By John McDonald, David Malkin & Elizabeth McCoy

With all the talk about “killer apps” and “game changers,” the casual observer could easily be led to believe that the smart grid is just one technological breakthrough away from becoming an overnight reality. But the more likely scenario is one in which the smart grid evolves over time, with early deployments informing both utilities’ business cases and state regulators’ prudence reviews.

Nowhere will the smart grid evolution be more measured than with the consumer. Just over a year ago, Frederick Butler – a former commissioner on the New Jersey Board of Public Utilities and Chairman of the National Association of Regulatory Utility Commissioners – warned audiences “not [to] put the cart before the horse.” He was referring to the need to get consumers on board with the smart grid vision before aggressively deploying customer-facing technologies. His caution is understandable: Residential consumers in the U.S. have long been accustomed to electricity that is always available, at the same low price, regardless of the variable costs involved in generating and delivering that power at different times of the day. Demand response – a change in electricity usage in response to a price signal or other type of signal from the utility – represents a significant departure from business-as-usual for both utilities and their customers. But it also serves as an important vehicle for bringing the smart grid into the home.

To be sure, demand response has already proven its value to utilities as a tool for maintaining reliability and lowering system costs. At the height of this summer’s heat wave, Consolidated Edison used a basic demand response technology – programmable controllable thermostats (PCT) – to prevent rolling blackouts in New York City. The PCTs allowed Con Ed to remotely cycle on and off the air conditioners of 20,000 participating customers, who received a one-time payment for enrolling in this program.

Yet despite the benefits to both utilities and consumers, demand response remains a vastly underutilized resource. According to the Federal Energy Regulatory Commission, only 25% of available demand response is utilized. As utilities and regulators explore how best to get customers engaged in better managing their electricity usage, technology and policy will emerge as the critical enablers of this transition.

Early results are encouraging

While utilities have a long history of calling on consumers to reduce demand at critical times, the vast majority of this experience is with large commercial and industrial customers. The smart grid offers the promise of bringing residential consumers into the fold by providing them with access to energy usage data and variable rate structures.

Early results suggest that residential consumers will change their consumption patterns in response to real-time feedback on electricity usage. Real-time, or “direct,” feedback is typically provided by an in-home display that communicates with a consumer’s smart meter as part of a larger advanced metering infrastructure (AMI). In a 2009 survey of North American pilot projects, Ahmad Faruqui of the Brattle Group found that consumers reduced their usage from 3% to 18% in response to direct feedback from an in-home display. Another recent report by the American Council for an Energy-Efficient Economy found that real-time usage feedback resulted in average energy savings of 9% across surveyed programs. As utilities proceed with scheduled AMI deployments, additional consumers will have the opportunity to participate in demand response programs through the use of in-home displays.

Variable rates can serve as another tool for encouraging residential consumers to participate in demand response programs. Whether through critical peak pricing or time-of-use rates, the basic objective is the same: to encourage consumers to shift or curtail usage via a price signal. In a separate 2009 study of residential dynamic pricing programs, Faraqui and Sanem Sergici found that critical peak pricing led to a drop in peak demand of 13% to 20%. Shifting usage to less expensive off-peak hours can yield substantial savings for residential consumers. According to Navigant Consulting, participants in Ameren Illinois Utilities’ Power Smart Pricing saved an average of $305 per year (annualized) by signing up for dynamic rates.

While these early results provide the smart grid community with reason for optimism, perhaps an even more encouraging development can be found in the results of several recent consumer surveys. In a March 2010 survey of 1000 customers, GE found that 66% of consumers who are familiar with the term “smart grid” would be willing to buy in-home displays and other technologies that would enable their participation in smart grid programs such as demand response. Meanwhile, a separate survey by market research firm Frost & Sullivan found that 60% of respondents would change their electricity usage to save money.

As these results suggest, broad consumer participation in demand response is possible – perhaps even probable – but first, we must do better at publicizing the benefits to consumers, and second, we must get the right technologies and policies in place, including those to ensure the protection of consumers’ privacy.

Consumer technology is rapidly evolving

Consumer-facing devices have rapidly evolved to take advantage of the new functionalities inherent in today’s smart grid technologies. While early digital meters were designed to simply automate the routine collection of billing data, current state-of-the-art smart meters provide a wide range of capabilities, including near-real time data feeds, dynamic price signals, remote connect/disconnect, outage notifications and power quality monitoring. And so it goes with consumer-facing technologies.

