATA MANAGEMENT AND ANALYTICS
Source: Black & VeatchAll respondents were asked to select the top three operational areas they believe their utility would be best served by expanded data management and analytics capabilities.
Figure 16.
51.5%
38.2%
32.6%
48.9%
27.5%Monitoring performance
Identifying issues and losses
Outage management
Improving/maintaining service reliability
Evaluating operational or maintenance options/scenarios
0 10 20 30 40 50
26 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
DATA ANALYTICS
From a business function perspective, respondents
selected asset management programs, or components
of asset management, as the top three areas that would
benefit from expanded data management and analytics
capability (Figure 17).
The disconnect between the forward-looking
optimism toward the application of analytics in asset
management and its current usage was also highlighted
in Black & Veatch’s 2013 Strategic Directions in the
U.S. Water Industry report. In the report, more than
70 percent of respondents stated their utility has condition
assessment and inspection programs in place. However,
only 27.5 percent stated their utility has or is planning to
implement deterioration modeling to proactively manage
assets. The lack of deterioration modeling represents
a missed opportunity to improve rehabilitation and
replacement planning for their buried infrastructure.
Analytics and asset management programs go hand
in glove. Data, and the analytics derived from the data,
enable utilities to develop risk-based plans to proactively
manage utility assets. Because such programs break down
functional silos that exist within many utility organizations,
it is positive to see that more than 35 percent of
respondents (Figure 18) stated their utility is using cross-
functional teams to determine which data and analytics
investments to pursue.
IMPROVING SERVICES AND OPERATIONS
Improving customer service is also an important area
of focus for many utilities. Outage management is one
area where analytics can help electric utilities better
serve their customers. Analytics, data management and
communications capabilities allow utilities to respond
to outages in real time. These capabilities also help
the utility keep customers informed on the status of an
outage, the repair timeline and when service was restored.
Additionally, analytics helps utilities study the cause of
outages and develop preventive measures for the future.
For water utilities, analytics can be an essential part of
an integrated effort to improve efficiency across entire
infrastructure systems. Real-time information enables
operators to make informed operating decisions.
For example, in a storm situation, real-time data on
wastewater levels and flows enable an operator to make
decisions about what to treat and what to divert. Sensor-
based data can also aid in the understanding of water
utilization and distribution. Sound data and analytics can
help utilities provide customers with more accurate bills
and minimize nonrevenue water, a key industry issue.
Reliability factors are also particularly important for
utilities in regions with aggressive renewable portfolio
standards and incentives. The influx of distributed
generation, such as rooftop solar, can have a profound
impact on the traditional daily demand curves for a service
territory. While historical load ranges can help inform
decisions, each day offers opportunities for variations.
Analytics will be critical for utilities in scheduling
traditional baseload power and optimizing transmission
and distribution assets for rapid ramp ups and ramp downs
to continuously meet fluctuating power demands.
DEVELOPING ANALYTICS PROGRAMS
Many grid, utility and network operators have focused, and
continue to focus, on how best to use the volumes of new
data generated from across their service regions. Because
of this focus, data analytics and management represent
the next opportunity for utilities to reduce costs and
improve services.
However, more data for the sake of having more data is
not necessarily better. Developing data flows and analytics
programs requires merging together once siloed functions
to create a whole greater than the sum of its parts. Amid
the flood of new information, utility leaders must use
their organization’s business issues, questions, risks and
priorities as the guiding influences for their analytics
programs. Black & Veatch recommends that utilities use
their data analysts to respond to specific business and/
or operational questions by examining the appropriate
data sources.
BL ACK & VEATCH | 27
FIGURE 17 TOP BUSINESS AREAS FOR EXPANDED DATA MANAGEMENT AND ANALYTICS
Source: Black & VeatchAll respondents were asked to select the top three business areas they believe their utility would be best served by expanded data management and analytics capabilities.
Figure 17.
56.6%
29.8%
28.1%
42.6%
27.2%Customer billing, collections and/or revenue protection
Customer service/engagement
Risk management
Capital investment prioritization
Asset management
0 10 20 30 40 50 60
FIGURE 18 TEAM(S) RESPONSIBLE FOR DETERMINING ANALYTICS INVESTMENTS
Source: Black & VeatchAll participants were asked who in their utility has the lead in determining what operational data management and analytics investments to make.
Figure 18.
