The Smart Grid Dictionary defines energy efficiency as technologies, applications, and services that reduce the consumption of energy without impacting operations or behaviors.  It is that lack of change to behaviors or operations that sets energy efficiency (EE) apart from energy conservation.  EE produces negawatts – and treating it as that “penny earned” has been promoting welcome innovations in technologies and policies that financial and environmental benefits for consumers.

First, improved EE in products means lower total costs of ownership or TCOs for residential and business consumers.  The California Energy Commission recently adopted EE standards for battery chargers, which are vampire loads in just about every home and business.  Those chargers are often plugged in and drawing power even when they are not fulfilling their purpose of charging up a smart phone, mini-vac, or powered toothbrush.  In California alone, a cringe-worthy 5.3 gigawatthours of electricity is spent on chargers, mostly in the form of waste heat.  The standards, which take effect between 2013 – 2017, will require that manufacturers produce chargers that stop drawing power once the device battery is topped off.  That will lower consumers’ electricity bills and reduce the need to invest in additional generation capacity to support these vampire loads.  And that in turn helps keep electricity rates from rising.  California EE standards are reckoned to have saved its state residents over $36 billion since 1977.  That’s a lot of pennies earned.

Second, purposefully designing EE into products will reduce the amount of energy expended for any device’s operations – whether they are always tethered to the grid or reliant on battery power.  Researchers at the University of Michigan have a new technology called Energy-Minimizing Idle Listening that has reduced energy use in mobile devices by 44% in proof of concept testing.  By putting mobile devices into a “subconscious mode’, the device’s normal idle listening state consumes less energy, extending battery charges and reducing electricity consumption.   Another interesting technology trend first articulated by Jonathan Koomey of Stanford University and known as Koomey’s Law states that the amount of computing power per joule doubles every 1.6 years.  (A joule is a measure of energy, whereas a watt is a measure of the rate of energy consumption.)  Essentially, a fixed amount of computing power gets twice as energy efficient just under every two years, which has tremendous implications for our proliferation of electricity-guzzling data centers that support our growing use of cloud-based applications and digital storage.  IEEE’s local Silicon Valley Chapter of the Solid State Circuits Society is sponsoring a course about the fundamentals of low-power design, which portends opportunities for designers of computing devices, who have long understood the need to build in as much EE design as possible, to share their expertise with developers of consumer electronics.  These developments will ultimately reduce the costs of operation for many popular devices.

Third, thinking about energy efficiency as a penny earned enables policy-makers to support decoupling for electric utilities.  The Smart Grid Dictionary defines decoupling as a regulatory and market strategy that allows utilities to invest in and profit from efficiency-based capacity by assuring them a return that is equivalent to sales of electricity.  It means that utilities are not penalized for encouraging their customers to use less electricity.  Today, 30 states do not have pending or established decoupling policies in place for electricity and/or gas, and they should.  Consumers would like utilities to help them reduce their energy bills, but without decoupling, why would utilities negatively impact their revenues?  Understanding the full value of decoupling translates into political will to modify utility business models.  Why do regulators and legislators in these 30 states ignore the opportunities to save money for their citizens?     

Whether we’re looking at improving product designs or market mechanisms to encourage energy efficiency as that “penny earned”, the financial and environmental benefits for consumers are compelling.  Ben Franklin would approve.   

Such microgrids can exert profound and positive influences for 2.4 billion people living in energy poverty now.  In villages where young girls are routinely pulled from school to spend all day commuting by foot to and from remote water wells, a microgrid powering a local well can keep those girls in school.  Rural entrepreneurs can take the light from a single light bulb and extend working hours to build thriving local businesses that uplift everyone. 

That’s the vision of a new project from the Institute of Electrical and Electronics Engineers (IEEE) Community Solutions Initiative (CSI) under the guidance of the Power & Energy Society (PES) program is working to create low-cost, low-logistics, open-source solutions for electricity generation and distribution for people in energy poverty.  Their first significant project to prove out this concept is a Solar Trailer that provides 1.4 kWh of electricity – the daily power needed by 40 homes for single-purpose uses.  Each Solar Trailer charges a number of 12V batteries that can be used around a village or town.  By functioning as community charging stations, the roaming batteries run small devices like LED lightbulbs, chargers for mobile phones or power tools, or small refrigeration units.  The first trailers have been deployed in Haiti, but the project is more than a technology effort – it is an activity that requires local community involvement from planning through deployment stages.  The end goal is to create local jobs and work with the Haitian government’s goals of delivering electricity to 75% of its unserved citizens.

