Rise of the machines

Power & Energy talks to Andrew Berman of Sierra Wireless, Wavecom’s Stefan Lindvall and Chris Purpura of Aeris Communications to find out how M2M is revolutionizing the energy industry.

The rise in machine-to-machine (M2M) communications – machines gathering data and not only communicating in local-area networks but also feeding data to cellular networks and to the internet, powering revolutionary automation – is testament to the increasingly high value that the electric power industry places on networked data collection. But what benefits can M2M communications bring to the energy utility sector?

PE. North America has around 217 million electricity and gas meters, representing a substantial potential market for vendors of M2M communications solutions. What advantages does M2M technology offer to those in the electric utility industry?
AB. The utilities industry has a broad range of communications needs, from remote monitoring and control of fixed assets to mobile data and location tracking for large service fleets. M2M solutions offer the ability to monitor and control unmanned, remote applications, including measuring wellheads and flow meters, backing up substations and restoring power, and controlling remote equipment. In addition, these solutions can dispatch and track service fleets from a central location, and optimize customer service and efficiency. Some of the advantages that we’ve seen customers realize through deploying wireless M2M communications solutions include quick and measurable ROI; improved customer service; increased accuracy; installation cost savings; enhanced maintenance and distribution; and reduced fuel costs.

SL. The key advantage M2M technology offers the electric utility industry is the efficient collection of data from the meter, leading to the ability to optimize energy consumption and improve load management. To do so, the utilities must be able to monitor consumption in real-time and offer incentives to customers to use their energy more efficiently and share the load better. For example, if you know the consumption between the hours of 8-10am, you can increase tariffs on consumption at that time – when most businesses are turning on lights, computers, etc. Similarly, you can reduce the price of consumption at 10pm, and encourage people to balance the load by running their dishwashers when they go to bed rather than when they leave for work. In addition, M2M technology is beginning to advance to a stage when it can offer improved lifetime management of devices in the field through services like remote upgrades and monitoring.

CP: First off, the whole notion of M2M is the idea of “smart” and “connected” devices deployed through the power and energy market. This is key enabling technology to meet regulatory and business objectives around initiatives like Smart Grid and Demand Response. The key advantages of leveraging M2M vendors into these Utility initiatives is their ability to take complex combinations of specific hardware, communications, and software and get them all working together to deliver lower costs and faster time to deployment. In an industry like power and energy, requirements differ greatly, from a smart flow control switch to residential demand response, to field force automation and tracking. M2M vendors and their solutions specialize in the ability to serve this diverse set of needs.

PE. Electric utility networks, by their very nature, often span huge geographical distances, sometimes across difficult terrain and through harsh operating environments. Does the nature of the power and energy sector present any challenges to the M2M solutions development community? And how is the industry working together to address these challenges?
SL. Distance and difficult terrain are what makes cellular M2M solutions ideal for electric utility networks. By using pre-existing, wide-area public networks, electric utilities are able to reach areas prohibitive to other communications technologies. Leveraging the industrial and automotive expertise of those in the M2M industry gives the utility peace of mind that extreme temperatures, humidity and other environmental factors can be addressed without losing critical connections to data from the field.

One movement that is beginning to take off globally is the idea of embedded SIM for GSM cellular devices. The issue of SIM cards has been a major obstacle to the adoption of GSM cellular for this industry. Removable plastic SIM cards are often the weak link in a system that was designed for harsh environments. That’s because they are designed for handsets, in which it is easy to reset or replace them if the connection falters or the device itself fails, melts, warps or gets wet. In geographically dispersed and mission-critical settings, they are simply not reliable. However, there are a few approaches to embedded SIM being evaluated, and globally carriers are warming to the idea.

AB. The M2M development community recognizes the utilities market as one of the most suitable and prosperous industries to benefit from M2M technology. The expansive coverage of wide area wireless cellular networks allow for fast and reliable data transfer over extensive distances and in rural locations or harsh terrain where landlines or line-of-sight to satellite feeds may not be available. Cellular networks are ubiquitous and highly available, providing up to 99.9999 percent reliability. Furthermore, cellular carriers are increasingly offering competitive data rates, making wide area solutions more cost-effective than private networks – which have a high capex figure and are difficult and costly to maintain.

