The Critical Role of Advanced Metering Infrastructure in a World Demanding More Energy

A North American child born in 2007 will graduate from high school in 2025 in a world where crucial energy and natural resources are even more constrained than today. If we want to help the next generation, we need to reshape how we manage those resources now, rather than ignore or lethargically react to future shortages.

Governmental projections show that by the year 2025 there will be 2 billion more people inhabiting our planet, consuming more energy. Energy demand will rise by 54 percent. Environmental, legal, and social pressures already constrain where and how we obtain fuels, build generation plants and transmit energy. Without action, the problem will become markedly worse for us, and for the next generation. Electricity demand in the U.S. is expected to grow by 141,000 megawatts in the next decade, while only 57,000 megawatts of new resources have been identified.

We must do a better job of managing our dwindling energy resources, and a key to doing so includes measurement of usage. Measurement is one of the first steps towards management.

In the utility sector, advanced metering infrastructure (AMI) is burgeoning as a method for providing measurement of energy for the 21st century. Within the last year, more than 25 million meters worth of AMI business in North America, valued at more than $2 billion, has been put out for bid. This compares to the installed base of roughly 80 million meters operating under automated meter reading (AMR), a precursor to AMI.

Defining AMI

In August of 2006, in response to legislation and market forces, the U.S. Federal Energy Regulatory Commission (FERC) issued the following definition of advanced metering:

“Advanced metering is a metering system that records customer consumption [and possibly other parameters] hourly or more frequently and that provides for daily or more frequent transmittal of measurements over a communication network to a central collection point.”

In theory, any automated meter reading system operated through a fixed collection network can live up to the FERC definition of advanced metering. Such fixed network systems might be seen as advanced, when compared to other forms of AMR operated by walk-by or drive-by automated meter reading systems, or manual meter reading.

However, the magnitude of the problem and the opportunity in addressing energy management requires a more expansive and advanced definition of AMI. Itron defines AMI as the use of smart meters, with advanced two-way communication technologies, that enables utilities to:

• Meet their business & operational needs for meter data collection
• Empower all their customers to actively and frequently participate in demand response and energy conservation
• Help move toward a smart grid

Itron delivers on this definition with its AMI solution, OpenWay by Itron.

Market Forces Behind OpenWay by Itron

During the past two years, many different forces drove the energy utility industry and the market for advanced metering:

• Operations: Utilities are being pushed by ratepayers, shareholders, and regulators to contain costs while providing higher levels of customer service. Automating energy management through AMI helps reduce cost and improve service. It can reduce the labor force as the utility workforce ages and retires. Detecting and reducing theft of service through better measurement helps improve profitability.
• Regulation: The Energy Policy Act of 2005 is driving states to consider advanced metering and time-based rates. Regulatory reliability standards, especially those tied to performance-based rates, also drive utilities to improve their delivery of energy. Many utility CEOs foresee regulatory caps on carbon emission in the near future.
• Conservation: Conservation has become a driving force from both a practical and an ethical angle. Fuels for energy are becoming more expensive as they become harder to extract and transport. Those expenses provide incentive to better measure and manage energy. Energy consumption is linked to degradation of the environment through climate change and resource depletion.
• Technology: Computing and telecommunications technology continues along Moore’s Law (computing power doubling roughly every two years) and Metcalfe’s Law (a network’s power equals the square of the number of nodes), making them more affordable and powerful to deploy in service of utility operations.
• Grid operations: The North American transmission and distribution grid is strained and constrained. Increasing efficiency of energy consumption lowers stress on the system. At the same time, advanced metering contributes to the ability to model grid operations, one step in building a smart grid.

Components of the OpenWay Solution

A business problem as pervasive as energy measurement requires a complex and far-reaching solution. OpenWay by Itron is built from several components:

Smart meters

Energy measurement begins with the measurement device—the meter. While still in use today, the simple electromechanical meters developed in the 1800s is not up to the task of advanced metering.

The Itron OpenWay CENTRON solid-state meter leads the industry in all the normal requirements of a utility meter, such as field accuracy, durability, low cost, and ease of installation. In addition, it also offers these capabilities:

• Data storage. To support demand response and conservation, meters need to generate and store more data than just a total consumption number. To protect utilities’ long-term investment in meters, and to accommodate multi-vendor metering arrangements, OpenWay CENTRON meters support open standards for data storage structure, such as ANSI C12.19.
• Time-of-use rates. To support conservation and to change consumption patterns, utilities are moving from a flat price, such as eight cents per kilowatt hour, to rates based on time of use. Examples of time-based rates include time-of use rates, real-time pricing, critical peak pricing, and water conservation pricing. OpenWay CENTRON meters contain the data storage and computational power to adapt to various rate structures. The meters also synchronize their clocks and attach a time value to each meter reading.
• Remote programmability. AMI meters must respond to the new dynamism of rates and programs. Since it is cost prohibitive to visit a meter to update its programming, OpenWay CENTRON meters can download and install new settings and firmware without utility workers physically visiting the meter.
• Communications. By definition, AMI meters need to communicate their meter readings over a network to a central collection point. To effectively integrate with other devices such as thermostats, in-home displays, and other meters, OpenWay CENTRON meters can accommodate several communication methods such as Internet Protocol, GPRS cellular and wireless RF like ZigBee®.

