We know that utilities will need to work with regulators and elected officials to keep regulated utilities as healthy, relevant parts of the communities they serve. The model for how utilities earn on their investments will inevitably change. Revenue potential is the next element of our definition. Utilities already have much of this communications backhaul in place, so they are natural leaders to extend these systems into neighborhoods and communities. We think it will consist of a combination of Local Area Networks with takeout points connecting to a larger fiber and microwave point-to-point backhaul network. What kind of a data architecture will this create? If each device and system vendor uses proprietary protocols, smart cities will be forced to use products from a single vendor, as opposed to selecting the best-in-class product for each application. In addition to focusing on security, smart city data architecture will need to focus on common standards and communications protocols. We are arguably one cybersecurity event away from a major legislative and regulatory mandate to upgrade resiliency and security standards, so smart city planning efforts should be informed and shaped by advances in system and device security practices. As this overarching systems review is performed, special attention should be given to security standards. In order to benefit from these existing systems for smart city applications, the next step should involve a review of these systems across multiple utilities’ infrastructures.This would allow for the aggregation of data and the sharing of system maintenance and forecasting. Utilities already incorporate advanced technologies for mapping, meter reading and SCADA systems. All of these projects need to be supported by smart utility infrastructure that promotes operational excellence. There are many smart city projects currently underway, focusing on a specific application, such as transportation/streetcars, parking sensors, electric vehicle (EV) charging stations, street lighting and highspeed internet access. The first element of our definition is operational excellence. We think shareholder value can be derived from electric utilities becoming the center of smart cities. Traditional rate-base return on investment for “steel in the ground,” under the current regulatory model, will have to change. As a result of these trends, utilities need to answer the question, “What will drive shareholder value in the future?” Under Federal Energy Regulatory Commission (FERC) Order 1000, big transmission line build-outs have moved into the competitive arena, and fewer regulated utilities are going to be taking on these mega-projects.įinally, as more distributed energy resources come online, utilities face the challenge of maintaining grid resiliency and stability while meeting the demands of customers who may increasingly pursue energy independence by installing solar, wind or on-site energy systems. Many larger baseload plants are now being developed by third-party independent power producers who then participate in regular competitive power auctions held by the regional transmission operators. First, we see a declining number of big, central-station generating plants being built and put into service. Why should utilities consider moving to help develop smart cities?Ĭonsider these trends. While utilities are developing new private networks and advanced technologies to meet the demands of more distributed energy resources, they position themselves for smart city opportunities. High-capacity broadband is a fundamental part of a smart city. The window is open, but utilities have to move now or their competitors will beat them to the punch.Įlectric and gas utilities already have certain inherent advantages in enabling smart cities. Utilities are in a better position to benefit from this wave than big technology companies. The smart electric utility - the next-generation (NxG) utility - must be at the center of the smart city. This definition is developed from a utility perspective because we believe electric utilities can and should become indispensable partners in making smart cities a reality. Simply put, we believe a smart city is defined as connecting the basic infrastructure of diverse neighborhoods and communities to drive operational excellence, revenue potential and sustainable customer lifestyles. But there is still a lot of discussion about just what a smart city is. Would you like to live in a smart city? We believe electric utilities can enable the technologies needed to make smart cities a reality.
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