smart grid whitepaper

7/28/2019 Smart Grid WhitePaper

1/12

Realizing Smart Grid RevenuesUsing WiMAX to Fulfill the M2M Promise


2/12

2

ContentsWhat is a Smart Grid Network? .........................................................................4

The Smart Grid Market ....................................................................................... 5

The Market Segments ......................................................................................5

The Potential for Growth ...................................................................................5

Access Technology Choice is Critical .................................................................. 6

Access Network and Device Pair Options ........................................................6

Feature Set Considerations ............ .............. ............. .............. .............. ............7

The WiMAX ARPU Advantage ..........................................................................7

Motorola Smart Grid Solution..........................................................................10

Why Motorola .................................................................................................10

Summary ........................................................................................................10

Appendix: Smart Grid Open Standards and Architecture .............................. 11


3/12

3

Executive Summary

Realizing Smart Grid RevenuesUsing WiMAX to Fulfill the M2M Promise

Machine-to-machine (M2M) communication is

becoming a potentially very attractive revenue

stream for telecom carriers. One of the first and

most promising M2M applications is Smart Grid,

a comprehensive vision for improving the reliability,

efficiency and security of the power system.

The grid becomes smart when the conventional

electric grid is augmented with telecommunications

infrastructure, data management, automation and

control technologies. Many of the elements of a

Smart Grid implementation are already available,

including smart meters, automated monitoring

systems and power management systems. What has

been needed is a communication technology that canmake the Smart Grid not only possible, but profitable.

WiMAX is now emerging as that technology. Factors

that are encouraging many leading utilities to plan

Smart Grid deployments include:

Increased focus on energy efficiency and zero

emission power production

Stress on the electric grid due to growing power

demand and aging infrastructure

Dramatically lower cost of Smart Grid

infrastructure using wireless broadband

This paper provides a general introduction to the

Smart Grid market, a description of the business

case, and a blueprint that WiMAX carriers can use

to capture their share of the new ARPU that M2M

will begin to generate in the very near future.


4/12

4

Figure 1 Smart Grid Consistsof Parallel Communicationsand Utility Networks Electric Grid

Communications Network

Smart Grid = Utility + Communications

Smart Grid enables many energyand cost-saving features notpossible with todays electric grid

What is a Smart Grid Network?More and more, the machines we use every dayare becoming automated and intelligent. Smart

systems such as manufacturing robotics, automated

inventory controls and power management systems

have long been among industrys tools, but they

are now entering our households, as well. We have

dishwashers that start themselves when energy

costs are lowest, refrigerators that are aware of the

products stored on their shelves, and entertainment

systems that can be programmed over the IP

backbone from anywhere.

In fact, potentially smart machines already

outnumber human communicators. The European

Telecommunications Standards Institute (ETSI}estimates there are 50-70 billion connectable machines

in the world, compared to about 7 billion people and

while the majority of people are already connected to

one or more communication networks, only about 1%

of the machines are connected. For telecom carriers,

that makes machine-to-machine (M2M) communication

a potentially very attractive revenue stream.

Thanks to growing global energy demand and a

number of government-backed initiatives, Smart Grid

is likely to be the first fully realized M2M application.

In its most basic form, Smart Grid can be thought of

as a parallel power and communications network, asillustrated in Figure 1. The communication network

provides a means for all major elements of the electri

grid to communicate with one another in real time,

enabling many energy and cost-saving features not

possible with a standard, non-smart electric grid.

An electric grid with smart capability allows power

producers, distributors and users to maintain a near

real-time awareness of one anothers operating needs

and capabilities. With this awareness, the Smart Grid

can produce, distribute and consume power in the

most intelligent and efficient manner.

With a Smart Grid system, everyone benefits: Energy users can be provided real-time informatio

on energy rates by time of day, permitting them

the opportunity to use power when it is available

at a lower cost.

Energy users and producers can add automation

to the grid, optimizing the efficient transport

of power.

Utilities can have immediate information about the

exact scope and nature of outages, enabling them

to respond more quickly and efficiently.


