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The Smart Grid Grind: Will We Get What It Promises?

Feb. 10, 2011
Parks Associates' recent Smart Energy Summit summarized the slow progress with the Smart Grid and highlighted the coming benefits thanks to some applied communications technologies.

The Smart Energy Summit was held again this year in Austin, Texas, January 25-26. Sponsored by research firm Parks Associates of Dallas, the conference turned out to be a great update on what is happening with the Smart Grid. It primarily focused on the consumer side of the next-generation energy infrastructure, but it also provided a glimpse of the latest developments and deployments in Smart Grid components.

Grid Update
George Arnold, the Smart Grid guru at the National Institute of Standards and Technology (NIST), offered a good overview at a luncheon keynote and explained why we need the Smart Grid. The overall goal, of course, is cleaner and more reliable power in the 21st century by replacing some aging infrastructure.

Other objectives include reducing energy costs, building on the use of renewable energy like wind and solar, supporting the growth of plug-in/hybrid electric vehicles, and making the grid more reliable with a wide-ranging monitoring and control system. All of these goals will depend on the implementation of several new communications networks, from end users to the substations to the generating plants.

About 50% of our energy still comes from coal, with 20% generated by natural gas, 20% by nuclear, and 10% by all other sources. It will be seriously difficult to replace coal in the short term, if it even makes sense to do so. And will it be possible in our lifetime? If so, look for energy prices to soar even with energy savings due to Smart Grid developments, especially if uber-expensive solar and wind are mandated.

Of the energy users, residential usage represents about 37% of the total, industrial is 27%, and commercial is 37%. So, a good place to start saving or reducing energy usage is with the consumer. HVAC eats up the biggest chunk of residential usage, to the tune of about 35%. Lighting, television, and computers account for an additional 30%. The secret to making big reductions in the residential space is to implement home energy monitoring and control. To make this happen, two main things have to occur.

First, the consumer needs to be educated about what is possible. Only a very small percentage of consumers actually know that their energy usage can be monitored and controlled. More than 70% of consumers don’t even know what the Smart Grid is. The big question is if consumers will actually get with the program when they know about its options and benefits. So far, less than 10% of consumers are actively engaging in any kind of energy management. A whopping 49% of consumers said in a recent survey that they certainly do not want utility control.

Second, each home needs a smart meter. Meters that get the Advanced Metering Infrastructure (AMI) stamp have been developed to accurately measure consumer power use and provide that information to the utility for billing and tracking purposes as well as back to the consumer for monitoring usage and ultimately control. The utilities are still installing AMI meters, and by the end of 2010, only about 24 million or roughly 19% of U.S. homes had one. The rollout rate from the utilities is about 10 million to 11 million new meters installed per year. The guess is that by 2015 about 40% of homes will have one. Now is the time to begin educating consumers and implementing some form of monitoring and control.

REM Is The Answer
There are two forms of monitoring and control known as residential energy management (REM). In the first, the utility implements a home area network (HAN) inside the home to monitor energy usage. The HAN uses wireless or powerline communications (PLC) to talk to the meter, thermostat, and other monitored and controlled devices. In a REM HAN network, the utility controls the air conditioning or other appliances with the consumer’s permission. Few consumers like the idea of utility control, and it will be some time yet in coming.

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The more current opportunity lies in independent REM, or iREM. Consumers install a network via their AMI meter and actively monitor energy usage and exercise personal control to save energy. The iREM approach can happen now, once consumers learn about it. So, it’s up to the utilities to educate consumers about this option.

Parks Associates believes that the current opportunity for the next 10 years will be in iREM with HANs, controllable thermostats, monitoring dashboards, and load control devices to actually turn appliances or systems off and on. The company expects 11 million households to have remote monitoring and control systems installed by 2015. By then, with a critical mass of installed AMI meters, the utilities can become more involved. Despite all the benefits, some consumer backlash is expected.

