THE UTILITY OF THE FUTURE

Considerations for Evolving to a Smart Grid Infrastructure

Electrical power underpins todays economies throughout the
world. Any loss of power results in decreased production, lost
time, and additional cost to businesses. At the same time,
demand for more energy continues to increase, putting a lot of
pressure on utility companies to consider ways to upgrade
their aging supply infrastructure.
Much of the worlds current electric grid was designed more
than a century ago and, although the systems continue to
provide power to end-users today, the inefficiencies within this
aging infrastructure are expensive. For example, according to
data from the Environmental Defense Fund, a U.S.-based
nonprofit environmental advocacy group, approximately 10
percent of all electricity generated is lost in the transmission
and distribution system, costing consumers about $25 billion
annually. Additionally, power demand has risen sharply, about
30 percent over the last 10 years, resulting in a rising number of
power outages and blackouts that cost at least $150 billion
each year.

Grids provide the opportunity to take action on the societal,

financial, technological and regulatory/policy pressures that
utilities face.
This paper addresses the current status of the electric grid,
explains why upgrading to a Smart Grid is necessary, discusses
the importance of the communication networks role in this
migration, and offers prescriptions for success in a smooth
evolutionary path.

Why the Need for a Smart Grid?

The realities of a rapidly-changing, dynamic market are driving
the need for a Smart Grid. Utilities are feeling pressure to
pursue, at least to some extent, a restructuring of their current
grids. Traditionally, electricity has been delivered in just one
direction: Energy from a large, central station power plant is
transmitted along high-voltage lines through a substation to a
home or business. There is virtually no real-time monitoring
and control of the energy delivery system and very little
communication with consumers regarding management of
their energy usage. However, with the realization of the Smart
Grid, this will all change.

In the UK, a number of coal-fired plants will likely need to close

due to their inability to meet the clean air requirements
of the European Large Combustion Plant
Directive (directive 2001/80/EC). This
Distributed
shortfall will need to be filled by a
Generation and
Resources
combination of smarter usage,
higher efficiency, and renewable
Operational
energy sources.
Efficiency
In short, a host of market
pressures are bearing down
on utilities globally. It is no
longer a viable option to
Volatile
Energy and
ignore systemic
Fuel Costs
inefficiencies in the power
delivery system while
continuing to build
expensive new power
generation plants to keep
Security
pace with escalating energy
demand. Over the next 25 years
the best investment return will be
achieved by creating flexible, efficient,
and resilient Smart Grids. These Smart

A Smart Grid will automate transmission

and distribution functions, and an
aging infrastructure will be
modernized to deliver increased
Customer
Expectations
reliability, improved power
quality, and faster service
restoration capability. Better
overall management
through real-time data
Regulatory
communications will help
and Policy
Changes
alleviate the financial
strain on utility companies
by giving them greater
control and costeffectiveness.
Technological
Advances

Climate Change
and Environmental
concerns

Figure 1. Market pressures shaping utilities

W Whitepaper

As the Smart Grid evolves,

previously passive energy
consumers will be transformed into
active energy customers with new tools
to manage their energy use and control

FUTURE

PRESENT
Transmission
control
center

Transmission
control
center

Distribution
control center

Industrial
customer

Substation

Substation

Energy
service
provider

Distribution
control center

Electric
vehicles

Commercial
customer

Energy
storage

Substation

Industrial
customer

Commercial
customer

Substation

High-temperature
superconductor
Residential
customer

Energy
storage

ELECTRICAL INFRASTRUCTURE

Residential
customer

COMMUNICATIONS INFRASTRUCTURE

Figure 2. Smart Grid evolution

energy costs. Additionally, a Smart Grid opens the doors to

innovation and new technologies that will ultimately improve
the overall performance of electric utility systems. Although the
initial investment and commitment are significant for
stakeholders, the expected returns are even more significant.
In the end, the Smart Grid will be safer and more reliable,
secure, economical, efficient, and environmentally friendly.

