Transcript 0:00 [on-hold music] So we're at a point now where sensing has become, you know, cost affordable for, for a lot of utilities. 0:09 But what they're left with now is essentially all this data and no way to actually process it or combine disparate data sets and actually get value, you know, out of these, you know, data sets that they've, uh, generated in the past three to five years. 0:23 And that's where kind of the, you know, dual hardware and software innovation comes into play. And, and that's really the storyline that's categorizing, like, utilities moving forward. 0:36 [upbeat music] Welcome back to The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. Hello, listeners, and welcome back to The Peggy Smedley Show. 0:50 My next guest specializes in smart grid IT systems and data analytics, as well as advanced metering infrastructure. 0:58 Prior to joining his current company, he worked as a research analyst at Energy Equity, where he researched renewable energy projects and transmission planning dockets. 1:08 Please welcome Michael Kelly, Senior Research Analyst at Digital Innovations for Guidehouse Insights. Michael, welcome to the show. [chuckles] Thanks, Peggy. Pleasure to be here. So Michael, I'm pretty excited. 1:21 I want you to geek out with me to really talk about there is so much happening in the space today when we talk about innovation, we talk about sustainability, you know, trying to get people to understand what's happening, you know, in, in smart city s- and our homes. 1:36 But I really want you to dive into a little bit about the smart meter market, because I think there's a lot changing when we think about our infrastructures and what we're doing. 1:44 Help us understand how we can be more sustainable when we talk about the smart meter side. What, what actually is-- Walk us through that- Mm-hmm... smart meter just in general. Yeah, absolutely. 1:56 So, you know, I, I think it was the, you know, mid to late 2000s, the term kinda smart grid became the, you know, industry buzzword. 2:04 And that really started with kind of the proliferation of smart meters, um, across the US and Western Europe. Um, so what smart meter actually is, that's kind of a narrow term. 2:14 Um, I think advanced metering infrastructure is, you know, usually a lot more appropriate, particularly when we talk about stuff like innovation, analytics, digitization. 2:23 Um, so when we talk about smart meters, you know, you have the actual smart meter, the device you put on the back of your house spits out the energy usage reading, um, and sends that back to the utility. 2:34 Um, so what if, you know-- In terms of innovation at that level, um, you know, over the past ten years, we've seen, you know, more frequent inter-intervall readings, um, you know, hardened meters to mitigate against, um, you know, fraud and theft, uh, the emergence of edge computing. 2:49 You actually have kind of mini CPUs actually in that little device and can, uh, perform some processing at the edge. 2:58 Um, and then you have big communications infrastructure, um, whether it be the modules or the, uh, enabling infrastructure that actually sends that, you know, energy usage back to the utility. 3:09 Um, and we've seen the emergence of obviously a number of cellular technologies, RF mesh, uh, peer-to-multipoint. 3:16 Um, so really going beyond, uh, the power line carrier, which, you know, historically has categorized smart meter communication. Um, and then what really gets me excited is at the software level, right? 3:28 So, you know, you have kind of the core management platforms that, um, you know, manage smart meter data, your head-end system, your meter data management system. 3:37 Um, but analytics is really kind of where, um, a lot of, you know, industry interest has been over the past three to five years. Um, because there's so much, uh, you know, value trapped inside, uh, smart meter data. 3:50 Um, and to unlock it, the analytics platforms have, have emerged to, um, again, enable some customer benefits, grid benefits, um, and really take smart metering to the next level. 4:02 So we typically talk about our smart meter. You know, today people always say, "Look, we're getting the data. Everybody's doing it." But we know we haven't updated the grid in ever. I mean, you know, the reality is. 4:13 So it's like a catch 22. We're talking about we're getting all this analytics, but we haven't updated the grid. So where, where are we? Is it the software that's done it? 4:21 Because we're saying, "Look, we can get better meetings-- readings on our water. We can get better readings on our electricity usage. So, hey, don't turn that dishwasher on. Don't switch on that light." 4:30 But yet the grid itself is the most outdated ar-archaic thing ever. So it's a catch 22. Mm-hmm. Walk me through that then. Yep. 4:38 So it's kind of been a, uh, you know, a dual journey, um, with, you know, the proliferation of low-cost sensors. So you know what? You're right. 