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.

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.  

Could the new personal energy consumption data that will be available through new Smart Grid technologies and services have the potential for malicious as well as beneficial use?  The answer is yes.  Leaving aside all discussion of security, here are my answers to the questions posed last week to help you understand the need for strong privacy protections of our personal energy consumption data:    

1. Who “owns” my personal energy consumption data?  Me.  I own it, and I give permission to service providers to have access to it.  Of course, the entity that delivers electricity must have certain data to bill customers for the total amount of energy consumed, just as electric utilities have that stewardship of that information today.
2. What rules govern its availability, storage, and disposal?  This is a murky area.  There are few policies in place today about managing access, storage, and disposal of personal energy consumption data.  There are state and federal laws about personal information, but these are typically focused on data that does not include energy use.  Therefore, we need to ensure that laws address personal energy consumption data and clearly identify ownership and authorization rights. 
3. Who makes these rules and how are they enforced?  It would be nice to have a comprehensive federal law that governs personal energy consumption data, so that state regulators, municipalities and co-ops could develop regulations that align to it.
4. What are potential commercial uses of my personal energy consumption data?  Here are a few hypothetical situations, with two caveats.  First, these examples deliberately exclude Home Energy Management Systems, which can take this data and save us money and reduce our carbon footprints.  Second, these are purely hypothetical musings.  Much like information is collected to form your credit score, in the future third party entities might collect personal energy consumption information to form a carbon footprint score or an energy score.  This information might be purchased by potential employers or landlords to determine if you will be an energy guzzler in their operations or properties.  Market research firms might analyze personal energy consumption data and extrapolate lifestyle information so they can target ads and promotions to you.  Insurance companies might develop new calculations that tie energy consumption to health or longevity. 

This may all be possible, but it should only occur with our explicit consent for our data to be used by these third parties.  If they can make a compelling case of the benefits that accrue to us for this commercial use of our data, I’ll listen.  

To learn more about information that smart meters can deliver, join me at the Metering, Billing/MDM America conference in San Diego on March 7-10.  This annual event draws innovating utilities, meter manufacturers, and thought leaders to discuss not only theory but reality in Smart Grid deployments.

For my Silicon Valley readers, don’t miss the Sustainable Silicon Valley/Santa Clara University Smart Microgrid event on February 23 to hear about this local university’s plans to take their microgrid and make it a smart microgrid.

Shout Out

If you are interested in a green career, there’s a new book, Green Careers for Dummies, by Carol McClelland, PhD that delivers an excellent education for readers into a wide range of job possibilities and how to position their education, skills, and interests into fulfilling careers – including Smart Grid careers.  I particularly liked how careers are divided into categories such as Careers in Rebuilding the Infrastructure and Providing Green Products and Services.  These categories help readers target their interests and clearly describe dynamic new career areas like the Smart Grid as well as identify example job positions and important industry and market trends.  I highly recommend it. 

HEMS solutions usually include some sort of In-Home Display (IHD) that communicates information that ranges from current electricity rates, home electricity consumption rates, and what I term “home operations metrics” like temperature and security status. These IHDs can be wall-mounted displays or standalone, battery-operated wireless displays, or even visual devices that simply glow a different color to indicate home consumption or real-time tariff rates.

In the current electrical grid, the utility’s relationship with a residential ratepayer ends at the meter, affixed to the outside of a home. Bills arrive after the fact – at a minimum a month after your electricity use. HEMS and IHDs completely disrupt this consumer engagement model, and offer the opportunity for utilities to extend their relationship inside the home with much richer content and real-time data. True, utilities have websites that consumers can visit, but this information is relatively static.

Smart Grid-enabled HEMS solutions can deliver information that residential users would find compelling – such as real-time billing information mentioned above, tailored suggestions about how to trim their electricity bills, offers for participation in demand response programs to reduce rates, and more. This information empowers consumers to make educated decisions in real-time about how to manage their electricity consumption. That’s the good news.

