The Overlooked Consumer in Smart Grid

Andy Zetlan, a consulting director at SGL Partners, is the guest author of this great article about consumers and lessons that utilities can learn from product and service providers in adjacent business sectors.

As we have seen in recent reports, investment in Smart Grid technologies continues to grow world-wide, with continued advances in the deployment of smart metering and analytics delivers benefits to utilities. Utilities are seeing levels of benefit in return for these investments, in the enhancement of grid operations, more accurate billing, correcting for lost revenues, and other material issues. Engaging consumers, however, continues to take a back seat in priority in many utility projects.

According to the Smart Grid Consumer Collaborative (SGCC) where I have previously served as a Board member,

“… Surveys illustrate that there is high consumer interest in electric utility energy programs. For example, three out of five respondents stated that they would likely participate in a critical peak rebate program. Additionally, one-fourth to almost half of consumers interviewed in the survey say they would be likely to participate in three other pricing programs – time-of-use, demand response and critical peak pricing plans – that were tested in the survey.”

The SGCC goes on to say that consumers really are interested in new pricing plans and service options, and understand that the technology might lead to improved reliability, reduced environmental impact, and lower costs. Lastly, the survey indicated that consumers prefer simple solutions that leave the consumer in charge of household energy management.

Are utilities ready for this? Some have taken good steps forward, but for the most part, utilities are still catching up to other industries in understanding how to support an “Internet of Things” approach to its consumers. Instead, consumers are turning to off-the-shelf solutions and competitive solutions to start down the road to self-determination around energy, but continue to be more disconnected from their utilities except to review their consumption and review possible rate approaches off-line.

Further, the existing solutions don’t yet meet the “simple” rule, although progress is being made. Future announcements from industry leaders such as Google and Apple suggest a new focus on this, and we would hope that utilities would understand and push towards a more integrated posture to make it a solution, and not just a new consumer product. We should understand that consumers also want the positive reinforcement of their actions in supporting the objectives of their investment thinking … that of contributing towards reliability improvement, environmental mitigation, and cost reduction.

There are solutions out there, but there is also confusion. Utilities aren’t always leading here, but catching up to other vendors (think Nest and others), and service providers (think ADT and Comcast) that are already gaining traction. Where will complete solutions come from that meet the need for simple and strong feedback that consumers understand? The answers are not clear yet, but the need most certainly is.

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How Nanotechnologies will Disrupt the Electrical Grid

Is it just me, or is the pace of technology innovation speeding up for you too? Acceleration is certainly evident in nanotechnology R&D. Back in December 2014 I wrote two blogs that updated my 2020 predictions first published in January 2014. Nanotechnology discoveries are now occurring on almost a weekly basis. Universities have been a hotbed of scientific discoveries in material sciences. Consider the recent news that graphene, a particularly interesting nanomaterial and photons. A photon is a unit of electromagnetic radiation that has energy but not an electrical charge. To the naked human eye, photons are sunshine. Research in Switzerland revealed that graphene can take one photon and make multiple electrons. This is what today’s solar panels do – convert photons into electrons. But graphene has a multiplier effect, with the potential to boost existing best case conversion rates from 32% to 60%.

While this announcement addresses research results, commercialization won’t be far behind, and we’ll soon be reading about new solar panels that leverage graphene materials to increase harvestability of solar potential. Other research advances focused on making solar harvesting materials more flexible.   What do these research announcements mean? Here are three key points. Solar panels, like microprocessors, will shrink in size and increase in power. Second, areas that have marginal value for solar generation will get a second look as panels improve in their productivity and their flexibility to be adhered to non-traditional surfaces. Third, distributed energy resource (DER) momentum grows as a result as more rooftops, landscapes, and other building surfaces harvest solar energy and proliferate in distribution grids.Gr

Other nano research is concluding that a little stress can be a good thing for silicon crystals known as quantum dots. Around the time of the 1973 energy crisis, the popular saying was “small is beautiful”. In at least some research labs around the world, the new saying could be “small and stressed is beautiful”. One commercial application possibility focuses again on improving the energy harvestability of solar panels made from silicon. However, there’s also interest in how these nanocrystal reactions can increase the charge/discharge cycles of batteries, improve computer displays, and decrease power consumption.

Are investors paying attention? Graphene has been dubbed the “wonder material”, and big players like IBM and Samsung have been allocating money and resources into it.  China has filed more patents involving graphene than any other country. One of the first commercial applications of graphene research is a light bulb that improves on the energy efficiency of LED bulb technologies. Once these new bulbs are available later this year, investors who have been hanging back will be looking for other commercialization opportunities.

