Four Months In, Cisco Moves to Dominate Smart Grid

Sep 17, 2009

When Cisco announced four months ago that it was getting into smart grid, it was more of a "we're here, we're Cisco, get used to it," sort of announcement.

This morning, the company shared the nuts and bolts of its smart-grid offering, and its progress thus far, including a comprehensive security strategy and partnerships with everyone from ZigBee to General Electric.

There are two important bits of information couched in the company's announcement of its many partners (all of which will be part of something Cisco is calling its SmartGrid Ecosystem):

    First, it shows that Cisco will be able to provide comprehensive end-to-end smart grid solutions.

    Second, it shows that IP is officially the communication standard for the smart grid. Even ZigBee, which had initially resisted the move to IP, is now a partner with Cisco.

The communications giant's Ecosystem reads like a who's who of smart grid: smart meter leaders Landis + Gyr and Itron join mammoths Verizon, General Electric, Oracle, Siemens, as well utilities such as Duke Energy, consulting and financing firms Capgemini and Accenture, and smaller companies such as energy monitoring specialists Pulse Energy. They're all focused on one thing:

"Ecosystem members will work with Cisco to support interoperability testing and enable industry migration to an IP-based infrastructure for smart grids and energy management applications, all the way from generation to businesses and homes," the company's announcement says.

According to Inbar Lasser-Raab, senior director of network systems at Cisco, today's announcement represents three major areas of progress for the company: partnerships (the Ecosystem, which is working towards IP standards-based interoperability); customers (Cisco is working with more than 15 utilities and has established an international technical advisory board with both U.S. and EU utilities that it will bring together to discuss top smart grid issues); and security (new solutions and services).

The latter is something that has plagued the idea of an IP-based smart grid, with people running scared at the thought of hackers orchestrating massive blackouts.

While Cisco is focusing a lot of attention on security, Lasser-Raab insists that the security threats have been overly dramatized and that utilities are now comfortable with IP.

"IP has been around for many years and there are already many mission-critical networks that run on IP," she says. "If you look at the security threat versus the efficiency that an IP-based standard would bring, for most of the utilities we're talking to, the risk is outweighed by the benefits."

"There is trust there that IP has been around a long time and we've dealt with those issues many years ago—they have made the decision already that IP is the standard, that it's the right infrastructure."

Still, Lasser-Raab is quick to point out that no one is underestimating the security requirements that go along with an IP-based network, which is why Cisco also announced today a range of physical and cybersecurity services related to smart grid, including utility compliance assessments, physical site security vulnerability assessments, grid security architecture design, and physical and networking security design and deployment.

In less than six months, Cisco has managed to emerge as a dominant force in smart grid.

So far, that hasn't overly affected Silver Spring Networks, referred to as "the Cisco of smart grid" before Cisco got into the space, apart from taking a bit of the limelight.

Silver Spring already has relationships in place with most of the utilities Cisco has announced partnerships with and, in fact, there have been a couple of deals — Florida Power and Light and Duke Energy — on which the two companies have worked together. Silver Spring announced last month that it expects to be profitable by the end of the year, and there has been speculation that it will be one of the first start-up smart grid companies to go public.

Perhaps more importantly, with Silver Spring and Cisco jockeying for position as the networking giant of smart grid and wracking up utility deals weekly, there seems to be little room left for smaller players.

There still remain plenty of unknowns for the smart grid future. For one, the federal government is still writing the ground rules for building a national, compatible smart grid that will increase energy efficiency and facilitate the use of renewable energy resources.

The Federal Energy Regulatory Commission adopted its first official smart grid priorities in July, including cybersecurity, dynamic pricing, and the need for technology that can facilitate off-peak charging for electric vehicles. The National Institute of Standards and Technology is now working with the utility industry on writing hundreds of national smart grid-related standards to be completed later this year.

The president and members of Congress clearly recognize the value. The recovery bill passed earlier this year set aside $11 billion for smart grid development, and a climate and energy bill in the works now is expected to add more. According to DOE calculations, if the current power grid became just 5 percent more efficient, the energy savings and cuts in greenhouse gas emissions would be equivalent to removing 53 million cars from the road.

 

See also:

Smart Grid: Digging The Foundations

Overcoming Obstacles to a Smart Grid Future

FERC Adopts Smart Grid Policy with Rules for Raising Rates

What's Next in Smart Grid? IBM Picks 5 Companies to Watch

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