Danged if you do, danged if you don't

Phil Carson | Apr 21, 2010

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The overall impression I received from attending "Smart Grid Boot Camp" at the IEEE PES 2010 conference here in New Orleans was a fervent wish that I don’t get sent to the front lines.

While news of progress on the standards and interoperability front, delivered by EnerNex Chairman Erich Gunther, seemed reassuring, several speakers delivered dire warnings about the pitfalls of pursuing the smart grid.

You gotta do it, but oh man it’s gonna be difficult to grasp the end game in order to take the most efficient route, according to the panel’s speakers. And that end game is a doozy to get your arms around.

The afternoon’s most eloquent speaker, Wayne Longcore, director of architecture and standards for Consumers Energy, dubbed his talk "Smart Grid 101." But for a utility audience that is somewhat akin to Rip Van Winkle, awakening from a long slumber to the new digital marketplace, it might have been dubbed "Wakeup Call 101." (Yes, yes, the transmission system has been smart for decades, got it.)

The market – all the end users and their disparate electricity needs – will be the tail that wags the dog, according to Longcore’s view. And that means it’s increasingly likely that companies – nay, brands – at the periphery of your vision, now sometimes referred to by utility folks as "the Googles," as if there really were more than one, will soon be wagging the dog, too.

For instance, Longcore mentioned the iPhone, which today has become not just a mobile Internet device, but a symbol of disruptive technologies with unpredictable influence on human behavior and social interaction. Well, in a few years, a mobile Internet device is going to be the remote control for consumers’ homes – not just the "remote" for your critical loads such as heating and cooling, but the entire digitized home, from lighting to entertainment to cat food dispensers. And the "Googles" will be having the electric utilities for lunch. (My perspective.) Perhaps because these folks are just a little further along in data analytics.

Data analytics: the Next Big Thing, as the firehose gets turned on without proper preparation, a notion I’ve heard from many quarters recently.

I’d say partner up now or risk losing your identity and any real leverage you have over future relationships with your customers. Your consumer-level customers don’t really know you and they don’t really care. By the time you have reached out for that warm, fuzzy relationship you imagine is still yours to enjoy, consumers will have said "yes" to "the Googles."

Meanwhile, vendors are attempting to breach the castle walls, in Longcore’s view. His remark that, "if a vendor’s lips are moving, they’re probably lying," may drive home the point – caveat emptor – to utility managers. But can that really be a constructive addition to the conversation? Personally, I get the impression that many vendors (percentage of the total, of course, completely unknown) are really offering serious, bread-and-butter solutions. In fact, I know that’s true.

On the other hand, Longcore’s statement that the smart grid is only "a means of managing the sale of food to robots" certainly bears further scrutiny. Of course, all he’s saying here is that intelligence on the grid feeds electricity to the end-user devices in our homes and businesses that require it to produce useful work. But Longcore ignored that the robots will be feeding the grid, too.

In the end, the cumulative effect of all the dire warnings delivered at "Smart Grid Boot Camp" made the ensuing journey sound lengthy and fraught with peril – in short, as it probably will be.

Perhaps even longer than the walk from one end of the Ernest N. Morial Convention Center to the other, with one exception: the Morial Center’s most notorious days seem to be behind it. If all this sounds dark, you can thank the boot camp crew – and that’s what boot camp is all about, right?

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com 
303-228-4757

 

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Comments

PHil, are you removing the free market comments?

just wondering where my comment went?  maybe it was sent off for data analytics?

this is why people (average) don't trust a central controlled government or unitilities...

How can we really trust what you're saying if you won't let us question what you are saying?  just sayin'

Add value or someone else will

It comes down to providing value to your customers.  How can you save them money, be more sustainable, be more comfortable, etc.  Safe, reliable, well priced energy is still important, but demand side issues are particularly important at the margin.

If utilities cannot create and communicate value, then it will be difficult to build meaningful relationships customers.  This opens utilities to companies like Google who will likely find ways to create value and connect to customers.  This is further complicated by monopoly markets that have resulted in many inwardly focused, risk averse utilities who do not have the leadership, talent, nor resources to assemble the new marketing puzzle.  One of the foundations of the marketing puzzle is data analytics and the ability to squeeze consumer insights from the terabytes of data just waiting to be exploited.

