I surveyed several US-based utility websites to see how they answered a basic website query for smart meters.  In my role play as a consumer seeking information about smart meters, my most basic question was “what’s in it for me”, also known as WIIFM.  This is a basic lesson taught in Marketing 101 – always tell the consumer what benefits they receive from a new product or service.  Lesson two is to make sure it happens early and often. 

My survey revealed that while smart meter information is presented on each website, it requires some effort to find the WIIFM information and sometimes fails to connect a benefit to a feature.  There are some interesting approaches that include the use of social media as new channels to deliver information, but these lack consistent messaging content.  Communications plans that deliver consistent, multi-layered, multi-channel messaging are necessary to address consumer questions about the value that smart meters have for individuals and communities.   None of the sites in my survey included any gamification elements – although these could have been embedded in pages that require a customer login. 

Here are some survey results.

Utility 1:  The first two search results were useless. The third search result reported on their smart meter deployment and identified two changes consumers would see – remote reading and connect/disconnect capabilities.  The WIIFM benefits were missing, and although they may be obvious to those of us in the business, we can’t assume that consumers will fill in those blanks.    

The fourth result directed me to the FAQ page for Smart Grid topics.   If I wasn’t already in search fatigue, I could find several questions and answers about smart meters, starting with the basic question:  What is a smart meter?  The answer to my WIIFM question was disappointing.  Here’s what I would learn:  “A smart meter – or digital meter – is just one part of a smart grid system. But the device is important in delivering nearly real-time information to our customers. With a digital meter on your home and supporting energy management programs, you can find out – at any time during the month – how much energy you’ve used from the previous day(s).”

This is not a compelling reason for a consumer.  I’ve been told I have a capability to learn how much energy I’ve used the previous day.  But there’s no connection to a consumer benefit here- such as being able to take actions that help me reduce my energy usage, and therefore my energy bills.      

Utility 2: My search results started with a page on how to read smart electric meters.  This page has a box on the right hand side of the page titled Smart Meter, and led to a new page that had a clear feature/benefit statement, “understand energy use to make money-saving and environmentally-friendly changes.”  Clicking on other areas of that page provided information on why smart meters are important in terms of delivering, individual, community, and global benefit perspectives.  The messaging about making choices to save money on energy bills was well-reinforced throughout the text, and ubiquity is important.

The fourth option down in the text box was titled Benefits.  Here I learned that not only would I save energy and money, I’d gain privacy through the elimination of meter reading, find outage sources quickly, and reduce the need for power plants.  The best statement I saw was embedded in a fact sheet linked to that benefits page.  It stated that a smart meter will let you know exactly when you use energy and what it costs.  Had the statement continued on with “and this information helps you make smart decisions to reduce energy use and your bills”, it would have been a fantastic benefits statement. 

These are five takeaways for utility marketing departments:

1. Consumers expect the Smart Grid to help them save money – connect the dots via multi-layered messaging to show how smart meters achieve that.
2. Cut the words – consumers are busy people and shouldn’t have to wade through lots of text.
3. Prominently position the benefits statements up front.
4. Test your website search results and make sure the pages you want to appear first will appear first.
5. Think about how social media channels and gamification techniques can deliver benefits messages about smart meters.

Games are identified as one of the biggest trends for social media and mobile devices.  Gamification is called the next big thing for marketing.  Both have exciting implications for behavior change in the health care sector.  So will social games and gamification play a significant role in changing consumption behaviors for electricity, gas, and water?  Yes.  Gamification incorporates various game mechanisms like achievements, points, status, and behavioral momentum into existing communication channels to engage and educate target audiences.  It’s a great tool for utilities and Smart Grid vendors to use with residential consumers to communicate complex concepts around energy efficiency, demand response, integration of distributed generation and new pricing programs.

Social gaming differs in several key aspects.  First, it is based in social network infrastructures like Facebook.  Second, it requires interaction with other players in a competition built around an application specifically designed for play.  There are additional distinctions, but this explanation sets the stage for why utilities should infuse gamification into their existing websites to build knowledge and support for Smart Grid initiatives such as smart meter deployments, introduction of Time of Use (TOU) pricing, or enrollment in demand response (DR) programs.  Smart Grid vendors should build games into their solutions that allow for communication of achievements (such as “hey look at the score I received on my energy behavior knowledge) to interactive programs that deliver status or rewards to players and winners.

