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INTERNET
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ENERGETIC SMART
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Report author:
Christine Herzog
Founder, Smart Grid Library
hertzog@smartgridlibrary.com
Editors:
Dawn Bushaus
dbushaus@tmforum.org
Lisa Hughes
lhughes@tmforum.org
Publisher:
Amy Goggins Page 5 Section 1
agoggins@tmforum.org The dazzling promise of the Internet of Things
Advisors: challenges and opportunities
Nik Willetts, Chief Digital Officer, TM Forum
Rob Rich, Managing Director, Insights Research, TM Forum
Page 7 Section 2
Report Design:
thePAGEDESIGN
What is smart energy and what challenges
does it bring?
Published by:
TM Forum
240 Headquarters Plaza Page 12 Section 3
East Tower, 10th Floor
Morristown, NJ 07960-6628 What can energy utilities learn from others?
USA
www.tmforum.org
Phone: +1 973-944-5100 Page 17 Section 4
Fax: +1 973-944-5110 New business models and partnership
ISBN: 978-1-939303-62-2 opportunities
2014. The entire contents of this publication are protected by copyright. All rights reserved. The Forum would like to thank the sponsors and advertisers who have enabled the publication of this
fully independently researched report. The views and opinions expressed by individual authors and contributors in this publication are provided in the writers personal capacities and are their sole
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Executive summary
The Internet of Things is in its very early they need to make much greater and more
stages. While there tends to be tremendous diverse use of that data to meet the rising
focus on its dazzling, unprecedented scope demand for power.
and scale, and immediate solutions, the key Whatever the scenario, the commonalities
to its success is long-term viability for all of their challenges outweigh sector-specific
stakeholders. In some sectors there is almost issues, including the necessity of partnering
a panic to get underway, as time-honored to develop and deliver new services
operational modes and business models cannot sustainably. In this instance, weve chosen
simply be updated or upgraded to cope with the energy industry and its similarities to
changing circumstances. the communications sector which after all
In digital health an aging population in underpins the whole thing to demonstrate
developed economies and the desperate need these principles and possible ways forward.
for primary healthcare in emerging markets The key message of this research is dont
cannot be served by the measures in place waste time, resources and money reinventing
now they cant be scaled or rolled out wheels that have been created already
affordably. elsewhere. Rather, learn from those whove
Transportation companies and those whose tackled similar problems, then adopt, adapt
businesses rely on workforces in the field and partner to innovate, and to gain agility,
and the delivery of physical goods are under competitive advantage, speed and sustainability.
terrific pressure to improve services while To cite one of the worlds greatest sports
cutting costs. coaches, Be quick, but dont hurry.
There is a growing interest in the connected Section 1 of our report looks at the Internet
car and home in the interests of greater of Things and its challenges and opportunities.
safety as traffic continues to boom on roads Section 2 examines the challenges particular
everywhere (which affects many industries, to the electricity generating and distribution
including transportation and insurance), and companies.
people want to have more control over and Section 3 looks at work underway to tackle
derive greater convenience from appliances the challenges of needing new approaches
and energy consumption. to operations, infrastructure and partnering to
Around the world, energy utilities are facing succeed in the digital age and in particular
radical changes on many fronts. This includes the progress of the joint efforts of the
having to accommodate many small suppliers communications and electricity industries
of electricity into their grids and manage through TM Forum.
everything from network loads to payments, Finally, Section 4 outlines some of the
driven by regulation in many markets. New possible new business models and roles
competitors like Google are entering the established players could assume within them
market and the deployment of smart meters to achieve the best outcome for everyone.
are putting massive strains on their siloed All feedback is most welcome you can
data infrastructure, designed to cope with contact Annie Turner, Senior Director, Content
megabytes, not petabytes and beyond. Further, via aturner@tmforum.org
Section 1
Section 2
repairs to give customers the most accurate The entry of companies like Google and Apple
information. The bottom line is that all utility into residential energy management solutions,
departments must work collaboratively with IT and the continuing offers for similar services
colleagues to gain access to valuable data for as bundled packages from communications
multiple uses. service providers, highlight the growing interest
in energy consumption inside buildings and
Benefits of convergence dwellings. This is an area that utilities avoided
One of the primary benefits of ongoing IT and as the other side of the meter.