5/12

5

The Market Segments

Just as energy users break logically into two

primary segments, commercial and residential,

so too does the Smart Grid market. Industrial and

large commercial power users typically represent

just 12% of a utilitys customer base, but consume

about two-thirds of the power produced. Massive

power usage at a discrete service location makes

an excellent business case for any technology thatcan help monitor and optimize that usage, so Smart

Grid technology has been in use in commercial

applications for decades.

Among residential users, however, 88% of the

customer base consumes about one-third of the

power generated. The incremental expense of

connecting so many energy users to a common

communication network has been a serious hindrance

to Smart Grid deployment for this segment.

That situation has changed dramatically of late,

thanks to recent advances in digital technology and

low-cost WiMAX wireless networks. The business

case for residential Smart Grid is now strong, as will

be demonstrated as we explore further.

The Potential for Growth

Several Smart Grid global hot spots are moving

forward with deployments at a rapid pace:

The Australian government has committed up to

$100 million to develop a demonstration projectcalled Smart Grid, Smart City.This initiative, which

will commence in July 2010 and continue until

June 2013, demonstrates Australias position atthe forefront of global efforts to use energy more

efficiently, ensure network reliability and combat

climate change.

SP AusNet recently announced a comprehensive

plan to deploy a WiMAX Smart Grid network. Allof their customers will have smart meters advanced meters that can identify consumption in

detail and communicate back to the local utility for

monitoring and billing purposes by 2013.

Europe is expected to deploy 145 million smart

meters by 2020. European deployments are beingdriven by the EUs Smart Grid 2020 Directive. It

calls for 20% carbon emission reduction, 20%energy efficiency use, and 20% renewable by 2020

The US Department of Energy recently awarded

$4.5 billion in Smart Grid stimulus funds.The State of California has published aggressive

efficiency and CO2 reduction regulations and

mandated the deployment of smart meters. As a

result, California utilities have projects underway

to deploy millions of smart meters. Various other

state mandates have motivated US utilities to

launch 31 projects deploying a total of 81 millionsmart meters.

China is also moving rapidly, concentrating on

distribution automation to reduce grid loss. In thecurrent five-year plan, all major generators will

have Smart Grid measurement sensors by 2013.

In all, utilities are expected to invest up to $240

billion to upgrade over 2 billion utility meters

worldwide (see Figure 1). Each of those 2 billion

devices will need to be paired with an access

network to enable Smart Grid functionality. The

question then becomes, which network makes the

most sense?

The Smart Grid Market

Figure 2 Global Utility Meters Global Utility Meters

1400

1200

1000

800

600

400

200

0

Electric Gas Water

1165 370 945

110 30 30

Unautomated

Automated

Over 2 billion unautomated meters worldwide

Numbero

fMeters(millions)

Source: Robert W. Baird and Co., January 2010

Utilities will invest up to $240 billionon Smart Grid deployments


6/12

6

The choice of access networks can make or break

a Smart Grid deployment, since the consequencesof selecting an inappropriate access network and

device technology can be staggering.

For example, consider a utility with 300,000Smart Grid customers. The network would consistof 300,000 residential devices, perhaps 200 to 1,000

access nodes and one or two core networks. One can

reasonably replace components in the core if the first

choice in design or products is ultimately not selected.

However, replacement of equipment in the access

network or customer premises is nearly unthinkable.

The choice of access network and associated smart

meters should be subject to intense analysis in order

to avoid Technology Regret.

Access Network and Device Pair Options

The access network and devices must be analyzed

as a mated pair. This is essential because they must

speak a common language (e.g., protocol) and very

few access networks and devices are multi-lingual.

For example, WiMAX devices and access networks

speak to one another over the 802.16e wireless

protocol using equipment in accordance with the

WiMAX specification. Likewise, a proprietary 900

MHz access network will only communicate with

a 900 MHz device manufactured by the same

manufacturer as the access network.

The utility faces the challenge of determining which

access network/device pair (i.e., which technology)

is best suited to provide a cost-effective and reliable

communications network for Smart Grid. There

are three basic forms of access network/devicetechnologies in the market.

