Only 8% of utilities around the world have completed their smart grid technology implementations while 37% have projects under way and more than half haven’t yet started, according to a new Microsoft Corp. survey released at CERAWeek 2010.

The Microsoft Worldwide Utility Industry Survey 2010 (PDF), surveyed almost 200 professionals within electric, gas and water utilities and related companies around the world. The survey highlights a range of challenges—from financial and regulatory to technology and return on investment—for utilities already unsure of the right path to building the smart grid.

"As this study clearly shows, the disruptive nature of the smart grid revolution, and the innovations it brings, has caught many in the industry by surprise, including many utilities that already have embraced smart grid technologies," said Jon Arnold, managing director for the Worldwide Power & Utilities Industry at Microsoft. "Some incorrectly assert that the utility industry is unwilling to change, but the survey shows the opposite. It’s the magnitude of change to everything from business models to systems that’s overwhelming, especially given utilities’ existing asset and technology investments combined with the need to ensure profitability and reliability."

The survey shows that utilities professionals and executives perceive distribution management and smart metering solutions as the most important technologies for successful smart grid implementations. Integration of renewable energy sources into the smart grid and consumer energy management solutions follow closely. However, 63% of the respondents in the Americas think the information technologies available today are not sufficient to address future challenges, while only 45% of respondents in Europe, the Middle East, and Africa and 42% of Asia Pacific respondents believe they are insufficient.

Smart Grid Cost Concerns

Respondents worldwide cite financial concerns—both costs and return on investment—as the main challenge to smart grid development. (Watch for the forthcoming article on smart grid costs in POWER magazine’s April issue, available at the first week of April.) They also cite regulatory factors as the most influential to smart grid technology deployment decisions.

The survey reveals that 42% of the respondents are currently incorporating distributed generation sources such as wind and solar on rooftops and another 25% will begin to incorporate these sources in the next one to three years. By early 2013, half of the respondents expect to offer time-of-use pricing to all of their residential customers.

Only 8% of respondents believe their utility has a technology architecture that is adequate to support new business processes and new technologies. To fund all of these investments, 77% of respondents expect their budgets for smart grid technologies to increase over the next two to three years.

IRS Question Resolved

In related news, multiple organizations and stakeholders in smart grid technology applauded a decision last Wednesday by the U.S. Treasury Department that found smart grid investment grants provided by the Department of Energy would not be taxable to the grant recipients.

Questions about tax liability had been a contract sticking point between grantees and the DOE. The Internal Revenue Service decision means that a lot of smart grid project initiators and vendors are breathing a huge sigh of relief. A total of $3.4 billion in Smart Grid Investment Grants and $615 million in Smart Grid Demonstration Project Grants were at issue.

Sources: Microsoft, DOE, DRSG, GridWise, National Association of Regulatory Utility Commissioners