Early energy monitoring devices – including those used in many of the studies referenced above – often consisted of nothing more than a device that attaches to the home’s meter or circuit breaker and transmits usage information to a display inside the customer’s home. Even more basic technologies include a multi-colored orb device that plugs into a consumer’s outlet and receives wireless commands to change colors when a utility calls a critical or peak event.

Recent advances in consumer-facing devices are designed to take full advantage of current AMI and smart meter functionalities. For example, the GE Nucleus* home energy manager is designed to receive and store real-time data feeds from the smart meter, gather information from digital thermostats and smart appliances, and display that data in an easy-to-read, easy-to-manage format on the consumer’s PC. And for those consumers on variable rate programs, GE Nucleus can track changes in electricity prices to enable users to shift consumption to less expensive times.

As GE and other market entrants look for new energy management technologies with broad consumer appeal, we should heed the advice of Energy Secretary Steven Chu: “[the use of these devices] needs to be as easy and automatic as possible.”

Policy will play a critical role

While technology will make broad consumer participation in the smart grid possible, policy is needed to turn this vision into a reality. Specifically, policy can address the critical issues of data availability, electricity pricing, consumer education and data privacy.

Policymakers and regulators can take the lead in ensuring that consumers have access to timely and useful energy information, a necessary condition for participation in the smart grid. Although modern smart meters have the capability to collect and transmit detailed usage data, these features are not always activated and utilities do not always make this information available to consumers. In recent months, several states have taken steps to address these gaps in data availability. For example, California state regulators issued a December 2009 order requiring the state’s investor-owned utilities to provide those consumers served by a smart meter with access to usage data on a real-time or near-real-time basis by the end of 2011.

While California has emerged as a leader among the states, the federal government is also taking steps to ensure consumers’ access to timely and useful data. Earlier this year, companion bills were introduced in the House and Senate to establish national standards for consumers’ access to usage data collected by the utility, as well as the near-real-time usage data that comes directly from the meter. Termed the “Electric Consumer Right to Know Act,” these bills serve as an important example of how federal lawmakers and state regulators can work together to support consumers’ adoption of smart grid technologies.

On the issue of pricing, the smart grid holds great promise in allowing utilities to offer residential dynamic pricing as a means to incent consumers to shift demand to less expensive off-peak periods. Outside of utility pilot programs, however, currently less than 50,000 residential customers participate in variable rate programs. Low participation numbers are explained, in part, by the absence of AMI in many areas. But an equally important reason is that many state regulators and legislators worry about a backlash among consumers who believe that variable rates will result in higher electric bills.

Given the evidence presented above, however, consumers with in-home displays should welcome variable rates as a means to potentially save money on their electric bills. As such, state regulators and legislators should remove restrictions on variable rates and mandate that utilities offer such tariffs on an “opt-in” basis for customers.

Policymakers and regulators can also play a key role in educating consumers on the potential benefits from participating in demand response programs. At the national level, FERC recently released its National Action Plan on Demand Response. One of the stated goals of this plan is to “provide broad-based customer education and support through coordinated national and local action.” Meanwhile, organizations such as the Smart Grid Consumer Collaborative – of which GE is a founding member – are gathering data to support regulators and other important stakeholders in their efforts to educate consumers on the benefits of the smart grid and demand response.

Lastly, policymakers have an obligation to address privacy concerns associated with consumers’ participation in the smart grid. Whereas AMI and in-home displays can collect vast amount of data to support consumers’ decisions around energy usage, there are concerns that this data can also potentially pose a threat to the privacy of those consumers. Policymakers at both the federal and state levels are already taking steps to address these concerns. For example, in the House version of the “Consumer Right to Know Act,” legislators explicitly prohibit utilities from disclosing customer data to third parties unless a utility first receives written consent from the customer. Similar efforts are underway at the state level; during NARUC’s 2010 summer committee meeting, regulators approved a resolution “recognize[ing] the need to provide consumers with protections that ensure the privacy of customer information.” Taken together, these efforts can ease consumers’ privacy concerns and increase their willingness to participate in smart grid programs.