1. Wireless Networks WiMAX, cellular (2G and3G) and proprietary (e.g., 900 MHz)

Wireless networks have the lowest build-out

costs. Typical installations range from $120 - $250

per customer depending on density of customers

covered. Furthermore, many regions already

have several networks in place and capacity can

be leased from a wireless carrier at a low cost.

Typical lease costs can be as low as $0.50 3.00

per subscriber for large volume, long term deals.

2. Wired Communication Networks Cable,Digital Subscriber Line (DSL), Ethernet

Wired communication network build costs vary

from $500 - $2,000 per customer depending

on density of customers covered. As such, they

are not typically economically viable for Smart

Grid. However, they can still be considered

because they can often be leased from wireline

communications carriers where they exist.

3. Wired Power Line Communications

Broadband over Power Line (BPL), Data

Communications Link (DCL)

Wired power line communications networks use portion of the electric network for data transport.

They have proved viable in a small number of

cases where the electric grid design permits

hundreds of homes to be served by a single

1 All figures in this section are Motorola internal calculation

based on actual customer deployments

Access Technology Choice is Critical

Figure 3: Smart Grid CAPEXand OPEX

Smart Grid CAPEX and OPEX

Core Networkand Applications Access Network Residential Devices

CAPEX Cost:OPEX Cost:

15%20%

35%50%

50%50%

Source: Motorola Internal Study

e.g. WiMAX, 2G & 3G Cellular,

Proprietary, Mesh, Others

e.g, BPL, PLC, DLC, DSL,

ADSL, HFC, Others

Choosing the Right Access Technologywill prevent Technology Regret


7/12

7

transformer. This configuration is uncommon and

these deployments have typically proved to be

cost effective only in portions of Europe.

On the basis of cost and availability, then, wireless

networks provide a clear benefit.

Feature Set Considerations

When building a Smart Grid, careful consideration

must also be given to the features enabled by a given

access technology in order to assure that it meets

the minimum requirements for a successful service.

Figure 4 compares the features for the access network

alternatives considered to be most competitive.

As can be seen in Figure 4, WiMAX offers a number

of advantages over other technologies for Smart

Grid support. It offers the best value to the utility byproviding the greatest feature/functionality at the

lowest cost. The advantages over Programmable

Logic Controllers (PLC), Data Link Control (DLC) and

Mesh networks are significant and compelling.

Motorola has outfitted cellular wireless networks

with features to support Smart Gridlike applications

for several years and they work well for a limited

feature set. To support full featured Smart Grid

deployment and to future-proof ones access

network investment, the speed, performance and

features inherent to 4G technology are needed.

Taken as a whole, WiMAX is typically the optimal

technology for Smart Grid.

The WiMAX ARPU Advantage

For a wireless carrier, WiMAX offers one final

advantage the rich revenue opportunity afforded by

M2M communication over a WiMAX infrastructure.

A WiMAX base station not only provides a low cost

last mile infrastructure, it is also highly scalable, able

to support from 450 to 3,000 subscribers. For high-

bandwidth usage, a typical load would likely average

about 500 users, each generating an ARPU of about

$30/month. So one base station could generate

revenues averaging about $15,000/month.

Now consider that same base station in use

in a Smart Grid. Because machine-to-machine

communications, such as regular monitoring of

smart meters, are focused, predictable and can

be managed without human intervention, thecommunication load can be optimized to take

advantage of WiMAXs tremendous capacity.

So a single base station can easily support 25,000

smart meters. Even though M2M ARPUs are much

smaller ranging from $.50 to $3.00 the greater

volume of subscribers served can yield monthly

revenues between $12,500 to $75,000 on a single

base station. The case for WiMAX as the Smart Grid

access technology of choice is becoming very clear.

