Message from “the edge” – SmartGrid and the consumer (Part II)

So a few days ago, I wrote a pretty bleak blog about consumer engagement in SmartGrid. Fully 90% of small consumers (residential and small retail) are not interested in participating in SmartGrid technologies. The other 10% divide into groups interested in saving the planet, saving some money or beating their neighbors. When looking at how to reach the 90% that remain apathetic, I concluded yesterday that much of the status quo efforts in this area will not work, or will not work as intended. It’s easy to say something can’t be done, but much harder to suggest ways that might be more effective at accomplishing the goal.

One of things that struck me in all of the discussions during GridWeek was the interesting opportunities for innovators and entrepreneurs to engage the small consumer. There has been much focus on “SmartGrid” meters as the absolute baseline for all new applications for consumers. I argue that this is NOT the case and, in fact, a smart meters may well be the LAST application at the retail consumer level.

Currently, the meter sitting at each house is owned by the utility. To upgrade to smart meters capable of some of the more complex interactions between end consumer and utility is a fairly expensive proposition for the utility. Today, where it is available, most utilities are operation strictly on an “opt-in” basis. The utility has some upside for installing smart (or at least not completely stupid) meters if, in the exchange, they can convince the consumer to reduce usage during peak hours. But sending trucks to individual homes scattered across their service areas is inefficient and costly. As more people decide to participate in such programs, those trucks and service people will make repeated calls into the same neighborhoods.

Conversely, installing expensive smart meters in a wholesale fashion in neighborhoods if 90% of the homes will not take advantage of, or participate in load shifting programs is a costly inefficient use of limited resources on the utilities part as well.

For the most part, people expect savings associated with such an upgrade. This makes the whole effort a questionable cost-benefit analysis for the utility. How much are they gaining by putting in more expensive meters? How much does it cost? Consistently the rate setting commissions have been reluctant to allow utilities to venture into time of use based rates, especially for residential consumers, unless it is an “opt-in” basis. Making the wholesale installation of smart meters not cost effective unless the government subsidizes the entire effort. I think that money is better spent elsewhere.

Considering lessons learned from pioneering technologies in the past, let’s look at more interesting entrepreneurial opportunities at the residential consumer level. To cite examples of market creation in MY lifetime. Let’s consider PC’s, microwaves, cell phones, laptops, DVD players as technology disruptions that have quickly expanded. In some cases, there was “no market” and “no need” for these technologies when first introduced, and yet today some of these appliances are almost considered standard in most homes.

One way to begin to bring consumers into the market is to promote devices that can be retrofitted to current appliances and meters to observe home consumption. A multitude of online store offer such packages at various price levels. More consistent advertising and advocacy for such devices and demonstrated savings associated with their use will expand the application more widely. The penetration into the home market is still limited, but expanding.

An interesting idea that is being developed is a video game that has a character that gains strength as the home reduces energy usage. One presumes that such a game would come with a device to measure and transmit usage. The idea that teenagers and other gamers might start turning off all other lights and appliances and run the software on the most efficient systems possible delights me.

As PHEV’s or even just EV’s begin to come into the market, it would be a wonderful opportunity to provide purchasers with some options regarding these vehicles. A sensor/timer device that will only charge the car during non-peak hours, or a package offering that would allow the utility to use the battery during high peak load and provide the consumer with cost incentives could make such vehicles more attractive and more cost competitive.

The need for smart metering can wait until market penetration of these more mundane devices has reached a level where a smart meter system can make economic sense for both the end consumer and the utility.