Navigant Research Blog

AMI Data Brings New Possibilities for Energy Efficiency Measurement and Verification: Part 1

— June 29, 2017

Coauthored by Emily Cross and Peter Steele-Mosey

Utility industry stakeholders have been debating whether the proliferation of advanced metering infrastructure (AMI), also known as smart meters, will change the way energy efficiency program evaluation, measurement, and verification (EM&V) are conducted. Many utilities remain unsure about what is realistically possible. This uncertainty is compounded by the fact that new firms seem to emerge each year, claiming to provide increasingly deep insights into customers’ energy reduction potential (such as appliance-level load disaggregation and building-specific identification and targeting) using little more than consumption data from the utility.

How Can AMI Data Be Used?

In the field of EM&V, what is AMI data good for? How can it be used by utilities, regulators, and stakeholders to reduce evaluation costs, deliver more accurate and precise estimated program results, and improve the effectiveness of program delivery?

To answer these questions, it is helpful to define the two key evaluation-driven use cases for AMI data:

  1. Operational improvements: Early indications of program achievement provide the opportunity for course correction. Due to the continual collection of AMI data, it should be possible to quantify the impacts of changes in marketing approach and customer targeting on energy efficiency achievement more quickly than is traditionally required for program evaluation.
  2. Program impact evaluation: What is the best estimate of the energy and demand savings that a program delivered? This type of information is required to track utilities’ progress against mandated energy efficiency targets, to enable energy efficiency programs to be bid into energy and capacity markets as resources, and to quantify overall program cost-effectiveness.

Part 1 of this blog covers operational improvements, while part 2 will cover program impact evaluation. This topic is covered in detail in Navigant Research’s new report, Utility Strategies for Smart Meter Innovation: Energy Efficiency Measurement and Verification.

Operational Improvements

Utilities are all too familiar with the frustration of waiting for results from evaluators. Typically, a full year of data is required and the evaluation itself may take several months. This lag between implementation and assessment limits the ability of program administrators to course correct underperforming programs or understand how to tailor messaging to maximize the recruitment of high potential customers.

AMI data is collected continually, and several firms have recently come to market with prebuilt software solutions designed to quickly plug and play with this data. In theory and depending on the type of program, it should be possible to obtain ongoing updates of program performance long before the actual evaluation even begins.

These software packages have their limitations and are no substitute for a custom econometric evaluation, as they tend to be one size fits most. Additionally, the innovative approaches they employ sometimes lack the support of academic and professional literature from which econometric approaches benefit.

There is no denying, however, that these prebuilt software solutions can deliver results much more quickly than the traditional approaches. The results may not be sufficiently robust for a regulatory environment, but they may (depending on the program and the vendor) be sufficient to allow program administrators to take greater control of their programs and monitor their progress in near real-time. Program administrators would have the opportunity to make more effective use of program budgets and increase the value of their programs for their shareholders and ratepayers. They could use these software solutions for programs where simply multiplying the implementer‑reported savings by the prior year’s realization rates is not expected to be accurate.

 

Itron Steals the Demand Response Spotlight by Acquiring Comverge

— May 9, 2017

Just when all parties in the demand response (DR) industry were waiting for EnerNOC’s quarterly earnings call on Tuesday morning to see if there is an update on its corporate structure, Itron came in and stole the show. The company announced its acquisition of Comverge on Monday for $100 million. Another independent DR/energy efficiency company gets swallowed up by an industry giant.

New Opportunities

From a pure technology product perspective, the move appears to make sense. Itron is a leader in advanced metering infrastructure (AMI) hardware and software for utilities, but it has not succeeded in breaking into the DR space on its own over the last several years. Moving further down the DR and customer value chain does not necessarily play into its strengths of meters, backend systems, and data management. For a company of Itron’s size, it is much easier and quicker to buy the capabilities that Comverge offers as opposed to trying to develop them organically.

Comverge has been operating successfully for the past several years since becoming a privately held company. It obtains long-term contracts from utilities at healthy margins, an attractive combination for a prospective buyer. The DR market as its own target is limited in growth potential, but Itron’s hope is that the combination of AMI and DR solutions will open up new opportunities that don’t exist in each separate market.

Questions and Risks

That’s where the questions and risks come in. Integrating different technology platforms is always easier said than done. AMI has not been successfully implemented for DR purposes at scale to date. If the combination with Comverge’s systems can overcome that obstacle, a huge barrier in the industry will be removed. But will that limit Comverge’s business opportunities to utilities that use Itron’s AMI system, or will it still be able to implement independent DR programs regardless of the meter provider?

In an interview, Comverge’s Senior Vice President of Sales Steve Hambric said, “we are not turning our backs on our core business in any way,” and that existing clients will not be jeopardized. Having Itron’s resources will help the company move into more markets more quickly than before.

You don’t have to look too far back in history to find a similar case. Oracle bought Opower just about a year ago, and there is no evidence of great successes to date. They are probably still in the integration phase, but the internal focus seems to have slowed Opower’s market momentum to some degree. Will Comverge find a similar path of distraction, or will the combined team be able to hit the ground running and get some early wins?

