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Technology for the Masses

The consumer-centric smart grid and its challenge for regulators.

Fortnightly Magazine - October 2011

intricacies of their utility bills and consumption in order to make energy efficient choices, because the smart devices can be programmed to make the optimal choices. Smart apps are emerging that make it easy for customers to save money and energy without needing to become energy wonks.

The signs for this ideation are emerging. Appliance manufacturers are planning to follow manufacturers of printers, computers, and handheld communicators by adding IP addresses and communication features to such things as refrigerators, washers, dryers, space heating and cooling, hot water devices, thermostats, and more. Until recently there has simply been a shortage of available IP addresses. The Internet Protocol for IP addresses needed to identify communication origin and destination has been based on a 2 to the 32nd power definition. This limited the available worldwide IP addresses to 4.29 billion. This is probably enough if each adult person or family on the planet has one IP address. As developing nations grow economically and the number of devices grows, 4.29 billion IP addresses worldwide have become woefully insufficient. Plans to move to 2 to the 128th power IP address system are underway. This will yield connectivity for 5,440 billion, billion, billion, billion unique IP addresses. Virtually all energy-using devices can and will have a unique IP address. The improved communications and now-available software mean consumers can save money and energy without a full understanding of their utility bills and energy use.

The core strength of broadband, high-speed communications in a future with literally every energy-using device in a home or business having its own IP address is that the consumer would never need to understand or master the meaning of a kWh or BTU. Without this need, consumers who are concerned about the overall costs of their utility and other monthly bills can make choices with real-time cost saving and environmentally friendly consequences without advanced degrees or endless amounts of time committed to getting this right. Smart devices or meters could communicate with individual appliances. This would add value for utility consumers and change the way people make energy use decisions without requiring consumers to become particularly energy use savvy. These devices would permit real-time pricing, load control, and two-way communication.

Advanced smart meters aren’t necessarily tied to the so-called smart grid. Regardless, an obvious benefit of any smart meter is that such devices would achieve labor savings and other improvements through automatic meter reading (AMR). These meters can also be programmed or designed to do much more, particularly in terms of real-time pricing and direct load control.

Regulators and consumers very reasonably view regulated energy companies as having important and necessary qualities and energy related skills. In addition, regulated energy companies have the experience to help consumers select the technologies and commercial vendors that can help them achieve the promised energy enhancing services. Financing expenses associated with potentially more costly replacement units or renewable energy systems might also cause even well-intentioned consumers to under-invest in energy systems that are more efficient, renewable, or both. Regulated utilities might be more likely to overcome cost-of-money and long