The smart grid has long been touted as a boon to public utilities and consumers alike. For public utilities, site-specific intra-day power usage information opens the possibility of developing incentive-based rate structures to decrease consumption during peak periods. It also supports remote diagnostics for power quality issues, such as surge voltage and harmonic distortion. Consumers benefit from access to real-time usage data and energy alerts (email or text) that help them regulate their power consumption (and save money!)
Utilities nationwide have been gearing up for substantive investments in advanced metering infrastructure, meter data management systems, and Supervisory Control and Data Acquisition (SCADA)/Distribution Management Systems (DMS). Yet all of these investments fall short of their potential absent a reliable, robust telecommunications backbone to support two-way communications between each service provider and ALL of the endpoints served.
Telecommunications presents significant challenges for rural cooperatives. These cooperatives lack universal access to cellular and fiber optic technology. Line-of-sight technology (e.g., radio) may be compromised by the terrain, yielding weak to non-existent signal strength. Transmission costs may be higher due to the distances covered.
Despite the challenges, electric cooperatives and others press forward to keep pace with industry standards. As they gather around the planning table, they’ll need a clear understanding of the breadth and depth of applications that will leverage two-way communications in order to make the right technology and capacity decisions. The sheer number of possible communications deployments is daunting, and each carries distinct advantages, limitations, cost structures, and implementation requirements and timetables. Suffice it to say, telecommunications experts need seats at the table.
In an era in which public utilities and telecommunications provider actively seek partnerships or mergers as a matter of survival, a window of opportunity may be open for cross-pollination between these two categories of providers. The telecommunications companies can provide the expertise to lead the deployment of the backbone communications network. In turn, they may gain access to new customers and expand their revenue base. In addition, there may be back-office efficiencies that the two parties could realize – e.g., billing, collections.
Whether pursued alone or in partnership, the move toward smart grid technology and the associated communications network demands careful attention to the financial impact of these infrastructure investments. This assessment must consider the required capital outlays in light of available access to debt and equity. It must consider cash flow requirements while new services are brought online. And it must provide a risk analysis to assess sensitivity to variances in revenue and cost forecasts.
Your team at Aldrich stands ready to meet your financial and tax planning needs as you contemplate this substantial undertaking.