Cisco Officially Enters Smart Grid Market: Why It Matters

Is the “smart grid” that everyone’s so excited about really just a communications network by another name?

According to network giant Cisco, the answer is basically yes.

Making the grid “smart,” for those who missed the media blitz surrounding the $11 billion the stimulus package is investing in smart-grid technology, entails giving utilities and consumers the tools they need to see more deeply into supply and demand curves.

The idea is that eventually wireless sensors will gather data about the availability and use of energy and send that data to smart meters, which will then “talk” to the utilities and automatically power devices in the home, office or data center on and off depending on the availability and cost of energy.

For all that to work, utilities need reliable, standards-based communication networks, and that’s where companies like Cisco and Silver Spring Networks come in.

While Silver Spring has made a big splash in the last month as the smart grid darling, thanks in no small part to being the first company chosen for investment by Google’s new venture fund, Cisco’s announcement this morning brings serious competition to the market. 

Cisco unveiled its first end-to-end smart grid solution, marking its official entry into the space.

The company will offer not only the communication network necessary for wireless sensors, meters, and utilities to share information, but also the actual sensors, meters, and energy management software. Products that Cisco doesn’t make itself, such as smart meters and wireless sensors, will be provided by technology partners, and the company will work with integrators to ensure that utilities and their customers don’t have to deal with multiple service providers.

Cicso, which has quietly been working with various partners on smart grid technology for about two years now, also publicly announced several projects with utilities, including Florida Power & Light and Austin Energy. Somewhat surprisingly, Cisco and Silver Spring are actually teaming up as part of the Energy Smart Miami project announced last month, which aims to make Miami-Dade County the first region in the country to have a complete smart grid.

What does all this mean? A few things:

First, if there were any doubt that the smart grid was coming soon, this all but eliminates it. Cisco brings deep networking knowledge and the security expertise necessary to allay any fears about the vulnerability of an Internet-based electrical grid.

Second, it looks like the much-argued-about communication standard for the smart grid will inevitably be Internet Protocol (IP), despite protests from some companies working with alternate standards such as HomePlug and ZigBee (a standard backed by many utilities). In fact, ZigBee is now working on IP compatibility.

There are still plenty of other standards to work out, however, and it’s probably no coincidence that Cisco, which stepped in during the 1990s to help the National Institute of Standards and Technology (NIST) develop standards for the cable industry, is now working with NIST (along with other tech companies, utilities, and standards organizations) to develop standards for smart grid interoperability on the world’s tightest timeline.

Once standards are agreed upon and all the right players in place, the smart grid could soon start delivering on its promise.

“On average, 30 percent of the energy produced by utilities is just hanging out and waiting to address peak load because there is no visibility into grid. If that energy isn’t used, it’s wasted," says Inbar Lasser-Raab, senior director of network systems at Cisco.

"With the right infrastructure in place, utilities can optimize production based on data, and reduce that over-capacity that’s wasted. Even if they can move 10 percent of that over to regular usage, that’s a huge impact on the grid.”

A smarter grid will also make it easier for utilities to use renewable energy and meet state and future federal mandates to do so. Because renewable energy sources are variable, and utilities currently don’t have the technology in place to monitor these sources, integrating them onto the grid has been problematic. 

Smart grid technology will also help utilities prepare for the almost-guaranteed onslaught of electric and plug-in hybrid vehicles plugging into the grid as yet another result of the stimulus package. In fact, Lasser-Raab imagines a future in which electric cars help smooth the power supply curve as a key component of the smart grid.

“Effective storage of power is a key challenge for utilities, so one idea is that if there are more electric cars out there, they can act as temporary power storage areas. When the grid generates power that we don’t use, then we’ll charge those cars, and when the grid has peak load, it may be able to actually draw energy from those cars.”

Demand-response systems, the “old-school” precursors to the smart grid, will also get a boost from a smarter grid. These systems incorporate energy-management software with automated meters that do things like turn off the lights and wireless access points in an office when no one is at work.

“The assumption has been that businesses would use these systems to optimize power usage based on their business policies or hours, but if they were connected to a smart grid they could base it on when the tariffs would be lower.”

Perhaps the greatest potential of the smart grid lies in reductions of greenhouse gas emissions.

Utilities are among the largest producers of climate-changing greenhouse gas emissions. If they can optimize supply, bring in more renewable energy, rely less on over capacity, and provide services that encourage us to consume less, they can begin to become part of the solution.

See also:

Overcoming Obstacles to a Smart Grid Future 

IBM Bringing World’s First Whole-Nation "Smart Grid" to Malta 

Smart Grid: Where Home Appliances Automatically Day-Trade Electricity