In addition to the Solar Trailers, other community charging stations may generate electricity through pedal-power or wind turbines, or perhaps other innovative local generation technologies.  All generation technologies used in the CSI initiative will be open-source and based a Sustainable Energy Reference Architecture (SERA), because it is essential that local resources can develop and maintain their community operations.  The CSI website also shows a number of creatively cheap products such as battery-powered light sticks that can be made with bamboo and a few LEDs – very cool ideas that could translate into local businesses that create local jobs and address energy poverty.

The IEEE PES CSI team participates in the UNF MicroGrids Work Group that was described in my September 19 blog.  Their work will certainly contribute to the best practices for technologies, community involvement, and financing that will help turn microgrid concepts into reality for the developing world. 

In countries like the USA, microgrids can increase reliability at the distribution level, expedite integration of local renewable generation sources, and create new business models for campuses and neighborhoods.  For the developing world grappling with energy poverty, microgrids can cost-effectively expedite delivery of basic electricity services and have profound impacts on quality of life for 1.4 billion people.  These are Smart Grid benefits that are definitely worth pursuing everywhere. 

To learn more about how your company can get involved in the UNF MicroGrids Work Group or the IEEE PES Community Solutions Initiative, please contact me, or attend this webinar on  September 28 titled: Microgrids: Game-changing solutions for developed and developing electricity grids.   

Consider life for those 2.4 billion people living in energy poverty.  It limits the amount of time they spend in work or education to daylight hours.  It limits connections to the outside world to communications equipment operating on battery power.  They can’t rely on refrigeration systems to keep food safe or water purification systems to ensure potable drinking water.  They suffer from health problems which cannot be addressed with any medical devices that require electricity or refrigeration.

Reliable electricity has profoundly positive implications to developing economies.   But existing ways of planning, building, and delivering electricity – defined by centralized generation, transmission, and distribution systems, are cost-prohibitive and time-consuming to deploy.  What is needed is an innovative Smart Grid solution to eliminate energy poverty for one third of the world’s inhabitants.

I recently spoke with Terry Mohn, Founder of General MicroGrids, Inc., a company that specializes in sustainable energy solutions.  For him, the answer is yes, microgrids will become the prevalent energy delivery solution to eliminate energy poverty.  He is putting his expertise to work as Co-Chair of the United Nations Foundation’s MicroGrid Work Group with the mission to leverage industry experience to achieve this objective.        

 The UNF Project Underway                               

The United Nations (UN) recently organized an effort through the UN Secretary-General’s Advisory Group on Energy and Climate Change to commit UN member countries to address energy poverty.   The effort is led by UN-Energy, a collaboration of 20 UN agencies, as the UN Campaign on Sustainable Energy For All.  It has three main objectives to meet by 2030:  1) Achieve universal access to modern energy services; 2) Improve global energy intensity by 40 percent; and 3) Produce at least 30 percent of the world’s energy from renewable sources.   

The UN Foundation (UNF) plays a key supporting role to drive concrete actions on energy access at the national level. The UNF has oversight of global awareness and education campaigns and fosters private-sector engagements.  The Work Group that Terry co-chairs is building a practitioner network focused on addressing the barriers to achieving the project goals.  According to Terry, “we need to bring together global stakeholders to develop a more integrated approach to energy access planning and execution than has previously been done. We intend to catalyze the scale-up of renewable and low-carbon technologies and spur the market toward universal energy access. It will focus in particular on the removal of barriers to the effective delivery of energy services by promoting the development of new technologies and innovative financial and business models. It will also identify and disseminate best practices and foster strategic partnerships to promote energy access.”

The Work Group is reaching out to companies that have experiences in planning, building, and financing microgrids.  The answer is yes, microgrids can help eliminate energy poverty.  But there’s more to this story, and the discussion about microgrid market opportunities, barriers, and ongoing projects continues in next week’s blog and will also be explored in an upcoming Energy Collective webinar. 