Here’s one example of how games could expedite enrollment in a DR program.  A utility is building a communications outreach plan to the residential consumer base to build enrollment in a new DR program.  As the project team reviews the multiple channels available for outreach (such as contact centers, printed billing inserts, websites, Facebook pages, and community interaction tactics) they acknowledge that the program is difficult to explain and therefore negatively impact their ultimate enrollment success.  Some team members read that games have often been used to educate and motivate desired actions.  They note that the utility website would be a natural location to add game mechanics to teach consumers about the individual, community, and societal benefits of DR participation.  Rewarding “players” through a series of simple games for achievement can motivate them to actively seek information and recruit more players when rewarded for that.  Players earn points for participation based on the game objectives. End result – consumers become promoters of the DR program, and peer-based recommendations for participation in the DR program causes enrollment to surge.

The gamification project doesn’t stop there. Consider how its influences can be extended to positively impact local businesses in the utility footprint.  The utility project team realizes that any point rewards need to be redeemed somewhere, and sees that they can dramatically expand the scope of the educational outreach (and deliver some additional community benefits) by working out agreements with local businesses that are willing to redeem game points towards the purchase of approved merchandise or services.  Services could include energy efficiency upgrades, HVAC maintenance and other actions that deliver long-term benefits to utilities in reduced energy use.  Merchandise can include energy-efficient appliances and light bulbs, EV charging stations, or solar panels.  These “redemption centers” are listed on the utility website, and those commercial establishments that are participating in any other utility energy efficiency or curtailment programs are highlighted to recognize their good energy behaviors, and extend the teachable moments to consumers and other businesses.  Local merchants enjoy the increased sales activity, local governments applaud the boosts to local business, and the utility has achieved many more benefits than mere load reductions.

Gamification presents very intriguing possibilities for utilities and Smart Grid vendors, and should be incorporated into ongoing Smart Grid projects that are visible and disruptive to consumers.  I’ll talk about innovative outreach that includes gamification in a webinar on June 21.  Join us to learn more about leveraging all channels of communication to educate, engage, and enlighten consumers.

But when it comes to consumers, this link in the electricity value chain is lacking in knowledge about the benefits that the Smart Grid delivers.  This knowledge gap has profound implications for utilities.  A recent study from EcoAlign shows that consumer awareness has the potential to go a long way in reducing energy consumption and reducing energy bills (with a concomitant reduction in CO2 emissions).  In fact, the EcoAlign study reveals that a stunning 87% of the respondents would like utilities to suggest ways to reduce their bills.  This is the opportunity and the challenge for utilities.

Utilities can play a distinctly new role with their commercial, industrial, and most especially residential consumers.   Utilities can take on the role of “trusted advisors” with consumers to educate and enlighten them on products, services, and simple behavior changes that reduce energy consumption without impact to lifestyles, comfort, or health.  Trusted advisors can build interactions or engagement with consumers and move beyond the traditional delivery of electrons.  Why is this important?  Historically, the lifetime value of a consumer used to mean that utilities supplied electricity, gas, and/or water, and consumers reliably purchased it, at steadily growing rates of consumption year over year.  However, with consumers expecting utilities to suggest ways to reduce their bills, which means reducing their consumption, lifetime value would be a diminishing number.  That’s not exactly a thriving business model or one that excites a lot of investors.

Utilities that become trusted advisors will have a portfolio of different services beyond the safe and reliable delivery of electricity.  These new services go well beyond the rollout of Demand Response (DR) programs to residential consumers.  New services may include Home Energy Management Systems (HEMS), home health or wellness, or water management services.  Services like these offer intriguing possibilities for utilities to increase the lifetime value of consumers.   And even services that utilities are more accustomed to offering, such as energy efficiency and DR, benefit from utilities taking a more active educational role with consumers.

A 2010 report from the Department of Energy’s Lawrence Berkeley National Lab titled “Coordination of Energy Efficiency and Demand Response” studied opportunities for utilities to offer both energy efficiency and demand response programs as a powerful combination to reduce overall and peak demand.  The conclusion was that the payoffs are substantial, but since these are complicated topics, program participation will require consumer education.  Utilities structured to operate as trusted advisors can provide that education, and will be the organizations that thrive in the future Smart Grid.  Otherwise, utilities may simply deliver electricity, gas, or water and watch other businesses sell services to help consumers manage consumption and other home and business-based activities.

Utilities will have to reorient their operations to take on the trusted advisor role.  Part of the transition includes a thorough communications strategy for internal and external constituencies.  This will be one of the discussion topics in an upcoming webinar on June 21 titled How to Deliver Communications and Education about Smart Grid Benefits to Utility Customers.  Join us to learn more about Smart Grid transformations.

There were two common messages within these conferences:

1.  People are emotional about their car purchases and about how they invest their money. 
2. A lack of experience holds back full embrace of new technologies and can build a FUD (fear, uncertainty, and doubt) factor.  The lack of consumer experience with EVs is holding back rapid consumer adoption.   The lack of venture capitalists’ (VCs) experience with some technology sectors may be doing the same in investment decisions.

