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'Smart' device makers: Variable electricity rates needed

For the smart grid to take off, consumers need financial motivation to use energy at off-peak times and total control of their appliances, says appliance trade group.

For grid-aware appliances to deliver on the promises of the smart grid, electricity rates needs to be overhauled, according to appliance makers.

The Association of Home Appliance Manufacturers (AHAM) on Monday released a white paper (click for PDF) outlining what it called the requirements for smart grid acceptance. The release of the paper was timed for the same week that international climate negotiations are going on in Copenhagen.

Smart grid technology, including so-called smart appliances, have the ability to help consumers cut their electricity use and shave their utility bills--but only if three pieces fall into place, according to AHAM. Those include time-of-use electricity rates, open communications standards, and products that let consumers retain full control of their home appliances.

Utilities around the world are installing two-way meters that can send information back and forth between customers and utilities. That data can be used in a number of ways, including real-time energy monitoring and dialing down electricity use at peak times.

But already there are complaints surfacing that consumers aren't getting the benefits of those more capable and more expensive smart meters.

AHAM says that time-of-use pricing is required to motivate consumers to run energy-intensive tasks, such as running a load of laundry or the dishwasher, at off-peak times. "It must be recognized that existing residential tariffs and rate structures do not provide sufficient economic incentive to spur maximum consumer participation in the use of smart grid technologies," the industry association said in its paper.

The reasoning behind time-of-use electricity pricing is to reflect cost of power to utilities, which varies depending on the time and demand.

GE, Whirlpool, and other appliance makers plan to make appliances that can receive signals from a smart meter on changing electricity prices. On a hot summer day when air conditioners are maxing out the grid's capacity, a dishwasher, for example, could go into energy-saving mode and take longer to finish its job. GE on Monday said it will introduce a line of "smart-grid enabled" washers and dryers in 2012.

However, many states charge for electricity at the same rate at all times, so consumers have little financial incentive to run loads at off-peak times or purchase appliances that can respond to demand response signals from smart meters.

In addition, AHAM calls for a "rapid drive towards open standards" for in-home communications. The National Institute for Standards and Technology (NIST) is overseeing an effort to codify a number of smart-grid related standards.

But in the area of home networks, disputes among appliance companies is slowing down the process, according to George Arnold, the national coordinator for smart-grid interoperability at NIST.

Finally, AHAM said that privacy and security need to be assured for consumer acceptance. "Projects should emphasize the consumer as the decision maker as opposed to scenarios where the utility possesses absolute control over the consumer's appliances and devices," it said.

Updated at 2:15 p.m. PT with GE's production plans for washers and dryers.