Navigant Research Blog

How Utilities Can Improve Their Public Images

— May 1, 2014

In my previous blog, I discussed the difficulties that electric utilities face in fostering positive public perception.  While a monopoly electric utility didn’t necessarily have to fret endlessly over customer satisfaction 50 years ago, that simply isn’t true today.

As William Pentland wrote recently on Forbes.com, “To remain sustainable in an era of aging infrastructure, heightened service-level expectations, shifting views of social and business risk, the monopolies that call themselves investor-owned electric utilities and the state commissions charged with regulating them depend on the public’s confidence that the system is providing adequate service, protecting public health and safety and managing infrastructure costs efficiently.”  (Emphasis added.)

That may require a new mentality on the part of utility executives.  Here are a few simple ways that utilities can improve their customer engagement and public perception:

  • Social media:  If Facebook can help foster a revolution in Egypt, you better believe it can have a meaningful impact on how your utility is perceived — for better or worse.  Many utilities already leverage social media for communication with their consumers, but don’t make it all about the outages.  Proactive, positive reinforcement of what a utility is doing for its ratepayers should be constant on outlets like Facebook and Twitter.  Most consumers toss their paper bill inserts in the trash without a second glance, but they read their Facebook and Twitter walls religiously.  Contests, giveaways, and other incentives can be used to attract friends and followers.  Social media is free and easy — use it.
  • Regular, timely communications:  Even the appearance of brushing dirt under the carpet during a negative event (outage, accident, environmental fiasco) will undo months of tweeted goodwill.   This is the age of instantaneous communications and the public expects to know what’s happening — and what you’re doing about it — within minutes of an event.  The public will be eminently more forgiving if it believes that it’s been kept aware of what happened and why — and how the utility plans to prevent a similar accident from occurring in the future.
  • Promote renewables: Keep the public informed about the renewable capacity your utility is adding and, importantly, make sure it understands the costs of that transition.  Solar and wind power are popular, but they’re not the nirvana that the public perceives.  Help educate consumers about where and when renewables make sense and where they don’t.  Also, be proactive about informing your customers about how decommissioned coal generation sites are being handled and what’s being done to minimize the environmental impact.

Excellent consumer engagement analytics programs are available to help utilities with these efforts, including solutions that can help slice and dice your customer base and target each segment with the most effective promotions based on income, location, usage patterns, and a whole host of other demographic characteristics.  Navigant Research’s report, Smart Grid Data Analytics for Consumer Engagement, provides a deep look at these tools.

Effective customer engagement and communication may very well have a deeper impact on the utility industry’s long-term success than the billions of dollars in smart grid technology now being deployed.

 

The FACTS about Distributed Wind and Renewable Generation

— March 4, 2014

Since the mid-1990s, during my annual pilgrimage to DistribuTECH, I’ve always picked up a new emerging trend or a newly released technology.  This year’s show in San Antonio, Texas was no different.  I went to Texas to learn more about flexible AC transmission system (FACTS) technologies and had the opportunity to talk to many of the major vendors and some interesting new companies.  My focus started with traditional FACTS technologies (i.e., series compensation [SCs], static VAR compensators [SVCs], and static synchronous compensators [STATCOMs]).  These are almost always complex engineered systems designed to correct voltage drops in long-distance, high-voltage AC lines to perform power factor correction in areas where generation stations have been retired.

Smaller-scale SVC and STATCOM technologies were typically used to correct voltage sag, power factor, and flicker at large industrial sites such as steel mills, large-scale mining, crushers, pumps, and other inductive loads.  At DistribuTECH, vendors like S&C Electric, ABB, and AMSC talked about the use of D-SVCs and D-STATCOMs to stabilize the megawatts produced by distributed renewable sources on the edge of the grid.  These new, downsized versions of transmission grid-scale SVC and STATCOM technologies are now being modularized in familiar 8’ x 40’ containers that can be delivered quickly for any application, sometimes coupled with modular battery storage, to smooth out the intermittency of distributed renewables.

Small and Scattered

This move to smaller-scale distributed FACTS solutions has other implications as well: they can be added quickly to both transmission and distribution substations, with minimal space requirements. They can also be deployed near the edge of the grid at distribution substations or even on local feeders where renewables and electric vehicle charging installations are stressing the local grid in ways that were not imagined when the distribution grid was originally installed.  Startup companies like Varentec Inc. are now introducing pole-mounted mini-FACTS systems.  These systems are wired into the transformer with wireless communications, enabling edge-of-grid corrections in near real-time, far beyond the local centrally controlled substation.

When I started my latest research on FACTS technologies, I imagined that they would be limited to the big iron at thousands of high-voltage transmission system substations where SC, SVC, and STATCOM technologies have been traditionally used.  It was eye-opening to see the emergence of FACTS technologies deployed on the distribution-level grid, where they are opening significant new markets for both traditional and emerging FACTS vendors.  Transmission system designs and technologies are covered in detail in Navigant Research’s report, High-Voltage Direct Current Transmission Systems.  In addition, recent Navigant Research reports, such as Emerging Wind Markets Assessment and Distributed Solar Energy Generation, cover the rapid adoption of distributed renewables in all regions of the world.  Over the next year, our Smart Utilities team will release a series of in-depth reports on the high-voltage transmission grid, starting with my upcoming report, Flexible AC Transmission Systems, which is expected to be released in 2Q 2014.

