BuddeBlog

The future growth of Broadband over Powerline now largely rests on smart grid development and in 2008 it is becoming clearer that smart grids will be one of the networks of the future. Utilities around the world are turning their attention to smart grids for internal energy monitoring and management. This is primarily due to rising concerns relating to climate change and CO₂ issues and the utilities are now in a race to upgrade their decades old infrastructure to make it more intelligent and efficient.

At the same time, many utilities involved in this market have become unwilling to take on the telcos in the broadband market and the support for BPL as a third broadband access for the home is waning. Applications for BPL technology now revolve around smart grids and Demand Side Management services. Utilities are looking internally and using the technology and skills to upgrade their networks for smart grid purposes. The utilities involved in these developments are embracing the concept of an end-to-end solution in the total energy chain.

BPL offers benefits in home networking due to its ubiquity. Utilities and access providers around the world are aggressively deploying HomePlug in BPL applications for electric grid management, automatic meter reading applications, Command and Control and broadband to the home. The regulatory and social environment today favours energy conservation which is pushing utilities toward DSM as a way to reduce costs, minimise investment in new power plants and improve customer service. There is growing requirement for a more sophisticated management of energy in people’s homes and businesses.

A smart grid will also offer smart meter features which will allow users and utilities to utilise information about usage, supply and real-time price, as well as allowing them to better manage energy use both from an end-user and a supply perspective. However governments need to ensure that smart meters do form part of an overall smart grid strategy. Smart meters on their own could be an expensive dead-end investment if this hardware eventually has to be removed from homes to be replaced with IP-based, software-driven meters with two-way communication over the Net.

This report provides an insight and analyses into the trends and developments taking place in BPL with a focus on smart grids. The report provides a market overview of developments and explores in detail the movement towards using this technology in smart grids. A summary of smart grid activities around the world is included along with developments at a regional level for North America, Latin America, Europe, Middle East, Africa and Asia Pacific.

Key highlights:

• In the US OnCor has purchased its BPL infrastructure and will no longer have it managed externally. OnCor is using the infrastructure primarily for Smart Grid management and due to its success plans to continue the BPL roll-out that will eventually pass around 1.5 million homes.
• The first smart grid project was launched in 2007. Today Australia, Italy, France, Germany, Hong Kong, USA and Russia are considered to be some of the leading markets in terms of smart grid development.
• Applications for HomePlug technologies include home and business control of lighting, appliances, climate, security and energy consumption. HomePlug product shipments have doubled in the past year or so.
• In Africa, some power utilities are billing as little as 30% of the electricity actually being consumed.
• Countries in South and Central America that have started to develop smart grid technology include Brazil, Colombia, and Venezuela. Latin American utilities are interested in smart grids particularly with a view to reducing theft, a major regional challenge.
• While Middle East Gulf countries are making little use of the technology at home, investment companies from the region are funding smart grid technology companies around the world.

BuddeComm has just launched a new report titled: 2008 Global Utilities - Environmental Focus for Smart Grids.

Smart Grids would make a lot of sense in Chile, an energy-poor country facing a power crisis. Hydroelectric plants have been producing 60% of Chile’s electricity, while the remaining 40% has come from natural gas imported from Argentina. Due to a reduced supply of Argentine gas and lower hydroelectric reservoir levels caused by scant rainfall, Chile has had to look for alternative sources of power. In March 2008, a law was passed requiring electricity companies to invest in nonconventional energy sources (NCES), including wind, solar, geothermal, and hydraulic power. By 2010, at least 5% of all the electricity supplied by any one of Chile’s utilities must come from NCES, gradually increasing to 10% by 2024. The law is an attempt by the country to diversify its supplies as it tries to feed a booming industry, particularly in the copper mining sector.

Smart Grids are intelligent IP overlays of the electricity grid by means of which utilities can better manage their network, limit electricity loss, reduce carbon emissions, prevent outages, and provide customers with in-house information and tools (smart meters) to better manage their own energy use. Broadband Powerline (BPL), fibre-optic, fixed-wireless, and mobile can all be used to link a smart grid backbone to a customer’s premises, and such a network also offers opportunities to sell excess capacity (on a wholesale level) to other telcos and ISPs.

The idea of broadband in conjunction with their electricity networks is not an entirely new idea for Chilean utilities. In the 1990s, when BPL solutions looked promising, three Chilean electricity companies (Chilectra, CGE, and EMEL) undertook BPL tests. In 2001, Subtel granted Compañía Americana de Multiservicios Limitada, a subsidiary of the Enersis group (a Chilean utilities conglomerate with Spanish ownership interest), authorization to implement a pilot project based on BPL technology, exclusively for exhibition purposes and not to be implemented commercially. But tests globally came to a standstill due to problems in relation to international standards and radio interference. In 2004, technological developments spurred renewed interest in BPL, but further delays in standardisation, the relatively high cost of hardware, added to the fact that moving further into the broadband access market was outside their core business, put a virtual stop to new deployments over 2006-2007.