OT convergences is the delivery of new or
improved situational awareness and remote Becoming trusted advisors
control to utilities. Traditionally, utilities and grid Utilities are now asked to perform as trusted
operators relied on limited real-time knowledge advisors to prosumers, and rapidly need to
of ongoing grid conditions and reacted to learn a great deal more about them and how
changes in status. to communicate with them to satisfactorily
Some industry observers compare these perform that important role. Technology
traditional grid operations to driving a car. If you disruptions will culminate in disruptions to the
are comfortable doing 60 miles per hour on a utility/consumer relationship and need to be
crowded highway, with your eyes shut and only intelligently managed if utilities are to continue
opened briefly every four seconds, then you to own the consumer relationship and
have a good understanding of how electricity avoid intermediation by new energy service
grids have been managed. Utilities can now providers.
apply data to make real-time, proactive decisions While some utilities may have experience
that reduce outage times, improve asset of these new types of service providers
maintenance and aid in long-term planning. to manage energy efficiency and demand-
These IT/OT convergences are impacting response programs, the growing presence of
consumers at the edge of the distribution non-traditional energy suppliers will offer new
grid. Bundled solutions comprising advanced possibilities for mutually beneficial B2B2X and
analytics with simple user interfaces on mobile B2C2X relationships.
devices make energy management available
to all electricity consumer/prosumer classes The role of policy disruptors
residential, commercial and industrial, and Similar to the communications sectors history
agricultural. Prosumers (producing consumers) of deregulation and divestiture, electricity
are the owners of the assets involved in utilities are revising strategies and business
distributed energy resources and participants in processes to address changing regulatory and
demand-response programs. legislative landscapes. For the North American
electricity sector, the old business rules started energy storage and participation in demand-
crumbling years ago, with initial policy steps response or energy efficiency programs which
towards deregulation and decoupling. reduce electricity consumption.
The situation is similar in other developed
economies around the globe. Local and national Threats to revenues and grid stability
policy initiatives use portfolio standards to In nations like Germany and Australia,
encourage clean, renewable generation distributed energy resources assets, in
sources. Theres increased emphasis on the form of rooftop and community solar
energy efficiency programs, and more utilities deployments, are radically revising utility
and regional planning operations are placing revenue growth and creating grid stability
reliance on demand-response solutions and problems. Distributed energy resources are
services to reduce electricity use at selected also gaining acceptance as a valuable strategy
times. to deliver grid and community resiliency.
More private businesses and micro grid As weather patterns include more summer
projects are exploring the use of new derechos (widespread, long-lived, straight-line
innovations in technologies, such as combined wind storms associated with a land-based,
heat and power and fuel cells, to distribute fast-moving group of severe thunderstorms)
generation and energy storage assets close to and polar vortexes, resiliency is discussed at
points of consumption. kitchen tables, in corporate boardrooms, and
The old supply chain of remote and government offices.
centralized power generation is transforming. Prosumers actions based on these
It relies on high voltage transmission grids considerations will challenge regulatory
to eventually power low voltage distribution frameworks for utilities by democratizing
grids and consumers end uses. In contrast, generation of both kilowatts and negawatts
in the smart energy world, the supply chain (theoretical units of power, measured in
transforms into a value chain or fabric a watts, representing an amount of energy
mesh of value chains. This includes distributed saved). Progressive regulatory agencies
energy resources appearing as investments in are taking initial steps to modify regulatory
residential and commercial scale generation, structures.
Other states will follow the lead of policy form may be coupled with solar
pioneers like the New York Department of generation or offered on a standalone
Public Service and California Public Utilities basis as a resiliency solution. Whatever the
Commission to dramatically revise utility offering, there will be new entrants into the
business models. Traditional utility B2B and electricity sector that intermediate utilities
B2C relationships will transform into more traditional consumer relationships (B2B and
complex consumer and prosumer relationships B2C) and add new assets to the grids stability
that may include new business partners in and capacity.
these equations see page 9.
Rising operating costs
Financial disruptors Even as their utilities are required to manage
At one time, it was inconceivable for anything grids in reliable, safe, and cost-effective ways,
other than a utility or other very large entity to and make investments in the smart grid, there
secure financing for power generation. Now is real fear that they will only see increasing
third-party ownership of residential rooftop operating costs and declining revenues just
systems, in which building owners lease the like their counterparts in communications
solar systems and get a guaranteed price for infrastructure. Utilities will have to develop
their self-generated electricity, is the most strategic agility and tactical superiority
popular financing mechanism to date. to survive and thrive in the smart energy
However, theres a growing number of ecosystem.
solar-as-a-service financial models with the The electricity business sector will look
potential to accelerate the already healthy very different on the other side of this
adoption rates for small-scale distributed singularity and its varied drivers. A report from
generation. Some utilities have seen solar PV the Solar Electric Power Association (SEPA)
installations double from one year to the next, documents one key change underway the
contributing to the erosion of their revenues disruptions that renewables put on utilities
from electricity sales. organizational structures. How can utilities
The same trends will promote rapid successfully navigate the singularity and
deployment of private energy storage. emerge as winners? This is the subject of the
Energy storage in both fixed or mobile next section.
