By Richard Stubbe, BloombergNEF editor. This article first appeared on the Bloomberg Terminal.
Oracle Utilities released the latest version of its Opower customer engagement platform for utilities on Jan. 29, adding features intended to give customers more power over their energy use and utilities more information about the systems they operate.
It’s the latest upgrade for Opower, which began operations in 2007 and was purchased by Oracle Corp. in May 2016 for $532 million. The service, powered by the world’s largest residential data analytics platform, handles customer engagement services and tracks usage trends for more than 100 utilities worldwide, including Exelon Corp., National Grid and American Electric Power Co.
The software suite enables utilities to keep up with the ever-growing demands of customers and the exponential growth of the data they’re generating, said Rodger Smith, senior vice president and general manager of Oracle Utilities. He answered questions from BloombergNEF in an interview on Jan. 22, along with company vice presidents Mike Ballard and Brad Williams.
Q: The utilities industry is changing fast. What are you seeing in the space?
Smith: I started in nuclear construction in the heyday of that industry. And I’ve seen a lot of changes. The changes I’m seeing in the last few years, especially the past three to four, and then the changes coming up will be as dramatic as any time I’ve seen. It’s going to be a customer-driven industry, whereas it was very linear.
Everything a utility does now is important to the customer. They want to be able to say what kind of kilowatt-hours they are actually using, and they want some say about what their bill looks like. That is a huge change.
Q: How involved do customers want to be with their energy use?
Smith: Most don’t want to spend a whole lot of time figuring out their optimal energy use. Residential customers are trying to make sure their utility is engaged in all the new things that are going on.
The large commercials like Walmart have very aggressive programs. They have local power management systems and consistency across all their stores. Just about every business that’s a heavy electric user is looking for a way to optimize usage, for purely sustainable reasons or to improve their own bottom lines, or both.
Q: How will that affect the utilities?
Smith: The good news is utilities are probably the most trusted supplier of any service in general across the globe. Customers want the utilities to be proactive about their needs. They want utilities to offer different types of services beyond the meter.
Q: Where does Oracle Utilities come in?
Smith: If you understand that people want different mixes of power, that’s going to impact what kind of power you dispatch and when you dispatch it. So you need software that enables that. Then you have DER [distributed energy resources] on the other edge of that value chain we talked about. You have to be able to dispatch that in conjunction with the baseload. And you have to do all of that on a real-time basis. We have technology that does that. But that information needs to flow through transmission and distribution and all your asset management programs so that you can provide those services cost-effectively.
Q: Are utilities coming to you and saying, “We need this,” or are you going to them and saying, “We have this and you need to buy it”?
Smith: Some of both. There are utilities we’ve worked with for a long time that saw things like microgrids coming or solar generation coming a lot quicker, and we built applications based on what they were seeing.
Q: What about regulators? How are they responding?
Williams: Some of the regulators are proactively asking us and seeking advice on how they can help utilities get there.
Q: What are the issues for utilities that want to go to the cloud for data services like Opower? It seems like some regulators are telling utilities to go ahead.
Smith: A few states, like Illinois, New York and Pennsylvania, have reacted well to that. There is an accounting issue. The Financial Accounting Standards Board continues to be a little bit fuzzy about how they want that stuff treated. If regulators around the world would say, “Moving to the cloud is a good thing. We think it will help reduce overall costs to our customers. Go ahead,” then utilities wouldn’t care as much about the accounting treatment.
Q: Opower collects and generates enormous amounts of data, and that data is multiplied by developments like artificial intelligence, machine learning and inexpensive sensors. How is the cascade of information affecting your business and the utilities you work with?
A: We’re seeing applications across the value chain — generation, but also a lot of outage management and network management as well.
Williams: The cost of the sensors keeps going down, so the question becomes how can we tap into that data cost-effectively and securely and provide actionable insight. That’s where the real value comes. It’s just a matter of being able to scale to the volumes we’re talking about, and then we get into questions of cybersecurity.
Smith: Security questions are probably the biggest. That’s where cloud would have a real advantage. If utilities don’t get a handle on the volume and the security, that will be a real sea anchor on the process of change.
The volumes are huge. A utility in the Midwest installed 1 million smart meters, and data requirements went from almost zero to 42 terabytes. So imagine the volume increases you’ll see when you have those sensor technologies across your whole distribution system, across your whole transmission system, and then beyond the meter with your customer.
A lot of utilities are collecting the information and letting it sit idle.
Q: What’s Oracle doing about that?
Williams: We’ve made investments in our user interfaces that makes them more seamless. Behind the scenes, there’s a lot of processing to determine what’s important to the user. We process all that information and we make available what’s important for the dispatcher to see. If they want to drill down and see more detail, they can.
Q: We’re going to have batteries in cars and in houses connecting to the grid, both consuming and providing power. What are the pros and cons of that?
Smith: We just announced some product updates to our Opower suite, where we talked about DER in regards to our customer engagement and utility. Let’s take them one at a time.
With solar, I think a lot of customers have been disillusioned that they didn’t understand the costs of solar and the benefits and they have a power bill that’s not as inexpensive as they thought it would be. So the utilities need to do a better job of educating their customers, and two, the customers need to have a better understanding of what you really do save. So we came out with an announcement about how we innovate around customer engagement with DER, with solar applications, especially to try to get that understanding to be more clear.
With electric vehicles, utilities have to be able to identify who all the customers are with EVs. Some of the applications have been updated to allow utilities to do that, because aggregating those EVs in certain areas could be a generation source. It’s already headed there, and I think that’s going to be the play.
We think batteries will solve a lot of the challenges around solar and wind. Our DER software can handle a lot of that from a utility perspective. All the software we’ve been building is because we believe they’re going to play big roles.
Ballard: Also, there’s a much higher level of complexity among the participants in the network. You now have a never-ending loop of generation, transmission and distribution, so the financial accounting and settlements among the participants gets much more complex. And it has to be done in real time.
Q: What else are we going to see with batteries?
Smith: One of the biggest sustainable challenges with storage is we’re facing a huge recycling issue with batteries in general. I’m an old nuclear guy from the days when everybody thought nuclear would be the big savior, and the big issue was we never got a handle on the waste in this country, unlike the French.
The questions are: How do we handle the residual effects of some of the new technologies? How do we handle old solar panels on a roof that needs to be replaced and the vendors are gone? How do we handle batteries piling up all over the place?
You read about how we’re going to aggregate them, and that might buy you five or six years, but you still have a huge recycle issue.