0
5
10
15
20
25
30
35
4035.3%
7.7% 8.1% 8.5%
Cross-functional
team
IT Operations Plant/facility management
26.4%
Senior/corporate
management
11.5%
Other
2.6%
I don’t know
28 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
Outlook: A Growing Relationship Between
Data Centers and Utilities
BY JOHN VOELLER
In the United States alone, more than 600 independent
data center projects of varying sizes and scope
commenced or were completed between January 2011
and November 2013. Business and consumer trends are
expected to propel data center construction spending
for the foreseeable future. The volume and pace of
constructing new data centers, or expanding or renovating
existing facilities, reflects the growing need to manage
data for virtually all types of businesses, including utilities.
These figures do not include the hundreds, if not
thousands, of private facilities that corporations and firms
are building to serve their internal needs. Independent
data centers represent a unique challenge and
opportunity for electric utilities. Large facilities represent
a lucrative power customer or resource. Independent data
centers also represent a potential service provider for
storing and managing the steadily increasing amount of
information generated from across a utility’s enterprise –
regardless of utility type or size.
DATA CENTERS AS A CUSTOMER OR RESOURCE
As client demand increases the load on a data center,
the infrastructure supporting the facility must become
more robust as well. Meeting the unique and growing
needs of data centers will require a thorough assessment
of an electric utility’s business capabilities and plans,
its customer needs and the economics of developing
alternative power solutions.
One area to watch will be whether increases in data center
revenue per minute justify the continuation of traditional
power provider relationships. Should power prices
impact data center returns, or if client needs and service
levels impact the cost and capital structure, data
center operators may choose to adopt an island or
“off-grid” structure.
In North America, low-cost natural gas has prompted
commercial and industrial users of all types to consider
on-site, natural gas-fueled generation. Such decisions
may have strategic benefits for facility owners and electric
service providers. For example, adding new, traditional
baseload power generation can be challenging for
utilities in many regions. The elimination of a large power
consumer from the local grid could delay or prevent
the need for new capacity additions. This scenario could
benefit customers by providing lower rates over the long-
term as a result of reduced or avoided utility
capital spends.
“Off-grid” data centers can also benefit utility operations.
The dynamics of an evolving power portfolio, in addition
to potential financial, environmental, security and other
issues, could result in some utilities encouraging off-grid
data center operations, or providing independent systems.
For example, the increasing penetration of distributed
generation, particularly intermittent renewable resources
such as rooftop solar, requires grid operators to have
DATA ANALYTICS
BL ACK & VEATCH | 29
reserves available for rapid start up. Data centers could be
a resource by selling excess capacity back to utilities that
need to constantly balance fluctuating loads.
DATA CENTERS AS A SERVICE PROVIDER
The growing wave of data generated by utility investments
in intelligent metering and automation devices helps
to create a trove of information at the operational and
enterprise level. But for some utilities and telecom
services providers, the data wave creates a logistical
challenge as well. Specifically, each bit of data must
be both stored and accessible to facilitate its use in the
development of data-driven, analytics-based decision
making. While storage prices continue to come down,
the sheer volume of utility “smart” data could pose a
capital challenge requiring innovative solutions and
management approaches.
Further, as utility system technology evolves, demands
for greater productivity and improved customer service
will push utilities to generate more and extract value from
as much data as possible. For smaller utility operators,
off-site data storage and cloud technology can offer
benefits in terms of security and resiliency at a price point
that in-house management cannot.
In the future a greater role can be expected for
independent data centers as a consumer and as a
resource for many utilities. But it remains to be seen
whether the independent data center marketplace will
take on a uniform structure or whether different client
needs will result in different approaches. One certainty is
that the wave of new information managed and stored in
data centers is nowhere near cresting.
John Voeller is a Senior Vice President in Black & Veatch’s federal services division. Among his numerous career
accomplishments, Voeller served as a White House Fellow from 2003-2008 and a consultant from 2008-2010 in the Office
of Science and Technology Policy. His primary effort was to be the White House representative and editor of the National
Critical Infrastructure Protection R&D Plan to address the vast array of issues related to protecting the nation’s critical assets
as required by Homeland Security Presidential Directive 7.
30 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
UTILITIES AND THE CLOUD BY G. SCOTT STALL ARD AND RICHARD A ZER
Most technology transitions are initially viewed with immense skepticism and,
occasionally, fear. However, once the value of any technology is fully understood,
rapid acceptance generally occurs. Considering the historical precedent and the
tremendous value such services provide, Black & Veatch anticipates utilities will
begin to rapidly embrace cloud technologies within the next three to five years.
