Cisco is betting that utilities are more likely to invest in new data centers than new power plants in the coming years.
The tech giant is developing a suite of smart-grid products designed to add networking smarts to the existing grid, including routers for substations and home energy-monitoring systems. But a large chunk of the $20 billion per year in smart-grid spending that Cisco anticipates is in traditional data centers.
Since smart-grid technologies rely on a steady flow of information, Cisco expects that utilities will need to invest in more sophisticated IT systems, said Mark Weiner director of Data Center Solutions and a member of a Cisco smart-grid team.
Once utilities put in smart meters, their data processing and storage needs explode. Instead of sending a person to read meters once a month, information for billing or other applications can be sent back once a day, once an hour, or even every few minutes.
If utilities are regulated to reduce peak-time usage, their IT needs shoot up even higher. Demand response, where a utility can turn down energy use at participating customer sites, requires utilities to poll information regularly from a potential large number of locations.
"The requirements are for huge amounts of data to be involved when you have these more advanced pricing models where the goal is to mitigate power generation," said Weiner. "The catcher's mitt for that data is the data center."
By cutting peak-time usage, utilities can avoid turning on auxiliary "peaker plants" to supply electricity on a given day or, potentially, avoid building new power plants to meet growing demand.
Cisco is involved in a handful of smart-grid pilot programs, including projects in Amsterdam and Miami, where it is providing networking gear that transmits information from people's homes and the electricity grid back to utilities.
Duke Energy contracted with Cisco to build an "information architecture" to handle an anticipated flood of data from its smart-grid programs where it will be installing hundreds of thousands of smart meters in the next two years. Duke Chief Technology Officer David Mohler said last month that gathering data from sensors on cables, people's appliances, and substations could add up to a million nodes on the network.
Cisco is certainly not the only tech company that's targeting the utility industry and stimulus money dedicated to the smart grid. The large IT suppliers--IBM, Oracle, SAP, Microsoft--have long had offerings geared specifically for the utility industry.
The number of smart meters in the U.S. is projected to grow from about 8 million units installed, or about 6 percent of all meters this year, to 13.6 million installed next year and to over 33 million in 2011. Utilities will also need to upgrade their computing infrastructure so that their systems for controlling the delivery of electricity can talk with other applications, such as billing, Weiner said.
But even with millions of dollars available, building out the smart grid--and smart-grid data centers--will likely take years.
"We'll start seeing a significant impact (in data centers) in five years because the moment you start using meters, the data's coming in," Weiner said.