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Traffic Signal Ahead

Smart grid evolution requires two-way communication—with meters and with customers themselves.

Fortnightly Magazine - September 2011

The smart grid is all about information. It’s about using information to better accomplish utility goals: more efficient processes, reliable service, empowered customers, and a sustainable environment. Along with smart grid comes promises of a wealth of data for both utilities and consumers. But how are utilities communicating the benefits? How are they and their customers using that data? In the wake of several smart grid and smart meter successes—and failures—what’s next?

In its second year, Oracle’s report, Smart Grid Challenges & Choices, Part 2: North American Utility Executives’ Vision and Priorities comes at a critical time for smart grid visionaries. Earlier this year in his State of the Union address, Pres. Obama called for a new national goal of generating 80 percent of America’s electricity from clean energy sources by 2035. 1 While the goal might seem a long way off, utilities must prepare to address the challenges that lie ahead.

Against this backdrop, the 2011 report sought to further understand utilities’ vision for the upcoming decade, how smart grid plans and expectations are evolving, and how utilities can more effectively communicate these changes to their customers.

Survey Says: Customer Buy-in is Essential

The more things change, the more they stay the same. While smart grid promises a slew of new capabilities, utilities are focused on the basics—service and efficiency. The 2011 Smart Grid Challenges & Choices report found that utilities, both large and small, agree that their top priorities for the next 10 years will be improving service reliability and operational efficiency (with 40 percent of respondents identifying those among their highest priorities) as well as controlling customer costs and limiting rate increases (another 40 percent). When comparing the top priorities of the decade year-over-year, “implementing smart metering” fell from the second top priority in 2010 to the fifth in 2011, with only 26 percent. The survey also found another differing priority; U.S. utilities are more likely than Canadian utilities to say “controlling customer costs” is a top priority—54 percent to 23 percent respectively.

Just half of utility executives believe smart grid is the answer for improving energy service (see Figure 1) . When asked if they think that smart grid is the answer for improving their utility’s ability to provide safe, reliable, cost-effective energy to customers, less than half of the polled executives said “yes.” Thirty-two percent responded “no” and 19 percent were “unsure.” Interestingly, the size of the utility seemed to affect the answer as well. The survey found that smaller utilities are more likely than larger utilities to say smart grid isn’t the answer—38 percent compared to 23 percent.

If smart grid isn’t the answer, then what is? Some comments from utility executives included, “good asset management programs; good financial stability” as well as “streamlining operations and diversifying renewables across the board.”

What can we learn from these findings? Today, customers not only look forward to reliable service, but are beginning to expect