Search Results for: smart grids

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Just where does Intel fit in the Smart Grid ecosystem?

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Intel Solar Installation Vietnam

When we think of smart grids, Intel is not the first name we think of.

This is a perception that Intel is anxious to change. The multinational chip manufacturer, which has seen its revenues drop in recent years, is looking for new markets for its products. The smart grid space with increasing billions being spent annually begins to look very attractive. And Intel’s place in it? Intel is positioning itself very much at the smart in the smart grid. The distributed compute and intelligence needed to power the smart grid.

One of the most important functions of an electricity grid is to precisely balance electricity supply from its various generators, to the demand from consumers. This is an increasingly complex task in a world where consumers are more and more becoming prosumers (producers and consumers). Utilities need transparency to forecast how much energy will be consumed, and where to help stabilise the energy flows, and the price of energy on the grid.

To achieve this transparency, particularly towards the edges of the network, chips like Intel’s Quark SoC will be important.

Intel isn’t relying on its silicon chops alone though. Speaking recently to Intel’s Hannes Schwaderer (Director of Energy and Industrial Applications for EMEA), Hannes was keen to point out the other strengths Intel brings to the table. Smart grids generate big data, and lots of it. Intel’s investments in Cloudera, and Mashery give Intel a big footprint in the big data and analytics spaces, according to Hannes.

And then there’s the old security chestnut. Apart from your health, no data is as personal, and so in need of privacy, as your energy information. Intel’s purchase of computer security company McAfee allows it to offer quite a unique combination of hardware (the chips), analytics, and security to its potential customers.

And while end consumers were never Intel’s customers in the PC world, similarly in the smart grid space utilities are not the end customer for Intels smart grid solutions. Rather expect to see Intel selling to the Schneider Electronics, the GE’s, the Siemens of this world.

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Logica and SAP in exclusive joint bid for UK Smart Meter data provisioning

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Smart meter

The UK has an interesting Smart Meter infrastructure model. Data from all the country’s Smart Meters will flow to a centralised data repository (called the DCC), from where, energy retailers will pull the data for billing purposes. The beauty of this system is that consumers dictate who has access to their data, and so switching energy providers, is not held up by data ownership issues.

The build-out of this system is still at very early stages with RFP’s expected towards the end of the year but SAP and Logica have come out of the blocks early with an announcement that they are going to put in a joint bid to become the data service provider for the DCC.

Logica and SAP are both heavily involved in the utilities sector in the UK, so it makes sense for them to bid for this – the interesting aspect is that they agreed to bid together and that their joint bid is exclusive.

The six main suppliers in the UK are all either involved in trials, or in the process of starting to trial smart meters. All six are using Logica’s head-end system for their trials, so if Logica and SAP win the bid, the transition to the DCC system should be relatively painless.

Talking to Tara McGeehan, Logica’s Head of Utilities UK on Monday, she said that the idea behind the bid was to move the debate away from technology and comms, onto the power of the data to affect things like micro-generation, energy efficiency and smart grids.

Having seen Centrica’s Smart Meter Analytics application, which runs on SAP’s HANA, earlier this year, the proposition that there is gold in them thar data, certainly rings true.

Photo credit Tom Raftery

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Centrica’s Smart Meter Analytics application could make energy management compelling

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As I have mentioned here previously, Smart Meters are going to bring a flood of data to utility companies which will need to be properly managed and which can be a source of intelligence for the utility, if they mine it well.

At the recent SAP Sapphire Now conference, UK Energy retailer Centrica showcased their Smart Meter Analytics application running on SAP’s HANA. HANA is SAP’s in-memory computing solution (In-memory computing moves data off traditional storage on servers and into RAM, providing a performance boost over having to read the data off disks).

Centrica are the largest single instance utility on an SAP system with 18 million residential accounts for and one million business accounts. Right now they are billing residential accounts every three months and they are managing 75 million meter reads per annum.

With the move to smart meters, Centrica will take electricity reads every 30 minutes and gas reads once per day. This means a shift from 75 million meter reads per annum to 120 billion meter reads a year. 120 billion – that’s billion with a b. That’s a phenomenal amount of data to have to deal with. Doing any kind of traditional analytics on a data set that large would very quickly get totally bogged down. One of the interesting things about HANA however is that the performance scales linearly with the hardware. If it’s starting to slow a bit with 120 billion meter reads, throw a couple of extra terabytes of ram and servers at it and hey presto you are back in business, or so the theory goes!

