Customer Acceptance - Part 2

An article came out in the NY Times this week talking about this very issue.

It seems that smart meters are being installed in California and other places and it is starting to dawn on the customers that the power companies want to control the customer's usage. In addition, the idea of real-time pricing is coming up too and that is making consumers nervous. So it boils down to the consumer thinking: "What's in this for me?"

This seems to point to what I said before about the power companies not doing enough to educate their customers about the benefits to the consumer of these new smart grid technologies. It just seems to be all about the power company saving money.

I remember listening to a local radio talk show host talking this week about the already existing CoolKeeper program (the power company can shut down your A/C when demand is too high) - His point being, why should we just trust the power company to control our A/C when they could be just turning it off because they might sell their power to California at a higher rate than they would get from us at that time. The radio talk show host suggested that the power company needs to share more information with us about why they are 'pulling the plug' on our A/C's. Is it really because demand is getting close to available supply or because they can make more money selling their power elsewhere or avoid paying for much higher priced power at that moment. This appears to be pushing the burden of sacrifice on the consumer to the benefit of the power company.

So, it would seem, that smart grid technologies and demand reduction programs may require a new level of transparency, education, marketing, and public relations than the power companies have been used to doing -- several orders of magnitude higher.

Thoughts on getting customers to accept real-time pricing and utility control

In my previous post, I mentioned a AMI-HAN Bill of Rights. The purpose for the Bill of Rights was to allow the consumer to exert some control over his/her destiny while the power company changes the consumer's world.

This begs the question - Why would a consumer want to have real-time pricing, or buy a home area network, or respond to grid signals?

All the consumer wants to do is to keep plugging in electronic devices and expect them to just work. Oh, and not have his/her electricity rates go up.

Ah, but that's the point, the cost to utilities to produce power is going up - by a lot - due to the increased environmental regulations and restrictions. So, to help the consumer cope or 'manage' his/her increased costs (and reduce the utilities costs) he/she gets smart meters, home area networks, real-time pricing signals, etc. Ok, its more somewhat more involved than that, but that is how the consumer likely will perceive it.

The net result is that the consumer can likely continue to operate as before, but at a substantially higher cost or use the new technology to control his/her power usage according to real-time power price changes.

How?

In Home Displays (IHDs) such as Tendril's Insight or Control4's EC-100 controller provide the basis of a simple home area network (HAN) that talks to a smart meter and provides feedback to the consumer on the IHD of power usage, real-time pricing signals (what my current kWhr price is), power usage rules, and control of appliances.

The idea is that you, the consumer, will buy into this new model because you now get to know how much power you are using right now, what it is costing you today and you can set rules to automatically turn things off and change the thermostat to reduce power usage for periods of time when power is more expensive throughout the day.

Is that really enough of an incentive?

For some it will be. For others it will take more and there will always be some that it will cause information overload.

My guess is that you will see products that add unrelated services to the IHD such as traffic, weather and news to endear you to the IHD so that you will use it more often.

Utilities might add pre-paid power or power budgets (don't exceed $X) to simplify the whole process and to help customers to think in terms that they are used to with their own personal finances.

Whatever products and services are provided, however, it will require a level of promotion, training and communications from the utilities to its customers to which neither have been accustomed.

Demand Response Bill of Rights?

I ran across a presentation from last year titled: "Requirements Engineering for the Advance Metering Infrastructure and the Home Automation Network (AMI-HAN) interface" by Diane Peptone where she talks about the rights and obligations of customers regarding AMI systems and demand response plans.

Here's the summary:
1) Customers have the right to receive price (periodic and real-time) signals and reliability signals without enrolling in utility programs and without registering their equipment with their utility.
2) Customers have the right to choose if and how they will program their programmable communicating devices to respond to price and reliability signals.
3) Customers have the right to purchase, rent or otherwise select from any vendor any and all devices and services used for energy management or other purposes in their premise.
4) Vendors have the right to compete in an open market to sell HAN related systems, devices and services to all utility customers.
5) Utilities have the right to offer DR and energy management services to customers
which utilize the informational and communication capabilities of their AMI system.
6) Customers have the right to participate in utility sponsored programs and at the same time,
use equipment, not involved in the utility program, that receives price and reliability signals.