Section 3
Figure 3-1: Key similarities between the electricity and communications sectors
n First
responders or n Just-in-time
management of n Explosive
growth of devices
supporting first responders power deliveries and network and data traffic
capacities
n Severeeconomic and n New networks and increased
social impacts in service n Collaborative, mutual aid traffic on existing networks
disruptions cultures
of data, the Catalyst project incorporates Figure 3-2: The five aspects of a partnership agreement and how to
security considerations into the technology
align both business and technical activities
procurement requirements, data policies and
business practices.
Partnership
Initial results, next steps Agreement &
Business Requirements
Initial results confirm that there are significant Collaboration
Section 4
critical electric, water and gas operations. first responders in natural disasters without
Communications service providers have their combined services, police, fire and
the specialized expertise to assist utilities medical services cannot function effectively.
in managing their diverse communications Leveraging communications service providers
networks. That expertise allows utilities to expertise in network optimization can speed
focus on their core competencies in grid diagnostics and resolution of workforce and
operations. operational grid communications problems.
Collaborative partnerships in communications Ultimately this results in shorter outage times
network services can be especially welcomed for utilities which are then free to focus on
by utilities, which have resource and funding solving power delivery issues.
limitations. Communications service providers
can be important partners to ensure that the Live, successful partnerships
networks utilities rely on remain optimized for Smart energy applications such as distributed
quality, performance, security and robustness. automation devices or transmission grid
Otherwise, there are big, upfront costs for monitoring deliver significantly more data
utilities to stay current with the latest upgrades over communications networks. The network
and releases in communications technologies. conditions are dynamic and complicated,
It is also costly for utilities to train resources with different quality of service requirements
to stay up to date with these technologies for different applications. Communications
and maintain plans for network upgrades. infrastructure providers are experienced at
Partnerships with communications service engineering robust and secure networks for
providers can offload these costs from utilities a variety of traffic volumes and priorities.
and allow utilities to dedicate investments to Utilities can leverage that in-depth experience
substation upgrades, distribution management to manage the complexities of multiple utility
systems and other measures to improve grid networks and reducing network operating
operations. costs for utilities.
An electricity utility in the Philippines
Responding to natural disasters planning a transmission upgrade partnered with
Additionally, both communications service a local communications service provider to
providers and electricity utilities are often the deliver the communications infrastructure and
optimize its operations while keeping companies for help in building private
capital investments focused on power grid clouds with the latter in the role of project
solutions. This is also one of the primary integrator. Smaller utilities, including
motivators for two Italian companies, utility municipals and rural cooperatives, may find
Enel and Telcom Italia, to explore synergies compelling business value in leveraging
in their respective operations and expertise. broadband networks, computing assets and
Innovative and scalable solutions that share IT skills for specific applications such as
infrastructure to maximize asset value and smart meters and meter data management,
reduce costs can benefit subscribers to or meter-to-cash services.
both services. Cloud computing is a de-risked strategic
path for utilities as they transition to a
Distributed electricity generation smart energy world. Reliance on a cloud
Many utilities are also contending with platform offers utilities flexibility, scalability
increasing numbers of distributed generation and upgradability for computing and
assets that are registering as small generators. communications assets and applications as
Their legacy systems are often inflexible they grapple with declining revenue trends
and unable to accommodate this growth. and policy shifts.
Communications service providers have Business transformations always have risks
the tools and skills developed from device associated with them. In the ongoing smart
management to assist utilities in tasks ranging energy transformations, utilities will evolve
from workflow optimization, such as electronic from established electricity supply chain
submission of interconnect requests, to asset service providers into electricity value chain
tracking procedures to automate identification service providers. Utilities dont have to face
of distributed generation type, capacity, the multiple challenges identified in this Quick
location and performance. insights report alone.
