Businesses offer best path to money in smart grid

Dozens of companies are developing tools to get consumers involved in home energy management, but businesses are easier customers to serve, say smart-grid execs.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
3 min read

BOSTON--For consumers, the face of the smart grid is most likely to be a home energy monitor that gives people insight into home electricity use. But from a business perspective, there may be more action catering to business customers, rather than homeowners.

A panel of smart-grid company executives here at the AlwaysOn GoingGreen East conference on Tuesday said saving commercial, industrial, and business customers is an easier sell than helping consumers save on utility bills.

Images: The many faces of the smart grid

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Home energy monitoring systems and Web applications such as Google PowerMeter let people get details on where home electricity is going. But it's unclear at what point consumers are willing to make changes in their behavior based on that information.

"I think we need to temper our expectations," said Tim Healy, the CEO of energy efficiency company EnerNoc. He noted an "apathy found by consulting company the Shelton Group, which found that consumers would be willing to spend $129 more a month on energy bills before taking actions, such as buying an EnergyStar appliance or scheduling dishwasher or dryer jobs to take advantage of off-peak rates. (Click for PDF of study.)

"That's an astronomical amount of pain that a customer will endure before they say, 'I better do something about this,'" said Healy. "Right now the low-hanging fruit, the interesting opportunities are in the small commercial and industrial market."

EnerNoc sells energy management systems designed specifically for commercial and industrial customers. Its demand response software ratchets down electricity use during peak times at businesses, such as hospitals or retail stores. Customers get paid to lower use and utilities pay EnerNoc because reducing grid use is cheaper than turning on "peaker plants" to meet peak demand.

Compared to residential customers, businesses have more motivation to lower energy use simply because they use more and pay more, said Stephen Doroff, director of smart grid initiatives at consulting company KPMG. In addition, a lot of the infrastructure, such as broadband connections and two-way meters, are already in place at businesses, he said.

Federal governments around the world have created incentives for utilities to upgrade the electricity distribution infrastructure with digital equipment, such as smart meters. But state regulations in the U.S. often make it difficult for utilities to make investments in smart-grid programs, say industry experts. Regulations are often structured around providing a return to utilities' investment in power plants, rather than efficiency-related technology, panelists said.

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"Some utilities are not even looking at (smart metering)--the standards haven't been defined, there are too many types of devices. But they know that they need to integrate collection meters with existing (IT infrastructure)," said Doroff. "They can start analyzing data and then they know how they will respond."

Still, millions of consumers will get smart meters and, in some cases, in-home energy monitoring systems as part of grid modernization projects.

There has been ratepayer backlash from consumers who are not willing to pay higher electricity rates, whether they are related to the smart grid or not, said Jeff Ross, director of business development from smart-grid company GridPoint. But the right products could prompt consumers to get more involved in energy management and reduce bills, he said.

"If companies provide tools that are easy to use, consumers will take control and want visibility to save energy," he said. "That's a function of how good tools are and how easy they are to use and, as rates go up, that'll be a bigger issue for people."