In the demo above, Centrica are using the analytics to examine their customer segmentation. They can look at the energy profile of similar businesses in a specific area and where there are anomalies, they can work with those businesses to help them cut their energy consumption until it is more in line with their peers. Increasing pressures to be energy-efficient and to reduce carbon footprints are being looked on by Centrica as an opportunity to open an energy services business, going to customers to help them to become more energy-efficient. The Smart Meter Analytics application is going to be crucial for this new practice within Centrica.

Centrica's Energy Efficiency Scorecard

Centrica's Energy Efficiency Scorecard

In the residential market the Smart Meter Analytics app presents householders with an Energy Efficiency Scorecard. This facilitates charting actual usage patterns against the various tariffs Centrica offers to find the optimal rate plan. The score card also allows home-owners to compare their energy efficiency with similar households in the same area.

This is an impressive use of Smart Meter analytics and it presents hugely useful information but to avoid a short MTKD (Mean Time To Kitchen Drawer – the time it takes for people to get bored with this app and metaphorically stuff it in the kitchen drawer), the scorecard has to keep homeowners engaged. There are several ways of doing this. One of main ones would be to bring in some gamification – make a game of it. The Scorecard could set energy reduction targets for people to meet in the next set period, allot points or awards for achieving reduction targets, build social media in for sharing achievements and put up a leaderboard to add some real competition to the game.

Energy management applications to-date have suffered from the fact that they were working with estimated data a lot of the time, from lack of a significant networked dataset and from a lack of a usable analytics engine. Large energy retailers, like Centrica, have the opportunity now to change that and to make energy management in the home compelling. Let’s hope they make it so.

Disclosure – SAP paid my travel and expenses to attend Sapphire Now.

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If Utilities don’t step up their customer communications, they risk their considerable smart grid investments

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Smart meter

Smart grids don’t come cheap.

They are typically projects costing in the order of hundreds of millions of dollars (or Euro’s, or pounds or whatever your currency of choice). Just think, the most fundamental piece of the smart grid, the smart meter, alone costs in the order of $100. When you factor in the costs of installation, etc., you are looking at over $200 per smart meter. Therefore if you have in the order of one million customers it’s going to cost you around $200m just for the smart meter rollout.

Given that they are so costly to implement, you’d think utility companies would do everything possible to protect these projects from failure – not so, according to the latest smart grid research from Oracle.

The report from Oracle surveyed 150 North American C-level utility executives about their vision and priorities for smart grids over the next ten years. The findings are both interesting and disturbing.

It is interesting but not too surprising for example, that when asked to select their top two smart grid priorities over the next 10 years, they chose improving service reliability (45%) and implementing smart metering (41%) at the top of the list.

What is worrying though is that while 71% of utilities say securing customer buy-in is key to successful smart grid roll-outs, only 43% say they are educating their customers on the value proposition of smart grids. This is hugely problematic because, as I have written about previously, customer push-back can go a long way to de-railing smart grid projects.

And those who are educating their customers, how are they doing it?

Well, from the report, to communicate with their customers 76% of utilities use postal communications, and 72% use their own website. Only 20% use social media (and who knows how well those 20% are using their social media channels).

Tellingly, the report also mentions that only 38% of utility customers take advantage of energy conservation programs when they are made available. There are a number of reasons for this:

  1. the savings from these programs often require work on the part of the customer for no immediately visible benefit
  2. the savings are typically small (or put another way, energy is still too cheap) and
  3. Because of the extremely poor job utility companies have done on communications to-date, their customers don’t trust them, or their motivations. There is no quick fix for this. It will take time and a significant improvement in how utility companies converse with their customers before they start to be trusted

I have written lots of times over the years about the need for utilities to improve their communications.

Utilities have a lot of work to do rolling out their smart grids – but if they don’t step up their customer communications, they risk their considerable smart grid investments.

Photo credit Tom Raftery

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HomeCamp 3 – hacking for smart homes, smart energy, and free beer

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We had big plans for HomeCamp in 2010, but facts seem to have got in the way. What with Chris joining CurrentCost, and my wife and I having a second child- we didn’t have as much time to apply to the event as it deserved, or the community for that matter. Which is why I am very pleased to announce that we will be homecamping in London on December 13th from 4pm onwards.

