Stephan Scholl,
SVP & General Manager

Guerry Waters,
VP Industry Strategy

  EET&D   :  Gentlemen, I think we can probably all agree that we begin our discussion today at a very interesting point in the evolution of the electric utility industry. By that I mean that there are signs all around us that seem to suggest that when it comes to the grid, the time for hype is over, and it’s time to get down to the business of what I prefer to call grid transformation.

In several previous interviews with other industry leaders, we’ve talked quite a bit about what the future might bring and especially the role of creativity and innovation in bringing our 100-year-old power delivery system into the 21st century. Both the U.S. Department of Energy’s Grid 2030: A National Vision for Electricity’s Second 100 Years – published in July 2003 – and EPRI’s IntelliGrid: Smart Power for the 21st Century, which followed in 2005, have served as roadmaps to the future for power delivery. But until passage of the American Recovery and Reinvestment Act in 2009 there was relatively little progress toward achieving the objectives set forth by these early grid transformation visions.

Recently we’ve seen a number of early Smart Grid projects run into problems, however, mainly due to difficulties with public acceptance of smart metering and its associated costs, which I want to quickly point out is but one dimension – albeit a financially significant one – of what grid transformation is ultimately all about. While the jury is still out on most of these projects, it would appear that any notion of just going forward and having ratepayers blindly follow is proving to be more than a little naive.

Now, however, with more than $3 billion in ARRA funding being disbursed all across the country – even as we speak – it seems that there is an implicit call to action. So, with that background, my first question is a simple one, but one that I suspect doesn’t have a simple answer: Is there really going to be a Smart Grid, and if so, in what time frame are we likely to see it emerge?

  Scholl   :  The utility industry has been working toward a Smarter Grid for decades, and it will continue to do so. There’s no end point because human ingenuity keeps showing us new and better ways to deliver energy. But we are probably close to the so-called “end of the beginning” – a period in which the industry agrees on a set of common goals and objectives. 

  Waters   :  One thing that’s been key to the first stage of the Smart Grid is the tireless efforts of literally hundreds of suppliers, utilities, and consulting organizations, as well as industry and professional associations, trade groups, and regulatory and governmental bodies around the world. They are providing vital architectural building blocks on which future innovation will rest. 

  EET&D   :  The recent efforts of Secretary Chu at the Department of Energy and Secretary Locke at the Commerce Department, in convening the series of meetings orchestrated by the Electric Power Research Institute at the request of and under the supervision of NIST, seem to have effectively accelerated a process that would have otherwise taken several years to achieve under routine circumstances. But even with that boost, what is the latest conventional wisdom regarding a time line?

  Scholl   :  Most industry experts agree we are probably five to ten years out from wide-scale smart grid implementations. However, most utilities are taking steps forward now to address the associated challenges. They’re improving information management and analysis, enhancing grid security, boosting revenue, increasing stakeholder value, transforming customer relationships, and more carefully assessing environmental impact. “Smart” utilities will ensure they implement standards-based technologies that integrate with their existing investments; put together plans to manage the exponential growth in data promised by the smart grid; and develop strategies to merge operational, information, and customer technologies.

  EET&D   :  Speaking of integrating and merging techno­logies, Oracle itself has been through quite a rigorous technology integration exercise over the past few years. Ever since the November 2006 acquisition of SPL WorldGroup, Oracle has been systematically expanding its utility presence and broadening its products and solution sets for this sector. At what point did your utilities business really begin to take shape?

  Scholl   :  Oracle has been serving utilities’ database needs for decades. So the company has been a natural partner for utilities as they have embraced new dimensions in middleware. Then came an expansion of that footprint into business software applications. PeopleSoft and JD Edwards, which Oracle acquired simultaneously at the end of 2004, both had a solid presence in the utility business, which continues today. And Oracle E-Business Suite is delivering strong business results among utilities.

The acquisitions of SPL and Lodestar – both providers of mission-critical software unique to the utility industry – were a turning point for Oracle’s utility business. The two companies were combined into the Oracle Utilities Global Business Unit so that Oracle could consolidate its utility-specific expertise and better address utilities’ specialized needs.

  Waters   :  The SPL acquisition enabled Oracle to offer best-in-class solutions for customer care and billing, mobile workforce management, outage and distribution management, and asset management designed around utilities’ unique asset portfolios. Lodestar brought meter data management along with highly targeted applications like quotation management and load profiling and settlement. But what’s important about these acquisitions is that today, utility software specialists within the Global Business Unit interact constantly with Oracle’s technology, middleware, and business software specialists to help all parts of the utility’s IT portfolio evolve together.

  Scholl   :  That point bears repeating. Combining utility-specific applications with technology, middleware, and business software expertise has allowed Oracle to deliver the most complete solution to utilities’ operational, business, and technology solutions for investor-owned and public sector utilities. And now, with the acquisition of Sun, we’ve expanded that footprint into hardware as well.

