Smart grid successes -- and failures
By Jason Rodriguez, CEO and Director of Research, Zpryme
Jason Rodriguez, CEO, Director of Research, Zpryme
For more than 10 years, utilities worldwide have begun installing new technology to increase grid reliability and efficiency through improved communications and technology, creating a smarter energy grid. During this time, many utilities have experienced both successes and failures from which other utilities can learn.
Customers are Key
One of the most important and overlooked lessons from previous experiences is that customers should be a central part of every smart grid deployment. As end users, customers are a highly involved shareholder in the energy value chain and can either help or hinder projects.
Utilities must recognize and show customers how important they are. Customers will control their energy usage if they receive information about their usage, as well as specific information to help them conserve energy. Utilities that focus on establishing relationships with their customers have benefited from customer and community involvement.
For example, National Grid worked with the City of Worcester to update their electrical grid. Through community summits, education programs, and a university demonstration center, the community was able to create 13 new programs, led by either National Grid or the community itself. Likewise, in New Orleans, Entergy established relationships with non-profit organizations, allowing them to maximize community involvement and provide consumer education.
By involving customers from the earliest planning stages, utilities have been able to incorporate community input into their design plans. In fact, several communities have been able to co-create their smart grid based on their individual needs and expectations, leading to a more successful deployment and system overall.
Other utilities that did not involve their customers were not as successful. PG&E is a company that did not involve its customers. They began deployments of one of the largest smart grids in the U.S. without talking to their customers about the updates being made. As a result of a lack of community involvement, PG&E faced a class action lawsuit from its customers.
One of the most important and overlooked lessons from previous experiences is that customers should be a central part of every smart grid deployment. ___________________________
Continued and continual consumer education is also important to smart grid deployments. Consumers must be educated about their energy consumption. Utilities that have employed consumer-focused technology which enable customers to manage energy consumption have experienced decreased overall demand, decreased consumption during peak periods, and a more efficient system in general.
Florida Power & Light created a customer dashboard that provides energy consumption education to senior citizens and lower income consumers. By providing real-time feedback about their energy consumption, consumers became empowered to control both consumption and cost.
The main consideration is that all data be represented in a meaningful format. National Grid, for example, utilized a digital picture frame type display that provided comprehensive graphs for consumption data, as well as additional functionality for the consumer.
In addition to educating consumers about energy consumption, utilities must also educate customers about conservation. Consumers respond best to specific information enabling energy conservation.
In Wake Forest, North Carolina, Wake EMC utilized a web portal to not only allow consumers to understand their usage, but to recommend specific configurations to maximize energy savings. The consumer could apply changes once, and maximize their conservation benefits through passive management. The program has been very successful, benefiting both the community and the utility.
On the other hand, even utilities that implement aggressive customer engagement strategies can face community push back. For example, Naperville, Illinois, which has implemented an aggressive customer outreach program, is still facing a federal lawsuit that could potentially halt the city's smart meter program due to citizen concerns over health, privacy and security.
Clearly, customer involvement and consumer education are key lessons derived from nationwide smart grid deployments.
Don't forget employees
A second key lesson to be learned from smart grid deployments focuses on employees.
Customers have limited interactions with the utility. Thus, it is essential that every interaction be a positive one. This makes communication skills extremely important to both technical and non-technical workers alike. Employees must be empowered to work with the customer and make the experience positive. For that reason, utilities that have employed training programs to develop employees have experienced numerous benefits.
Talquin Electric Cooperative, for example, focused on educating all employees at every level of the organization, from the CEO to line workers, before the first customer was contacted. The resulting consumer education has enabled the utility to proceed with roll-out plans, initially saving the utility more than 11,000 customer visits.
Other utilities have encountered issues due to employees that did not understand the public relations role they play and that every consumer interaction is important. For example, employees must go out to every customer with the tools necessary for a successful appointment. Failure to have all needed equipment or information necessary to have a successful visit results in limited consumer engagement and increased resistance.
As part of PG&E's plan to resolve customer complaints, the utility added 165 new customer service associates, and offered continuing education programs to train all employees on customer service. As PG&E learned, it is important to adequately train your employees to provide excellent service and make every customer interaction a positive one.
In addition to instituting employee training programs, another key success feature in smart grid deployments is to employ a comprehensive management team, comprised of both technical and non-technical team members that work together to address challenges.
