Blog Post

10 Reasons Utilities Want to Build Their Own Smart Grid Networks

The debate over whether utilities want to use public networks, like cell phone company infrastructure, or build out their own private networks for their smart grid deployments, rages on. On one hand smaller utilities don’t generally want to have the responsibilities — and expenses — of an IT company, which has to manage, build and upgrade a digital network. But on the other hand, a variety of utilities that want to have more control over their networks, and plan to use the networks for other digital services (like voice and video) are opting to build out their own digital grids.

Here’s 10 reasons that utilities want to build out their own smart grid networks. I’ve compiled some of these from Pike Research’s interesting new report out on Smart Grid Networking and Communication, and others from our own research.

1). Coverage: Utilities need to be able to offer service to pretty much every single customer in their footprint. But cellular and cable providers like to build out networks to be able to cover large urban areas, and often neglect to build out the edges of  a network to a handful of rural customers. Private networks can be built out to cover everyone.

2). Public Network Tech Moves Fast: Cellular companies are constantly upgrading their networks to meet the growing demand for bandwidth and wireless data. While this could be an advantage for some utilities, others fear that they will have to upgrade the tech in their smart meters too often to match that changing technology.

3). Rental Bill: Over the life time of a smart grid network, renting space on, say, a cellular network, can get pricey, according to some utilities and vendors. While building out a network, of course, requires the upfront capital investment, after that initial investment is paid utilities don’t have the reoccurring rental bill.

4). What If It Breaks, Or Someone Breaks In: Some utilities are concerned that if they are paying for space on a public network, the telecom company won’t be able to guarantee them the same amount of security and reliability that they could with their own private, controlled network.

5). Control Freak: The sense of having control over the end-to-end communication system of their grid, drives some utilities decision to build their own network. As Pike Research puts it, this can even be a sometimes vague desire.

6). Regulation Back Up: Regulated utilities also can earn profits on capital expenses like building their own networks. As Pike Research puts it: “The regulatory cost-recovery framework favors capital expenditures by the utility versus ongoing operating costs.”

7). Lower Bandwidth Needs: Some utilities see the higher bandwidth networks of cellular, DSL, and cable operators as far more than they need to operate smart grid networks.

8). No Sharing: Utilities are worried that when they rent space on networks that are also being used for other purposes (like our cellular calls) their traffic will not be given as high a priority. Utilities don’t want a crucial data signal to get stuck in a queue behind all our daily cell phone jabber.

9). No Home Connection: Utilities that want to work their way into the home environment (by offering energy management services and linking their grids from the neighborhood level to the living room) can’t rely on customers in the U.S. to have home Internet connections. Building out an end-to-end grid that links the home, meter, and neighborhood is one strategy to get around that.

10). Video, Voice, Data: In contrast with some utilities that have lower bandwidth needs, other utilities like San Diego Gas & Electric are using their networks to run high bandwidth applications. These applications can include offering mobile and video services for employees and connecting and analyzing grid sensor data. Building one network that can cover all of these applications can be more cost effective than renting space and services from a public network.

For more research on the smart grid check out GigaOM Pro (subscription required):

Report: Open Source & the Smart Grid

Home Energy Management: Consumer Attitudes and Choices

Cisco Seizes Smart Grid Low Hanging Fruit

Pike Research is a GigaOM Pro partner.

Image courtesy of rainy city.

4 Responses to “10 Reasons Utilities Want to Build Their Own Smart Grid Networks”

  1. Ted Kato

    Hi Katie I agree with you.
    Most of utility Co. have own data cables along with mamhole and utility pole.Beside some of their data protocals are it does not support by ordinalty service.