Smart phones and tablets are the new Smart Grid devices to provide information at the grid edge for consumers.  Smart phones are already at 36% penetration rate in the USA according to a recent Nielsen survey, and tablets, which show a similar growth trajectory to smart phones, could even outstrip smart phones if the most optimistic projections from Morgan Stanley research come to pass.

People Power has taken this idea to the point of creating an Energy Service Platform that resides in the cloud and offers real-time and historical analytics about energy consumption of devices – posted to smart phones.  The solution incorporates behavioral science knowledge to facilitate energy awareness and decisions for inhabitants of both residential and commercial buildings.  They are thinking big – beyond the Smart Grid and into the Internet of Things, a concept that is generating significant global attention and the subject of some of my blogs.  Their open source software developers kit can accelerate device and application integrations to their platform – and create opportunities for development of creative games, peer-based coaching, and other innovative channels of building awareness and decisions about energy consumption.

So we are starting to see the pieces of the puzzle come together.  We have the devices.  We have the platforms to create appealing applications for these devices.  And as was pointed out at the recent Smart HEMS Summit where I moderated a session on consumer engagement, appliances are getting smart (meaning they are enabled with communications capabilities), and we have fairly ubiquitous WiFi in the USA to deliver communications – no smart meter required.  So what’s holding back adoption? 

Communications.  Adoption requires thoughtful, layered communications campaigns led by electric utilities, since consumers believe that utilities are a natural source of information to help them reduce their electricity and gas bills.  This is a topic that’s been covered in my ebook, “The Smart Grid Consumer Focus Strategy:  Transforming Utility Operations to Build Consumer Value.”  Utilities may find partners in retailers, as a recent initiative that involves 3 utilities – Pacific Gas and Electric, Reliant, and Constellation Energy in partnership with Best Buy – to explore the value of onsite and online Home Energy Departments that will be similar to their Geek Squad centers of specialized knowledge. 

Financial Rewards.  The crossover will also require innovative business models that deliver financial incentives to consumers to adopt these tools and embrace changes in their homes and their lifestyles.  Research conducted by GE reveals that residential consumer participation in programs such as Demand Response – which are seen to be critical to addressing peak energy consumption conditions – will be stimulated by monetary rewards.    

Time will tell if utility communications programs and these nascent consumer outreach initiatives yield success.  But we still need innovative financial models to motivate consumers to cross the Smart Grid chasm. 

But what exactly is a smart building?  Is a residential building smart if it has a home energy management system?  Is a commercial building smart if it has been retrofitted with energy efficient windows and better insulation?  Is it a net-zero building – meaning a building that is so energy-efficient that its electricity needs can be supplied with onsite renewables generation.  The definition of a smart building is more difficult to define than the Smart Grid itself.  For the Smart Grid, the simplest definition is the bidirectional flow of information and electricity.  But the definition of smart buildings is more complex and complicated.   It is complex because buildings have different occupant uses and energy use patterns.  It is complicated because building energy use is contingent not only on the amount of intelligence inside the four walls (lighting controls, occupancy sensors, etc.), but on the intelligence of the design, materials, and construction of the four walls too.  In other words, its energy efficiency.

For starters, let’s consider that a smart building has some ability to recognize its internal and external environments and take actions, with or without occupant intervention, to reduce energy use based on these environmental variables.  The most common variables include internal building temperatures and outside temperatures, and the amount of natural daylight or time of day/night.  Heating, ventilation, air conditioning (HVAC) and lighting are typically the two biggest energy uses in both commercial and residential buildings – and directly influenced by weather and time.  Home energy management systems (HEMS) offer monitoring and control of selected devices for residential buildings, and like energy-efficient lighting, are gaining a toehold in new and retrofit markets as more homeowners adopt solutions to reduce overall energy bills.  Commercial buildings have a longer timeline of energy management experience, and there are new entrants with relatively sophisticated offerings to help existing and new building stock manage lighting, plug loads, small data center, and HVAC expenditures. 

The effectiveness of these actions, however, is greatly influenced by the building envelope –comprised of roof, walls and windows.  The most impressive energy management system has limited benefit in a building with single pane windows, inadequate insulation, and inefficient incandescent lighting – extreme energy inefficiency.  One strategy to address this challenge is the Energy Savings and Industrial Competitiveness Act of 2011 introduced in May by Senators Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio).   It creates a national energy efficiency strategy that “can make our economy more competitive, start addressing our nation’s energy challenges, and create private-sector jobs today.”    That last benefit is especially welcome news for the US economy.  This bipartisan bill would move the USA forward to the goal of a unified energy policy, something that is sorely needed for energy, economic, and environmental security. 

