John McDonald, GE Digital Energy: Q&A

Jump on optimization, go slow with consumers

Phil Carson | Sep 16, 2012

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John McDonald, currently director, technical strategy and policy development at GE Digital Energy, has a long history of contributions to the power industry through his affiliation with private companies, industry associations and government panels. He is a past president of the IEEE Power and Energy Society and an IEEE PES distinguished lecturer.   

We did a piece based on an IEEE Q&A with McDonald back in February, "GE's John McDonald: Regulatory Changes Needed." The original interview is on the IEEE site. Recently, McDonald penned an op-ed piece titled "The Human Smart Grid." 

We caught up with McDonald by phone last week and offer an edited portion of that conversation here. 

Intelligent Utility: You're serving as chairman of the board at the Smart Grid Consumer Collaborative, which is a new angle for a grid-side guy, isn't it? 

McDonald: I have over 38 years working in power system automation, all on the grid side. That's where most of us have experience. But as I got into smart grid in detail, so much of it is now on the consumer side. Or at least the new part is on the consumer side. So, GE was a founding member of the SGCC, and I have been on the board since the beginning. Personally I wanted to immerse myself in it, learn more about the consumer side and be more of an expert on it.

Intelligent Utility: Direct load-control programs at power utilities have a long and fairly successful history. Looking back, what were the drivers and were there any lessons learned on consumer engagement from that practice?

McDonald: You would hope so, but the relationship required for direct load-control was minimal. The utility would offer by mail a discount over the summer months and if you agreed they'd attach a control device to your air conditioner. The driver for those programs was primarily peak-load reduction. That was it. So there wasn't really any interaction with the customer to any great extent with those programs. The primary participants in those programs were the market segment that we have [identified] now, which is the segment where their prime focus is to save money.

Those programs are more of a historical relic. Going forward the emphasis will be on what tools I can provide the consumer. [Utilities will provide] education, information and empower the consumer to do their own energy management.

Intelligent Utility: You mention education and information. What about devices? Some pilot projects seem to show that it's the price signal rather than, say, an in-home display that motivates most consumers. What do you see?

McDonald: I think of home energy management on three levels. One level is just within the home with respect to lights, lighting, certain loads, programming the thermostat. You can manage energy use in your home without a smart meter and without dynamic pricing from the utility. And there are substantial benefits to be gained just by doing a better job of managing your energy use. The second level would be if the home has a smart meter and the utility has provided access to your energy usage information. So now you're looking at your energy use information and if we can see what's happening, it's more obvious to us the opportunities for savings, right? And I would say the third level would be if the utility is in a state where the public service commission supports dynamic pricing, then you have an opportunity for much more substantial savings, because if you can shift load to off-peak periods where the price of electricity is a lot lower, you can save a lot more money.

Intelligent Utility: Across those three levels, where would you say we are in aggregate in the United States?

McDonald: I would say we're in the very beginnings of level one. With respect to level two, in many, many places that have smart meters the homeowner does not have any access to their energy usage information. So it's primarily to make it easier for the utility to get meter readings and the homeowner hasn't really benefited. And then in perhaps a dozen states the public service commission has approved dynamic pricing. So there aren't a lot of states yet that have dynamic pricing.

Intelligent Utility: One perennial question is around the delay between meter installation and AMI build-out and any sort of tangible consumer benefit. What's your view on that?

McDonald: When the utility notifies the customer that they're switching-out the meter, to me an important part of that is managing the expectations of your customer. If new technology, more sophisticated technology, is going to be installed at my home, I want to be able to do something with it. I think most people at least want to understand what the possibilities are. And that's why to me it's very important, before any meters are installed at any consumer site, that the utility touches every single consumer. Utilities need to make sure that the consumer understands what the utility's doing, what capabilities will be provided with the new technology and the timing of when those technologies will be available. You have to manage the expectations of every single customer before you implement any technology. We've learned that the hard way. 

Intelligent Utility: What's your view on whether the industry has gone to the consumer too soon and hasn't done all the work under the hood that it could do, or whether these are simply parallel developments?

McDonald: I personally feel that they're parallel developments but at different rates of implementation. The strongest business case in North America is for distribution optimization. And the tools are available today. Utilities should be investing in these now, [though] the amount of the investment depends a lot on the public service commission of the state and the extent to which utilities get compensated for investing in things like that. Policy is so important. 

On the consumer side, I don't want to rush. I want to take baby steps, because we do not know [yet] how to engage consumers. We don't know what technologies we should put together. And I don't want to have even one big misstep, because it takes a lot of successful projects to overcome that one bad project. So let's take our time.

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

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