Smart grid revolution becomes 'disruptive' for utilities worldwide

HOUSTON, USA: Only 8 percent of utilities around the world have completed their smart grid technology implementations while 37 percent have projects underway and more than half haven't yet started, according to a new Microsoft Corp. survey.

The Microsoft Worldwide Utility Industry Survey 2010, released at CERAWeek 2010 in Houston, surveyed almost 200 professionals within electric, gas and water utilities and related companies around the world.

The survey highlights a range of challenges — from financial and regulatory to technology and return on investment — for utilities already unsure of the right path to building the smart grid.

"As this study clearly shows, the disruptive nature of the smart grid revolution, and the innovations it brings, has caught many in the industry by surprise, including many utilities that already have embraced smart grid technologies," said Jon Arnold, managing director for the Worldwide Power & Utilities Industry at Microsoft, who was recently named one of the 100 People You Must Know in Smart Grid by Greentech Media Inc.

"Some incorrectly assert that the utility industry is unwilling to change, but the survey shows the opposite. It's the magnitude of change to everything from business models to systems that's overwhelming, especially given utilities' existing asset and technology investments combined with the need to ensure profitability and reliability."

Distribution management and smart metering are critical
The survey shows that utilities professionals and executives perceive distribution management and smart metering solutions as the most important technologies for successful smart grid implementations. Integration of renewable energy sources into the smart grid and consumer energy management solutions follow closely.

However, 63 percent of the respondents in the Americas think the information technologies available today are not sufficient to address future challenges, while only 45 percent and 42 percent of respondents in Europe, Middle East and Africa (EMEA) and Asia Pacific respectively believe they are insufficient.

"The clear objective is to optimize current power generation and delivery assets to help utilities improve grid reliability; achieve demand response, environmental and conservation goals; and avoid unnecessary capital expenditures," said Julie Hance, vice president of software solutions for Itron North America, a Microsoft partner.

"It will take close industry-wide collaboration — from the smart meter into the home and the smart meter back to the array of generation sources — to complete this complex task and achieve a smarter, more sustainable future."

Respondents worldwide cite financial concerns — both costs and return on investment — as the main challenge to smart grid development. They also cite regulatory factors as the most influential to smart grid technology deployment decisions. However, the economic climate is tied with regulatory factors as the two biggest influencers among Asia Pacific respondents.

The survey reveals that 42 percent of the respondents are currently incorporating distributed generation sources such as wind and solar on rooftops and another 25 percent will begin to incorporate these sources in the next one to three years. Also, by early 2013, half of the respondents expect to offer time-of-use pricing to all of their residential customers.

Only 8 percent of respondents believe their utility has a technology architecture that is adequate to support new business processes and new technologies. To fund all of these investments, 77 percent of respondents expect their budgets for smart grid technologies to increase over the next two to three years.

Arnold said: "The inevitability of change combined with financial and regulatory uncertainty makes it critical for utilities to begin implementing the right technology capabilities now to meet the challenge of any regulation, energy source or distribution need in the future."