Nega-watts are better than megawatts

Kate Rowland | Mar 01, 2010


Last week, I touched upon a number of issues and ideas brought up at the TechAdvantage conference, and promised to delve deeper into Tariq Samad’s presentation, which discussed customer interface beyond the meter.

Samad, who is a corporate fellow with Honeywell Automation and Control Solutions, and a member of the governing board for the Smart Grid Interoperability Panel, shared his thoughts about the homes-and-buildings side of automation control.

About three-quarters of the nation’s electricity consumption is in homes and buildings, he told us. So, it would logically follow that one of the benefits of the smart grid is to enable more widespread use of demand response (to reduce peak electricity demand) and energy efficiency measures (to reduce overall demand).

The realization of this and other smart grid benefits, not the least of which is to increase consumers’ awareness of their own energy consumption, will need variable pricing, deployment of controls beyond the meter, and standard architecture and communications controls, Samad said. But automated meter reading (AMR) deployments can be leveraged to achieve these goals under variable pricing plans.

There are architecture and security considerations, especially with regard to Home Area Network (HAN) architecture. In Samad’s scenario, the energy management system (EMS) connects to the meter, and controls the HAN devices in the home. As anything connected to the utility has to be authenticated, the EMS allows for privacy and security benefits by creating an effective firewall. When necessary, the utility can also communicate directly through the EMS (such as in demand response situations, for example). This, he feels, is the most optimal architecture “beyond the meter.”

This particular HAN approach also minimizes risk and maximizes the benefit from real-time consumption information, Samad said. As well, the aggregate data provided by AMR and AMI bring into play a lot of potential services of interest both to utilities and consumers, such as usage comparison over time and among neighbors, best practices, usage comparison patterns, and more.

What struck me most about Samad’s presentation, however, were his thoughts on the economics of energy efficiency and demand response.

“Energy efficiency can be viewed as a ‘source’ of electricity: nega-watts instead of megawatts,” he explained. The cost to the end-user of electricity “generated” from energy efficiency products is typically 4 cents to 8.5 cents per kilowatt-hour, Samad noted, and it can be as low as 1 cent per kilowatt-hour in certain cases. “It compares favorably with today’s retail prices for electricity [about 11 cents per kilowatt-hour],” he said.

Demand response, too, compares favorably with all types of generation: “it is two to three times cheaper than peak generation from natural gas under conservative assumptions,” Samad told us.

I have been writing in this space about energy efficiency and its smart grid connections for many months. At times, it feels like a shout into the dark, because energy efficiency hasn’t, for many, been a part of the grid intelligence equation. It is, however, informed by grid intelligence, and therefore difficult to separate when looking at the ultimate goal. It was encouraging to hear Tariq Samad’s “beyond the meter” thoughts at TechAdvantage, not only because they echoed my own (validation by an expert in the field is always good), but because of the clarity with which he presented his argument.

In summary, because his points deserve driving home:

  •  The smart grid doesn’t stop at the meter.
  •  Nega-watts are better than megawatts.
  •  Architecture definition must be informed by end-use considerations.


I encourage your comments, and would like to hear your thoughts on this. Please use the comment button here, e-mail me at, or telephone me directly at 720-331-3555.

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Coerced demand response is the likely result regardless of initial good intentions...and nearly everyone makes that connection once you dispense with the technobabble and describe demand response in simple terms.

Actions have consequences and consequences have consequences.

"Samad, who is a corporate fellow with Honeywell Automation and Control Solutions" is not exactly the model of an unbiased expert. While I applaud the full disclosure, I would encourage proponents of all-new-things-green to get into the guts of implementation (including private fianancing) and to bear in mind mean ol' Mr. Reality bites hard regardless of the best intentions.

A tremendous volume of public money is being poured into the Green Utility concept without any real evidence that favored programs like "smart meters" make legitimate business sense. My fear, in fact my suspicion, is that many of these programs amount to little more than money laundering: funds are turned into new gadgets, vendors smile, the rate-base is fattened and after all is said and done, the benefits are net-zero or worse. Meanwhile, real needs for generation and TD infrastructure go wanting

If you're a PE out there reading this, I just want to remind you of your ethical responsibility. Your standard-of-excellence may include "making the client happy" but your ultimate responsibility does not include that at all. In many ways you are an agent-of-the-state, charged as much with policing sophisticated schemes as with making valid calculations and accurate drawings. The numbers will work or they won't. Gut-check everything and everyone. Do not be lulled into an ethical abyss by certifying act that has the unhappy result of shifting the entire liability load onto your shoulders.


Remember PCTs

Energy efficiency and demand management are vey worthwhile goals.  The reason Kate feels she's been shouting in the dark is because consumers have little incentive to conserve when electricity is cheap, and  they have even less incentive to manage demand when they pay prices that are time-insensitive.

Consumers are not going to allow utilities to control devices in their homes and businesses.  Just look at the furor over programmable communicating thermostats (PCTs) in California two years ago, which could only be activated with a consumer's consent.  Conspiracy theorists had a field day.  We can expect the same kind of response when utilities and regulators insist that utilities be able to control an EMA from outside a home or business.

Consumers have to be the ones buying the devices Mr. Samad would lke to sell.  Utilities should not, by default, have the ablity to control them externally.  We don't let refiners control retail purchases of gasoline (even when prices soar) and there is no reason to change that practice for electricity.

Energy efficiency and demand management are typically relatively cheap to implement.  However it's tough to place a value on the utility consumers lose when they engage in demand response, and it is this value rather than the cost of hardware, education and other enablers that is key.  With energy efficiency and demand response, consumers must trade off capital investment against energy savings.  Few have the tools or the expertise to do so.  Moreover, in many cases the payback period at current electricity prices is well beyond the economic time horizon of most consumers. 

All of this leads to one inescapable conclusion, which is that electricity is too cheap.  Make it more expensive, and delivering on energy efficiency and demand management goals would be much simpler.  But of course, raising the price of electricity would conflict with the policy goal of affordability.