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Achieving Decentralized Coordination In the Electric Power Industry
For the past century, the dominant business and regulatory paradigms in the electric power industry have been centralized economic and physical control. The ideas presented here and in my forthcoming book, Deregulation, Innovation, and Market Liberalization: Electricity Restructuring in a Constantly Evolving Environment (Routledge, 2008), comprise a different paradigm – decentralized economic and physical coordination – which will be achieved through contracts, transactions, price signals and integrated intertemporal wholesale and retail markets. Digital communication technologies – which are becoming ever more pervasive and affordable – are what make this decentralized coordination possible. In contrast to the “distributed control” concept often invoked by power systems engineers (in which distributed technology is used to enhance centralized control of a system), “decentralized coordination” represents a paradigm in which distributed agents themselves control part of the system, and in aggregate, their actions produce order: emergent order. [1]
Lynne Kiesling, Northwestern University
The Utilities Project Volume 8, May 19, 2008
Advanced Metering Infrastructure: The Case for Transformation
Although the most basic operational benefits of an advanced metering infrastructure (AMI) initiative can be achieved by simply implementing standard technological features and revamping existing processes, this approach fails to leverage the full potential of AMI to redefine the customer experience and transform the utility operating model. In addition to the obvious operational benefits – including a significant reduction in field personnel and a decrease in peak load on the system – AMI solutions have the potential to achieve broader strategic, environmental and regulatory benefits by redefining the utility-customer relationship. To capture these broader benefits, however, utilities must view AMI as a transformation initiative, not simply a technology implementation project. Utilities must couple their AMI implementations with a broader operational overhaul and take a structured approach to applying the operating capabilities required to take advantage of AMI’s vast opportunities. One key step in this structured approach to transformation is enterprise-wide business process design.
Malinda Gentry, IBM, Joshua Lich, IBM
The Utilities Project Volume 8, May 19, 2008
Anthropogenic Global Warming: Some First-Order Questions
Today, there’s growing sentiment among members of the U.S. Congress that it must do something to confront the possibility of catastrophic CO2-driven climate change. With this in mind, American corporations have begun taking steps to minimize the adverse financial impact of any actions Congress and the U.S. Environmental Protection Agency might take to address anthropogenic global warming (AGW) – this despite the fact that there continues to be controversy within the scientific community over the degree to which anthropogenic carbon emissions are actually contributing to global warming.
Edward A. Reid Jr., Fire to Ice, Inc.
The Utilities Project Volume 8, May 19, 2008
Business Intelligence: The 'Better Light Bulb' for Improved Decision Making
Although some utilities have improved organizational agility by providing high-level executives with real-time visibility into operations, if they’re to be truly effective, these businesses must do more than simply implement CEO-level dashboards. They must provide this kind of visibility to every employee who needs it. To achieve this, utilities need to be able to collect data from many disparate sources and present it in a way that allows people companywide to access the right information at the right time in the form of easy-to-use and actionable business intelligence (BI).
Larry Cochrane, Microsoft Corporation
The Utilities Project Volume 8, May 19, 2008
Collaborative Policy Making And the Smart Grid
A search on Google for the keywords smart grid returns millions of results. A list of organizations talking about or working on smart grid initiatives would likely yield similar results. Although meant humorously, this illustrates the proliferation of groups interested in redesigning and rebuilding the varied power infrastructure to support the future economy. Since building a smart infrastructure is clearly in the public’s interest, it’s important that all affected stakeholders – from utilities and legislators to consumers and regulators – participate in creating the vision, policies and framework for these critical and important investments.
Guido Bartels, IBM, Steve Hauser, GridPoint, Inc.
The Utilities Project Volume 8, May 19, 2008
Customer Service in the Brave New World of Today’s Utilities
Today’s utility customers are energy dependant, information driven, technologically advanced, willing to change and environmentally friendly. Their grandparents prompted utilities to develop and offer levelized billing, and their parents created the need for online bill presentment and credit card payment. This new generation of customer is about to usher in a brave new world of utility customer service in which the real-time utility will conduct business 24 hours a day, seven days a week, 365 days a year, and Internet-savvy consumers will have all the capabilities of the current customer service representative. They’ll be able to receive pricing signals and control their utility usage via Internet portals, as well as shop among utilities for the best price and switch providers.