Here’s a coda to my previous articles on data analytics – I’ll be moderating a panel session on September 21 for Agrion in the San Francisco Bay Area.  Focused on Distribution Automation (DA) and advanced communications, we’ll discuss the role of analytics in DA and converged networks.   

What’s wrong with this picture? If you are a utility that gets revenues based on the volume of sales of electricity, then energy efficiency programs that reduce volume translate into reduced revenues. Imagine if a fast food restaurant encouraged you to NOT supersize your meal – although it would be good for American waistlines, it would be bad for the restaurant and its investors.

Utilities that operate in this model face a real dilemma therefore in offering and aggressively promoting effective energy efficiency programs. Here’s where a regulatory concept called “decoupling” helps. It is a ratemaking mechanism that removes the barriers to energy efficiency programs. It eliminates the link between electricity sales and utility profits. The regulatory body guarantees a revenue return through rates that are typically calculated on a per-customer basis, and periodically reviewed to see if the pre-determined revenue requirement is met.

What does decoupling and support of energy efficiency programs mean for utilities and investors? Decoupling provides stability in revenue expectations, reducing risks for investors. According to a recent report released by Ceres, utilities that engage in energy efficiency programs also reduce their risk exposure to fluctuating energy prices.  Utilities that support diversification and distribution of generation assets take risk reduction a step further.  Utilities that engage in energy efficiency and diversification and distribution of generation are more likely to attract low-cost capital, enabling better returns for investors.

What does decoupling and participation in energy efficiency programs mean for consumers?  It means increased and improved opportunities to reduce utility bills.  Depending on the state, the programs can cover replacement of selected appliances with energy-efficient models or rebates on certain building remodeling projects.   Federal tax credits may also come into play and add even more financial benefits for consumers. 

What does decoupling and energy efficiency mean for the environment?  It means reduced carbon emissions reflecting reduced electricity consumption.  And because decoupling also removes a barrier to localized generation – the prosumer model – decoupling facilitates broad integration of renewable energy sources into the grid.

What does this have to do with the Smart Grid?  The Smart Grid is more than an overlay of ground-breaking technologies, it is based on smart policies that provide incentives to consumers and utilities to optimize generation, transmission, distribution, and consumption of electricity.   

For more information, the Regulatory Assistance Project has good presentations that explain decoupling and its benefits to consumers, utilities, and our environment.  

Electric vehicles (EVs), a key component of the Smart Grid, serve many beneficial purposes.  First, even those that get electricity from fossil fuel power plants still have a far lighter impact on the environment than gas powered vehicles.  The cumulative greenhouse gas emissions from coal power plants powering EVs are still less than the cumulative emissions from millions of gas powered vehicles.

EVs also help shape electricity loads through smart charging, which uses communications and charging control software to manage the timing, pace, and extent of charging loads from utility to EV and manage the load stored in the EV.  It can respond to fluctuations in demand on the grid, so it charges when electricity is readily available and suspends charging when it senses peak load times.  EVs can help stabilize the grid, and avoid grid purchases of expensive peak power, keeping costs down for everyone.

EVs can earn money for their owners through carbitrage.  Carbitrage is defined in the 2^nd Edition of the Smart Grid Dictionary as:  “The capability for an EV or PHEV (Plugin Hybrid EV) or charging station to communicate with the electrical grid to schedule charge/discharge activities based on conditions including pricing signals, tariff agreements, TOU (Time Of Use), DR (Demand Response) programs, and manual overrides by car owners.”  Just imagine – one day there will be an iPhone app that calculates how much money that sweet little EV you’ve been thinking about purchasing will earn for you.  Contrast that to the mental subtraction of a couple thousand dollars we all do as we drive a gas-powered car off the dealer’s lot.

EVs are much cheaper to operate than gas-powered vehicles, and electricity pricing has more predictability to it than barrels of oil.  And then there’s the convenience factor.  I can’t wait to eliminate filling up the tank as one of my chores.  How much better it will be to pull into my garage and plug in the EV – which my smart charging system will juice up when prices are at the lowest. 