This is especially important during deployment, because challenges affect multiple departments. Cross departmental teams can identify potential problems to each area, or determine if a proposed solution could have unintended consequences. In fact, many utilities also include key stakeholders, such as community leaders and suppliers in their teams to direct deployment.
Pepco has experienced some of the problems associated with not having a comprehensive management team when it worked with Accenture to manage its network operating center deployment. The fragmented nature of the team resulted in an inability to address issues in timely fashion, ultimately leading to extensive deployment delays and unexpected expenses.
The largest planning problem utilities typically face in deployment efforts are interoperability issues. Utilities suggest several solutions.
Pepco, for example, says to perform a complete inventory of all devices currently being used. During their deployment, Pepco found that some legacy equipment was produced by vendors that were no longer in business, and identified several integration issues with legacy devices. Eventually, the deployment team was able to identify ways to communicate with every device, including using custom coding in some instances. Pepco then recorded organizational responsibilities and procedures to identify areas of inefficiency, as well as potential organizational issues.
Karen Lefkowitz, Vice President of Business Transformation, said, "We underestimated the change management challenge, so we lost time. But there is a reward if you put in the time to get it right. If you confront and overcome the barriers, you end up with a much stronger foundation for your organization."
National Grid tested for interoperability issues before deployment in a test lab. They realized most issues occur between devices and that understanding the interconnection between them is paramount before widespread deployment. National Grid tested their deployment by installing 5,000 smart meters before full-scale deployment in order to implement any necessary changes before deployment occurred on a large scale.
Another key issue many utilities face is improper cost planning. Boulder, Colorado's smart grid deployment encountered a number of unforeseen difficulties which resulted in additional costs and significant resistance from customers. Xcel Energy went significantly over budget due to a lack of vendor integration and collaboration. Current Group was responsible for the fiber optic cable installation. The original estimate was drastically short and other project costs, such as diamond-tipped drill bits and granite removal, increased project costs from $15 million to more than $44 million.
Xcel Energy now encourages other utilities to perform a cost-benefit analysis and obtain a "Certificate of Public Convenience and Necessity," which would have created a more accurate budget and allowed the utility to cap costs as they were incurred. Currently, the community resists additional smart grid deployments and are not engaged or satisfied with the program.
Utilities have also experienced problems with realistic goal setting, for example, in setting customer recruitment expectations. Research is necessary to not only identify the number of customers that qualify for a new product or rate, but also the number of customers that are willing and able to implement it.
All goals must be specific, measurable, and realistic to adequately guide the organization. Many utilities utilize focus groups to understand customer concerns, determine effective marketing messages, and derive key benefits. Equipped with this information, utilities can set realistic recruitment expectations and program participation rates. Utilities should also pre-qualify proposed programs, utilizing the focus group's results to generate realistic expectations and avoid costly mistakes.
Realistic expectations must guide goal setting efforts. Goals give the utility a target and unite the entire organization toward a common thread. Goals also give the utility the ability to assess progress, incorporate education, and modify strategies to meet them. For example, reliability goals are only as effective as the equipment's ability to meet them. If the goals are set too high due to constraints, then they are impossible for the utility to meet without additional improvements.
Smart grid deployments have presented many lessons that can improve system efficiency and reliability, and increase profits for utilities. Customers are a key stakeholder and utilities should cultivate these relationships, as well as educate customers in ways that allow them to manage, control, and curb their energy consumption.
Utilities that focus on developing employee communication and customer service skills, implement employee training plans, and create interdepartmental management teams are best poised for successful deployments.
Proper planning is necessary to ease the transition to a smarter grid. Planning for interoperability and setting realistic expectations will keep the utility focused on maximizing benefits while minimizing problems.
Utilities that take note of these recommendations have the potential to avoid costly errors and expedite the benefits they receive from smart grid deployments.
About the Author
Jason Rodriguez spearheads strategy and market research projects for clients in the clean tech, renewable energy, smart grid, semiconductor, mobile device and IT industries. Rodriguez has led the development of significant industry reports on smart appliances, V2G, advanced metering infrastructure, demand response technology, consumer smart grid attitudes, private and public networks, electric vehicles and renewable energy for the smart grid. Rodriguez has served as an analyst for Pedernales Electric Cooperative Inc. and Verizon Wireless.