The bad news is that, operationally and culturally, utilities are not accustomed to selling to residential end users. They don’t inhabit a competitive world where they must fight for mindshare and market share. If you look at the take rate for utilities’ consumers to sign up for electronic billing as an indicator of their selling capabilities, it is abysmal. Only 17% of all residential utility customers have enrolled in electronic billing. In comparison, 40% of telecom customers have electronic billing. Clearly, there’s a problem in utility outreach and education to sell consumers on a program that has solid environmental and convenience benefits.

If utilities have low success rates in getting people to enroll in simple programs like electronic billing, then there are real challenges in communicating complex and layered messages about the benefits of HEMS solutions and associated IHDs. As I noted in last week’s blog about PG&E’s rollout of smart meters, residential end users will have the opportunity to have a very visible and very disruptive technology introduced in their homes. If it’s done well, not only do the utility rate payers benefit, but overall we all benefit from fast adoption of Smart Grid solutions. However, technology rollouts that result in confusion, opposition, and lawsuits have negative impacts on everyone.

Utilities are depending on HEMS solutions to enable widespread participation in demand response and energy reduction programs. The stakes couldn’t be higher to plan and conduct effective rollouts of these HEMS applications, starting with clear messaging about the benefits of HEMS solutions to average residential customers. Not every consumer embraces change – especially when we have all been conditioned to regard electricity as a cheap and plentiful commodity that doesn’t require much attention on our part. However, we can be educated to welcome changes such as smart meters and HEMS solutions, as some utilities have successfully demonstrated.
HEMS rollouts must clearly articulate the benefits to end users – what’s in it for them, what’s required of them, how to get more information, how to get support when things break, and examples of what the solution looks like and options for IHDs. A successful HEMS rollout requires a sophisticated sales and marketing strategy. Next week’s blog will explore some of the key tactics in a successful strategy.

Flat Panel TVs Get Energy Efficiency Standards in California
Break out the Champagne for the bold decision by the California Energy Commission (CEC) in approving new energy efficiency standards for TV sets sold in California!
Recent blogs (see archives: October 12th and 26th, November 2nd and 9th) covered the brouhaha that the CEA and some TV manufacturers created with the usual scare tactics about job loss, economic disaster to businesses, and all the other assorted ills that have been projected with every previous CEC energy efficiency standard. Fortunately, the CEC knows from actual experience that these standards improve economic conditions – for California consumers who will enjoy reduced operating costs (i.e. electricity bills). In energy efficiency matters, other states often adopt the CEC rules, so here’s hoping that this positive trend to reduce energy consumption continues across the nation.

There was plenty of “whine” on November 4, or to be exact, at 4:55PM on November 3, when the CEA sent a 91 page document 5 minutes ahead of the 5:00PM deadline for comments on the California Energy Commission’s (CEC) proposed TV energy efficiency standards. In order to review this and other comments that arrived at this 11th hour, the CEC has postponed its hearing until November 18th.

The CEA comments oppose the proposed standards, citing that energy efficiency standards would increase the price of TVs. According to this industry association, the average digital TV uses the same electricity as two light bulbs – incandescent light bulbs. The average 42 inch LCD TV consumes 203 watts, and the average 42 inch plasma TV guzzles 271 watts. The average California home has three TVs. It appears that the CEA is strongly advocating for not only increased operating costs for consumers, but also construction of more expensive power plants and increased electricity rates to pay for increased power generation.

It’s a shame that the CEA can’t take the bold step of working cooperatively with the CEC to reduce consumers’ operating costs of TVs and reduce carbon footprints as well.

Smart Homes and HEMS in a Smart Grid

I attended a presentation by Vint Cerf, often called the “father of the Internet” last week, and part of his presentation covered sensors and actuators in homes, monitoring environmental conditions and sending alerts based on defined triggers. His example was his wine cellar. If the temperature goes above a threshold, sensors note the condition and send an alert to his mobile phone. An actuator could trigger a change in the air conditioning temperature to eliminate that threshold and alert.