Black & Veatch survey responses indicate that utility
leaders are buying into the concept of enhanced
automation in the distribution of their product/service
and the operational benefits of mobile technologies
(Figure 19). However, only 5.1 percent of respondents
selected cloud computing as the emerging technology
that will have the greatest impact on how utilities operate
in the next five years. This relatively low percentage for
cloud computing likely indicates a disconnect between
what technologies drive functionality and what is
perceived as a value point.
Cloud computing can mean two things: the ability to
access data securely from any connected device anywhere
in the world and/or the environment to manage massive
data stores and data complexity. For example, most
utilities have begun or have finished implementing
advanced metering infrastructure (AMI) programs.
To manage the huge volumes of data generated by AMI,
cloud services offer a level of flexibility and efficiency
previously unavailable through hard-wired connections or
in-house storage.
With most utilities still planning or finalizing AMI
implementations, the use and need for cloud services
is limited. Nearly 27 percent of utility respondents
stated their organization is currently using some form of
cloud-based solutions (Figure 20). The majority of these
respondents stated they are using these solutions for data
storage, a valuable, but limited, application.
While AMI does generate significant amounts of data, it
is only one system. As utilities move into more advanced
distribution automation programs, they will deploy
additional sensors across their network that generate
exponentially more data than the current AMI network.
This will create a pressing need to manage the volume of
data and variety of data types to make elements across the
enterprise work concurrently. This is where the need for
cloud and advanced data analytics becomes particularly
important (refer to the Data Analytics section).
Cloud technology also offers resiliency benefits, including
the ability to quickly restore servers and work capability
after system disruptions. For example, when a server
supporting multiple systems goes offline, a range
of operations can be affected or interrupted. Adding
resiliency through the deployment of a virtualized
server allows operators to quickly restore and replace
its functionality.
Perhaps even more appealing is the ability of virtualized
cloud-based servers to interact with multiple end-user
software systems. This greater flexibility eliminates the
need for same system replacements and can speed
restoration from a complete outage from days to hours.
TECHNOLOGY
BL ACK & VEATCH | 31
FIGURE 19 EMERGING TECHNOLOGIES THAT WILL HAVE THE GREATEST IMPACT ON UTILITY OPERATIONS
Source: Black & VeatchParticipants were asked which of the listed emerging technologies they see as having the greatest impact on how utilities operate their businesses in the next five years.
0
5
10
15
20
25
30
25.1%
20.4%
15.7% 15.3%
Advanced distribution automation
5.1%
13.2%
5.1%
Advanced metering
infrastructure
Mobile devices
Operational technologies
Advanced data
analytics
Cloud computing
Other/I don’t know
FIGURE 20 CURRENT USE OF CLOUD-BASED SOLUTIONS
Source: Black & VeatchRespondents were asked if their utility currently uses any form of public or private cloud-based solutions.
0
10
20
30
40
50
9.8%
0.4%
12.8%
3.8%
Yes, light/limited use of public
cloud infrastructure
Yes, heavy reliance on
public cloud infrastructure
Yes, light/limited use of private
cloud infrastructure
Yes, heavy reliance on
private cloud infrastructure
43.4%
No
29.8%
I don’t know
32 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
TECHNOLOGY
CLOUD BENEFITS ALL
An interesting statistic within the survey data is the
significantly higher percentage of water utility use of third-
party (public) cloud services compared to use by electric
and/or combined utility providers. Nearly 30 percent of
water utilities use public cloud infrastructure to some
capacity, compared with 7 percent of electric utilities and
13 percent of combined utilities (Figure 21).
When compared by ownership structure, 16 percent of
publicly owned, or municipal, utilities use third-party
cloud infrastructure. Comparatively, 20 percent of
investor-owned utilities (IOUs) use privately owned cloud
infrastructure. Moving forward, the industry will likely see
small and/or publicly owned utilities adopt cloud-based
services on a wider scale than will the larger IOUs (refer
to Outlook: Tech Advantages Moving to Small Utilities).
In the past, small utilities and/or municipalities were
generally limited in the types of technologies they could
procure, be it computers, software or advanced utility
operating systems. Previous Strategic Directions reports
have indicated a sharp difference between the IT and
cybersecurity capabilities of mid- to large-scale utilities
when compared to smaller providers.
