1. Energy, Utilities and Chemicals the way we see it
Smart Grid: Leveraging
Technology to Transform
T&D Operating Models

2. Contents
Introduction 3
The State of the Market 4
Regulation and Legislation 4
Global Climate Change 4
Customer Expectations 5
Aging Infrastructure 5
Power Quality and non-technical losses 5
The Opportunity 6
The Vision 7
The Roadmap 10
The Business Case 11
Starting the Transformation Journey 12
Glossary 14
©2007 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.

3. Energy, Utilities and Chemicals the way we see it
Introduction
What will the future hold? Another key indicator of future
This is a question we would all like direction is actions being taken by
answered with some assurance. As we legislators and regulators. This year we
all know, it is nearly impossible to have seen the United States House of
predict the future but it is possible to Representatives pass the Smart Grid
look at trends and activities taking Facilitation Act of 2007.
place in our lives and get a good This legislation provides a nationwide
indication of the direction we are focus on the development of an
traveling. The same is true in the Electric Smart Grid. In Europe similar
electric utility industry and the future efforts are underway, in parts of Asia
of the electric distribution grid. the situation is even more advanced,
Tokyo has completed the
It is clear that dramatic change is implementation of a smart grid. The
coming in the future for the electric only sure thing is that doing nothing is
utility industry and the way energy is not an option since an increasing
generated, delivered and consumed electricity demand is pushing the aging
substantially changing the whole electric grids to the breaking points;
business model. This change is coming the current state of the electrical
to a piece of the industry that hasn’t infrastructure is not sustainable. To
been known for radical change over its change its course, utility companies
120 plus year history. Electric must embrace a fresh approach to
distribution has been basically the managing the grid, peak demand and
same industry since the time of Edison system security - one that will drive
and Tesla, both would easily recognize market efficiency while supporting
what is installed today. The utility economic, environmental and social
industry is often accused of being slow priorities.
to adopt and resistant to change, a new
study by Platts and Capgemini
suggests just the opposite. According
to the study, in which more than 120
senior executives at U.S. and Canadian
utilities participated, a majority of the
surveyed executives reported that they
are embracing new technology as a
means of improving overall grid
performance.
Smart Grid: Leveraging Technology to Transform T&D Operating Models 3

4. The State of the Market
The reality is that the compliance- technologies – meters by 2010. Again Ontario is a
based industry in which utilities the market/retail side is the primary power constrained market with strong
operate doesn’t offer enough incentive beneficiary. resistance to any new power plant
for consumers, regulators or utilities to construction.
take the difficult steps necessary to Despite these current realities, a
make electrical energy markets operate number of internal and external factors In a number of states in the US, the
efficiently. are converging that will enable and regulators have implemented incentive
provide the right types of incentives for based rates to force utilities to improve
I Consumers want lower prices, higher
utilities, regulators and consumers to reliability to their customers.
quality service and absolutely expect
adopt innovative approaches to
the power to flow 24x7. In Quebec and Manitoba in Canada,
demand management and market
I Some regulators impose long-term efficiency. Those factors will drive the the regulators are pushing forward
rate caps in an attempt to please electric power infrastructure to distribution automation and smart grid
consumers. radically change. initiatives to allow for the placement of
I Regulated rates are not tied to distributed generation and to improve
wholesale markets where utilities Regulation and Legislation reliability of the grid.
purchase all or a portion of the power Governments around the world are
making energy conservation, energy Global Climate Change
they sell.
independence and global warming As a society, we increasingly recognize
I Incentives for consumers to conserve how burning carbon-based fossil fuels
top-of-mind issues. A wide range of
are not significant enough to change adversely affects the environment.
taxes, legislation and other policies
their behavior. Momentum is building on many fronts
designed to reduce the combustion of
I Regulators impose conservation fossil fuels are being considered across to limit carbon emissions.
program requirements on utilities, the globe. Government, major corporations,
and as a result, utilities suffer from citizen groups and utilities alike are
decreased revenues which are directly The Smart Grid Facilitation Act of promoting environmentally-friendly,
tied to consumption. 2007 establishes a Federal Grid green solutions. Utilities are looking
I Networks are constrained enough Modernization Commission, requires for alternative generation that will
that true pricing is not possible – the (unlike EPACT 2005) utilities to force the grid to become much more
Enron games in California show what consider ways to encourage Smart distributed. Many are insisting that
happens when the incentives are high Grids, energy efficiency and demand behavior must change and adoption of
enough for market participants. response; it provides a nationwide a conservation culture is critical.
focus on the development of a Smart
I Construction difficulties linked to Current generation stations are located
Grid. In California the California
complex local regulations. close to where the demand for power
Public Utility Commission (CPUC) –
I Public resistance to the addition of Energy Action plan I and II required all is, in many cases it is close to major
new transmission lines, while they utilities to submit a business case, the cities and major transportation routes
want the power, they do not want to goal is completion of a 20 million that makes it easy to move fuel to the
see the lines. smart meter deployment prior to the central stations. On the contrary, green
end of 2012. This deployment is power exists where nature put it, in
Incentives for grid operators will many cases long distances from major
mandated not for utility billing, but for
depend on the ownership model, in demand locations, meaning that the
demand response in a power
Nordics where grid operator is a power from wind farms will have to
constrained market.
monopoly there are very few incentives travel long distances to the customers.
to commit to lower prices for the In Ontario, Canada the Energy This transportation may be on major
consumer, their primary interest is Conservation Responsibility Act from high voltage routes, or it may be on the
efficiency, quality, control and low the Parliament issued a directive distribution network. The best place in
operating cost. In situations like this imposing conversion of meters. The the world to make solar power is in the
the grid operators are only indirectly schedule is to convert all meters deserts near the equator, hot, dry
tied to the consumptions – and they (residential and business) to smart locations that have few electric
are not benefiting from those new
4

