Sigh. Yet another test of dynamic pricing. Will we believe it this time?
By: SGN Staff
Quick Take: The smart grid pioneers of the Austin, TX-based Pecan Street Project are launching a field trial of dynamic pricing and other tools for shifting demand away from peak periods.
Sigh. I've learned from experts such as eMeter's Chris King and Brattle Group's Ahmad Faruqui that there have already been at least 100 tests of dynamic pricing. We hardly need another. Yet, in typical utility fashion, Pecan Street doesn't think (apparently) that it can rely on that previous testing. No, it needs to replicate those studies yet again.
Will the 101st time be the charm? Probably not. Probably the next utility that gets interested in dynamic pricing will decide it needs a pilot of its own. That's one reason why innovation takes so long to occur in our industry.
To be fair, the project has some interesting angles, as you can read below and in the press release on page 2. And it will be testing other things as well, including the use of default settings to drive the behaviors you want; and the use of text messages to improve participation during peak events. So when utilities ignore the Pecan Street pricing results, they'll have additional valuable data to ignore as well.
Anybody see any solution to the "we need to retest it ourselves for another two years" problem? Use the Comment section if you see any hope. - Jesse Berst
Pecan Street Inc. and collaborators including the Center for Commercialization of Electric Technologies (CCET), Frontier Associates and volunteer Austin, Texas homeowners are about to launch a side-by-side field research trial of the comparative impacts and benefits of new pricing models and a variety of other tools for shifting electricity demand away from peak use periods.
"The new field trial holds enormous promise to create innovative customer benefits, improve air quality and make electric system reliability even better," said Pecan Street Inc. CEO Brewster McCracken.
Over the past two years, over 500 homes in Austin, including a cluster of 250 homes in the city's Mueller neighborhood, have participated in Pecan Street's research on how people use electricity, natural gas and water on a minute-to-minute basis and how utility reliability, carbon emissions and customer needs and preferences are affected by the introduction of new consumer products like home energy monitoring equipment, green construction, EVs, natural gas applications, rooftop solar panels and in-home energy storage.
The new trial will compare the effectiveness of time-of-use electric rates, default thermostat settings and text messaging at times when the grid is stressed, such as hot summer afternoons. Pecan Street says the need for those energy shifting and saving tools has grown as a result of higher summer temperatures and droughts, a pending shortage of electricity plant capacity to meet demand on those hot afternoons and a larger share of intermittent renewable generation in the available energy mix.
Pecan Street Inc. and CCET Launch 18-month Electricity Pricing and Customer Behavior Research
Field Trial Builds Upon Pecan Street’s Robust Customer Energy Research
(Austin, TX - March 19, 2013) Some of the Austin homeowners participating in Pecan Street Inc.’s groundbreaking consumer energy research are about to embark on yet another first: the nation’s first side-by-side research trial of the comparative impact and benefits of new pricing models and other tools for shifting electricity use away from periods where the electric grid is strained.
"This new field trial holds enormous promise to create innovative customer benefits, improve air quality and make electric system reliability even better,” said Pecan Street Inc. CEO Brewster McCracken. "We are grateful for the people who are volunteering to participate in this important public interest research.”
For the last two years, more than 500 homes in Austin, including a concentration of 250 homes in Austin’s Mueller neighborhood, have been participating in Pecan Street’s research of how people use electricity, natural gas and water on a minute-to-minute basis down to the appliance level and how utility system reliability, carbon emissions, and customer needs and preferences are impacted by the introduction of emerging consumer products such as home energy monitoring systems, green building, electric vehicles, natural gas applications, rooftop solar panels and in-home energy storage.
This research has already resulted in the world’s deepest database on customer energy use, the nation’s highest residential concentration of electric vehicles and the world’s first network of electric smart meters installed and operated for research purposes.
Now, through support from and collaboration with the Center for Commercialization of Electric Technologies (CCET), researchers from Pecan Street and Frontier Associates and volunteer homeowners will be working together on a nationally unique research trial. The trial focuses on the comparative effectiveness of time-of-use electric rates, default settings (a tool touted by behavioral economists such as Nudge co-authors Richard H. Thaler and Cass R. Sunstein) and text message appeals during critical grid conditions (such as those that occur on some hot summer afternoons).