Sam D. Turner Jr., Jackson Energy Authority
The Utilities Project Volume 8, May 19, 2008
Developing a Customer Value Transformation Road Map
Historically, utility customers have had limited interactions with their electric or gas utilities, except to start or stop service, report outages, and pay bills or resolve billing questions. This situation is changing as the result of factors that include rising energy prices, increasing concerns about the environment and trends toward more customer interaction and control among other service providers – such as cell phone companies.
Cary Harmon, IBM, Jasmeet Anand, IBM
The Utilities Project Volume 8, May 19, 2008
Enhancing Energy Efficiency and Security for Sustainable Development
The United States Energy Association (USEA) is a private, nongovernmental organization that functions as the U.S. member committee of the World Energy Council (WEC), the foremost international organization focused on the production and utilization of energy. With members in more than 100 countries, the mission of the WEC, and correspondingly the USEA, has been to promote the sustainable supply and use of energy for the greatest benefit of all people.
Barry K. Worthington, United States Energy Association
The Utilities Project Volume 8, May 19, 2008
Growing (or Shrinking) Trends in Nuclear Power Plant Construction
Around the world, the prospects for nuclear power generation are increasing – opportunities made clear by the number of currently under-construction nuclear plants that are smaller than those currently in the limelight. Offering advantages in certain situations, these smaller plants can more readily serve smaller grids as well as be used for distributed generation (with power plants located close to the demand centers and the main grid providing back-up). Smaller plants are also easier to finance, particularly in countries that are still in the early days of their nuclear power programs.
John Ritch, World Nuclear Association
The Utilities Project Volume 8, May 19, 2008
How Intelligent Is Your Grid?
Many people in the utility industry see the intelligent grid — an electric transmission and distribution network that uses information technology to predict and adjust to network changes — as a long-term goal that utilities are still far from achieving. Energy Insights research, however, indicates that today’s grid is more intelligent than people think. In fact, utilities can begin having the network of the future today by better leveraging their existing resources and focusing on the intelligent-grid backbone.
H. Christine Richards, Energy Insights
The Utilities Project Volume 8, May 19, 2008
Improving Call Center Performance Through Process Enhancements
The great American philosopher Yogi Berra once said, “If you don’t know where you’re going, chances are you will end up somewhere else.” Yet many utilities possess only a limited understanding of their call center operations, which can prevent them from reaching the ultimate goal: improving performance and customer satisfaction, and reducing costs.
Ed Glister, IBM
The Utilities Project Volume 8, May 19, 2008
Intelligent Communications Platform Provides Foundation for Clean Technology Solutions to Smart Grid
Since the wake-up call of the 2003 blackout in the northeastern United States and Canada, there’s been a steady push to improve the North American power grid. Legislation in both the United States and Canada has encouraged investments in technologies intended to make the grid intelligent and to solve critical energy issues. The Energy Policy Act (EPAct) of 2005 mandated that each state evaluate the business case for advanced metering infrastructure (AMI). In Ontario, the Energy Conservation Responsibility Act of 2006 mandated deployment of smart meters to all consumers by 2010. And the recent U.S. Energy Independence and Security Act of 2007 expands support from the U.S. government for investments in smart grid technologies while further emphasizing the need for the power industry to play a leadership role in addressing carbon dioxide emissions affecting climate change.
Paul Karr, Trilliant
The Utilities Project Volume 8, May 19, 2008
Leveraging the Data Deluge: Integrated Intelligent Utility Network
If you define a machine as a series of interconnected parts serving a unified purpose, the electric power grid is arguably the world’s largest machine. The next-generation version of the electric power grid – called the intelligent utility network (IUN), the smart grid or the intelligent grid, depending on your nationality or information source – provides utilities with enhanced transparency into grid operations.
Jeffrey S. Katz, IBM
The Utilities Project Volume 8, May 19, 2008
Making Change Work: Why Utilities Need Change Management
Many times organizations are
reluctant to engage change
management programs, plans
and teams. More often, change management
programs are launched too late in
the project process, are only moderately
funded or are absorbed within the team
as part-time responsibilities – all of which
we’ve seen happen time and again in the
utility industry.
Patty Bruffy, IBM, Lauren Laplante-Rottman, IBM
The Utilities Project Volume 8, May 19, 2008
Meeting Future Utility Operating Challenges With a Smart Grid
The classical school of utility operations
prescribes four priorities,
ranked in the following descending
order: safety, reliability, customer
service and profit. Although it’s not
hard to engage any number of industry
insiders in an argument over whether
profit in the classical model has recently
switched places with customer service
(and/or whether it should), most people
accept that safety and reliability still reign
supreme when it comes to operating a
utility. This is true whether one takes a
policy-, economic-, utility- or customer-oriented
perspective.
