PEi: Having just received an additional $13 million funding, how difficult are you finding it to secure investment in the existing economic climate?
|Willie: Funding from any market or any source is very difficult right now. The economic climate worldwide has made the criteria for receiving new investment even more stringent than normal. Ultimately, in our particular space, investors are looking for companies who have innovative products with proven field results and customer references. Despite the hurdles, Current is proud to have secured the confidence of global investors and I think it speaks of the momentum we have in the market that we were able to translate this into an investment round.|
|Willie: wants more clarity from regulation|
PEi: What difference has the EU’s 2020 climate targets made to the growth of smart grids?
Willie: The EU 2020 targets have encouraged all Member Countries to consider all types of projects, including those related to Smart Grid in order to achieve the goals. Specifically for Smart Grid this has included the mandate for new smart metering, strong incentives for distributed generation and, therefore, the utility grid improvements required to absorb these sources, and electric vehicle charging station investments.
PEi: Where do you see the biggest growth area for Smart Grid and extended technologies: Europe or Asia? Or do they offer similar potential? And what are the prospects of smart grid technology in Africa?
Willie: It truly depends on your specific definition of Smart Grid. For Current’s products, the initial growth area will definitely be Europe and Australia, where regulatory mandates and incentives are in place to deploy. Asia represents a massive growth opportunity in the coming years, but much of Asia’s focus right now, especially in China, is on new ‘smart’ transmission and expanded generation. In the next few years we believe they will also make the transition to distribution investments. Africa is still a few years out from the rest of the world at this point, although specific demonstration projects exist to show the potential of a Smart Grid.
PEi: In Europe, which countries are ahead of the curve in terms of smart grid technology and which have a way to go?
Willie: Italy had initially led the way in Europe with its metering roll-out but the utilities in Spain, Portugal and the UK to a different extent are driving significant advancements in both approach and application of smart grid concepts. In Spain, Iberdrola has been a founding member, working with industry giants like Current, Itron, L&G, Texas Instruments, etc. in the formation of a fully open and interoperable metering standard named Prime (www.prime-alliance.org). They have used their deployment of smart metering to add additional intelligence to the grid in the form of sensing and automation. In Portugal, the Innogrid project and vision of EDP has led to significant innovation on multi-purpose Smart Grid platforms, combining metering, sensing and communications into a single core infrastructure. They are also world leaders in charging station innovation and strategies. Current is proud to be working with both utilities as well as happy to announce the addition of our Portugal investor, Espirito Santo Ventures.
PEi: Current is involved in a smart city project in Boulder. How is this progessing and are there plans to become involved in similar projects, and if so, where?
Willie: The Xcel Smart Grid City project was initially started as a true “innovation sandbox” in which the most cutting edge technologies and innovations for Smart Grid could be demonstrated, tested, validated, or refuted. This project still remains the United States’ single most advanced Smart Grid network in deployment today. However, as the project came to a conclusion and leadership on the project changed, it began being measured primarily on the cost of deployment instead of the lessons learned from innovation, which was clearly not the initial target. The lessons in innovation and technology obtained from this project are the central building blocks of Smart Grid networks being considered outside the US in Europe and Asia, where smart metering, sensing, and communications must play a collaborative role in building the entire network. Current is directly applying the lessons from Smart Grid City to all of our international projects in Europe and Asia while the US seems to have focused on deploying smart metering initially to avoid the additional implementation costs required to build a comprehensive Smart Grid.
PEi: In the UK there is concern over Smart Grids regarding security of data and cyber crime. How have you addressed these issues?
Willie: Security has been a concern for all types of networks not just Smart Grid. Since the heart of a Smart Grid is communications it is certainly warranted to concern ourselves with these risks… However we must also not discount that because a Smart Grid is a communications network it can build upon the dozens of years of learning and advancements in encryption, VPN utilization, and other security lessons learned from telecom and internet deployments. And these foundational principles of good network security, learned from years of telecom experience, are being applied in Current’s products.
PEi: What are the current barriers to further Smart Grid growth that you would like to see overcome?
Willie: Ultimately the utilities are a public service driven by regulation, and therefore regulation plays the single most important role in driving Smart Grid deployments. There have been great examples of regulatory clarity and incentives like those found in the UK’s Low Carbon Network Fund and the EU FP7 innovation projects. These need to be followed up with a clear path to mass deployment. If the technologies are proven, and the results are validated, then utilities need clarity that their investments in these mass deployments will have an ROI. So clarity from regulation would be my number one barrier.
|A sensor used in Current’s Smart Grid applications|
PEi: Are the public in the US educated enough about Smart Grids? Are they onside or could more have been done in a way you would want to see in Europe and Asia?