WiMAX is typically the optimaltechnology for Smart Grid

Figure 4 Access NetworkTechnology Comparison

Critical Attribute PLC DLC Mesh WiMAX Cellular

High Bandwidth

Suitability for High

Customer Densities

Suitability for Low

Customer DensitiesSecurity

Standards Based

Scalability

Large Supplier Ecosystem

Reliability

Option to Wholesale/Lease

System Availability

Cost

Source: Motorola Internal Study

Comparing Access TechnologiesWiMAX provides the greatest feature set and functionality at the lowest cost


8/12

8

The strengths and weaknesses of the three strongest

alternatives in the market 900 MHz proprietary

systems, 2G/3G cellular systems and WiMAX are

summarized in Figure 5 below. Again, WiMAX clearlyhas an impressive set of compelling advantages that

make it worth serious consideration by any utility

planning a Smart Grid deployment:

IP-based technology

Much higher capacity and lower latency than 2G

and 3G

Genuine standards-based technology

Full ecosystem of suppliers and equipment assure

competitive pricing

Proven interoperability between suppliers

guarantees the supply chain

Large installed base of carriers future proofs

the technology

Best Business Case

Cost effective, low OPEX, end-to-end solution

Enables both build and lease options

Best Feature Set

Full QoS regime assures utility traffic is given

proper priority

Strong security features safeguard grid and

customer information

Licensed spectrum assures interference will not

affect network performance

Private or Virtual Private Network support isolates

utility traffic from that of the public carrier

All-IP Architecture assures feature transparency

Carrier-grade, high availability network assures

system availability

Scalable for very high and very low device

densities New technology just beginning its service life (i.e.

will not be replaced in the coming decade as is the

case for 2G/3G)

There are more than 500 WiMAXNetwork deployments worldwide

WiMAX Forum, March 2010

Technology Advantages Disadvantages

900 MHz ProprietarySeveral suppliers

Field proven

Proprietary

Wed to a single supplier

Interference issues

2G/3G CellularWidely deployed

Open standard

Limited capacity

Limited service life

WiMAX

Highest capacity

Best feature set

Supplier ecosystem

Open standard

Deployments in process

Figure 5 WiMAX Advantagesand Disadvantages

Comparing Wireless Access Technologies

WiMAX emerges a clear winner


9/12

9

When utilities first began to consider Smart Grid as

a business opportunity, most simply presumed that

they would deploy and operate their own Smart Grid

access networks. As they have gained experience,

many have come to understand that they have

another option lease capacity on an existing

network operators network. This alternative has

several tangible advantages, including faster time to

market, lower capital costs, and better ROI.

This alternative has not been overlooked by cellular

network providers. Verizon and AT&T have recently

established programs and rates structures intended

to capture the utilities Smart Grid business. A typical

deal structure would be as follows (also see Figure 6):

Carrier provides the network and basic connectivity

Utility provides and deploys the meters

Utility maintains the Smart Grid back office

Carrier bills the utility based on users per month

and call model

Guaranteed minimums and incentives for volume

The cost of leasing network capacity can vary based

on several factors, including: capacity requirements,

term of lease, services provided, frequency of

meter reads, outage recovery requirement, etc. The

following carrier ARPU estimates are considered

typical for most cases and can be used as a starting

point for business case analysis:

Large volume deals: $0.50 - $1.50/subscriber,depending on the service

Small volume deals: $1.50 - $3.00/subscriber,depending on the service

Low end: Automatic meter reading (AMR) usecase, periodic reads of usage data and basic healt

checks

High end: Advanced metering infrastructure (AMIuse case, real time metering

Figure 6 Smart Grid BusinessStructure

Utility

Wireless Carrier

Utility Customer Management

Utility Applications

Network Management

Telecom Customer Management

Carrier Applications

Network Management

IP/MPLS Network Base Stations

Gateways,

Service Edge

and Firewalls

Smart Meters

Wireless Devices

Wireless

Last Mile

Smart Grid Business Structure

To realize all the benefits of Smart Grid, a utility needs to usean access network, not own it.

Leasing capacity from an existing wireless carrier is a win-win for both partners.

Business Model Build or Lease

Leasing means faster time to market,lower capital costs, and better ROI


10/12

10

Motorola offers a tightly integrated end-to-end Smart

Grid access network solution. The major componentsas illustrated in Figure 7 include:

Smart Grid core network

Wireless backhaul solutions

Smart Grid access network

Smart Grid meters

Design, deployment and implementation

services

Why Motorola

The optimal supplier for WiMAX Smart Grid networksneeds a unique combination of WiMAX experience

and Smart Grid know-how, as well as a product line

that supports smooth integration and deployment.