  EET&D   :  Meter data management was still in its infancy at the time of the Lodestar acquisition, but utilities are increasingly learning that the selection of a suitable MDM solution needs to be made much earlier in the smart metering process than was routinely thought or practiced. Are you finding that more utilities are addressing this challenge sooner rather than later?

  Waters   :  Smart metering is characterized by huge increases in the volume of data utilities must handle and the number of departments and utility business processes that rely on that data. MDM is thus an area where utilities really need to establish a point of control early in the process of architecting the smart grid because so many other things are dependent on the accuracy and validity of those meter readings – creating a correct and timely bill, reducing the number of times repair trucks roll out to service “false alarms,” improving the speed and accuracy of outage detection, appropriately sizing equipment in the field, shaving supply costs, and much more. And yes, I think that message is indeed beginning to break through across the utility market landscape.

  EET&D   :  How does one go about establishing and maintaining control of such an enormous amount of data, make sense of it and ensure that it is put to good use – beyond the bill, I mean?

  Scholl   :  MDM is important, of course, but just a beginning. But utilities must establish full control over their data by simplifying their infrastructure and integrating applications in ways that prevent repetition and overlap. Oracle adds applications that provide business intelligence and insight, thus aiding process improvement and increasing customer satisfaction and loyalty. These combined solutions help facilitate utility initiatives to fully address emerging customer needs.

  EET&D   :  Stephan, over the past several years Guerry and I have had several opportunities to talk and compare notes on Smart Grid evolution, but until recently, those conversations have centered almost exclusively on Oracle’s software products – primarily those associated with customer information systems, billing and customer care. However, now that Oracle has completed its acquisition of Sun Microsystems, which fundamentally changes the complexion of the company to one with a major hardware presence, a lot of folks see this as a game changer for Oracle. Can you give our readers an idea what impact the Sun hardware presence and asset base is going to have on your utility business?

  Scholl   :  Oracle’s Sun products for the energy and utilities industries are extensive and innovative. The acquisition combines best-in-class enterprise software and mission-critical computing systems, enabling Oracle to engineer and deliver an integrated system – applications to disk – where all the pieces fit and work together. Customers won’t have to do the integration themselves. Our utility customers will benefit as their system integration costs go down while system performance, reliability, and security go up.

  EET&D   :  Am I correct to assume from the substance and tone of your comments that you’re both fairly bullish about the future of grid transformation? 

  Scholl   :  I certainly understand that there is a lot of skepticism out there. Much of it is legitimate; there’s been far too much hype around the whole Smart Grid concept. But no one should be thinking that this is going to quietly fade away. The need to transform the grid for the next hundred years is more than just a variation of the tagline associated with the original DOE Grid 2030 concept; it is something that we absolutely must do. How we do it, what technologies we use, how we change the regulatory landscape to accommodate it, how we actively engage utilities’ customers in the process, and a lot of other things are at various stages of being sorted out. But what’s important to focus on is the fundamental need for transformation. 

  Waters   :  The grid that has served us so well for the past 100 years will not adequately address the challenges of the next hundred years. Huge commitments of capital and other resources have already been made, with an eye on the specific needs of a growing population and increasing environmental concerns. As we’ve discussed on other occasions, Mike, there is probably way too much emphasis placed on smart metering and not enough on the various other dimensions of grid transformation. The ability to turn the power delivery network from a predominantly one-way system into a more balanced two-way topology is no small undertaking that goes far beyond transitioning to two-way communications at the meter level – although that too is certainly a formidable undertaking.

  EET&D   :  A lot of what we hear and read about transforming the grid suggests that there is a huge R&D effort required, but although there is certainly a lot of application-level work to be done, how ready – and more importantly – how available are the tools needed to make Smart Grid a reality?

  Scholl   :  I don’t believe there’s a limit on human ingenuity. There is no end-point to grid R&D. That said, it’s important to realize the great improvements we can make with technology and applications that exist today but have not yet been fully implemented. We’re in considerably better shape than some people think. What I fear most is that because the progress to date has been extensively directed to the architecting phase we discussed at the beginning of this interview, that it would somehow be interpreted as a lack of progress. Guerry, I’ll let you have the last word. Any thoughts you might like to add?

  Waters   :  From my perspective, I see grid transformation as very much a work in progress. I don’t know that it will ever really be finished, any more than the grid we have today was ever finished – or should be, for that matter. There is a very large body of technology available to get the job at hand well under way, and I have every confidence that whatever else we need is well within our collective abilities as an industry to identify and create in a timely and cost-effective manner. Oracle looks forward to being a part of that team effort while doing its part to differentiate itself in ways that are both constructive and beneficial to utilities and their customers.