Super grid

What role can giving consumer's better information about their energy consumption have in reducing peak demand?

Keith Schaefer. Visibility is an important part of reducing energy consumption. Our experience consistently results in a 10-20 percent reduction in energy use from customers using our EasyGreen portal. More and more, consumers are choosing to be green and they have consistently valued lower energy bills. Over the next 10 years, home area energy networks will create a web of connected devices providing consumers with visibility into energy use, information on energy saving and services to optimize energy intensity. Coordinated management of electric devices in a home, and among homes and commercial facilities, will help level load during peak demand. However, peak load reduction is best achieved with our integrated Demand Dispatch technology for direct load control. BPL Global (BPLG) has demonstrated nearly twice the effective yield compared to traditional load management systems. Direct load control and verification takes the uncertainty out of timing and level of load reduction, replacing the need for new peak power plants. Deploying our technology provides utilities with a solid ROI and consumers with the benefits of peak load management.

John Rossi. While empowering consumers with actionable information on their energy consumption has a critical role to play in reducing peak demand, it should not be seen as the silver bullet. Instead, a combination of technology, services and information management solutions are required to intelligently manage and reduce peak demand. This fact has been demonstrated in a number of cases and trials over the years.  

For example, dispatched demand control will continue to play an important role as many residential customers would prefer to have their AC cycled off when necessary rather than investing time in monitoring their energy consumption and dealing with the complications of price response. This has been demonstrated in some of our programs as when the customer is given a choice between switching on a compressor that requires no interactions or a programmable communicating thermostat that they need to monitor regularly, they often choose the switch. That said, it is important to note that one size does not fit all, a sentiment that was echoed by FERC chairman, John Wellinghoff at a recent Demand Response Town Meeting when he stated that both traditional DR and price response will play a role going forward.

Gary Bloom. We recently ran a pilot in the District of Columbia (PowerCentsDC) to determine how consumers would react when given better information about their energy use. The program found consumers participating reduced summer peak demand by up to 50 percent, with the greatest reductions occurring when dynamic prices were combined with automated air conditioner control via smart thermostats.

Clay Nesler. You can't manage what you don't measure. Most US businesses and homeowners receive an electric bill that provides them limited information. The bill is not timely and does not provide information on what consumes, when it occurs and how it compares to other consumers. When people see energy data in a timely manner, several things happen to reduce peak demand. First, they reduce consumption. Several studies establish that feedback via visible displays creates energy reductions typically between five and 10 percent. Second, they adjust consumption patterns. When frequent energy information is combined with price signals, peak demand is reduced. Commercial and industrial sites in California have used information and automation to reduce demand 10 percent during critical peak price signals. Lastly, they invest in energy efficiency. Good energy data provides a framework for better energy management. Recent research by Johnson Controls shows that organizations that monitor daily energy usage execute ~50 percent more energy-saving projects than those that do not. These organizations will also have higher energy-savings to cost ratios as compared to their peers because they know exactly where to invest.

Do challenges exist in promoting energy monitoring to customers? Are such challenges focused around technology or ingrained consumer attitudes?

JR. Changing consumer behavior is always difficult, even when the benefits are very clear. In the case of promoting new energy monitoring solutions to consumers, the key is to design programs that save the consumer money through a compelling and intuitive user experience. By adding simple "set and forget automation" features, the barriers to adoption are removed and consumers are able to easily realize the benefits of intelligently monitoring their energy consumption.

This has been demonstrated in our work over the last decade with Gulf Power on its pioneering price-response energy management program. As part of that program, customers are given a Programmable Communicating Thermostat that controls HVAC and three other appliances based on time or price or a combination of both. Customers love the program and it is easy to understand and respond to. In fact, what we see is that customers program their thermostat once and then just let it do the work for them.  

This combination of simplicity and cost saving is key to customers embracing a program. Remove either and you'll face an uphill battle.  

GB. The biggest challenge is making energy information available to consumers through a home area networking (HAN) device and/or a web portal.
 
Consumers are begging for more data. They want to see how consumption directly relates to their bill. In our PowerCentsDC pilot, we found that smart meters combined with smart prices and good energy information gives consumers meaningful energy saving opportunities. Over 90 percent of the customers saved money - and over 90 percent said they would recommend it, with its features of dynamic prices, information, and smart meters, to their family and friends.

