Utilities want to know if vendors are overselling their wares.  Are vendors making commitments that that they really should not?  Sometimes it’s hard to know what a product will actually do – or not do – until it’s installed and running.  So most buyers will try to assure themselves that the product – hardware or software – will do what it says on the label.

But there’s another side that gets less attention: do vendors underplay the difficulty of living with a product?   As Calvin once explained to Hobbes, there’s a big difference between getting something and having something.  After the discussion session at a recent smart grid conference, I understand that having meter data management (MDM) can be more complicated than buyers may grasp during the acquisition cycle.

At the conference session, I joined five utility executives discussing their experiences implementing MDM.  The group was given a preset list of questions to discuss.  The first, “What have you learned from going beyond billing?” resulted in a bunch of blank stares.  The reason: that’s all these utilities have done with MDM – generate bills.  There is little “beyond billing” yet.

Perhaps the most common theme of the discussion was the difficulty of installing MDM and then integrating it with other applications.  All of the participants felt that this aspect had been underplayed by their vendors during the MDM purchase cycle.  Integration of MDM to other applications such as energy management, outage management, or customer information systems, has proven far more difficult than expected.

Response Times Slowed

All five utility officials were also dissatisfied with their MDM’s reporting capabilities.  Several utilities had reinstalled legacy reporting systems, piping the data from the new MDM back to the reinstalled legacy systems.  The group also wanted a separate replicated MDM database for reporting because running complex analyses against the online database significantly slows the response to real-time queries – usually driven by customer portals on the Internet or help desk agents on a call.

Everyone present agreed that MDM should be done before a smart meter rollout, or at least simultaneously.  No one thought it a good idea to deploy smart meters before the MDM was in place.  Some of the group felt that the holy grail of smart metering – interval readings every 15 minutes – is useless for residential applications, although useful in commercial and industrial applications.  One panelist said his utility had activated remote disconnect for only 1% of its smart meters, although that was due to local regulations governing disconnect processes.

Navigant Research’s report, Meter Data Management, published 3Q 2012,  stressed the need for detailed planning before installing an MDM system.  These discussions reminded me how true that is!

The demand response (DR) market is evolving from curtailing electrical demand during peak periods (typically only a handful of hours per year) to continuously balancing supply and demand for power on the grid.  Some observers refer to this new development as DR 2.0, while others are calling it “fast DR” or “grid balance.”  One of the major drivers is the need for ongoing adjustment to adapt to small, frequent changes in the power system on a second-by-second basis.  This becomes more imperative as more and more utilities have to incorporate intermittent renewables like wind and solar power into the grid, typically by adding ancillary or frequency regulation services that match total generation on the system with total demand on a second-by-second basis.

The major stakeholders, such as the Federal Energy Regulatory Commission (FERC), grid operators, and aggregators, are paying heed and are updating their policies and procedures to support the increased use of grid balancing.  For example, Ontario’s Independent Electricity System Operator (IESO) issued an RFP in August 2012 for non-generation suppliers to provide grid balancing.  It sought proposals from multiple vendors to procure 10 megawatts (MW) of regulation services from alternative sources, such as dispatchable and aggregated DR and storage technologies, including batteries and flywheels.  Similarly, New York ISO (NYISO) provides retail customers that are able to meet telemetry and other qualifications with an opportunity to bid their load curtailment capability into the market through regulation services.  These efforts have been given a boost by FERC, which released a new rule in October 2011 that requires grid operators in organized markets to compensate frequency regulation services based on actual services they provide.

Inherently Flexible

Several vendors have stepped forward to champion grid balance, including ENBALA Power Networks, which won IESO’s RFP and has been operating and delivering regulation services to the market served by the regional transmission operator, PJM Interconnection, for over a year.  ENBALA’s intelligent platform captures storage that already exists in the power system by aggregating available demand-side storage, by making small automated adjustments in the electricity use of equipment at commercial, institutional, and industrial sites, to deliver real-time flexibility back to the grid.  Another vendor, Calico Energy Services, recently announced that it’s licensing a set of technologies from Battelle called Grid Command Active Demand Management (ADM).  With this enhanced software capability added to its Energy Intelligence Suite (EIS), a hosted energy management platform, Calico will help utilities execute DR automatically, using two-way communications.

Undoubtedly, other vendors will emerge to provide fast DR as they begin to realize that many electrical loads, such as aerators, pumps, and chillers, have the inherent ability to be flexible without adversely affecting operating processes or changing the overall energy consumption of the system.  Fast DR represents not only a significant market opportunity, but also the next frontier of demand-side management.

Utilities expect smart grid technologies to help them in three key areas:  grid efficiency, financial management, and customer engagement.  Of the three, customer engagement gets by far the least attention in the media.  But as often happens, what we read in the papers is merely the tip of utilities’ project iceberg.  At the ElsterConnect conference in San Antonio, I saw an impressive example of enriched customer engagement.  The keynote speaker was Michael Lowe, chief customer executive at Salt River Project (SRP).