5. Energy, Utilities and Chemicals the way we see it
consumers. That means either moving In many household cable television Power Quality and non-technical
the people or moving the power to the and internet access cost much more losses
location. than electricity. It used to be that residential customers
mostly used power in lighting, heating,
The ability to build conventional fossil Aging Infrastructure refrigeration, and analog
fuel based power generation will Much of the transmission and entertainment. Today there is
decline over the next decade, already distribution infrastructure is more than increasing use for digital
more than 50% of the coal fired power 50 years old and was designed to entertainment. Harmonics and other
plants that have been announced to be provide power in a different era. For power quality issues were confined, to
built in the US over the last 5 years many years, utilities typically a large extent to the industrial segment
have been cancelled. It is not that the underinvested in the grid of power delivery and so could be
use of coal is being reduced – rather – infrastructure or neglected to make the handled with a small number of
the rate that the use of coal will go up significant, ongoing investments industrial sized solutions. Today with
is slowing down. With Green house required to sustain the infrastructure Plasma televisions, and other
gases being a high priority topic, the over the next decade. As a result, most electronic devices creating harmonics,
ability of utilities around the world to utilities are now at a crossroads, facing the problem has moved from
build as much fossil fuel generation as a decision that will be crucial to their manageable to unmanageable.
they like will be constrained by futures. Additionally, the non-technical losses
environmental concerns. By 2030, it are climbing and many utilities are just
may be very difficult to build new Aging Workforce
starting to understand the real extent
fossil generation in most of the A significant percentage of the current
of the non-technical losses. In the
developed world. utility workforce is nearing the age of
today world the extent of both
retirement. In some companies more
problems is mostly reported by urban
Customer Expectations than 70% of the workforce will retire
myth and small samples, but there is a
As household electricity consumption between 2001 and 2010. With the loss
growing body of evidence that in this
increases year over year, peak loads are of these resources comes the loss of a
case the smoke hides a growing fire.
increasing and changes in huge pool of operating and network
consumption patterns are causing load knowledge. Much of this knowledge
factors to decrease. At the same time, has not been adequately captured in
consumers expect higher quality corporate records. It will be necessary
power to operate the increasing to capture this information and be able
number of digital devices that we to communicate it to a whole new
amass each year. Finally, consumers are workforce. This is also compounded
demanding this improved quality at by the fact that the current generation
the low, stable price levels of the past has been raised on a different
while, at the same time, wanting a communication media. Today’s paper
voice in how the power they consume maps and network diagrams mean
is generated. nothing to them. They are use to
computer access and graphic user
The fastest growing sector for power interfaces. A means will have to be
consumption is residential. created to quickly and cost-effectively
Commercial and Industrial customers train these new resources. This change
have the financial incentives needed to is driving up the need to provide data
reduce power consumption. to the field workforce at a rapid rate.
Residential customers to a large extent
still see power as a low cost necessity.
Smart Grid: Leveraging Technology to Transform T&D Operating Models 5

6. The Opportunity
Nobody can tell you today exactly The technologies for tomorrows Smart
what technologies the future Smart Grid are evolving and being created
Grid will incorporate but we have been today. But, based on a report by EPRI -
able to compile a list of key more than 7,000 pilots are underway
characteristics. We expect each utility today and more than 1,000 of them are
to have its own version of the Smart more than a decade old. There is only
Grid but it is clear it will have the one utility that has truly created a
following characteristics: smart grid, that one is Tokyo Electric
I Autonomous restoration, Power, and their implementation is
specific to the needs of Tokyo.
I Resist attacks – both physical and
Technology will continue to advance,
cyber,
and utilities will continue to invest.
I Supports distributed resources – This is not a revolution, but an
(generation, storage, demand evolution. Any deployment of a new
reduction), smart grid technology will probably be
I Supports renewable energy sources, measured in years or decades, rather
I Provides for power quality, than months. Since utilities must
The regulatory environment and the invest today the key is to build a vision
I Provides for security of supply,
convergence in the marketplace have and architecture that allows them to
created a great opportunity for the
I Supports lower operations costs, leverage today’s investment while
electric utility industry to recreate itself I Minimizes technical losses, maintaining flexibility to evolve the
and transform the “Electro-mechanical I Minimizes manual maintenance and Grid as technology advances. To wait
Grid” into “Digital Smart Grid.” intervention. for the “perfect answer” is not
acceptable, since the perfect answer
If we are going to embrace the Smart To deliver on those characteristics, a will never appear.
Grid we first need to understand grid with more intelligence has to be
exactly what is it. Many industry designed. The challenge is very clear;
groups (more than 40 at last count!) the old electro-mechanical network
have been formed to help define a cannot meet the needs of the new
vision of the future Smart Grid. Most digital economy. The future grid
of these efforts have been focused should be able to produce faster fault
around the technology. While the location and power restoration, hence
Smart Grid will utilize the latest lesser outage time for the customer and
technology to achieve its goals, it is not manage many small power generation
just about technology. Implementation sources.
of the Smart Grid will require a
complete rethinking of the utility The system network architecture will
business model and business need to change to incorporate multi-
processes. way power flows, and will be much
more intelligent than a series of radial
lines that just open and close. The
future data volumes will require large
data communications bandwidth and
communication network technologies
will be a key.
6