CN. There are two main obstacles. First, systems are not set up to provide real-time energy data to customers. Every user interface needs data and this means meters, submeters, loggers and other hardware that must be connected and configured to work with legacy building systems. Today it is a fairly custom process, but energy services companies (ESCOs) continually improve with experience and scale that lowers costs and increases value.

The bigger challenge is the difficulty for customers to evaluate the energy information benefits because it enables further action that may or may not require additional investment. This is being overcome as organizations shift to managing facility energy usage with similar processes used in their operations (e.g., Six Sigma). Today, Johnson Controls is helping leading organizations embed energy management into their core business - monitoring usage, assessing priorities, setting quantitative goals, implementing projects, and tracking results - bringing energy into focus and obtaining significant results.

KS. In the US and Europe, we find great enthusiasm for energy efficiency programs. Not everyone signs up, but even 20 percent voluntary participation will transform the industry. The technology exists and enough consumers are ready. The challenge is changing the regulatory paradigm to place more value on investments in peak load reduction and energy efficiency than on generation and T&D infrastructure. With business as usual, the world will use 30 percent more electricity in 2020 according to the US Energy Information Agency. With the accelerated smart grid deployment, we could save 10 percent in efficiency gains and enable 20 percent from renewables. The challenge is greater in high growth countries like China. While China is building significant new generation capacity to fuel its economy, a commitment to clean energy and smart grid investment is likely to accelerate energy efficiency programs that engage customers. As the regulatory environment shifts to value energy efficiency, distributed storage and renewables, the industry will evolve to offer a broader array of services that engage more and more customers.

Do challenges exist around the interoperability of smart metering technologies? What efforts are underway to resolve any issues?

GB. The single most important communications standard in the smart grid is the interface between smart meters and electricity consumers' premises. And the winning standard for wireless links has likely emerged: ZigBee Smart Energy.

As successful deployments of tens of millions of smart meters in North America, Europe, and Asia-Pacific have shown, multiple proprietary and open protocols work well for two-way communications between utilities and meters. But the smart grid vision can't be achieved without a single, open protocol from the meter to the premise.

The next big thing after smart meters is sending messages from those meters to in-home displays, smart thermostats, and smart appliances. These messages contain the usage, pricing, and control information that enable consumers to capture the desired smart meter and smart grid benefits of demand response, energy efficiency, renewables integration, distributed generation, and electric vehicle charging. And an open interface for sending those messages is essential for the free market to invent and deliver, at low cost, all sorts of exciting and creative products and services.

CN. Interoperability is always a challenge. While utility deployment of Advanced Metering Infrastructure is not trivial, the bulk of the interoperability challenge (and opportunity) is within buildings. From the commercial building perspective, there are three primary issues. First, no consensus around the communication standard between meters and equipment exists. Second, the medium for communicating is not settled (e.g., wireless, IT networks, Building Automation Systems). Finally, there are no formal tests to ensure standards compliance. Each issue is being addressed by experts through the NIST smart grid interoperability initiative. The upside benefit of a connected and interoperable systems is massive. Tens of billions of dollars in annual savings are possible through lower energy bills, capital deferral and better grid operations.

KS. Interoperability challenges exist in deploying smart grid solutions across the grid. This is a much bigger question than interoperability of smart metering technologies. The value of a smart grid is multiplied by sharing information across applications. Smart grid applications across the energy value chain from generation to consumption must interoperate for the smart grid to realize its full potential. We have built our Power SG smart grid software solution as an open platform designed to integrate vertical smart grid applications. Interoperability enables collaboration across applications. For instance, when a transformer monitor identifies an imminent failure, a substation automation system takes the transformer off line and the demand management system reduces the corresponding load on the substation. Efforts are underway in the US and Europe to develop interoperability standards. Having a common, global set of standards is vital to a robust smart grid industry.

JR. This is a complex and challenging area, but standards such as Zigbee are being developed that are starting to be rolled out. Alongside industry standards, operating systems such as the Comverge Apollo platform can help overcome interoperability challenges by intelligently empowering a host of emerging energy management applications and smart grid technologies.

Logic seems to suggest that more energy-efficient customers will result in lower revenues for utilities. What business benefits does efficiency bring for suppliers of energy?

