Who 'Believes' In Smart Grid?
As one might expect, launching this open-ended question on a LinkedIn smart grid executive forum - as one participant did three weeks ago - was likely to lead to a lengthy and many-splendored thread.
The question itself is a bit of a riddle. "Believing" is often defined as "accepting as true or real." Which gets us to "acceptance," implying that someone else has tested the hypothesis or gathered data, requiring us to make a leap of faith.
And there's been enough discussion of the meaning of the term "smart grid" to exhaust anyone, because its meaning runs the gamut from "grids already are smart" to "an interactive fabric of energy and information whose shape is yet to be imagined."
But I found the initial question and a late-breaking "answer" - bookends, as it were - informative and thought it would be valuable to highlight them for a broader audience.
As I skimmed through the long thread, it struck me that it mirrored many conversations I've had or overheard at industry conferences. Yet I also heard something fresh in the questions and the answers. (I'll not identify participants, in case they expected anonymity from journalists.)
"Asking the Un-askable: How many of us believe in smart grid?" was the initial question.
"I have no doubt about the long-term need, but wonder how large the bubble of self-delusion is growing," the initiator said.
The writer segued to smart meters, citing problematic roll-outs, deployments without attendant service offerings and the fire hose of resulting meter data. Will meters need replacing within years? he asked.
(One company whose business model competes with smart meters told me off-the-record that Europe is a mess in this regard and will have to rip-and-replace. Can you imagine the firestorm if that is necessary here, after billions of dollars spent, millions of customers alienated and the smart grid promise undermined?)
The initiator summed up: "Will the bubble burst once government stimulus packages end or are we progressing well in convincing consumers to change their energy usage behavior?"
That was three weeks ago. Late yesterday, another writer attempted to bring some order - and a solution or two - to the thread. This writer suggested that the thread could be whittled down to the meter, who controls customer appliances and "key problems with the smart grid."
First, utilities may have to deal with meter obsolescence now that they've joined the digital revolution and "consider replacement on a more frequent basis" than in the past. The meter and its wireless gateway to the home may have to be disaggregated, this writer suggested.
"Combining industrial products [i.e., smart meters] with consumer applications [i.e., the gateway] creates the problem," this writer said. "Separate the meter from the gateway and this problem [of obsolescence] disappears."
The utility should own the meter, while the customer should own "everything else" on the home side, the writer concluded.
As for who controls customer appliances:
"It's time for the power industry to recognize not only that times and customer preferences have changed, but that pilot results show greater productivity and customer acceptance from 'indirect control,' otherwise known as price response," our writer suggested. "Provide the customer with a clear, understandable price and technology that allows them to 'set it and forget it' and guess what - greater load reduction, energy savings and broad customer acceptance."
Last but not least, the "key problems," which our writer broke into two categories: unrealistic expectations and the customer should come first, not last.
"Smart grid is an exercise in system integration," our writer intoned. There's two parts. The first part is bringing efficiencies to the transmission and distribution system, the second involves the integration of renewables, storage and intermittent resources. The second part is ripe for hype, but also presents real difficulties - the solution is to adjust expectations for phasing out fossil fuels and phasing in renewables.
"Telling the customer that smart meters are great because they will reduce utility operating costs and then putting a surcharge on their bill for a 'smart meter' won't fly," our writer said. "How about starting with a few simple things like giving the customer a rate and a bill they can understand? Smart meter implementation should be accompanied by very clear customer applications and services - simple applications like access to meter data through a web application, choosing your billing date to correspond to your payday. And how about a few simple rate options so you can start saving/learning now rather than later?"
Great questions, great answers. Have a look for yourself on the arc of the discussion and see if it doesn't simultaneously sound familiar and fresh to you.
And let us know your thoughts.
Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757
Comments
The Transformation to the Smart Grid is not Based on Believes
Hi Phil,
Please take a look at the three part EWPC article Initiating the Smart Grid Transformation Part 1, Part 2 and Part 3, whose summary says:
By following John Kotter’s suggestions about why transformations efforts fail, it becomes crystal clear that the smart grid undergoing process lacks a clear vision as it was not designed as transformation effort, but to make use of the financial opportunities given by the stimulus package. A vision that puts customer first is urgently needed to initiate a transformation process. The emerging vision leads to two systems that mutually reinforce each other: the regulated Smart T&D Grid and the competitive Smart Enterprise that put customers first. The vision integrates the two systems into a smart grid only at real-time operation.
Putting a surcharge on their bill for a 'smart meter' won't fly
Well summarized article obviously hitting the stride for many readers - me too. "Telling the customer that smart meters are great because they will reduce utility operating costs and then putting a surcharge on their bill for a 'smart meter' won't fly," our writer said."
To make the smart grid business model work, in my opinion (at least the portions beyond DA, transmission efficiency, and operational improvement), the customer is the key. While making it easy to participate is one thing, but addressing the need to participate is quite another. Dare I say most customers don't really understand the energy value chain? How is energy produced? When? What exactly do the pay for on each bill? How are regulated utilities financed through tariffs? Why does energy cost more throughout the day? Which customer classes drive consumption throughout each day? etc...
A big challenge for education and customer adoption. In the end, an educated consumer has a better chance to understand that investments in the present (higher rates) are intended to reduce costs in the future (efficient delivery and load shifting). It's the same overall concept as deciding whether to invest in solar panels or double-pane windows - just that the onus is on the utility to execute.
-Believe but Verify
Like Faith and Hope without Charity
"Belief" is all about faith and hope. Aboriginal peoples across the globe employed faith and hope prior to the emergence of hard science. It now appears we're reverting. Why? I'll leave this as a rhetorical question today.
Good piece. Thanks.
Wish I'd written that, too
Good morning,
Yes, I thought the suggestions here were spot on. How simple is that? Think about it - out of all the data, trials, rollouts, ideas and discussion, here is one simple way forward that can be customized to any utility. This is the power of clear thinking.
As for the transition - getting there from here - Niall McShane's suggestion is also simple and likely to demonstrate an attractive value proposition.
To answer the question cited in my column on whether we're convincing anyone to change their behavior, I'd say we're well behind where we should be. But these ideas could go a long way towards making progress on that front.
Regards, Phil Carson
Knowledge is Power
Your correspondent stated: "How about starting with a few simple things like giving the customer a rate and a bill they can understand?"
How many utilities who are rolling out smart meters are using the data collected from those smart meters to inform the customers on their existing bills what their payments would be on various rate plans that are available to them? I envision a bill which shows the actual billed cost on the customer's current fixed rate plan with one or two alternative billing options showing alternate costs based on actual utilization by that individual customer under a ToU or critical peak pricing plan.
By doing this, the utility could educate customers about the true variable cost of electricity and either demonstrate to them the potential cost savings or prove to themselves that there is no cost incentive for the average customer in their service area in which case they need to find an alternative marketing strategy.
Niall McShane
Arlington Heights, IL
A "Believer"
I wasn't the one who wrote that thread at the end of the conversation, but I wish I had been because it sums up my thoughts very accurately. As that author points out, the second part is doable but it is full of hype right now. The only way it can reasonably work is by presenting customers with prices that incentivize the right behavior. But we also have to recognize that customers need to be persuaded to participate rather than being bludgeoned into going along.
Jack Ellis, Tahoe City, California (reporting from Iowa city, Iowa)