7. Energy, Utilities and Chemicals the way we see it
The Vision
In order to make meaningful progress functions include operational and utilities, but the effort to transform an
toward addressing the current grid monitoring activities like load electric power grid into an intelligent
challenges and delivering on the future balancing, detection of energized power grid involves much more than
grid characteristics, Utilities should downed lines, and high impedance just hardware and software. Figure 1
focus on four main activities: faults and faults in underground “Smart Grid Conceptual Architecture”
cables. Non real-time functions provides a conceptual view of all the
1. Gather Data: Data will be collected include the integration of existing and components that will be needed to
from many sources on the grid new utility databases so operational deliver on the Smart Grid vision.
(Sensors, Meters, Voltage Detection, data can be fused with financial and
etc.), in-home sensors for high other data to support asset utilization Grid Hardware: Sensors on existing
consuming appliances, and external maximization and life cycle hardware on the grid, from meters at
information like weather. management, strategic planning, the home to reclosers and
maximization of customer satisfaction, sectionalizers, transformers and
2. Analysis / Forecasting: The data substations will need to be deployed in
and regulatory reporting.
that is gathered from all those a prioritized fashion. The easiest way
sources will be analyzed – for Electric utilities already have many of to do this is to change the purchasing
operational and business purposes. the data sources needed to support standards for new and replacement
For operational purpose analysis analytics for these functions, but these equipment to include the sensors, so
will have to be done in real-time or data sources are usually siloed and, that they are automatically deployed
near real time and for business therefore, very difficult to combine. with each device. Then you can fill in
analysis purpose analysis can be Worse, the operational data is usually with additional sensors as required as a
done on non real-time data. sequestered in the Supervisory Control retrofit. They key is to understand
and Data Acquisition (SCADA) system what sensor readings can bring
3. Monitor / manage / act: In the
and not readily available to support operational value to your smart grid
operational world data that comes
analytics or business intelligence tools. effort, there is no reason to bring back
from the grid hardware will trigger a
data that you can not act on, either
predefined process that will inform, Some elements of an intelligent power billing a customer, changing settings in
log or take action. Those are SCADA grid already exist in most electric the grid, or planning maintenance.
applications that sits at the operation
center and use for monitoring the
Transmission and Distribution Grid. Figure 1: Smart Grid Conceptual Architecture
In the business analysis world the
data is analyzed for usage and rate
purpose.
4. Rebuilding the grid to support
bi-directional power flow and
transfer of power from substation
to substation: The first three steps
will have little impact to the end
customers, if the information that is
collected and analyzed can not be
acted on. This will be the most
expensive part of the smart grid
deployment and will in most cases
take 20 years or more to complete
across a whole service territory.
These activities fall into both real-time
and non real-time categories. Real-time
Smart Grid: Leveraging Technology to Transform T&D Operating Models 7

