The Lexington Institute’s recently released report entitled “Moving Forward On Smart Grid” makes several important points in its chapter named “Conservation and the Grid for Tomorrow” that again affirm the critical need for a transactive grid with price signals that motivate consumers to act & conserve. In sum, consumers need more than information to conserve, they need a reason (usually most strongly calibrated in monetary terms) to act:
“…Motivating consumers to conserve electricity can be an immediate benefit of smart grid technology. In Boulder, Colorado, a husband and wife who signed up for the smart grid quickly found they did not know much about each other’s energy habits and preferences. The Boulder couple sparred over an extra deep freezer, the clothes dryer and where to set the thermostat when they had guests over the holidays.
Although they resolved their differences, “it took about four months,” the husband said. Analysis suggests that evaluating personal energy choices is well worth the effort. Consumers stand to benefit from lowering consumption and strategizing about when and when not to use particular appliances. The larger point is that part of the smart grid revolution will be infusing more awareness into individual consumer choices. Few Americans alive today recall life without cheap, plentiful electricity. Hefty summer air conditioning or winter electric heating bills have been virtually the only source of feedback on household energy consumption.
Part of the smart grid revolution will be infusing more awareness into individual consumer choices. Still in the realm of the unknown is the extent to which consumers will conserve. “Just because you plug in a smart meter,” noted southern Company chief executive David Ratcliffe, “doesn’t mean a customer will immediately take smart actions.” Others are more sanguine. “studies show that when consumers can see in real time how much energy they are using, they save 5 to 15 percent on their electricity use with simple behavioral changes, and even more with investments in energy efficiency,” testified Edward Lu, a google smart grid projects manager, at a senate hearing in March 2009.
An experiment in Washington State suggested that the potential may be quite deep, but smart grid proponents and utilities managers will have to work to get it. Customer choices in the olympic Peninsula experiment initially led to a 15 percent decrease in overall demand. After a storm, customers were informed that cutting back could ensure everyone had at least some electricity, and demand dropped 50 percent. Ongoing efforts are likely to land somewhere in the middle, but the point is that smart grid technology is necessary to tap the full potential of consumer conservation.
Currently, price is an obstacle. “Most consumers will not change behavior without price signals, education and technological assistance,” testified Katharine Hamilton, President, gridwise Alliance, in March 2009. “With increased information, and technological innovation, consumers could see in real time the impact of their electricity use and take action to reduce their bills.” Price and other incentives will have to be part of the deal as smart grid technology expands…”
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