We have some great presentations planned, from the likes of AMEE, and IBM.

That’s right. IBM in the home? Surely some mistake? Not so- Andy Piper will be coming along to tell us more about how hackers are using lightweight messaging technology from IBM in all sorts of sustainability/home hacking apps. Given I had my doubts IBM would really go after a pervasive, volume market, led by developers, I am really looking forward to this one…Dave Bartlett from IBM likes to say A Smarter Planet begins with A Smarter Building. Well, perhaps sustainability begins at home. Maybe Andy can tell us how a Smarter Planet begins with a Smarter Home.

But more importantly than great speakers is a nice venue to hang out, catch up on all things homecampy, and drink some beers. Extra special thanks to one of the stalwarts of the homecamp community- Mike Beardmore – for sorting out the venue.

So if you’re interested in home automation protocols and standards, demand response, energy management, the future of smart grids, the role of hackers and alpha geeks as leading indicators for emerging markets, and so on, then HomeCamp is the place to come – you can sign up here. We’d love to see you.

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Smart Grid Technology conference

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Trust

Photo credit TerryJohnston

I attended the Smart Grid Technology conference in London last week and there were a number of interesting themes which became apparent.

The main theme to emerge was the question of how utilities could engage the residential customer. This is good news – the first step on the road to recovery is acknowledging that you have a problem!

The other two discussion points which came to the fore were 1) that energy is too cheap for small price shifts to incentivise behavioural change and 2) what to do with all the data arising from smart meter roll-outs (the prevailing opinion was that data from smart meters should be used for billing purposes only because that there was far too much data to be of any practical use!). I’ll talk about these in other posts.

The question of how to engage customers is a new one for utilities. Remember, this is an industry that refers to its customers as ‘load points’ or ‘rate payers’! Traditionally, the only time utilities interact with customers is to send a bill, to disconnect, or when the customer calls to enquire why their power is out. Not the most positive of communications, I’m sure you’ll agree! Consequently consumer attitudes to utilities vary from outright distrust to, at the very best, indifference.

How to change this?

Well, any councillor will tell you the best way to fix a relationship is through increased communication. Utilities need to really step up their game when it comes to communicating with their customers. This needs to be done using a combination of updating traditional communications, targeted, viral social media campaigns and good old-fashioned outreach. And this needs to be an ongoing, sustained two-way communication, not once-off and not not one-way.

It is only by building an ongoing conversation with their clients that utilities can build the necessary trust to engage customers in smart grids.

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Smart Grid Heavy Hitters – Dr Ann Cavoukian, Information and Privacy Commissioner of Ontario, Canada

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I recently had an opportunity to interview Dr Ann Cavoukian, the Information and Privacy Commissioner for Ontario, Canada about Smart Grid data privacy. Commissioner Cavoukian has written and presented extensively about Smart Grid privacy. She is also the author of a white paper on Smart Grid privacy called SmartPrivacy for the Smart Grid and Dr. Cavoukian partnered with two major utilities to develop a practical roadmap for utilities to achieve the gold standard in data protection (Privacy by Design: Achieving the Gold Standard in Data Protection for the Smart Grid).

Here is the full transcription of our chat:

Tom Raftery: Hi everyone, and welcome to the Smart Grid Heavy Hitter Series. My guest on the program, today, is Commissioner Ann Cavoukian, the Information and Privacy Commissioner for Ontario. Commissioner, I?m curious, why is the Information and Privacy Commissioner of Ontario concerned about Smart Grids?

Commissioner Cavoukian: Well, I always say that in order to protect the privacy of the citizens of Ontario, I have to protect the privacy of people anywhere in the world. Privacy knows no bounds and technology transcends jurisdiction. So, whatever new technologies arise that have privacy implications, we need to get right in there and ensure as much as we can that protections are built into, especially, new technologies and new developments like the smart grid. The ideal opportunity to protect privacy is at the outset and ideally embed privacy into the design of new technologies like the smart grid.

Tom Raftery: Why is there a concern at all about privacy and smart grids? What?s the danger?

Commissioner Cavoukian: Anytime that there?s the possibility of collecting personally identifiable information either directly or through some data linkage to it, privacy enters into the equation.

So, with the smart grid you start with smart meters. And I should tell you that here in Toronto, Ontario we are leading in the smart grid, smart meter applications. By the end of this year, all houses in Toronto will have smart grids and in Ontario by the end of 2012. So, it?s widespread application.