An EV buyer has to install charging equipment at home and learn the location of charging stations – something that internal combustion engine owners don’t worry about (although at one time, gas stations were not commonplace either).  An EV buyer has to learn a different maintenance schedule and pattern, and be comfortable with the safety record of EV batteries and future resale value of their used EV.  In contrast, a VC being asked to commit millions of dollars has to consider the projected future value of a new company that may have a disruptive technology.  The VC has to weigh the pros and cons of that technology, the alternatives to it, the market space, and whether or not the company’s management team has the right skill set to build and execute a winning strategy. 

The Emobility conference discussed consumer attitudes towards EVs.  One recent study revealed that 66% of respondents support investment by utilities in EV charging infrastructure, and 52% want utilities to take leadership in a consumer shift to EVs.  That’s good news for electric utilities – consumers look to them to reduce that FUD factor.  However, they may have their hands full.  At the VC Summit, Tim Draper, of Draper Fisher Jurvetson, said that good investing opportunities lie within monopoly industries because they get “sloppy”.  Utilities are monopolies in most of the USA, and there’s certainly a significant amount of disruptive Smart Grid technology swirling in that sector.  Will existing utilities execute Smart Grid strategies effectively and efficiently?  New Smart Grid technologies can put distributed generation in the hands of new electricity producers; new energy service providers may disrupt the utility/ratepayer relationships; and new entrants might deliver energy provisioning and management services – including services for EVs – that could dramatically alter the composition of the electricity market and introduce competition in unexpected places. 

Todd Chaffee of Institutional Venture Partners identified three top investment areas for his company -communications and wireless technologies; enterprise IT solutions; and Internet and digital media.  These technology categories will be disruptive to the existing grid ecosystem.  These areas also reflect the comfort levels of a large number of VC firms in the USA – they know software and communications networks and the Internet. They don’t know as much about battery chemistry or materials science outside of microprocessors, but the successful IPO of A123 has gotten their attention.  Clean technologies will be a big investment area for VC firms, however most of them will be focused in their comfort zones.  Start-ups in different Smart Grid technologies outside of these areas that are seeking capital will have to work doubly hard to build VC knowledge and eliminate the emotional FUD factor.

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.

The National Institute of Standards and Technology (NIST) is diligently working on Smart Grid standards with a focus on interoperability and security.  There is a two-day workshop going on right now between NIST and vendors of Smart Grid solutions to develop these standards.    

Some may argue that proprietary solutions are inherently more secure than open solutions. Unfortunately, proprietary systems are just that more vulnerable to any threat.  Let’s use an example from biology.  Which organism is the stronger – the one that is out in the environment, exposed to various germs that improve its immune system and ability to combat infections, or the one that lives in a bubble and is prey to the first biotic threat because its immune system has no defense experience?  We all know the answer to that question. 

Software must be open and interoperable, or else as consumers we will all pay the price in higher utility costs, more expensive solutions, and less reliable energy networks.  It must also be secure.  Security has become a hot button issue, as noted at the recent Black Hat conference, where 2 sessions identified vulnerabilities in smart meters and network configurations and 1 session focused on weaknesses in Zigbee, a wireless networking specification favored for Home Area Networks (HANs).    

Security concerns cover everything from physical access to a meter all the way to the sophisticated types of attacks perpetrated on Internet-connected sites and networks .  Let’s face it, anything can be vulnerable, so it’s a matter of reducing the losses suffered at any point of attack.  Our centralized grid worked very well, but it is the wrong overall network architecture for the bi-directional flow of electricity and information that is the essence of the Smart Grid.  A distributed architecture – one that accommodates distributed generation – minimizes the security risks by spreading generation, transmission, and distribution functions – even down to microgrid proportions.

What are some of the other common software characteristics for Smart Grid solutions in addition to being open and secure?  It should be scalable.  If it is meter software, it should work from hundreds of meters up to millions of meters.  If it is a utility billing or enterprise resource planning type of solution, it has to manage large amounts of data, and filter the meaningful data for that utility’s operations. 

Smart Grid software also has to be flexible with regards to latency of data.  Some applications will require real-time data, while others can take data at times of least network traffic to avoid congestion situations.  For example, the sensors that monitor transmission conditions for lines or equipment need real-time communications back to operations centers.  Electricity usage information from my meter may not need real-time communication capabilities, but might need to be sent more frequently than once a month. 

Smart Grid software solutions also need to incorporate Web design principles where appropriate to offer the most intuitive user portals for sharing information and managing distributed generation arrangements with utilities.    Many of these characteristics will be covered at the upcoming Green Software Unconference on August 19^th in Mountain View, CA.  I hope to see you there!