Energy Efficiency, Smart Grid—It’s all About the Customer
The energy industry is one of the last to transition from its original, late-1800s design to a modern system that provides customers and utilities ...
by Cheri Warren, IEEE
The energy industry is one of the last to transition from its original, late-1800s design to a modern system that provides customers and utilities with real-time information that can lead to better decision-making and lower overall cost for customers. Until a utility implements smart grid technology, it doesn’t know when customers are without service until customers report outages—something most customers do not realize.
For low-income families in the U.S., energy costs consume as much as 34 percent of their budgets. For medium- to high-income families, energy costs run 8 to 10 percent.
What other service bills customers one to six weeks after customers have consumed goods yet doesn’t tell customers what they got for their money? No wonder energy customers are not engaged.
Customers usually deal with utilities only when they have bill complaints, power outages or questions about moving. A debate within the industry rages about the need to engage residential customers in particular because achieving residential demand response and energy efficiency objectives is more difficult and yields significantly less energy reduction. Most entities work with larger customers to achieve demand response goals.
But all customers, including residential, are essential to digitizing the electric grid. The path to get there is through smart grid, energy efficiency and demand response programs. Without the common people, a utility cannot achieve the investment necessary to bring electricity networks to the technology level required to meet customers’ current and future needs. The technology level is not only to digitize but, in many cases, to redesign the electric networks to meet customers’ needs and demands and accommodate new industry the U.S. needs to revitalize its economy. Two-way power flow and communications are becoming crucial to modern life and business.
Think about the phone industry. Fifteen years ago we didn’t carry cell phones, and not many people would have dreamed they would dismiss landlines in their homes. Today, many people have only cell phones, and many use them primarily for texting. Customers choose plans that suit their needs, ranging from pay-as-you-go minutes to all-inclusive data plans. The telecom industry transformed completely in less than two decades. Many things accelerated those changes, including regulation, customer convenience and attitudes, as well as technology.
The electric industry stands ready to embark on its own digital revolution, but how? People worry: Having no phone is seldom life-threatening, but having no power can be. Electric utilities are heavily regulated, and the pace of change tends to be much slower. The electric network has been called the world’s most complicated machine, and it was built to handle 20th-century customers, not 21-century businesses. Big investments in infrastructure hit the bottom line: customer’s bills. In a fragile economy, extra investment to secure the future can be a difficult sell to people who struggle financially.
So how do we begin?
National Grid decided on a new, bold approach that would include everyone in planning for the future electric network. Partnering with the city of Worcester, Mass., and key stakeholders, National Grid used a technique called appreciative inquiry (AI) developed by David Cooperrider.
AI allows hundreds of people who make up an ecosystem to come together to plan the future. It creates change at the scale of the whole and builds on innate strengths within an ecosystem to design a better future. The Worcester Summit was called Green Today, Growth Tomorrow: Transforming Worcester into the innovative energy leader of a smarter Commonwealth (http://green2growth.com). The ecosystem was composed of low- to high-income residential customers; small commercial and industrial customers; regulators; the attorney general; city officials; students; college professors; nongovernmental organizations; and utility workers.
For two days, people came together to build on their collective strengths and use AI techniques to design a better future. Customers could see the value proposition for themselves, their families and businesses. National Grid understood what customers want and need. As a result, National Grid retooled its smart grid pilot proposal filed in December 2011 and is awaiting a decision from regulators.
The AI technique is robust and often produces 10 to 15 buildable concepts. One concept that had considerable momentum at the summit was a sustainability hub where people could touch smart grid technology, get additional educational opportunities and possibly develop job opportunities. National Grid with Clark University plans to build this hub in a low-income neighborhood across the street from the university upon regulator approval. Jobs will be offered to students, and the hub design might remind people of an Apple store.
Building on the success of the Worcester Summit, National Grid worked with IEEE to propose community summits across the U.S. IEEE is working with several utilities to begin launching summits that can help others accelerate customer engagement in new ways. Combining this approach with IEEE is opening doors to volunteer opportunities in the smart grid space and in the process forming even tighter bonds with communities.
As customers participate and reinvigorate the economy while reducing energy use and saving money, everything changes. I predict:
- Investment in energy networks will become essential to all stakeholders. The investment can begin to unlock the latent value in a distribution grid built to withstand estimated as opposed to actual peaks. Engineers are very good at developing estimates, but there is no substitute for actual information, especially in real time when it comes to billion-dollar investments.
- Sensor technology will become ubiquitous across energy networks, enabling autonomous control that can lead to significantly fewer power interruptions and much better power quality.
- Communications technology will form the backbone for two-way energy flow that enables renewables and microgrids. Microgrids have the potential to offer customers services they cannot obtain now because of cost or technology. Think about a medical campus that offers the latest in robotic surgery. Being under the knife when the power unexpectedly goes out is unacceptable. Our energy offerings meet customers’ needs now and they will tomorrow. The design of our networks can begin to change economically because latent value is unlocked, but regulation and customers must be essential collaborators. Being allowed to reinvest the unlocked value back into the grid without impacting customers’ bills could change the game forever. Regulation, much like the power system, was not built to handle this approach. Moving to the digital grid will require a new level of collaboration among all stakeholders.
Customers hold the key to the future. Those who engage customers as partners will accelerate the pace of change so we can share in a brighter economic
Cheri Warren is Division VII director for IEEE. As board director, she helps strategically steer the institute. She is vice president of asset management for National Grid, where she is involved in distribution planning, reliability, strategy, asset information and leading smart grid and research and development efforts.