But even more significantly, a shift to EVs means the beginning of the end of costly Big Oil.  You can take your pick of studies that calculate the sum total of US federal and state subsidies that go to these companies.  The eye-popping numbers range from $330B between 1950 – 2003, to a mere billion dollars a year.  That’s right fellow US taxpayers, at least a billion dollars a year in subsidies to mature, profit-engorged multinational oil corporations.  I’d much rather see those sorts of subsidies going to domestic, renewable energy  and EV businesses that will make the petroleum spewing a mile deep in the Gulf as obsolete and cringe-inducing a fuel as whale oil.   Wouldn’t you? 

I Want To Be A Prosumer

Alvin Toffler coined the term “prosumer” to describe a situation where a producer of electricity may also have a consumer relationship with a utility, aggregator, and other energy provider.

That’s exactly what is happening today.  Consumers can play the role of renewable electricity producers at individual or community levels.  For instance, in California, Community Choice Aggregation offers neighborhoods and municipalities opportunities to join forces to source renewable energy for their electricity needs.  This sensible policy encourages growth of local businesses to build and manage renewable energy production and stimulate local economies.  Unfortunately, Pacific Gas and Electric, the monopoly in Northern California, wants to undermine these policy goals and economic benefits to consumers through its Proposition 16 campaign (See my April 19 blog).

Future electricity production must also consider the “negation” of electricity use.  A negawatt is defined in the Smart Grid Dictionary as “A term that identifies watts of energy saved through a reduction in energy use or increase in energy efficiency.  It is the greenest form of energy.”  It is also called the “first fuel”, and it should be bought and sold like any other energy source.

There are growing numbers of solutions that enable homeowners to monitor and manage their electricity use, and create negawatts.  In other words, a consumer can actively participate in reduction of electricity consumption through new Smart Grid technologies.   Traditionally, utilities or third party aggregators enrolled customers into programs that usually delivered day-ahead notification of requests to reduce electricity consumption.  In the future, maintaining a stable grid with renewable resources will require real-time requests for electricity consumption adjustments (and energy storage too).  That implies low cost, high performance reliability in solutions that homeowners use to manage electricity consumption.  One of the most interesting technology platforms uses open source hardware and software – called OSHAN (Open Source for Home Area Networks).  Why is that important? 

Open source solutions (like Linux, MySQL, Apache –foundations of the Internet) have a solid reputation for top quality, reliability, security, and flexibility.  Open source solutions are created at fractions of the cost of traditional development cycles and eliminate risks of buying products that won’t work together. The OSHAN platform could play an important role in unleashing the creativity of software and hardware developers to create innovative products that manage and reduce energy use, creating negawatt value for consumers.   Just as the Smart Grid enables a broad base of participation in electricity production and consumption, technologies like OSHAN can propel the most cost-effective and easy-to-use energy management products into mainstream use.   I look forward to being a prosumer. 

For example, I recently attended an EV showcase.  Five manufacturers described their solutions, detailing power trains, their batteries and the pros and cons of these technologies, and other factoids.  I noticed two common elements to all EV cars and descriptions:

1.  Not one car had a purse garage for women.  Apparently we can redesign cars from the engine out, but we can’t think about arranging a car interior oriented to women.
2. More to the point of this blog, every manufacturer mentioned that consumers need to be educated about the differences between owning and maintaining an internal combustion engine (ICE) vehicle and an EV. 

Consumers need to LEARN how to manage an EV.  Think about it.  Remember history because it does repeat itself.  At one time, people had to learn how to manage a car instead of a horse. 

An EV means a charging station.  Most consumers will want Level 2 charging capabilities, which may mean scheduling a visit from an electrician to install a 3-prong plug like clothes dryers use to support charging an EV in a couple of hours instead of 8-12 hours.  Once you have that charging station, you avoid the inconvenience of filling gas tanks, and spend pennies instead of dollars to “refuel”.  And because an EV has fewer moving parts than an ICE, you may spend less time at auto repair facilities.  These are positive changes to lifestyles and wallets.  Are these positive benefits communicated on a broad scale to consumers?  Not really.  Many consumers will perceive an electrician’s visit to be an unwelcome additional expense or inconvenience.  And the majority of consumers suffer from “range anxiety” – figuring an EV could never support the daily distances they travel so they are not going to give it serious consideration.     

