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.   

I study HEMS solutions and always ask the HEMS manufacturers about the support model.  There is remarkable unanimity in their assertions that the utilities will take the first support calls – for HEMS web portal software and for IHDs.  The HEMS providers are confident that their solutions are so easy to use that support is quantified as a nominal increase in support calls.  Some of them go to great pains to develop friendly user interfaces.  But I have marketed, sold, and deployed many software applications in my career, and what is “a nominal increase in support calls” to a vendor may be dramatic increases in call volumes to utility customer contact centers.    

Regardless of the success of the introduction of a HEMS solution and associated IHDs, if the support model is inadequate, the end result will be frustrated ratepayers, lagging participation in crucial Demand Response and other energy conservation and energy efficiency programs, and more utility time and expense to fix these problems. 

Utilities that offer HEMS solutions to their customers need to include software and hardware support of the HEMS solution and IHDs into their Consumer Enlightenment Model.  Bring in consulting professionals with experience in contact centers, software support, and emerging technology introductions who are knowledgeable about Demand Response and Energy Efficiency programs.  Work with them to develop a fully integrated Consumer Enlightenment Model that aligns with utility objectives to reduce overall energy use during peak and non-peak times and manages not only the introduction, but the ongoing support of visible, disruptive, and extremely important HEMS solutions and their IHDs. 

Feds Step Up Enforcement of Appliance Reporting Standards

Energy efficiency was proclaimed to be “sexy” by President Obama just last week, and the days of lax enforcement of energy efficiency standards are thankfully at an end.  The Department of Energy (DOE) recently announced that January 8, 2010, is the deadline for manufacturers of certain residential products to submit accurate certification reports and compliance statements regarding energy efficiency.  A 30 day grace period lets the slackers correct their non-compliance without penalty. 

After January 8th, the DOE will begin enforcing these reporting requirements, including leveling civil penalties or fines for non-compliance. This covers reporting and certification requirements – not the actual energy efficiency standards, which are already subject to scrutiny by DOE.  The requirements include a certification report for each basic appliance model covered by the energy standards, along with a signed compliance statement.  You can access the DOE press release and fact sheet, and for even more info, here is the Web site for DOE’s Appliances and Commercial Equipment Standards Program.   To all the appliance manufacturers that have been playing by the rules all along, kudos to you.  To those manufacturers who treated the rules cavalierly, the playing field just got leveled.

Much like the familiar LANs or Local Area Networks, HANs are simply the same communications capability within a home.   Here is the definition of a HAN from the Smart Grid Dictionary:  “A network of energy management devices, digital consumer electronics, signal-controlled or enabled appliances, and applications within a home environment that is on the home side of the electric meter.  It can also be considered as a home-based LAN, but it connects more than just computers.  HAN specifications include Zigbee, HomePlug, Z-Wave and Wireless M-Bus (a wireless variant of M-Bus).” 

Instead of a network of servers, printers, copiers, and computers, the HAN connects devices that are capable of sending and receiving signals from a meter, In-Home Displays (IHDs) and /or HEMS applications.  While it is unlikely that in the future my refrigerator has anything interesting to say to my dryer, both devices should communicate with a smart meter or an IHD to identify start times or learn operation parameters that were set up by my HEMS application. 

Wired or wireless, there are tradeoffs that involve power consumption, signaling distance, sensitivity to interference, and security.  The main point here is that HANs are not energy management applications – they enable energy management applications to monitor and control the devices on the home network. 

HANs and IHDs still need an energy management application – a HEMS solution – in order to gain the most benefit from these Smart Grid components.  IHDs are great devices, but have limited data input and display capabilities – in fact some do nothing more than provide a visual indicator of the electricity rates at any point in time.  A HEMS web portal is the best interface to the utility billing and Demand Response programs – it enables the easiest designation of intelligent appliances that can be “enrolled” into utility demand response programs.  The HEMS solution allows me to “set and forget” my appliances’ operations, get suggestions on energy efficiency improvements, and see how my energy management compares to others in my peer group or neighborhood.      

What are the other features I’d like to see in a HEMS solution? 