Willie: We need to understand that there are so many parallel pressures acting both for and against Smart Grid in the US marketplace specifically. First, the visibility and intensity of the debate on carbon emissions, a major driver of potential Smart Grid deployments and public acceptance, has taken a distant back seat to economic concerns. In Europe, this is significantly less of the case in the public eye and in China, where air quality is a major concern, it also is less the case. Secondly, so much of the debate in the US is about educating the public because so much of the focus in the US is about smart metering and in-home behaviour change. Of course, if you are looking to have end users change their behaviour, then mass education must be done… and this is a serious hurdle to overcome, especially since you start the conversation with “your rates are going up for now, but you will pay less over time”. Not the greatest opening line. Acknowledging this, utilities in the US are really starting to get back to basics and the regulators really need to be there to support them. We see a strong interest now from utilities to invest in the grid side of the network, even more than the home side in some cases. Improvements in grid reliability, grid efficiency and asset management can be had with technologies that exist today without ever stepping foot into end user homes. These projects clearly have up-front costs, but they also have significant long-term benefit on grid performance, carbon, and capital budgeting clarity. Regulators need to recognize this grid-side investment, stop focusing entirely on the home, and give the utilities the clarity and support to deploy these types of solutions.
|Overview of Current’s Open Grid Distribution system in Boulder, Colorado, the most advanced Smart Grid in the US|
PEi: How do you see the global Smart Grid landscape in five years’ time?
Willie: Like many questions related to Smart Grid, the answer is regional in nature. In the US, Current sees the winding down and completion of the deployments of smart metering and in-home solutions that were driven by the 2009 stimulus funding in the next 12 to 24 months. There will be a lag time after these installations are completed for utilities to really validate the success or failure of these systems, and during that time we believe the US market for smart metering and in-home solutions will experience a significant slowdown in new installations and new opportunities as utilities not involved in the stimulus adopt a wait-and-see approach. In the meantime, Current really believes that a back-to-basics approach to grid operations will take hold. For example, the infrastructure and workforce is ageing and the need for sensing and automation solutions is becoming more critical over time. Whether this is called Smart Grid or simply deployed in the US as a way of improving reliability and dealing with a fundamental workforce issue is a matter of semantics – but in the pre-Smart Grid days these technologies would be installed as part of the normal capital budgets of a utility in an effort to improve reliability scores.
In Europe, the next five years will bring full-scale roll-outs of smart metering and automation solutions to most of the EU Member Countries and we believe some countries like Turkey will also enter the fold toward Smart Grid installations. These EU investments will be driven by a variety of factors unique to Europe which have fairly universal European Union and national level support, such as carbon mitigation through distributed renewables and electric vehicle integration, smart metering to encourage retail competition and serve as a benefit to aid the end user in reducing consumption, as well as a significantly ageing infrastructure, especially in big cities, much of which was constructed after World War II.
In Asia, the present focus on transmission will continue for the next one-to-two years before the adoption of distribution technologies typically called Smart Grid make their way onto the Asia grids – but primarily driven by new construction instead of ageing infrastructure. Additionally, while much has been written about metering installs by China State Grid, China is having much bigger difficulties finding a smart metering solution which works in their networks in a scalable and reliable way.
PEi: As the new chief executive of Current, what are the challenges you face to keep your company in a market-leading position?
Willie: From a technology perspective Current has always been at the forefront of innovation in the Smart Grid space and we have confidence in our understanding of the space, our technology readiness, and its application in the markets we serve. In general, the Smart Grid industry faces challenges such as the speed of adoption by the utilities as they navigate regulatory support, technology trials, and operational changes required for large-scale deployments. We’ve solved some of these hurdles due to our longevity in the business.
What Current has learned over the last decade is that being the most innovative or technically advanced vendor only starts a conversation with a utility customer, but doesn’t necessarily close a deal. Current has merged innovation, stability and longevity with the right operational cost structure, partnerships and sales process that meets the needs of the diverse markets today and down the road.
As part of this funding round and my appointment to chief executive we have focused our operations towards markets and utilities that we believe have the environment to succeed, which for us is in Europe and Asia primarily. In this way, Current is very much ahead of many US Smart Grid companies that are dependent on limited stimulus funds and without the ability to grow business abroad while maintaining a low burn rate.