Let’s add in some more changes in the form of carbitrage.  The Smart Grid Dictionary (2^nd Edition – June 2010) defines it carbitrage as “the capability for an EV or PHEV to communicate with the electrical grid to schedule charge/discharge activities based on conditions including pricing signals, tariff agreements, TOU, DR programs, and manual overrides by car owners.”  It’s a fabulous concept, and it means that one day my car can earn money for me while it is hooked up to the grid simply by selling back electricity at peak times.  This is a real game-changer, but not easy to explain in a sound bite to consumers. 

No matter the Smart Grid subject, if the technology is anywhere near the consumer, education is required.  We need coordinated communications campaigns to align consumer, government, and industry views of Smart Grid visions, realities, and most importantly, the benefits to consumers.  Consumers, taxpayers, and ratepayers need to understand what values they gain from making what will be some dramatic changes in their lifestyles. 

If EV manufacturers really want to sell EVs, they need to build educational campaigns to instill familiarity and confidence in consumers.  Stop spending marketing dollars promoting gas-guzzling SUVs.  Feature real-life EV owners and how they use their vehicles.  Every EV manufacturer should have a fun, interactive game on their website that engages consumers to enter info about their daily driving habits to learn just how often they would have to charge up an EV, and the cost comparison of their electricity charges versus avoided gasoline costs.  That would open a lot of eyes in the USA.

This is the GOOD about California’s Smart Grid plans – it’s a public process that invites an open exchange of views about the roadmap for a successful and cost-effective Smart Grid in this state, which often serves as a template for other states. It included a great deal of discussion about what is in the average residential ratepayer’s best interests – and the aspects of the Smart Grid that benefit consumers.

The BAD is that decisions have to be made quickly, and in advance of cyber security and interoperability standards recommendations coming from the National Institute of Standards and Technology (NIST). It’s becoming a common theme – everyone is waiting for these standards recommendations, everyone wants state and Federal regulators to establish policies, but regulators are reluctant to pick winners and losers.

The UGLY is a sad, cynical and manipulative ploy by one of the three California IOUs to squash competition from municipal utilities. That utility is PG&E. It is sponsoring and investing more than $25 million dollars in a misleadingly-named “Taxpayers Right to Vote Act” also known as Proposition 16. This proposition requires that 2/3s of voters must approve any local government’s provisioning of electricity through a municipal utility. Why is this ugly? First, it contravenes the proposed California Smart Grid roadmap’s goals of accommodating all generation and storage options. Second, it directly counters another roadmap objective to enable electricity markets to flourish. PG&E definitely does not want alternative markets organized around Community Choice in California that could compete with them. Third, it is blatantly unenlightened behavior from a utility that had the courage to divorce the Chamber of Commerce for its “extreme position on climate change”. Does PG&E have an evil twin that is currently running the show?

Shout out to the EPA and DOE
The US Environmental Protection Agency and the Department of Energy are strengthening the ENERGY STAR program as noted in previous blogs. New testing is underway on six of the major electricity consumers in average American homes, and new ongoing verification testing will ensure continued compliance in addition to the third party testing already put into place. The appliances are freezers, refrigerator-freezers, clothes washers, dishwashers, water heaters and room air conditioners.

In addition, the DOE has been aggressively stepping up enforcement of Energy Star standards, requiring manufacturers to actually comply with these standards, and revoking the ENERGY STAR label from non-compliant products. This is all good news for American consumers, because the ENERGY STAR program is well-known and trusted to guide purchasing decisions. Beefed up enforcement will save consumers money – estimated to be $250 – $300 billion in savings over the next 30 years. Now that’s what I call a good use of taxpayer money. For more information, click here.

The Smart Grid Dictionary defines distributed generation as “Electric generation that feeds into the distribution grid, rather than the bulk transmission grid, whether on the utility side or customer side of the meter.   It includes customer-owned microturbines, wind-powered generators, hydro units, and PV arrays.  Customers who own generation resources usually want to reduce the amount of power purchased from the local utility or supply their own backup power needs, and this form of DG is sometimes known as on-site DG.   Excess power may be sold back to the utility through net metering.   Utilities may invest in DG to mitigate substation level peak loads and/or avoid building or upgrading local distribution lines.  The technologies used in distributed generation are sometimes referred to as Distributed Energy Resources.  DG is also known as decentralized energy.”    

