Cisco Certifies Smart Grid as the Next Big Thing
By Jesse Berst
May 17, 2009 - 2:02:24 PM

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 Today, one of the biggest players in communications, Cisco Systems, has announced an ambitious plan to position itself as the centerpiece of the Smart Grid. The company briefed SGN in advance of its announcement. SGN Founding Editor Jesse Berst analyzes what Cisco is planning and what it means for other players.

 

Telecom powerhouse Cisco Systems has staked its claim on the Smart Grid, and, trite as it may sound, the world may never be the same.  I’ll outline what Cisco is proposing, consider the implications for the electricity industry as a whole, and conclude by identifying who stands to lose from Cisco’s plans.

 

From Generation to Home and Everything in Between

Cisco Systems, the San Jose-based networking and communications giant, today revealed that it intends to provide “an end-to-end, highly secure network infrastructure solution” for the Smart Grid and everything it touches.

 

Cisco’s strategy is to ensure that there is one, consistent, IP-based infrastructure for the electric power industry – a standards-based foundation that will ultimately be able to connect any device to any other anywhere at anytime. In other words, an Internet for electricity. Cisco will provide some of the hardware, most of the networking software, and a few of the applications that run on top. It will turn to partners for the rest. Since Cisco intends to build on open standards, both vendors and customers will be free to build their own applications, just as they do today over the Internet.

 

The Cisco Approach

Cisco’s constellation of Smart Grid solutions consists of four parts: T&D automation, security, smart meter and endpoint communication, and business and home energy management.

• Transmission & distribution automation. Cisco will deliver substation-hardened routers and switches, embed legacy protocol translation, and work with equipment manufacturers to achieve interoperability based on Internet protocols.
• Smart Grid security. Cisco will provide the architectural framework for security as well as other security solutions such as firewalls, IPS, VPN, identity, access control. Physical security will include video surveillance, alarms, and hardened network devices. The system will feature real-time monitoring, management, and correlation.
• Smart meter / endpoint communication. Cisco partners will handle the smart metering technology itself with Cisco providing the backhauling communication infrastructure. Cisco pledges interoperability on both the software and protocol (IP) level.
• Business & home energy management. Cisco will promote IP as the standard for business and home energy management and work with equipment manufacturers to ensure interoperability with this standard. The company plans to develop a home energy control appliance and manage these services in conjunction with its partners.

Why Go Public Now?

In her briefing to SGN, Cisco VP of Network Systems and Security Marie Hattar identified utilities as the primary customer for the company’s Smart Grid solutions. A widely reported example is Cisco’s involvement with Florida Power & Light’s ambitious “Energy Smart Miami” project (see SGN News Roundup for April 21). Those utilities want Cisco to lay out its future vision to inform their own long-range planning.

 

So What?

As the company that gave us the tools for keeping hundreds of millions of people online at once, Cisco has the experiences and the resources to repeat that success in the Smart Grid world. Indeed, Cisco is promoting their Smart Grid role with an Internet analogy.  “It’s like building an Internet in the electrical system,” says Hattar. “We’ve been clear leaders in Internet and will do the same for Smart Grid.”  In the long run, Hattar expects Cisco’s Smart Grid business to eclipse the company’s Internet services in number of access points, since more people are tied to the electric power network than to the Internet.

 

And let’s not forget that Cisco has also built very strong businesses in the telecomm and cable industries as well. It has lots of practice remaking networks.

 

Implications

The entrance of Cisco, with its broad and ambitious vision, entering the Smart Grid space has several far-reaching possibilities:

• The dial tone effect. Today, grid connectivity is a patchwork cobbled together with a bunch of proprietary technology, each system different from the next. Tomorrow, we will see a true end-to-end "Internet for electricity," where any device can talk to any other device at any location.  Thanks to Cisco and the competitors that will follow it, it will be as reliable and familiar as the dial tone: You pick up the phone and there it is.
• Calming and energizing. Such consistency and reliability will have a calming effect on customers, and “revving up" effect on entrepreneurs and innovators. It's like when Microsoft announced Windows 95 or Apple opened up the iPhone for applications. Customers could feel more secure that they would have a robust solution with lots of choice. And entrepreneurs could see that they would soon have a standard platform. By writing for that platform they could reach tens of millions of customers.
• The electricity economy. As a result, the future of the electricity industry may look more like telecomm 2.0 (think iPhone) and Web 2.0 —a networking foundation that carries applications and services. Once this possibility exists, the Smart Grid turns into the next vast infrastructure for delivering products and services and conducting commerce anywhere on the planet. It is that vision/possibility that has Google salivating.
• Misunderstood. Some people think Cisco wants to run the Smart Grid over the public Internet. That will rarely be the case. Instead, you will probably not send the signal over the same line that brings in your broadband Internet. Most utilities will probably use a separate (usually wireless) connection. Using Internet protocol (IP) doesn’t mean using the Internet itself.

Winners and Losers

Cisco is exceptionally skilled at working with and manipulating the standards process. In the cable world, Cisco worked with partners to help establish the DOCSIS standard for carrying data over cable lines.  The move greatly benefitted Cisco, while companies that waited too long to get onboard went out of business. The same thing could happen to manufacturers of smart meters, substation equipment, and intelligent electronic devices. Although Cisco’s announcement specifically includes plans for legacy protocol translation, it’s unwise to bank on Cisco maintaining those indefinitely. 

 

The message for vendors is clear:  Engineer your equipment to work over IP or risk being shut out of Smart Grid communications.  Similarly, utilities need to plan for an IP-based infrastructure. Any company who does not follow Cisco’s lead in communications protocols is putting their financial health at risk.

 

In addition, the list of losers could also include the following:

• Alcatel and Cisco's other networking competitors who may get to the party too late.
• Utilities who may be disintermediated once it becomes easier to reach around them and go directly to energy customers.
• Small companies attempting to create the platform in the center, because they won't be able to match Cisco's speed and strength.   

   SGN’s Cisco profile

   Cisco press release

 

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