Sadly, the same Congress that can propose this type of farsighted policy is also capable of producing H.R. 2417, the BULB Act, which wants to repeal energy efficiency standards for light bulbs.  Trotting out the same tired old arguments (kills jobs, increases costs) that have been used about seat belts, emissions controls, fire safety standards and so on, Rep. Joe Barton (R-Texas, infamous for his apology to BP for the trouble the federal government put them through for a massive oil spill), ignores facts in favor of fiction, and ignores the arguments of lighting manufacturers in favor of a couple of talking heads.

Smart buildings require intelligent management systems plus energy efficiency standards.  Smart buildings are an important part of the overall Smart Grid because they help reduce electricity requirements especially during peak demand timeframes.  Let’s hope that we get smart policies that move us forward to energy, economic, and environmental security, and not more insecurity as formulated in the BULB Act. 

This energy consumption data may benefit from a new approach to the growing awareness of the value of personal data.  There’s an interesting organization called the Personal Data Ecosystem Consortium that promotes the idea that “individuals control their own data by enabling a thriving network of businesses around personal data stores and services.”  I like the idea of an ecosystem that lets me benefit from my data.  After all, if it is valuable enough for grocery store chains to entice me to share it in exchange for cents off of items, then perhaps there are other ways I can gain value from my data.  The same could be true for energy consumption data.  My energy consumption data could have value to utilities and to other companies that could offer me solutions that range from home energy audit services to more energy-efficient appliances. 

If you are of an age to remember green stamps or other early loyalty programs, you’ll recall that you received these stamps when you shopped at certain grocery stores.  After accumulating books filled with stamps, you redeemed them at special merchandise centers.  It was a family activity as children pasted stamps into the books and parents scanned the catalogs for redemption options.  Companies like People Power could take their initial solution and extend it into the personal monetization of energy data by building a common rewards platform that is based on this green stamps model (which still exists as green points).  Use of a common rewards platform as part of any HEMS solution would assist utilities in their efforts to incorporate gamification into their websites. 

For example, utilities could use that rewards platform and award points to consumers for participation in web-based energy awareness games, energy efficiency programs, demand response (DR) programs, or other Smart Grid-enabled programs.   Like the green stamps of years ago, participation can involve entire households – especially using gamification and social gaming to build data, knowledge, and desired consumer energy behaviors.  Point awards could be redeemed for merchandise or services from local businesses that participate in these programs.  Services could include energy efficiency upgrades, HVAC maintenance and other consumer activities that reduce overall electricity demand for utilities.  Merchandise could range from energy-efficient appliances and light bulbs to EV charging stations and solar panels.   

For utilities, the benefits include increased consumer participation in programs which result in reduced need for new generation facilities, reduced operating costs, and reduced CO2 emissions.  For local businesses, the benefits include more consumer transactions and increased loyalty.  Consumers enjoy the monetization of their data in the form of tangible products or services that reduce their energy bills, keep their rates down, and reduce CO2 emissions.  They might also have some fun in the process.  Of course, we must ensure that personal energy consumption data has appropriate privacy safeguards, and recommendations are being developed through the efforts of the National Institute of Standards and Technology (NIST). 

Unlike search, consumer purchase, and social network data, we have the opportunity to create a different value model for the monetization of energy consumption data.  The benefits of a new value model for energy consumption data can directly accrue to individuals, communities, businesses, and achieve environmental and energy security objectives too.  It’s an opportunity worth exploring.

Cars are much smarter than homes.   Cars have sensors, computers, and visual displays that provide information about performance and status like speed and alarms such as that dreaded “check engine”
light.   The key point is that I have alarms information that allows me to react and make small repairs before they become big repairs.  The car dashboard is an excellent model to apply in designing the smart home dashboard.  I’d like to be reminded that it’s time to replace a furnace or AC filter, have leak detection sensors in the floor around the water heater for early warning about tank failures, and oh yes, keep an eye on electricity, gas, and water consumption.