The International Scene
The rest of the world is further along in implementing Smart Grid systems. Most European countries and Canada have mandated carbon-dioxide (CO2) reduction programs that are pushing consumer participation. It is estimated that more than 100 million smart meters will be installed in Europe by 2014. Scandinavia already has 50% of its households equipped with smart meters. The biggest energy user of all, China, is aggressively rolling out meter installments with an estimated 212 million to be in place by 2015.

That may be the good news, but the bad news is that surveys seem to show that the average consumer couldn’t care less. Furthermore, some actually believe that consumers just aren’t qualified to monitor and control their energy usage intelligently. Consumers in the U.K. and elsewhere have resoundingly refused utility control. So while other countries are moving faster, they obviously have the same issues as the U.S. Some expect a larger part of the savings will come from the lighting sector as incandescents are phased out and compact fluorescent lamps (CFLs) and LEDs become mandatory.

iREM Net Versus HAN
A HAN is a complete low-speed network that lets the AMI meter talk to the thermostat, monitor dashboard, and load control modules on the air conditioner and other appliances that hog energy. It uses wireless technologies like ZigBee or Z-wave or PLC like that from HomePlug devices. HANs may also include controls for lighting and for security monitoring.

An iREM Net is a bit simpler. A limited network comprises the wireless or PLC link from the AMI meter to the programmable thermostat and a dashboard monitor. The iREM Net may also include some load control but no lighting or security provisions. It lets consumers watch energy usage throughout the day and then decide how to manage it. Consumers then can participate in any time of use (TOU) or demand response (DR) programs that their utility may offer.

These systems require active consumer participation and possibly even some lifestyle changes, but savings are possible. Will consumers really use iREM Nets? Some will, yet will it be enough to make an overall national impact? That remains to be seen, but the potential is there.

The bottom line is that consumers don’t know what they don’t know. Also, the value proposition behind iREM and HAN is still mostly unclear. Solve that problem and we can be on our way to implementing the Smart Grid.

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Parks Associates estimates that about 10 million U.S. households or 8% will have some form of iREM Net by the end of 2015. Another 4.7% or 5.9 million will have a HAN. Some say that more benefit will come from the iREM approach, which gives the consumer choice, versus direct control.

An Interesting Development In The Cloud
Homes with installed AMI meters will have access to energy usage data via their iREM Net or HAN. This data is also available to the utility for billing and other functions. However, this data can be made available to others with the consumer’s consent as well. This provides an opportunity for others to take the data, analyze it, and make suggestions for savings to the consumers via the Internet. If you have an Internet connection, one of these third-party services can provide an energy management program that will be available to you on your computer or via a dashboard monitoring device, usually a touch LCD or a thermostat.

Verizon will launch such a service in the second quarter of 2011, and other broadband suppliers like Cox Cable are joining the energy cloud movement. Other cable and telecommunications companies will be testing these waters. Some utilities may even subcontract with the cloud providers for monitoring and control services, reducing their investment in large and complex backhaul systems. We can also expect to see some wireless services make remote cell-phone monitoring and control an app.

What To Look For
The future holds some significant events, such as increased smart meter, HAN, and iREM Net deployments. Also, broadband providers will offer cloud services, while cable and telecom companies will play a role. There will be more industry players as well, as Parks estimates that more than 200 companies are involved in related HAN or iREM products and services.

The rollout of the Smart Grid has been very slow despite the stimulus money and industry interest. With more than 3100 independent electric utilities in the U.S., the deployment of meters and services will come at different places at different times and at different rates.

Energy monitoring and control is not that exciting to consumers. It isn’t as sexy as video or smart phones or tablet computers. They want to save money on energy, of course. But if that savings isn’t great enough and comfort and convenience are compromised, look for a very low opt-in percentage.

Early adopters will be altruistic consumers who really want to lower CO2 even at the expense of some lifestyle compromises. And there are still some consumers who doubt that the utility actually wants them to reduce their energy bill as well as utility income and profit.

Finally, a note to design engineers: REM products should be super simple to deploy and use, and they should have some kind of “cool” factor. Get on it.

Parks Associates

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