8. Communication Backbone: To Data Management: Smart Grid will be applications in this category are
support all those data sources on the the largest increase in data any utility SCADA applications that sit at the
grid a communication infrastructure has ever seen; the preliminary estimate operation center and used for
must be in place. A wide range of at one utility is that the smart grid will monitoring the Transmission and
wired and wireless communications generate 22 gigabytes of data each day Distribution Grid.
technologies are available to transport from their 2 million customers. Just
data. There are more than 20 collecting the data is useless – knowing 2. Front Office: Those functions that
communication technologies that an tomorrow what happened yesterday on help the business operate beyond
electric utility might consider the grid does not help operations. Data management of the grid in real time
including MPLS, WiMax, BPL, optical management has to start at the initial – load data to feed to forecasting
fiber, mesh, WiFi and multi-point reception of the data, reviewing it for models that support generation
spread spectrum. There is no perfect events that should trigger alarms into planning and spot market power
communications method. The one best outage management systems and other purchases or demand management
choice for how to communicate with real-time systems, then and only then, programs. These uses of data are
the electric grid does not exist, and should normal data processing start. typically same day, same hour
with the exception of satellite, there is Storing over 11 Gigabytes a day per applications, but there is time to
no single system today that covers the million customers is not typically scrub the data and even try again to
whole service area of a utility’s grid, useful, so a data storage and roll off get information from the field.
including adequate coverage to handle plan is going to be critical to managing
3. Back Office: Those are all the non
every meter and other device that the flood of data. Most utilities are not
real-time applications that provide
might be deployed. The future data ready to handle this volume of data.
rate analysis and/or decision
volumes will require large data For a utility with 5 million customers,
support, based on the processing of
communications bandwidth and they will have more data from their
intelligent Smart Grid data. The
communication network technologies distribution grid, than Wal-Mart gets
analytics functions transform data
will be the key. from all of their stores and Wal-Mart
into actionable information. This is
manages the world’s largest data
Any smart grid initiative will have to where the accountants, engineers,
warehouse.
pick 2 or 3 communications methods planners and standards engineers
and mix and match as required to get Knowledge Continuum: Data coming will go for the data they need to do
to the level of coverage required, some from the field has different values to their jobs.
may be owned and operated by the different parts of the company to
Most of the Smart Grid applications at
utility (e.g. fiber to the substations) different users on different timing.
the knowledge continuum layer are in
and some may be commercial Outage data is best served to the
their infancy and innovation is highly
networks (e.g. cellular phones). outage management system as rapidly
desired. The applications listed below
as possible. Load information might be
Data Standards: These data sources are some of the applications that might
best served on a 15 or 30 minute basis.
do not always communicate via comprise the smart grid capabilities.
Engineering analysis may not find they
common standards. The two dominate have useful data until they have a full I Distribution Monitoring and Control
standards are the common information year of data available to analyze. This System (DMCS): This is the master
model (CIM) standard and Multi Speak. continuum can be simply system that takes feeds from all the
Both define a standard data interface characterized into three major other systems in the grid, to provide a
that supports batch and real time data categories: single view of what is going on in the
exchange. Multi Speak originate with grid. Normally the distribution
the National Rural Electric Cooperative 1. Operational/Analytical: Those are operations manager would be sitting
Association and CIM is an open-source all the real-time/near real-time at a console with this as his primary
standard through the IEC. Those data operational type of applications. view on the status of the grid.
standards will need to define a Those are the application that I Distribution Substation Monitoring
standard data structure for each data monitor / manage and act base on System (DSMS): This system would
source on the grid to communicate. events that comes from the smart bring back and manage all of the data
grid hardware. Most of the from the substations and feed the
8

9. Energy, Utilities and Chemicals the way we see it
DMCS. It would also relay the orders systems – data flows in from the failures, and the DSMS for the same
to the controls in the substation. meters and is managed within the purpose.
With many utilities there are multiple system. MDMS were designed to I Minor Equipment Monitoring System
vendors of substation equipment collect information from metering (MEMS): This system monitors
already installed. Consequently, there systems that were designed purely for capacitor banks, transformers,
might be two or more copies of the billing. With the change to the voltage regulators, re-closers,
DSMS in operation to allow the requirements that the utilities are sectionalizers, and other minor
legacy equipment in the substations placing on metering systems – equipment that are outside the
to continue to perform. demanding operational abilities in substation fence. The system
I Automated Feeder Switch System addition to billing support – MDMS supports the DMCS with fault reports
(AFSS): This system would monitor, systems are finding that they have and in the cases where the minor
operate and control the automated significant gaps in the ability to equipment has controls, allows for
feeder switches. Typically it would be support the new requirements. Real- operation of those controls.
autonomous in its control and time and full two way round trips to I Smart Grid Planning System (SGPS):
operation, feeding changes to the the meters in near-real time are
This system records long-term trends
DMCS. Unlike many beyond what the current generation
and fault patterns so that they can be
implementations today, it would not of MDMS systems were designed to
reviewed by planning and
only balance substation and system support. This rapid change in
engineering as a baseline for
load but have the ability to balance requirements is forcing rapid
construction, maintenance and other
circuit loadings between phases, a reengineering by MDMS vendors.
activities.
functionality that wise future grid I Distribution Forecasting System I Smart Grid Operational Data Store
designers will leverage. (DFS): This system would take
(SGODS): This system houses the
Distributed Generation Monitoring information from the DGMS and the
I
historical data from all the systems
System (DGMS): This system would MDMS to support load and supply
that are used to manage the Smart
monitor the status of the various forecasting on the grid. It is expected
Grid. This allows data mining,
distributed generation sources on the to be a bottom-up system that would
engineering studies, regulatory
grid. It would feed status to the use the actual data from the points on
reporting (e.g. IEEE SAIDI, CAIDI,
DMCS and to the Distribution the grid to supply forecasts for
etc.) and other activities where large
Forecasting System. demand and for supply.
amounts of historical data are useful
I Automated Meter Operations System I Smart Grid Work Management for analysis.
(AMOS): This system is the real-time System (SGWMS): This system is
monitoring system for meters and used to manage work orders for parts The Smart Grid will be built as a series
other devices deployed beyond the of the Smart Grid sensor network of related projects, with each project
meters in the field. Its job is to (meters, controls, communications bringing a large amount of value to the
manage the meter operations, network, etc) that are in need of utility, ultimately transforming from
conduct outage determinations, maintenance or repair. It would focusing on energy value to focus on
manage demand management events normally feed the overall distribution information value while touching and
and communicate to end user work management system. changing many of the utility processes
devices. It feeds the Outage I Communications Network as you know them today. The key first
Management System (OMS) and the Monitoring System (CNMS): This step is to collect the timing and data
DMCS. system talks to the various requirements and determine what the
communications vendors systems to communications backbone will need
I Meter Data Management System
determine communications outages to look like, otherwise, every project
(MDMS): This system would be
and manages the information on will be burdened with that aspect and
responsible for management of the
communications outages. It feeds the the business cases for each will be
data collected from the automated
DMCS information on much harder.
meters deployed in the field. The
primary purpose of this system is to communications blackout areas, the
support billing operations. MDMS AMOS to allow for the removal of
systems are expected to be one-way communications related meter
Smart Grid: Leveraging Technology to Transform T&D Operating Models 9