Smart Grid technologies can make this possible, but the smart home dashboard will evolve over the next decade.  First, let’s consider placement of a home dashboard.  The car dashboard is positioned for maximum visibility and information availability to the driver.  Where is the best place for a home dashboard?  I suggest the kitchen.  First, it’s a common room that all home occupants use.  It would be readily available for everyone to see.  Second, there are already visual displays for appliances there, so it won’t look out of place.  What will be the most desirable form factor for this home dashboard?  A tablet or iPad-type computer that wirelessly connects to the cloud-based home operations management and to my IP-enabled devices (appliances and electronics) as well as to my “sensored-up” monitoring points.  It may be affixed to a wall or tilted on a kitchen counter, but its portability means I can also remotely monitor and maintain operations in my home (or switch to a smart phone application).

A review of existing Home Energy Management Systems (HEMS) applications and home control solutions reveals an array of display options around electricity consumption.  A homeowner can choose between relatively simple In Home Displays (IHDs) that color code electricity usage in green/yellow/red lights to more elaborate web-based portals that provide running graphs of usage, and tablets that provide information in nicely designed user interfaces. Some solutions provide a snapshot of individual consumption, others will tell you how your electricity consumption compares to your peers.  Most HEMS vendors address a combination of security monitoring, home entertainment, lighting controls, even home wellness.  These are all useful applications, but I haven’t seen anything that answers the preventive maintenance and alarms requirements mentioned here, and one of the most important aspects of a car dashboard.  And face it, a home maintenance application will have appeal to insurance companies – just as homeowners get premium discounts for security and in-home sprinkler systems, there could be future discounts for sensor-based detection of water leaks in the roof or lint build-ups in dryer filters.  Predictive and preventive home maintenance lacks the sexiness of automating home entertainment, but it makes sense and it’s a lot easier to cost justify for the majority of consumers.

This will be one of the topics of conversation at the Smart Grid Technology Conference, where I’ll be participating in a panel session about HEMS solutions.  Join me there, or if you’re back east, head to Atlanta for the Grid ComForum show.

1.  A Thinking of You to my electric utility, and to all the hardworking employees there who work so diligently to ensure my ongoing reliable and safe delivery of electricity in spite of an aging infrastructure.  I do appreciate the great service you provide.  However, don’t rest on your laurels.  There’s lots of work to be done to regain the hearts and minds of other ratepayers who don’t have such a positive view of you.  You might start with more education about the consumer benefits of smart meters – within your company as well as to your customers.  Not enough ratepayers know that these will help everyone manage their electricity use and help avoid the investment in new peak power purchases or equipment, thereby saving all ratepayers money and reducing CO2 emissions.
2. A Thanks for Being There greeting to California representative, Jackie Speier, who just introduced HR 654 to protect Internet users’ personal information.  Called the “Do Not Track Me Online Act of 2011”, it delivers an opt-out capability for consumers regarding the collection and sale of their online history.  This bill sets up a “do not track” feature that consumers could invoke to prevent detailed data gathering about search history.  According to a recent USA Today poll, 70% of Facebook members and 52% of Google users are either “very concerned” or “somewhat” concerned about their privacy, so, if passed, this bill would enable everyone to get a small measure of protection for some online activity.  However, the bill does not address broader privacy issues, and it does not address whether or not energy use data is a form of online data.  (As I mentioned in previous blogs, Smart Grid leaders need to clearly articulate what types of information is collected by smart meters and/or gathered by Home Energy Management System (HEMS) solutions in order to avoid consumer concerns about their energy use privacy.  So far, there’s little evidence that lawmakers or regulators are considering this new type of data in their development of online data legislation.)
3. A You’re Special sentiment to all the auto manufacturers introducing electric vehicles (EVs) to the American market.  The latest turmoils in the Middle East should serve as sobering reminders of the incredible risks the national and world economies face because of dependencies on oil.  Further amplification of that need to disentangle our economy from oil comes from today’s headlines about gas prices topping $4 a gallon this year.  There’s no amount of drilling that gets around the fact that more countries like the fast-developing economies of China and India are competing for the remaining supplies of petroleum, and these will go to the highest bidders.  Yes, we need more affordable models and rapid build-out of a charging infrastructure, but these are surmountable problems that create local jobs.  Did Henry Ford stop building cars because there were more stables than gas stations when he started his company?
4. A Don’t Stop message to the growing numbers of application developers that are entering the Smart Grid sector.  While much initial attention has been given to the HEMS market, developers should keep in mind that the entire electrical infrastructure needs upgrading, and much of it will be done with software.  From sophisticated communications capabilities to distributed intelligence for complex event processing to knowledge retention and training applications, the need for software is growing, and existing vendors, many of whom have hardware expertise, won’t be able to develop and support quality software on their own.