Fortunately, third-party, multi-tenant systems are now
providing the scale and security necessary to make big
IT systems, such as customer information systems (CIS),
cost effective for smaller organizations. This not only
enables smaller utilities to use the advanced technologies
but also provides the necessary security programs many
of these organizations currently lack.
Regardless of utility size or types, organizations should
spend time developing their cloud strategies. It is
important to consider the entirety of the organization’s
data and analytic migration. It will also be important
to consider what information is going to be required,
consumed, manufactured and used in terms of utility
operations and business continuity.
Metaphorically, if system and customer data represent
individual jigsaw puzzle pieces, the cloud is the table
upon which utilities will be able to see how each piece fits
together. Paired with advanced analytics, cloud technology
enables utilities to gain the maximum value from their
IT investments.
FIGURE 21 USE OF CLOUD-BASED SOLUTIONS - BY UTILITY TYPE
Source: Black & Veatch
Figure 21.
0
10
20
30
40
50
60
25%
Yes, light/limited use of public
cloud infrastructure
Yes, heavy reliance on
public cloud infrastructure
Yes, light/limited use of private
cloud infrastructure
Yes, heavy reliance on
private cloud infrastructure
No
7%
13%
4%
0% 0%
4%
16%
7%
0%
5%
0%
54%
38%
52%
Electric Utility Water Utility Combined Utility
BL ACK & VEATCH | 33
Outlook: Tech Advantages Moving
to Small Utilities
BY G. SCOTT STALL ARD AND RICHARD A ZER
The benefits of advanced automation and metering have
not been distributed evenly among service providers
to this point. Lacking the requisite economies of scale
to support large-scale capital investments in IT and
advanced metering infrastructure (AMI), many small
utilities have lagged their larger peers across the water,
electric and combined utility markets. Black & Veatch
forecasts that the small utility technology gap will narrow
as a result of the availability of cloud-based solutions.
Small businesses of all kinds are now enjoying access to
the latest software and technology advances as a result of
scalable, cloud-based subscription services. Despite their
relatively recent introduction, cloud-based administrative,
finance, customer relationship management and other
tools have helped businesses succeed at the retail level.
These services offer users the ability to harness a level
of software functionality that was previously not feasible
because of cost barriers.
Traditional IT infrastructure follows a cost curve similar
to most capital investments. Regardless of its capacity,
the first unit includes all of the startup costs and is,
therefore, the most expensive. Each subsequent capacity
addition then drives average unit costs lower. For small
utilities, these startup costs have precluded investments
in advanced data analytics, cybersecurity, mobile
technologies and system automation. However, the
adoption of this technology could be pushed forward
by a combination of new economic realities and
regulatory pressures.
In February 2013, President Barack Obama issued
the Executive Order Improving Critical Infrastructure
Cybersecurity, requiring all critical infrastructure systems
to become more hardened against cyber threats. While
electric utilities have previously fallen under the auspices
of the North American Electric Reliability Corporation
Critical Infrastructure Protection (NERC CIP) standards,
the executive order will force each of the covered vertical
markets, including water, gas and telecommunications
providers, to address potential areas of cyber vulnerability.
Black & Veatch anticipates that the executive order, like
any regulatory mandate, will result in a wave of IT-focused
capital spending among utilities. Additional guidance
from the administration will likely shape the financial
repercussions of the order.
While larger utilities have begun to take steps to address
their vulnerabilities, cybersecurity needs are significant
among smaller utilities. The Black & Veatch 2013 Strategic
Directions in the North American Natural Gas Industry
report showed that less than 40 percent of small gas
utilities, or utilities serving less than 50,000 customers,
had formal cybersecurity programs in place. This is
in marked contrast to utilities serving more than
100,000 customers, in which 76 percent of respondents
had plans in place. The pressure is building for smaller
utilities to modernize or implement cyber protocols
to protect customer information and enhance
operational resiliency.
Interestingly, cloud-based services, particularly third-
party services, provide the equalizing effect for small
utilities. Multi-tenant systems have the scale and security
needed to safeguard critical operational data and sensitive
client information. Most importantly, they give even the
smallest organizations cost-effective access to big system
capabilities. Previously inaccessible computing power and
data analytics and management tools can be deployed
to increase efficiency and help facilitate data-driven
management approaches.
