Getting smart: first things first

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As I take the plunge into the world of intelligent utilities, I'm not able to instantly answer every question posed by readers. But as questions come my way, I'll get answers and share them.

And as I seek out thought leaders, I'm going to be agnostic on where they draw their paycheck -- if I find an expert at a utility, an industry association, an academic or (heaven forefend) a vendor, I'm going for it. I trust readers to de-spin and share their thoughts.

Over past weeks, I've heard variations on a theme: Why smart meters? Why now? What's the next step? What's the business case?

The shortest possible answers: Smart meters and advanced meter infrastructure (AMI) provide two-way communications serving both utility and consumer. They are the gateway that enables useful data for both parties and must be in place first. The next step for utilities is to use that data to craft business cases for time-of-use pricing and other demand management options. Pilots and full-scale deployments will yield data on consumer acceptance. 

I recently read a cogent piece on smart meters and home area networks by Skip Ashton, senior vice president for engineering at Ember Corp. and chair of the ZigBee Architecture Review Committee. Ember designs, manufactures and writes software for Zigbee-based chips that will provide the smarts in home area networks and in-home appliances. So, naturally, he has a vested interest in smart meter and AMI rollouts that will enable a market for his company's clients' products.

Nonetheless, when I reached him by phone yesterday I found him refreshingly frank and his take on this topic worthy of your time today.

Households consume one-fifth of the nation's energy each year, with 60 percent of that consumption in the form of electricity, according to Ashton. Half that residential use typically is consumed by heating and air-conditioning, thus the low-hanging fruit at the heart of early demand management programs.

The "peak energy demand dilemma," as Ashton put it, is that about 10 percent of electric generating capacity exists only to be utilized about 1 percent of the time.

Enter AMI and the American Recovery and Reinvestment Act (ARRA) stimulus funding. Utilities applying to their regulators for approval and to the U.S. Department of Energy (DOE) for funding originally cited savings due to automated meter reading, and remote connect/disconnect of service as their rationale. But they also realized that by reaching into homes and small businesses they could begin shaving peak load, buying time to figure out new generation sources and efficient capital allocation. AMI subsequently claimed a big chunk of those stimulus funds.

"The joke is that the stimulus funds were 'meter stimulus funds,'" Ashton told me.

In his view, smart meter deployment and its less visible, data backhaul component is just the first step in an evolving business case to realize the benefits of two-way communication between a utility and its customers. Some consumers are recoiling from the thought of a utility reaching into the home to adjust air-conditioning cycling, for example.

"Some people are petrified at this thought," Ashton said. "And utilities do not want to have that 'big brother' image."

Thus, in Ashton's view, opt-in programs for utility control over air conditioning, for instance, will maintain a real-time opt-out provision, should the consumer change his or her mind.

Why meters first? Smart meters provide the means, the gateway, for consumer data to reach the utility, and enable consumer-facing home area networks (HANs) and in-home devices such as energy information displays, according to Ashton.

HANs lag behind smart meter deployments by necessity, in Ashton's view. He points out that HANs largely remain in pilot study status right now. Wearing his ZigBee hat, Ashton said that ZigBee's wireless open standard allows for innovation on the widest possible scale. That grows the market for competition, which implies cost-effective devices.

As for the in-home energy use display, "we have a chicken-or-the-egg problem," according to Ashton. Vendors are building prototypes for trials on the scale of, say, 50,000 units. But an intelligent utility such as Southern California Edison, for instance, has 14 million customers.

"The market has yet to decide how this will roll out," Ashton said. "Meanwhile, there'll be some healthy churn and innovation."

What is the consumer reaction in trials of HANs and energy use displays and how does that relate to reality?

"That's the $64,000 question," Ashton said. "And it's an open question. What is live consumer behavior going to look like on a scale of, say, one million homes?"

Pilot programs this coming summer may provide answers. And though studies show that awareness of energy use in the home leads to behavioral changes and conservation of 5 percent to 10 percent of energy use, will simple displays reinforce that behavior over time? Or will consumers become jaded and backslide on wise use?

That's where time-of-use pricing and automated parameters for the operation of major appliances come into play, Ashton said. The interactivity of smart meters and AMI should provide further incentives to pay attention.

"Efficiency at scale," Ashton said. "That's what it comes down to."

This scenario of evolving business cases gives some people the willies. Let me know what you think is wrong with this picture.

Phil Carson     
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com [3]
303-228-4757