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.   

Like many introductions of past technologies or services, our knowledge of best practices and management lags behind the discovery of unintended consequences.   Do you recall when credit card receipts used to display the full card number?  It didn’t take long for unsavory characters to collect discarded receipts and go on spending sprees.  Credit card issuers and consumers didn’t think through the consequences of this display of information.  Many are learning the hard way today about posting information on social media sites.  There are recent news reports of insurance companies patrolling sites like Facebook to determine if claimants with back injuries just competed in marathons or completed other strenuous physical endeavors.  Doing much of the work previously done by insurance investigators, photographic evidence is voluntarily supplied with these updates.  Just like mom said, honesty is the best policy – and now we know why – you avoid the unintended consequences.                                                                                                                                                   

Many companies employ Chief Privacy Officers (CPOs) to develop and enact guidelines for the use and management of consumer data.  These companies also have documented policies for internal handling of data as part of employee training.  The four cornerstones of good privacy program development cover people, policy, process, and technology.  Privacy by Design identifies seven principles for good programs, including a proactive stance, end to end lifecycle protection, and respect for user’s privacy.  Utilities and vendors of Home Energy Management Systems (HEMS) should implement good privacy programs now.  These programs should emphasize protected handling of the minimum amounts of personally identifiable information because as far as data breaches are concerned, security professionals agree that it’s a matter of when, not if, these breaches will occur.  Privacy, like security, needs to be built into all products that monitor and/or manage energy consumption. 

Beyond the privacy concerns, there’s one other issue about energy use data that needs discussion – the topic of data use or exploitation.  Google, Facebook, and Amazon devised many profitable ways to sell or use information based on search history, purchase patterns, or like attributes.  There’s no doubt that HEMS solutions can collect vast amounts of use data about appliances and that utilities and other vendors may have authorized access to it. 

The bottom line question is:  who owns the value of that energy use data?  In the case of investor owned utilities, should regulators insist that proceeds of sales of anonymized energy use data be disbursed to ratepayers instead of shareholders?   And in the case of energy service providers, whether a utility or another vendor, there are a range of questions about how that data could be used that must be answered to avoid the mis-steps and abuses of privacy that we have seen from some social media sites.  Transparency will be critical to developing consumer confidence in Smart Grid technologies and programs, and all players planning to work with energy use data need to be aware of the responsibilities they have in building trust about that data.  Abuse or careless handling of this data could have the unintended consequences of damaging consumer support of Smart Grid projects.

CAISO, following the lead of other ISOs based in the Northeast and Mid-Atlantic states is introducing a new program called Proxy Demand Response or Proxy DR into the wholesale California power market around August of this year.  Demand Response (DR), which is saddled with a terrible name, is a smart energy practice to reduce electricity use at times when demand is greatest.  California has always had DR programs at the retail level (such as residential opt-in programs to change air conditioning temperatures), but the introduction of Proxy DR into the wholesale market has broader implications for California commercial and industrial (C&I) and residential consumers. 

Proxy DR lets companies – not just utilities – be generators of virtual power by reducing energy consumption at times of peak electricity demand.  In other words, you reward the behavior.  In practice, a chain of grocery stores could commit to dimming lights in California stores at high use times to reduce their electricity needs, and receive compensation for their reductions.   Those payments help them keep their operating costs down, which in turn benefit consumers through lower prices for products and services.  Since Proxy DR participation is based on a competitive bidding system, CAISO can award business to the lowest bidders, helping ensure the lowest costs for electricity in its region. 

There are regional and national environmental benefits as well.  Jon Wellinghoff,  Chairman of the Federal Energy Regulatory Commission (FERC) stated that an estimated nationwide 20% reduction in peak electricity demand “if realized, can reduce…the number of power plants needed to meet peak demand and thereby reduce carbon emissions by as much as 1.2 billion tons of carbon annually.”  That’s huge.

In addition to saving money and the environment, Proxy DR is also an important tool to integrate variable renewable energy sources such as solar and wind into the grid.   If you’ve ever been sailing, you understand how fickle the wind can be. The ability to quickly reduce system-wide electricity use through a Proxy DR market program helps ISOs manage variations in electricity production caused by solar or wind through deployment of these virtual generation resources. 