From a Smart Grid perspective, graphene has exciting application potential in energy harvesting, energy storage, and even energy consumption, specifically reductions in waste heat. It’s a rapidly innovating area of materials science research that will be the foundation for disruptive technologies integrated into the electric grid. The dual impacts of these disruptors will be to increase the amount of electricity generated by DER assets and reduce electricity consumption as devices become more energy efficient. The speed at which R&D in graphene and other nanomaterials is advancing to commercialization may blast past my predictions of overall progress by 2020.

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What Energy Harvesting Means to Smart Grid and M2M Sectors

New terms and jargon sometimes appear over time. “Sustainable” is one example. From a shorthand description of smart, long term practices applied to fisheries and agriculture to thoughtful consumption embedded into modern society, it has achieved jargon status.

The term, and its conceptual basis is now migrating into electronic component power technologies and designs. Self-sustainable operation means that whatever the device or function, it is self-powered, and that has extraordinary possibilities for the Smart Grid and M2M sectors. Just a few short years ago, embedded sensing and communications functions in devices created insurmountable engineering challenges in terms of how to power those devices. No matter how cleverly chip manufacturers reduce energy consumption – there’s still a requirement for some energy. That energy source was either a wired connection to the grid, or batteries. There have been advances in battery technologies at both the micro scale to utility scale, but without an ability to recharge batteries, there is a lifecycle limitation that culminates in battery or device replacement. That limitation in turn impacts the potential of innovative M2M applications in Smart Grid, Smart Infrastructure, and verticals like health.

There’s new research underway that can unlock the potentials for the Smart Grid and M2M sectors. It builds on energy harvesting research, but has the objective of completely eliminating the need for a wired power delivery or battery replacements in devices. The best phrase to describe this growing field of research is energy self-sufficiency. Energy self-sufficiency will be a term used with increasing frequency in the Smart Grid and M2M sectors.

There are a number of promising sources of energy that can be used to deliver energy self-sufficiency such as solar, piezoelectric (kinetic forms like vibration), and thermal energy. There are pros and cons to each of them, and they are already deployed in chipsets – sometimes in combination for power provisioning. But electromagnetic waves can be harvested too – a concept first proposed by Nikola Tesla and Heinrich Hertz over a century ago.

There’s no shortage of ambient wireless or radio frequency (RF) activity around those of us living in developed economies. In fact, we’re practically marinating in electromagnetic waves. Interesting energy self-sufficiency research includes both near-field and far-field applications that harvest TV, cellular, and Wi-Fi signals. Other research continues to build knowledge on optimal operation modes for power-up, sleep, and active states of energy self-sufficient devices.

These technologies may not add up to powering devices like smart phones completely without grid connection, but they may extend the time between needed connections to grids. But more importantly for the Smart Grid and M2M sectors, these technologies may power sensor platforms in a broad range of applications and increase the energy harvesting potential of solar panels that can also perform as hybrid RF harvesters. It’s an intriguing expansion of the green revolution in electronics.

For utilities, this can have significant impacts on projections for future grid-delivered power and in opportunities to apply more “standalone” sensing and control mechanisms into operations. That second impact also translates into new possibilities for Smart Infrastructure applications – particularly where water grids are concerned. Without a doubt, energy self-sufficiency in sensing and communications devices should have communications service providers and M2M application providers cheering as conventional technology constraints decrease and their market opportunities grow.

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How Utilities Can Build Expertise with the Five Vs of Data

There’s been a significant amount of hype about the Smart Grid’s four Vs of data – volume, velocity, variety, and veracity. But there’s a missing element to these discussions, and that’s the fifth V – the value of data.   In the Age of the Prosumer, the value of data has profound implications for the utility sector in general, and to defining consumer and prosumer value in particular.   To excel in this new world of real and digital energy service choices, utilities will have to develop prosumer-centric operations and manage the data that is most valuable to them and their consumers and prosumers.

That’s not an easy task. Utilities are challenged to manage terabytes and petabytes of data with processes, tools, skillsets, and metrics designed for megabytes of data. As more devices become smart – capable of sensing and communicating status and accepting commands – the challenges to maintaining productive and cost effective operations will grow. Utilities can’t afford to engage in traditional siloed methods of learning – they will have to look to other sectors for knowledge, best practices, and tools.

As noted previously, other business sectors have knowledge that can be leveraged to good effect by utilities to avoid reinventing wheels of discovery and education. Some sectors are adept at tailoring promotions for both brick and mortar and online purchases (aka omni-channel strategies), to push discounts, loyalty program awards, and purchase suggestions. Their data expertise and best practice experiences can help utilities develop B2B2X marketing programs and definitions of consumer and prosumer value. The telecom sector has extensive expertise in segmentation and churn analytics. This sector also has standardized processes to ensure interoperable transactions with partners – knowledge that could be particularly useful to utilities to support the successful development and management of seamless digital energy services targeted to consumers and prosumers.

