The Smart Grid can be 50% cheaper, and boost our economy 2-3 years sooner than currently planned! How?
I was recently having some conversations with partners who build smart grid devices about why so many Utilities are building their own wireless or powerline networks, vs. using public cellular networks (full disclosure – I work for a company that provides integration and management services based on CDMA and GSM cell networks to OEM’s building smart grid devices). It’s always been a fascinating topic to me- why a power utility would be spending millions to tens of millions of dollars to build a communications network in 2008, heading into 2009. Given that the economy is heading down, consumers are pinched, and electric prices are probably only going to go up, it just doesn’t seem logical to go build a network when there are numerous options in place to use TODAY. Now, I know that some of these projects are historical, started before cell networks were data capable and coverage was ubiquitous, but that doesn’t mean a Utility cannot shift directions and finish out the rest of their smart grid deployments using what is now available and affordable.
Now this topic has been out there for some time, but what caused me to write about it now was that I tripped across three pieces of news and information in the last week or two. One was the Google announcement about using TV Whitespaces to transmit data. It makes me wonder if this is the next Broadband over Powerline (BPL), or private RF radio solutions that are proprietary and don’t scale coverage or throughput wise. The second piece of news was Andy Seybold’s blog about BPL (see http://www.andrewseybold.com/blog.asp?ID=214). It’s the same story as Municipal Wi-Fi networks; the network build costs are too high and the payback is too long (or not viable) to make the overall project a success. The last piece of information I saw was truly amazing to me. I pulled a presentation off the FERC web site, dated Feb 5, 2008 by FERC Commissioner Jon Wellinghoff, entitled Energy Efficient Services, Road to the Smart Electric Grid. On slide 24, it shows a cost/benefits analysis. On the costs side is the capital outlay for smart meters for both residential and C&I. The total 10 year capital needed is estimated at $20 - $30 Billion dollars. Then comes the interesting part. It has a cost line item of $25 - $30 Billion to build out the “Network Infrastructure”. That means that building out a proprietary network infrastructure over the next 10 years to support the smart grid is half to over half of the entire investment. In addition, think about the time delay while these networks are being built out vs. sticking a cellular radio in each meter and getting them installed quickly. If you then look at the payback on these technology investments, the payback per year by 2015 is $14 - $21 Billion/ per year. Just think of the economic boom this would give the US economy, if we could cut $20-$30 Billion of cost out of the investment, and accelerate those payback benefits to start sooner than 2015. So, why wouldn’t we do this?