Proxy DR is a creative program that can be used at wholesale and retail power markets, and the retail aspect will be addressed in next week’s blog.  The retail market presents different challenges, and that’s where Smart Grid technologies such as Home Energy Management Systems (HEMS) come into play.  However, as many of my blogs point out, there’s a need for consumer education about this market innovation.  Consumer education and enlightenment models will be discussed at the upcoming Peak Load Management Alliance (PLMA) Spring Conference, where I’ll be one of the panelists delivering perspectives on how to rollout innovative technologies and services.  

Smart Grid technologies give us the detailed information to modify home operations for the benefits of reduced energy bills, reduced carbon emissions, and improved energy security.  Existing meters retrofitted with readers or smart meters deliver the granularity we currently lack about our use of anything that draws electricity.  Home Energy Management Systems (HEMS) offer portals to conveniently monitor and manage energy consumption using this detailed information.   Saving money on my utility bill, saving the environment, and building energy security – what’s not to like about these compelling benefits?

There’s only one downside – there’s an amazing amount of lifestyle information that can be extrapolated with granular energy consumption data from any residence.  In the traditional electricity grid, we have always been data producers and utilities have always been the data consumers – gathering kilowatthour (KWh) data so it can charge us for our electricity use.  The Smart Grid delivers a richer data set and the potential for new commercial uses of personal energy consumption data.   The pool of data consumers of our personal energy information may grow well beyond the traditional utilities, and we as the data producers need to consider these questions:

1. Who “owns” my personal energy consumption data? 
2. What rules govern its availability, storage, and disposal? 
3. Who makes these rules and how are they enforced? 
4. What are potential commercial uses of my personal energy consumption data? 

The rules about privacy of this new data need to be developed so that we as the data producers ensure smart management of its consumption.  Fortunately, there is work underway to create data privacy recommendations as part of the National Institute of Standards (NIST) Smart Grid Cyber Security Strategy and Requirements initiative.  Next week’s blog will discuss some possible answers to the questions listed here.

Shout Out

Congratulations to the state of California’s Building Standards Commission, which adopted CALGreen, a mandatory green building standards code which takes effect on January 1, 2011.  CALGreen requires inspections of energy systems in non-residential buildings over 10K sq ft, 20% reductions in water consumption, 50% diversion of construction waste from landfills, and use of materials that reduce indoor pollution.   The CALGreen program is a first for the USA, and let’s see if other states adopt similar measures, and go one better by mandating the same measures for residential buildings.  Go here for more information. 

And then there are the acronyms, designed to increase inscrutability not only between the various Smart Grid domains, but sometimes also within them.   For instance, there are at least two meanings for CSP.  If I’m in the Service Provider domain, CSP means a Curtailment Service Provider.  If I’m in renewables, CSP means Concentrating Solar Power.  Ditto for OASIS.  Anyone from an ecommerce background would understand that acronym to mean an organization focused on creating ecommerce and web standards.  Others familiar with power markets would immediately think of an Internet-based tool that shares transmission price information. 

The convergence of emerging technologies and existing domains means that it is important to develop a Common Information Model to deliver an industry-accepted inventory of terms and definitions.  This ensures that a knowledge foundation is accessible to everyone to encourage rapid adoption of solutions and acceleration of innovations.  A Common Information Model needs to reflect the Smart Grid perspective for each definition and be vendor-agnostic as well as technology-agnostic.  The Smart Grid Dictionary addresses these needs, not only for industry veterans but also for people interested in learning more about the Smart Grid.  This is especially important in fostering innovations that will come, as they always do in Silicon Valley, from new approaches to existing problems.  Just imagine how Google is going to shake up the energy business through its Google Energy subsidiary.  

A  Smart Grid Dictionary reader had this to say:  “Coming from server and microprocessor chip design backgrounds, I never heard of terms like AMI and Demand Response. The Smart Grid Dictionary has been a one-stop shop for me to get crucial help when climbing up the steep learning curve – and I’m still climbing this learning curve with the help of Smart Grid Dictionary now. I’ll be one of the loyal readers of the Smart Grid Dictionary for the foreseeable future. It suffices to say that the Smart Grid Dictionary has become one of the most important resources I could not live without. Thank you very much for making such a valuable resource available.”    

I can’t wait to see how this reader applies his skills and knowledge in the Smart Grid – and I know it will be an invaluable contribution that couldn’t have happened without his fresh approach to solving issues. 

I’ll be at the first Smart Grid Summit that ITExpo East is sponsoring next week to present and moderate a few sessions.  I hope to see you there, or at the upcoming Grid ComForum in early February!