Response to Firehose?

I think the earlier post regarding the amount of data analytics appropriate to a single consumer makes a very good point.  I keep coming back to the reality that, when I bought an apartment in London 25 years ago, I signed up for a variable rate plan with the electric company and installed storage heaters that stored energy overnight when the rate was low and released heat during the day at no additional cost.  Naturally, having made this choice, I also bought a couple of simple timer switches to allow me to schedule other energy hogs like the washer/dryer to run overnight too.  I didn't need a lot of analytics.  Nor did I need a smart meter to make this work.

On the other hand, I think the poster is missing the point regarding data analytics and the likes of Google.  The value of analytics will come from the aggregation of data across whole communities and will primarily be of value to the utilities or to others who have products or services to offer to the consumers within those communities, not to the individual consumers.  For example, A UK based firm called Navetas has a technology that allows them to disaggregate a demand profile and determine what appliances are consuming electricity within a premises.  With access to this data, analytics could conceivably learn about what devices each of us have in our home, how we spend our time etc etc and use that information to target us with ads for products and services that fit our lifestyle.  This may sound like a big brother nightmare but it is already here.  Google is already reading my email and placing context sensitive advertising in the margins of my gmail window.  Amazon.com keeps track of everything I purchase and mines the data for information that allows them to recommend other products and services to me every time I log in.  This is the real future of data analytics.

Well said

Thanks for this comment.

Personally, I always thought smart meters served the utility, not the end-user. Whatever means of getting usage data into the home for optional strategizing is fine with me.

And, as our poster pointed out here, the simplest automation, widely and cheaply available will allow us to manipulate various energy-consuming devices in the home, from the heating/cooling to the fridge to the lighting to the entertainment center. "Set and forget" says it all.

Phil Carson

Front Lines, Dog Tail & Jetson Stuff

Actually you are on the front lines and, in spite of our skirmishes, I think you do a fine job of holding up the proponent position.

With respect to "the tail wagging the dog", Jack Ellis is right...the customer is the dog. Demand is just that. Utilities don't push power, they can only respond to how it's pulled....and therein lies the future.

Then there's the Jetson stuff. At the risk of excessive brevity I'll just say this: all these gadgets to control and/or shift $30/month of residential electricity seems technically and economically asymmetric. Will "Norm" (average guy) spend any time managing his refrigerator? If so, isn't all this effort likely to backfire when Norm learns the time spent jockeying electrons returns $0.25/hour on his time? Of course the way to shift Norm into gear is to TOU him....a wildly regressive concept that may, as a by-product, hold the key to "selling" demand response. Sinister or merely predictable?

Candidly I wonder how many inner-city poor people are going to be killed off mid-summer when TOU rates with demand response components are widely applied. Will these folks be exempted, subsidized or just buried and forgotten?

Consequences have consequences and the SG fosters a consequence avalanche of biblical proportion.

Jetsons

" wonder how many inner-city poor people are going to be killed off mid-summer when TOU rates with demand response components are widely applied"

Personally I'd love to have dynamic pricing but I understand why many consumers might not be as enthusiastic.  So let's make it optional rather than mandatory, but lets also make flat rate pricing a bit less attractive so folks have a reason to kick the dynamic pricing tires.

If anything, dynamic pricing might do a lot more good than harm for the inner-city poor.  How?  Well perhaps by making it much more economical to run their air conditioners at night when they are more efficient, and less during the day when everyone else wants to stay cool.  Precooling works in commercial buildings and it worked for me in a residence that lacked air conditioning (we used fans to bring in outside air).  Perhaps it will work in the city, too.

Jack Ellis

Tahoe City, California

 

Fixed income and the poor

Personally, I tend to think of elderly folks with ailments who might be most affected by DR programs. Making them optional seems right. And giving exemptions to folks who qualify also seems right.

Phil Carson

Danged

Needing to pull out my statistics text to find the right formula my intuition is that trends are discernable rather than a scattering of plots concerning utility data analytics. I agree that maybe the utilities stick to wholesale business models in relationship to the dynamically evolving retail whirlwind of options and change. Communication with and education of end users would also benefit from a wholesale and retail business model. The "googles" are most unpredictable in the retail sector, missteps and casualties will occur. Dominant applications and their best positioned suppliers will take the day. On the retail side this is not your grandfather's world.

