Aeris Communications, Inc.

Smart metering has moved on from traditional Automatic Meter Reading (AMR). Advanced Metering Infrastructure (AMI) solutions offer the potential to benefit the entire value chain of energy stakeholders. Aeris Communications' Chris Purpura, Motorola's Jim Hanson, Oracle Utilities' Guerry Waters and SAP's Klaus Heimann sat down to discuss the vital features to look for in an AMI system to guarantee success with the lowest amount of risk.

KH. Smart Grid technologies either serve or leverage the grid communication network, providing the means for enabling visibility into the true state of the grid – be it reliability of the grid's component architecture or the consumption patterns of the various electricity consumers. Visibility enables all stakeholders to better understand consumption patterns and balance electrical supply and demand.

GW. The data that comes from many new technologies provides opportunities to better analyze demand patterns and reduce waste. Within the utility, for instance, analysts can now enhance power-flow information with detailed consumption on a building-by-building, block-by-block basis to ensure that transformers are neither over nor under-sized. They can use this same information in a completely different way – to refine demand patterns so that their supply portfolio (generated and purchased energy) meets customer needs without power wastage. Consumers can use interval data to better understand when they use electricity and in what quantities.

Many will be surprised to discover the cost of 'vampire' appliances that continue to consume power when ostensibly turned off. Others will be better able to weigh the power cost of a second refrigerator against its benefits. As prices inevitably rise, we foresee consumers actively seeking lower power home systems and appliances.

JH. By creating a secure connection between the utility and its energy consuming customers, smart grid technologies create the enterprise infrastructure and management systems that enable the utility to monitor and control their energy delivery system. This secure connection enables utility companies to provide more reliable and cost effective services to their customers while giving them the tools to manage their own energy consumption patterns resulting in a utility/customer partnership that optimizes the efficient use of energy resources.

CP. It will take utilities and consumers both working together to make a material impact. We talked about the digital economy in the late 1990s, but the smart grid may become the most critical part of the digital economy going forward. The digital economy needs electricity. It doesn't work without it. The smart grid itself needs to have smart devices coupled within a communications network that spans from power generation to consumption.

Once the Utilities can shrink the real-time gap (waste) between energy supply and demand, the next step will be to control both via real-time networks and devices that enable command and control. Energy conservation, peak pricing and voluntary controls will be aggressively marketed to commercial and residential consumers like never before. Many utilities already offer incentive programs to install smart devices in the home that display the real-time use and cost of electricity, or offer opt-in incentive programs so the utility can control electricity use during critical peak periods in exchange for rebates, or both.

PE. Energy companies are seeking information and services in AMI communications systems that go beyond the meter. What do such features and services entail, and what potential do they have to revolutionize the way energy is consumed and distributed?

CP. There has been so much focus on the meter, and not nearly enough on communications for the meters and other devices. Communications architecture is critical for any utility heading towards the smart utility goal. The utility must look long term at the real communication needs across the variety of applications and devices that will be deployed.

A good example of where this did not happen was in most of the early AMR deployments where the application was narrowly defined as a monthly meter read. The needs here were for one-way communications with small amounts of data sent once a month. As a result, many deployments were based on narrow band, one-way communications technologies. Implemented properly, the smart grid will not only link supply and demand but give the utility and/or the consumer more control over home energy use.

Communications architectures need to be planned for the long term because the cost to replace and/or upgrade communications equipment at every meter is prohibitive and typically outweighs the cost of the hardware itself. We are heavily involved in creating custom, tuneable private networks to meet specific utility needs for performance, cost, coverage and reliability.

KH. Going beyond the meter means connecting the meter to the 'home area network', or enabling normal home devices to respond to commands passed through AMI communication systems. This means we could conceivably turn off devices during peak loading, or adjust device parameters during certain times (for example, raise the air conditioning temperature when electricity prices are high), depending upon the needs of the grid in a particular area, or depending upon the preferences of the customer. This will revolutionize consumption and distribution.

JH. Utilities view their AMI Systems as the gateway to their customers, providing them with the means to communicate with them regarding their energy consumption needs. Also, with the addition of Home Area Network (HAN) Solutions utilizing industry standards like ZigBee 802.15.4, utilities companies can communicate with other devices in the home such as Smart Thermostats and Pool Pumps to provide demand response and direct load control capabilities.