Ok, it's not really fair to Diane to provide these out of context, but I do so only to illustrate the point that utilities (power, water, gas, etc.) are about to change the nature of their relationship with the consumer from a straight metering of usage to a metering of usage and control of usage model.

There will be much more opportunity for real-time data, conservation, cost savings, etc., but it seems that the issue missing from AMI and DR discussions is how do we get the customers to accept the new model? It's assumed that it will just happen or that 3rd party vendors will solve it for the utilities. I guess the reasoning is that customer acceptance is not a technical issue, thus it's not worthy of much discussion.

What is Demand - Response?

My definition is:

A predetermined process where a power company requests one or more users to defer power usage during a specified time, e.g., peak demand.

We everyday consumers likely haven't seen this happen yet, but we likely will.

Currently, large businesses or consortiums of businesses participate with their power company to give up some portion of their power consumption during a specified time period to smooth out demand peaks so that the power company does not have to buy much more expensive power from other sources.

As we move toward more renewable power sources such as wind and solar we may very well 'be encouraged' to utilize small electronic devices that communicate to 'smart meters' to turn off more than just the air conditioner when the wind dies down at the wind site or if there is a sudden rain storm at the solar site. Wind and solar are not reliable power sources and expanded usage, without some sort of large power storage technology, will make them problematic power sources for all of us.

Residential Smart Grid Pilot Experience

While beta testing a residential smart grid project I had an epiphany.

We found that when consumers could see, in real-time, what power they were consuming and how much is was costing them, they made immediate changes to how they consumed energy.

I expected that they would care, but I did not expect the passion at which they 'jumped on the bandwagon' to reduce consumption.

I remember one comment, "...I didn't know that my sound system was drawing 2 Amps when idle. I'm putting a switch on that to turn it off until I want to use it."

Smart Grid Musings

I've read the articles about the need for a smart grid because the current electrical grid is essentially unchanged since the 1960's. Ok. But just because a technology is old is not really a good reason for change.

After all, we are all pretty accustomed to flipping on the power switch and expecting the light to go on or the refrigerator to keep things cool. It just works, just like it has all of our lives.

So, why would we want to mess with a good thing?

There are several reasons, many of which are not being clearly articulated by the media:

1. Power demand continues to grow from year to year.
2. Power is generated mostly by coal, natural gas, oil, and nuclear.
3. Renewal power is growing, but it is currently less than 5% of less of the total.
4. Uncertainty about the regulatory climate (EPA rulings, permit denials, environmental legal problems, cap and trade legislation, etc.) has kept power companies from building new coal power plants to keep up with the demand for power.
5. Renewal power such as wind and solar cannot be brought 'on-line' as needed. Wind is available when the wind blows which varies minute by minute. Solar is available as long as the sun shines. See some wind power generation graphs here to see the variability of wind power: http://wind.aeptechlab.com/PowerGraph.aspx?DeviceID=1
   
6. We don't yet have massive power storage technologies to smooth out the variability of renewable power availability.
7. Power companies are exploring the use smart grid technologies to control power usage all the way down to your individual appliances.
   

So, at some point in the near future the consumer is going to be faced with the cold hard reality that the old days of instant power whenever he/she wanted it are over. It will happen when the power company puts in communicating thermostats that automatically bump up the temperature by 8-10 degrees in the summer when demand is about to exceed available power supply or that room air conditioner, dishwasher, washing machine and clothes dryer cannot be run during peak hours.

Why will this happen?

Power companies have to always make available slightly more power than is being used so as to not overload the system.

Because new renewable power sources being brought online are variable and unpredictable, the grid will need to be able reduce demand, in real-time, as the supply of power reduces. Existing power plants cannot be turned on and off quickly and economically to level out the supply of power. Also, because renewal power varies, the power availability margin will likely need to be increased to reduce the risk of demand exceeding supply.

The bottom line here is that smart grid technology will be used to control demand in real-time, so that demand stays below available power supply.

Power companies are running pilots all over the country using a variety of new smart grid technologies to figure out the best ways to control residential and business power usage. The biggest hurdle that they will face is how to get their customers to 'buy-in' to the new model with the least amount of resistance.

Watch those pilots closely.