10. The Roadmap
As utilities face the growing pressures means of providing high speed infrastructure that you build for
of electricity distribution in the 21st Internet, Voice over IP (VoIP), Video AMI/DRI will form the foundation for
century, difficult issues are sure to arise on Demand (VOD) and other future Smart Grid initiatives. If you
like regulatory barriers and financial broadband services to home and start with other smart grid building
constraints. The technical challenge is business - to augment the Smart Grid blocks (e.g. automated feeder switches,
very clear; the old electro-mechanical business case. distribution automation, etc) then they
distribution network cannot meet the should take into account the other
needs of the digital economy. The Many utilities today are starting down blocks you might put in place, like
business challenge for the electric the road of Smart Metering (AMI). AMI. This approach has a lower total
distribution utility executives and Smart metering comes in many flavors cost of ownership when compared to
regulators is the timing when to seize with very different capabilities. The more traditional integration
the opportunity before it becomes a traditional systems installed by several alternatives. Utilities will experience
problem. The confusing patchwork of utilities in the last 5 years will not significant cost savings and benefits
overlapping federal, regional, state and advance smart grid very much, since utilizing this integration infrastructure
municipal agencies and on top of this they are designed to report daily or less as complex legacy applications like CIS
the industry is neither fully regulated frequently. It is very hard to do real and billing systems are replaced or
nor completely deregulated cause time operations and short-term unbundled and new applications like
investors and entrepreneurs to often forecasting based on data that is days grid monitoring, analysis and control
hold back investments in Smart Grid. old. It is also very hard to do real are implemented.
In the past regulators reward investor- demand management on the grid or
owned utilities for building new power management of small distributed While each utility will have some
plants but not for energy efficiency or generation sources, with data that is variations, the business case
grid automation, this environment is days old. For AMI to be effective, the framework is one that is well
changing very rapidly in the last whole system needs to be able to understood by the captains of the
several years. report at each interval. This means that industry: utility executives, regulators,
the AMI system has to be designed, and government/owners. In today’s
From a financial point of view the grid including the backbone multi-stakeholder, balanced scorecard
is capital intensive and faces problems communications, to support regular world, business cases are no longer
imposed by utilities’ constrained reporting based on the operating pure numbers games. Planners and
balance sheets and difficulty to finance intervals of the utility. In France that is analysts constantly struggle attempting
large projects like the Smart Grid. half-hourly, in Ontario the wholesale to put dollar values on non-economic
Without regulatory push and ability to market operates on a 15 minute cycle, political, societal, environmental costs
recover some of the investments IOU’s and in most of the rest of the world and benefits.
will not be able to take on large Smart hourly is the typical operating cycle.
Grid projects. Utilities that have Even receiving outage information an
regulatory approval for AMI will be hour late is not as helpful as it can be
able to leverage their infrastructure for operations support.
investments in communication
backbone and data management Utilities should start by designing a
framework to get incremental benefits secure, robust, scaleable and
from grid operations by implementing extendable integration infrastructure
Smart Grid solutions like substation based upon reusable industry standard
and feeder automation, grid operations services, data and message structures.
and intelligent application. In North At the rate that technology is changing
America Capgemini is exploring Capgemini believes that this approach
alternative financial models like is the best solution for critical
revenue generating concepts – use the integration infrastructures. If you start
electric grid to offer and alternative with AMI, the integration
10

