Do most Americans spend eight or more hours of their days thinking about electricity? No. They spend their days worrying about more important things, like how to convince their children to sensibly use various social media channels; saving enough for retirement; and securing help for aging relatives. In other words, they are dealing with life.
In the Smart Grid world, there are conferences, webinars, and articles focused on educating consumers about the Smart Grid. This education is deemed necessary to arm consumers with knowledge to enable their full participation in Smart Grid benefits. And certainly Americans in their multiple roles as consumers, voters, and taxpayers need to understand the importance and urgency of investment in grid modernization. But why are we allocating most of our discussion focus and investment of time and money into consumer outreach and education? Shouldn’t we talk more about educating utilities and preparing their employees for changes that the industry will experience?
After all, utility employees are already dealing with some part of the electricity supply chain. The Smart Grid is influencing profound transformations in operations at all points of this chain, meaning generation, transmission, and distribution. Generation is changing from steady state fossil fuels to intermittent clean renewable energy sources like wind and solar. Transmission of high voltage electricity is getting a communications makeover to provide realtime situational awareness. Distribution of low voltage electricity to residential and commercial customers is experiencing the most change, including the introduction of distributed energy resources like rooftop-based solar power and energy storage; and vastly extended remote monitoring and controlling of distribution assets. But most importantly, the old electricity supply chain is evolving into a new value chain that puts an emphasis on consumers. Consumers can become prosumers, or producers as well as consumers of electricity. That means that utilities’ relationships with consumers must change as much as consumers’ relationships with utilities will change.
For utilities this new value chain means a shift in perspective from meters and ratepayers to customers and consumers. Here’s how we describe one implication of that shift in our consulting work at the Smart Grid Library: A customer is the one who gets the bill. That customer may be a sole occupant of a household, or there may be multiple occupants at that address. All occupants of residential or commercial buildings are consumers of electricity (or gas or water). If a utility is targeting all its communications and outreach to the customers who pay the bills, they are missing other consumers in those buildings.
There are 311 million Americans. There are 561,700 utility employees in the USA (this number includes water/water treatment and natural gas distribution workers). Wouldn’t it be easier to first ensure that all utility resources were educated to understand and communicate the changes wrought by Smart Grid projects and the value chain roles/responsibilities evolution rather than reach a vastly larger number of people who aren’t paid to concern themselves about electricity?
The Smart Grid is much more than some changes in technology to make electricity and communications bi-directional. It means deep, organizational DNA-level transformations for utilities. It requires serious industry attention to prepare utility employees for new ways of doing business, interacting with consumers, and new roles/responsibilities to manage consumer education and communications.
One of the largest US-based industry conferences for electricity, gas, and water utilities just wrapped up in San Antonio, Texas. The entire value chain for electricity was well-represented there – you could find products for generation, transmission, distribution, and consumption of electricity. These products modernize the grid – making it the Smart Grid. The profusion of products prompted me to think about what really drives innovation in the electricity value chain. In Silicon Valley, entrepreneurs know that successful new products or services have to be painkillers or vitamins. As a painkiller, an innovation has to resolve a pain for its target audience. If it’s a vitamin, an innovative product or service has to improve an existing situation. Otherwise, there’s just no motivation or incentive for a consumer or organization to adopt that innovation. And in a down economy, it’s all about painkillers.
So what are the pains in the electricity value chain? There are three main actors in the value chain –governmental entities, utilities, and consumers – that feel pain.
Governments have two specific pains that are addressed with innovations in the electricity value chain. First, the federal and state governments want to improve our energy security. Second, they want to improve our economic security. Both security concerns are answered by federal and state policies that encourage reductions in fossil fuels while simultaneously promoting development of domestic renewable energy sources. Intelligent policies can reduce the role of oil in the US economy through the adoption of electric and other alternative fuel vehicles that don’t need gasoline and improve energy efficiency in traditional internal combustion engines. The most recent policy action occurred last week with the California Air Resources Board’s (ARB) adoption of new clean car rules. If you don’t realize the import of a state like California taking this step, just research the history of how car emissions were reduced across the country because of pioneering regulations in California.
And the really good news is that stimulating new industries around the domestic production of renewable energy sources builds economic security in the form of jobs in America as well as energy security. We can’t export the jobs required to set up and maintain the numerous wind and solar generation facilities springing up across America. We won’t need to deploy military resources to keep the sun shining and the wind blowing.
Innovations that directly tie back to energy and economic security are not only painkillers, they are welcome cures for our current addiction to oil. These innovations are found in electric vehicles (EVs), renewable energy and energy storage technologies. However, these are not the only technologies that have potential to be painkillers as far as governments are concerned. The federal government is also very concerned about cyber security and reliability of the electricity supply. If you suffered through the great Northeast blackout in 2003, you will recall the pain of an unreliable electricity supply. Important painkilling technologies focus on increasing the resiliency of the electrical grid, hence the current focus on deployment of advanced sensors called Phasor Measurement Units or PMUs to help monitor and control our transmission grids.
The North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC) are actively working to reduce risks of future blackouts due to unintentional (natural) or intentional (malicious) causes. Solutions that reduce risk are painkillers for governments, as well as utilities and consumers too.
Stay tuned for more exploration of innovations that are painkillers for utilities and for consumers.