Hot Questions on Demand Response, Smart Grid
A GridWise Alliance webcast yesterday focused on demand response under the aegis of the alliance's commercial/industrial subgroup, and I knew I had to listen.
What better way to understand the concerns of commercial/industrial electricity customers who for decades have taken advantage of real-time pricing and demand management techniques to control one of their biggest costs?
Seda Atam, manager for national customer markets for the Edison Electric Institute (EEI), described EEI's work with commercial customers with national footprints and the high value of demand side management in that context. Then Michael Cornicelli, executive vice president for BOMA/Chicago (Building Owners and Managers Association), described the concerns of his members, who manage 125 million square feet of space - 80 percent of Chicago's central business district. (Electricity is second only to property taxes as their highest expense.)
But the most revealing of the presenters was John Anderson, president and CEO of ELCON, the Electricity Consumers Resource Council, which represents large industrial manufacturers. Anderson's constituents have been participating in dynamic pricing and demand side management for decades.
"The facilities of our members represent hundreds if not thousands of megawatts at each site," Anderson said, underscoring their scale.
"We've never heard a U.S. president talk so explicitly and fervently about an electricity issue the way President Obama talks about the smart grid," Anderson observed. "We have some very basic questions."
Here I render his questions nearly verbatim in the breathless manner he delivered them - not unlike a patient shown the couch and asked to describe his anxieties. Why the realism? It lends authenticity to the concerns. After all, Anderson represents the largest electricity consumers in the country. (Note: when Anderson uses the word "consumers," he typically means customers such as his members.)
"For instance, what is a smart grid?" Anderson asked rhetorically. "Does it involve transmission, distribution, or both? Will it bring mandatory requirements to consumers? Or will participation be voluntary? Can participants opt out? Will it be Internet or wireless based? Will hardware and software from different vendors talk to each other? What are the cyber security implications? What will the smart grid cost? Will it produce long-lived assets or will consumers be faced with stranded costs? Why have no qualified consumer groups supported the idea? Is real-time pricing what customers want? Will customers be prohibited from hedging against price volatility by seeking fixed-price contracts in the smart grid era? Will cyber security concerns drive tremendous costs, spread across all customers? Finally, do we really need the smart grid to bring about peak load control goals? For 40, 50 years, utilities have been installing radio-controlled switches on hot water heaters, swimming pool filters, air conditioning compressors and things like that. Utilities actually, directly dispatch these load-control appliances. It's a proven concept, a very, very inexpensive way to reduce peak load and verifiable. Customers have been pleased with the results. Finally, there are real problems being raised. California is ahead of the rest of the United States on many issues, and certainly they are with smart meters, ordering them for all customers. They started installing a couple years ago and immediately they started getting complaints. As one of them said: 'For the utility to come into your home at any time of day or night and know what appliances you're using is corporate intrusion on your life.' PG&E for a long time denied there were problems, but just last month they recognized that there is significant customer discontent, discontent that may have merit. A senior vice president said 'I just don't think we did a good job of seeing the world through the lens of the consumer.' I think the idea of a smart grid may be a terrific idea, it probably is, but that message has not resonated with many consumers, at least to date. To be successful, I think consumers must be convinced of net benefits, benefits that they want, not something that someone else says they want. I urge advocates of the smart grid to directly address consumer concerns, or else I think you might find you'll get some backlash."
"We certainly have an open mind," Anderson concluded. "And we're looking forward to learning more about it."
These are the largest, most sophisticated electricity customers in society and their leader rattled off myriad concerns without drawing a breath. All smart grid proponents - including yours truly - should take note and attempt to answer these concerns. Then take a deep breath.
Intelligent Utility Daily