The good news is that there’s an entity called the TM Forum that collects and manages this repository of knowledge, and it is available to utilities as part of their Smart Energy program. TM Forum provides a neutral, open, and structured forum for collaboration between service providers and their vendors. Their goals are to reduce costs and risks, ease system and process integrations, and improve business and information agility.    Members utilize consensus-built tools, metrics, and best practices to accelerate their initiatives in network operations modeling, customer experience management (CEM), and data architecture strategies.

For example, a tool called the Business Process Framework is a proven blueprint for enabling successful business transformations – something that can be extremely helpful for utilities as they revamp and restructure their operations to accommodate all the new data generated by Smart Grid solutions. What’s more, TM Forum supports projects called Catalysts to explore how their tools can be applied to different business sectors and their unique challenges.

There’s an ongoing Smart Energy Catalyst that has already demonstrated large-scale integration points and digital handshakes necessary to connect utility grid and back-office operations and concomitant applications to support digital energy services for consumers. Participants in this low-risk proof of concept project include utilities (BC Hydro, Hydro-Quebec, and Salzburg AG) and solution providers (Esri, Infonova, and BaseN, among others).

Learning by doing in the collaborative environment enabled by a Smart Energy Catalyst is a great first step for utilities to build expertise in data that supports strategic objectives. Getting the 5Vs of data right will be critical success factors for utilities to build prosumer-centric operations and properly define prosumer value.

Disclaimer: TM Forum is an SGL Partners client.

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What is Prosumer Value to Utilities?

The Age of the Prosumer presents challenges for utilities accustomed to thinking of their customers in terms of kilowatthours consumed. The Smart Grid is responsible for these challenges, borne out of technology, policy, and capital innovations. These innovations are triggering many disruptions to the utility business model, and will eventually transform the historic dependency of electricity consumers on utilities into new prosumer relationships of interdependency.

Interdependency is the key distinction between a consumer and a prosumer and will be a significant factor in developing formulas to assess the total value of these relationships to utilities. A consumer is dependent on the utility and generates revenues. A prosumer has different value for utilities through an interdependent relationship in which the utility may rely on commitments to reduce electricity use (negawatt production) or supply electricity to the grid (kilowatt production) at specified times. At other times, the prosumer may be reliant on the utility to supply kilowatts.

The calculations of prosumer value are explicitly impacted by regulatory policy. Consider two different state regulatory commission decisions in 2014. In March the Minnesota Public Utility Commission approved a process to create the first “value of solar” tariff. This tariff includes non-traditional calculations such as the offset costs of other forms of electric generation and environmental considerations. In late December the Arizona Commerce Commission allowed two regulated utilities, Arizona Public Service and Tucson Electric Power, to offer programs that essentially let them seek authorized use of customer rooftops to deploy rooftop solar generation assets.

These two decisions herald the first steps that utilities will make to develop definitions of prosumer value that are unique to their business environments. Where another business sector may be satisfied with analyses of demographic and behavioral data, utilities must include geographic data, weather data, and solar irradiance data correlated with grid operational attributes and performance data to build a value of solar tariff. Similar data can help create prosumer value assessments.

In the Arizona scenarios, data analysis of this type will help determine if a certain number of rooftops outfitted with solar along a distribution line can postpone an expensive grid upgrade. The owners of rooftops with excellent solar potential on congested lines will have very different prosumer values to a utility than owners of rooftops with similar solar potential that are connected to areas of the grid that are problem-free.

Prosumer value will be different for each utility. It is also dynamic, with variable rates of change for key factors in formulas. While an address is fixed on the grid, the occupants at that address change, and their load patterns change too. Rooftops and vegetation change. Grid assets have always changed over time, along with the loads on them. The challenge for utilities is that the numbers of assets and variables that impact grid operations will vastly increase. Simulation applications can assist in creating different scenarios that become the frameworks for consumer or prosumer valuations. Today utilities benefit from condition-based maintenance – a predictive analytics approach to asset performance. Similar methodologies can contribute to prosumer value definitions by modeling historical consumption trends and correlating that data with projections for production to create predictive reports about multiple asset generation capabilities.

The Age of the Prosumer has profound implications for utilities as they venture into defining and managing new interdependent relationships with dynamic prosumer valuations. Smart Grid technologies, particularly sensing, communications, and analytics will play critical roles in defining and managing prosumer values as well as the assets that create these new values.

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