Toward a cleaner future

The smart grid offers utilities a wide range of tools to improve grid performance and mitigate the environmental impacts from power generation. But if utilities are to fully realize these benefits, then a concerted effort must be made to bring the smart grid into the home. Demand response can serve as the vehicle for doing so, and results from early deployments suggest that consumers stand to benefit just as much as utilities do. And with the right technologies and policies in place, consumers can play a key role in meeting our country’s future energy needs.

John D. McDonald, P.E., is an IEEE Fellow and is the General Manager of Marketing for GE Energy T&D. He is also a member of IEC Technical Committee (TC) 57 and Working Groups (WGs) 3 and 10, the VP of Technical Activities for the US National Committee (USNC) of CIGRE, and the past chair of the IEEE PES Substations Committee. David Malkin and Elizabeth McCoy are colleagues of Mr. McDonald at GE Energy T&D.

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*Nucleus is a trademark of General Electric Co.; the application to register Nucleus with the United States Office of Patents and Trademarks was filed July 2010 and is pending registration.

By Andrew Nusca | May 28, 2010

Microsoft says its Hohm website will help you understand the energy consumption of your home.

(Get it? “Hohm”?)

But what’s the business model? What’s in it for Microsoft — and how will this really help the smart grid?

I spoke with Hohm project manager Troy Batterberry about how the Redmond, Wash.-based company’s new site is like Mint.com for home energy consumption — and why underneath it all, it’s really the seed of a new cloud computing platform.

SP: How did you get involved in Hohm?

TB: I’ve been with the company 13 years, and 10 years ago, I went off, got married and took a sabbatical honeymoon with my wife to Mt. Everest. Literally on the mountain, I had a professional midlife crisis.

Previously, I had been spending a lot of time on entertainment technologies, and prior to that I was doing weapons research. When I came back to Redmond and told them I wanted to do something different, they came back and suggested the coming energy crisis.

To bottom line it all, that was the genesis for how Microsoft Hohm was born three years ago. If you look back, the other market we were focused on was healthcare. We chose to focus on the residential energy market at first because it’s the largest — bigger than commercial, bigger than industrial.

There are two things we wanted to help consumers do: help them drive efficiency, and help them automatically shift discretionary electricity consumption to off-peak times.

SP: So what’s your business model? How does Hohm make money?

TB: In the short term, it’s really about using data we compile to provide advertisements and lead data to consumers who want to change habits.

In the long term, we have the potential to sell some of these services back to utilities to help them manage the grid better.

We’re providing a tool and a service that a consumer can use today, independent of whether their utility has smart meters in the ground.

We’re also working with utilities — we have deals in place with four, the largest being Xcel Energy in the Midwest. Collectively, 4.5 million households can use an enhanced version of Hohm.

We’re approaching it from a consumer perspective, a utility smart grid management perspective, and a device perspective, with the Ford Focus. We want to create value for everyone involved.

[Hohm] is something that gets me up in the morning. I’m literally excited about going into work. One of the challenges is that there’s so much tremendous opportunity, so many partnerships to support. But you have to focus on value. It has to start with the consumer. We take that point of view not because we don’t value utilities — on the contrary, we see them as important partners.

Site traffic is continuing to build. Consumers really want this type of information. But they want it to be an easy-to-use package.

SP: So what’s next? Can I get Hohm with my next electric bill?

TB: Today, you get the Hohm application by going directly to the web. But utilities are asking about incorporating it into what they do.

Right now, what we’re trying to do is totally focus on innovating those consumer experiences, independent of utilities first, and making it the de facto experience for the web.

I think the utility industry is really behind some other industries when it comes to online support. There are 3,500 utilities in the United States. A lot of them are very, very small. But we have millions of partners worldwide. We’re going to have a process in place where a utility could easily be added to Hohm.

SP: When will Hohm go OpenID, instead of only Windows Live ID?

TB: Today we support Windows Live ID. We’ll certainly consider other methods of logging in in the future.

It’s not a trial balloon. We’re in this business. We are in this business for the future.

Energy is going to become more costly. Renewable energy can be intermittent. Hohm allows for the first time to finally couple supply with demand. There’s a great value proposition.

SP: When will you provide better support for urban folks like me who live in apartment buildings?