4:45 I mean, the utility industry is one of the most archaic in terms of kind of, um, you know, digital transformation and maintaining, um, kind of up to, you know, twenty-first century standards. 4:56 Um, so like I said, so that's, you know, what, what the, you know, the EU directive and the Smart Grid Investment Grant tried to do, um, was, you know, increase the surface area of these kinda low-cost sensors. 5:08 Um, so, you know, beyond smart meters, you have distribution line sensors, transmission line sensors, um, that are trying to provide some visibility into these traditionally un-networked assets. 5:20 Um, so we're at a point now where, you know, uh, sensing has become, you know, cost affordable for, for a lot of utilities. 5:28 Um, but what they're left with now is essentially all this data, um, and no way to actually process it or combine disparate data sets and actually get value, um, you know, out of these, you know, data sets that they've, uh, generated in the past three to five years. 5:43 And that's where kind of the, you know, dual hardware and software innovation, uh, comes into play. And, and that's really the storyline that's, uh-You know, categorizing our utilities moving forward. 5:55 So where are we headed? I mean, if we really think about this, we have a, a young leaders that are pushing for sustainability, saying, "Look, we have to do something. We can't have these dramatic water shortages. 6:09 We can't waste what we waste, and that's what we do. So we have to invest in our infrastructure. We have to invest in things to be smarter globally, because there's people who go without." 6:23 So now we're at a crossroads, right? Yep, absolutely. 6:28 And, and that's, you know, one, one of the, you know, key value propositions behind smart meters is that, you know, more sustainable or, you know, more efficient uses of energy. 6:37 Um, you know, previously with your, you know, old electromechanical meters, it would spit out a reading once every month, um, not really granular, and so, and insights into, uh, you know, how customers use their energy. 6:49 Um, you know, now with smart meters, we can tell, you know, how a customer uses energy on, you know, hourly intervals or, or typically now with a 30-minute or 15-minute intervals. Um, so how do you use that information? 7:01 One, you give it back to the customer to show them, you know, what their temporal patterns of energy usage are. Um, you know, you incentivize them to use less, whether it be through time of use pricing or rebates. 7:14 Um, and then you can also use that information to inform kind of grid parameters, right? When you think about stuff like load forecasting, uh, DER forecasting, um, simply maintaining kind of your productivity models. 7:27 There are a lot of use cases that have emerged over the last three to five years, um, that can, can increase the value of our, of our existing infrastructure, um, and really bring about kind of, uh, efficiencies that, um, you know, the, the industry hasn't seen. 7:43 So do you think what's happening right now, regardless of whether we get these efficiencies, w- if we don't do something, this is how I look at. I'm a bad guy. 7:52 I'm a nefarious character, gal waiting in the wa- weeds, and I'm saying, "Look, this is the perfect opportunity to hack away." I can shut down states. I can shut down countries. 8:05 I can bring them to their knees because- Mm-hmm... I can hack into it, and I can do something horrible. I mean, I- Mm-hmm... 8:13 I don't wanna say that I wanna encourage that, but that's really what can happen if you have something, if something's not done. I mean, the data's there. 8:21 You just said all this data's sitting there, and it's on all these people, and it's incumbent to cities, governments, countries to act, or everybody's in, in a, uh, is in a terrible bind. Yep, absolutely. 8:37 And, you know, obviously, you know, the energy, you know, sector is, you know, one of those critical, you know, infrastructures that's, um, you know, captured under some cybersecurity regulation. 8:46 Um, but it is, you know, fairly baseline and, and, you know, really doesn't reach where, you know, it needs to be. Um, so there has been, you know, a, really a surge in interest, uh, in, in cybersecurity space. 8:57 Uh, you know, when we talk about smart meters, you know, at, at, you know, at a high level, you look at them, you know, they're low-cost pieces of equipment, often in pretty isolated, stranded locations, theoretically, you know, fairly open for attack. 9:12 Um, that being said, you know, utilities have been investing a lot in their cybersecurity architectures, so stuff like segmenting their networks. 9:20 So, you know, um, you know, uh, smart meters that sit in the IT network, um, don't really cross over and can't really access the OT control networks, which is really where the devastating impacts of a cyberattack, you know, could occur. 