Chief what, you ask?  Already you’ve sensed the problem – many utilities don’t rate their customers highly enough to give them their own chief executive.  That was the first hint that SRP is going about things differently.

Mr. Lowe declared that every customer interaction with SRP must be rewarding, easy, and pleasant.  Those three words were on the screen in what looked like 1,000-point font throughout much of his remarks.  SRP’s goal is that 90% of its calls are answered within 30 seconds, and they have set no limit on how long a customer call can last – the company doesn’t even collect that data.  That is pure heresy to classic call center management but pure bliss to SRP customers.

We Guarantee It

SRP says it hires its customer service agents for attitude in a hiring process that’s described as speed dating.  The underlying concept is that happy employees will yield happy customers, and successful current employees are the best judge of who will make great future employees.

SRP’s goal is to make energy tangible to their customers, to get the customers to think about it.  That means giving them enough information, in ways that are easy to receive and digest.  The most popular page on SRP’s website is the daily usage graph, which each customer can access for their own account.  Customers can get a weekly SMS text message showing their anticipated monthly bill, given current usage.  Customers can pay their bill via phone call, text message, at hundreds of kiosks in the Phoenix metropolitan area, or by U.S. mail.  Only 20% are paying via post now.  Meanwhile, giving more information to customers online has reduced phone contacts by 28%.

SRP also offers time-of-use billing through their EZ-3 program, to shift usage away from the 3 p.m. to 6 p.m. peak demand period.  So far, 20% of its customers have volunteered out 845,000 smart meters deployed.  The program includes a money-back guarantee: If TOU billing doesn’t lower a customer’s bill, then SRP refunds the difference and returns the customer to single-rate billing.

Finally, 15% of SRP’s customers use prepaid plans.  Doing the math, that is about 125,000 prepay customers – the largest prepay program in North America and far beyond any definition of a pilot.  Prepay users reduce their monthly energy bills by 12% on average, thanks to the discipline required by prepay plans.  Improving service, apparently, carries benefits for the utility and for its customers.

Smart thermostats garnered a lot of energy industry and media attention in 2012 and will likely continue to do so as the market continues to grow (for example, a recent GigaOM article claims Nest is shipping 40,000 to 50,000 thermostats each month).  While the energy industry tries to figure out a) what smart thermostats are capable of and b) if consumers will pay to swap out their “dumb” thermostats, it’s clear these devices have the potential to help create more efficient homes by enabling consumers to adjust their energy use.  Still, some consumers continue to debate whether smart thermostats can actually save energy.  Thus, it’s a good time to review that ways in which thermostat setbacks can save energy.

Thermostat setbacks are defined as setting a thermostat at a lower – or higher, depending on the season – temperature than normal so the HVAC system will run less often.  Typically, setbacks are deployed when less heating or cooling is needed, i.e., during the day when occupants are at work, or at night when occupants are sleeping.  The common misconception around setbacks is that the extra energy needed to recover the original temperature nullifies the energy saved by using the setback, and can even raise energy bills.  The fact is, that’s not how setback savings works.

How It Works

The savings from temperature setbacks are directly related to the amount of time spent at the lower temperature setpoint (or, in summer, a higher setpoint).  The energy savings accrued while the indoor temperature falls (or rises) is approximately equal to the additional energy needed to bring the indoor temperature back to the original setpoint.  Since those two conditions cancel out, the measurable savings amass during the time spent at the lower setpoint.

Let’s look at a specific example in the winter.  Consider a thermostat using a comfort setting of 70°F while the home is occupied and a setback setting of 62°F while the home is unoccupied.  At 9 a.m., the thermostat lowers the indoor temperature from 70°F to 62°F.  At 5 p.m., the thermostat brings the home back to 70°F.

The savings accumulate during the 8-hour span while the home is at 62°F; again, the assumption is that the energy saved while the house dropped from 70°F to 62°F equals the energy required to bring the house back to 70°F.

Some argue about setback savings because they don’t agree with that key assumption.  Variables like a home’s physical characteristics (envelope, insulation, solar heat gain, etc.) as well as the HVAC system’s efficiency all help determine the effectiveness of setback savings.  In general, the older a home and/or its HVAC equipment, the more likely efficiency losses are present, especially while the HVAC system recovers from a setback.

However, it’s worth pointing out that the HVAC system doesn’t work harder per se to recover the original temperature; the system just cycles longer.  As North Dakota State University’s (NDSU) “Thermostat Setbacks Do Pay Off” article puts it, “It is not like the throttle on your favorite automobile, where the harder you push, the harder the motor works.  Heating systems are simply on or off.”

Still don’t believe the savings setbacks are selling?  Feel free to comment below to provide your arguments.