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Vendor solutions for utilities:
Understanding power
providers’ needs

Understanding power providers’ needs is key – it’s about more than just good technology
Challenges facing utilities
Aligning your technology with a specific business case
Technologies lead to functions lead to benefits lead to value
Testing and real-world pilot installations reduce perceived risk
Summary: five points vendors should consider
1
Understanding needs
3 Developing a business case 5
Testing and pilots
2
Utilities’ challenges
4 Functions, benefits, value
6
Five points
www.dnvkema.com

UNDERSTANDING NEEDS
Understanding power providers’ needs is key —it’s about more than just
good technology
The Smart Grid arena is currently crowded with companies, both
familiar and those new to the power industry, offering technologies
and solutions that are promised to be the answer for utilities, intensive
energy users, and other industry stakeholders. Utilities are businesses
with the same responsibilities to shareholders and bottom lines that any
other business has — they just also happen to have the requirement
of reliability and quality to think about. After all, a power outage can
impact millions of people and businesses. Many energy producers/
users are overwhelmed with the available technology options, and
might be tempted by one-stop-shop purchases. However, given the
complexity of this new era, clear, structured connections between
these technologies and their applications — specifically the impact
these technologies will have on the business of producing energy —
are necessary. It is not a surprise then that utilities want assurance that
their investments will offer clear benefits and cost-savings. Vendors
must help them understand how a technology will play a risk-free
role, and how it fits into the utilities overall Smart Grid strategy.
A vendor’s Smart Grid Strategy should include:
» Business benefits
» The elements and functionalities that need to be validated
» The processes required to ensure that deployment would provide
true value to the utility and end users
Only if these three pieces are coordinated can potential Smart Grid
benefits be realized.
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
1

UTILITIES’ CHALLENGES
Challenges facing utilities
Utilities are facing a number of challenges that vendors new to the
power industry should have a firm grasp on, both in terms of dayto-day
operations and future Smart Grid implementations. Vendors
who position their technologies as a solution to a specific challenge
will be met with more openness to initial engagement. While
specific challenges vary a great deal regionally, the following are a
few examples.
Aging infrastructure
In most developed countries, power grid assets are getting old.
In the United States, for example, transformers that were installed
in the 60s and 70s are often in use today. While utilities and
power providers are interested in upgrading their systems, this is a
gradual process, and any new installations need to coexist with those
old components.
Interoperability
In addition to working with existing infrastructure, smart technologies
added to the grid need to work with one another, including across
vendors and across borders—an issue particularly pronounced in
Europe. Given today’s lack of universal standards for Smart Grid
communications, utilities need to feel confident that a given vendor’s
technology is flexible enough to communicate with the rest of their
Smart Grid developments.
Shifting regulatory environments
Because the Smart Grid is a young market, the regulatory environment
still has a great deal of uncertainty. Many regions do not have
detailed, concrete regulations in place. Those who have begun the
regulatory process are still trying to determine what measures are
most effective. Utilities are working in a world of shifting expectations,
and vendors need to understand and speak to the specific regulatory
challenges that a potential customer is facing.
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
2

DEVELOPING A BUSINESS CASE
Aligning your technology with a specific
business case
The entire Smart Grid system and deployment go beyond technology
alone—a fact vendors need to understand that in order to be
successful. Those vendors who have successfully broken into the
market have recently understood the need to sell-in solutions, rather
than technology. A utility’s Smart Grid strategy takes into account
all the processes, people and organizational changes that have to
occur in order to achieve expected benefits. For example, while
many new technologies enable two-way communication (potentially
resulting in benefits such as self-healing networks and customer
empowerment), the reality is that business benefits like shaved peak
demand or reduced system interruption cannot be achieved without
substantial investment in business process reengineering as well
as integration with legacy systems. Taking advantage of possible
benefits requires a significant capital expense above and beyond
the cost of the technology solution. Vendors attempting to enter
the energy market must not only understand these deeper utility
operations, they need to help utilities envision the path for optimizing
the use of a new technology. This can be a daunting task for many
vendors to undertake – there are a number of companies, including
DNV KEMA, who offer consulting services to help vendors tackle that
very problem.
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
3