9:34 Um, so, you know, utilities are taking the, the steps to mitigate and, and protect against, um, you know, an upstream attack, uh, by accessing the smart meter. 9:44 Um, but that said, you know, uh, you know, overall, you know, the utility industry, you know, is certainly still trying to catch up, um, you know, across hardware, software, and, and communication security. 9:55 But Michael, you and I both know part of the problem that we've had up to this point is that the average consumer does not like Big Brother knowing everything about them. Yeah. 10:05 And that's been the problem up to the smart meter is the communication, the ed- education that's gone out to citizens has been horrific. We've not explained what the real benefits are, and the communication's been bad. 10:19 So right now, that's it. So are we going to get at a point that cities are going to have to do a mandate and say, "Look, you're going to have to have a smart meter whether you like it or not"? 10:29 And here's what's gonna happen. It's gonna be no different than wearing a mask. They're gonna have to say, "Just like what you had COVID-19, everyone's gonna have to wear a mask. 10:36 Everyone's gonna have to have a smart meter whether you like it, and that's what's coming." Well, it's interesting 'cause that is an issue that's been playing out, you know, across the US over the past few years. 10:46 Um, you know, a lot of, uh, you know, pushback from the consumer perspective, um, just on, on some of those kind of privacy concerns. 10:54 So, you know, it's, um, kind of a fragmented regulatory landscape, uh, often state-by-state basis, where a lot of states now, uh, offer an opt-out, opt out. 11:04 Um, so essentially you can opt out of receiving a smart meter, but the crux there is who bears the cost, right? So, you know, the utility still has to pay for a meter reader to go to those opt-out properties. 11:16 Um, so typically what they do is they offload that cost onto the consumer, um, which obviously doesn't, you know, help public perception in all cases 'cause, you know, that opt-out customer now has to pay, you know, $15 to $30 per month to get that meter reader out there. 11:32 So a- again, going back to your point, I, I think it's a, 11:36 you know, there's a big, you know, concern about, um, you know, public outreach and, you know, there have been some utilities that have gone, you know, taken that, you know, second step in terms of, um, facilitating more, um, you know, uh, appropriate, you know, customer outreach, um, informing customers of the benefits, incentivizing them via, you know, digital marketplace or rewards programs. 11:59 Um, so yeah, you know, that is an issue that's playing out. Um, but like I said, opt-out, you know, policies or opt-out programs are, are one of the ways that utilities are trying to, uh, address it. 12:10 I don't think it's gonna be opt-out. I think it's gonna be government regulation. It's just gonna say, "Look, you know what? What's the worst? Because if you don't do it, something worse is going to happen." 12:18 It's gonna be an interesting time. Well, Michael Kelly, Senior Research Analyst, Digital Innovations at Guidehouse Insights, thank you for your time. 12:26 Where can our listeners go to get more information on what you're doing? 'Cause it sounds like you've got your handle on all of this. What's going on? So yeah, guidehouseinsights.com. 12:36 Um, like I said, we have, you know, an AMI tracker, which actually tracks some of these deployments, uh, at the utility level, um, as well as a host of research reports that touch upon, you know, smart metering and, um, and all related technologies. 12:50 Michael, I loved it. I hope you'll come back again, and we can talk more. Absolutely. Thanks, Peggy. It was a, it was a pleasure. All right. Listeners, we're out of time. 12:58 Remember, we broadcast live every Tuesday at 12:00 PM Central. You can check out our website at connectedworld.com, our show website at thepeggySmedleyShow.com. But you know what? 13:07 Most importantly, what I want you to do is I want you to tweet at us at ConnectedWMag. I wanna hear what you think. We wanna know, are you afraid of having a smart meter, or do you think it's really important? 13:16 Those are things we need to talk about, and there's so much more. As we start thinking about sustainability, we start thinking about we have to stop being so wasteful. 13:25 As you know, I wrote a book about sustainable in a circular world, and these are things we have to start thinking about. We can't be as wasteful as we were. All right. That's all the time we have for today. 13:34 Remember, this is The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. And remember, with great technology comes great responsibility. Have an awesome week. [upbeat music]