Mapping a Strategy
The core of a robust Smart Grid is an increased two-way
communication capability. In other words, what makes the grid
smart is its ability to communicate seamlessly between two
parallel systemsthe information network and the energy
delivery systemat every level. Innovation in communications
has always been at the forefront of innovation in utilities. The
next-generation utility will leverage the latest advances in
critical network communications to fuel the growth of
automation, moving toward achieving a state that requires
minimal human interference while promising extreme efficiency
and maximum reliability.
In developing a utilitys Smart Grid strategy, each utility must
plan to introduce different levels of intelligent technology
advancement, ranging from basic communications initiatives to
comprehensive plans for Smart Grid implementation that
include consumer energy management, advanced metering,
distribution automation, outage management, and
environmental management.

At the most basic level, the vast majority of utilities are

upgrading the legacy communications networks to support
future initiatives and technology advancement. In tandem with
communications network modernization, an advanced
metering initiative to enhance customer service capabilities
and demand response is typically the first step toward full
intelligent grid integration. Millions of smart meters are being
deployed around the world. The end-to-end communications
network necessary to run metering applications also will be
used to transport data for many other emerging Smart Grid
applications such as distribution automation and integration of
distributed solar and wind energy sources.
Today, most utilities are developing a vision and plan for an
integrated Smart Grid that represents a multi-decade
transformation. Naturally, the utilities must make trade-offs in
deciding how the overall system design is planned. Regardless
of the approach they choose, successful deployments will
feature these three key characteristics:
Flexibility
Since the utility industry is not a one-size-fits-all industry,
deployment planning must be tailored to the specific nature of
a utilitys operating characteristics and the territories and
customer bases served. Utilities must plan for the short term
with an eye toward multiple potential decision points in the
future. As technologies advance, new options will become
available that require flexibility in the Smart Grid to allow
multiple paths to new architectures and a better chance of
long-term success.

Learning curve
To leverage the maximum benefits of the Smart Grid, utilities
must develop plans with an approach that allows them to ramp
up activities to take advantage of the inevitable technological
learning curve.
Controlled migration
New networks cannot be built overnight and existing services
must be preserved, so a smooth evolution path must be
defined and executed to migrate from todays legacy network
to tomorrows next-generation network. Pilot programs in areas
of uncertainty can allow utilities to test processes they may
wish to pursue in commercial operation within a controlled
environment, providing more certainty over the long term.

The Important Role of the Communication Network

Successful deployment of new Smart Grid applications will
require a fast, reliable, secure, integrated packet-based
communication network that will span transmission,
distribution, and last-mile requirements to the customer.
Therefore, the network architectural choice is a critical first
step. The architecture must support multiple traffic types on
the same network, ease of traffic management, lower latency
for critical applications, faster restoration after a failure, higher
potential capacity, and proven performance.
To achieve these goals, the traditional legacy SONET/SDH
networks still widely in use will require a smooth migration to
IP/MPLS and Carrier Ethernet technologies as new applications
trend toward packet-based technologies to leverage cost,
functionality, and scalability improvements. This migration also
will help ensure protocol standardization and simplified
interoperability across the more complex Smart Grid system.
Different technology approaches offer pros and cons, and the
best solution will often depend on the individual utilitys needs
and operational objectives. For example, as SONET/SDH
gradually fails to provide the needed flexibility to support new
packet-based architectures, Carrier Ethernet is emerging as an
ideal replacement where lower cost, simplicity, and low latency
are key requirements.
As utilities embark on a controlled network migration, they
must navigate and resolve a range of important design criteria
as shown in Figure 3.
Addressing these and other important network design
questions can often push a utility out of its areas of expertise
and lead to unwanted program delays as various options are
debated. It is therefore advisable to enlist the help of a
network specialist early in the planning process.

Reliability
High reliability typically ranks as the top criteria for utility
communication networks as they move from time-tested
legacy technologies to newer packet technologies.
Fortunately, advances in standards for packet network
resiliency and rapid recovery are mitigating early
technology migration concerns.

Latency
Low latency is also a major concern because of the
magnitude of the risk to operational reliability associated
with certain latency-sensitive applications. The most
challenging application in this regard is teleprotection,
which requires very low inter-substation network latencies
to ensure the power system is protected.