For more information about TM Forums
As-a-service activities in Internet of Things and smart
Other opportunities to work together in smart energy, visit www.tmforum.org/IoT or contact
grid-as-a-service or cloud-based solutions Craig Bachmann, Senior Director, Open Digital
include utilities turning to communications Program via cbachmann@tmforum.org
FRAMEWORX
AND HOW CAN IT HELP YOU?
Adopted by 91 percent of the worlds largest a company thinks and operates, including embracing
service providers, TM Forums Frameworx suite agile methodologies, forging strong partnerships
of standards-based tools and best practices internally, truly understanding the needs of the
continues to be the most widely used blueprint for customer, opening up to partners, and much more.
effective, efficient business operations. TM Forum Frameworx 14 delivers critical tools, best
members can now download and use all the tools, practices and a common taxonomy essential to
best practices, standards, APIs and interfaces successful digital transformation, and showcases
found in the current release, Frameworx 14, with a how the Forum is uniting our members to
new version released in December 2014. collaborate on common challenges and raising
That evolution will include significant their collective chances of success.
enhancements including digital transformation Key features of Frameworx 14 include NFV
with network functions virtualization (NFV), open specifications and user stories; REST APIs; new
digital ecosystem around partnering and APIs, big data analytics case studies; innovative new
and additions to customer centricity from privacy scoring techniques; and a new approach
omnichannel to more use cases for customer to managing customer engagement with an
experience and data analytics. You can find integrated maturity model, lifecycle model and
details of Frameworx 14.5 at www.tmforum.org/ metrics, among others.
Frameworx14.5. Frameworx 14 centers around the crucial issues
As proof points on the success of Frameworx, facing service providers of all kinds in an open
this latest edition of TM Forums Case Study digital economy.
Handbook features nine, diverse service providers These are reflected in TM Forums three
success stories highlighting how they harnessed Strategic Programs:
the potential of Frameworx to successfully
address a range of business transformation issues. n Agile Business and IT focuses on improving
See www.tmforum.org/casestudies operational agility while reducing cost and risk;
A total of 82 products, solutions and n Open Digital is designed to drive new digital
implementations, from 34 unique companies services revenue growth;
(both service providers and suppliers) have had n Customer Engagement targets better market
their products, solutions and implementations share retention and greater growth.
certified as conformant to Frameworx through
TM Forums Conformance Certification program. Constant evolution
In fact, 72 percent of service providers certified in Frameworx was created by TM Forums members
TM Forums Frameworx adoption survey mandate and is constantly evolving to meet their changing
Frameworx in many or all specifications, and 75 business needs. Members, including every type of
percent claim that whether or not a product or service provider, software suppliers, integrators,
solution is conformant has an important influence universities and enterprises, establish project
on their buying decision. priorities and lead collaborative project groups to
implement the work and create updates to the
Collaboration is key standards and best practices.
Transforming to be a successful digital business While Frameworx major releases are published
demands more than simply embracing new every six months, some features of Frameworx 14
technology; it requires a fundamental change in how (released in June 2014) were developed in short-
In todays highly connected and networked economies, its not surprising to find that utilities and CSPs face
similar challenges, like how to transform the vast quantity and variety of data coming from their operational
networks into actionable insights for a profitable and growing business. By examining the data management
strategies that CSPs have employed to ensure the right information is captured, verified, and distributed
to the many enterprise applications, utilities can leap-frog past the digital challenges and pitfalls, and
accelerate their own data-driven business initiatives.
Sensors are becoming ubiquitousin Reaping the benefits of IoT will require produces a deluge of data, collecting
mobile devices, wearables, smart enterprises to cost-effectively monitor multiple data points which provide event
meters. Machine-to-machine (M2M) and manage their networked devices and and consumption information about
communications is the hot topic as more promptly analyze their vast new stores energy delivered to the service delivery
and more devices are connected in of data for continuous improvements and point. And multiple departments within
the Internet of Things (IoT), generating profitable growth. Finding new, agile, the utility are interested in different
volumes of valuable data that can be and effective means to connect devices, aspects of the collected datafor billing,
analyzed and acted upon to enable both platforms, applications, suppliers, and network management and optimization,
efficiencies in current processes and the customers to extract greater bottom- forecasting, outage management,
creation of new services across a variety line value will be a significant challenge customer service, and more. But
of industry segments. Cisco predicts shared by all enterprises, but it is a utilities, like so many businesses today,
that $14.4 trillion in potential bottom-line challenge acutely felt by utilities today as are struggling to digest and distribute
value will be created as companies and they implement smart meters and build their data quickly and cost-effectively.