Stephen J. Callahan, IBM
The Utilities Project Volume 8, May 19, 2008
Opportunity Ahead: The Aging Workforce
Conventional thinking has it that the utility industry’s aging workforce represents a critical problem demanding a call to arms. But is an aging workforce really just a human resources dilemma? Or can it be viewed more broadly as a window through which utilities can examine ways to foster positive change for the future of their organizations? When viewed in this light, the exit of a large cohort of skilled workers may represent the most significant opportunity a utility will ever confront – one that could fundamentally alter the way it does business and upgrades financial performance.
Jack Dugan, LogicaCMG
The Utilities Project Volume 8, May 19, 2008
Plugging in the Consumer
Thanks to new technologies and the spirit of independence and empowerment fostered by the digital age, consumers are taking on broader and more active roles in an increasing number of industries. Not only are consumers increasingly vocal and decisive about what they will or will not buy, they are in many cases becoming designers, producers, marketers and distributors of the products they once simply purchased.
Michael Valocchi, IBM, John Juliano, IBM
The Utilities Project Volume 8, May 19, 2008
Policy and Regulatory Initiatives And the Smart Grid
Public policy is commonly defined as a plan of action designed to guide decisions for achieving a targeted outcome. In the case of smart grids, new policies are needed if smart grids are actually to become a reality. This statement may sound dire, given the recent signing into law of the 2007 Energy Independence and Security Act (EISA) in the United States. And in fact, work is underway in several countries to encourage smart grids and smart grid components such as smart metering. However, the risk still exists that unless stronger policies are enacted, grid modernization investments will fail to leverage the newer and better technologies now emerging, and smart grid efforts will never move beyond demonstration projects. This would be an unfortunate result when you consider the many benefits of a true smart grid: cost savings for the utility, reduced bills for customers, improved reliability and better environmental stewardship.
Michele Tihami, IBM
The Utilities Project Volume 8, May 19, 2008
Smart Metering Options for Electric and Gas Utilities
Should utilities replace current consumption meters with “smart metering” systems that provide more information to both utilities and customers? Increasingly, the answer is yes.
Guerry Waters, Oracle Corporation, Utilities Global Business Unit
The Utilities Project Volume 8, May 19, 2008
Smart Meters on a Roll in Canada
Electricity supply challenges in Ontario, Canada, have led the provincial government there to take aggressive action on both the supply and demand sides to meet customer electricity needs. Between now and 2025, it’s estimated that Ontario must build an almost entirely new electricity system – including replacing approximately 80 percent of current generating facilities (as they’re retired over time) and expanding the system to meet future growth. However, just as building new supply is vital, so too is conservation. That’s why Ontario’s provincial government is introducing new tools like smart meters to encourage electricity consumers to think more about how and when they use electricity. By implementing a smart metering infrastructure by 2010, the province hopes to provide a foundation for achieving a more than five percent reduction in provincial demand through load shifting, energy savings and price awareness.
Danny Reilch, Hydro One Networks
The Utilities Project Volume 8, May 19, 2008
SmartGridNet Architecture for Utilities
With the accelerating movement toward distributed generation and the rapid shift in energy consumption patterns, today’s power utilities are facing growing requirements for improved management, capacity planning, control, security and administration of their infrastructure and services.
Jonathan D. Weiss, Alcatel Lucent, Tim Mew, Alcatel Lucent, Peter Johnson, Alcatel Lucent
The Utilities Project Volume 8, May 19, 2008
Software-Based Intelligence: The Missing Link in the SmartGrid Vision
Achieving the SmartGrid vision requires more than advanced metering infrastructure (AMI), supervisory control and data acquisition (SCADA), and advanced networking technologies. While these critical technologies provide the main building blocks of the SmartGrid, its fundamental keystone – its missing link – will be embedded software applications located closer to the edge of the electric distribution network. Only through embedded software will the true SmartGrid vision be realized.
David Cohen, Infotility
The Utilities Project Volume 8, May 19, 2008
The Customer-Focused Utility
The utilities industry is in transition. External factors – including shifts in governmental policies, a globally felt sense of urgency about conserving energy, advances in power generation techniques and new technologies – are driving massive changes throughout the industry. Utilities are also under internal pressure to prevent profit margins from eroding. But most significantly, utilities must evolve to compete in a marketplace where consumers increasingly expect high-quality customer service and believe that no company deserves their unconditional loyalty if it cannot perform to expectations. These pressures are putting many utility providers into seriously competitive, market-driven situations where the customer experience becomes a primary differentiator.
