Microsoft unveils smart grid software secrets

John Arnold explains the software behind smart grid systems

It is hoped through smart grid technology some of the pressure currently on power plants in the Middle East and globally can be lifted.
It is hoped through smart grid technology some of the pressure currently on power plants in the Middle East and globally can be lifted.
Jon Arnold, managing director, Microsoft's worldwide power and utilities industry.
Jon Arnold, managing director, Microsoft's worldwide power and utilities industry.
Larry Cochrane, industry technology strategist, Microsoft?s power and utilities industry.
Larry Cochrane, industry technology strategist, Microsoft?s power and utilities industry.

John Arnold, managing director and Larry Cochrane, industry technology strategist of Microsoft’s worldwide power and utilities industry division, explain the software behind smart grid systems.

Smart grid is the hot topic on every utility executive’s mind around the world.

The European Commission estimates that €1 trillion will be spent improving Europe’s electricity network and generation capacity by 2030 in response to supply challenges, security requirements and climate change.


As a result, the deployment of smart grids will play an important role. In France, some €6.2 billion will be spent on smart grid initiatives from 2009-2016.

In the UK, new meters will be installed with in-home information displays over the next 10 years - a total of 26 million installed at an estimated cost of £7 billion to £9 billion. According to a recent IDC report, in EMEA intelligent grid IT spending will reach $8 billion in 2010 and this is expected to grow by 27% in the next three years.

In the United States it is estimated that some $70 billion will be spent on smart grid projects in the next few years, and that many tens of billions more will be spent at utilities around the world.

Additionally, in November 2008, the Chinese government approved a $629 billion stimulus plan, including approximately $169 billion for utilities. And, the Indian government currently has a programme underway that has an estimated $1.5 billion targeted for smart grid technologies.

As the Hindustan Times puts it, “India is gasping for energy,” with 76 million rural households that have never turned on their first light bulb, and projections for 700,000 megawatts of additional generation to support its expanding economy and population.

Approximately $450 million will be invested in smart grid projects in Australia, Sweden, Switzerland and Turkey in the next few years, according to news reports.

US Federal government involvement in smart grid development also will provide significant impetus, and business opportunities. For example, President Barack Obama recently announced $3.4 billion in government grants to improve the efficiency of the nation’s electric power transmission network.

The grants will be used to replace the country’s ageing electricity transmission system with smart-grid technologies to improve transmission efficiency and reliability and accommodate additional energy generation sources.

The smart grid, or smart energy ecosystem as Microsoft defines it, becomes smart by injecting software into the various control points in the power system, so that households and businesses have ready access to timely, user-friendly information that can help them make smart choices about their energy use.

While adding data acquisition solutions to a smart energy ecosystem helps provide additional, valuable data, the real benefit will be the insights created by the integration of ecosystem-wide information and the analysis and presentation of the information.

Establishing New
Business Models

Utility industry executives are increasingly concerned about the possible costs involved in changing their business models to enable the development of the smart energy ecosystem.


For example, utility company CIOs who have responsibility for data collection and warehousing for millions of customers, as well as all related business and generating operations, are looking for solutions that help in-house staff to support and fully respond to the challenges of smart grid scale and interoperability.

The transition of the power and utilities business to the new smart energy ecosystem may well be the most significant change to shape the industry since its inception.

New processes such as end use loads dynamically participating in the ecosystem in a meaningful way, and new data requirements such as the 2,880 fold increase moving from one customer billing sample per month to 15 minute samples for a 30-day month, will significantly change the landscape.

Smart metering, automotive electric propulsion, renewable generation, new communications, new business models and a host of new industry players will all shape the future. The outlook can be a daunting challenge for anyone in the power and utilities computing arena.

To succeed, utilities will need a holistic view of how the smart grid fits into a smart energy ecosystem, as well as a strong foundation for migrating to the new infrastructure and services necessary to interact with, monitor, control and report on the assets of this new power system. This is especially true as utilities and the energy value chain reconfigure their business processes to establish new business models and capture new opportunities as they arise.

Architecting a Smart Energy Ecosystem
A technology architecture is needed to support the transition of the power and utilities business to the new smart energy ecosystem. The technology architecture of the smart energy ecosystem, however, won’t be confined to the need to revise business practices for workforce, consumer and regulatory changes. It will also need to be an enabler of new technologies, some we know about, and some that are yet to come.

For example, a new generation of field and home devices that have the ability to make local decisions using two-way communication capabilities will allow customers to better monitor, control and schedule energy consumption, as well as respond to demand response events and pricing signals.

Utilities or independent service providers could use these devices to extend their operational capabilities by facilitating registration of the devices in energy programmes that permit the power provider to adjust schedules to provide more efficient and balanced operation of distribution networks.