34 | 2014 STRATEGIC DIRECTIONS: UTILIT Y AUTOMATION & INTEGRATION
THE ROAD AHEAD: SMART INTEGRATED INFRASTRUCTURE™ BY MARTIN TR AVERS
Aging infrastructure, aging workforces and limited budgets continue to increase
the pressure on utility service providers to do more with less. This Strategic
Directions report shows that many utility service providers have made progress
in using their telecom networks to deploy advanced metering infrastructure
(AMI) and automation capabilities. However, significant opportunities remain
to expand “smart” programs to other parts of the utility network and to use
analytics to improve performance.
INFRASTRUCTURE IS BECOMING MORE
INTELLIGENT, DISTRIBUTED AND COMPLEX
Black & Veatch is frequently asked by our clients about
the steps they need to take in order to become a “Utility
of the Future.” We believe that greater use of network
connectivity, automation and data analytics provides
the foundation for Smart Integrated Infrastructure (SII).
SII combines integrated infrastructure and smart analytics
solutions to improve a utility’s efficiency, reduce the cost
of operation, increase reliability and enhance the overall
quality of service.
However, SII is not simply the proliferation of intelligent
devices. The concept of SII is based on many large
infrastructure groups interacting with each other across
platforms. For example, smarter electric grids represent
a major step in making intelligent infrastructure. By
providing a wealth of new data about usage, loads
and power quality, smart grid systems provide critical
information that can help improve utility business
systems. Deploying additional sensors and using
available telecom networks to stream data from across
a distribution network, operators can begin to develop a
much more complete picture of their overall integrated
energy network.
Water and wastewater utilities that make operating
decisions based on supply source information, regional
power needs and other factors are helping to propel this
transition. Greater communication between water, energy,
telecom and transportation infrastructure will make
communities more adaptive, resilient and sustainable.
The use of analytics can help operators make data-driven
decisions so that less focus is spent on gathering system
data and more time is spent analyzing and acting on it.
This focus is particularly important because the adoption
of asset management programs is a key goal for utilities
worldwide. Analytics can also be applied to help address
these more complex issues.
Over the next few years, renewable energy resources pose
a particularly interesting situation for electric utilities as
they grapple with its promise and challenges. A report
released by the California Independent System Operator
(CAISO) in December 2012 detailed the growing need for
flexible power generation resources to offset the growing
use of intermittent renewable resources. These resources
are needed to meet the state’s 33 percent renewable
portfolio standard by 2020. At the same time, the influx
of renewable resources is projected to create a roller
coaster-like dip and then rapid increase in daily demand
for thermal plant generation (Figure 22).
CONCLUSION
BL ACK & VEATCH | 35
The dip in the CAISO chart shows how the influx of solar
power reduces the overall demand for conventional power
when these assets are delivering at their peak power
capabilities – between the hours of 10 a.m. and 4 p.m.
local time. The steep decrease in demand is followed by
a rapid spike to daily peak demand levels. This pattern
reflects the growing complexity of providing reliable
power flows that operators will have to plan for and
adapt to. Most notably, the CAISO chart reflects a typical
day. Many other factors, ranging from daily temperature
changes, wind speed, sunrise and sunset times, and
scores of other issues, create an inherent need for
automation and analytics. A fully integrated data analytics
program can help manage the complex system changes
in order to optimize efficiency, maintain reliability and
minimize network damage.
As renewables become a greater part of the energy mix
and utility systems get more complex, it will be essential
for operators to better understand their assets, so they
can plan, operate and adapt to extract the maximum value
from their renewable energy and energy storage assets.
Black & Veatch anticipates that the industry will see a
wide array of creative solutions to address this integration
problem and a wide variety of systems and tools to
manage the complexity.
Building on the capabilities created by smart grid
investments, the Utility of the Future will not be viewed as
a single operating entity. Rather, the Utility of the Future
will integrate and coordinate its infrastructure system with
other service providers (i.e., electric, gas, water, telecom
and transportation) in order to provide performance
improvements. As utilities large and small prepare for
greater systems integration, Black & Veatch will provide
the knowledge and solutions necessary to speed these
transitions.
FIGURE 22 CAISO NET LOAD 2012-2020
Source: California ISO “Flexible Resource Adequacy Criteria and Must-Offer Obligation Market and Infrastructure Policy Straw proposal.” December 13, 2012.
Figure 22.
0
27,000
25,000
23,000
21,000
19,000
17,000
15,000
13,000
11,000
201220132014201520162017201820192020
Potential Over-Generation
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Typical March Day — Significant Change Starting in 2015
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