Today, broadband capable wide area networks also allow utilities to provide their customers with other consumer services such as internet access, security and energy monitoring to give them unprecedented control over their energy footprint.

GW. AMI is likely to change consumption by encouraging use of home-area networks and smart appliances. As demand response programs become common, consumers will likely want to have more of their 'response' obligations taken over by automated load control equipment. Such devices have additional benefits, too. They can identify maintenance issues, for instance, and diagnose appliance problems.

AMI also promises to change distribution, although the path forward is not entirely clear. Remote terminal units and similar devices currently form an extensive communications system between grid and utility. AMI is a second, parallel communications system that duplicates the first to some extent. Utilities are already examining ways to reduce overlap, but 'best practices' to do so have yet to emerge.

Most of the 'revolution' may still be hidden. It will arise from the insights we gain as we analyze the large quantities of new data that AMI produces.

JH. While the use of ANSI and IP standards by metering and AMI vendors and the open protocols being used for databases is allowing multiple solution providers to enter the market offering utilities greater competitive choices. There also is evidence that some utilities are waiting to see which solution providers have the staying power to stabilize their offering while providing a robust road map for future Smart Grid solutions. Solution providers need to clearly articulate their roadmap, how it relates to current product offerings, and how that helps to alleviate a utility's concern around investments in general.

GW. Technology can support virtually any proposed market change. The challenge for utilities is determining the pace at which their market is actually changing. Today, utilities are proposing and implementing a large number of new programs for which demand appears to be low. Typically, utilities respond to polls indicating that a majority of customers would purchase higher-cost renewable energy only to find that participation hovers around one percent. Utilities typically measure net metering participation rates in hundredths of one percent.

CP. Vendors are making huge strides in all areas, and the issues are really around how fast the business side can consume the new technologies properly. The pervasiveness of 2G/3G wireless networks, coupled with plummeting hardware and data costs, is creating an Internet effect for application and service providers. Applications are no longer constrained by narrow data pipes, or only having data from a small percentage of devices (verification) to calculate decisions like spot market capacity purchases or load shed controls.

It's now economically and technologically viable to connect and collect real-time data from 90 percent of customers in making these decisions instead of 5-10 percent in many early deployments. Moreover, many vendors are working together to 'pre-integrate' more pieces of the solution so that utilities and consumers can purchase and 'plug in' pieces that work together out of the box. The bigger business issues will be with the regulators and utilities figuring out a new type of relationship with consumers, which are morphing into energy generators through, as an example, solar panels and plug-in hybrid electric vehicles (PHEV). The technology and business models are probably changing faster than the industry can adapt.

KH. For the most part, technology providers are keeping up with the market. However, depending upon the region, regulators may be lagging.

GW. AMI features do not guarantee low risk. You lower risk only when you design and size the system to meet achievable goals. AMI is not a case of 'if you build it, they will come'. Some utilities have found that 'successful' demand response pilot programs fail when fully deployed because customers tire of the daily need to check energy prices and move on to other priorities.

KH. AMI systems should adhere to emerging communication and security standards to ensure interoperability with all architectural components. They should facilitate two-way communication, provide some manner of VEE (validation, estimation and editing), and should be able to register new assets installed on a premise on the network through communication with the business applications that manage commercial or operational transactions associated with meter data.

CP. The answers depend on the business goals and needs of the utility, which are not all the same. Over time, the definition of an AMI system will evolve and include a range of applications that come from more than one vendor (no single vendor has complete solutions today in our opinion). CIOs should first (if they haven't already) determine their IT and communications architecture(s). This should be a Service Oriented Architecture (SOA) based approach. SOA at this point is a basic requirement for any vendor to get in the door.

Next determine the anchor platform for AMI initiatives. Will it be a real-time data warehouse, a decision support system built on top, the Meter Data Management System or something else? The key is to know what the goals are for the program and lay out the architecture and roadmap. Given the scope and multi-year duration of most AMI projects, the biggest risks are regulations, business needs, requirements scope and technology changes during project implementation. Ensuring openness, flexibility, and extensibility into AMI solutions is critical to manage these risks.

JH. Utilities companies should look for vendors that provide solutions that are IP-based and use open standards, such as the ZigBee Alliance and are ANSI C12.19-compliant with all major meter manufacturers that provide for smart device choice. They should also use open databases that can interface to multiple legacy utility systems.

