Courtesy of The Energy Collective, an interesting article on the role of consumers in smart grid deployments and the impact that artificial price signals and bill complexity have resulted in little efficiency improvements. While we are sanguine about the report’s suggested solution – distributed energy storage – we would much rather have smart markets, using a metric that all consumers know and love (money), motivate real behavior change. As the article notes:
“…Smart grid technology is all about demand side management. Leveling load on the grid and better matching load to electricity generation, particularly where that generation is variable, renewable generation, is the ultimate function of most smart grid systems. Load leveling on the grid today is an inefficient, antiquated, and complex process. Making the grid smarter is about finding a better way to do it.
The retail electricity consumer is the cause of most of the problem (yes, variable wind and sunlight may have something to do with it, but blaming God for the problems of the grid is problematic on a number of different levels). Consumers don’t use electricity when they should. They come home at 6:00 p.m., turn on the T.V. and the washer, cook dinner, take a bath and, perhaps, charge an electric car. And at night, when they should be using all that nearly free wind and base load generation, they go to sleep. Outrageous!
Earlier this week I attended a hearing of the Illinois Commerce Commission on integrating electric vehicles onto the grid. At the hearing a series of witnesses spoke about the consumer problem, albeit in a more courteous tone than mine. Many of the witnesses proposed solutions. All those solutions involved better measuring consumers’ electric usage (generally through smart meters) and then training consumers, through a series of rewards and punishments (with an emphasis on the latter) to use electricity better or, more accurately, when it was more convenient from the standpoint of the grid for consumers to use it. Unfortunately, Dr. Pavlov could not make the hearing, but his spirit was fully in the room.
It is time that we recognize the retail electricity consumer as the public menace that he is. The retail electricity consumer is incorrigible. Electricity price elasticity appears negligible, and it is virtually certain that no one has ever lost a dime by overestimating the discount rate of the average American electricity consumer. Compact florescent light bulbs are a case in point. Despite a payback period of less than 10 months on bulbs that can last well in excess of 10 years, consumer adoption has been notoriously slow. The average consumer does not understand his electricity bill and has no desire to do so.
While it may be fair to blame the consumer, it is harder to fault him. Electricity is a dull subject for most and its relative costs have thankfully remained low. Modern life is complicated and time is limited. Consumers don’t want to spend their limited free time learning the intricacies of a utility that has historically been cheap and plentiful. They are voting with their light bulbs and will likely continue to do so.
In dealing with demand side management of consumer electricity purchases, we need less Ivan Pavlov and more Donald Trump. Effective demand side management requires that we fire the consumer.
An electricity grid structured to service the demands of the electricity consuming public is a grid that is designed for inefficiency and waste. We need to leave the old grid behind. Creating a smart grid demands that we cut the link between the consumer and the grid. On a smart grid system, the consumer look somewhere else for his power.
The place the consumer will look is to a distributed energy storage system (DESS) powered by a battery, very much like the batteries that today power the first generation of plug-in electric vehicles. The DESS will be located in the consumer’s home or near his home in his community. A consumer can take electricity whenever he wants it from the DESS, and at the same price anytime of the day—just like at a gas station. Electricity will be easy to use, easy to understand and a much more attractive fuel to put into a vehicle. The grid will still be there for the consumer, but only as a source of backup power.
The primary job of the grid will no longer be to serve the consumer, but to serve the DESS that supplies the consumer. Because the DESS will be under the control of the grid operator, the operator can wheel power into the DESS when it is cheap and convenient for the grid operator to do so, not when the ultimate consumer wants to use electricity. Peak power will become a thing of the past, a curiosity of an earlier technological age. Building massive infrastructure to generate and transmit peak power will no longer be necessary. Maintenance expenses on lines and transformers will be significantly reduced. But peak power will be eliminated, not because we spend billions of dollars on smart meters and education programs for the Great Unwashed, but because we build a smart distribution system incorporating DESS technology.
DESS is not some futuristic technology that needs another ten years in the laboratory. The technology is available today and several utilities are demonstrating its use in projects around the country. But DESS faces an uphill fight. Selling peak power is big business. Moreover, demand side management schemes involving smart metering, consumer education, complex billing systems and (most importantly) the collection of consumer data have spawned cottage industries of companies hoping to become the first smart grid Google. To those companies, DESS is a threat that has the potential to make them as outmoded as peak power and incandescent light bulbs.
The potential of energy storage, and most particularly distributed energy storage, to transform the grid is only slowing becoming apparent to policy makers. DESS is a disruptive technology, not just for the old grid, but also for many companies purporting to build a new, smarter one. This will be an interesting fight. Stay tuned.
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