(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
I Want My In-Home Display
Consumers await a revolutionary interface.
It’s a mid-summer evening and you’re just arriving home from work. You pull into your driveway, get out of your car and plug it in. You take a second to wipe the sweat from your brow. It’s hot out.
Inside, the first thing you notice is a blinking light on your in-home display. The grid has recognized that your car, which has been charging all day from the solar panels on the roof of your company’s garage, has a nearly full battery. Demand is high and your utility is offering to purchase that electricity for a premium price. You’re not going out that night, so you touch the screen to authorize the transaction. You note that your account is instantly credited.
You take a minute to scroll through the rest of your appliances. Your dishwasher ran at 4 a.m., when power was cheapest. After you went to work, the hot-water heater cycled off, just as you programmed it. At noon, as demand rose, the grid turned your thermostat up a few degrees per your price plan. It’s warm in the house, but not uncomfortably so. Still, you have dinner guests that evening, so you click to override. It might cost a few bucks extra, but the power you just sold from your car will offset the expense.
This scenario could become a reality in the not-too-distant future. In fact, most of the technology required already exists. Just how far we are from actual implementation, however, is another question.
The face of tomorrow’s utility might be the in-home display—a robust interface that provides real-time cost and consumption data, allowing consumers to maximize efficiency and make informed decisions on conservation. In-home displays also will allow retail utilities a much broader field for competition on price and products, and will open the gate for an entirely new generation of wireless-controlled appliances and controls.
This technology promises benefits for all stakeholders in the industry, but disincentives to innovation inherent in utility business models and the U.S. regulatory patchwork are making for slow progress.
“The analogy for the way things are today is the car without a fuel gauge,” says Ahmad Faruqui, a principal at consulting firm The Brattle Group. “Imagine going to the gas station and not knowing how much gas you’re putting in the tank, or how much it costs. Then at the end of the month you get a bill that says you pumped 100 gallons of gas and you owe $500. That’s where we are with electricity. There is no connection, no feedback between behavior and cost.”
With demand on the rise and sustainability concerns driving public policy, the need for that connection is obvious. What’s less apparent is who will fund the infrastructure upgrades needed to close the loop. Advanced-metering technology is the lynchpin of any meaningful consumer interface. But at about $300 a pop, hundreds of millions of smart meters represent a massive investment.
“Who pays for that?