 

In the Real World, Smart Grid Programs Proving Themselves

— March 4, 2014

Two utilities on two continents are demonstrating the value of the latest technologies for helping residential customers reduce energy consumption and lower their costs.  This is important because often the benefits of smart grid technology have gone unnoticed or under-reported while stories highlighting the negative aspects of smart grid deployments gain attention.

In the United Kingdom, British Gas says that 9 out of 10 customers report that smart meters have helped them better manage their energy consumption, according to a survey.  Results of the survey also show that 54% of respondents with a smart meter are saving money, in some cases up to £75 ($125) per year.  Also, data from smart meters has motivated 40% of customers to take some type of energy efficiency steps, such as adding insulation.  British Gas has deployed smart meters to about 1 million of its customers so far.  The mandated widespread deployment of smart meters is set to begin in the fall of 2015.

Low Overrides

Here in the United States, Nevada’s NV Energy says customers enrolled in its mPowered program reduced air conditioning use by 12% and whole-house electric consumption by about 6% per year.  Program participants receive an EcoFactor smart thermostat that connects the home’s AC system to a cloud-based efficiency and demand response (DR) service.  Participating households reduced their load by 3 kW to 3.5 kW in the first hour of DR events last year.  Customers can override a bump in temperature settings during a DR event if they want to not take part, keeping the home cooled at a level they prefer.  However, the rate of overrides has held steady at about 11% in the first hour and 7% in the second hour since the utility has been tracking this metric since 2008.

These examples represent the latest evidence of smart grid technologies making a difference to customers after years of utility deployments and somewhat murky results.  Pilot programs and eager vendor hype have indicated savings of up to 20% on a given customer’s bill.  These two examples are noteworthy for being more realistic.  They’ve been normalized over time and over a wider customer base – plus, they’re similar to results from OGE and BGE.  What’s missing are similar normalized results from dozens of utilities that are using smart grid technologies to create greater efficiencies and provide ways for customers to control costs.  Those results will eventually come, but until then, many customers will remain skeptical.

 

As Momentum Slows, Europe Seeks New Smart Grid Boost

— November 8, 2013

Europe continues to be home to some of most innovative and ambitious smart grid pilots in the world, but the dangers of ‘pilot-itis’ are looming large.  Evidence of real-world, large-scale distribution automation upgrades or other smart grid innovations are hard to find, and it’s likely we won’t see any breakthroughs until the economic recovery is assured across much of Europe.  Waiting for an economic upturn is not enough if Europe is to meet its targets for 2020 and to provide a boost to its energy and engineering industries.  The European Union, national governments, and regulators need to take a fresh look at progress on smart grid modernization and be more active to ensure the momentum is restored.  Innovative regulatory regimes like the RIIO model in the United Kingdom are vital – but they’re just a start. Innovative projects need to evolve into concrete strategies for grid modernization.

The need to inject greater urgency into Europe’s smart grid programs was a common theme at the European Utility Week conference in Amsterdam.  The annual gathering of utilities and supplies is always a good opportunity to assess the current state of Europe’s smart meter and smart grid market.  Last year,  in the middle of the eurozone crisis, there was a palpable sense of relief that the crisis seemed to be having a limited impact on smart meter and smart grid programs across Europe, even if there was clearly a slowing down.  This year there was a more evident sense of frustration that progress had continued to slow.

The United Kingdom and Beyond

Suppliers with a foothold in the U.K. market were the most positive.  The announcement of the contracts for the GB Smart Metering program has been a significant boost to the industry – and winning suppliers like CGI and Sensus could rightly celebrate their success.  Meter suppliers like Landis+Gyr, with its strong relationship with British Gas, can also take encouragement from the United Kingdom’s progress, even if the end date has now been pushed back to 2020.

The French program, on the other hand, is still some way off, despite continued reassurance that it will go ahead.  The suppliers I spoke to were also taking a more negative view than I did in my recent blog on the German government’s decision not to mandate a roll out of smart meters.

It would be wrong to paint too gloomy a picture. In addition to the GB program, the Nordic countries are also progressing.  The roll out of smart meters is almost complete across the region, with Norway and Denmark now filling out the map.  This of course makes it of less interest to smart meter vendors, but it does mean the region is becoming an important test bed for the real benefits of smart meters and for next steps in terms of grid optimization.  We are starting to see interesting projects emerge for home energy management, advanced demand response, and distribution optimization.

Vienna Enters the Real World

The intersection of smart grid and smart cities also continues to be a focus for new projects.  A good example is the new smart city/smart grid project launched by Siemens and the Austrian utility Wiener Stadtwerke.  Details of the €40 million ($55 million) project were presented during the Smart City session that I chaired at the conference.  Based in a new development outside Vienna, the Aspern Smart City Research Program will be more expansive than most European smart grid and smart city pilots.  The development will eventually support a community of up to 20,000 people by 2030, including living and working environments.  It will involve a host of smart grid, smart city, and smart building technologies alongside an integrated approach to spatial design, energy strategy, and mobility planning.  The project team is particularly intent on testing these technologies against the real living experience of people at work and home.

Aspern could offer a roadmap for how Europe can move from small-scale pilots to real-world integration of smart grid and smart city technologies.  As I wrote in a blog last year, Europe has the opportunity to be a leader in many areas of the smart grid, but all parties need to ensure there is real substance behind the ambitious visions.

 

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