In March 2005, Chilean triple player VTR (provider of converged telephony, broadband, and cable TV) was the first company in Latin America to launch an In-House BPL service commercially for its residential clients. In-House BPL, also known as Power Line Indoors or Internal Telecoms (PLIC), is a home networking technology that uses devices developed by HomePlug Powerline Alliance. VTR’s system converted a dwelling’s electrical wiring into an Internet access network, allowing users to connect a WiFi transmitter or cable port to any power point in their homes. The service was however expensive and short-lived, and had disappeared from the company’s offerings by 2007.

Chile’s main electricity distribution firm Chilectra has toyed with BPL technology on a broader scale, across its entire grid. Lacking a telecom service licence, the company aimed to offer the system as a backhaul alternative for licensed carriers, but commercialisation of the system is on hold despite extensive testing.

A ‘Smart Grids Latin America’ conference, to be held in Santiago de Chile, is scheduled for November 2008. The purpose of the conference is to sensitise Latin American utilities, regulators, consultants, and vendors to the huge changes taking place globally in utilities’ power delivery and metering markets, and to understand the future impact these changes will have both nationally and within the region. It is to be hoped that the conference will spur Chilean utilities to invest in Smart Grid infrastructure.

See also: Chile - Convergence, Broadband and Internet market

Lucia Bibolini - Senior Research Analyst - BuddeComm

I certainly believe that our industry should have, and could have, made a greater contribution to the Summit. We could have played an important role in generating visions and strategies for e-health, tele-education, smart grids and e-government.

By failing to be more prominent part of the Summit we missed the opportunity for really effective participation. Telstra seems to be the only company that was represented with several delegates. Many more from our industry were nominated, but in the end they didn’t make it onto the Prime Minister’s final invitation list.

Having said that, the reality is that our industry will be the facilitator in many of the issues raised by the Summit.  Every item identified by the ten groups will require input from our industry.

The fact that telecoms and the digital economy were grouped under infrastructure was reasonable and correct. This further highlights the fact that the government needs to ensure we have structurally separated infrastructure from the telecoms services, to facilitate what this group put on it top priority list – a world-class broadband system to foster full participation in the digital economy.

Proposals currently on the table from Telstra could jeopardise this, as the access price to that broadband infrastructure would be out of the reach of most Australians.

I would suggest mini-ICT summits, bringing the various industries and government organisations together to address some of the issues as a follow-up to the 2020 Summit.

Of course, one could argue that the telco industry is conducting its own 2020 Summit at the moment, trying to achieve the right outcomes for the Minister’s plan for a National Broadband Network. This debate is far from over.

Another key outcome from the various groups at the Summit was a more collaborative government and, again, these are issues that our own ‘Summit’ has been addressing. One could almost say that we are even a step ahead, having brought together four federal departments in our smart grid debate (Climate Change, Environment, Energy and Broadband).

The Smart Grid Australia alliance will take a coordinating role in this process from here on. There was another link from the Summit to this topic. Under the Summit topic of ‘Sustainably’ the Climate Change group also listed smart grids with true intelligent meters at people’s homes as a key item.

Next month at the FttH Applications Roundtable we will begin to make strategic plans (under the banner of the FttH Applications Workgroup – part of the FttH SIG). We will be discussing how we can also bring the Departments of Education and Health into dialogue with the broadband infrastructure developments.

Both health and education featured strongly on the Summit’s topics list and I hope that this will also be followed up within our industry. If we are building a nationwide broadband infrastructure why aren’t we talking more about the need for this infrastructure to facilitate health and education? These services have nothing to do with high-speed Internet to peoples’ homes. The organisations/authorities involved need to be able to use the broadband infrastructure to deliver their services, independently and at a very low cost. If that was brought home more clearly to the decision-makers in these departments they would better understand the importance of getting the management and structure of that broadband infrastructure right, so as to facilitate real wins in these social sectors. A vertically-integrated telecoms industry cannot deliver an economically viable broadband infrastructure for healthcare and education – it’s as simple as that.

On the positive side, there is now more political will at the top to build more collaborative government structures, but at the same time the reality is that these departments are already overloaded and have little time left to look beyond their own borders. Unless direction comes from the highest levels of government this will not happen, beyond token gestures and lip service.

I judge these to be the key issues for our industry, and I will be exploring how we, as an industry, can further contribute to the work that will now follow the Summit.

Your ideas and suggestions are very welcome.

Paul Budde

See also:

• Australia - Competition Issues – 2008
• Australia - Labor Government Policies – 2008
• Australia - Operational Separation of Telstra
• 2008 Australia - Government, E-Health, Energy and Tele-education Markets
• 2008 Australia - E-Commerce, Marketing and Advertising
• FttH Special Interest Group
• FttX Plans from Telstra and G9
• Australia - Smart Grid Australia
• Australia - Utilities Broadband - Smart Grids Moving into 2008
• Australia - Revenue Statistics, Analysis & Forecasting (by provider) - 2000-2009
• Australia - Revenue Statistics, Analysis & Forecasting (by service) - 2000-2009