Now, what smart girds enable the utility to do is to on a real time basis go in to your home and give you a very clear indication of your electricity usage, which is very good because it will promote energy consumption reduction, and a number of other programs – this is all very positive. As long as the information is kept between the electrical utility and the consumer, there?s no issue. It?s no different than now so to speak.

However, with the possibility of third parties being interested in this information, the possibility of unauthorized data usage of this information there?s link to an identifiable individual and with the growth of smart appliances – your computer, your television, your refrigerator; everything is going to be telling you and telling the utility what you?re doing, when you?re doing at, at what times – this introduces a whole new element of potential profiling of a consumer?s activities within the household, which is after all your castle, right? Your home is sacrosanct.

No one has been able to peer into the activities within the home before now. They?ll be able to do that. So, we have to ensure that this information is protected like Fort Knox.

Tom Raftery: How widespread are the concerns? How many people are aware that this is an issue and how are people trying to deal with that issue?

Commissioner Cavoukian: And you are absolutely right. About a year, a year-and-a-half ago I did an article. And I call privacy the sleeper issue of the smart grid; because certainly last year not a lot of activity associated with this area, but I can tell you that in the past year the interest has grown dramatically.

In Canada, we have jurisdiction over electrical utilities. So, I?ve been working with Hydro One, here, in Ontario, Canada and Toronto Hydro and they not only understand the issues, of course, they?re regulated. I oversee complaints with these two utilities; however, I want to tell people – don?t rely on regulation.

I want to exceed regulation. I want appeal to electrical utilities that in order for the smart grid to work you need consumers to sign up and to become involved, you need to build trust and consumer confidence.

The way you do that is by ensuring that they know what you?re doing as an utility, they know what information you have from them, and most important, you are not going to disclose this information, you?re not going to share it with any third parties without their consent – this is big.

So, my appeal to utilities, and I?ve been working with utilities throughout North America and the US Smart Grid Alliance. I?m an active member there.

My pitch to them, is do this because it?s good for your utility, because you want to get the buy-in of consumers, you want to get their cooperation, you must have their trust, you must have their confidence.

So, by embedding privacy into the design of the smart grid you will be able to grow your smart grid in a way that attracts more consumers to it and that?s the win-win proposition of this.

Tom Raftery: It?s great that you?re telling utilities this. What are they actually doing? Are they taking what you say on board, are they saying, ?Oh! Commissioner, Cavoukian is a nut case and we?ll just put her concerns to one side,? or are there a range of reactions?

Commissioner Cavoukian: Well, I am sure it is some of them think I am a nut case, I give you that, but I think the majority the ones who have reached out to us have been actually quite positive about our approach.

They?ve actually given me a complement and they?ve said, ?You?re not like most regulators we know.? And I take that as a complement, because once there?s — my message to utilities and to everyone is do a positive-sum paradigm not a zero-sum paradigm.

By that, I mean, I definitely want you always to protect the privacy. I don?t care if you?re the private sector, the public sector. If you?re doing individual?s personally identifiable information you must protect that information.

However, I don?t say protected to the exclusion of your own interests, your business interests. You have a business model, it has to survive, and hopefully strive. In this case, with the smart gird electrical utilities want to grow this in an effort to promote conservation of energy, grow green programs, reduce reduction, consumption of energy, empowering your users your users. We are all for that; so we?re not doing this — we?re not saying protect the privacy to the exclusion of those interests, not at all.

We?re saying you can do both. We show you how to do both by embedding privacy into the design of the smart grid, and I should tell you it?s at the ideal time. This is the time to do it when you?re at the nascent stage. It?s at it?s infancy, the smart grid development, starting with the smart meters and I?m not giving you a pie in the sky. I?m telling you how to do it in a very defined way. We?ve worked with Hydro One, for example, and Toronto Hydro.

We have two papers that we?ve produced that are available on our website. This one, the latest one with Hydro One is called, ?Achieving the Gold Standard in Data Protection for the Smart Grid?.

So, we?re trying to get people to reach for the sky on this in terms of doing it now, embed privacy, and we tell you how to do it. This is best practices on exactly how to do it and we do it in partnership with an electrical utility. So, we give you the road map on how to do this and also respect privacy and enhance your business interests, positive-sum win-win.

Tom Raftery: Commissioner, we?re running low on time, so one final question. Is there anything about privacy on smart grids that I haven?t asked you that you would like to address?