TB: Clearly our sweet spot right now is the single-family and the townhouse. That’s the majority of the market. We will get there, absolutely.

SP: How will you get the word out about Hohm? How will my parents find out about it?

TB: We have a variety of marketing campaigns. We have a variety of grassroots social marketing campaigns. If you provide a great consumer experience that others find value in, they will let you know.

Our utility partnerships will continue to drive traffic. Our device partnerships will continue to drive partnerships.

We’re creating a new category here, and that takes a lot of time and effort. But that’s what so exciting about this. It has that virtuous impact.

SP: In many ways, Hohm feels like personal finance site Mint.com, for what I would call “energy finance.”

TB: It’s really a superset of Mint. At some point in the future, not only are we going to manage the information in your household, but we’re make it possible to manage and control your use.

Such as through devices, in four to five categories: EVs, water meters, white goods appliances, smart plugs, the thermostat.

We think the thermostat is a strategic device when it comes to the household. Frankly, it’s ripe for innovation. Networking connectivity opens up a whole new set of scenarios.

SP: Will Hohm be able to leverage Microsoft’s large corporate footprint?

TB: It certainly helps that Microsoft is such a well recognized brand. All these devices really scream out the need for a platform — a cloud based services platform. That’s really our DNA. That’s what we do. We think it’s really well-aligned: the company, our core strengths and our brand.

More Microsoft Hohm coverage on SmartPlanet:

May 13, 2010 | Camille Ricketts

The Smart Grid, an upgrade to our energy infrastructure driven by information technology, is unquestionably gaining momentum as an industry in its own right. But it can also be divvied up into many different segments ranging from smart meters, to transmission-line upgrades, to demand response. The fastest-growing sector within the Smart Grid is home energy management.

There has been an explosion of venture-backed enterprises looking to take advantage of this new area of interest — not to mention several major corporations, including Microsoft and Google, who also want a generous piece of the pie. But, so far, all of this has amounted to a lot of noise. Most consumers looking to increase their energy efficiency want to accomplish it as easily and simply as possible, and may be deterred by the morass of options to choose from.

What do most people want out of a home energy-management system? Interests vary. Some want to see exactly how much they are using on a granular basis, and how much it is costing them in real time. Some want a service that will generate a list of recommendations for how they can make their homes more energy-efficient. And still others, perhaps the bulk of these people, want a tool that will take care of efficiency for them, ideally without compromising their comfort.

There are services and tools tailored to meet each of these needs — but the best of all would necessarily meet all of these needs. Here, to provide some insight, are five qualities to look for in an optimum home energy-management system, and examples of companies that could provide one.

1. Simplicity. There are many people out there who consider themselves green early adopters. They are the ones that want a system to show them how much energy they are using in real time, what happens when they switch off appliances, how much electricity is costing them based on overall demand, etc. But this is only a sliver of the population that is generally interested in conserving energy in their homes. Most people don’t want to worry about it at all — they just want it to happen.

These are the same people who should consider only targeting major energy sucks in their homes, like refrigerators, and especially heating and air-conditioning systems. For example, one of the most elegant tools to make thermostats more efficient is EcoFactor, a startup that makes two-way thermostat software to automate heating and cooling, simultaneously shaving off energy (and money off your monthly bills), while maintaining your desired level of comfort.

2. Utility-free. Some of these home energy management systems only work when they can be integrated with smart meters installed by electric utilities. But not every home has a smart meter, and those that do have equipment that is wholly owned by the utility in question. For those interested in consistent energy-efficiency management, it is best to choose a solution that works regardless of whether a smart meter is installed or not.

Many of these architectures are also very simple. A prime example is The Energy Detective (which can also transmit data to the Google PowerMeter interface graphing how much energy you are using). It consists of a transducer that sits outside at your home’s power mains. The component then transmits consumption data to a very simple display that reflects the most digestible of information: How much your electricity is costing you per hour, how much electricity you are currently using, and how much your monthly bill is to date. These are very actionable figures. AlertMe, another system working with Google PowerMeter, offers the same capabilities without an upgraded meter.

3. Rule setting. Between those who watch their energy use like a hawk, and those who don’t worry about it at all, is a subset of consumers looking to play an active role in efficiency, but only to a certain extent. They want more options to be involved, but they want them to be simple to execute.

