Distributech 2011 showed that the Smart Grid is big, and getting bigger.  With over 8000 attendees and 400 exhibitors, there was plenty of buzz about distribution automation, partnerships, and the last link in the value chain – the consumer.  Many exhibitors featured their own or partnered Home Energy Management Systems (HEMS) solutions aimed at helping residential consumers manage energy use in their homes.  While there’s plenty of talking points about the value of energy use data to reduce utility bills, there’s virtually no talk about the information value of energy use data beyond that immediate application, and who benefits from it. 

It’s clear that consumers, policy makers, utilities, and Energy Service Providers (ESPs) need to understand the value that energy use data may have in the future.  Today, we have offline data, which includes income, credit rating, home value, past purchases, number of children – all types of data that have been used by direct marketers for years.   Online data, which consists of IP-addressable search history and public information posted on sites such as Facebook and LinkedIn, is relatively new.  The latest trend is the merging of offline and online data for sale to advertisers, researchers, and content aggregators, and here’s where the concerns rise.  Electricity use data is a new form of online data – especially if you have a HEMS solution or IP-addressable appliances and electronics.  HEMS solutions will probably be offered by your local utility and/or ESPs.  Therefore, the policy about collection and use of that data could vary by utility (if these are the data collectors), or by ESPs such as a wireless communications company or a HEMS company.

Will we see HEMS analogs to the Google business model in which the search is free and the money is made selling search history data to advertisers and researchers?  What if the HEMS solution is free and the ESP or utility has the ability to take subscriber energy use data and market it?  What are the responses from policy makers so far?

The German government recently announced a new German foundation to investigate data security and the use of security standards and technology to protect user privacy.  Canada has a Privacy Act that defines how the federal government must handle information about individuals. There is ongoing National Institute of Standards and Technology (NIST) activity to create privacy and security recommendations for energy usage data for both residential as well and Commercial and Industrial (C&I) customers.  The USA does not have a comprehensive national data law, but instead relies on a patchwork of privacy laws and enforcement mechanisms. 

Until the NIST recommendations are completed, utilities and vendors might want to follow the lead of PG&E, which outlined this privacy policy on its website.  This policy reflects the collection of data by smart meters, and goes well beyond the usual privacy statements that are found on most other utility websites.   It clearly states, “We do not sell or provide personal customer information to third parties for their commercial benefit.”

Another source for guidelines is the Network Advertising Initiative‘s self-regulating policy for consumer opt-outs from behavioral advertising which addresses existing online information.  This might be the type of policy that manufacturers and ESPs offer for new online information about energy use collected from IP-addressable devices.   Consumers who understand that value of their data may be more likely to opt-in to enjoy reduced prices, membership discounts, or money back on their utility bills.  Transparency about who gets the value of energy use data will be key to win consumer confidence and support for Smart Grid initiatives.