Energizing the grid

By Ben Thompson, Senior Editor

Power & Energy talks to Xcel Energy’s Chief Information Officer Mike Carlson about how he is increasing the value business systems deliver to the organization.

Mike Carlson knows all about the transformative power of IT. As Vice President in charge of Xcel Energy’s business transformation unit, Carlson was instrumental in introducing new processes and technologies to the company’s day-to-day operations. Now, as CIO for the energy utility – the fourth-largest combination natural gas and electricity company in the country – he has his sights set on a higher goal: realizing Xcel’s vision of a 21st century smart utility.

It’s a lofty aim, but one that will be critical to the company’s ability to offer enhanced services to its customers while at the same time managing energy consumption in its service territories for a positive environmental contribution. Clearly, having the right platform in place to begin with is critical. Xcel has regulated operations across eight states, 10,000 employees, over three million electricity customers and nearly two million natural gas customers – an operating footprint that presents significant challenges from an IT perspective in terms of standardization and commonality of systems. As Carlson points out, it’s about increasing the value that those systems deliver to the organization. “I think technology has got to be balanced in its delivery of value,” he explains. “Each jurisdiction – both geographic and operational – has its own view of value, yet we try to operate a standard technology platform for the obvious opportunity to leverage investment across a wider footprint. Finding the investments that are equally agreed to by eight jurisdictions, obviously, is a little more challenging than just getting buy-in from one or even two.”

Carlson explains how the company’s drive towards consolidation and standardization actually started back in 2000 when Xcel was formed through the merger of New Century Energy and Northern States Power. “Since then, we’ve invested over $500 million to achieve our current level of IT integration, and I would say for the most part that we’ve been very successful,” he says. “In terms of incremental investment on top of that, our new challenge is working out how to continually expand and improve to get the highest return from our investment.”

Transforming the grid
And this is where Xcel’s Utility Innovations initiative comes in. Utility Innovations was specifically created to address this need by driving business transformation and developing new – and often groundbreaking – ways to deliver service to Xcel customers. “Utility Innovations is critical for a number of reasons,” asserts Carlson. “First, it represents our test bed of opportunity where we can throw caution to the wind, stretch our capabilities and look to prove our concepts. But it’s also the place where we can start to look at how we can integrate technology into our internal business processes.”

The company currently has a number of initiatives in the pipeline, including combining chemistry analysis with technology capabilities to manage slagging in the boilers, and looking at x-ray technology to assess the condition of its infrastructure – both above ground (wooden pole), and below ground for buried cable fault failure. Utilizing predictive indicators with data analytics is another example of how Xcel is trying to extend the innovation footprint.

However, as Carlson explains, most of the developments center around the evolution of a true end-to-end, vertically and horizontally integrated smart grid. “Utility Innovation is certainly a driver for that evolution,” he says. “I think there is a huge amount of vertical technology that’s been available in recent years for smart grid innovation in terms of data collection, but it’s the horizontal integration of all of that data – putting it into the hands of decision-makers, utilizing automated tools and capabilities – that we see really defining the smart grid of the future.”

Xcel’s long-term smart grid concept imagines an evolved energy grid with layers of functional, sophisticated intelligence built in – intelligence that will foster communication and integration among the grid’s various components and processes. This would enable the grid to better monitor, manage and even balance itself. “Having the consumer being able to preset their preferences in the knowledge that the utility can respond to those in any given situation, and taking an industry that can get excited about a four or eight-hour look-ahead model to a point where we have a real-time, millisecond cause, effect and response type structure – that’s where we see the evolution of the smart grid actually taking us.”

Smart grid city
In mid-January, Xcel Energy announced the formation of a consortium of partners who, in conjunction with Xcel, will actually build an end-to-end Smart Grid City that enables technology across the entire footprint of a suburb or small metropolitan area (between 50,000-100,000 people). The company is currently evaluating cities within its service territory to determine where the program will be trialed, and expects to have a decision by mid-March.

Indeed, Xcel has been moving aggressively over the last several years in terms of its vertical deployment of smart grid technologies – everything from substation automation systems to distribution sensor monitoring and home automation integration. “We’ve got smart substation and smart transmission projects underway to look to further automate the management of those infrastructure systems,” he says. “Home web portals for our consumers are under development to communicate what their energy consumption options and control capabilities are. Taking this back into the generation and markets side of our business to make the right choice on generation is key. But all of that vertical technology can never be fully optimized until you can put that horizontal integration and decision-making layer in place.”