Several companies, including Control4 and Tendril, offer web-based interfaces that make it possible to set rules for your home’s energy use. For example, you can specify that you never want to pay over a certain amount at an hourly rate (so it won’t let you run your clothes dryer, or it will toggle power flowing to your fridge), or that you only want to complete certain energy intensive actions (like making ice, or charging your plug-in vehicle) during off-peak hours when energy is at its cheapest. These customers can set these rules directly in their internet browsers. That way they only have to worry about it one time, and their home will take care of the rest.

This fits into the rapidly growing trend of home automation, which includes energy-efficient lighting systems that know when to turn off or on, automatically-adjusting thermostats, and smart appliances that get their jobs done while conserving as much energy as possible.

4. Remote control. Leaving the coffee machine, pool filter, or air conditioner running after we leave the house is something we can all relate to. It’s been a problem practically since the introduction of household appliances, and it eats up a surprising amount of energy. For this reason, the best home energy management solutions also give you the option of controlling your electronics remotely.

Several venture-backed companies offer or are working on mobile applications that allow you to switch appliances on and off from your phones. Tendril, again, is a prime example of this. It offers a mobile app that not only presents you with a heat map of where the most energy is being used in your home at the time, it will eventually allow you to deactivate your pool filter from wherever you are. So the next time you leave the AC running, you won’t have to worry about racking up your bills for no reason.

5. A how-to attitude. Home energy efficiency isn’t all about automation, tracking consumption on an hourly basis, or only running certain appliances at certain times. There are a lot of simpler actions you can take that can actually have more of an impact on your overall energy use and bills. Most people aren’t aware, for example, that weatherizing your home (caulking windows, adding insulation, and the like), drastically slashes the amount of energy you use without requiring permanent changes in behavior. Even fewer people know how to accomplish these tasks, and who can help them.

Luckily, some of the home energy management systems on the market today generate detailed and custom-tailored recommendations for home improvments that can take a bite out of your electricity use. The best example here is Microsoft Hohm, a tool that will one day incorporate most of the desired qualities listed above. Not only does it operate independently from smart meters, and convey data via a simple interface, it lists efficiency actions its users can take, based on information they volunteer about their homes. It also helps them find local contractors, the right materials, and relevant discounts to get the jobs done as easily and affordably as possible.

Closely related to this kind of recommendation engine, is the ability to see how your home’s energy use and efficiency stack up against those living around you, in your neighborhood, city, state or even on a national level. That way, if your consumption greatly exceeds local averages, you can identify pain points and changes that can be made. This is also something Microsoft Hohm excels at.

It might be difficult to find a home energy management system that offers all of these features right off the bat. Even the most advanced players in the field, Tendril and Microsoft Hohm a cut above the rest, are still working on expanding these capabilities and making them easy to use. That said, there is a lot of value in choosing an easily upgradable system, that won’t require you to buy new pricey hardware, re-enter home specifications, or reset energy rules every time an advance is made.

Fortunately, the best systems out there right now will make this possible. I would suggest keeping a close eye on what Tendril, Microsoft, and Control4 are releasing. It looks like they have the best handle on what the average consumer is will to do, what motivates people, and the most strategic ways to up efficiency as much and as fast as they can

press release May 4, 2010, 10:00 a.m. EDT

Advanced, Proven and Available Technology Designed for Electric Mobility, Telecoms, Uninterruptible Power Supplies, Renewable Energy Generators and Electric Utilities

WAYNESBORO, Ga., May 04, 2010 (BUSINESS WIRE) — FIAMM, one of the world’s largest battery manufacturers, and Switzerland-based MES-DEA, the leading global producer of sodium-nickel-chloride batteries, have partnered to create a new company called FZ Sonick that will manufacture and market alternative energy storage solutions throughout the world. This proven and highly reliable storage technology is available for immediate deployment. FIAMM’s North American headquarters are located in Waynesboro, Ga.

Currently, MES-DEA sells advanced battery technology under the ZEBRA brand for use in electric vehicles. A version of the ZEBRA batteries is scheduled to power the first electric vehicle fleet of the European postal service. The new company’s SONICK-branded sodium-nickel-chloride product portfolio will improve energy storage in wireless cell sites, telecom data centers, uninterruptible power supplies, wheelchairs, busses, trains, and electric utility SmartGrid applications, among others.

