strategy+business Winter 2013 : Page 16
16 Also contributing to this article were Booz & Company partner Joseph Van den Berg and senior associates Art Davidson and Jag Mukherjee. Network automation and utility efﬁciency. Grid digitization im-strategy+business issue 73 leading ideas leading ideas Smarter Is Better The obstacles are numerous, but given the possibilities this technolo-gy offers, the widespread implemen-tation of the digital grid should be an imperative for utilities in the United States and around the world. Here’s a look at what could happen. Reliability. With a digital grid in place, power companies would no longer have to wait for customers to call in and report a loss of service. The utility could immediately dis-patch service crews to restore power whenever and wherever the network infrastructure detected an outage. This would also avoid the costly and time-consuming process of sending restoration crews into the ﬁeld to pa-trol power lines in search of trouble spots. At the same time, notiﬁca-tions would automatically go out to customers through the Web and so-cial media, followed by progress re-ports with time estimates for power restoration. This is one of the ﬁrst digital grid technologies being de-ployed today, though it is still limit-ed in scope. Digital technologies also hold the promise of preventing outages. Over time, utilities will implement self-healing capabilities that reduce the frequency, scope, and duration of power loss. Sensing mechanisms in the network will sniff out trouble before it can cause an outage, en-abling the power company to act. Pricing. Digitized electric net-works will give customers the infor-mation they need to manage their power consumption and cut their electric bills. The system tells cus-tomers how much power they’re us-ing at various times of the day, and how much electricity costs at each time interval. This information re-veals opportunities to save money by shifting more power usage to the hours when rates are lower. Al-though few consumers relish the prospect of turning on the dish-washer at 3:00 a.m., home automa-tion technology eventually will take over the chore of managing power consumption for optimal pricing. And as more people spread out their consumption, price spikes at times of peak demand could stabilize. Supply–demand integration. Digitization turns traditional one-way power distribution channels into two-way streets. Today, most electricity is generated at a utility’s power plant and sent over the grid to customers. That will change as new technologies enable power to ﬂow back into the grid from alternative energy sources. Customers who install solar panels on their roof or erect a wind-mill on their property can offset electricity costs by selling some pow-er back to the utility. At times of heavy demand, customers with on-site power-generating capabilities can also save by switching to their own power source, in response to a warning signal from the utility that rates are peaking. Product and service innovation. proves operating efﬁciency at utili-ties. Smart meters are already reducing the need to send techni-cians out for routine matters such as service activations and shutoffs, and, of course, meter reading. As utilities become more efﬁcient, they can re-spond faster to customer needs. Greater efﬁciency can also slow the rise of electricity costs over the long term. As electric grids become smart-er and more efﬁcient, utilities won’t need to spend as much money on improvements to infrastructure and other projects that require signiﬁcant capital investment. Cost reductions for the power companies mean cus-tomers won’t see rate increases in their bills that are meant to recoup expenditures for the utilities. There are many shoulds and coulds when it comes to the digital grid. But in the end, it will take commitment and investment by the utilities to turn this vision of a more energy-efﬁcient and cost-effective future into reality. + Reprint No. 00201 The interactive capabilities of intel-ligent electric networks open the door to a wide range of new prod-ucts and services that will help cus-tomers use electricity in new ways. The relationship that now ties cus-tomers to utility companies will be-come more open, encompassing a range of vendors that will provide hardware, software, and services for the digital grid. These offerings will help consumers understand their electricity use and capitalize on digi-tization to squeeze more value from the wattage they consume. Don Dawson email@example.com is a partner in Booz & Company’s digital business and technology (DBT) practice, and leads the ﬁrm’s energy, chemicals, and utilities DBT practice in North America. He is based in Dallas. Earl Simpkins firstname.lastname@example.org is a partner with Booz & Company’s energy, chemicals, and utilities practice, and is based in Dallas. Josh Stillman email@example.com is a senior associate in Booz & Company’s energy, chemicals, and utilities practice, and is based in Dallas.