Market Insight

Utilities Offer Leadership in Smart City Development

November 01, 2016

Jenalea Howell Jenalea Howell Research Director, IoT Connectivity and Smart Cities
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As cities create intelligent connected ecosystems, utility providers are in a unique position to help drive development as they own many of the assets that are being leveraged. In 2016, 25% of all smart city projects worldwide are focused on energy and resource efficiency. The smart utility network comes into focus for electricity, gas, and water, where there is a strong amount of integration between the utilities and city government, providing the utilities the opportunity to bring leadership in implementing new organizational models that are empowered to adopt connected technology and also help the city overcome challenges of interoperability between communication networks when developing wider projects.

Unique role of utilities to spearhead smart city development

While smart utility networks share a similar device density as other city functions, the transition to a shared platform for multiple applications is much more complex than just the technology. The city itself, and all parties involved, have to be able to quantify and justify each use case against the investment needed. This is a complex organizational issue where utilities can potentially take the lead.

Progressive utilities have overcome organization silos to knock down barriers allowing them to fully leverage modern technology. Utilities are the pioneers of installing connected devices – especially compared with other departments in any given city. Their valuable experience also proves that business cases have existed for some time, and shows the value in getting data from devices/nodes that previously were not monitored.

While smart meters are by far the most common devices connected on utility grids at this time, other devices are now following. Utilities continue to see increasing value in monitoring other aspects of their delivery network – from transformers and substations on the electric grid to pump stations on the water network.

The more data that gets collected by a utility, the more valuable each individual data point becomes. A common scenario is that a utility will begin by automating only those meters that have the highest consumption levels or those that are most difficult to reach, but once it has invested in back-end systems and gained the benefits of automation, it will look to expand those capabilities to its entire user base. Time-of-use pricing, more effective peak load shedding, and remote pinpointing of outages continue to become more effective as more endpoints are connected to the network.

The smart utility network continues to mature with evolving views of software and analytics platforms to make the best use of the extensive data generated. Evolution of the utility distribution network into a system more managed as an IT network is the first mature smart city application for many cities globally. Smart utility networks share the density needed by numerous other city functions, like for example waste management, postal delivery and street lighting.

The main priority of smart city projects at the moment is to increase citizen satisfaction as many cities look for initiatives to increase competitiveness and continue to drive their local economy forward.  Utility companies are identifying solutions that address satisfaction but engage customers, which can also support efficiency targets. Several utilities are launching their own ‘bottom-up’ smart city initiatives by engaging consumer participation through smartphone applications, such as home concierge services and connected thermostats for demand response. Specifically for analytics, this can help with consumer-facing applications to help improve customer engagement and satisfaction, but they could also help a utility in predictive analytics if, for example, there’s a surge (or drop) in consumption, and react with peak-load shedding or smoothing programs they have in place.

IoT technologies enabling interoperability across smart city verticals

The most successful smart city projects around the world are those that deliver tangible improvements for citizens. Just as every city is unique, each smart city project must be carefully planned to suit that city’s individual needs. The clear message for this young smart city market is one of large growth potential across all technology applications.

The smart city device market is currently at an early stage and most projects are trials; however, the past two years have seen several national governments commit to developing smart city projects to cope with the pressures of mass urbanization. IHS predicts that smart city device shipments will increase more rapidly after 2017 when more large-scale smart city projects will start being implemented.

Global unit shipments of smart city devices, which are internet-connected devices used in smart city projects, will increase from 115.4 million in 2015 to 1.2 billion in 2025. Although in 2015, North America, Europe, and Asia Pacific each received approximately one-third of unit shipments, the Asia-Pacific region will receive over half of total device shipments by 2025.

IHS defines a ‘smart city project’ as one that uses smart city devices as part of an integrated information and communications technology (ICT) system to monitor, measure and manage key city functions to create safer and more sustainable cities.

Implementing communication networks in utilities as long-term initiative

Modern utilities no longer view metering, or other large infrastructure projects, for that matter, as single, stand-alone projects, but rather try to integrate them in a longer term “technology roadmap” with goals that can extend out for years or even decades. With this in mind, they have increasing desire for open protocols, and companies that have the ability to support and upgrade their products over the long-term.

•The technology roadmap means that smart metering is only the first step along the journey to build the smarter grid, and beyond that to build the “social grid,” which gives individual consumers much more control over their energy usage.

•The smart meter is still the backbone of the grid, but it is increasingly viewed in the context of contributing to wider needs (i.e. a smart or ‘social’ grid), and as such, meters are much more likely to gain advanced functionality and future-proofed design.

The installation of a communications network for the purposes of metering is often the harbinger of a further buildout of the so called “smart grid.” Although still at relatively early stages, the smart grid and smart city movements can become huge drivers for more shipments of communicating meters in the long term. As communication implementation in smart meters is still in this early phase we see IoT networks account for only 18% of smart electricity meter shipments in 2015.

  • Utilities may be slow to adopt new IoT networks as concerns remain around the longevity of the network and solution, especially as it relates to reliability and accurate transmission of data.
  • LPWAN solutions are still relatively new to the scene and NB-IoT is still not deployed. Although to date there have been no major deployments using those technologies in electricity meters, due to these technologies being well suited for the use needs of utilities there is a wider adoption of these technologies in smart water and gas meters. There are two reasons for this: 1) water and gas need low power connectivity because they are not powered, and, 2) LPWAN are typically sub-GHz which is better at penetrating down to underground water meters.

Utilities, particularly those based in North America, often prefer their own private networks so they can maintain a greater degree of control over data and ensure a quick response in the event of network compromise.

Focus on smart city ecosystem can help overcome challenges

Smart city projects are far reaching, both in scope and geographic area, focusing on using the infrastructure to collect useful data. A secure and reliable communication network is an essential part of smart city projects, and ideally this would be a single network to connect all applications in any given smart city.  However, it gets complicated across a city to handle multiple technologies and multiple networks. 

Two different, but much intertwined issues are coming to the forefront as utilities begin evaluating IoT solutions. Utilities are evaluating technology and facing the challenge of connecting and/or pulling data from disparate systems to drive out a unique value. Due to the number of applications across a city that can be considered ‘smart’, city planners are faced with an interoperability challenge. In general, M2M for smart cities is one of the most established verticals and as many are already looking at generation 2 or 3 solutions, these new challenges of integrating into new solutions in other applications or existing utility solutions are highlighted as a wider problem.

The recommendation is to think of smart cities as a concept and not multiple smart individual pieces of technology throughout the city. Cities should focus on maximizing return of the deployment, accomplished through purchasing smart technology based on a long–term strategy. There are multiple strategies to overcoming interoperability challenges when planning ahead, including software, standardization, and partnerships.  City planners should explore how to leverage standards to drive interoperability and data sharing. By creating a long term strategy that is looked at holistically by city planners and in partnership with utilities a more efficient system can be created.

 

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