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By Chet Geschickter

An earlier SGN article outlined the business case for utility investment in home energy management.  It also warned that utilities can't and shouldn't mimic consumer electronics companies.  What they really want is peak demand curtailment.

 

For utilities, home energy management is an enabler, not an end in itself.  The exciting news:  technology now enables utilities to tap into the residential market for peak curtailment – given the right market conditions.

 

That latter point is critical.  But what exactly are the right market conditions?  For now, we see three market scenarios for home energy management technology adoption:

1.     Markets with public policy mandates for energy efficiency and peak consumption reduction.  Pennsylvania Act 129, for instance, mandates a reduction in peak demand of 4.5 percent by summer 2012, and a reduction in overall energy consumption of 3 percent.  This makes it attractive for utilities like PPL to partner with companies like Comverge that can provide turnkey residential energy management services including recruitment, enrollment and technology installation.

2.     Distribution system operators in deregulated markets (in North America, Texas and Ontario) are actively piloting home energy management technology. The Ontario Power Authority (OPA) plans to deploy a new province-wide demand response program this year.  OPA will use broadband-connected home gateways to connect with smart thermostats, load control switches, and in-home displays from Energate.  Likewise, local distribution companies (LDC) participating in the pilots will standardize on Energate Load Management System.

3.     Open demand response markets also create opportunities for energy service providers to aggregate blocks of residential peak demand curtailment to sell into capacity markets.  The California Independent System Operator is leading the way, with others being spurred on by FERC. 

 

Many utilities operate in markets different from those described above.  Should they take some action or stand idly by?  The recipe for success is simple.  Begin by gathering detailed power consumption data and providing tools to turn the data into actionable information – conservation tips, energy efficiency insights and for designing new pricing programs and value-added services.  Customer interaction lays the foundation for a stronger customer relationship and a better understanding of the peripheries of the grid, which is useful for distribution planning, asset management and strengthening community relations – including regulatory affairs. 

 

Speaking of regulations, it should come as no surprise that these test beds of home energy management are laid on a regulatory foundation.  Ultimately, it may be regulators (not consumers!) that determine whether home energy management succeeds or fails.  Consumers will buy into convenience and savings when and if they are made apparent.  It is up to regulators and legislators to allow them to be made apparent – to create market conditions that foster innovation and motivate change.  It won’t happen by accident, and it certainly won’t happen overnight.

 

Chet Geschickter is a smart grid analyst with GTM Research and the author of a recent report on Smart Grid HAN.

 

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Current Comments (4)

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Segmentation and DR Programs

Enjoyed your article and your points on how different regulatory markets will impact DR strategies. From a cost standpoint I think it's important to realize that relatively few customers will drive the bulk of DR savings. A few people will care deeply. Many won't care at all. And the mass in the middle will be very hard to reach to encourage their participation. Figuring out which customers fall into each group and developing appropriate communication strategies will ensure that any money spent is spent well to reduce demand and provide a positive return on investment for the utility.

Jeff Fread - 04/13/2011 - 08:31

Focusing Efforts

Jeff Fread makes a good point that “relatively few customers will drive the bulk of DR savings.” It’s proven wisdom that a marketing budget is best spent on “heavy users,” people who have already bought into the sales proposition. There will always be holdouts, late adopters and those who simply distrust anything promoted by a utility. There were skeptics who doubted the value of the Internet, resisted using a telephone, and probably warned against ever using fire. Although their concerns – both legitimate and otherwise– must be treated respectfully, it is a waste of effort trying to change their minds. That effort, be it policy- or market-driven, is best focused on encouraging the “relatively few,” promoting the growth of that demographic until the benefits they enjoy become as obvious to everyone else as the benefits of...oh let’s say the Internet, telephones, and fire.

John Morley - 04/14/2011 - 09:12

HAN - Smart grid devices and suppliers

I have been reading a lot about this subject and opportunity to avoid regular power outages at one of our under limited power supplied vacation homes (i.e. insufficient amps). The house has been badly/inefficiently balanced and instead of doing a full rewiring we would like to inject a HAN into/after the utility supply to send overloads to circuits that have capacity, thus not overloading the circuit and cut our main fuse. What in all this search I did not come across a supplier that has/sells the devices to build such a smart grid. May you could simply provide me with a name of a company selling these devices. Thanking you in advance. Henri

LEHNER Henri - 04/20/2011 - 14:00

Home wireless energy monitoring solution

It is great to be here and we are a Home energy monitor Menufacturer from china. We have already produced more than 1 million pcs Home energy monitor for UK market .Our quality assurance & technology accumulation is able for us to support any Home energy management program all over the world. Our technology can integrate Home energy monitor with Smart meter, Solar panel , Even Mobile phone . Our own-patented bi-directional technology enable customer to control their appliance remotely. But we don’t know much about USA market so anybody who can give me some guide will be highly appreciated. We would like to be partner of any company/anybody who is interested in HAN market. My email address is henry@eco-smarter.com and my skype is henry_huang1982, thank you.

henry huang - 06/01/2011 - 22:55

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