Utility pros fret over consumers in smart grid

Utilities and tech companies say they need to do a better job selling the benefits of a digital energy infrastructure because consumer buy-in is needed for energy efficiency gains.

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
5 min read

WASHINGTON--How successful utilities are at motivating consumers to actively manage energy will go a long way toward determining whether many smart-grid investments improve the country's energy efficiency.

At the GridWise Global Forum here this week, consumers, although absent, are playing a starring role, a reflection of how many utilities realize they need to change how they interact with customers.

Several speakers, from IBM CEO Sam Palmisano to Federal Energy Regulatory Commission chairman Jon Wellinghoff, voiced concern that residential electric power customers are vital to efficiency gains through smart-grid technology, yet many have not bought into the idea.

"All these infrastructure investments, which I think we all believe are necessary to make, are mucking up the picture for the customer because, on the surface anyway, they drive up the cost of service and are complicating their lives," said Alex Laskey, the president of OPower, which provides home efficiency recommendations through utilities. "There's an obligation on our end to deliver value."

Many states have regulations that require utilities to use energy more efficiently, one of the reasons for grid modernization. Early smart-grid trials have shown that giving consumers more information on usage, either through a Web portal, dedicated device, or a printed report, helps consumers cut wasted energy.

But for many of utilities' efficiency investments to bear fruit, they need participation from customers. For example, scaling back peak-time energy usage requires consumers and businesses to sign up for demand-response programs where they turn down power use in exchange for some kind of payment.

At the conference, attendees talked far more about the human component of the smart grid, rather than the nuts-and-bolts technology. That's because people have realized that surfacing detailed energy information on a smartphone, PC, or in-home display doesn't get people to act and take more responsibility for their energy use, said David Merkoski, executive creative director at design firm Frog Design.

"The problem with these devices and services is that there are lots of them. We are now drowning in awareness tech," he said. "They're helping--they make the invisible visible--but they're not getting to the fundamental problem, which is a behavioral problem."

What are the direct benefits?
Smart meters, the most visible aspect of a digital energy grid, can provide benefits to consumers quickly, said OPower's Laskey.

People could, for example, get bills that explain how power use breaks down between different appliances, or get alerts notifying them that they are on track to consume more than usual. In many cases, people can save money with the introduction of time-of-use rates, he said.

Home energy-saving technology (images)

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The problem for the electric power industry is that early smart-grid trials didn't clearly inform consumers of the potential benefits of the smart grid, either to their personal energy spending or society at large. In many cases, introduction of an unfamiliar technology--a smart meter--caused distrust and angry customers, conference speakers said.

"Nobody is doing a good job [with consumers]," said Paul Budde, the executive director of Smart Grid Australia. "It's very sad, but we are all learning."

Utilities in Australia were forced into working with consumer interest groups, such as people with disabilities, and are now seeking more input from customers on the services they want, Budde said.

Talking about "customer engagement" and launching customer outreach programs is a big shift from the traditional model where customers were "passive ratepayers." But increasingly, utilities are finding more energy-conscious consumers who are willing to take steps to conserve, said Ted Craver, president and CEO of California utility Edison International.

"Things are accelerating and we anticipate the pace of change will be quite rapid, but it will be gated by how we can really engage the customer," he said. "Now we have the lowest level of engagement you could possibly imagine--it's one way, it's slow, and it's pretty much one size fits all."

Investing in infrastructure globally
Many of the benefits of a digital energy system don't directly touch consumers' pocketbooks. Smart meters and sensors on power lines, for example, help utilities more quickly locate and resolve power outages, which are very costly to the economy overall.

The grid also needs to be upgraded to handle growth in demand, fuel large numbers of electric vehicles, and add more intermittent power sources, such as wind and solar.

In Ireland, for example, grid operators need to better control energy flows for the country to meet its goal of getting 40 percent of its power from renewable energy, largely wind, said Eamon Ryan, Ireland's minister for communications, energy, and natural resources.

The same is true at Dong Energy in Denmark, which needs digital technologies to make full use of the growing percentage of wind energy on its grid. Meanwhile in India, one of the main goals of the smart grid is to improve reliability of service.

Compared to other countries, U.S. consumers are more focused on economics, rather than the societal and environmental benefits from the smart grid, said David Rouls, the global lead for smart-grid services at consulting company Accenture. Prices for energy in the U.S. are significantly lower than other countries, and U.S. consumers consume about twice that of people in Europe.

"The question is: are we in the U.S. going to pay attention to our energy consumption?" Rouls said. "People are more willing to support renewable energy in Europe--it's more in front of people's consciousness."

One reason to invest in upgrading the grid infrastructure in the U.S. is simply to keep up with the rest of the world. Texas justified some of its grid investments because customers expect a modern technology infrastructure, said Jim Greer, senior vice president of asset management and engineering at utility Oncor. The utility has a surcharge of $2.20 a month and consumers are able to save about $8 a month on average, he said.

China, in particular, was named several times as a country with clear priorities around its energy policy, including creating an "Internet of things" with the smart grid.

Smart-grid naysayers say that we should wait until there's a killer application before bulking up the infrastructure, but great smartphones would not have come about without the Internet backbone, counters Bob Gilligan, vice president of energy at General Electric.

"The U.S. lags the rest of the world on clean-energy policy," he said. "What consumers need to understand is that we are in jeopardy of losing the race and not being the country that benefits from the energy Internet."