Backup generation has been around for decades.  Telecommunications systems and other mission-critical operations like hospitals and data centers routinely install generators (often diesel or natural gas) along with battery backup to keep running even when an emergency event prevents electricity delivery from the utility grid.  However, the BUGS business model uses distributed generation assets to provide grid support and add generation capacity in situations where the utility’s usual generating capacity is not sufficient to meet customer demands for electricity.  The old business model would require that utilities either fire up an expensive “peaker” plant and/or ask customers to reduce their electricity use through demand response programs.     

The BUGS model presumes that utilities would own, install, and manage the backup generation assets at substations.   It is an innovative option for utilities to avoid capital expenditures on new generation plants and transmission and distribution facilities.   It’s a great idea, and when it combines renewable energy sources and energy storage for grid support, it gets even better.  Rather than continue investments in remote generation and long distance transmission facilities, placing more generation closer to users reduces electricity losses incurred during transmission and therefore improves overall grid efficiency.   There’s a diagram of it at the California Energy Commission site.

Utility-owned distributed generation is not sufficient to address long-term generation capacity requirements, making it critically important for utilities and state regulatory agencies to encourage more distributed generation business models that convert residential, commercial, and industrial sites into energy producers rather than just energy consumers.   We need innovators who can take the mantra, “Think globally, act locally”, and transform it to “Think globally, generate locally”.

A few weeks ago I had the opportunity to discuss, well, no, that’s the wrong verb to describe the scenario.  I had the chance to bow on bended knee to humbly suggest to a representative of my local utility that it could improve its messaging about the benefits of smart meters and Smart Grid technologies in general, and target messaging to women in particular.  The response, delivered in the chilliest of tones was that since the utility had a woman at the head of the marketing effort, that demographic was more than amply covered.  No, sorry, it’s not covered.  Not even close.       

It is employee attitudes like this that will kill Smart Grid support, which is needed at both the taxpayer and ratepayer levels.  It is employee attitudes like this that have utility CEOs despairing of successfully effecting change within their own organizations*.   It is attitudes like this that torpedo any possibility of a utility being the trusted advisor to help consumers manage significant changes in their relationships with energy.  And the saddest realization of all is that while consumers overwhelmingly expect utilities to offer advice about energy consumption, utilities like the major IOU (Investor Owned Utility) in my area are serving up plenty of material for future business school courses about how to squander trust in utilities through a lack of interest in ratepayer communications.    

There are smart utilities out there that have successfully enlightened their customers about smart meters and Smart Grid benefits, and it would be fantastic if all utilities actively shared successes and failures to facilitate the development of practical advice.  The smart utilities understand that today’s ratepayer relationship may migrate to a customer relationship in the future, and that customers will have choices about energy suppliers.  These same utilities also understand that sustaining and growing trust relationships will help engage consumers to be enthusiastic participants in residential demand response programs and energy efficiency programs. 

So when you read the definition of the Smart Grid in the Smart Grid Dictionary, the point about bi-directional communications is more than an evolutionary change in a network, for some utilities, it’s a revolutionary change in their behaviors.  You may not always like what you hear from your ratepayers, but start listening now and building rapport to deliver the complex messages about the Smart Grid and the benefits to consumers.  And Smart Grid solution vendors need to remember that the Smart Grid is more than just wealth creation for them.  It won’t happen without value creation for consumers. 

To all the hard-working, dedicated, and insightful PG&E employees who understand the importance of enlightening consumers about Smart Grid initiatives and are working to do that, thank you from the bottom of my heart.  I support your efforts, and I am sorry that you have to deal with colleagues who just don’t get the fact that Smart Grid success is contingent on ratepayer and taxpayer support.  Maybe if you post “It’s the Consumer, Stupid” signs in the office, the message will sink in. 

*IBM global study of utility CEOs:  70% anticipated turbulent change within their organizations about Smart Grid, and from one year to the next reported a 19% drop in their expected success in managing that change.