11. Energy, Utilities and Chemicals the way we see it
The Business Case
System benefits are those benefits that initial technology investments will
can be achieved through the require a ROI but utilities must
operations of the grid system like remember that these initial
reduction of congestion cost, reduction investments build the smart grid
of restoration time and reduction of infrastructure that will position them
operations and maintenance due to for larger future ROI for smaller
predictive analytics and self healing incremental investments. Current
attribute of the grid, reduction of peak projects that can be positioned for
demand, increase integration of regulatory rate relief (i.e. smart
distributed generation resources and metering) should be considered in
higher capacity utilization and light of the long term advantage as well
increased asset utilization. Societal as the immediate return. The question
benefits are those benefits that accrue for any investments today should be:
to non-utility stakeholders (i.e. the does it leverage the utilities position in
region at large) and represent such the future?
things as fewer outages resulting in
avoidance of lost revenue to local Sequencing and running the smart grid
Getting a handle on the smart grid businesses, job growth, and an increase program as deployment programs over
business case is tricky; there is no in high-tech businesses that require a long, steady period of time represents
consensus on what kind of benefits to and value high power reliability the lowest risk. However, programs
expect. Early business cases at several (e.g., biotech, pharmaceutical and longer than 3 years have a tendency to
utilities show a range of partial and full research and development) and the become sluggish and are open to many
deployment concepts using different resultant economic development changes in scope, which can greatly
standards and – most interestingly – attributes. There are other areas that reduce the effectiveness of the overall
anticipating different results. That will benefit from smart grid concepts – program.
makes comparing these business cases one example is asset management that
difficult. It is very obvious that there is is an important component of the
no one-size-fits-all recipe for utilities to holistic smart grid approach.
develop a business case and a
roadmap, each utility must take stock It is obvious that smart grid
of its current efforts, strategy, investments will pay – in the long run
infrastructure, and regulatory – dividends to utilities, shareholders,
circumstances while tailoring a smart- customers and society at large. The
grid technology road map and business smart grid serves an important role in
case to meet particular circumstances. facilitating energy efficiency programs
However, recent study by The Energy and distributed/renewable energy
Policy Initiative Center in San Diego integration: both key trends that will
from October 2006 outlines a scenario help ensure improved environmental
of smart grid implementation on the outcomes in the future. However the
San Diego electric grid. This study capital costs and operations and
shows that an initial $490M maintenance costs are substantial and
investment would generate $1.4B in this level of effort is very challenging to
utility system benefits and nearly $1.4B a utility especially considering other
in societal benefits over 20 years. significant projects in progress. Each
Smart Grid: Leveraging Technology to Transform T&D Operating Models 11

12. Starting
the Transformation Journey
A strategic focus should be applied governance. The gaps between the “as-
when developing the Smart Grid is” and “to-be” determine the high-
transformation roadmap. Recent level timeline based on requirements,
workshops run by Capgemini for a resource availability, constraints, and
number of utilities around the world, desired benefit timing.
have shown that smart grid is strategic
in nature and requires involvement Common Infrastructure: Pilot
from a broad cross section of the projects are used to validate and
company. AEP and EdF are both taking mitigate business process, technical,
this approach to the smart grid, with adoption, cost and project risks
the initiatives being driven by senior associated with the Smart Grid. They
executives in the company. A can reach from a limited small-scale
comprehensive approach to the deployment to a large end-to-end
development, support and validation deployment. It is very important that
can yield a blueprint/roadmap for the very early on during the pilot the
development of the Smart Grid. utility will establish a formal benefits
realization framework and governance
Capgemini Smart Grid roadmap has structure so they have a way to
three stages (1) planning – includes evaluate the success or failure. It is
developing the Smart Grid strategy and imperative to address the change
blueprint, (2) common infrastructure – management aspects of the program as
includes experimenting and piloting early as you can and selectively
with different technologies, transform the processes and
establishing the benefits realization organization to align with and take the
framework, and change management maximum advantage of the availability
planning, and (3) execution – includes of the Smart Grid. Do not
building the foundation and Smart underestimate the planning and efforts
Grid applications. required to manage such change in the
organization, employees should be
Planning: Pursuing incremental steps made part of the design.
without the benefit of the bigger
picture can lead to suboptimal Execution: Execution is a series of
solutions. Implementation can be projects that are planned, sequenced
incremental and spread over time, as and coordinated based on the roadmap
long as each step is a part of the larger that was defined in the planning stage.
strategy. The key to developing your The Smart Grid foundation and
Smart Grid strategy is to focus on how application will be built as a series of
it will enable your Transmission and related projects, with each project
Distribution (T&D) strategy then delivering some value, this is evolution
determine the required capabilities. At not revolution. Careful roadmap
this point the utility can establish development and project management
strategic goals, along with process or is essential.
investment strategies. As part of the
planning stage the utility will start with
the “as-is” and “to-be” states with
respect to process, application, data,
organization, standards, and
12