In any case, I look forward to EnerNOC’s earnings call on Tuesday morning for the next dose of excitement in the ever changing DR industry.

 

How Invested Is NY REV in a DER-Centric Energy Future?

— November 10, 2016

Last week, the New York Department of Public Service (DPS) released a report examining the best means of future integration for distributed energy resources (DER). Spoiler alert: it’s not net energy metering.

Instead, under the Reforming the Energy Vision (REV) proceeding, state policymakers want to see the development of a valuation framework for DER that values resources according to benefits that can be achieved by both the utility and customers. This should be done by establishing the holistic value of DER on the grid in the short term and by enabling the configuration of transactive, distributed markets for DER in the longer term. In the short term, proposed value for DER will be focused on two areas:

  • Distribution grid services, which include offsets and deferment of short-term and long-term investment costs.
  • Aggregated generation resources and ancillary services to be sold to the New York Independent System Operator (NYISO) through NYISO markets to optimize generation and transmission operations and costs.

The DPS report stated: “The modernization of New York’s electric system will involve a variety of products and services that will be developed and transacted through market initiatives. Products, rules, and entrants will develop in the market over time, and markets will value the attributes and capabilities of all types of technologies. As Distributed System Platform capabilities evolve, procurement of DER attributes will develop as well, from a near-term approach based on requests for proposals and load modifying tariffs, toward a more sophisticated auction approach.”

Though the recommendation does not completely get rid of retail net metering (which it proposes to grandfather in), this is a significant stepping stone in terms of providing a roadmap toward the active restructuring of an energy market around DER integration.

Initiatives at Odds?

Prior to the report, REV introduced two other efforts related to the accurate valuation of DER. The first, the 2015 Benefit Cost Analysis framework, sought to establish a precise structure for evaluating and comparing different types of investment required to establish a distribution-level market for DER (including both distribution infrastructure and grid-connected DER). A corresponding DPS effort includes a proposal to create utility Distribution System Implementation Plans, which “identify [utility] system needs, proposed projects for meeting those needs, potential capital budgets, particular needs that could be met through DER or other alternatives, and plans for soliciting those alternatives in the marketplace.”

But these tasks and initiatives seem to run counter to what the state is actually enabling utilities to invest in. As of now, the only major investment projects in New York seem to be for advanced metering infrastructure (or smart meter) deployments. On the other hand, REV demonstration projects have been single use cases and limited in scope. To take on the task of granular, accurate valuation—one of the most complex technology challenges associated with DER integration—might require a bit more upfront and direct investment.

 

What the Reaction to Toll Road Congestion Pricing Means for the Future of Energy Dynamic Pricing

— November 2, 2016

Electric Vehicle 2In my home state, the Massachusetts Turnpike is moving from manned toll booths to open-road tolling, known as gantries. While this change in itself has the potential to disrupt the status quo, local news investigators discovered some hidden ideas that could be rolled out in the future. These disclosures caused such an uproar that the governor publicly announced that the ideas are not being considered now but may be in the distant future.

One of those ideas, congestion pricing, is that toll prices would be higher during rush hour to encourage people to avoid those times, thereby reducing traffic. Sound familiar to those in the energy industry? Terms like dynamic pricing, time-of-use rates, and critical peak pricing are used to describe such mechanisms. There has been a lot of interest in these concepts since advanced metering infrastructure has made them possible. More people are installing smart thermostats, solar, and energy storage, which give customers a greater ability to respond and take advantage of such rates.

A Cautionary Tale

The reaction to the congestion pricing revelation should prove a somewhat cautionary tale for enthusiasts of dynamic pricing for electricity. In general, people were outraged that the government would consider enacting this type of scheme and assumed there was some ulterior motive. Some people felt that tolls should be lower during rush hour since those drivers are the most frequent travelers and a lot of workers can’t control their work schedules to avoid those times. Other people were just concerned about the government knowing that much about their travel habits and how that type of data could be used.

The point is, despite all the logic that can be used to explain the benefits and economic purity of such designs, human nature is the biggest obstacle to be overcome to ensure mass adoption. Many people will always mistrust the government or utilities trying to enact new structures, assuming that said structures must have some kind of advantage for those entities. Others will feel that it is unfair to charge the biggest users of a resource (electricity, roads) more, since for many other goods and services there are cheaper prices for more consumption. The concern for those who cannot control when they use the resource (those with 9-5 jobs, the elderly, or low-income residents for energy) must be successfully countered, particularly for the political establishment to get onboard. Finally, data privacy concerns must be addressed, although 100% of the users will never be satisfied with solutions in that regard.

Of course, the cases of electric dynamic pricing and automotive congestion pricing aren’t an exact comparison, but energy industry dynamic pricing proponents may face the same fate if they fail to consider the human side of the equation.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Advanced Metering Infrastructure","path":"\/tag\/advanced-metering-infrastructure?page=2","date":"5\/27\/2018"}