Bandwidth
With the need for complex, high-speed, two-way communication, the Smart Grid will require a network with more
bandwidth capacity. Wide-area backhaul and last-mile
access simply cannot rely on existing narrowband wireless,
one-way, or relatively slow-speed wireline networks

Convergence
To optimize network asset utilization and capital efficiencies, it is desirable for different traffic types to flow over
one converged network. However, the technologies
chosen must ensure simple and secure separation and
prioritization of critical operational traffic from corporate
communication and IT traffic running over the same fiber.

Security
Security of information, physical assets, and energy supply
is also a major, often regulatory, requirement for utilities.
Networks must be protected from both physical and
cyber attacks. These security issues are even more vital for
utilities because two-way digital technologies pose
increased risk due to millions of potentially vulnerable
end-points on the network.

Figure 3. Communication network design criteria

The Power of Partnership

In managing the migration to a Smart Grid, selecting the right
network specialist as a partner is a key to ensuring success.
Ciena is such a partner, combining the right technologies with
a high-touch consultative approach to address all of the key
requirements for creating an intelligent network infrastructure.
Ciena provides the products and services that facilitate a

Strategic
Engagement

Focused
Expertise
Collaborative
problem solving
with customers

The right
balance between
focus and scale

Leadership in
strategic, next-gen
technologies

Figure 4. Cienas network specialist approach

practical, evolutionary modernization of utility communication

networks to support an ever-evolving range of applications.
Applying global leadership in packet-optical network
innovation, Ciena has developed a Smart Grid reference
architecture that is a combination of high-capacity optical
transport with integrated, intelligent, and resilient Ethernet
aggregation and switching. Enduring value is created by
introducing a combination of capital savings through platform
and functional convergence and ongoing operational savings
through various levels of network automation. This
combination provides the means to transition smoothly to a
Smart Grid infrastructure that ultimately becomes a powerful
and strategic business asset.
Cienas network architecture is being implemented successfully
in leading utilities to deliver a continuously-sensing information
network. This architecture leads to new opportunities for network
monetization and enables on-demand access to data and
information used to better manage, automate, and optimize
operations and planning processes throughout the utility.
As utilities invest in the upgrade and modernization of their
network infrastructure, the natural tendency is to also
investigate how to achieve an enhanced return on those
investments. Utilities tend to have good geographic fiber
coverage due to the nature of power distribution across a
country. This makes them ideally placed to leverage their
communications network toward expansion into the lucrative
telecoms business services market, offering Ethernet and
optical business services to enterprises and traditional telecom
service providers that require fiber connectivity to complete
their service.
Many of the attributes of Cienas Smart Grid architecture, such
as high reliability, guaranteed performance, and low latency,

are equally well-suited to delivering commercial business

services. Ciena has already helped a number of customers
expand into the business services segment while providing a
full suite of support capabilities, from service definition to sales
training and lead identification.

Where Are We Headed?

With the evolution to Smart Grid, utilities will become very
different entities in the near future. Legacy operations will give
way to next-generation operations that provide better
management and efficiency, easier monitoring of critical
processes, automated restoration that will eventually become
self-healing, improvements in blackout and failure protection,
and greater end-user choice in terms of cost and usage.
The potential benefits of a Smart Grid utility system are
understood across the board, from the utilities themselves to
government entities, public sectors, environmentalists, and
consumers. Even considering the costs and timelines involved,
the advantages for utilities to begin the transition are
undeniable. The impact of the Smart Grid will be felt by
everyone, from provider to consumer.
At one end, the Smart Grid will enable active participation by
consumers who previously had very little control over their
energy consumption. At the other end, the Smart Grid enables
utilities to offer better service, optimize the use of assets,
respond more quickly to system disturbances, and more easily
manage a more flexible, reliable, and cost-effective system
through the use of advanced communication technologies.

Ciena may from time to time make changes to the products or specifications contained herein without notice.
Copyright 2013 Ciena Corporation. All rights reserved. WP119 6.2013

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