FUNCTIONS, BENEFITS, VALUE
Technologies lead to functions lead to benefits
lead to value
Many vendors talk about the specific functions their technologies can bring to a
utility’s infrastructure. However, utilities are not necessarily interested in the function
of a technology — functionality is just a means to an end. Instead, they care about
the ultimate benefit that functionality offers them, and how that benefit translates
into value.
Take as a simple example a Distribution Automation provider that may have a fault
location, isolation, and service restoration solution. The table to the right outlines
potential functions, benefits, and value might look like this.
Functions Benefits Value
• Devices quickly
detect line faults
• System
incorporates meter
data and customer
calls for outage
verification
• System allows
switching for
fault isolation
and service
restoration
• Devices quickly
detect line faults
• System incorporates
meter data and
customer calls for
outage verification
• System allows
switching for fault
isolation and service
restoration
• Improved system
reliability
• Improved electricity
service time
• Reduced outage
time
• Improved service
response efficiencies
Utility
• Increased revenue
• Reduced penalties
• Improved customer
satisfaction
End customer
• Reduced downtime
for increased
productivity/
revenue
• Satisfaction in
electricity service
provider
• Reliability in
service provider
for efficiency
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
4

TESTING AND PILOTS
Testing and real-world pilot installations
reduce perceived risk
Implementing a new, unproven technology onto an existing grid
infrastructure is a risky prospect for a utility; if the system goes down,
countless people can be affected. However many vendors are in
the position of needing to sell unproven technology. Until a vendor
is able to prove that its technologies are reliable and will work within
the existing grid infrastructure, it will face reluctance from utilities
to incorporate that technology. There are two key components
to demonstrating real-world reliability: pilot installations and
extensive testing.
Pilot Projects
Pilot projects are the next step in the validation process. Before utilities
will make the investment to install a new technology across their
entire grid infrastructure, they will want to see a real-world installation
project. As comprehensive as testing has become, there are always
unanticipated variables that can arise on a real grid. Vendors who
go into a pitch with the understanding that a pilot project might be
necessary, and a general plan for what that pilot might look like, will
have a leg up on their competitors.
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
5

TESTING AND PILOTS
Testing
There is a wide range of testing that needs to be undertaken before a utility will accept a new
technology. While the specifics of each test will vary from region to region, utility to utility,
and technology to technology, there are a number of standard testing themes that utilities
are interested in. First and foremost, utilities need assurance that the technology can handle
whatever power load they would be subjected to, both sustained and power spikes. Utilities
will also want to see how these technologies react to fluctuations in the grid, and how well they
integrate with other technologies. And finally, utilities will want to ensure that the technologies
are calibrated properly.
Often overlooked, but equally important, is the need for vendors to manage their own supply
chain. Regardless of how good a concept or device might be, if one small component does
not work, or isn’t compatible with other technologies, then the vendor’s whole product will be
hard to sell. Vendors need to be very careful about the partners and suppliers that they work
with, and make sure that each component has been tested and lives up to the same high
standards as everything else in the product.
DNV KEMA’s Testing Labs
Flex Powergrid Lab in Arnhem, Netherlands
Interoperability Lab in Cleveland, United States
High Power Lab in Arnhem, Netherlands
High Voltage Lab in Arnhem, Netherlands
Calibration and Metering Lab in Arnhem, Netherlands
Contact us at www.dnvkema.com to find out more about our
testing capabilities for vendors.
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
6

FIVE POINTS
Summary: Five points vendors
should consider
The more clarity and confidence that vendors can provide utilities
about the ultimate value of a given Smart Grid solution, the more
successful that vendor will be. Below are five things that vendors
should consider and address in pitches and proposals.
Technology — How does your technology enable you and your
customers to perform over the competition?
Operations — How do you help/interact/engage with the
utility client?
Customer — Are you demonstrating an understanding of the
complications to the utility industry created by the regulatory
environment and customer base?
Partners — Do you utilize partners that are known in the industry
for improved implementation or performance.
For help structuring an effective proposal that demonstrates and
understanding of a power provider’s needs, please contact DNV
KEMA at smartgrid@dnvkema.com.
Positioning — How are you positioning yourself as different than
the competition in the eyes of the utility?
1
2
Understanding needs
Utilities’ challenges
3 Developing a business case 5
4 Functions, benefits, value
6
Testing and pilots
Five points
www.dnvkema.com
7

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For general inquiries, please contact
our head office in Arnhem, the
Netherlands at +31 26 356 91 11 or
via email at smartgrid@dnvkema.com
To find specific contact information for
your region, please visit
www.dnvkema.com/locations
www.dnvkema.com
1
Understanding needs
3 Developing a business case 5
Testing and pilots
2
Utilities’ challenges
4 Functions, benefits, value
6
Five points
www.dnvkema.com