This is the type of technology I want to see enabled on the one device I almost always forget to adjust before a trip – my hot water heater. Wouldn’t it be great if I could remotely set it to vacation mode and save energy and money – money that I could use for a future vacation? Wouldn’t it be even more wonderful if I had a powerful but easy-to-use Home Energy Management System (HEMS) that maintained a series of defined “Vacation mode” settings for my entire home? Instead of setting individual lamps on timers, having the ability to instruct my home to turn selected lights in selected rooms on and off on automated schedules would make my HEMS a handy preventive security system.

One way to achieve this is to make devices internet-enabled and addressable – maybe not all of them, but many of them. For utilities, one of the promises of the Smart Grid is the opportunity to expand and enrich their Demand Response (DR) programs. Through these DR programs, utilities can work with consumers to automatically power down pool pumps or refrigerator ice makers, remotely adjust HVAC temperatures up or down, and find other mutually agreeable actions that can pare down electricity demand at peak times. Some consumers are suspicious of any utility reach into their homes, so it will be very important for utilities to structure their DR programs so that consumers can override these automatic and/or remote controls – but at the price of higher peak electricity rates as a result of that ability to override.

There is another very important point about this future vision of a Smart Home in a Smart Grid – and it covers Internet security. Mr. Cerf pointed out that internet security is in definite need of research and development, and he’s right. If we are going to make a home truly Internet-enabled, as homeowners we’ll expect that our homes can’t be hacked with the unfortunate regularity that befalls our computers. HEMS solution providers need to consider appropriate security designs and processes into their software and hardware that consider worst-case scenarios. As we all know, one negative incident in the USA, one highly publicized negative incident, could set back the HEMS industry for years.

Check out the Global Smart Energy Bilateral Trade and Investment Opportunities event on November 13 in Monterey. The agenda is filled with Smart Grid sessions that cover national and global perspectives.

Of course, there are lots of contributing technologies and actors needed to support the intelligent consumption of electricity.  One important actor is the National Institute of Standards and Technology (NIST).  At the recent GridWeek conference in Washington, D.C., they unveiled the NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft).   What is the value of standards – especially for interoperability?  It helps protect investments from product obsolescence and helps protect all assets from compromised or reduced operations. 

Standards will dictate items as basic as a common plug for all electric vehicles (EVs), to more complicated matters such as common data tables for meters so that Home Energy Management Systems (HEMS) and utility back-office systems can expect to see the same data in the same format regardless of the vendor of the meter that supplies that info. 

There are over 70 gaps and issues that NIST has identified in current standards that apply to the developing Smart Grid, and 14 have been prioritized for earliest resolution.  The 14 breakdown into meter upgradability, definitions for electricity market mechanisms and structures, distributed generation integrations into existing Grid infrastructure and systems, consistent information standards for energy use and Demand Response (DR) price signals, and network signaling and timing.  The report is available for public review and comment at http://www.nist.gov/public_affairs/releases/smartgrid_interoperability.pdf.

Another announcement that received less fanfare was a Presidential Memorandum issued back in February to the Department of Energy (DOE) about energy efficiency standards for some appliances that are near and dear to Americans:  beverage vending machines, dishwashers and general service incandescent lamps; microwaves and electric and gas kitchen ranges and ovens; commercial boilers and air conditioning equipment; and general service fluorescent lamps and incandescent reflector lamps.  The DOE has now issued all standards impacting these appliances, which will result in reduced electricity use and reduced carbon emissions.  This is the first time that beverage vending machines are held accountable for energy consumption, and not a moment too soon.  Improvements in energy use will save vending machine owners $38 – $52 million per year.  That’s a lot of money spent on electricity. 

Continued development of energy efficiency standards has many benefits to consumers, but there is a cautionary tale in the certification of standards compliance. 

