On Thursday January 28th, I had the pleasure of attending a town-hall style gathering of energy execs brought together by Katie Ferenbacher of earth2tech. The exclusive event, held at their office in downtown San Francisco, was organized to discuss one key question. What will be the killer applications for the smart grid, and what needs to happen to drive the future of these innovative applications?
This is the team that was selected by Katie to lead the discussions.
Andy Tang, PG&E Senior Director of the Smart Energy Web
Warren Weiss, Partner Foundation Capital
John O’Farrell, EVP Global Business Development, Silver Spring Networks
Darren Brady, Chief Operating Officer, EnerNOC
John Steinberg, CEO EcoFactor
I am aware that thought leaders have a tendency to believe that customers think as we want them to. As I listened to the discussions I became progressively more concerned about the gap between what the experts said consumers needed, and what I have observed consumers saying they want. But rather than let this detract from the information communicated by the experts, let me first cover the information presented, and then offer an objective opinion from our consumers perspective.
The discussion was opened by Andy Tang from PG&E, responsible for technological initiatives stretching from energy generation through to customer consumption, with an update on PG&E's smart grid initiatives.
First he mentioned PG&E's involvement with the North American SynchroPhasor Initiative. How different this is from the consumer power factor correction scams we have been writing on. This is a pure technological initiative, requiring cooperation between all the utilities in the United States, to increase the phasor measurements on the grid from 4 times per second to 30 times per second. The goal of this project is to use these precise measurements to save the 15% energy distribution losses currently incurred in the grid.
Andy went on the explain that the supply and costs of reliable electricity are significantly impacted by the peaks in demand. The issue he explained is managing supply for the 15 "hot" days in the year. The crucial element is the efficient storage of electricity. PG&E are pioneering a 300 MW compressed air storage facility.
Over 50% of the distributed energy generation in the United States, in particular rooftop solar, is produced by consumers within PG&E's coverage area. Providing reliable energy with this level of distributed generation (will increase), and a complex system of demand response is soon to be further challenged by the availability of electrically powered vehicles. The traditional nighttime storage capabilities may be lost as thousands of consumers use nighttime electricity to charge their car batteries. Electric cars do require energy, and although the break from a dependence on fossil fuels is welcomed, the energy to charge the batteries still needs to be delivered. I was pleased to hear that PG&E have joined with 30 car manufacturers and epri to define the common standards for a smart vehicle charging system. Can you imagine if a home would only support charging a particular manufacturer's vehicle?
At this point I realized we were in for a long day. These three topics alone were sufficient in their complexity for me to want a break. But this was not to be, in fact all Andy had covered was an introduction so we could have a broader context to position the discussion to come. But before he dived into the subjects we were all expectantly waiting for, smart metering, smart monitoring, home area networks and energy control systems (note no consumer feedback) Andy stepped back and asked if he might comment on the parallel being raised between the development of the Internet and that of the smart grid.
The first difference is found in the driver of demand. The Internet was built by the telcos in response to consumer demand for information access. The smart grid is being driven by the utilities as a way to better serve their consumers. These could not be more different, end user pull vs. supplier push. The second difference is in rate of change. The Internet refreshes it's technology every few years. Consumers are willing to replace computers, routers, screens in order to get what they want. The electrical grid must deal with 40 year technological increments. I am still digesting the implications of this statement as I reflect on the purchasing criteria and standards issues utilities must consider.
We could write a book on the sociological implications of what Andy had just said. We live in a time of market-driven demand and it is hard to accept that there are some consumer requirements where the consumer does not know what is best for them. I believe electricity is one of these. Most consumers do not understand (or want to) the complexities of providing 120 Volts (plus or minus) 365 days a year, 24 hours per day, 60 minutes per hour, 60 seconds per minute, and at 60 cycles per second. We consumers have come to expect this to be there! Most of us hardly look at our electricity bill, it is smaller than most of our other bills, and we cannot do without it.
Andy began his comments on home area networks by saying "we need to make this real for the customer". I could not have agreed more for up to this point I had a clear appreciation of the complexities he faced in delivering electricity to consumers, but I could see little advantage to consumers, at least as I understand their expectations. They get reliable electricity today, and assume this will be the case. If the utility can reduce its costs of distribution and billing me, I only care if it will result in a reduction of my bill.
Customers need to to be able to use the data about their electricity supply to make changes to what their bill will be, and not simply be told what it was one month after the event. He likened the existing billing structures to receiving a credit card statement with a single amount, and no ability to compare to what had been done. But there was an implied statement here, for at the moment the only way I can change my bill is to reduce the number of kilowatt hours. If the utility company is going to introduce other factors making up my bill, then they will need to provide ways for me to manage these other factors.
I suddenly realized that there is a huge disconnect between what the utilities think the opportunity in providing more granular electricity consumption data is, compared to what I, TED and other monitoring/display technologies companies think the data can be used for. We have been examining the use of individual appliances on a second by second basis and suggesting that this information be displayed to help consumers change behavior and save electricity. The utilities are thinking that more data is an opportunity to invent new billing models, and to equip the home owner to manage these. Both are correct, both are useful, but they are fundamentally different.
Now I understand why utilities think 15 minute and one hour data interval are sufficient. They are from their perspective, not as a way to inform users how to reduce the electricity of a device at a moment in time, but as a way to manage the new tariffs we will see. I really do not desire to raise this as an issue, yet! I understand and support why utilities need to bill for electricity in ways that reflect the actual costs. But I wonder if consumers understand and appreciate the intentions afoot to modify how we are billed?
But whatever the definition of energy data and how it will be used by the utilities, I strongly suggest that we work on the principle that smart meters are there for the utilities purpose. This begins with recording the electricity delivered to the customer in a way that will allow them to be charged. With this in mind the technical discussion on how the AMI mesh network and the data would be transported to the utility company became clear. The issues being considered were not about working with other home wireless devices, but of reliable secure delivery to the utility company's data centers, and from there being provided to the users over the Internet.
Andy concluded by saying that the standards for home area networking were still being established, but that they would be fundamentally open in nature. This is a big shift from the closed proprietary computing environment of the existing meters. Time will tell exactly how the AMI data will be made available to devices that can receive it. The AMI network is not a broadband data channel, and there will always be latency constraints. The integration of zigbee and 6LowPAN is a platform issue that PG&E will not be solving. All vendors of the home area network products are invited to visit the test facilities PG&E have in San Ramon for integration testing.
Andy's presentation concluded with two remarks. First, that the smart grid will be built on a robust ecosystem of open standards. Second, that the State has mandated a policy issue with regard to delivering hardware to the home, in particular that there would be a level playing field and competition would be encouraged.
In conclusion from open4energy, it seems to me that we have a clear case of the utility companies doing what is needed to provide us a next-generation reliable safe and billable electricity delivery system. But it is a stretch to suggest that a more flexible billing model, which allows utilities to modify rates and billing models is automatically in our interests. I do not believe that there are any issues for California, for we are one of seven states in which the generation of electricity is separate from the distribution of electricity, and where both bodies are highly regulated. At the same time we must remember that these are public companies, required to make a profit, and we will need to keep a close eye on how this plays out for the average consumer!
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