(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Smart Grid: A Customer Challenge
Consumers hold the key to technology’s benefits.
customers behave just like consumers would if they purchased food at the grocery store without knowing any of the prices. Consider how after making multiple trips to the store they get a bill finally at the end of the month. Do you suppose the bill would look different if the prices were known at the time the purchases were made? It’s the same thing for electricity—smart grid will help customers know the price of electricity when they consume it, which should make consumption patterns quite different.”
This is why Forbes reporter Andy Greenberg wrote, “The smart-metering movement slowly rolling out across the country’s utility systems doesn’t merely represent an invisible upgrade to America’s power supply, it also aims at a more ambitious transformation: changing passive power customers into active participants in energy savings.” 2 Smart-grid related load (and energy) reduction can be achieved through either curtailment ( e.g., thermostat set-back on space- or water-heating devices) or efficiency strategies (replacing an electric furnace and air conditioning with a heat pump). 3 But to fulfill one of its key promises, the smart grid will need to achieve both load reductions and shifting.
So the fundamental challenge is to build a common, though very different, understanding of what is consumed and the importance of when an electrical device is operated. Many utilities have started the process through Web sites that upload consumption information to allow households (and energy advisers) to more easily identify peak periods of use. The best programs, like the one run by the Sacramento Municipal Utility District (SMUD), also include information on how an individual’s consumption compares to the neighbors’ usages. 4
But programs like this still fail to build an adequate level of understanding required to make the smart grid a success. They are inadequate because they don’t really illuminate the two primary components that drive use: installed consumption capacity, i.e., appliance wattage ratings, and key household characteristics, such as the age of occupants, their income and (for those with electric space heat) their thermostat settings. 5 The next step required is to provide kW and kWh modeling tools to build a better understanding of how installed devices and behavioral factors influences energy and peak use. These tools also will help customer-service representatives to better advise consumers on strategies for reducing their system impacts and bills.
Influencing Residential Adoption
Typically overlooked during discussions of potential smart-grid benefits, is how presumed adoption rates will be achieved and sustained. Since the characteristics of the earliest adopters likely will be very different from others, achievements in early experiments and analyses probably aren’t predictive.
All indications are that adoption rates of conservation behavior are slow. For example, a 2005 survey by the Department of Energy’s Energy Information Administration found that only one third of Americans own programmable thermostats and “less than a fifth use them to change their homes’ temperature during the day, even though half of Americans leave their houses empty from morning until evening.” 6 If we are going to do better at influencing consumer behavior, the studies and theories concerning