Many people in the USA are familiar with the Energy Star ratings that appear on many devices that consume electricity.  We like to feel good that we’re buying a product that has been tested and rated to exacting standards that help the environment.  The Energy Star program guidelines state that only the top 25% of products in any one category can earn this special rating for energy efficiency.   Energy Star is a great concept, but the reality is a bit different.  Currently, companies test their own products, under their own conditions, to report on their energy use.  For example, some refrigerator manufacturers tested their products’ energy use with the ice-makers turned off.  Is that really the most common mode of operation?   I don’t think so.  Does self-certification serve the public interest?  Not in these situations, and when big money is involved, verification of compliance with standards becomes critical.  

NIST is aware of the issues of self-certification and is already taking steps to ensure that the new Smart Grid interoperability standards are trusted and enforceable.  There is work underway between NIST, industry representatives and other stakeholders to develop a framework for testing and certification to the developing interoperability standards.  That’s a very important activity with meaningful stakes for all of us as ratepayers, industry players, and electricity consumers.  After all, the revolution in how we as consumers manage electricity accelerates when we have energy management and energy efficiency standards that are backed with solid test and certification credentialing.

And now?  There’s a trend to distributed generation, evidenced in homeowners installing alternative energy solutions like solar and wind to offset at least some of their electricity needs.  Those numbers will certainly grow when Feed-In Tariffs (FITs) are in place in more states.  FITs require electric utilities to buy back excess electricity from individuals or businesses that have their own means of generating electricity from alternative energy sources.  The onset of smart meters helps the growth of distributed generation since these meters ostensibly can handle the ebb and flow of electricity.  However, a big obstacle to widespread adoption of distributed generation lies in the software that tracks and monetizes the electricity flow. 

The electric meter on your home or business is the cash register for a utility.  The billing software that calculates charges and sends out your monthly bill is usually a hairy and gnarly application that is modified only with great care and caution.  It may have to work with many different price models.  It may interface or integrate to other utility software applications for customer service, trouble tickets, and outage management.  Therefore, consider the time and effort involved for utilities to revise their existing systems (or take the risk of scrapping them for a new suite of integrated applications) to accommodate additional calculations to not only charge you for your use of their electricity, but pay you for their use of your electricity. 

Its quite a task, and possibly one without comparison.  My wireless carrier, landline provider, and cable TV provider are not set up to “buy back” unused time or channels (although I would love to stop paying for bundled cable channels I never watch), and the best deal I can find is that I get 5 cents off my grocery purchase for each bag I bring to use when shopping at my local stores.

Think about what billing software looks like to support distributed generation and FITs.  It has to interface with all other existing systems, and it has to have an interface to each participating homeowner or business.  That interface has to be real-time and hold historical data for look-backs that could range from yesterday to this day last year.  The complexity and amount of information is best managed by a web-based solution, so that homeowners can log in at any time from any computer to view their account.  Information has to include the pricing plan(s) for customers who sell back electricity, and visual displays of current flows – is the electricity flowing from utility to home or vice-versa?

Then think about what this means for the customer support operations in utilities.  People call now with questions about their bills.  There will be a huge increase in calls to utility customer service centers once distributed generation and FITs are more widely adopted.  Some of that volume is a learning curve issue and a percentage of calls will of course decrease over time, but invariably, homeowners will call in to question why their solar panels are not generating as much electricity as they think they should to trim their utility bills.  These calls really should go to the solar manufacturer, but if consumer behavior is true to form, the first call is to question the accuracy of the billing statement. 

Savvy Home Energy Management System providers (HEMS) have an opportunity to become the utilities’ best friends by reporting not only the energy consumption within a home, but also the energy generation in that home.  The ability to integrate to any manufacturer’s PV, wind, or other alternative energy system and report on performance (plus diagnostics for routine issues) can significantly impact the operational costs for utilities’ customer service centers. 

Distributed generation is going to be a big part of the Smart Grid evolution, and there will be lots of opportunities for strategic partnerships between energy producers and energy management solution providers.  Utilities could and should be encouraging these partnerships because it will make their jobs easier, and keep their customer service costs down.