Bob Brnilovich, IBM
The Utilities Project Volume 8, May 19, 2008
The Distributed Utility of the (Near) Future
The next 10 to 15 years will see major changes – what future historians might even call upheavals – in the way electricity is distributed to businesses and households throughout the United States. The exact nature of these changes and their long-term effect on the security and economic well-being of this country are difficult to predict. However, a consensus already exists among those working within the industry – as well as with politicians and regulators, economists, environmentalists and (increasingly) the general public – that these fundamental changes are inevitable.
Warren B. Causey, Sierra Energy
The Utilities Project Volume 8, May 19, 2008
The Power of Prediction: Improving the Odds of a Nuclear Renaissance
After 30 years of disfavor in the United States, the nuclear power industry is poised for resurgence. With the passage of the Energy Policy Act of 2005, the specter of over $100 per barrel oil prices and the public recognition that global warming is real, nuclear power is now considered one of the most practical ways to clean up the power grid and help the United States reduce its dependence on foreign oil. The industry has responded with a resolve to build a new fleet of nuclear plants in anticipation of what has been referred to as a nuclear renaissance.
Jeanne DiFrancesco, ProOrbis, LLC
The Utilities Project Volume 8, May 19, 2008
The Smart Grid: A Balanced View
Energy systems in both mature and developing economies around the world are undergoing fundamental changes. There are early signs of a physical transition from the current centralized energy generation infrastructure toward a distributed generation model, where active network management throughout the system creates a responsive and manageable alignment of supply and demand. At the same time, the desire for market liquidity and transparency is driving the world toward larger trading areas – from national to regional – and providing end-users with new incentives to consume energy more wisely.
Laurent Schmitt, Areva
The Utilities Project Volume 8, May 19, 2008
The Technology Demonstration Center
When a utility undergoes a major transformation – such as adopting new technologies like advanced metering – the costs and time involved require that the changes are accepted and adopted by each of the three major stakeholder groups: regulators, customers and the utility’s own employees. A technology demonstration center serves as an important tool for promoting acceptance and adoption of new technologies by displaying tangible examples and demonstrating the future customer experience. IBM has developed the technology center development framework as a methodology to efficiently define the strategy and tactics required to develop a technology center that will elicit the desired responses from those key stakeholders.
Dave Roggen, IBM
The Utilities Project Volume 8, May 19, 2008
The Virtual Generator
Electric utility companies today constantly struggle to find a balance between generating sufficient power to satisfy their customers’ dynamic load requirements and minimizing their capital and operating costs. They spend a great deal of time and effort attempting to optimize every element of their generation, transmission and distribution systems to achieve both their physical and economic goals.
Christopher Couper, IBM
The Utilities Project Volume 8, May 19, 2008
Utility Mergers and Acquisitions: Beating the Odds
Merger and acquisition activity in the U.S. electric utility industry has increased following the 2005 repeal of the Public Utility Holding Company Act (PUHCA). A key question for the industry is not whether M&A will continue, but whether utility executives are prepared to manage effectively the complex regulatory challenges that have evolved.
Pattabi Seshadri, Boston Consulting Group, Rick Peters, Boston Consulting Group, Jeff Gell, Boston Consulting Group, Gary Morsches, Boston Consulting Group, Michael Finger, Boston Consulting Group
The Utilities Project Volume 8, May 19, 2008
Wind Energy: Balancing the Demand
In recent years, exponential demand for new U.S. wind energy-generating facilities has nearly doubled America’s installed wind generation. By the end of 2007, our nation’s total wind capacity stood at more than 16,000 megawatts (MW) – enough to power more than 4.5 million average American homes each year. And in 2007 alone, America’s new wind capacity grew 45 percent over the previous year – a record 5,244 MW of new projects and more new generating capacity than any other single electricity resource contributed in the same year. At the same time, wind-related employment nearly doubled in the United States during 2007, totaling 20,000 jobs. At more than $9 billion in cumulative investment, wind also pumped new life into regional economies hard hit by the recent economic downturn. [1]
Robert H. Gates, Clipper Windpower
The Utilities Project Volume 8, May 19, 2008
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