• Open, non-proprietary, and standards-based software
• Simple and intuitive user interface
• Delivers user-definable information to a selection of IHDs
• Support for IHDs that combine HAN gateway and HEMS display capabilities
• Controls any manufacturer’s intelligent appliances
• Contains HAN diagnostics
• Easy to deploy and upgrade
• Secure access to utility billing system to view bills
• EV charging management
• Micro generation and energy storage management and diagnostics

Some of these capabilities are available now from a number of HEMS providers, but others are future capabilities and will be for quite some time.  I’ll talk about other desirable HEMS capabilities in next week’s blog.

What does this really mean?  Here’s the bottom line.  Utilities now have power plants that only operate at the times when the need for electricity is greatest – called peak demand.  These expensive assets (also known as “peaker” plants) may only operate for hours – seriously, mere hours – of time, but are required to deliver electricity at the times of greatest consumption, or else we experience blackouts.    The most predictable periods of greatest electricity use are those hot spells in the summer when everyone cranks up their air conditioning.  There are 8760 hours in a year.  Some peaker plants only operate for 50 hours in a year.  Global warming will certainly increase air conditioning use, but even then, it is hard to create a nice Return on Investment for a seldom-used peaker plant.  

However, if utilities and consumers can work together to reduce other electricity usage during these extreme weather conditions that trigger peak demand, it means utilities can avoid adding more expensive peaker plants that sit idle except for those few hours in a year.  If utilities have to build more power plants, consumers usually see rate increases.  So, if we work with utilities to reduce our electricity consumption during these times, we all save money, or at least keep the cost curve under control.  In fact, some programs could even offer money back to consumers who reduced their electricity use during specified timeframes.    

Smart Grid technologies like smart meters and Home Energy Management Systems (HEMS) will dramatically increase the opportunities for consumers and utilities to work together to reduce and shift electricity consumption.  As we’ve already seen with some smart meter rollouts, success is defined by the quality of the marketing and communications plans.  The same will be true about programs that require consumer participation on a massive scale.

The Federal Energy Regulatory Commission (FERC) just closed the comment period for a Discussion Draft titled, “Possible Elements of a National Action Plan on Demand Response”.  This process invited feedback from the public on objectives, strategies, and actions that can ensure the maximum participation and success of demand response programs.  Buried deep in the 76 page document was a question about whether or not the term “demand response” needs some consumer-friendly terminology.  Absolutely and most definitely.  If you need an explanation to understand that demand response really means an opportunity for consumers to save or make money, then you need to change the term. 

In my comments to FERC, I suggested that at a national level, demand response programs should be called Smart Saver programs because there’s no question about the objective.   For many utilities, the greatest Smart Grid challenges are not technical, but instead are marketing and communications.  There will be significant amounts of complex information that must be shared with residential consumers in the next few years about Smart Grid technologies and HEMS solutions as part of well-designed consumer enlightenment programs.   If the utilities’ starting point for consumer enlightenment is talking about demand response, a term that defies intuitive understanding, then the communications challenge is magnified.

A consumer enlightenment model informs utility customers about the HEMS solution and the beneficial impacts of the HEMS solution to consumers, to utility bills and rates, to the environment, and to energy security.  A consumer enlightenment model delivers education along with aspirational messages that generate interest and excitement for the HEMS solution and the evolving Smart Grid.  It also places the utility customer front and center as an active participant in magnifying the positive impacts through increased energy efficiency behaviors as well as enrollment in utility programs to reduce, shift, or shape demand.

Here are four critical actions that utilities must take in successfully introducing HEMS solutions to their residential customers.

1.  Recognize the long-term strategic value of the HEMS solution to the utility.  The best HEMS solutions have adhesive qualities that make customers more likely to “stick” with an energy services provider.  Why is that important?  If deregulation is coming to your area, the local incumbent utility may not be the only choice of energy services providers.  That makes the utility’s selection of the right HEMS solution so critically important to not only initial rollout success but to long-term market share objectives.  And what is the right HEMS solution?  Stay tuned to next week’s blog for that answer.
2. Recognize the strategic nature of the HEMS rollout to the residential end-user.  This is not a time to discount the value of communications and messaging, as is often the case in engineering-oriented organizations like utilities.  This is not a business-as-usual project – this is a business-as-enlightened project.  The HEMS rollout needs support from the highest corporate levels and must include all the departments that interact with residential customers, so all field resources will deliver consistent messages as well as traditional customer contact points. 
3. Define clear objectives for the consumer enlightenment model.  Make sure these objectives – whether they are based on HEMS adoption rate, DR program enrollment, or energy reductions – align with the overall corporate utility strategy.  If the priority is to keep rates as low as possible, then residential consumer participation in DR programs and reductions in energy use will help by eliminating the need to build expensive peaker plants or avoid additional power purchases. 
4. Develop and deploy a HEMS communications strategy and project plan that identifies objectives, segmentation, messaging, and media.   Engage the internal departmental stakeholders in the process to ensure that their objectives and tactics align with the overall HEMS rollout strategy.  Plan for careful orchestration of messages and communication tactics, internal training about objectives and messages, and adjustments in staffing for customer care centers to handle increased customer communications.