Commissioner Cavoukian: Just one final point for the people listening to this. I would like them to view the smart grid and how to protect information in a way that is not the usual ?who owns the data?. The question of ownership often comes up and I?m going to suggest to you that?s the wrong language to frame this in.

When you talk about privacy and personally identifiable information, data protection you use the language sort of bundles of rights associated with that information. It?s the language of custody and control of the information as opposed to ownership; because it?ll be easy for the utility to say, ?You know, it?s our data, we collect it, and then you get mired into this whole legalese about who owns the data. It?s not one of ownership.

Of course, the utility is collecting the data, they?re providing a service to consumers, and there?s an exchange of information. I think it?s better to talk about what obligations and duties are associated with that.

So, for a utility, who has custody and control over the data they also have a duty of care and obligations with respect to protecting that data, they have a duty of care, confidentiality, and ensuring that the consumer not only knows what you?re doing. So, you?re transparent with respect to your practices, but they have access to their own data and ideally they have full ability to say no, no third party use of its data unless I consent to it.

That?s the Gold Standard and that?s what I?m hoping that, that language will be embraced in this area.

Tom Raftery: Commissioner, thanks a million for coming on the show.

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GE’s U.S. Consumer Impressions of the Smart Grid survey

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Results of GE Smart Grid consumer survey

GE published a U.S. Consumer Impressions of the Smart Grid [pdf] survey* recently.

I spoke to the general manager of Metering and Sensing Systems for GE?s Digital Energy business, Luke Clemente about the survey and he told me that the main points of the survey were:

  • 96% of Americans who are familiar with the smart grid are overwhelmingly positive about the technology and what it will do for the country
  • while only 2% thought that smart grid was not a smart investment by utilities and/or consumers
  • 80% of U.S. consumers are excited about upgrading the electrical network with smart grid so that their country can rely more on clean domestic energy sources
  • 78% think that the smart grid would help reduce the number of power outages and restore power more quickly when outages do occur
  • 74% understand that the smart grid will give them the info they need to make better decisions about electricity usage
  • 72% think the smart grid will help them save money on their monthly bills
  • 63% believe the smart grid will create new jobs in the energy sector
  • 66% agree they would buy smart appliances and other in-home devices to maximize their control over energy once smart grid rolls out in their community

In our follow-up conversation Luke said

One of the awareness issues which needs to be driven, is that it does cost more to generate electricity at two o’clock in the afternoon than it does at 2am. To the extent that we can shift our use of energy to less intensive times, that will end up driving better utilisation of the grid and better economics

Luke went on to mention the Department of Energy’s year-long study which showed that consumers, when given information on their electricity consumption, reduced their bills by 10% and reduced peak demand by 15%.

There are three crucial points here –
consumers have quite a positive attitude to Smart Grids
consumers will adjust their behaviour when given information related to their energy use and
that response is good for the grid (and by extension, for its users).

We have seen some instances where utilities failure to communicate effectively with their customers has led to blowback against Smart Meter and Smart Grid projects.

However, as this survey shows, overall consumer sentiment to Smart Grids is positive. Utility companies need to beware that they don’t squander this goodwill – right now it is theirs to lose.

You should follow me on twitter here.

* The survey was conducted in March 2010 by StrategyOne among a census representative sample of 1,000 U.S. consumers via telephone. The margin of error for the sample of U.S. consumers (n=1,000) is + 3.1% at the 95% level of confidence.

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Can Arqiva provide the Smart Grid communications infrastructure for Britain?

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Communications Mast

Photo credit Lee Jordan

We had a really interesting Smart Grid related conversation with a company called Arqiva the other day.

I hadn’t heard of Arqiva before but they are quite a significant player in communications infrastructure. They own or have exclusive marketing rights for 16,000 communication masts in UK – what they call vertical real-estate! They also own, operate and maintain all of the UK’s terrestrial television network as a regulated monopoly. And they are responsible for rolling out the switch-over from analog to digital broadcasting for the country.

If that weren’t enough Arqiva are Europe’s largest provider of satellite linkage services!

All very well I hear you say, but what does this have to do with Smart Grids?

Well, Arqiva have a fascinating proposition. They are expecting Ofgem (the regulator for the electricity and gas markets in Great Britain) to announce some kind of central procurement for a Great Britain-wide network and if that occurs, Arqiva would be in a very strong position to bid for it.