Due the mission critical nature of these unmanned applications, it’s vital that remote devices are designed to stay online and be accessed from anywhere at anytime. To that end, communication devices are becoming more and more intelligent and are packaged with sophisticated remote management software, allowing devices to leverage IP networks and provide real-time data for analysis and action.

CP: The biggest challenges that the power and energy sector presents are probably the same areas where M2M solutions deliver the biggest benefits. The challenge that is typically most top of mind is related to the pervasiveness of coverage for wireless communications. In the M2M world, the idea of layering networks together to provide not just geographic coverage, but depths of coverage, solve both the availability of signal and the quality of available signal. Devices in the field that use M2M networks can choose from multiple signals based on strength and quality, all with the same cost to the customer. Another challenge is the reliability of communications. Again, M2M vendors have built in this type of reliability for many life-safety applications like air bag deployments in automobiles, real time tracking of armored car fleets and other high value assets, as well as home and business alarm systems. These types of capabilities were proven effective over the last 10 years in other markets outside of energy, but are directly relevant to the challenges here including meeting regulatory requirements around reliability. The M2M industry as a whole has worked together and continues tight collaboration to ensure that these types of requirements are addressed end-to-end across the radio, device, network and customer pieces of the solution.

PE. Progress in short-range networking, the growth of mobile networks and advances in user devices have allowed significant progress in wireless M2M. What are the key technologies currently converging to drive increased adoption of these types of communications systems?
SL. The technology convergence we see most impacting this segment is a combination of Zigbee and cellular communications, which enables the electric provider to network a ‘neighbourhood’ full of devices with Zigbee nodes and use a series of dispersed cellular-enabled meters as concentrators to read and communicate the data gleaned from the entire area over the cellular internet. This architecture offers huge savings and we expect it to open the door to broad global adoption of M2M technology in the power and other utility industries. Related, but more interesting still, is the growing interest in home networking, in which utility meters, security system sensors – even climate control systems – can all communicate using short-range networking technologies to a single, all-purpose, in-home interface. Equipped with cellular communications, this will allow both service providers and the homeowner to review and remotely control the home network.

AB. The integration of 2G and 3G cellular technologies with short-range technologies like Zigbee, Wi-Fi and WiMAX has the potential to lower price points and make M2M communications systems more accessible to all utility providers. The lower cost of device components combined with open standards will ultimately lower the barriers-to-entry for device manufacturers, and offer customers many more alternatives – further increasing competition. With respect to the devices operating on both wide area cellular and 802 standard networks, we see a paradigm shift from centralized network intelligence to intelligence at the endpoint, or within the device. As networks converge, device intelligence will allow for more customization and efficient use of hardware by enabling similar devices to perform separate functions, therefore better utilizing both the hardware investment and the solution capabilities.

CP: The great news is that the 2/3G network build-outs are combining with major advances in hardware capabilities and costs. The chipsets and hardware price performance curves are starting to get much closer to the computing industry (not there yet). We’ll see CDMA radios in the market in 2008 that are less than half the cost of the prior generation, and they’ll have 10X more performance. In addition, we are seeing many price viable options for multi-mode devices that combine a variety of short and long range technologies. This really gives customers the option of using the right technology for the right application, hopefully right off the shelf.

PE. According to analyst firm ABI Research, municipal Wi-Fi and WiMAX will both challenge 3G cellular technology as the most suitable methods to achieve high-speed M2M communications for many applications and in many locales. What impact will these developments have on the electric utility industry?
AB. Currently, cellular provides the fastest data transfer rates and most pervasive connectivity for high-speed M2M communication. However, cellular also requires more energy than Wi-Fi and WiMAX, which can raise carrier operating expenses and per subscriber rates. If the 802 standards can meet a minimum data delivery requirement that can compete with 2G and 3G technologies, cellular carriers may move from a traditional cellular-only approach to one that integrates WiMAX and metro Wi-Fi. This progression would lower M2M solutions costs and provide electric utilities with a broader range of communications solutions options.

However, it’s important to note that many M2M deployments are in remote areas –making the ubiquity of 2G and 3G cellular networks a key feature. Furthermore, there are inherent advantages to using licensed spectrum, including less interference, more reliable connections and a very high level of availability. Indeed, it’s apparent that no single wireless technology will be the sole provider for M2M connectivity. Instead, optimal operating efficiencies will be achieved as communications are layered with local area/mesh networks into local aggregation points and backhauled using the appropriate wide area wireless technology.

