1. Smart Grids & Telecoms The Enabler
by David Brown
Mob (Aust): +61 459584298, Email: dmcbeclipse@gmail.com
Smart Grids & Telecoms The Enabler 1
Executive Summary
Interest in smart grids as a pathway to achieving affordable and sustainable energy has
gained momentum with the continued decline in the price of battery storage.
Communication systems will enable more efficient investment in renewable energy
sources and battery storage. There is a presumption the mobile industry is the default
communications platform to enable this potential, which is not necessarily the case.
This article asserts four key points.
First, ultra-fast low-latency communications is a key enabler to releasing the scalable
potential of battery storage and, therefore, optimising investment in battery storage and
renewable energy sources. Second, it is unclear whether the predictive algorithms used
in whatever part of the electricity grid as a substitute for ultra-fast low-latency
communications will achieve an optimal investment outcome. Third, the mobile
telecoms industry will need to shift their revenue model from best efforts broadband to
one that guarantees high levels of reliability if the full potential of a smart grid is to be
realised. Finally, the scalability of battery storage means that a faster financial
settlement period is possible, allowing for a more efficient supply outcome.
This article concludes that to assess the full potential of smart grids and to identify the
minimum communication requirements, a system-wide approach to their design is
needed. It remains unclear whether or not the optimal telecoms mix can be achieved via
the market, or whether changes to telecom regulation will be required. Assuming that
fibre optics has some important role to play in the mix, this article advocates a more
flexible and adaptive 3rd-party access regime to encourage the use of existing non-
telecoms infrastructure to facilitate the deployment of fibre optics. A more systematic
approach would help un-lock value potential across utility sectors given that smart
infrastructure relies on sufficient availability of appropriate telecom infrastructure and
service competition.
Smart Grid Design
Just like a run-away car rolling down a hill is difficult to slow down, so is the spinning
mass inside a synchronous generator when its energy source is taken away. This
inertia, the physical characteristic of synchronous generators, is the first line of defense
to ensure frequency reliability. FCAS1 market services provide remedial inertia in the
short moments following a disturbance to frequency. Renewables present two main
challenges: the first is their intermittent nature, which affects their availability; the
second is the reliability of inertia. The first challenge can be overcome by battery
storage; in the case of the second challenge, PV2 does not offer any inertia and there are
challenges with WT3 offering a reliable source of inertia arising from DC to AC
conversion4.
The faster and more reliably that stored battery energy can be released, the less
investment in excessive buffering is needed both in storage and renewable generation5.
Likewise, even if the electricity industry is not able to invent synthetic inertia to enable
1 Frequency Control Auxiliary Services
2 PV (Photovoltaic)
3 WT (Wind turbine)
4 In the case of WT research is underway to evaluate the reliability of renewables as a substitute for inertia response.
5 The system needs appropriate controls, also dependent upon telecoms services to avoid false positives.

2. Smart Grids & Telecoms The Enabler
by David Brown
Mob (Aust): +61 459584298, Email: dmcbeclipse@gmail.com
Smart Grids & Telecoms The Enabler 2
recovery in the first moments following a frequency variation, battery storage may have
some role to play to restore frequency in the subsequent moments if the
communications were sufficiently fast and reliable.6
The most desirable smart grid topology and how that may impact the efficiency of
storage and renewables is unclear: A fully decentralised versus centralised topology, or
some mix of the two. The relationship between a number of parameters need to be
weighed: Cost of new technologies declining over time; density of new technologies in
terms of transmission loss and reliability; cost savings achieved from aggregated
procurement and reduced maintenance under the different topologies7.
It is unclear whether using predictive algorithms to manage the system as an alternative
to ultra-fast low-latency communication would lead to an optimal investment in battery
storage and renewables. Predictive algorithms would reduce the need for such
stringent levels of reliability in communications. However, the issue is whether, or not
such predictive systems would inadvertently lead to additional investment in battery
storage and renewables given that such systems rely on averages and are imperfect.
The cost savings from relying on less stringent levels of reliability would have to
outweigh the cost savings from a leaner investment profile in battery storage and
renewables over the long term. Upfront cost savings would also need to account for the
total cost of ownership of the communications platform.
AusGrid8 conducted trials on various smart grid technologies and concluded that
demand management tools generated more incremental benefit than battery storage.
However, these conclusions were based on the existing grid topology and not one that
had been optimised for wide scale battery storage. Nor did it anticipate that the decline
in the price of battery storage would be as fast as it has been. It would make sense to
firstly optimise the grid design in view of declining prices (battery storage and
renewables) and technical constraints; and then secondly, consider what enabling
technologies (eg communication systems) are best suited.
It is vital to understand what are the minimum performance characteristics needed to
optimise a smart grid. This is to ensure a sufficiency of wireless, or fixed capacity across
the wide-area, otherwise a 2nd-best solution may be adopted.
Telecoms Total Cost of Ownership
There are two aspects worth considering, which have implications for regulation and
telecom operating models: First, how important are ultra-fast low-latency services to
optimising the smart grid and which technology standards can best serve in a low cost
and reliable way; second, the fact that licensed spectrum wireless solutions have a
technology cycle of 4-6 year, as opposed to the fixed industry, which is on a much longer
cycle of around 20-years.
In terms of performance, the ITU sets down five performance parameters, which it
hopes to see incorporated into the mobile industry’s 5G roadmap. It identifies ultra-fast
6 FSAC (Australia regulates the response of auxiliary services to be between 0-seconds to 6-seconds, then 60-seconds
and then 5-minutes.)
7 AMEO’s FPSS (Future Power System Security) programme is evaluating security of the electricity system in the context
of an increasing penetration of renewables energy sources.
8 AusGrid: Smart Grid, Smart City: Shaping Australia’s Energy Future Executive Report, 2014.

