Smart technology initiatives could save $20.4B by 2030

By Eric Marks, PricewaterhouseCoopers

Smart technology is being rapidly incorporated into new and legacy systems and technology. The implementation of smart grid technologies could reduce electricity use by more than 4 percent by 2030, according to the Electric Power Research Institute. Over a 17-year period this doesn't sound like much, but it translates into a savings of $20.4 billion for home and business owners.

Eric Marks of PricewaterhouseCoopers

Smart technology optimizes resources use while delivering equal or superior performance when compared with traditional technology. Coupled with clean technology, it covers a broad scope of industries, including those related to smart initiatives such as energy, water, materials, facilities/buildings, transportation and design/planning.

There are few transformations driven by information and communication technologies (ICT) that are as promising as smart grids in meeting the world's urgent energy challenges. Smart initiatives are fueling innovation in the enterprise because businesses are realizing that smart machines and smart applications can take information from a system or the environment to create new revenue streams, control costs and improve products and services. In fact, the opportunities to use machine-to-machine (M2M) to bolster the performance of a business are more attractive and justifiable than ever before. 

There are five primary smart machine-to-machine (M2M) sectors supporting clean tech initiatives, according to a 2011 Jupiter report. They include in-vehicle applications and telemetry; smart metering and industrial M2M applications; healthcare M2M; connected homes/buildings and appliances; and M2M retail and banking segments.

The strong focus on this industry is driving manufacturers to quickly churn out new products to support smart initiatives. As a result, product and device manufacturers are streamlining their manufacturing processes and investing heavily in such technologies as product lifecycle management (PLM), enterprise resource planning (ERP), process control systems and computer-aided design (CAD) programs. The success of manufacturers trying to cash in on the smart grid's market potential will be heavily based on their continuous product innovation, brand extensions and category leadership - all depending on management of the product portfolio and a constant flow of new and improved products. Together with the backdrop of an industry which is in a state of rapid change, time-to-market, throughput of products, compliance with regulations, and the flexibility to change quickly have become issues that are more critical than ever.

PLM technology is well-suited for clean tech manufacturers beginning to develop new devices. Having this technology in place early on provides a platform for efficient product design processes, improved product quality and the ability to meet product targets, including regulatory compliance.

M2M product manufacturers are already starting to adopt such systems to replace paper-based processes with online, real-time, interactive solutions that provide both structure and flexibility to the process. However the one area not to be forgotten is how compliance as well as security will come into effect. Moving too far, too fast with new technology or methods puts compliance and security at risk. To put organizations in a position to pass compliance audits and avoid fines and other negative fallout, utilities must be able to substantially document processes and be able to conduct audits. To secure the smart grid, network security needs to be embedded in the fabric of the advanced metering and smart grid communication infrastructure architecture, not just the back-office enterprise architecture.

Security architecture must be designed early in the process and aligned with other key business, information and communication architectures. To ensure a compliant architecture, security needs to be based on existing and evolving industry standards, such as NERC CIP 002-009, NIST 800-53 & 57, ISO 27001/2, AMI-SEC and FIPS 140-2, FIPS 197, ANSI C12.22, Smart Energy (SE) 1.0/1.x and OpenSG AMI-SEC. In fact, utilities should strongly consider becoming actively involved with industry security working groups to address the evolving industry standards and new and emerging threat scenarios.

All components on the grid need to be tested regularly and thoroughly in order to identify and remedy security deficiencies. As smart grids are inherently dynamic, with new IP-enabled assets being introduced, they are susceptible to new and emerging threats as they evolve. As security risks evolve, so should the security protections in place - with a consistent, well-considered long-term approach and methodology.

As data is generated, moved and stored throughout the grid and within the enterprise, it must be protected with levels of security consistent with the classification of that data. Addressing concerns and providing reassurances to consumers will be a key step to realizing the benefits available from driving adoption of smart grid and related technologies.