industries worldwide harness the Internet the Smart Grid. Without a smart implementation strategy
of Things over the next decade.1 to adeptly handle this data, along with
According to the 2014 Global Business Avoiding the high cost of progress the integration of even more new
Services Survey, a survey of 800 According to Energy Digital, utilities will devices and applications generating
businesses in eight countries/regions spend $100 billion in capital investments and consuming this data, staying on
conducted by MachNation on behalf over the next 18 years to replace power a profitable path and making progress
of CSG, IoT will soon be as important plants, implement new technologies, and towards a Smart Grid will become an
a technology to large enterprises as meet changing regulatory requirements. even more expensive proposition.
unified communications (UC), and more Take for example smart meters, an Luckily, this particular challenge is
important than social networking and investment that has allowed utilities one the communication service provider
mobile payments. Certainly smart meters, to replace the manual, time-intensive community has collaborated on to
one of the earliest heralded use cases for process of reading meters on a monthly develop some best practices, and
the Internet of Things, are fundamental basis with sensors capable of providing through the TM Forum Frameworx
to the utilities industrys Smart Grid usage data at 15-minute intervals, provided a strategic roadmap that utilities
initiatives, which some forecast to 24x7x365. Quite a change! can emulate to accelerate their own
increase the efficiency of todays Yet utilities existing data management initiatives using proven, cost-effective
systems by more than 9%, saving more systems have faltered in the face of methods for acquiring, validating and
than 400 billion kilowatt-hours or architectural limitations and large- distributing data.
$42 billion annually.2 scale, complex data. Each smart meter
Mediation is a strategic tool in the IT/ fundamental capabilities. Operational data the data from these systems can be
OT architecture because it extends the management allows data from a utilitys used appropriately throughout the entire
value of existing systems and applications disparate systems to be collected, operation. More importantly, this data
and provides a framework for the future managed and distributed correctly to becomes more powerful due to the
and the growing use of analytics. provide actionable intelligence on the collation and enrichments provided by an
Like their CSP counterparts, utilities stability and resilience of the power ODM solution.
need to accelerate their pace on the grid, renewable and distributed energy
path to operational evolution, by taking resources, regulatory compliance and Smart data management
immediate, manageable steps that produce customer experience. The Internet of Things has the ability to
measurable business results while still Developed to help enterprises transform businesses with the infusion
taking the long view. Operational, business solve the data challenges which are of large amounts of data acquired from
and command/control systems across present across all organizations and a multitude of devices. And utilities, like
the utility infrastructure were architected industry domains, the operational data CSPs, must be capable of extracting
to produce, deliver and consume data in management (ODM) platform: the wealth of information from the data
a singular format via a singular system and putting it to work in the enterprise.
or user. However, as grid modernization n Enables the acquisition of data from Proven and cost-effective methods to do
evolves and IT/OT converge, downstream any and all of the disparate systems this are in use today.
systems require specific subsets of data collecting event and consumption Whether its called mediation or
integrated from multiple upstream systems (state) data from utilities energy and operational data management, employing
(e.g. AMI and/or SCADA) or vice-versa. communication networks a data management framework that
Integrating these diverse systems and n Provides the business intelligence to utilizes a single centralized platform
applications so that data can flow between validate, analyze, correlate, aggregate, to streamline processing, increase
them has been complex, costly, and can be filter and transform the data across the efficiency, speed time to action, and
overwhelming to maintain. The next step various disparate data streams lower costs is a smart data management
to evolving the modern utility and unlocking n Provides the framework to automate strategy.
the potential value for enterprise and human-in-the-loop and closed loop Proven in a variety of industries
operational efficiencies is following a similar business and operational processes most notably communicationsand
path to that of the CSP by satisfying the n Delivers the right data in the right at enterprises with large volumes of
need for the right data, at the right time, in formats to the right systems and users complex data that serve customers with
the right formats, to the right systemsa at the right time complex products and pricing bundles,
step utilities can take today with the right n Provides an auditable, bi-directional operational data management is the key
operational data management solution. transaction brokerage for transaction to addressing the challenges utilities
delivery, information delivery and face in gathering and utilizing data for
Operational data management control of devices in the network. enhanced insights, and establishes the
An operational data management foundation for future system, network
platform is built on the same principles While network and system silos may and service evolution.
that underlie mediations proven still exist, when using an ODM solution
1
http://www.cisco.com/web/about/ac79/docs/innov/IoE_Economy.pdf
2
http://www.whatissmartgrid.org/smart-grid-101