SmartGridCity in Boulder won't include Internet
Friday, May 23, 2008
Denver Business Journal - by Greg Avery Denver Business Journal

A game-changing technology sending high-speed Internet and communications over powerlines instead of telephone or cable television wires is at the core of the $100 million SmartGridCity program Xcel Energy started May 12 in Boulder.

The utility's main contractor, Current Group LLC -- a company that counts John Malone's Englewood-based Liberty Media, Google Inc., Earthlink Inc., Duke Energy Corp. and Goldman Sachs among its investors -- has led the domestic push for broadband-over-powerline (BPL) in the United States.

But Xcel doesn't plan to offer Current Group's BPL for Internet. Instead, Xcel is using the technology to make the power grid in Boulder a two-way communications system capable of detecting problems on powerlines, manage electricity more precisely -- potentially even down to household devices -- and give customers the ability to tailor their electricity use and make it more "green."

The Minneapolis-based utility (NYSE: XEL) will wire Boulder's 50,000 households with "smart" utility meters, and put sensors in transformers around the city and connect them to a control center. The system will let customers check the details of their power use through a website and, eventually, "program" their homes to minimize consumption and use power more when it's being generated by renewable resources.

"This is a response to what people have been asking for a long time," said Ethnie Groves, an Xcel spokeswoman.

After failures to fulfill its promise as a broadband alternative to fiber optic and cable television networks, BPL is finding new life in "smart grids."

Germantown, Md.-based Current Group is one of the more high-profile companies developing the technology. Current will install transformers on Xcel's powerlines to ethernet cable, install devices at the transformer that can pull digital data traffic from the raw electricity in the lines and hook Boulder homes to the smart grid through a new meter that acts like a modem.

About 15,000 Boulder homes should be connected by August, with the rest of the city's electrical meters transformed by year-end.

Xcel immediately will gain the ability to detect localized problems, such as a tree brushing a powerline, and do something to prevent an outage instead of relying on customers to call about a downed line.

"This gives them a predictive maintenance system as opposed to the run-to-failure systems that's state of the art today," said Brendan Herron, vice president of corporate development and strategy for the 275-employee Current Group.

Eventually, Xcel could have the ability to stagger the cycles of air conditioners in a neighborhood to keep demand down or to change the settings of home thermostats by a degree or two to achieve a broad reductions in demand.

What the system won't do is connect customers to the Internet on Xcel lines. But it could. Current Group says its BPL is capable of Internet speeds up to 8 megabits per-second for upload and download, slightly faster than the broadband speeds cable TV offers.

"The technology works well; it mainly depends on the regulatory environment and whether the utility is interested," Herron said.

About 50,000 households in Cincinnati get Internet from Current Group in partnership with the utility Cinergy. Current's biggest project has been with Texas utility Oncor, formerly TXU.

The Texas project involved installing a smart grid for the electric company in return for using its power system to offer broadband to the entire Dallas-Fort Worth area of 1.8 million households. Current Group partnered with satellite broadcaster DirecTV Group Inc.-- which Liberty Media (NASDAQ: LCAPA, LCAPB) controls -- to offer television, Internet and Voice-over-Internet Protocol telephone bundles. Satellite TV companies have long sought a broadband technology, which would let them compete better with cable television and telecom giants.

But Oncor announced May 2 that it will pay Current Group $90 million to buy the equipment so far installed on its smart grid. The utility system no longer would offer Internet services or TV, but would license the SmartGrid from Current and use it to manage its system. An Oncor spokesman told the Dallas Morning News the company had no interest in becoming a telecommunications company.

Current Group is content to focus on making power grids more intelligent networks, Herron said.

The smart grid technology has been encouraged by acts of Congress and has drawn interest from some the nation's biggest investors.

The Electrical Power Research Institute has estimated that smart grid technology could reduce electricity production by 10 percent domestically and cut electricity-related greenhouse gas emissions by 25 percent.