Cisco's Smart Grid Bigger Than the Internet

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» 18 May 2009

Cisco's Smart Grid Bigger Than the Internet

Cisco is a seasoned veteran in the art of building profitable networks, so it views the smart grid as a once-in-a-lifetime $100 billion market opportunity. On Monday, the corporation will announce its plans to make communications equipment for the electricity grid—everything from grid substations to routers to home energy controllers.

Cisco, whose networking gear is used in all corners of the Internet, believes that the smart grid could become an even bigger network than the worldwide web itself. On Monday morning, Cisco CEO John Chambers is scheduled to discuss Cisco's smart grid campaign at a JP Morgan conference in Boston.

Cisco's smart grid push is a clear indication that the long outdated electricity distribution system is overdue for a digital upgrade. Other multinational companies like IBM and Intel plus several startups are already bracing themselves for a possible smart grid revolution. Cisco predicts that there will be many investors from utilities and federal governments lining up to adopt the new system, and it also believes that the communication segment of that build-out will probably cost $20 billion a year for the next half-decade.

The idea behind the smart grid is to renovate the electrical industry by overlaying digital communications onto the grid. From there, smart meters in a user's home, for instance, can transmit energy usage rates to utilities in nigh-real-time a la the Internet. This boost in information technology allows the utility to efficiently manage the energy supply on any given home and prospectively allow the consumer to benefit from cheaper electrical bills.

Cisco's smart grid program fits right into the corporation's area of expertise. After all, its product portfolio already covers the products needed to make the project successful, like data center equipment. According to Marie Hatter, vice-president of marketing in Cisco's Network Systems Solutions group, Cisco is also developing new products to fulfill other necessities like smart meter security and home networks.

Although Cisco advocates Internet Protocol (IP), Hattar stresses that a modernized smart grid for electrical systems should be separate from the Internet in order to lessen the possibilities of security vulnerabilities and cyber terrorism.

Cisco expects the smart grid network to be 100 or 1,000 times larger than the Internet. It's because electrical systems are far more widespread and necessary than Internet connections. "Everyone has electricity access—all of those homes could potentially be connected," the vice-president clarified.

However, even though many vendors expect a lot of money to be used on improving the grid, smart grid technology is still in its testing phases. Regardless, Cisco and many other businesses aim to install about 1 million two-way utility meters in the near future.