Communications network

An AMI system requires a communication network for collecting data from a meter, and for sending command and control signals to a meter. With the proliferation of networks, Itron built the OpenWay CENTRON meter with the ability to communicate with a variety of networks. Such adaptability gives utility operators the greatest flexibility in planning and operating their AMI system. The American National Standards Institute has developed the C12.22 data addressing standard for sending meter data over any type of network. OpenWay by Itron supports C12.22 and other open standards as a way of ensure interoperability.

System software

AMI solutions generate a lot of data. Consider this math for a mid-sized investor-owned utility using an AMI system to read their meters every 15 minutes: one million meters multiplied by four reads an hour multiplied by 8760 hours in a year equals 35 billion meter reads in a year. That’s an enormous amount to read and certainly more than the 12 million monthly consumption reads performed just for billing. Clearly, utilities need a new way to manage and apply all this new data.

Itron Enterprise Edition Meter Data Management handles these large volumes of data. This scalable data repository can store, secure, verify, and audit meter data, and interface with other systems inside the utility to share that data easily across the organization. Instead of residing in separate and isolated silos, the information can be used across multiple departments. Other data sources such as weather forecasts, fuel prices, and calendars can be used to analyze and enrich meter data.

Once meter data is collected and made available, utilities also need analytical applications to derive knowledge from the data. These applications are used for utility operations, billing, conservation, and more. Itron provides a complete suite of analytical applications for complex billing, customer care, curtailment, transformer load management, and revenue assurance.

Conservation

The Itron view of AMI includes support for pervasive demand response and conservation programs. These programs can’t necessarily be supported with just the OpenWay CENTRON meter, or even by just one AMI vendor. AMI systems need the interoperability to work with devices from third-party vendors who specialize in demand response and conservation. Itron has partnered with Comverge to provide demand response. This collaboration relies on the support both companies provide for wireless communications over the ZigBee open standard.

Partners

Deploying AMI is a complex endeavor that will, by design, transform the way a utility conducts business. At times, AMI deployments need a solutions consultant to help define and guide the project and its impact on the utility. Itron partners with many major consulting companies that have practices dedicated to AMI, companies such as Accenture, IBM, Capgemini and InfoSys.

The Value of Using AMI

Deploying an AMI solution like OpenWay by Itron has many types of benefits.

• Operational: Advanced metering lowers the cost per read. Having frequent meter readings and on-demand readings can eliminate the need for field service calls and reduce insurance and repair and maintenance costs. This level of data can also speed up resolution of customer service telephone calls.
• Energy Conservation: OpenWay provides the infrastructure for demand response and direct load control, two energy management strategies that lower price. It also increases reliability, and has a small impact on overall energy consumption. AMI provides the time-differentiate meter readings needed to support time-based rates, which can lower energy consumption by 4 percent. Giving consumers access to detailed daily consumption information has been shown to reduce energy consumption 3 to 11 percent.
• Smart Grid Support: OpenWay by Itron can provide to the network frequent data about who used how much of what commodity, where they used it and when they used it. Without this level of information, it’s difficult for the transmission and distribution system to be smart about self-optimizing and self-healing.

A New Generation of Energy Measurement

A generation ago, telephone customers in America rented a rotary phone from the one phone company that offered service in their area. Back in the day, customers could not conceive of the present variety and power of cellular phones from multiple providers.

Energy utilities are on the verge of a similar transformation. Increased computing power and associated technologies are reshaping how energy is managed. In a world of increasing population and constrained resources, Itron is meeting the needs of this generation and the next with better resource measurement through our AMI solution, OpenWay by Itron.

Eric Miller has 24 years experience in energy software development and sales, wholesale energy trading, energy project development, retail electricity marketing, finance, and public advocacy. He has held numerous management positions with Itron, Silicon Energy, Foresight Energy (Founder and CEO), Kenetech, and AES Corp. He is currently Vice President of Global Software at Itron, where he is responsible for all aspects of Itron’s software business.