Smart Grid Grants Favor Meters and Energy Displays

Yesterday President Obama announced $3.4 billion in grant awards for smart grid investments under the American Recovery and Reinvestment Act (ARRA), the stimulus law passed earlier this year.

Among the goals of this spending are infrastructure improvements to make it easier to integrate renewable energy sources into the power grid; improve grid reliability and reduce outages, which the President said cost Americans over $150 billion per year; and eventually reduce consumers’ energy bills. (The cost of power outages is something I cited as support for grid investments in an earlier post on the smart grid.)

Smart Meters a Favored Technology

The president’s talk of reduced energy bills is a reference to the strong support for smart meters reflected in the grant awards. Most of the projects the government is supporting with these grants involve the installation of smart meters.  As the president said,

Smart meters will allow you to actually monitor how much energy your family is using by the month, by the week, by the day, or even by the hour. So coupled with other technologies, this is going to help you manage your electricity use and your budget at the same time, allowing you to conserve electricity during times when prices are highest, like hot summer days.

The “other technologies” he mentioned include in-home energy displays, the focus of a market research study I am currently wrapping up and which should be published in the fourth quarter of this year.

One Million In-Home Energy Displays

According to an administration summary of the grants, the funded projects, when fully implemented, “install more than 1 million in-home displays, 170,000 smart thermostats, and 175,000 other load control devices to enable consumers to reduce their energy use.”

These grants are a boon for the winning utilities and the vendors they have selected as suppliers and implementers. And, assuming these projects largely deliver on the hope-for benefits, these projects will prime the pump for large-scale deployments over the next 5-8 years in the U.S. and, over a longer time period, globally.

Stimulus Temporarily Stalled the Smart Grid Market

Over the last couple of months, I’ve spoken to many technology vendors in this space, as well as utilities that had submitted smart grid proposals. The general consensus among this group about the impact of the stimulus was that it had the comically ironic effect of putting the smart grid market in a state of suspended animation.  With billions of dollars of grants in the balance, any utility that had been contemplating making an investment in smart grid technologies had every reason to put it on hold until it learned whether the government was going to foot part of the bill.

So the vendors watched and waited (after helping their prospective customers with their grant applications).

Some Utilities Will Proceed Even Without Grant Money

I spoke to one utility today who had ambitious plans for smart meter and in-home deployments in its service area. The utility, a cooperative, did not receive a hope-for grant to fund half of the over all expense. They are disappointed but say the intend to press forward with their plans, albeit on a slower deployment schedule. And they hope to submit a revised grant proposal for a second phase of awards.

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9 Comments

Filed under efficiency, grid, in-home displays, smart meters

9 responses to “Smart Grid Grants Favor Meters and Energy Displays

  1. David–Great to hear you’re going deeper on this topic. Wearing the consumer hat, big questions remain about smart meters. The important ones are: (1) whether the enabled time of use pricing will produce off peak savings that benefit the homeowner or on peak increases that are good for the utility; and (2) whether consumers will have access to the data in real time. The President’s premise on the value of the data, in my opinion, depends on that.

    Early cases of smart meter deployment, such as Toronto Hydro that we’ve been writing about, are not positive on either of these points.

    Smart meters have a chance to be a great thing, or they may turn out to be the most cleverly branded trojan horse for higher utility rates ever conceived.

    PT

    • David Schatsky

      Hi Peter,

      Thanks for your comment. Yes, I’ve heard of several examples where consumer say they were (or would have been) worse of with time-of-use pricing. I don’t believe utilities see smart meters as a Trojan horse. But I do believe that the design of the pricing structure is critical. Done wrong it can do more harm than good. And sometimes with these kind of schemes, as can be seen in analogous schemes like congestion pricing in cities, even if the average consumer might end up better off, some individuals could end up worse off. Economists tend to advocate compensating losers from the pool of gain achieved in aggregate. But that can be tough to do logistically and politically.

  2. Matt Roche

    Not really that cleverly disguised Trojan Horses.

    In California, the PG&E program has several large flaws:
    1. The meters are usage only, not net metering (AKA revenue meters or Feed-in meters). You want to put excess solar on the grid, you have to pay to have the new smart meter replaced.
    2. The wireless networks that support them rely on the ATT backbone that is too slow for realtime data.
    3. Time shifting usage, for the most part, is preposterous without storage. You are not going to run your oven at 2am.
    4. People’s bills are going up that are not on day rate plans. See http://www.smartgridnews.com/artman/publish/News_News/California-Senator-Questions-Value-of-PG-E-Smart-Meters-1231.html.

    When Duke electric ran their smart meter experiments, they announced that people shifted usage when they had realtime display of power consumption. What they put in a footnote was that the change in consumption required a nearly 500% increase in daytime rates.

    Utilities make their revenue off of the rate base. The roll out of smart meters gives PG&E an estimated $4 per household in extra revenue for years. It also gives a gateway into the home for potential curtailment.

    There needs to be a clearer articulation of the necessary components of a “smart grid”. This morning’s announcement by Obama at the Florida solar array was reported as a “smart grid project”. It is renewable, but what does it have to do with smart grid?

    The smart grid should have at least these characteristics:
    1. Any meter should have the ability to feed in or consume power (within limits, of course).
    2. Real time pricing should be available at every node.
    3. Allow the network to shift power production around the grid to balance consumption.

    Cool, in home LCD displays of meter readings are a parlor trick.

    • I agree that the trojan horse idea is off-base — I think that gives too much credit to the utilities; what would they do with that data anyway once the horse was in your house? Utilities are not know for their expertise in managing data.

      Smart Meters have this sort of mythology around them — we can all see how they might do many wonderful things, but they are a small part of the more important smart grid: in their simplest form they provide they ability for the utility to optimize voltage delivered, which could result in a rather large efficiency improvement on its own. Smarter meters could do more, and several scenarios have been spun on how that would work.