13. Energy, Utilities and Chemicals the way we see it
Most utilities have successfully Reduce operating expenses: In most IOU’s capital spending has
completed some Smart Grid projects. Automated meter management will failed to keep pace with
However, the process is not a lower operation and maintenance straightforward annualized renewal.
straightforward, standalone, install- costs, reduce theft and improve The annual network renewal
some-technology project – it is a revenue collection. Remote asset investment of a typical IOU is about
Business Transformation of the electric monitoring will help avoid emergency one percent of its asset base, this
distribution utility - the ultimate target maintenance and replacement of amount to a renewal cycle of about 100
is reinvention of the electric utility. The assets. years – well beyond the design life
transformation will reach an audience span of network assets.
as wide as it is deep – from the board Higher grid reliability: Accurate
to the field worker and from the utility demand forecasting will improve real- As your firm faces the growing
to the customer, regulator, elected time configuration of the network, pressures of electricity distribution in
official, supplier, educator, and society allowing components to operate within the 21st century – business as usual is
at large. The Smart Grid will enable their actual capabilities. Detailed, real- no longer an option – you probably are
new applications we cannot yet time information from the sensors on asking your self:
predict. Underneath all mission the grid will prevent blackouts I How to respond to the growth of
setting, strategic planning, organizing, whenever possible, and to keep them distributed generation?
controlling, and coordinating lie the as short as possible when they occur. I How do I meet today and future peak
business, people, and technical demand?
Productive People: Excellent
paradigms – how a firm’s executives,
information and good displays help I What do I need to do to prepare to
managers, and workers perceive the
people do their job, better and faster the smart grid transformation?
utility world now and into the future.
with fewer safety issues. Smart grid is I At the rate that smart grid technology
This transformation is certainly a tall not just about technology, there is lots is changing, what is the best scalable
order, but Capgemini believes utilities of technology available, it is also about and interoperable solution?
can meet all of their priorities and people, people who can do their job in I Who needs to be involved in the
likely realize a host of other benefits. a more professional fashion with less
smart grid planning?
One example of a technology is smart guessing and less concern about who
can respond to a specific situation. I How do I involve the regulator?
metering. Let’s look at how it can
impact your company from a smart Today much of the success of the I How do I make the training and
grid perspective. distribution grid relies on people who process changes that are needed?
have decades of experience, and are
Reduce capital expenses: Lower peak closing in on retirement. Replacing this
demand by using smart meters and experience in today’s world is
improvement in load management. impossible; it will take most
Improve asset utilization by replacing companies years to recover from the
components that are approaching the loss of this knowledge. Technology is
end of their annual life spans. Support never a substitution for motivated and
distributed generation with remote involved people, but good information
asset monitoring and control. can help them do their jobs better.
Smart Grid: Leveraging Technology to Transform T&D Operating Models 13

14. Glossary
American Electric Power (AEP): Broadband over Power Line (BPL): Demand Management: Energy
IOU in Columbus, Ohio - provides Also known as power-line internet or demand management, also known as
electricity to customers in Arkansas, Power-band, is the use of Power Line demand side management (DSM) or
Indiana, Kentucky, Louisiana, Communication (PLC) technology to Demand Response Infrastructure
Michigan, Ohio, Oklahoma, provide broadband Internet access (DRI), entails actions that influence the
Tennessee, Texas, Virginia, and West through ordinary power lines quantity or patterns of use of energy
Virginia. consumed by end users, such as
Customer Average Interruption actions targeting reduction of peak
Advanced Metering Infrastructure Duration Index (CAIDI): Reliability demand during periods when energy-
(AMI): Means the infrastructure measure - CAIDI is the average number supply systems are constrained. Peak
associated with the installation and of hours per interruption. These demand management does not
operation of electricity metering and indices are electric utility industry necessarily decrease total energy
communications including interval standards. CAIDI and ASAI are consumption but could be expected to
meters designed to transmit data to reported on a rolling 23-month reduce the need for investments in
and receive data from a remote locality. average. networks and/or power plants.
Alternative Generation: Generation California Public Utility Electricity de France (EdF):
of electricity from nature (green Commission (CPUC): The PUC The main electricity generation and
generation) that does not emit large regulates privately owned distribution company in France.
amount of CO2 in the atmosphere, telecommunications, electric, natural
example are solar, wind, hydro etc. gas, water, railroad, rail transit, and Energy Conservation Responsibility
passenger transportation companies, in Act: The Energy Conservation
Average System Availability Index addition to authorizing video Responsibility Act received Royal
(ASAI): Reliability measure - ASAI is franchises. The CPUC serves the public Assent in March, 2006. Under the Act,
the percentage of time the power interest by protecting consumers and ministries, agencies and broader public
system is available. These indices are ensuring the provision of safe, reliable sector organizations will be required to
electric utility industry standards. utility service. prepare energy conservation plans on a
CAIDI and ASAI are reported on a regular basis, and report on energy
rolling 23-month average. Customer Information systems consumption, proposed conservation
(CIS): Software application that measures, and progress. The proposed
Balance Scorecard: A concept for address the customer interaction call Legislation also provides the
measuring whether the activities of a canter, billing, etc for gas, electric and framework for the government's
company are meeting its objectives in water utility companies. commitment to install 800,000 smart
terms of vision and strategy. By
meters in Ontario homes and
focusing not only on financial Common Information Model (CIM):
businesses by 2007 and to have them
outcomes but also on the human a standard developed by the electric
installed in all homes and businesses
issues, the balanced scorecard helps to power industry that has been officially
by 2010.
provide a more comprehensive view of adopted by the International
a business which in turn helps Electrotechnical Commission (IEC),
organizations to act in their best long- aims to allow application software to
term interests. exchange information about the
configuration and status of an electrical
network.
14