"Our ability to work with Pecan Street and Frontier Associates to carry out this one-of-a-kind research trial speaks to the energy expertise concentrated in Texas and the unique research capabilities developed by Pecan Street,” said CCET’s President and COO, Milton Holloway.
For much of the smart grid era, economists, behavioral researchers and utilities have sought to understand the effectiveness of and consumer interest in tools such as time-of-use pricing, thermostat default settings optimized for energy conservation and text message appeals during critical electric grid conditions. Electric system need for such tools has grown in recent years due to a confluence of factors: higher summer temperatures and droughts, a looming shortage of power plant capacity to serve total customer demand on these summer afternoons and higher levels of intermittent renewable generation.
To be conducted from March 2013 through October 2014, the new trial will test how new features can influence customers’ likelihood of shifting portions of their energy use away from critical high peak periods on hot summer afternoons and toward nighttime hours during months when Texas wind farms are most productive.
Pecan Street and CCET will oversee and co-manage the research, which is funded by a Department of Energy smart grid demonstration program under a cooperative agreement with CCET.
During the study, participants will be presented with different test configurations:
- One group of residents will test a time-of-use electric rate that includes a discounted electric rate during periods of peak wind generation and a higher electric rate during summer afternoons when the ERCOT electric grid in Texas is experiencing demand-driven strains.
- A second group of residents will receive a free programmable thermostat that comes with a default setting optimized for energy conservation. Residents will be free to change the thermostat setting away from its default setting without any restrictions.
- A third group of residents will receive a text message appeal to reduce electricity use during periods when the ERCOT electric grid in Texas is experiencing demand-driven strains. Researchers will evaluate the comparative effectiveness not just of message content but also when the message is sent.
The study will include a control group that does not receive any additional services or directed information.
Researchers working at Pecan Street’s Pike Powers Laboratory and Center for Commercialization will also work on methods for modulating electricity use of specific products, such as electric vehicles, in response to pricing and grid condition signals delivered over the Internet and utility electric meters.
Participants in the pricing trial component of the research will continue to receive their regular electric rates and monthly bills and will not incur any additional energy costs by participating. Pecan Street will provide each participant access to a web portal that compares their actual bill to a simulated bill based on the experimental pricing models. If their energy behavior results in a lower simulated bill, the customers will be paid the difference.
"When it comes to variable pricing, the financial benefit has to be as real as possible,” said Pecan Street data group director Grant Fisher, who is managing the field trial. "We can’t just tell people they would have saved money. They need real-time feedback that quantifies their financial savings.”
Pecan Street and CCET are providing the equipment and incentive payments used in the research trial.
About Pecan Street Inc.
Headquartered at the University of Texas at Austin, Pecan Street Inc. has two divisions: research and commercialization.
The research division carries out three principal activities: (1) research trial management, (2) research data management, analytics and curation and (3) research support of original analyses carried out by researchers using Pecan Street research data. Modeled on pharmaceutical clinical trials organizations, Pecan Street specializes in carrying out research trials in the homes and businesses of volunteer customers. Through its groundbreaking Pecan Street Project, the research division is the nation’s most significant creator of original customer energy use and behavioral research data that can be shared with researchers, and it operates the nation’s most data intensive field trials open to researchers and member companies. Pecan Street carries out this field-based research to advance research in three critical public interest areas: (1) climate change solutions, (2) electric system reliability and (3) customer needs and preferences. Learn more at www.pecanstreet.org.
The commercialization division, based at the Pike Powers Laboratory and Center for Commercialization (opening Spring 2013) focuses on testing, verification and commercialization of smart grid, natural gas, building control, application control and distributed generation and management applications. Learn more at www.pikepowerslab.com.
About The Center for the Commercialization of Electric Technologies (CCET)
The purpose of CCET is to modernize the electricity system through technological innovation to enhance reliability and power quality that is crucial to an increasingly computerized society, and to enhance economic growth and the standard of living of Texas citizens. CCET facilitates electric industry, technology company and university collaboration for the purpose of enhancing the safety, reliability, security, and efficiency of the Texas electric transmission and distribution system through research, development and commercialization of emerging technologies. Learn more at www.electrictechnologycenter.com.
CCET’s focus is on the completion of projects that lead the ERCOT market 3 to 5 years ahead of today’s solutions through technology development and demonstration, market definition and business case testing and promotion of policy and legislative initiatives that support the effort.