They have dedicated UHF spectrum (412 MHz) and a nationwide mast footprint already capable of reaching 100% of the homes in the country. A significant advantage of the dedicated long range spectrum (apart from the lack of contention) is that it will have no problem reaching into houses where meters can be located under stairs or in basements, for example. Cellular networks don’t have the same luxury and are more plagued with health concerns around the transmissions from their masts.

Having a single provider of the communications infrastructure for smart grids is a very appealing proposition – especially if it has regulated returns and contestable pricing which you would expect in a system like this.

Arqiva announced [PDF] just the other day that nPower is joining Arqiva’s Smart Grid proof-of-concept network which covers 80 square kilometres around Reading. nPower are a significant utility with around 6.5 million residential gas and electricity accounts throughout the UK. This will allow Arqiva to test smart gas as well as smart electricity meters and they ultimately want to include smart water meters in their network as well.

Arqiva say they have thought about security as well (which is just as well seeing as a single communications network for electricity, gas and water makes for an extremely attractive strategic target). They are using encrypted communications over licensed spectrum, and are operating a closed system so that should help but security is a constant battle so it is one they will need to stay on top of.

If Arqiva manages to roll this out successfully in the UK, this will leave them in a very strong position to reproduce this model in other countries.

You should follow me on twitter here.

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Understanding the Smart Grid – my TreeHugger interview

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Interview

Photo credit Lee Jordan
Jaymi Heimbuch contacted me recently to ask if I’d agree to be interviewed for a TreeHugger article she was planning to write on Smart Grids. “Love to”, I said.

Jaymi sent on the questions, I replied and today she posted the interview on TreeHugger.

Here are the questions and my answers:

TH: What’s the biggest barrier with smart grids right now? Is it utilities not latching on? Is the technology too new? Is it that not enough people understand what it is?

There are multiple barriers to complete smart grid roll-outs at the moment. The biggest one, as far as I can see is money!

The smart meter roll-out alone costs in the order of $150 per household just for the device. Then there is the installation engineer on top of that. And the software to back it up. In terms of the software, remember that presently utilities take maybe one meter reading a month. When they start taking readings from smart meters they will be taking up to 2880 per 30-day month when they are taking 15 minute readings (or 720 for hourly readings). If they have 1 million customers they go from 1m meter readings a month to 720m per month (or 2,880m). That’s a massive jump in the amount of incoming data which needs to be stored, queried for billing, and held for however long.

A lot of the software to handle this is still being developed and utilities, being very conservative, don’t want to be guinea pigs. And newer technologies tend to have a price premium.

Circling back to the price for the utilities. If they have 1 million customers, they are looking at spending hundreds of millions on the smart grid roll-out (smart meters, communications infrastructure for smart meters, back-end database for data, back-office apps for using the data – customer care, billing, etc.).

One of the big deals about smart grids is that it will help us reduce our consumption – from the utilities perspective, they should invest these large sums of money so we can reduce the amount we purchase from them? You can start to see the difficulties.

TH: What’s the most apparent way a smart grid will change the average person’s daily life? What about the most important way?

You know, the best way a smart grid could change the average person’s life is ‘not a jot’ – apart from reduced utility bills.

Utilities are talking up demand response programs and how they will be able to come into your house or apartment and turn down your air conditioner (for example) at times when supply is short and demand is high. This is a top-down approach destined to piss off customers and will in no way get buy-in from a skeptical public.

Far preferable would be some kind of automated demand response, completely controlled by the consumer, so far example as a homeowner I’d set my dishwasher at 8 PM to come on at 5c per kWh or 5 AM, whichever comes first. As long as the dishes are done by 7 AM, I’m happy. Similarly with other devices. Plenty of loads in the home are movable. You don’t care when your hot water is heated, as long as it is hot when you need it hot. A well lagged (insulated) boiler would mean you could heat it when electricity is cheap, and then use it whenever.

By the way, totally counter-intuitive but cheaper electricity has a higher renewable percentage so actively selecting for cheaper electricity means you are actively selecting for electricity with a higher percentage of renewables in the mix. How does this work?