SL. Most current and even conceptual applications of M2M technology related to the electric utility industry simply do not need the bandwidth or speed afforded by broadband wireless. That said, the utilities may be able to take advantage of municipally supported infrastructure to support their applications and we’re already seeing fairly widespread use of Wi-Fi for that purpose. The problem with Wi-Fi is that it is relatively short-range and still requires the deployment of personnel to read the information onsite (if only through a vehicle). Which wide-range technology may become more prevalent will ultimately depend on the cost of the technology itself and the subscription service – both open questions today with regards to WiMAX. Those market forces will remain the determining factor, even as the need for broadband may arise as a result of household systems convergence.

CP: First of all, we think the introduction of these new wireless technologies is great and plan on supporting them all over time. The reality comes down to commercial availability with the coverage, reliability and price performance required to meet the applications needs. The beauty of CDMA for example, is the backward compatibility from 2G to 3G. This gives utilities the longevity they need for the life of their devices better than the other choices available today. WiMax will come, but it’s unclear when and to what markets. Network transitions are very disruptive and costly (field service calls), and customers should do their deep due diligence with their network providers before making large investments.

PE. Finally, how do you see this market developing over the next few years? What will be the major trends, challenges and opportunities?
SL. We see this as a segment of the larger M2M marketplace that is poised for tremendous growth. The key to that growth is to enable the intelligent grid in a way that is inclusive of other wired and wireless communications technologies and other potentially related systems. To truly enable that kind of convergence, the M2M industry must provide technology expertise, tailored network services, data security and back-end support. It is not a short list or a small task, but it is one to which we are dedicated – and one from which our customers can benefit because it allows them to focus on their primary goal of energy optimization rather than worrying about the bits and bytes of communicating with their field equipment.

AB. Real-time data will facilitate operational efficiencies, safety, security and an enhanced product for the end-user. Deployments will become more highly integrated and automated, creating pervasive adoption and driving the need for intelligence on both ends of the applications. Additionally, device intelligence will evolve data communication from simple collection to automated analysis, where patterns or triggers will be detected and programmed actions taken in response to further improve application control. Intelligent dispatching and deployment of mobile workers will continue to add efficiencies that directly contribute to the corporate bottom line.

As these factors drive adoption of M2M solutions for the utility industry, there will be some challenges. Foremost among those is increased competition around M2M solutions, which drive down prices and margins for network providers and device manufacturers. Regardless, the future for M2M in the utility sector is bright, with enhanced technology helping the entire energy supply chain – from energy production to wholesale distribution, storage, management, dynamic routing and retail distribution. We fully expect for wireless M2M to become the standard for utility providers, enabling them to greatly increase operational efficiencies, drive down costs and improve customer service and satisfaction.

CP: We see the growth of M2M in the energy sector as simply part of a 50+ year investment in technology and automation. From the original SCADA system investments, to the more recent investments in ERP and CRM systems, it’s historically been about automating everything inside the enterprise. For the energy industry, M2M is simply a set of enabling technologies to extend real-time information; automation and decision support capability upstream to the supply chain and down stream to the consumers. The major challenges will most likely not be in the communications end of things, but rather the enterprise’s ability to consume massive increases in data efficiently. Real-time information has tremendous value from power generation, to wholesale distribution and grid management, and all the way out to understanding real-time consumption of energy. None of that data will be valuable unless it can be processed and acted upon quickly and accurately. If we can make the wireless communications networks as easy, predictable, reliable and secure as their wired network, then energy IT professionals can be free to focus on their critical data needs and business processes.

As SVP and General Manager, for Mobile and M2M at Sierra Wireles, Andrew Berman is responsible for the company’s mobile and M2M product line and business. Andrew comes to Sierra Wireless from AirLink Communications, where he spent three years as CEO before the company was acquired by Sierra Wireless in 2007.

Stefan Lindvall joined Wavecom in 2006. In addition to his roll as Group Vice President, Head of Americas Region, he is also responsible globally for the development of business in the industrial and M2M segment. Previously, he served as VP of Sales and Marketing, Americas, for Sony Ericsson’s M2M Com business unit.

Chris Purpura, who joined Aeris Communications in 2007, is SVP of Marketing and is responsible for all marketing and product management activities. Chris has more than 15 years experience in Internet, infrastructure software and VoIP communications companies.