Many utilities lack the in-house resources with sufficient time or experience to build the customer enlightenment model or manage the HEMS rollout.  Use consulting experts to assist in these strategic projects with in-depth experience in telecommunications (similar regulatory structures and technology disruptions), successful introductions of innovative software applications, knowledge of the Smart Grid sector, and demonstrated creativity in using traditional and social media channels.  

We’ve already seen that it is easy for consumers to build the wrong impressions of smart meters.  Let’s make sure that introductions of HEMS solutions – the most disruptive and visible technology that residential customers will see – are done right. 

*Virtual Service Aggregators or VSAs are defined in the Smart Grid Dictionary as a business model concept that proposes that an organization dispatch and control renewable sources of energy plus energy storage devices, and manage demand response and smart EV charging services.

I asked this question because this n application will be ubiquitous in homes in the next few years.  The answers I received included an R&D shop’s solution (which might be proprietary), feedback about sensitivity of usage data, and a reference to the UtilityAMI Home Area Network System Requirements Specification.  

Let’s talk about the sensitivity of usage data – how much energy you use.  This is often cited as a security concern – if people can capture the data about the electricity you are consuming, they can tell if you are home or not.  I guess that’s true, but they would have to know an awful lot about my typical electricity use.  What if I’m a careless energy consumer that leaves computers, TVs, cell phone chargers, and lights on all the time – whether I’m home or not?  In this example, will there really be a significant difference in my KWh if I leave town for a week?  Maybe from a stratospheric bill to merely sky-high. 

In a world with more microgrids, the bad guys looking at my usage data would not know that a sudden decrease in my energy bills might be due to my brand new mini-wind turbine and solar panel installation. 

I do think people would be very touchy about the confidentiality of this information – I might not want my neighbors to know that I’m an electricity guzzler.  However, I don’t think extrapolating my usage data is a worthwhile criminal enterprise for people looking to make an illegal buck.     

More malicious activities would involve comprising the integrity of my usage data.  Although I can’t see what monetary gain a hacker would reap from modifying this data, they could certainly stress me out if my next utility bill was in the stratosphere.  Ditto if they messed with my microgrid data, depriving me of that cash that I was expecting from the utility based on their purchase of my microgrid’s generating capacity. 

So usage data may not be the most important data to secure in a HEMS application.  However, financial data and personal identification data like Social Security Numbers might be connected somewhere in a HEMS application to a utility, and therefore may be vulnerable to unauthorized access or compromised integrity.  That could be a problem.  We read stories all too often of the global criminal networks engaged in buying and selling credit cards and identification information.  This is a potentially huge liability for utilities, but they are working to address it through groups like the UtilityAMI OpenHAN Task Force.   

The UtilityAMI OpenHAN (Home Area Network) Task Force has defined 4 sections under the security category for guidelines that promote open, standards-based interoperable HANs.  Any HEMS application would be part of the HAN, and governed by the security guidelines under development by this group and other knowledgeable organizations.  The OpenHAN Task Force defines the following four subcategories: Access – the control and confidentiality of data and information; integrity – the ability to ensure protection of data (in storage and in transit) from unauthorized users; accountability – the date/time/user event info to audit a system; and, registration – the authentication of identities that are established within a HAN and known to a utility.   This is a great construct for utilities and vendors to ensure that all software is designed and deployed to ensure security as well as interoperability.

This Task Force takes a utility-centric view, which is perfectly reasonable considering that utilities have a great deal at stake in getting the right specifications defined for future Smart Grid operations.   The work that this Task Force has been doing is also shared with the ongoing work that NIST is taking in conjunction with EPRI to develop interoperability and security standards. 

I’ll lead a discussion about software characteristics – especially at the user interface in HEMS applications – for the Smart Grid at the Green Software Unconference on August 19^th in Mountain View, CA.   .   Join me there – click here to learn more about the agenda and how to register.