KEMA panel: What drives the "prosumer"?

Digital age ushers in rising expectations, say panelists

Phil Carson | Jun 10, 2011


 Yesterday we focused on the contributions of Byron Washom, director of strategic energy initiatives at the University of California San Diego (UCSD), to a Wednesday panel titled "The Prosumer: Not Your Average End User," at KEMA's fourth annual leadership forum in Denver.

For readers who care about money, grid reliability and how a microgrid in your service territory could benefit you, you might want to read about UCSD's microgrid in "The Future Grid: A Seamless Ebb and Flow of Supply and Demand?"

Here are a few more nuggets from the same panel, which was composed of participants on the frontlines.

Moderator Audrey Zibelman, founder, president and CEO of Viridity Energy, asked her panelists to name the drivers for the "prosumer." 

Jim Gallagher, senior manager for strategic and business planning at the New York ISO and formerly New York Mayor Michael Bloomberg's top energy advisor, said that because real estate costs are so high in the city, energy costs for commercial buildings are too low to be a direct motivator. (Gallagher cited energy as perhaps two percent of commercial costs per square foot.) Instead, commercial tenants must answer to shareholders about what they're doing to be energy efficient and environmentally responsible. Also, laws are beginning to mandate energy efficiency for buildings so customers can compare apples-to-apples in a high-vacancy environment.

(This notion is worthy of further exploration: The investor's viewpoint appears to be that businesses that don't focus on these matters have high operations and maintenance costs and may incur costly liabilities. The other, of course, is that some investors want to align their personal beliefs with their portfolio. Readers?)   

Another driver, Gallagher said, is the city's ambitious PlaNYC, which aims to cut energy use to save money and lower the city's carbon footprint over the coming 20 years. Mayor Michael Bloomberg has pressed staff to comply, budgeted $100 million per year to retrofit city-controlled buildings for energy-efficient operations and summoned the heads of hospitals and universities to join his effort.  

Gallagher had introduced himself by remarking that "we're good at setting goals and not so good at achieving them." If there's a difference today, it's that technology and "enthusiasm at the top" - both politically and corporately - are driving change, he said.

Glenn Steiger, general manager and CEO of Glendale Water & Power, spoke to the challenge of meeting California's renewable portfolio standard of 33 percent and goal to reduce water use by 20 percent by 2020. On the prosumer angle, Steiger's answer echoed Gallagher's, in that Glendale's largest commercial/industrial customers include the Walt Disney Company, Pixar Animation Studios and DreamWorks Studios, all of which have demanded that their utility be as environmentally progressive as possible, in part due to investor concerns.

To that end, Glendale stands at about 80 percent deployment of electric and water meters, which feed a meter data management system for billing and analysis. The utility expects to be fully deployed and operational by fall, Steiger said. The utility's 88,000 electric customers will use home area networking devices akin to digital photo frames.

The philosophy here, Steiger said, was to allow a customer as much control as it wants while centrally maintaining reliability through smart grid technologies. 

That seemed to be the operational philosophy behind the microgrid-based UCSD (please read yesterday's column), so that's another thread we'll follow up on for our readers in the near future.


"I live inside a beehive." Byron Washom, director of strategic energy initiatives at the University of California San Diego, asked about cyber security on an 18,000-student campus. KEMA conference, June 8, 2011, Denver, Colo.

Phil Carson
Intelligent Utility Daily

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Cost as a Driver

Gallagher's point is very relevant.  For nearly all commercial customers, and most residential and industrial customers, electricity is a very small part of their overall budget in relative terms.  Energy sold at retail constitutes less than 2% of GDP.  There are exceptions, but they still represent only a small fraction of end-use consumption.  What this suggests is a) for cost to be a driver, likely unacceptably large price increases are going to required, b) efficiency has to be built in from the beginning, because retrofits are usually not cost-effective without large subsidies, c) there needs to be more focus on increasing load factors so that consumer demands for the utility (heat, cooling, light, entertainment, mechanical work, etc) provided by electricity can be satisfied with a smaller quantity of expensive fixed assets (aka, demand response).

We're fooling ourselves and consumers if we think energy efficiency and demand management is going to cut bills in half.  The best is can do is lead to percentage savings in the low teens, and then only over a period of time as the same quantity of fixed assets is worked harder.  There will be some societal benefits that accrue to those who would otherwise find themselves living next to a power plant or a transmission line.  However, there are no silver bullets here, and we have to be both thoughtful and careful about how we sell this to consumers, regulators and politicians. 

Jack Ellis, Tahoe City, CA