I spent the beginning of this week in our nation’s capital, attending one of the smart grid’s flagship conferences: GridWeek. While the big theme last year was the timing of the advanced meter infrastructure (AMI) rollout, as well as standards for the smart grid, this year “consumer engagement” was the phrase on everyone’s lips.
Why? Because utilities have started to roll out AMI, but they won’t get its benefits without fully engaging consumers to reduce energy consumption and change behavior. It’s like taking a big CapEx project on without really figuring out how you’ll pay it back. Public utility commissions (PUCs) don’t like that one bit. In fact, the PUCs have already flexed their regulatory muscle in CA, TX, and MD and will continue to do so.
So, utility execs are worried and want to solve this problem. Here are five things I overheard at GridWeek, as well as my responses:
#1. We have to come up with a new term for “demand response.” I’m a customer. I’m not a “demand.”
Utilities aren’t great at marketing. They tend to come up with overly technical terms or acronyms that don’t communicate any benefit or call to action. Maybe it’s time to give up “demand response” when talking to homeowners. Call it a “rebate” or something that sounds similar to other financial incentives they’re used to – even if the term is technically less accurate.
#2. We’re building infrastructure without any idea what the apps will be.
This partially explains why it’s taken so long to decide on standards and vendors for smart grid infrastructure. Is 60 min time granularity ok for the smart grid? Or do we need 15 min? Well, it depends on the application you want to run. If you just want to do automated bill reading, then you don’t need short interval data. If you want to do active demand-side management, though, you may need the 15 min granularity. You better decide soon. Making the latter choice of application tomorrow will require a more expensive infrastructure today.
So, utilities are in the difficult position of trading off the future optionality of critical infrastructure with the odds of cost recovery on an increasing plethora of applications. The result is the “pilot hell” we’re in today.
#3. Don’t act like demand-side management isn’t a commitment!
Those of us in demand-side cleantech often think of demand-side management (DSM) as the easy answer. It’s so much simpler to put some controls on load than build a new power plant, right?
Well, from a utility perspective, DSM is also risky. If you choose it over building new generation, you better be able to sustain that demand-based resource for the lifetime of a new generation facility: 20-30 years. Active DSM hasn’t even been around that long.
#4. We need time-of-use rates to justify AMI, but we can’t punish our most vulnerable customers with rate increases.
Once upon a time, an economist decided that it is maximally efficient for the highly volatile wholesale price of electricity to be passed onto the retail customer. He argued that the closer we can get to real-time pricing at the end of the grid, the lower the overall cost of power will be for everyone in aggregate. John Stuart Mill would be proud.
Unfortunately, there’s always going to be a subset of the population for whom electricity will be viewed as a right, not a commodity to be purchased at market rates. These are primarily low-income customers and the elderly. Mandating time-of-use (TOU) rates without giving them an exception will be unacceptable to the PUC. Yet, for TOU to be effective, it must be applied over a significant portion of the utility’s service area. Furthermore, unless it’s “opt-out,” few will actually adopt TOU.
Perhaps the way TOU gets rolled out will be a combination of opt-out for most and opt-in for the most vulnerable customers. Just a suggestion, but it should be interesting to see how this plays out, especially given the political season we’re entering.
#5. [Question] How would you explain the smart grid to your grandmother?
Not one panelist out of five answered this question well. Some in the audience actually started laughing at their responses, which were either technocratic gobbledygook or meaningless PR snipets.
Like I said, utilities aren’t good at marketing.
What would my answer be? Remember, it doesn’t need to be technically accurate. It just needs to make sense and communicate a tangible benefit:
Grandma, the smart grid is like the internet for energy. When it’s finished, you’ll have actual choices on how you use energy in your home. And, by making smart choices, you can ultimately lower your bills significantly.
I think that’s pretty good. Let me know what you think.