The AMI System Gateways/Collectors need to support multiple public and private wide area networks (WANs) for backhaul to the utility's operation center. WAN backhaul choices can provide the flexibility and bandwidth utilities need to cost effectively handle current requirements while providing room for future Smart Grid applications.

JH. The adoption of smart meters is seeing unprecedented growth and I see that continuing, given the adoption of communication standards such as ZigBee that positions the smart meter as the gateway to other HAN applications. In order to realize the benefits of more capable Smart Meters and other Smart Grid devices, utilities should be working with their public and private network providers in developing their Smart Utility WAN requirements to ensure that the enterprise's communication infrastructure is adequate to provide the coverage, capacity and capabilities required to support current and future needs.

KH. In the near future, the AMI market will continue along its current trajectory. During this time, the home aware network architectures and systems will emerge and begin to leverage the AMI communication architecture. Regarding distributed generation or 'virtual utilities', as policy changes occur, technology will facilitate this growing area, specifically around the need to accommodate the changing role of the customer/consumer, who will become more of an energy partner than a customer.

CP. We will continue to see application consolidation and integration from fewer large vendors – another reason why SOA is so critical. We also see that AMI and Demand Response are really parts of an overall demand management portfolio of capabilities utilities will want to possess. The number of smart meters will be in the tens of millions in the next five years. Even with relatively smaller deployments (10,000s), we also see an explosion in data volumes and processing needs.

IT departments will need to determine how to disseminate hundreds of terabytes of data efficiently to enable intelligent decision making and actions. More should be done to drive technologies toward usable solutions. I'd like to see fewer industry organizations anchored by large vendors with marketing slogans, and more anchored by Utilities and/or ISOs that are willing to publish case studies as test cases or best practices, and work in collaboration with vendors to tune our offerings to meet real needs and requirements.

GW. Smart metering is growing in North America in part as the result of market structure. Most utilities remain fairly integrated; many different departments can realize small AMI savings that, in the aggregate, justify AMI costs. That's not the case in competitive markets. When different companies provide separate generation, transmission, distribution and retail services, questions about who will pay the costs and who will reap the benefits have few clear answers. Until utilities find an appropriate AMI cost-justification model, implementation will likely lag.

As the former VP of Marketing, Chris, was responsible for all marketing and product management activities. He has held various senior executive level positions across Marketing, Product Management, Strategy and Alliances functions at Internet, infrastructure software, and VoIP communications companies for over 15 years.

Jim, Motorola's Global Energy & Utility Industry Principal, is responsible for working with the company's customers, sales teams and partners to bring additional value through fixed and mobile data solutions. He has over 20 years of experience in the utilities industry, having served in a variety of sales management and business development roles with leading suppliers of utility solutions.

Guerry, VP, Industry Strategy, joined the Oracle Utilities Global Business Unit (previously SPL WorldGroup) in 2000. Previous positions include VP of Energy Information Strategy at META Group (now Gartner) and CTO and Director of Technology Strategy and Engineering at Southern Company. He focuses on IT strategies that help utilities meet their goals amidst changing customer demands, regulations, and market structures.

Klaus currently works at SAP AG's board area Product and Technology Unit (PTU) in the role of a Senior Industry Advisor. According to his professional career at SAP , his activities concentrate on solutions and services of SAP for the Utilities industry. Since July 2007 , Heimann has been coordinat ing a strategic development project integrating the SAP for Utilities solution to Advanced Metering Infrastructure (AMI) Systems.

Smart Metering solutions work by attaching an Automatic Meter Reading (AMR) device to an existing meter. The device picks up the meter's pulse. By measuring the pulse, the AMR device can record how much gas has passed through the meter as frequently as every hour. The information is then sent via mobile communications to the suppliers' systems where it is validated before onward transmission.

Smart Metering provides accurate and detailed information on the energy that is being using, which allows customers to better manage their energy usage. Below is a simple diagram showing broadly how AMR works:

1. Your meter generates a pulse as gas passes through it.
2. A National Grid Metering AMR device captures the pulse and records how much gas has passed through the meter as frequently as every hour.
3. The information is sent via mobile communications where it is validated.
4. The information is made available to you via your via your gas supplier.

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