      Sure, smart meters should do more, but we need to start somewhere and tomorrow’s meters will be better than today’s.

      I respectfully disagree with Matt Roche on several points — time shifting, while certainly most effective for manufacturing facilities could easily apply to home usage, if not to ovens, then clothes dryers, water heating, dish washing, electric car charging, and to a lesser degree air conditioning.

      And finally, as a user of several monitors for the last year, I can assure you that these devices without doubt make electricity use and cost transparent where it is now opaque. I have made numerous small changes, reduction in waste, mostly, that have dramatically cut my consumption. While I may not be “normal”, evidence suggests that people tend to save a significant percentage just by having them installed. I now use the TED 5000, and it’s an amazing thing indeed.

      Tom H

      • David Schatsky

        Thanks, Tom.

        I’d be curious to hear about your experience with the TED 5000 if/when you hook it up with Google PowerMeter, a capability announced earlier this month.

      • Where is the evidence that people save money?

        The tests that were run showed no effect without a price signal. There is clearly a selection bias when you look at buyers of a kill-a-watt or beta testers of Google.

        My main concern is that these smart meters are greenwashing when you look at what really needs to be done to diversify energy production and storage. The meters cost $Billions that could be used to develop distributed power generation that could lower the load on long-distance transmission, enable peak shaving, and let people use power when they want to!

        Or you can think about it this way. In-home usage data is a little like a scale – it may get you to say “Wow, I am overweight”, but very few people end up actually losing the weight. You might be virtuous, but a betting man would say that the scale won’t have an effect without a real stimulus like money.

  3. David —

    Yeah, I’m a geek and was racing several others (MapAWatt, EnergyCircle.com, etc) — I think we all got Google PowerMeter going the day it was released.

    PowerMeter is very cool. The TED integration was a snap. The charts they produce are quite useful — different than the ones produced by the TED Footprints software where you can get similar data, but it’s not as real. Notably, the display shows how your usage stacks up against others, and also shows how you’re doing against your own goals.

    The one disappointment is that the data cannot be shared (it’s available only from iGoogle as a widget). But the Googlers I talked to say “Soon, real soon”.

    You can check my blog, linked above and search on “ted” to see some of my obsessions observations, or click here for Google PowerMeter with TED 5000 Screenshots.

  4. Matthew —

    Thank you for your response. I appreciate your viewpoint and how well you express it. Still, I see things differently.

    I think the weight-loss analogy is not valid. Weight loss requires reduction of pleasure (or something) and has little monetary benefit. While I agree that the people like me using self-installed, non-free energy monitoring devices are clearly a self-selected group, and cannot argue that price signals clearly influence outcomes, there is still some evidence that merely giving people information provides suitable incentive to change behavior. Money may have little or nothing to do with positive change.

    I checked around for studies published on the Internet and found this one done in the UK suggesting that an otherwise disinterested consumer would reduce their consumption by 5% by having immediate access to consumption and price data. I cannot find now a study done by PSE&G in which customers’ usages were compared to neighbors on their monthly bill using merely a smiley-face notation — my recollection was that change was significant and persistent. We respond to various signals, including but not limited to money.

    My experience has been simply that a highly motivated household (me and my family) can reduce consumption by more than half without making significant reductions in comfort or service, and that’s just with electricity usage.

    We live in a modest single family house which was far from excessive before we started observing the impact of our changes. My blog, “Five Percent” was named in 2005 when I started because I hoped I could reduce my consumption by that amount. I was off by ten times, and counting.

    With modest expense, almost all of which has paid back by now, my electric consumption runs about 14kWh/day, which is less than half of what we used several years back. This translates to a monthly savings of over $100 just on electricity, for us. We don’t live in the dark — we just learned where we consume electricity with no actual benefit to us.

    Yes, I am an outlier and unusual in most ways. Still, what I learned in this experiment is that simply knowing how what you do affects something can change how you do that thing. I had no clue about my energy usage before; now I do and know how my actions affect things.

    If I cared about money (I do) I might find a $100/month savings enticing. And were I to have the same data for my larger Northeast US heating bill, I would have undoubtedly acted sooner in spending the small amount of money and time I spent this summer making my house better insulated and more efficient.

    I expect to pay between 1/3 and 1/2 as much for heat this year as a result of our investment in insulation and air sealing. So if I am saving a couple hundred dollars a month on energy, I would argue there is a price signal, but one that is obscured greatly by the lack of granularity and detail in the data consumers see. Still, while that’s a big number, and one that I suspect is not far from the mean, people are not lining up to make the changes I have made. Why?

    Yeah, this is largely a matter of intuition, and certainly few indicators have shown that people are willing to, for example, spend $1,200 in the summer in order to get $100/month back on their investment forever. Meanwhile, people buy lottery tickets.

    This doesn’t boil down to classic economics (a subject I studied at my university in the 1980’s) — people don’t respond the way the economists predict. Behavioral economics might have it a little closer, but it just doesn’t boil down to that kind of “science”, if you ask me.

    Why do people buy lottery tickets, when far better investments (such as conservation) are available? It’s not about the money (even if it is wrapped in monetary terms). It’s about simpler things: opportunity for pleasure, or avoidance of pain.

    So while there’s always room for skeptics, and people pointing out why a given idea will not work, speaking as an engineer and scientist, I still think this is an issue of social change, not pure economics.

    So while I see your point, and certainly agree that smart meters, monitoring or anything else may not be the “best” way to use scarce resources, I am quite sure that how the economics boil down is the least relevant component of what will, eventually, cause us all to make changes or one kind or another.

    Respectfully,

    Tom

  5. Pingback: Marketing Home Energy Management Without Utilities «

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