“After more than 10 years of steady testing and growth in the transportation sector, we are now ready to also focus on the stationary applications of this innovative energy storage technology,” said Cesare Sinigaglia, former general manager of MES-DEA and FZ Sonick’s new managing co-director.

(continued below)

The SONICK advanced battery technology delivers numerous benefits versus existing energy storage solutions, such as increased capacity, longer lifecycle, zero emissions, low-cost raw materials, enhanced safety, and high energy density that reduces the battery size and weight compared to lithium ion and lead acid batteries, according to Nicola Cosciani, FIAMM’s director of strategic development and FZ Sonick’s new managing co-director.

“A number of battery-dependent industries have been looking for an alternative energy storage solution that is both environmentally friendly and efficient,” said Cosciani. “Through this partnership, FIAMM is now able to offer a unique solution in the form of the SONICK batteries that are a clean and renewable energy. They are durable and reliable, and can be recycled completely because of their composition of salt and nickel.”

Further, the SONICK sodium-nickel-chloride technology enables a wider range of applications than sodium sulfur (NaS) technology, which has received notable attention as an emerging alternative energy source. According to the Electricity Storage Association, NGK Insulators, Ltd. of Japan is currently the only manufacturer and supplier of sodium-based batteries; however, General Electric (GE) announced in May 2009 its plans to manufacture sodium-based batteries at a plant that is scheduled to open in mid-2011.

According to Rick Fioravanti, director of storage applications and support, KEMA, Inc., “As electricity grids continue to evolve into smarter systems, energy storage is expected to play a key role across multiple areas of our future grids. Advancements in electricity storage throughout the last few years have allowed the technology to grow from a future concept to an accepted tool of today’s smart grid.” KEMA is a leading energy and utility consulting, testing and certification firm active in energy storage.

Based on projected market demand for energy storage solutions, FZ Sonick plans to increase annual production to 170 MW from the 90 MW level recently achieved by MES-DEA. The company is evaluating additional manufacturing capacity for this advanced battery technology in North America, Cosciani noted.

FZ Sonick will be headquartered in Stabio, Switzerland where MES-DEA currently operates its manufacturing facility with a staff of 190 employees. Research and development efforts will take place at FIAMM’s headquarters in Italy. As part of the financial terms of the partnership, FZ Sonick purchased all patents, intellectual property and manufacturing equipment that were previously owned by MES-DEA.

The addition of advanced battery technology complements FIAMM’s existing line of industrial lead-acid batteries traditionally used in telecoms, electric utilities, data centers and manufacturing sites.

About FIAMM

The FIAMM Group, constituted in 1942, produces and sells batteries for the starting of cars, industrial use (units of continuity, back-up of energy) and warning horns (electric horns and sirens). FIAMM, which is headquartered in Italy, operates manufacturing facilities in Italy, Czech Republic, China, Brazil and United States. The company projects 2010 sales to exceed $660 million. Globally, it serves the leading automotive, telecommunications and technology companies such as General Motors, Vodafone, AT&T, Verizon, and the U.S. Government. FIAMM Energy, located in Waynesboro, Ga., manufactures stored energy solutions for diversified power applications such as telecommunications, industrials, security and renewable energies, among others. The FIAMM Energy product line comprises sealed (VRLA) and vented (flooded) batteries available in a wide range of capacities and technologies to cater for all requirements. For more information, visit http://www.fiamm.com/, http://www.fiammsonick.com/, http://www.fzsonick.com/, or call 706-437-3220.

About MES-DEA

MES-DEA is a business unit of the CEBI Group, which has been active for decades in the automotive components sector, appliances and alternative energy components. The CEBI Group has more than 3,000 employees worldwide with an expected turnover in 2010 of $690 million. Major markets served by CEBI companies are Europe, China, United States, South America and Australia. It serves customers such as Whirlpool, Electrolux, Bosch, BMW, Ford, Chrysler and Visteon, among many others. For more information, visit http://www.cebi.com/.

SOURCE: FIAMM Group

Fahlgren Mortine Public Relations for FIAMM
Paul Vetter, 614-383-1630
paul.vetter@fahlgren.com