CN. It is clear there is a misalignment of incentives between energy efficiency and selling electrons, but the regulated utility business model is more complicated than just selling electrons. Utilities have the "obligation to serve" their customers with safe and efficient service. If building power plants and substations is not the best way to meet customer needs, utilities should promote and be compensated for these alternatives. This is happening in some markets. In these markets both Johnson Controls and utilities see the benefits of working together. The benefits of energy efficiency to utilities are numerous. Smart investments in energy efficiency can substantially decrease peak demand, extend the life of existing infrastructure, improve the ability to shape the demand curve, enhance customer relations and decrease business risk. Working with credible ESCOs that guarantee their work creates an extremely reliable "supply source" to meet future needs with no fuel price risk, no siting issues and can be implemented now.

KS. In the short-term, efficiency can result in reduced utility revenues. However, regulators can approve decoupling to sustain utility revenue while lowering consumption, aligning utilities and their customers on energy-efficiency goals. In addition, we find operational, environmental and economic advantages to deploying smart grid solutions. Reducing peak demand on congested substations or replacing spinning reserve assets with load management solutions provides a measureable ROI for utilities even though demand is reduced. Energy efficiency is the most cost-effective approach to reduce utility asset costs as well as reducing carbon emissions that contribute to global warming. Investments in the smart grid create local jobs for a nation and help achieve energy independence. Energy efficiency creates lower energy intensity generating the same benefit with less energy. Just like a capital investment in new generation or T&D infrastructure, returns on investments in energy efficiency and the smart grid must be built into the rate base. Done correctly, this can be a win for the utility, the regulator, the consumer and the environment.

JR. While that would seem to be the case on first glance, decoupling utility income from the amount of energy delivered, as is the case in California, eliminates this concern. In addition, performance metrics for utilities can be put in place that tie returns to customer satisfaction or other parameters not tied to the quantity of electrons pushed through the wires.  

Another way of circumventing this issue is a legislative mandate like Pennsylvania Act 129. This is one of the most forward thinking energy laws in our country as it sets both peak demand reduction and energy efficiency improvements goals that need to be implemented by 2012. The law provided a budget for the program and imposes penalties if the goals aren't met. Both of these approaches, the carrot and the stick, accomplish the goal of having utilities embrace energy efficiency.

GB. Regulators are cognizant that the current business model does not reward utilities for promoting energy efficiency. For this reason, a number of states (California, Connecticut, Idaho, Maryland, New York and Vermont) have all created market structures that decouple profits for one or more utilities. Decoupling effectively removes a major disincentive for promoting energy efficiency. We expect decoupling to become even more commonplace as consumers and regulators become increasingly energy efficiency conscious.

Efficiency also leads to improved asset utilization. Currently, more than 200 billion USD of assets are used only 100 hours per year. We can halt the production of additional power plants and learn to better use existing resources by making information available and giving consumers the tools to manage usage.

There is also concern that some of the new innovations hitting the market such as electric vehicles and renewables will have difficulty incorporating into the grid. With improved efficiency, we can help solve these issues and provide a more solid platform for further innovations.

Here are some of the facts the drive the move towards the smart grid: US utilities will realize about $3-5 billion in annual operating savings from smart meters. Demand response savings, at a 10-15 percent reduction in critical peak demand, will save about $5 billion per year total. Also, energy efficiency (at just five percent) will save about an additional $18 billion per year or so. Most of the demand response and energy efficiency savings will flow through to consumers via lower wholesale power purchase and production costs.

Biography

Clay Nesler is the Vice President, Global Energy and Sustainability for the Building Efficiency business of Johnson Controls. In this role, he is responsible for energy and sustainability strategy, policy, marketing, education, innovation, operations and NGO relationships on a global basis. He also serves on the company's global environmental sustainability council.

Gary Bloom is CEO & President of eMeter. Previously Bloom served as Vice Chairman & President of Symantec. He joined Symantec through its merger with VERITAS, where he served as President & CEO from 2000 to 2005. Bloom joined VERITAS after a 14-year career with Oracle rising to the rank of Executive VP.

Keith Schaefer, President and CEO of BPL Global, a technology innovator and successful entrepreneur, has co‐founded or led more than 10 start‐ups. Foreseeing the potential to transform the energy efficiency and reliability of a global industry, Schaefer co-founded BPL Global in 2004 to provide integrated smart grid solutions.

John Rossi, a co-founder of Comverge, has 25 years of experience. As Senior Vice President of Business Development he leads all Corporate Strategic Planning.  Rossi evaluates different approaches to energy use and optimizes the Comverge solution portfolio. He holds six patents for utility related applications and an MS in Electrical Engineering from the University of Detroit.