Earlier this month Duke Energy Corporation (NYSE: DUK) released the white paper Duke Energy: Developing the Communications Platform to Enable a More Intelligent Electric Grid [pdf]. The paper addresses the company’s vision and plan to digitize the electric grid.
Duke Energy is one of the United States’ largest electric utilities and if its merger with Progress Energy Inc. (NYSE: PGN) goes through, the Charlotte, North Carolina-based company will likely become America’s largest utility by the end of the 2011.
With an aging electric grid and new energy generation, distribution and storage devices rapidly being deployed, utilities such as Duke face significant challenges to modernize the grid. However, according to Duke Energy’s Manager of Technology and author of the white paper, David Masters, as utilities nationwide race to modernize and retrofit the century old electrical grid, Duke is leading the industry.
On Tuesday, Masters told EneryBoom that, where most utilities would fight to be second or third so as to avoid the problems that come with early adoptions of new technologies, Duke is “out in front pushing a lot of what will be required for the smart grid transformations that are coming.”
Duke’s approach is to create an end-to-end digital grid system. A major component of this approach is to automate the collection and exchange of near real-time information and to enable adoption of new technologies as they become available.
To achieve this Duke energy has opted to build a system that decentralizes the collection and analysis of data. One of the big reasons for this choice Masters says is the “shear numbers of devices that may be trying to communicate with the system.” If all of this information is sent back to a centralized data center it further delays the response time the company requires, which, as Masters’ states is “very problematic.”
Duke’s solution to this problem? Implementing communications nodes. A communications node will collect data from multiple meters and multiple devices chargers — distributed generation or storage — and have the capability to have those analytics assessed locally, and have decisions be made at the local area without having the data run through a centralized location.
The communications nodes will be equipped to send data and information not only to other nodes, but also back to a centralized location. Information to be sent back to the central hub would include “alarm data” as well as large-scale queries. For now these communications nodes reside at the distribution transformer level, Masters says.
Instead of building a communications network from the ground up, Duke has decided to use public carriers to communicate. The utility states that cellular companies have been building a data infrastructure for the past 10-15 years and the amount of data their networks are capable of handling is expanding exponentially so that such a strategy makes sense.
Masters says it is logical: “How do we utilize what is there? With a public carrier we pay for what we use, we are not paying to build a network that can handle 100 times what we need today. When you are talking about millions and millions of devices it’s a very large issue.”
Today, Duke is primarily using Verizon (NYSE: VZ) but is planning to use multiple carriers in the future. According to Masters, Duke has been “adding sensors working with new vendors and new approaches to how they will manage electricity for the past 4 -5 years” and will invest an estimated $1 billion into smart grid technology implementation.
The company has been testing deployment of these systems at varying levels of sophistication in both North and South Carolina. However, it is in Ohio, where it has received regulatory approval for mass deployment, that Duke runs the majority of its smart grid implementation. An estimated 200,000 to 300,000 smart meters have been deployed in Ohio compared to 14,000 in North Carolina and 4,000 in South Carolina.
Currently Duke is using smart meters manufactured by California-based Echelon, and communication nodes designed and built by Ambient (NASDAQ: AMBT). However, Masters said that the company is testing communication nodes from both Smartsync and Echelon.
When asked how important the company’s smart grid strategy is in Duke’s overall business strategy, Masters quoted company CEO Jim Rogers’ assertion that energy efficiency is equal to coal, natural gas, nuclear, and renewables; it is “the fifth fuel.” The fifth fuel will play a major role in the company’s target to cut their carbon emissions in half by 2030.
Smart grid technology “is very important in our overall infrastructure and requirements to meet our obligations. It is an enabler to energy efficiency, a tool to enable us to operate the fifth fuel.” said Masters.