Smart Grid City is Xcel’s platform for developing, testing and validating those capabilities. “We need to put the communication of that information into the hands of decision-makers who can use it to engineer a positive impact through reduced energy consumption and improved economics for the utility and the consumer alike,” says Carlson. “We also hope to see an overall end-to-end reliability improvement as a result of what we see as a huge opportunity to integrate all of the disparate capabilities that exist today.”

In terms of the actual integration process itself, he explains how his team has been working since late-2006 on defining the architectures and systems that could prove useful in integrating the different elements. “We’re currently working on what you would call the technical architecture design,” he says. “Our partners on this program – Accenture, Current Group, Ventyx, Schweitzer and OSI Soft – are bringing a lot of what they see as the key architectural requirements to the table. And Xcel is taking the lead on designing the systems in conjunction with our existing Utility Innovation and Technology Delivery organizations.”

The road to success
One related area that the company is currently focusing R&D attention on is the concept of plug-in hybrid electric vehicles. The goal is to determine how consumers can use the vehicles to significantly lower greenhouse gases, shore up electric grid reliability and prove PHEVs are a viable alternative to today’s carbon-emitting cars. Xcel is studying how the vehicles perform in varied geographic regions and climates over an eighteen-month period – and as Carlson explains, it all comes right back to the smart grid.

“PHEV is not only a direct contribution to a transportation opportunity; if you look at PHEV in a smart grid-enabled environment, you’re enabling a distributed generation model,” he says. The utility is currently in the process of finalizing six PHEV conversions, taking Ford hybrid vehicles and moving them to a full PHEV model that includes a vehicle-to-grid connection for two-way energy transmission so each can charge and discharge power to and from the grid. With every US home connected to the electricity grid, vehicle-to-grid technology could be key to meeting growing energy needs, and Carlson hopes the project will allow Xcel to explore how PHEVs can become an integrated part of a smart grid energy system – one that allows customers and utilities to work together to balance the power grid, lower greenhouse gas emissions and improve energy security. “There’s certainly a value contribution to the environment and, if properly utilized, an existing infrastructure that won’t require huge build-up,” he says.

Managing peak demand will be key, however, as an improper utilization of PHEV could increase infrastructure demands significantly. For that to be a success, Carlson suggests you need the smart grid in order to better utilize data regarding energy activity on the grid. “It’s got to have that real-time element,” he says. “You can’t anticipate where those vehicles might be in a certain time-period and base your spending on what you hope might happen. You’re going to need to know behaviors in order to properly manage peak demand, and that information is going to have to be accessible in real-time.”

Driving value
But while Xcel’s grid initiatives will clearly be a big part of Carlson’s focus for the upcoming 12 months, they are not the only projects the CIO currently has in his inbox. Indeed, aside from his transformational work with PHEVs and Smart Grid City, he also has day-to-day operational issues such as technology asset upgrades and workforce optimization to deal with. In addition, he is also leading an increased focus on IT efficiency initiatives.

“We’ve got a number of programs looking at additional opportunities for energy efficient IT,” he says. “For example, we rolled out an end-to-end replacement of our desktop and laptop systems and monitor technologies that we see contributing a 30 percent reduction in our own energy consumption. Elsewhere, VMware is a big partner with us on server consolidation, which has a direct impact on our energy efficiency. And we’re also now looking at different ways to not only power our datacenters, but manage the consumption of power within those datacenters through partnerships with IBM and Dell.”

There’s a lot going on in terms of technology refreshes, too – and while it may not sound as glamorous as some of his more high-level assignments, Carlson argues that such projects fulfill an invaluable function in terms of energy efficiency improvements as well as core reliability. “I think one of our challenges is matching up our traditional ‘refresh’ investments with real business value, and seeing them as opportunities to leverage environmental benefits as well as traditional reliability and performance aspects,” he says. “It’s sometimes hard, from a business point of view, to justify investment when it’s being made for the environmental gain alone. But when you combine it with a natural refresh for reliability and performance, you get a double return on your dollar, in our view. The key to the success of all of these energy efficient IT investments is making the business case.”

So what’s next for Xcel? Carlson maintains there are plenty of opportunities for innovation across the industry. “We will continue our vertical deployment of T&D and generation system automation along with enhancing data analytics across our entire business footprint. While the term might not speak to innovation, the techniques, capabilities and results certainly have the opportunity to realize a number of innovative advancements. We’ll also continue to look at solutions for optimization of our asset footprint, coal slagging technologies, emissions analytics and optimization. All of those are going to be a continued driver for us.”