3. Smart Grids & Telecoms The Enabler
by David Brown
Mob (Aust): +61 459584298, Email: dmcbeclipse@gmail.com
Smart Grids & Telecoms The Enabler 3
low-latency communications as one use case with a latency target of 1ms. The challenge
is whether or not this can be achieved economically once in the field; spectrum is a
shared resource and this is a challenge to guaranteeing end-user performance. The
main alternative is one of several fixed connectivity solutions, which can be designed to
guarantee end-user performance more easily, albeit the additional cost of implementing
the passive infrastructure if it is insufficient. There are alternative wireless technologies
operating in the unlicensed bands, but these have their own challenge such as
interference and security to mention a few.
In the case of licensed spectrum solutions, to guarantee performance a shift in telecom
regulation might be needed if the market cannot achieve the desired outcome. This may
mean regulating for minimum levels of latency. Alternatively, structural separation of
the mobile network from its retail layer may force wholesale networks to reflect the
value of competing uses in the price of performance (eg broadband entertainment
versus mission critical services). Either, or both approaches combined, might imply the
need for a re-allocation and designation of spectrum for mission critical applications
beyond what has been allocated to serve the Internet of Things. It is not just smart grid
operators requiring performance, but also the likes of the driverless car industry. These
requirements need to be considered in the aggregate. All of this will take time to resolve
and needs to be weighed against alternative solutions.
Alternatively, finding ways to lower the cost of fibre optic deployment with the view to
building a common passive fibre infrastructure serving a wider set of utility
requirements might be more desirable. The significant challenges experienced by the
NBNCo from having to rely on Telstra’s ducts has meant a complicated design and one
that has been limited to consumer best-efforts broadband. New ways to lower the cost
of fibre and allow for a wider range of fibre services are needed. In this context, new 3rd-
party access regimes opening-up a wider use of existing non-telecoms infrastructure for
non-prescribed purposes would reveal opportunities to lower the cost of installing fibre.
Super low latency services may not be required across the entire smart grid, which
suggests that some mix might be sufficient; however, this needs to be weighed against
the cost of relying on multiple technology platforms over the long term. Certainly,
mobile would enable a faster deployment of a smart grid; however, introducing multiple
technology layers adds to the total cost of ownership, also exacerbated by a much
shorter technology lifecycle in the case of mobile. A common fibre platform would
reduce the need for multiple communication platforms.
Market Design Implications
At present the Australian wholesale electricity spot market operates on 30-minute
settlement intervals, the average of six 5-minute dispatch prices. Dispatch prices are
submitted by wholesalers and ranked from lowest to highest with electricity dispatched
starting with the lowest every 5-minutes. This market design is in part the function of
the current mix of centralised synchronous generators all of which have different
power-up times and cost structures, which affect the dispatch increment.
Reliable and fast communications means the inherent scalability of battery storage can
be exploited allowing for smaller increments of scheduled load to be dispatched at
shorter intervals. This would allow excess capacity to be found with a new lower
ranked price to be more consistently cleared.

4. Smart Grids & Telecoms The Enabler
by David Brown
Mob (Aust): +61 459584298, Email: dmcbeclipse@gmail.com
Smart Grids & Telecoms The Enabler 4
Wholesale electricity markets will also need to evolve to accommodate future peer-to-
peer and peer-to-cluster trading models, as well as incorporate new definitions of
inertia to maintain frequency stability.
Recommendations
A system-wide approach to the design of smart grids is needed to reveal the full
potential and timeframes under which benefits can be realised. This would enhance the
telecom sector’s ability to respond to the needs of smart grids. The following
recommendations are made in this regard.
First, the adoption of an outcomes based approach is recommended to guide the
telecoms sector, in terms of how best to achieve performance requirements when
conceiving new regulation. Understanding the cross-sector value opportunity is key to
making the argument for what might be complex regulatory reform. Smart
infrastructure relies on sufficient availability of appropriate telecom infrastructure and
services.
Second, a common ICT platform to unlock cross-sector potential, whether wireless or
fibre may have an important role to play. This should not be taken to necessarily mean a
single owner of a single network, but instead a common set of design parameters to
achieve a minimum outcome.
Regardless of whether this is achieved using wireless, or fixed telecoms the role of fibre
optics has an important role to play in terms of creating sufficient alternatives as a
competitive counterweight.
The certainty that 3rd–party access regimes have created within some infrastructure
sectors, such as access to telecom facilities need to be extended to include access for
non-prescribed purposes different to the host infrastructure. For example: fibre optics
installed within sewage ducts; rail track along the medium strip of dual carriageways.
This needs to accommodate rules governing maintenance, access and provider of last
resort.
-End -
Author: David Brown, Mob (Aust): +61 459584298
Email: dmcbeclipse@gmail.com
http://www.linkedin.com/in/davidmcbrown
David has over 20 years of experience in the telecoms sector spanning
strategy, business case development, implementation, procurement and
stakeholder management. He operates at C-level to present carefully
crafted strategic narrative. His experience spans mobile and fixed
operators, investors and consultancy firms in the UK, EMENA, North
America and SE-Asia. He is now collaborating with Australian enterprise
and government in developing their smart city strategy encompassing the
Internet Of Things, smart utilities, as well as presenting new initiatives to
monetise utility assets.