The smart energy ecosystem also will require new computing paradigm approaches. Real-time energy management systems, whether at the transmission or distribution levels, will continue to have rigorous performance and reliability constraints.

A smart energy reference architecture recognises that close coupling of all the new participants to the operation of the real-time systems will prove to be fragile and unreliable over the long term.

The scale of connected smart energy systems will grow to new levels with the addition of the active participation of loads (end-use customers) and a multitude of tiny new devices. Systems will need to be designed to be flexible and adaptive to autonomous behavior.

The true measure of success will be building a working system out of autonomous independent unreliable devices and participants.

The smart energy reference architecture as a result must enable interoperability in order for the ecosystem to develop in a cost effective manner. New solutions must work with previous utility technology systems in order to protect those investments.

Pragmatic integration approaches will need to be considered and the reference architecture should be flexible to allow deploying new components without custom integration. Otherwise, the vision for the ecosystem will not be pragmatic and will go unfulfilled.

the Integrated Utility of the Future
As the worldwide utility industry rushes forward with new smart grid projects funded by national stimulus programmes, they will need sound, tested technologies and clear architectural strategies that help them to succeed as stewards of taxpayer money.

A reference architecture for the utilities industry’s smart energy ecosystem, consequently, is needed to help create a world where thousands of smart devices can seamlessly and securely plug into the grid thanks to common standards and interoperability frameworks, just as the plug and play model allows thousands of devices to seamlessly plug into PCs today.

This reference architecture can serve as the basis for the development of the “integrated utility of the future” -- enabling utilities to enjoy significant benefits from ever greater collaboration, especially as the smart energy ecosystem, including the smart grid, evolves and requires the integration of everyday business processes and regulatory compliance.


By having the reference architecture for the smart energy ecosystem available to them, enterprise customers will have the solutions they need to make the smart grid a reality.

The reference architecture for the smart energy ecosystem helps utilities by providing customers a method of testing the alignment of information technology with their business processes as they evaluate how those IT solutions fit the requirements of the smart energy ecosystem and create an integrated utility.

The reference architecture also will aid independent software vendors (ISVs) in their efforts to create new solutions that serve the needs of the smart grid/smart energy ecosystem, and it can serve as a basis for the IT industry to discuss in depth and develop interoperability standards.

And, not least, the reference architecture will improve customer service and reduce the impact of energy usage on the environment.

It not only will enable utility customers to take advantage of the greater availability of “green energy” from sustainable sources such as wind and solar, but also will encourage them to substantially cut their energy usage, and costs, through new tools, including the direct feedback from smart metering systems and advanced energy usage analytics, as well as indirect feedback from improved billing processes.

In short, the reference architecture for the smart energy ecosystem will in the future provide a roadmap for utilities to solve their integration issues.

It will help to show how applying standards for solving integration issues across the enterprise can enable and accelerate the smart energy ecosystem.

For example, by unlocking the data that currently exists in disparate systems or silos across the whole utility value chain.

It also will empower users to drive improvements in real time, as well as to accelerate continuous improvement over time, especially as technologies and approaches to enabling the smart energy ecosystem advance and evolve over time.

In essence, the reference architecture helps puts the smart in our future’s energy ecosystem.

Smart grid savings
Smart metering and smart grids can save GCC utilities and governments US$5-10bn, according to a report by AT Kearney.

Based on analysis of the energy sector in this region, the firm believes the GCC to be on the forefront of the smart grid revolution.

“Smart meters are the technology of the future to measure real-time-electricity which enable consumers for the first time to control and monitor their electricity consumption via the internet or home displays. Pilots have shown that ‘consumption aware’ and ‘informed customers’ reduce their consumption by around 10%,” said Christian von Tschirschky, principal, AT Kearney Middle East.

Smart grids allow direct intervention of a utility company into selected consumers’ consumption during peak times.

At A.T. Kearney we estimate that GCC utilities and governments can avoid investments of around $5-10bn into peak load capacities, up until 2020. In addition they can potentially reduce the peak load demand by 10-20 percent through effective customer behaviour changes, that evolve with smart metering implementation and the usage of remote control of air conditioning systems,” added von Tschirschky.

The UAE and Saudi Arabia are currently piloting smart grid projects and it is expected that these countries will adopt the technology relatively quickly.

“The investments in smart metering will pay-off, considering the cost reduction in operations and the reduced investment demand for additional power plants. It is an efficient way of managing and securing electricity supply as well as the future contributions from alternative energy,” concluded von Tschirschky.

Global smart grid figures
US€1 trillion - estimated spend on Europe’s electricity network by 2030
€6.2 billion – amount spent in France on smart grid initiatives, 2009-2016
$169 billion – approximate figure China will spend on utilities as part of stimulus plan
US$5-10bn – amount Middle East governments can save through smart grids according to reports


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