He also feels that the communications and data management vendors need to step up to the plate in terms of what they can offer the industry. “I think in terms of data management, there are huge opportunities for this sector to leverage much of the proven technology out there,” he concludes. “If you look at the communications side, on the other hand, there is a lot of potential for utilities to really get quite innovative. Mesh networks, optimization for cost and reliability of throughput; I see all of those being both areas of focus and opportunities where we’ll see some significant movement over the next couple of years.” Despite Xcel’s technology leadership position, it’s clear that Carlson is not resting on his laurels.

An innovative approach
In December 2003, Xcel Energy brought together its leading technology partners to create the Utility Innovations initiative. The initiative was a visionary project that leveraged the power of partnership and collaboration to drive innovation. Xcel Energy understood that it could create new value for the company, its employees, partners and customers by utilizing the minds and efforts of many, rather than relying on a business-as-usual approach of attempting to find new solutions on its own.

By combining individual partner company strengths in hardware, software and utility industry expertise, Xcel Energy is developing synergies and advancements to benefit utility customers. Taking the best ideas of diverse companies, Utility Innovations looks for solutions to help transform our business by improving operations and customer satisfaction through enhanced system reliability and efficiencies in cost structure.

Today, the initiative has evolved into an Xcel Energy program staffed by project managers who continue to work with Utility Innovations partners. Some of the participants have changed as new companies have joined to begin work on different initiatives. Other partners, their work complete, have left. Like innovation itself, projects are dynamic and constantly changing.

Xcel’s smart grid initiatives

• Neural networks: a state-of-the-art system that helps reduce coal slagging and fouling (a build up of hard mineral in the boiler). The backbone of the system combines laser and sensor technologies with an analytics software platform to optimize the emissions produced within the boiler. By limiting slag, Xcel Energy expects to reduce emissions and improve reliability and operational performance.
• Wind to batteries: involves testing a one-megawatt battery system to store wind energy and return it to the grid. Xcel Energy expects to demonstrate and prove long-term emissions reduction from increased availability of wind-generated power.
• Smart substation: involves retrofitting an existing substation with cutting-edge technology for remote monitoring of critical and non-critical operating data. This project also involves developing an analytics engine that processes massive amounts of data into near real-time decision-making and automated action.
• Smart distribution assets: tests existing meter communication equipment that can automatically notify us of outage and help restore outages more quickly. By using this advanced meter technology, Xcel’s control center will be able to detect isolated outages in advance of customer calls.
• Smart outage management system: tests diagnostic software that uses statistics on eight factors, including equipment maintenance, real-time weather and history to remotely diagnose and possibly predict problems in the power distribution system. Success means responding to outages faster, and with properly equipped crews – and maybe even preventing the problem.
• Consumer web portal: allows customers to program or pre-set their own energy use and automatically control their power consumption based on their personal preferences, such as energy costs or environmental factors along with accessing detailed energy consumption data.
• Plug-in hybrid electric vehicles: this is one of the nation’s first real-life tests of plug-in electric vehicle and vehicle-to-grid technology and involves the conversion of six Ford Escape PHEVs for fleet and personal use.

Transformational technologies
Mike Carlson explains how mobile apps are helping Xcel drive greater information into the field.

We’re in our fourth year of our mobile strategy, and are continuing to expand our mobile footprint. It started out as a very high-level, remote capability, but now we’ve reached a point where our field crews use it as an invaluable everyday tool – today, everything from dispatch to field management to job information is all being handled using mobile applications. We’ll have somewhere in the region of 4000 units in the field by the end of 2008.

These mobile technologies are really helping us drive towards greater operational efficiency, but they’re also becoming a key part of what we see as our knowledge management strategy. With an aging workforce, knowledge is becoming more and more critical. We have huge amounts of data, but it doesn’t become knowledge until it can be delivered at the right time, in the right way, to the right people – it has to be accessible, and that is factoring into our mobile strategy as well.

We see a continued increase in workforce efficiency by keeping field crews out in the field. So if we can automate what used to be a paperwork process through the use of mobile information, it gives us a huge advantage in terms of what we can do for customer delivery and automation.

We are also currently looking at how to leverage geospatial technologies. There are a lot of great ideas out there, but I would admit that it’s probably one of our areas of innovative challenge – to figure out how to make use of what is a very cool technology, and make it a useful technology. It all goes back to making the business case.