What’s the best way for a German utility to handle the combination of that country’s unclear smart metering future and its increasingly pressing need to manage the world’s largest share of customer-generated solar power?

Last week, E.ON’s metering subsidiary and global IT giant IBM announced one potential solution that may well push the boundaries of how cloud computing infrastructures are being applied to solve utilities’ smart grid and big data challenges.

In simple terms, E.ON Metering announced that it will host its smart meter IT infrastructure at one of IBM’s data centers in Germany, using IBM's SmartCloud and Intelligent Energy Service Enablement Platform (IESEP). The goal is to “improve the deployment and management of smart meters, simplify the integration of renewables, and other innovative services, while at the same time maintaining a high level of customer service.”

E.ON, which owns nearly 68 gigawatts of generation capacity and also supplies energy to about 26 million customers across Europe, said it will start using the private cloud platform for customers in Germany, Austria and Switzerland, though the partners also want to use it for other international markets.

First steps for customer-facing applications include “usage profiles for information about time-of-use-rates” and “changes in use patterns that can be compared with historical data” -- features that are fairly common in smart meter deployments today. The utility offered few specific details beyond that, though it noted both customer-facing and internal business cases for the platform.

“What remains to be seen is how big data and analytics continues to drive additional innovation and usage,” Michael Valocchi, IBM’s global energy and utilities leader, said in an interview last week. The partners plan to add new analytics and business management tools as time goes by, which could range from customer energy usage prediction and behavioral analytics, to integrating demand response, distributed generation management, or other new functions that are as yet unforeseen.

“What are the business models as the market continues to evolve? It’s hard to speculate on where E.ON really looks at that from a business perspective -- but it is going to open up a whole new set of strategic questions, for all components of the value chain” across Germany’s deregulated energy landscape, he said.

E.ON has already engaged in a similar cloud-based smart metering project with Ericsson in Sweden, managing more than 600,000 metering points. But that’s focused on a country that has largely completed its nationwide smart meter deployment, while Germany’s deployment has yet to take shape.

“This allows E.ON to have the platform and the infrastructure,” Valocchi said. “That’s a control point that’s really important.” (Greentech Media will be delving into the benefits and challenges of the move to cloud-based smart grid architectures at our Soft Grid 2013 conference on October 1-2 in San Francisco.)

Scaling to Meet Customer-Side Innovation

Unlike France, Spain, Italy and the U.K., Germany’s government has declined to adopt a European Union recommendation to push smart meters en masse to 80 percent of all residents by 2020. Instead, it’s looking at more of an opt-in smart meter model, based on customers and the nation’s deregulated energy market players choosing what kind of grid-to-home technologies they want -- as long as they meet strict government data security and standards-based interoperability requirements.

German regulations do require smart meters for new buildings and major renovations, along with customers with an annual consumption of more than 6 megawatts or sites producing more than 7 megawatt-hours of distributed generation. Even so, a July report from Ernst & Young, which gave the German government the data to determine that a full rollout of smart meters wasn’t cost-effective, also estimated that these existing regulations would only push smart meters to about 23 percent of Germany’s 48 million meters by 2022.

“I’m not sure you’ll ever see full, wholesale rollouts there,” Valocchi said. “But what you will see is a very value-added and very targeted rollout,” with the remaining non-required smart meter deployments being based on whether or not they’re deemed worthwhile to users.

“The other thing that this pushes the industry to do is to continue to prove the value of the metering data,” he added. Without government mandates, subsidies or other forces pushing smart meters, “The onus is going to be on the industry to show that this information is going to be very valuable to them.”

Germany’s smart meter plans also include a component that most other national plans lack, the U.K. being a noteworthy exception. That’s the idea of a central hub, or in-home gateway, that links water, gas and electric meters and other in-home devices to the utility’s backhaul networks. The so-called “BSI gateway,” named after Germany’s information security office that is overseeing privacy and security aspects of the plan, is also meant to support a standards-based array of third-party devices.

That’s something that Germany, as a deregulated energy market, needs to do to allow multiple retail energy vendors to mix and match their devices and services with the underlying support network.

“The government is trying to drive innovation,” Valocchi said. ”They want to open a platform, and they want people to be able to innovate on the open platform -- which is why they’re allowing customers to drive some of the adoption.”

Integrating Distributed Renewables on a Mass Scale

At the same time, Germany is also the country with the most distributed PV solar in the world, with a staggering 34.5 gigawatts of solar capacity as of this summer, providing nearly 7 percent of the country’s power in the first half of 2013. That’s given the country a rightful role as solar energy world champion -- but it’s also made for a fast-growing set of unpredictable and nearly invisible power inputs to the country’s grid, which in turn has pushed grid stabilization requirements to unprecedented levels.

From an operational perspective, Valocchi, said, IBM and E.ON are also looking for “the additional information we need to continue to make sure we’ve got a reliable and resilient grid. That includes some of the predictive capabilities on what we’re going to have from a distribution resource perspective.”

Germany has already set requirements for “smart” inverters that can help balance distributed solar, and is a leader in “virtual power plant” systems that link local, or grid-wide, assets for balancing tasks. It’s also a likely emergent market for energystorageto back solar power, which could also help mitigate the impacts of large numbers of solar panels on distribution grids.

But managing customers’ energy use patterns and influencing their energy behavior could be an important additional tool to help balance solar with grid needs -- and one that requires much less capital expense. 

“As customers become energy-conscious, and you provide them more energy information, I think we’ll see services providers coming in and proving more and more benefits,” he said.

Pushing the Boundaries of Cloud Services for the Grid

For the past several years, Greentech Media has been examining the slow but steady migration of utilities to cloud computing architectures. It’s been slow, because utilities are still leery of entrusting their IT needs to the cloud, particularly when it comes to core functions like operating the grid.

At the same time, the scalability, flexibility and future-forward adaptability that cloud computing offers is certainly attractive to utilities struggling to manage the two-way flow of both data and energy between them and their technology-equipped customers. 

While Valocchi didn’t lay out specific cost or time-to-market figures for IBM’s plans with E.ON, he did note that while “cost is always a driver...it’s the flexibility and speed to market that we're much more focused on.”

Valocchi cited other IBM projects that help lay the groundwork for the scale of the cloud computing effort it’s launching with E.ON, including the contract it won early this year to develop the meter data management platform for Canada’s Ontario province. On the home-to-utility energy data integration front, IBM was a key player in the Model City Mannheim project, one of Germany’s E-Energy series of smart grid pilots that make up a long list of tests of next-generation smart grid technologies across Europe.

At what point will utilities start to move wholesale into putting more critical infrastructure on the cloud? “That’s a hard one to answer,” Valocchi said. Creating a private cloud to manage metering isn’t itself a major step forward -- many smart meter deployments are managed that way.

"Yes, this is on a private cloud, but it shows the flexibility that the infrastructure of the cloud can provide, and gets back to the perspective of a flexible technology platform,” he said. In that sense, E.ON’s work with IBM represents “one toe in the water here, from a cloud perspective -- but it’s critical, because it a very strategic part of the business.”

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