Riding the “Smart” Electric Wave at Florida Power & Light

Many organizations live in constant trepidation of competitors or new entrants potentially poaching their customer base by offering a better value proposition. Since electricity is an integral part of daily human life, the utility industry is exempt from being in this constant state of anxiety. Customers simply cannot live without their product!

Owing to a regulatory compact agreement in the early 20^th century, utility companies were monopolies in their respective areas with regard to electricity supply. Customers are charged whichever rates utilities deem necessary to cover operating costs as well as provide a nice return on their investments [1]. The Public Utilities Commission (PUC) approves these rates as long as utilities can justify them. In return, utility companies build power plants to facilitate supply and distribution of electricity. Utilities are essentially incentivized to keep investing/ building power plants since the guaranteed returns on said investments represent majority of their revenues.

Today, the emergence of smart technologies and digitization is seriously disrupting utilities. Opportunities for increased efficiencies exist at every step of the value chain, from energy generation to customer service. Utility companies are overhauling their business and operating models to transform themselves ahead of the curve and Florida Power & Light is no exception.

Florida Power & Light is the third largest electric utility in the United States, serving more than 10 million people across nearly half of the state of Florida [2]. FPL is transforming its business by putting the customer first through the introduction of smart meters and smart grids and its Energy Smart Florida Initiative to increase reliability and transparency to customers.

Energy Smart Florida Initiative

Through this initiative, FPL is investing in smart grid technologies to build a smarter, more reliable electric infrastructure for its service area [3]. FPL’s investments in this initiative include intelligent devices on the electric grid, enhancements to grid performance monitoring centers and smart meters for about 4.5 million customers [3]. Energy Smart Florida represents an $800M investment from FPL and a $200M stimulus grant from the US Department of Energy [3]. The size of this investment shows FPL and the US Government’s dedication to adapting to the digital transformation happening in utilities.

Smart Grid

By including intelligent devices on their electric grid, FPL ensures reliability for their customers. By analyzing data from the smart grid, FPL performs predictive maintenance to prevent minor problems from becoming disruptive problems [4]. A few smart grid devices and systems include:

• Predictive Diagnostic Units – quick detection of deviations from normal operations [4]
• Phasor Measurement Units –  determines stress points on grid and assists with quick power restoration [4]
• Line Protection & Control Systems – remote assessment of equipment operating conditions and enables automated power restoration [4]

In addition, improving their grid performance monitoring center increases productivity and efficiency for FPL employees. Continuous analysis of smart grid data enables prevention of service interruptions or outages. In the case of outages, the smart grid facilitates quick response and restoration to affected areas. (See Exhibit 1 for overview of a Smart Grid)

Exhibit 1: Smart Grid Overview

 

Smart Meters

FPL started installing smart meters in its service area in 2009. Once a customer converts to a smart meter, they have access to more information and data about their electricity use. The customer can track their hourly/ daily/ weekly/ monthly electricity consumption on their energy dashboard, compare to usage from prior periods and adjust accordingly. (See Exhibit 2 for Energy dashboard)

Smart meters benefit customers by giving them control over their electricity usage and monthly bills. Convenience is another benefit to customers since the smart meter does not require the physical presence of a FPL representative for manual meter readings.

FPL also benefits from these smart meters through improved communication capabilities and ease of electricity usage data collection. There is also potential cost savings from labor and logistics of the manual meter readings done in the past. 

Exhibit 2: Sample Energy dashboard [5]

 

Looking ahead

Moving forward, FPL needs to take advantage of the big data opportunity in the growing smart home and smart devices industry to adjust their offerings to customers who might demand cleaner sources of energy [6]. In addition, FPL could build the infrastructure to support growth of the electric vehicle market.

With the emergence of distributed generation, customers not only now have capabilities to be less reliant on central generation from the utility but can also input energy into the central grid to be used by others. I would advise FPL to find a role for itself in the distributed generation market, perhaps by selling and installing solar panels.

The full impact of digitization in utility is uncertain but as long as customers’ interests and needs remain a priority, FPL will find ways to transform and align customer needs to their value proposition.

(797 words)

References

[1] Utilities for dummies: How they work and why that needs to change http://grist.org/climate-energy/utilities-for-dummies-how-they-work-and-why-that-needs-to-change/

[2] Florida Power & Light, Company profile https://fpl.com/about/company-profile.html

[3] Energy Smart Florida, Fact Sheet https://www.fpl.com/smart-meters/pdf/energy-smart-fact-sheet.pdf

[4] FPL, Enhancing Service Reliability  https://www.fpl.com/smart-meters/pdf/enhancing-reliability.pdf

[5] https://www.fpl.com/smart-meters/pdf/energy-use.pdf

[6] How digital transformation if influencing utilities http://www.digitalistmag.com/digital-economy/2016/06/09/three-ways-digital-transformation-is-influencing-utilities-04258313