For a small state, Vermont has big smart grid plans.

The Vermont Electric Power Company (VELCO) and IBM will build a statewide fiber optic and Carrier Ethernet network to provide the backbone for communications for Vermont’s utilities.

The network will connect transmission substations owned by VELCO, which is the statewide transmission company, to the distribution utilities.

"Our collaboration with IBM to construct a network that both strengthens system reliability and enables Vermont utilities to execute our collaborative statewide Smart Grid initiative provides an innovative model for the rest of the country to build a 21st century smart grid,” Chris Dutton, President and CEO of VELCO, said in a statement.

The transmission reliability project had been in place before Vermont put together its smart grid plans. The smart grid initiative, known as the eEnergy Vermont project, will install smart meters at most residences in Vermont by the end of this year. It will also support home area networks and offer demand response options, and the fiber network will allow for substation and distribution automation.

Although not all of those projects across the utilities will leverage the fiber network, it could be used for a variety of those applications.

The state of Vermont won $69 million in stimulus funds for smart grid projects that total about $138 million, and many of those projects must begin sometime in 2012 in order to make use of the federal dollars. To begin some of the other projects, such as substation automation, the backbone has to be in place. As such, the entire network will be built within the coming year, according to IBM.

“Really, its first purpose is reliability needs,” Allen Stamp, project manager for the eEnergy Vermont Project at VELCO, said of the fiber network. “This is something we were planning before the smart grid came into the forefront.”

However, the fiber network itself was not included in the ARRA funds, and is separately funded through regular cost-based recovery.

“Many talk about being able to do those types of applications, but they don’t realize the underlying communications infrastructure is not there today -- and they might have to change it dramatically,” said Raymond Blair, director of advanced networking for IBM Global Technology Services.

Although fiber is expensive (the fiber installation alone is expected to cost $53 million), Vermont has the advantage of economies of scale. The network will support nearly the entire state, covering more than 20 utilities. The state currently has a fiber network that can only go up to about 2.5 gigabits per second, according to Blair. He said the new system could support more than 17 terabits. 

Wait, 2.5 gigabits per second is too slow? 17 terabits?! Google is talking about building an ultra-fast broadband network that will run at one gigabit per second, similar to what South Korea has talked about rolling out nationwide. Talking to Blair, he noted that this is only going to the substation, where it will connect to the utility. And just because the immense bandwidth can run at those speeds, it often won't, depending on the application. 

IBM will provide the project management and networking system, but it will ultimately be VELCO that controls the network. Unlike some other communications systems that could potentially be obsolete in just a few years, VELCO expects to use the network for 15 to 20 years.

Although fiber will provide the backbone, some utilities are also using cellular for metering. Vermont Electric Cooperative has already recouped the costs for its metering upgrades through improved outage restoration times. The co-op is layering SmartSynch’s cellular solution on top of its PLC platform for next-generation needs, whatever those may be.

Building for whatever may come is the concept at the core of VELCO’s fiber project. “You are going to have these devices that are going to have high-bandwidth, two-way communication requirements, like synchrophasors. If you’re going to put a synchrophasor in, you’re going to need something like this,” said Blair. “VELCO will be a model for other utilities.”

Although Vermont is unique in a statewide system, other cities and regions are leveraging fiber for smart grid. Chattanooga, Tenn.-based utility EPB will offer its existing customers an ultra-high speed internet connection at one gigabit per second. Google is also partnering with Kansas City (both of them) to build citywide fiber networks that will be a backbone for all kinds of city services, including utility applications.

Itron’s latest commercial and industrial meter model will be equipped with Tantalus communications modules. The first utility to use the C&I meters is Jackson Energy Authority in Tennessee, which is leveraging the Tantalus Homerun fiber network for the meters. Australia also has ambitious broadband plans, which could be used for some smart grid applications.

Up in Vermont, the focus now is just getting the system built before the utilities start dreaming big about what else could be layered on top of the backhaul network. Depending on how much bandwidth is available, other services, like broadband, could even be offered.

But for now, VELCO is squarely focused on reliability rather than dreaming about the applications that may be many years into the future. “If you build it, they will come,” said Stamp. “But we haven’t really contemplated that next step.”