A smart grid is a transactive grid.
- Lynne Kiesling
Utilities In The Dark Over Customer Engagement?

A triumvirate of articles all focused on “how can utilities get customers engaged with the smart grid?”  I’ll highlight the noticeable sections of each below, but doesn’t it strike readers that this question is posed backwards?  Rather than having utilities determine how to “engage” customers with the smart grid, perhaps giving customers a reason to engage would be more helpful?  Smart markets anyone?  Apart from giving away cash & prizes, I can think of no more powerful an engagement “tool” than a vibrant market in which customers can decide for themselves whether the smart grid makes sense to them.  But, I digress.  As promised, here are the more intriguing take-aways from the three articles:

First, via GreenBiz.com, a report that seems to conclude the best form of customer engagement is to automate them out of the process:

…So the question remains, how can utilities encourage the user to “engage” once the enabling technology of the smart grid is in place? Motivating factors could include cost savings, environmental benefits, or peer pressure.

The PowerCents DC project run by eMeter and Pepco Holdings demonstrated a 4-5 percent cost savings when variable pricing was introduced. Environmental benefits don’t seem likely to motivate when almost two-thirds of Americans do not see global warming as a serious threat.

Peer pressure worked in recycling, with neighborhoods placing colorful bins on their driveways demonstrating their environmental prowess, not to mentioned competitive spirit. Similarly, this strategy has worked for energy with companies like OPOWER, which has demonstrated a 1-3 percent reduction in energy use by the consumers they reach, based on reporting on energy usage compared to neighbors.

  • Accenture claims that “the average customer thinks about their utility bill six minutes per year.”
  • Utilities need consumers to “engage” to generate an ROI on a Smart Grid investment.

One way to reconcile these facts would be to automate consumer engagement and automate demand response. Many utilities practice “load control” today through controlling irrigation or HVAC systems to prevent blackouts in times of peak demand. The key variation on this theme is to allow the consumer to opt-out of this control, or resume function.

For example, if the utility turns the thermostat down a few degrees automatically, the consumer can simply turn it back up. In this way the consumer has the control, but the utility can help the consumer “engage” in energy efficiency and demand response. A representative from GE stated that 85 percent of the energy use in the home can be controlled between HVAC and appliances. The next generation of appliances should be “smart” such that they can receive signals from the utility and adjust operations accordingly.

Again, if an appliance is turned off or operations are delayed because of the utility signal, consumers can override the signal and resume operations as desired. In this scenario, utilities can deploy capital, become more efficient, and be more assured of a return on investment; and commissioning bodies will see the benefit to consumers financially through their “engagement” in energy efficiency.

While this appears to be a winning scenario for all involved, the migration to “smart” HVAC systems and appliances will take time. Perhaps utilities can request additional funds for “cash-for-clunkers” type programs at the same time as they request capital expenditure approval for smart grid infrastructure from state commissioning bodies. Once the pieces are in place, consumers can remain “engaged” in the same “6 minutes per year” while benefitting from lower electricity prices and a sense of environmental stewardship.

The second, courtesy of eMeter, points out that the staff at the California Public Utilities Commission recently published a white paper explaining how consumers benefit from smart meters.  (Is it me or is it odd that we need a white paper explaining why smart meters are good for consumers…?)  According to this white paper:

“Utilities and regulators have not done an adequate job of explaining how these new devices will benefit consumers.”

“An advanced meter provides more detailed information about electricity usage and costs… it can make informed decisions on how to better manage energy consumption and potentially reduce energy bills. Today, customers have to wait for the end of their billing cycle to receive usage information; but customers with an advanced meter can track electricity use as frequently as they choose… Having more accessible information and feedback on electricity usage will help customers find the right balance between electric usage, enjoyment from that usage, and amount paid for that usage.”

“Today, customers with an advanced meter can access their prior day’s energy usage through their utility’s web site. Within the next several years, by installing an in-home display device a customer could monitor their electricity usage and costs in real time (similar to the price and quantity displays on a gas pump), allowing them to adjust their usage instantaneously in response to changes in prices or signals from their utility by delaying the use of a high-energy appliance or shutting them off. This could be done manually or automatically by pre-programming the device or appliance. Customers will decide when and how to use their electricity before they get a bill that is beyond their monthly budget.”

“With a dynamic rate and with more consumption information, customers can better manage or budget for their monthly electricity bill. However, it is entirely possible that there will be customers who will want to use the information from the advanced meter to save money on their bill, but simply do not have the time to dedicate to managing their energy bill. Using the data from the advanced meter combined with the prices from the dynamic rate, third parties can introduce new ways to customers to help save money. These third-party services can vary from a cell phone application to an integrated communication device in an appliance.”

“Another benefit of advanced meters is that they provide better information about when and how electricity is consumed. This information can reduce the need to build a new power plant or avoid the use of an older, less efficient power plant.”

“Additionally, the advanced meter’s enhanced communication capabilities allow for faster outage detection.”

And in the big picture:

“Ultimately, the additional information about when and where electricity gets used will allow state regulators to make a more informed decision in how to set prices and what types of resources should make up the supply of the state’s electric infrastructure. Best matching consumption of electricity and electricity production will reduce the number of stranded resources and minimize electricity costs. This transition will lead to more reliable, cost-effective, and environmentally responsible infrastructure.”

The third, via Energy Collective, is equally insightful:

“…Too many of them are saying just giving people more and better information about electricity use, for example, is automatically a huge environmental plus,” Ralph Cavanagh, the co-director of energy programs for the Natural Resources Defense Council, said at the E2 Environmental Entrepreneurs recent conference.

“I’m all for better information but the average electric bill in the average U.S. household is $3 a day,” he continued. “If all you’re talking about is giving people more and better information about their $3 a day, at some point many of them are going to conclude that they have more important things to do with their time.”

Said Jesse Berst, president of the Center for Smart Energy, a research and consulting firm in Redmond, Wash.: “I think it’s a lot easier to teach devices to be smart about energy than to teach people to be smart about energy. I don’t see people clustered around the warmth of the home energy management console.”





This entry was posted on Friday, November 12th, 2010 at 10:47 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Authors
Grid Unlocked is powered by two eco-preneurs who analyze and reference articles, reports, and interviews that can help unlock the nascent, complex and expanding linkages between smart meters, smart grids, and above all: smart markets.

Based on decades of experience and interest in conservation, Monty Simus believes that a truly “smart” grid must be a “transactive” grid, unshackled from its current status as a so-called “natural monopoly.”

In short, an unlocked grid must adopt and harness the power of markets to incentivize individual users, linked to each other on a large scale, who change consumptive behavior in creative ways that drive efficiency and bring equity to use of the planet's finite and increasingly scarce resources.