15. Energy, Utilities and Chemicals the way we see it
Energy Policy Act of 2005 (EPACT) Investor Owned Utility (IOU): Return on Investment (ROI):
2005: A statute that was passed by the A utility owned by private investors, as A performance measure used to
United States Congress on July 29, opposed to one owned by a public evaluate the efficiency of an investment
2005 and signed into law by President trust or agency; a commercial, for- or to compare the efficiency of a
George W. Bush on August 8, 2005 at profit utility as opposed to a co-op or number of different investments. To
Sandia National Laboratories in municipal utility. IOU is rarely used in calculate ROI, the benefit (return) of
Albuquerque, New Mexico. The Act, the energy industry to refer to a an investment is divided by the cost of
described by proponents as an attempt promissory note, and utility by itself the investment; the result is expressed
to combat growing energy problems, typically refers to a public utility. as a percentage or a ratio.
provides tax incentives and loan
guarantees for energy production of Mesh Network: Mesh networking is a Customer Average Interruption
various types way to route data, voice and Duration Index (SAIDI): Reliability
instructions between nodes. It allows measure - CAIDI gives the average
Electric Power Research Institute for continuous connections and outage duration that any given
(EPRI): EPRI was established in 1973 reconfiguration around broken or customer would experience. CAIDI
as an independent, nonprofit center for blocked paths by “hopping” from node can also be viewed as the average
public interest energy and to node until the destination is restoration time.
environmental research. EPRI brings reached.
together members, participants, the Smart Grid Facilitation Act of 2007:
Institute's scientists and engineers, and Multi Protocol Label Switching H.R 3237: A bill in the US Congress:
other leading experts to work (MPLS): is a data-carrying mechanism To facilitate the transition to a smart
collaboratively on solutions to the that belongs to the family of packet- electricity grid.
challenges of electric power. switched networks. MPLS operates at
an OSI Model layer that is generally Supervisory Control and Data
Green House Gases: Greenhouse considered to lie between traditional Acquisition (SCADA) Systems:
gases are components of the definitions of Layer 2 (data link layer) SCADA systems are typically used to
atmosphere that contribute to the and Layer 3 (network layer), and thus perform data collection and control at
greenhouse effect. Greenhouse gases is often referred to as a "Layer 2.5" the supervisory level and placed on top
include in the order of relative protocol. of real-time controls.
abundance water vapor, carbon
MultiSpeak: MultiSpeak is a software WiFi: a wireless technology intended
dioxide, methane, nitrous oxide, and
specification designed to help electric to improve the interoperability of
ozone. The majority of greenhouse
utilities, automate their business wireless local area network products
gases come mostly from natural
processes and exchange data among based on the IEEE 802.11 standards.
sources but is also contributed to by
human activity. software applications. The MultiSpeak
Worldwide Interoperability for
specification helps vendors and
Microwave Access (WiMax):
Institute of Electrical and utilities develop interfaces so that
A telecommunications technology
Electronics Engineers (IEEE): The software products from different
aimed at providing wireless data over
world's leading professional vendors can interoperate without
long distances in a variety of ways,
association for the advancement of requiring the development of extensive
from point-to-point links to full mobile
technology. custom interfaces.
cellular type access. It is based on the
IEEE 802.16 standard.
Smart Grid: Leveraging Technology to Transform T&D Operating Models 15

16. www.capgemini.com/energy
Gord Reynolds
Practice Leader
Smart Energy Services
gord.reynolds@capgemini.com
+1 416.732.2200
About Capgemini and the
Collaborative Business Experience
Capgemini, one of the Capgemini employs approximately
world’s foremost providers 80,000 people worldwide and reported
of Consulting, Technology and 2006 global revenues of 7.7 billion euros.
Outsourcing services, has a unique way
of working with its clients, called the With 1 billion euros revenue in 2006 and
Collaborative Business Experience. 8,000+ dedicated consultants engaged in
Energy, Utilities andChemicals projects
Backed by over three decades of industry across Europe,North America and Asia
and service experience, the Collaborative Pacific,Capgemini's Energy, Utilities &
Business Experience is designed to help Chemicals Global Sector serves the
our clients achieve better, faster, more business consulting and information
sustainable results through seamless access technology needs of many of the world’s
to our network of world-leading technology largest players of this industry.
partners and collaborationfocused methods
and tools. Through commitment to mutual More information about our services,
success and the achievement of tangible offices and research is available at
value, we help businesses implement growth www.capgemini.com/energy
strategies, leverage technology, and thrive
through the power of collaboration.
This Point of View is based on the vast experience and knowledge of the global network
of Capgemini. The authors wish to especially thank Tom Anderson and Joe DeCrow
for their helpful input based on their experience through conversations and suggestions
on the topic.
EUC20070918
If you like to discuss ideas you can use to start your smart grid transformation please
contact us at info-energy@capgemini.com.