Gordon Shaw

Lincoln, Nebraska

Getting granular

Greetings Gordon,

Thanks for your thoughts. I spoke with someone at the IEEE conference that suggested utilities or "the Googles" will want to build granular psychographic portraits of their customer base in order to devise attractive rate options, say.

Utilities, as mentioned below, will also be getting much higher efficiency from their T & D systems through data analysis.

Regards, Phil Carson

Firehose?

Data analytics for what?  If all you have is 24 hours of energy usage data, a smart controllable thermostat...maybe control of a pool pump...what's the number crunching needed?

Also, after all the deployments, all the number crunching, all the nice graphs and charts, its going to be true in 90% of the cases...that when its hot outside on a weekday in the afternoon, the price of electricity is going to be high...if its really hot, then maybe really high. And if you have an electric vehicle..charging it at night would be the way to go.

And then all the above gives you maybe 5% to 10% shift in load? That's only 2 to 3 years of typical load growth.

Perhaps, its the other benefits of AMI that really matter? Maybe its more important to have the meter tell the applicances what time it is and how hot it is outside?

 

Data crunching

Greetings,

You paint a simplified portrait, but I believe if you speak with utilities involved in adding visibility and intelligence to their grid, you'll find that just in AMI, for instance, a utility with, say, a few million customers, is generating serious amounts of data. And that data -- again, talk to people who are involved -- can yield business value, if properly analyzed.

As I remarked below to Jack Ellis, end-users will be adding distributed generation, electric vehicle use may radically change the old patterns of demand and widespread energy efficiency work among end users could very well take out peaks and valleys now seen by utilities.

Add sensor and control data from the T & D system and the picture is anything but simple. Utilities will apparently be making major capital decisions based on how their grid is performing, so tens of millions of dollars are at stake.

Regards, Phil Carson

The Vikings Are Coming!

I realize I'm reacting to your impressions, which also means I'm writing in response to a second-hand account of someone else's remarks.  If there's any misinterpretation in this note, I'm prepared to take my lumps.

Mr. Longcore clearly understands the nature of the threat posed by disruptive technology and "the brands".  It would be interesting to know how he's thinking about using those two elements to help his customers.

Absent a sea change in the way utilities are regulated, perhaps Mr. Longcore's company and others like it should probably stick with building, operating and owning transmission and distribution assets. Those businesses are fairly safe, fairly predictable, and they embody much of what utilities do very well.  Let others wrestle over the right to sell home area networks and related gear; manage end-uses; provide demand response services; build and operate generation fleets; deal with RPS requirements; and possibly sell services like lighting and space conditioning in place of kWh.

I vehemently disagree with Mr. Longcore's assertion that "The market – all the end users and their disparate electricity needs – will be the tail that wags the dog..."  If today's utilities aren't in business to serve "end users and their disparate electricity needs", then what are they in business for?  How is today different from 10, 20, even 50 years ago?

The reality is that a utility is in business to serve customers, not the other way around.  Utilities, and increasingly independent grid operators, need to think about how to meet the needs of customers as the mix of generation changes and as technology provided consumers with better tools to manage and even redistribute energy use.  They also need to consider how they should be engaging customers to help balance the grid in this more complex environment, rather than seeing customers as a nuisance to be tolerated, which is what Mr. Longcore's remarks seem to imply.

Jack Ellis

Tahoe City, CA

A response

Hi Jack,

I think Longcore really meant that end-user behavior as we know it is going to change significantly from what it has been in the past.

I'm thinking of electric car usage and new patterns of demand, for instance. The utility-enduser interactions yet to materialize, that is.

Yes, it's very difficult to get a sense of a speaker's intent when a couple disparate quotes are tossed out there by the intermediary and, obviously the intermediary has his own points to make.

Longcore's intent, in my view, was to get his audience to think in terms of fundamental societal changes now upon us and "get" that the supply and demand balance is about to get more dynamic. Wayne Longcore struck me as very progressive and I'll look forward to getting him seated for an interview.

I also think that Q & A exchanges are worthwhile in this context, though they get edited for length, so that you all receive some unfiltered viewpoints. Look for this in the future.

Regards, Phil Carson