Motorola has that combination.

Experience: Motorola has demonstrated leadershipin WiMAX since its inception by being:

First to interoperate with other suppliers

First to deploy a commercial network

First to demonstrate mobility

First to be WiMAX Forum certified

First to build a WiMAX Smart Grid access network

Figure 7 End-to-end WiMAXSmart Grid Solution

Know How: Smart Grid is more than just anotherwireless application. Smart Grid applications place

new and strenuous requirements on a wireless

access network. Having deployed the first WIMAX

Smart Grid network, Motorola has developed

features, solutions and methods to assure that the

stringent performance requirements of Smart Grid

are met.

Right Product: Motorola is a full end-to-end

supplier, providing one-stop shopping. The

solution is fully compliant with open standards and

optimized for Smart Grid applications, so we can

work with our partners or with the utility providers

preferred suppliers. Motorola offers a rich set of

smart meter features that will permit a utility to getthe most from their investment.

Summary

The Smart Grid is emerging as one of the fastest

growing new businesses of the decade. WiMAX

carriers have the ideal access network technology

for the Smart Grid and can leverage their network

to capture a new, large revenue stream. As the first

WiMAX system supplier to deploy a WiMAX Smart

Grid Access network, Motorola is the sole WIMAX

supplier to optimize its system offering for the

demands of Smart Grid technology. Motorola provide

the products, services and know-how that WiMAXoperators will need to make the most of Smart Grid

revenue opportunities.

Motorola Smart Grid Solution

Motorola is a full end-to-end supplier,providing one-stop shopping

Canopy

Wireless

Backhaul

IP Core

Motorolas End-to-end Smart Grid Solution

PSTN

Internet

WiMAX

ASN Gateway

Consumer

Devices

MetersWiMAX Access

PolicyNet

NMS

MIMO Beamforming

Base Controller Unit

SERVICES

IP Services

Smart GridVoIP

Presence

Location

Prepaid

Gaming

Mobile TV

Push to X

Hosted PDX

IPMPLS Metro


11/12

11

Appendix

Figure 8 NIST Smart GridArchitecture

Early Smart Grid systems were proprietary. However,

the power industry understood the benefits of

establishing open standards and has been driving

the completion of standards in both the U.S. and

Europe. The U.S. National Institute of Standards

and Technology (NIST) recently released its Smart

Grid Reference Architecture (Figure 8) along with

recommendations for the adoption of 77 existing and

developing standards from organizations including

ANSI, DNP, IEC, IEEE, ISO, NERC, NIST, OpenADR,

OpenHAN and Zigbee. Several European groups are

also working on Smart Grid standards, including:

the European Industrial Initiative on electricity gridsunder the SET European Technology Platform (ETP)

Smart Grids, Open Meter 7 Group, and European

Utilities Telecom Council (EUTC).

The architectures and underlying standards being

crafted for Smart Grid are IP-based and have much

in common with 4th generation mobile network

architectures. This makes WIMAX and other 4th

generation wireless networks particularly well suited

for Smart Grid.

Utilities are leading the standards effort by making

standards compliance a minimum requirement in the

selection of venders for their Smart Grid projects.

Leading Smart Grid suppliers are adapting their

products to meet the U.S. and European reference

architectures and emerging standards. It is generally

anticipated that true interoperability will be achieved in

the coming years. Until then, interoperability is being

tested at each individual utility deploying a system.

Smart Grid

Open Standards and Architecture


12/12

The information presented herein is to the best of our knowledge true and accurate. No warranty or guarantee expressed or implied is made

regarding the capacity,performance or suitability of any product. MOTOROLA and the Stylized M Logo are registered in the US Patent and

Trademark Office. All other product or service names are the property of their respective owners. Motorola, Inc. 2010. All rights reserved.

04-10

www.motorola.com

smart grid whitepaper

Documents