Well, electricity prices on the wholesale market are very volatile. Consumers are protected from this but electricity prices can fluctuate by orders of magnitude within a 24-hour period. Price is set by good old supply and demand. Demand fluctuates according to day of week, time of day and by season. As the price drops on the wholesale market, it becomes less attractive for more expensive generators (the ones with start-up costs for their generation – the fossil fuel burners, for example) to stay selling in so they drop out. The renewables, on the other hand, are price takers. They don’t have significant start-up costs for generation so they stay in the market no matter what price they get. So, as the price drops, more and more fossil fuel generators drop out and the percentage of renewables in the mix increases!

TH: Other than this change in demand and timing, how will the smart grid help us incorporate renewables into the grid?

Utilities are used to dealing with a situation where their generation (gas coal, oil) is steady and predictable in its output and their customers’ demand is unsteady but generally predictable (demand tomorrow = demand this day last year +1-2%, say).

For various reasons utilities are having to move to a situation where they need to incorporate more renewables into their mix. Renewables generation is not steady and is only slightly predictable (via weather forecasts, for example). Because electricity has to be used as it is generated (can’t be stored, generally), the more unstable the generation, the more unstable the grid.

How can you fix this? Well, one way would be to align the demand with the supply.

How do you do that? Well, as supply and demand shift, they affect price on the wholesale market. So, if you expose people to the real price, they will modify their behaviour to select for when price is lowest (when electricity is in lower demand (or when their is a higher percentage of renewables as I mentioned earlier)). This is demand response.

Now, however you do it, if you roll out a demand response program, you are aligning demand with supply. The more you do that, the more stable you make the grid. The more stable the grid, the more renewables that can be added to it.

TH: Many people in the US are concerned with information privacy – they want to own their energy usage data and don’t want utilities handing it over to governments and third parties. What are some of the steps both businesses and people can take to appease people’s concerns?

Let me tell you, people in the EU are far more sensitive to data privacy issues that in the US! Honestly, on this question, I’m not sure there is a good answer though.

Consider your mobile phone. It is a tracking device. As long as it is on, it knows where you are 24×7 (and tells your mobile provider). Mobile phone records have been used to both exonerate and help convict people in recent years.

Now consider people working in the call center of your mobile phone company. How much are they paid per annum? If I offer to slip one of them $2k do you think I could have access to your movements for the last 6 months? Similarly for your energy consumption data soon.

The best way to protect against this is legislation. Legislate to keep data private and have very heavy fines for the utilities (and mobile phone co.s) for breaches. This will incent them to put processes in place to track inappropriate accesses to people’s data (and disable export functions, etc.).

TH: What’s your favorite saying about the smart grid, or a quote or insight that you always remember?

I spoke to Dr Monika Sturm a couple of years back. Monika is director of Siemens Center of Competency for smart meters – their research and development facility. She told me that the output from smart meters is extremely granular. So much so, that it is possible to look at the output of smart meters and identify all the devices which make up the reading. So by looking at the output from my smart meter, it would be possible to see that I have a 2008 Philips 37″ LCD TV, and a 2006 Indesit BHZ model fridge and a …. You get the idea.

This plays back to the privacy question you asked earlier but it also offers an alternative revenue option for utilities who are looking at people reducing their consumption. It goes something like this:

I get an email from my utility saying

“Dear Tom,
we notice that you have an Indesit BHZ fridge. This is currently costing you ?25 per month to run. We have a newer, more energy efficient model on special this month for ?10 per month. It will cost you roughly ?10 per month to operate so overall you will save ?5 per month if you avail of this offer.

If you sign up, by simply replying to this email, we will have our partner install the fridge by the end of the week and we can take away your old fridge for you, for no extra charge.”

Or similar.

TH: Anything you want TH readers to be sure to know about?

The problems associated with smart meters in places like Bakersfield were entirely predictable. [Editor’s note: Bakersfield residents felt the new smart meters from Pacific Gas & Electric led to inflated energy bills. It resulted in a lawsuit.] Utilities are not used to communicating with their customers. They do so only when it is time to send the monthly bill. With the advent of smart grids, utilities will need to be in far closer communication with their customers. If people’s consumption is approaching a threshold which could push them into a higher band, send them a text/email/IM/Tweet/all of the above (or whatever the customers preferred method of communication is) to let them know. If the customer’s consumption is lowest in their block/zipcode/subdivision/whatever, let them know, etc.

Communications is not something utilities have not traditionally needed to invest any time in. However as Bakersfield has shown, it will be a vital skill for utilities in the future, especially as the markets open up and people have a choice of who to buy their electricity from.

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